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Section 1: 8-K (8-K)

Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 24, 2019
Cousins Properties Incorporated
(Exact name of registrant as specified in its charter)

Georgia
(State or other jurisdiction of incorporation)

001-11312
(Commission File Number)

58-0869052
(IRS Employer Identification Number)


3344 Peachtree Road NE, Suite 1800, Atlanta, Georgia 30326-4802
(Address of principal executive offices)

Registrant’s telephone number, including area code: (404) 407-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o




Item 2.02. Results of Operations and Financial Condition
On April 24, 2019, Cousins Properties Incorporated (the “Company”) issued a Press Release and Quarterly Information Package containing information about the Company’s financial condition and results of operations for the quarter ended March 31, 2019. A copy of the Company’s Press Release and Quarterly Information Package is attached hereto as Exhibit 99.1. The information contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” with the Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.


Item 9.01. Financial Statements and Exhibits.

(c)    Exhibits

Exhibit Number        Exhibit Description


        




 





Signatures


Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 24, 2019


COUSINS PROPERTIES INCORPORATED

By:
/s/ Gregg D. Adzema
Gregg D. Adzema
Executive Vice President and Chief Financial Officer




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
397635590_q12019supplementcovera02.jpg

1

TABLE OF CONTENTS





Forward-Looking Statements
Earnings Release
Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations
Funds From Operations - Detail
Portfolio Statistics
Office Leasing Activity
Office Lease Expirations
Top 20 Office Tenants
Tenant Industry Diversification
Investment Activity
Land Inventory
Debt Schedule
Non-GAAP Financial Measures - Calculations and Reconciliations
Non-GAAP Financial Measures - Discussion
397635590_terminusnight10cropped.jpg

Cousins Properties
 
Q1 2019 Supplemental Information

FORWARD-LOOKING STATEMENTS

Certain matters contained in this report are “forward-looking statements” within the meaning of the federal securities laws and are subject to uncertainties and risks, as itemized in Item 1A included in the Annual Report on Form 10-K for the year ended December 31, 2018. These forward-looking statements include information about possible or assumed future results of the business and our financial condition, liquidity, results of operations, plans, and objectives. They also include, among other things, statements regarding subjects that are forward-looking by their nature, such as, 2019 guidance and underlying assumptions, business and financial strategy, future debt financings, future acquisitions and dispositions of operating assets; future acquisitions and dispositions of land, including ground leases; future development and redevelopment opportunities, including fee development opportunities; future issuances and repurchases of common stock; future distributions; projected capital expenditures; market and industry trends; entry into new markets; future changes in interest rates; the benefits of the proposed transactions involving us and TIER REIT, Inc. ("TIER"), including all future financial and operating results, plans, objectives, expectations and intentions, benefits of the proposed transactions with TIER to tenants, employees, stockholders and other constituents of the combined company; integrating TIER with us; the expected timetable for completing the proposed transactions with TIER; and all statements that address operating performance, events, or developments that we expect or anticipate will occur in the future — including statements relating to creating value for stockholders.
Any forward-looking statements are based upon management's beliefs, assumptions, and expectations of our future performance, taking into account information that is currently available. These beliefs, assumptions, and expectations may change as a result of possible events or factors, not all of which are known. If a change occurs, our business, financial condition, liquidity, and results of operations may vary materially from those expressed in forward-looking statements. Actual results may vary from forward-looking statements due to, but not limited to, the following: the availability and terms of capital, the ability to refinance or repay indebtedness as it matures; the failure of purchase, sale, or other contracts to ultimately close; the failure to achieve anticipated benefits from acquisitions, investments, or dispositions; the potential dilutive effect of common stock or operating partnership unit issuances; the availability of buyers and pricing with respect to the disposition of assets, changes in national and local economic conditions, the real estate industry, and the commercial real estate markets in which we operate (including supply and demand changes), particularly in Atlanta, Charlotte, Austin, Phoenix, and Tampa where we have high concentrations of our lease revenue; changes to our 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; the ability to lease newly developed and/or recently acquired space; the failure of a tenant to occupy leased space, and the risk of declining leasing rates; changes in the needs of our tenants brought about by the desire for co-working arrangements; trends toward utilizing less office space per employee, and the effect of telecommuting; the adverse change in the financial condition of one or more of our major tenants; volatility in interest rates and insurance rates, competition from other developers or investors; the risks associated with real estate developments (such as zoning approval, receipt of required permits, construction delays, cost overruns, and leasing risk); cyber security breaches; changes in senior management and 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; any failure to continue to qualify for taxation as a real estate investment trust and meet regulatory requirements; potential changes to state, local, or federal regulations applicable to our business; material changes in the rates or the ability to pay dividends on common shares or other securities; potential changes to the tax laws impacting REITs and real estate in general; risks associated with the ability to consummate the proposed transactions with TIER and the timing of the closing of the proposed transactions with TIER; the failure to obtain debt financing arrangements in connection with the proposed transactions with TIER; the ability to secure favorable interest rates on debt financing incurred in connection with the proposed transactions with TIER; the ability to successfully integrate our operations and employees in connection with the proposed transaction with TIER; the ability to realize anticipated benefits and synergies of the proposed transactions with TIER; the amount of the costs, fees, expenses and charges related to the proposed transactions with TIER; and those additional risks and factors discussed in reports filed with the Securities and Exchange Commission (“SEC”) by the Company and TIER, and those additional risks and factors discussed in reports filed with the SEC by the Company.
The words “believes,” “expects,” “anticipates,” “estimates,” “plans,” “may,” “intend,” “will,” or similar expressions are intended to identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, we can give no assurance that such plans, intentions, or expectations will be achieved. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information, or otherwise, except as required under U.S. federal securities laws.



