Cousins Properties Reports Results For Quarter Ended September 30, 2015

ATLANTA, Oct. 27, 2015 /PRNewswire/ --

Highlights

  • Funds From Operations were $0.24 per share.
  • Leased or renewed 770,009 square feet of office space.
  • Same property net operating income on a cash basis was up 1.2% over the prior year.
  • Second generation net rent per square foot on a cash basis increased 14.1%.
  • Opened Emory Point Phase II, a mixed-used development in Atlanta, Georgia. The project contains 307 apartments and 45,000 square feet of retail space.
  • Signed a 15-year lease with NCR Corporation to develop an approximately 485,000 square foot headquarters building in Midtown Atlanta.
  • Entered into a pre-formation agreement with a third party to form a 50-50 joint venture to develop a 259,000 square foot office building in Charlotte, North Carolina that will be 100% leased by the joint venture partner.
  • Sold 2100 Ross, an 844,000 square foot office tower in Dallas, Texas, for $131.0 million and recognized a gain of $36.2 million.
  • Initiated a $100 million share repurchase plan and through September 30, 2015, repurchased approximately 2.0 million shares of common stock for $18.7 million.

Cousins Properties Incorporated (NYSE: CUZ) today reported its results of operations for the quarter ended September 30, 2015.

"During the third quarter we continued to execute our capital allocation strategy by selling our 2100 Ross office tower in Dallas, a very successful investment for Cousins, as well as announcing two new build-to-suit opportunities and initiating a share repurchase plan," said Larry Gellerstedt, Cousins' Chief Executive Officer.

Financial Results

Funds from Operations ("FFO") was $52.5 million, or $0.24 per share, for the third quarter of 2015, compared with $41.7 million, or $0.20 per share, for the third