Cousins Properties
3
Q1 2019 Supplemental Information

EARNINGS RELEASE


COUSINS PROPERTIES REPORTS FIRST QUARTER 2019 RESULTS
Highlights
Net income per share was $0.08.
Funds From Operations per share was $0.20.
Same property net operating income on a cash basis increased 4.0%.
Second generation net rent per square foot on a cash basis increased 7.1%.
Executed 682,129 square feet of office leases.
Commenced operations at Dimensional Place, a 281,000 square foot office building in the South End submarket of Charlotte.
Sold air rights that cover eight acres in Downtown Atlanta for $13.3 million.
Entered into a series of agreements with Norfolk Southern Railway Company ("NS") pursuant to which Cousins will develop a new corporate headquarters for NS, recognizing associated fee income of $52.3 million, and has purchased 1200 Peachtree, a 370,000 square foot office building in Midtown Atlanta, for $82 million.
Entered into a merger agreement with TIER REIT, Inc. ("TIER") pursuant to which Cousins will acquire TIER in a stock-for-stock transaction.
ATLANTA (April 24, 2019) - Cousins Properties (NYSE:CUZ) today reported its results of operations for the quarter ended March 31, 2019.

Financial Results
Net income available to common stockholders was $35.3 million, or $0.08 per share, for the first quarter of 2019, compared with $16.0 million, or $0.04 per share, for the first quarter of 2018.
Funds From Operations ("FFO") was $84.5 million, or $0.20 per share, for the first quarter of 2019, compared with $64.6 million, or $0.15 per share, for the first quarter of 2018.
2019 Guidance
The Company's guidance only reflects information related to the Company as a stand-alone entity, and is not meant to reflect or give effect to, in any manner, the merger with TIER. For information related to the merger with TIER, refer to the Company's filings with the Securities and Exchange Commission.
The Company is adjusting its full year 2019 net income guidance to $0.25 to $0.29 per share from $0.35 to $0.38 per share and its full year 2019 FFO guidance to $0.70 to $0.74 per share from $0.70 to $0.75 per share.






Cousins Properties
4
Q1 2019 Supplemental Information

EARNINGS RELEASE


The Company leaves unchanged the previously provided assumptions of its 2019 net income and FFO guidance, except for the following updates
Same property net operating income growth of 3% to 5% on a cash basis, up from the previous range of 2% to 4%.
General and administrative expenses of $33.5 million to $35.5 million, net of capitalized salaries, up from the previous range of $27 million to $29 million, due to an increase in long-term incentive compensation based on the Company's stock performance.
No disposition of Meridian Mark Plaza in 2019.
Interest and other expenses, net of capitalized interest, of $50.5 million to $52.5 million, up from the previous range of $49.5 million to $51.5 million, due to the removal of the Meridian Mark disposition and the corresponding impact on interest and Meridian Mark loan prepayment penalty.

A reconciliation of projected net income per share to projected FFO per share is provided as follows:
 
Full Year 2019 Range
 
Low
 
High
Net income per share
$
0.25

 
$
0.29

Add: Real estate depreciation and amortization
0.45

 
0.45

Funds From Operations per share
$
0.70

 
$
0.74

The Company's guidance is provided for information purposes based on current plans and assumptions and is subject to change.
Investor Conference Call and Webcast
The Company will conduct a conference call at 10:00 a.m. (Eastern Time) on Thursday, April 25, 2019, to discuss the results of the quarter ended March 31, 2019. The number to call for this interactive teleconference is (877) 247-1056. The live webcast of this call can be accessed on the Company's website, www.cousins.com, through the “Cousins Properties First Quarter Conference Call” link on the Investor Relations page.
A replay of the conference call will be available for seven days by dialing (877) 344-7529 and entering the passcode 10130099. The playback can also be accessed on the Company's website.
Acting through its operating partnership Cousins Properties, LP, Cousins Properties is a leading fully-integrated real estate investment trust (REIT) with extensive experience in development, acquisition, financing, management, and leasing. Based in Atlanta, the Company actively invests in top-tier urban office assets and opportunistic mixed-use properties in Sunbelt markets.
 

Cousins Properties
5
Q1 2019 Supplemental Information

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)
 
March 31, 2019
 
December 31, 2018
Assets:
 
 
 
Real estate assets:
 
 
 
Operating properties, net of accumulated depreciation of $459,423 and $421,495 in 2019 and 2018, respectively
$
3,714,115

 
$
3,603,011

Projects under development
35,282

 
24,217

Land
35,868

 
72,563

 
3,785,265

 
3,699,791

 
 
 
 
Cash and cash equivalents
3,456

 
2,547

Restricted cash
170

 
148

Notes and accounts receivable
10,558

 
13,821

Deferred rents receivable
91,240

 
83,116

Investment in unconsolidated joint ventures
167,429

 
161,907

Intangible assets, net
146,994

 
145,883

Other assets
46,081

 
39,083

Total assets
$
4,251,193

 
$
4,146,296

Liabilities:
 
 
 
Notes payable
$
1,116,474

 
$
1,062,570

Accounts payable and accrued expenses
91,477

 
110,159

Deferred income
55,074

 
41,266

Intangible liabilities, net of accumulated amortization of $45,545 and $42,473 in 2019 and 2018, respectively
53,869

 
56,941

Other liabilities
106,070

 
54,204

Total liabilities
1,422,964

 
1,325,140

Commitments and contingencies
 
 
 
Equity:
 
 
 
  Stockholders' investment:
 
 
 
Preferred stock, $1 par value, 20,000,000 shares authorized, 6,867,357 shares issued and outstanding in 2019 and 2018
6,867

 
6,867

Common stock, $1 par value, 700,000,000 shares authorized, 430,926,519 and 430,724,520 shares issued in 2019 and 2018, respectively
430,927

 
430,725

Additional paid-in capital
3,605,692

 
3,606,191

Treasury stock at cost, 10,339,735 shares in 2019 and 2018
(148,473
)
 
(148,473
)
Distributions in excess of cumulative net income
(1,124,596
)
 
(1,129,445
)
Total stockholders' investment
2,770,417

 
2,765,865

Nonredeemable noncontrolling interests
57,812

 
55,291

Total equity
2,828,229

 
2,821,156

Total liabilities and equity
$
4,251,193

 
$
4,146,296



Cousins Properties
6
Q1 2019 Supplemental Information

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share amounts)
 
Three Months Ended March 31,
 
2019
 
2018
Revenues:
 
 
 
Rental property revenues
$
123,345

 
$
113,348

Fee income
8,728

 
2,894

Other
660

 
960

 
132,733

 
117,202

Expenses:
 
 
 
Rental property operating expenses
43,487

 
40,191

Reimbursed expenses
932

 
942

General and administrative expenses
11,460

 
6,809

Interest expense
10,820

 
9,778

Depreciation and amortization
45,861

 
45,093

Acquisition costs
3

 
91

Other
180

 
320

 
112,743

 
103,224

Income from unconsolidated joint ventures
2,904

 
2,885

Gain (loss) on sale of investment properties
13,111

 
(372
)
Loss on extinguishment of debt

 
(85
)
Net income
36,005

 
16,406

Net income attributable to noncontrolling interests
(664
)
 
(363
)
Net income available to common stockholders
$
35,341

 
$
16,043

 
 
 
 
Net income per common share - basic and diluted
$
0.08

 
$
0.04

Weighted average shares — basic
420,510

 
420,154

Weighted average shares — diluted
427,607

 
427,695


Cousins Properties
7
Q1 2019 Supplemental Information

KEY PERFORMANCE METRICS

 
2017
2018 1st
2018 2nd
2018 3rd
2018 4th
2018
2019 1st
Property Statistics
 
 
 
 
 
 
 
Consolidated Operating Properties
22

23

23

23

23

23

24

Consolidated Rentable Square Feet (in thousands)
11,428

11,936

11,944

11,944

12,203

12,203

12,573

Unconsolidated Operating Properties
4

4

4

4

4

4

5

Unconsolidated Rentable Square Feet (in thousands)
3,113

3,113

3,113

3,113

3,113

3,113

3,394

Total Operating Properties
26

27

27

27

27

27

29

Total Rentable Square Feet (in thousands)
14,541

15,049

15,057

15,057

15,316

15,316

15,967

 
 
 
 
 
 
 
 
Office Leasing Activity (1)
 
 
 
 
 
 
 
Net Leased during the Period (square feet in thousands)
2,190

330

328

486

455

1,597

682

Net Effective Rent Calculation (per square foot)
 
 
 
 
 
 
 
Net Rent
$29.41
$33.35
$32.40
$28.46
$31.02
$31.01
$27.86
Net Free rent
(0.75)

(0.55)

(1.00)

(0.94)

(0.86)

(0.85)

(0.49)

Leasing commissions
(2.32)

(2.67)

(2.49)

(2.40)

(2.17)

(2.41)

(1.13)

Tenant improvements
(4.43)

(3.07)

(4.50)

(4.29)

(5.43)

(4.40)

(1.74)

Net Effective Rent
$21.91
$27.06
$24.41
$20.83
$22.56
$23.35
$24.50
Change in Second Generation Net Rent
19.6
%
35.2
%
34.2
%
25.8
%
36.0
%
32.5
%
22.8
%
Change in Cash-Basis Second Generation Net Rent
6.9
%
19.3
%
13.1
%
7.6
%
13.1
%
13.2
%
7.1
%
 
 
 
 
 
 
 
 
Same Property Information (2)
 
 
 
 
 
 
 
Percent Leased (period end)
92.6
%
93.6
%
93.5
%
94.2
%
94.5
%
94.5
%
94.4
%
Weighted Average Occupancy
89.4
%
92.0
%
91.9
%
91.8
%
92.0
%
91.9
%
92.0
%
Change in Net Operating Income (over prior year period)
4.4
%
2.6
%
1.3
%
2.7
%
1.8
%
2.1
%
4.3
%
Change in Cash-Basis Net Operating Income (over prior year period)
5.3
%
9.4
%
4.1
%
4.4
%
1.2
%
4.7
%
4.0
%
 
 
 
 
 
 
 
 
Development Pipeline
 
 
 
 
 
 
 
Estimated Project Costs (in thousands) (3)
$490,500
$271,500
$358,800
$362,900
$245,900
$245,900
$199,900
Estimated Project Costs (3) / Total Undepreciated Assets
9.9
%
5.5
%
7.2
%
7.2
%
4.7
%
4.7
%
3.8
%
 
 
 
 
 
 
 
 
Market Capitalization (4)
 
 
 
 
 
 
 
Common Stock Price (period end)
$9.25
$8.68
$9.69
$8.89
$7.90
$7.90
$9.66
Common Stock/Units Outstanding (period end in thousands)
426,995

427,218

427,368

427,359

427,359

427,359

427,561

Equity Market Capitalization (in thousands)
$3,949,704
$3,708,252
$4,141,196
$3,799,222
$3,376,136
$3,376,136
$4,130,239
Debt (in thousands)
1,262,523

1,262,833

1,261,459

1,236,891

1,234,016

1,234,016

1,287,164

Total Market Capitalization (in thousands)
$5,212,227
$4,971,085
$5,402,655
$5,036,113
$4,610,152
$4,610,152
$5,417,403
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Cousins Properties
8
Q1 2019 Supplemental Information

KEY PERFORMANCE METRICS

 
2017
2018 1st
2018 2nd
2018 3rd
2018 4th
2018
2019 1st
Credit Ratios (4)
 
 
 
 
 
 
 
Net Debt/Total Market Capitalization
21.4
%
23.2
%
21.3
%
22.9
%
26.7
%
26.7
%
23.7
%
Net Debt/Total Undepreciated Assets
22.5
%
23.5
%
23.1
%
22.9
%
24.2
%
24.2
%
24.3
%
Net Debt/Annualized Adjusted EBITDAre
3.75

3.77

3.76

3.65

3.68

3.68

3.29

Fixed Charges Coverage (Adjusted EBITDAre)
5.58

5.39

5.37

5.67

5.39

5.46

6.08

 
 
 
 
 
 
 
 
Dividend Information (4)
 
 
 
 
 
 
 
Common Dividend per Share (5)
$0.24
$0.065
$0.065
$0.065
$0.065
$0.26
$0.0725
Funds From Operations (FFO) Payout Ratio
38.8
%
42.3
%
42.3
%
40.5
%
38.3
%
40.8
%
36.1
%
Funds Available for Distribution (FAD) Payout Ratio
60.2
%
61.9
%
61.2
%
59.1
%
62.7
%
61.2
%
56.4
%
 
 
 
 
 
 
 
 
Operations Ratio (4)
 
 
 
 
 
 
 
Annualized General and Administrative Expenses/Total Undepreciated Assets
0.56
%
0.55
%
0.65
%
0.31
%
0.26
%
0.43
%
0.87
%
 
 
 
 
 
 
 
 
Additional Information (4) (in thousands, except per square foot amounts)
 
 
 
 
 
 
 
In-Place Gross Rent (per square foot) (6)
$34.19
$34.98
$35.08
$35.23
$36.41
$36.41
$36.95
Straight Line Rental Revenue
$30,973
$8,136
$5,690
$5,148
$7,043
$26,017
$8,732
Above and Below Market Rents Amortization
$7,221
$1,793
$1,714
$1,730
$1,640
$6,877
$1,670
Second Generation Capital Expenditures
$53,485
$11,256
$11,077
$15,152
$19,182
$56,667
$8,074
 
 
 
 
 
 
 
 

 
(1) See Office Leasing Activity on page 18 for additional detail and explanations.
(2) Same Property Information is derived from the pool of office properties, as defined, in the period originally reported. See Same Property Performance on page 17 and Non-GAAP Financial Measures - Calculations and Reconciliations on page 34 for additional information.
(3) Cousins' share of estimated project costs. See Development Pipeline on page 25 for additional detail.
(4) See Non-GAAP Financial Measures - Calculations and Reconciliations beginning on page 30.
(5) The fourth quarter 2016 dividend was declared and paid one quarter in arrears.
(6) In-place gross rent equals the annualized cash basis base rent including tenant's share of estimated operating expenses, if applicable, as of the end of the period divided by occupied square feet.



Cousins Properties
9
Q1 2019 Supplemental Information

KEY PERFORMANCE METRICS


                                 
397635590_chart-fc95d3c5b0fe50d4bb6.jpg397635590_chart-f913d308bdb6559ca2d.jpg 397635590_chart-f220bd0bcbf75c91bc0.jpg
397635590_chart-1c13dbde788d55b3a71.jpg 397635590_chart-a3d9e84c92ef516fb84.jpg 397635590_chart-57df07544a0e5fb6b15.jpg

          

(1) Office properties only.
    
Note: See additional information included herein for calculations, definitions, and reconciliations to GAAP financial measures.

Cousins Properties
10
Q1 2019 Supplemental Information

FUNDS FROM OPERATIONS - SUMMARY (1)

 
(amounts in thousands, except per share amounts)
 
2017
2018 1st
2018 2nd
2018 3rd
2018 4th
2018
2019 1st
Net Operating Income
$
313,206

$
80,578

$
80,195

$
80,858

$
84,432

$
326,063

$
87,731

Gain on Sales of Undepreciated Investment Properties
67

330

2,449


512

3,291

13,132

Fee Income
8,632

2,894

1,798

2,519

2,878

10,089

8,728

Other Income
15,991

1,034

1,212

915

517

3,678

748

Reimbursed Expenses
(3,527
)
(942
)
(860
)
(955
)
(1,025
)
(3,782
)
(932
)
General and Administrative Expenses
(27,523
)
(6,809
)
(8,071
)
(3,913
)
(3,247
)
(22,040
)
(11,460
)
Interest Expense
(41,382
)
(11,293
)
(11,305
)
(11,208
)
(12,080
)
(45,886
)
(12,574
)
Other Expenses
(3,690
)
(695
)
(365
)
(257
)
(325
)
(1,642
)
(404
)
Depreciation and Amortization of Non-Real Estate Assets
(1,874
)
(473
)
(468
)
(469
)
(462
)
(1,872
)
(456
)
FFO (1)
$
259,900

$
64,624

$
64,585

$
67,490

$
71,200

$
267,899

$
84,513

Weighted Average Shares - Diluted
423,297

427,695

427,501

427,520

427,486

427,473

427,607

FFO per Share (1)
$
0.61

$
0.15

$
0.15

$
0.16

$
0.17

$
0.63

$
0.20




(1) See pages 30 and 33 for reconciliations of Funds From Operations to Net Income available to common shareholders.

Cousins Properties
11
Q1 2019 Supplemental Information

FUNDS FROM OPERATIONS - DETAIL (1)



 
(amounts in thousands, except per share amounts)
 
2017
2018 1st
2018 2nd
2018 3rd
2018 4th
2018
2019 1st
 
 
 
 
 
 
 
 
Net Operating Income
 
 
 
 
 
 
 
Consolidated Properties
 
 
 
 
 
 
 
Spring & 8th (2)
$
50

$
4,726

$
4,608

$
4,704

$
7,412

$
21,450

$
7,218

Hearst Tower
26,186

6,493

6,426

6,456

6,544

25,919

6,492

Northpark (2)
20,506

5,731

5,814

6,204

6,669

24,418

6,463

Corporate Center (2)
20,889

5,780

5,956

5,947

6,263

23,946

6,386

Hayden Ferry (2)
21,950

5,766

5,433

5,894

6,372

23,465

5,945

Promenade
16,755

4,240

4,242

4,125

3,895

16,502

4,788

Fifth Third Center
19,284

4,729

4,647

4,912

4,842

19,130

4,735

One Eleven Congress
15,146

4,036

4,039

4,034

4,109

16,218

4,446

Buckhead Plaza (2)
17,516

4,330

4,382

4,367

3,772

16,851

4,047

San Jacinto Center
16,069

3,635

3,632

3,596

3,789

14,652

3,665

Colorado Tower
13,557

3,429

3,453

3,511

3,380

13,773

3,480

816 Congress
10,898

2,780

2,911

3,016

2,949

11,656

3,290

3344 Peachtree
10,909

2,994

3,069

2,970

3,149

12,182

3,142

NASCAR Plaza
10,189

2,652

2,590

2,683

2,409

10,334

2,538

Tempe Gateway
8,079

1,893

2,029

1,997

2,015

7,934

2,165

3350 Peachtree
8,673

1,987

1,899

1,888

1,859

7,633

2,011

8000 Avalon
433

1,357

1,350

1,144

1,581

5,432

1,714

3348 Peachtree
6,146

1,405

1,360

1,472

1,483

5,720

1,527

111 West Rio
4,044

1,314

1,419

1,374

1,370

5,477

1,381

The Pointe
4,568

1,236

1,170

1,179

1,230

4,815

1,255

Research Park V
2,976

1,012

1,016

1,023

1,015

4,066

1,031

Meridian Mark Plaza
4,081

920

1,006

1,049

874

3,849

1,018

1200 Peachtree






775

Harborview Plaza
3,970

712

516

319

206

1,753

346

Other (3)
19,279







Subtotal - Consolidated
282,153

73,157

72,967

73,864

77,187

297,175

79,858

 
 
 
 
 
 
 
 
Unconsolidated Properties (4)
 
 
 
 
 
 
 
Terminus (2)
14,477

3,486

3,415

3,345

3,255

13,501

3,670

Gateway Village (2)
7,047

1,968

1,770

1,873

1,819

7,430

1,837

Carolina Square (2)
705

928

975

747

1,173

3,823

1,097

Emory University Hospital Midtown Medical Office Tower
3,913

990

1,031

1,028

975

4,024

1,027

Dimensional Place






206

Other (3)
4,911

49

37

1

23

110

36

Subtotal - Unconsolidated
31,053

7,421

7,228

6,994

7,245

28,888

7,873

 
 
 
 
 
 
 
 
Total Net Operating Income (1)
313,206

80,578

80,195

80,858

84,432

326,063

87,731

 
 
 
 
 
 
 
 
Gain on Sales of Undepreciated Investment Properties
 
 
 
 
 
 
 
Sales Less Cost of Sales - Consolidated
67




512

512

13,132

Sales Less Cost of Sales - Unconsolidated (4)

330

2,449



2,779


Total Gain on Sales of Undepreciated Investment Properties
67

330

2,449


512

3,291

13,132

 
 
 
 
 
 
 
 

Cousins Properties
12
Q1 2019 Supplemental Information

FUNDS FROM OPERATIONS - DETAIL (1)



 
(amounts in thousands, except per share amounts)
 
2017
2018 1st
2018 2nd
2018 3rd
2018 4th
2018
2019 1st
Fee Income
 
 
 
 
 
 
 
Management Fees (5)
5,794

1,524

1,401

1,537

1,449

5,911

1,379

Development Fees
2,140

291

271

951

1,422

2,935

7,022

Leasing & Other Fees
698

1,079

126

31

7

1,243

327

Total Fee Income
8,632

2,894

1,798

2,519

2,878

10,089

8,728

 
 
 
 
 
 
 
 
Other Income
 
 
 
 
 
 
 
Termination Fees
9,270

360

639

276

273

1,548

520

Termination Fees - Unconsolidated (4)
1,294






3

Interest and Other Income
2,248

600

493

468

161

1,722

140

Interest and Other Income - Unconsolidated (4)
921

74

80

78

83

315

85

Gain on Extinguishment of Debt
2,258



93


93


Total Other Income
15,991

1,034

1,212

915

517

3,678

748

 
 
 
 
 
 
 
 
Total Fee and Other Income
24,623

3,928

3,010

3,434

3,395

13,767

9,476

 
 
 
 
 
 
 
 
Reimbursed Expenses
(3,527
)
(942
)
(860
)
(955
)
(1,025
)
(3,782
)
(932
)
 
 
 
 
 
 
 
 
General and Administrative Expenses
(27,523
)
(6,809
)
(8,071
)
(3,913
)
(3,247
)
(22,040
)
(11,460
)
 
 
 
 
 
 
 
 
Interest Expense
 
 
 
 
 
 
 
Consolidated Debt
 
 
 
 
 
 
 
Senior Notes, Unsecured ($250M)
(4,842
)
(2,489
)
(2,490
)
(2,488
)
(2,491
)
(9,958
)
(2,490
)
Term Loan, Unsecured
(6,198
)
(1,858
)
(2,088
)
(2,205
)
(2,344
)
(8,495
)
(2,422
)
Credit Facility, Unsecured
(3,050
)
(742
)
(754
)
(754
)
(773
)
(3,023
)
(1,289
)
Fifth Third Center
(5,052
)
(1,247
)
(1,241
)
(1,235
)
(1,228
)
(4,951
)
(1,221
)
Promenade
(4,492
)
(1,102
)
(1,095
)
(1,085
)
(1,078
)
(4,360
)
(1,069
)
Colorado Tower
(4,236
)
(1,059
)
(1,059
)
(1,059
)
(1,056
)
(4,233
)
(1,051
)
Senior Notes, Unsecured ($100M)
(2,937
)
(1,036
)
(1,037
)
(1,036
)
(1,036
)
(4,145
)
(1,036
)
816 Congress Avenue
(3,233
)
(799
)
(795
)
(792
)
(787
)
(3,173
)
(784
)
Meridian Mark Plaza
(1,483
)
(366
)
(368
)
(359
)
(360
)
(1,453
)
(358
)
901 West Peachtree




(115
)
(115
)
(115
)
Other (3)
(7,243
)
(175
)
(177
)
(74
)

(426
)

Capitalized
9,242

1,095

1,390

1,536

881

4,902

1,015

Subtotal - Consolidated
(33,524
)
(9,778
)
(9,714
)
(9,551
)
(10,387
)
(39,430
)
(10,820
)
 
 
 
 
 
 
 
 
Unconsolidated Debt (4)
 
 
 
 
 
 
 
Terminus (2)
(4,823
)
(1,001
)
(995
)
(988
)
(992
)
(3,976
)
(1,038
)
Carolina Square
(184
)
(197
)
(281
)
(355
)
(390
)
(1,223
)
(406
)
Emory University Hospital Midtown Medical Office Tower
(1,285
)
(317
)
(315
)
(314
)
(311
)
(1,257
)
(310
)
Other (3)
(1,566
)






Subtotal - Unconsolidated
(7,858
)
(1,515
)
(1,591
)
(1,657
)
(1,693
)
(6,456
)
(1,754
)
 
 
 
 
 
 
 
 
Total Interest Expense
(41,382
)
(11,293
)
(11,305
)
(11,208
)
(12,080
)
(45,886
)
(12,574
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Cousins Properties
13
Q1 2019 Supplemental Information

FUNDS FROM OPERATIONS - DETAIL (1)



 
(amounts in thousands, except per share amounts)
 
2017
2018 1st
2018 2nd
2018 3rd
2018 4th
2018
2019 1st
Other Expenses
 
 
 
 
 
 
 
Severance
(446
)
(195
)
128

4

3

(60
)
(23
)
Partners' share of FFO in consolidated joint ventures
(16
)
(144
)
(134
)
(121
)
(159
)
(558
)
(171
)
Property Taxes and Other Holding Costs
(764
)
(130
)
(152
)
(148
)
(153
)
(583
)
(184
)
Loss on Extinguishment of Debt - Consolidated

(85
)



(85
)

Predevelopment & Other Costs
(803
)
(50
)
(30
)
8

(16
)
(88
)
(23
)
Acquisition Costs (6)
(1,661
)
(91
)
(177
)


(268
)
(3
)
Total Other Expenses
(3,690
)
(695
)
(365
)
(257
)
(325
)
(1,642
)
(404
)
 
 
 
 
 
 
 
 
Depreciation and Amortization of Non-Real Estate Assets
(1,874
)
(473
)
(468
)
(469
)
(462
)
(1,872
)
(456
)
 
 
 
 
 
 
 
 
FFO (1)
$
259,900

$
64,624

$
64,585

$
67,490

$
71,200

$
267,899

$
84,513

Weighted Average Shares - Diluted
423,297

427,695

427,501

427,520

427,486

427,473

427,607

FFO per Share (1)
$
0.61

$
0.15

$
0.15

$
0.16

$
0.17

$
0.63

$
0.20

Note: Amounts may differ slightly from other schedules contained herein due to rounding.
(1) See Non-GAAP Financial Measures - Calculations and Reconciliations beginning on page 30.
(2) Contains multiple buildings that are grouped together for reporting purposes.
(3) Primarily represents properties sold and loans repaid prior to March 31, 2019 that are not considered discontinued operations.
(4) Unconsolidated amounts include amounts recorded in unconsolidated joint ventures for the respective category multiplied by the Company's ownership interest. The Company does not control the operations of the unconsolidated joint ventures, but
      believes including these amounts in the categories indicated is meaningful to investors and analysts.
(5) Management Fees include reimbursement of expenses that are included in the "Reimbursed Expenses" line item.
(6) In 2017 and 2018, acquisition costs related to the transactions with Parkway Properties, Inc. In 2019, acquisition costs related to the merger with TIER REIT, Inc.

Cousins Properties
14
Q1 2019 Supplemental Information

PORTFOLIO STATISTICS

 
Office Properties
 
Rentable Square Feet
 
Financial Statement Presentation
 
Company's Ownership Interest
 
End of Period Leased
 
Weighted Average Occupancy (1)
 
% of Total
Net Operating
Income (2)
 
Property Level Debt ($000) (3)
 
 
 
 
 
1Q19
 
4Q18
 
1Q19
 
4Q18
 
 
 
Spring & 8th (4)
 
765,000

 
Consolidated
 
100%
 
100.0%
 
100.0%
 
100.0%
 
100.0%
 
8.2%
 
$

 
Northpark (4)
 
1,539,000

 
Consolidated
 
100%
 
92.4%
 
95.1%
 
86.9%
 
92.5%
 
7.4%
 

 
Promenade
 
777,000

 
Consolidated
 
100%
 
91.3%
 
89.4%
 
89.9%
 
88.0%
 
5.5%
 
98,230

 
Buckhead Plaza (4)
 
671,000

 
Consolidated
 
100%
 
82.4%
 
82.0%
 
81.6%
 
81.9%
 
4.5%
 

 
Terminus (4)
 
1,226,000

 
Unconsolidated
 
50%
 
90.8%
 
90.8%
 
87.9%
 
84.5%
 
4.2%
 
98,798

 
3344 Peachtree
 
484,000

 
Consolidated
 
100%
 
94.4%
 
95.9%
 
90.4%
 
92.4%
 
3.5%
 

 
3350 Peachtree
 
413,000

 
Consolidated
 
100%
 
94.7%
 
94.4%
 
88.1%
 
84.9%
 
2.3%
 

 
8000 Avalon
 
229,000

 
Consolidated
 
90%
 
100.0%
 
100.0%
 
100.0%
 
99.3%
 
2.0%
 

 
3348 Peachtree
 
258,000

 
Consolidated
 
100%
 
92.5%
 
92.5%
 
89.1%
 
88.0%
 
1.6%
 

 
Emory University Hospital Midtown Medical Office Tower
 
358,000

 
Unconsolidated
 
50%
 
99.4%
 
99.1%
 
99.1%
 
94.2%
 
1.2%
 
34,567

 
Meridian Mark Plaza
 
160,000

 
Consolidated
 
100%
 
100.0%
 
100.0%
 
100.0%
 
100.0%
 
1.2%
 
23,356

 
1200 Peachtree
 
370,000

 
Consolidated
 
100%
 
100.0%
 
NA
 
100.0%
 
NA
 
0.9%
 

 
ATLANTA
 
7,250,000

 
 
 
 
 
93.3%
 
93.4%
 
90.6%
 
90.7%
 
42.5%
 
254,951

 
Hearst Tower
 
966,000

 
Consolidated
 
100%
 
97.2%
 
98.5%
 
97.1%
 
98.4%
 
7.4%
 

 
Fifth Third Center
 
692,000

 
Consolidated
 
100%
 
99.8%
 
99.8%
 
99.6%
 
99.6%
 
5.4%
 
142,216

 
NASCAR Plaza
 
394,000

 
Consolidated
 
100%
 
98.9%
 
95.3%
 
91.5%
 
93.4%
 
2.9%
 

 
Gateway Village (4)
 
1,061,000

 
Unconsolidated
 
50%
 
99.4%
 
99.4%
 
99.4%
 
99.4%
 
2.1%
 

 
Dimensional Place
 
281,000

 
Unconsolidated
 
50%
 
94.3%
 
94.3%
 
94.3%
 
NA
 
0.2%
 

 
CHARLOTTE
 
3,394,000

 
 
 
 
 
98.4%
 
98.3%
 
97.2%
 
98.2%
 
18.0%
 
142,216

 
One Eleven Congress
 
519,000

 
Consolidated
 
100%
 
94.0%
 
90.3%
 
88.7%
 
86.7%
 
5.1%
 

 
San Jacinto Center
 
395,000

 
Consolidated
 
100%
 
91.4%
 
92.4%
 
91.8%
 
91.3%
 
4.2%
 

 
Colorado Tower
 
373,000

 
Consolidated
 
100%
 
100.0%
 
100.0%
 
99.5%
 
100.0%
 
4.0%
 
118,135

 
816 Congress
 
435,000

 
Consolidated
 
100%
 
96.3%
 
98.3%
 
96.6%
 
96.6%
 
3.8%
 
80,801

 
Research Park V
 
173,000

 
Consolidated
 
100%
 
97.1%
 
97.1%
 
97.1%
 
97.1%
 
1.2%
 

 
AUSTIN
 
1,895,000

 
 
 
 
 
95.5%
 
95.1%
 
94.0%
 
93.5%
 
18.3%
 
198,936

 
Hayden Ferry (4)
 
789,000

 
Consolidated
 
100%
 
94.9%
 
94.9%
 
93.4%
 
91.8%
 
6.8%
 

 
Tempe Gateway
 
264,000

 
Consolidated
 
100%
 
94.8%
 
96.8%
 
95.4%
 
96.5%
 
2.5%
 

 
111 West Rio
 
225,000

 
Consolidated
 
100%
 
100.0%
 
100.0%
 
100.0%
 
100.0%
 
1.5%
 

 
PHOENIX
 
1,278,000

 
 
 
 
 
95.8%
 
96.2%
 
95.0%
 
94.2%
 
10.8%
 

 
Corporate Center (4)
 
1,224,000

 
Consolidated
 
100%
 
98.6%
 
98.2%
 
94.9%
 
94.5%
 
7.3%
 

 
The Pointe
 
253,000

 
Consolidated
 
100%
 
97.1%
 
97.1%
 
96.1%
 
96.4%
 
1.4%
 

 
Harborview Plaza
 
205,000

 
Consolidated
 
100%
 
64.1%
 
64.1%
 
59.2%
 
49.7%
 
0.4%
 

 
TAMPA
 
1,682,000

 
 
 
 
 
94.1%
 
93.9%
 
90.8%
 
89.4%
 
9.1%
 

 
Carolina Square Office (5)
 
158,000

 
Unconsolidated
 
50%
 
79.4%
 
79.4%
 
78.6%
 
76.2%
 
0.3%
 
12,601

 
CHAPEL HILL
 
158,000

 
 
 
 
 
79.4%
 
79.4%
 
78.6%
 
76.2%
 
0.3%
 
12,601

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 TOTAL OFFICE
 
15,657,000

 
 
 
 
 
94.8%
 
94.8%
 
92.7%
 
92.6%
 
99.0%
 
$
608,704

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carolina Square Apartments (246 Units) (5)
 
266,000

 
Unconsolidated
 
50%
 
100.0%
 
100.0%
 
98.6%
 
99.7%
 
0.2%
 
21,214

 
Carolina Square Retail (5)
 
44,000

 
Unconsolidated
 
50%
 
89.3%
 
81.5%
 
81.5%
 
81.5%
 
0.8%
 
3,509

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 TOTAL OTHER
 
310,000

 
 
 
 
 
98.5%
 
97.4%
 
96.2%
 
97.1%
 
1.0%
 
$
24,723

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 TOTAL
 
15,967,000

 
 
 
 
 
94.9%
 
94.9%
 
92.7%
 
92.6%
 
100.0%
 
$
633,427

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See next page for footnotes

Cousins Properties
15
Q1 2019 Supplemental Information

PORTFOLIO STATISTICS



397635590_chart-e4960508ff0851d79dc.jpg
(1
)
Represents the weighted average occupancy of the property over the period for which the property was available for occupancy.
(2
)
The Company's share of net operating income for the three months ended March 31, 2019.
(3
)
The Company's share of property specific mortgage debt, net of unamortized loan costs as of March 31, 2019.
(4
)
Contains two or more buildings that are grouped together for reporting purposes.
(5
)
The Company's share of Carolina Square debt has been allocated to office, retail, and apartments based on their relative square footages.

Cousins Properties
16
Q1 2019 Supplemental Information

SAME PROPERTY PERFORMANCE (1)

 
Net Operating Income ($ in thousands)
 
Three Months Ended March 31,
 
2019
 
2018
 
% Change
Rental Property Revenues (2)
$
121,317

 
$
116,011

 
4.6
%
Rental Property Operating Expenses (2)
44,632

 
42,492

 
5.0
%
Same Property Net Operating Income
$
76,685

 
$
73,519

 
4.3
%
 
 
 
 
 
 
Cash-Basis Rental Property Revenues (3)
$
111,586

 
$
106,890

 
4.4
%
Cash-Basis Rental Property Operating Expenses (4)
44,466

 
42,344

 
5.0
%
Cash-Basis Property Net Operating Income
$
67,120

 
$
64,546

 
4.0
%
 
 
 
 
 
 
End of Period Leased
94.4
%
 
93.7
%
 
 
Weighted Average Occupancy
92.0
%
 
92.2
%
 
 
 
 
 
 
 
 
(1)
Same Properties include those office properties that were fully operational in each of the comparable reporting periods. See Non-GAAP Financial Measures - Calculations and Reconciliations. Properties included in this reporting period are as follows:
 
111 West Rio
Emory University Hospital Midtown Medical Office Tower
Northpark
 
816 Congress
Fifth Third Center
One Eleven Congress
 
3344 Peachtree
Gateway Village
Promenade
 
3348 Peachtree
Harborview Plaza
Research Park V
 
3350 Peachtree
Hayden Ferry
San Jacinto Center
 
Buckhead Plaza
Hearst Tower
Tempe Gateway
 
Colorado Tower
Meridian Mark Plaza
Terminus
 
Corporate Center
NASCAR Plaza
The Pointe
 
 
 
 
(2)
Rental Property Revenues and Expenses include results for the Company and its share of unconsolidated joint ventures. Net operating income for unconsolidated joint ventures is calculated as rental property revenues less rental property expenses at the joint ventures multiplied by the Company's ownership interest. The Company does not control the operations of the unconsolidated joint ventures, but believes that including these amounts with consolidated net operating income is meaningful to investors and analysts.
(3)
Cash-Basis Rental Property Revenues include that of the Company and its share of unconsolidated joint ventures. It represents Rental Property Revenues, excluding straight-line rents, amortization of lease inducements, and amortization of acquired above and below market rents.
(4)
Cash-Basis Rental Property Operating Expenses include that of the Company and its share of unconsolidated joint ventures. It represents Rental Property Operating Expenses, excluding straight-line ground rent expense and amortization of above and below market ground rent expense.

Cousins Properties
17
Q1 2019 Supplemental Information

OFFICE LEASING ACTIVITY(1)


 
Three Months Ended March 31, 2019
 
 
New
 
Renewal
 
Expansion
 
Total
 
Gross leased (square feet) (2)
 
 
 
 
 
 
798,040

 
Less: Leases one year or less, amenity leases, percentage rent leases, storage leases, intercompany leases, and license agreements
 
 
 
 
 
 
(115,911
)
 
Net leased (square feet)
466,013

 
182,687

 
33,429

 
682,129

 
Number of transactions
8

 
13

 
8

 
29

 
Lease term (years) (3)
4.0

 
7.9

 
7.4

 
5.2

 
 
 
 
 
 
 
 
 
 
Net Effective Rent Calculation (per square foot)
 
 
 
 
 
 
 
 
Net rent (3)(4)
$
26.91

 
$
30.47

 
$
26.89

 
$
27.86

 
Net free rent
(0.32
)
 
(0.84
)
 
(0.89
)
 
(0.49
)
 
Leasing commissions
(0.64
)
 
(2.24
)
 
(1.97
)
 
(1.13
)
 
Tenant improvements
(1.18
)
 
(2.50
)
 
(5.32
)
 
(1.74
)
 
Net effective rent
$
24.77

 
$
24.89

 
$
18.71

 
$
24.50

 
 
 
 
 
 
 
 
 
 
Second generation leased square feet (5)
 
 
 
 
 
 
283,457

 
Increase in second generation net rent (3)(4)(6)
 
 
 
22.8
%
 
Increase in cash-basis second generation net rent (3)(6)
 
7.1
%
 
 
 
 
 
 
 
 
 
 
(1) Excludes apartment and retail leasing at mixed-use projects.
(2) Includes 370,000 square foot lease with Norfolk Southern Railway Company at 1200 Peachtree.
(3) Weighted average.
(4) Straight-lined net rent per square foot (operating expenses deducted from gross leases) over the lease term.
(5) Excludes leases executed for spaces that were vacant upon acquisition, new leases in development properties, and leases for spaces that have been vacant for one year or more.
(6) Increase in net rent at the end of term paid by the prior tenant compared to net rent at beginning of term paid by the current tenant. For early renewals, represents increase in net rent at the end of the term of the original lease compared to net rent at the beginning of the extended term of the lease.



Cousins Properties
18
Q1 2019 Supplemental Information

OFFICE LEASE EXPIRATIONS

Lease Expirations by Year (1)
 Year of Expiration
 
Square Feet
Expiring
 
 % of Leased Space
 
 Annual Contractual Rents ($ in Thousands) (2)
 
 % of Annual Contractual Rents
 
 Annual Contractual Rent/Sq. Ft.
 
 
 
 
 
 
 
 
 
 
 
2019
 
616,908

 
4.7
%
 
$
20,274

 
3.7
%
 
$
32.86

2020
 
775,387

 
5.9
%
 
31,551

 
5.8
%
 
40.69

2021
 
1,685,260

 
12.8
%
 
59,383

 
10.9
%
 
35.24

2022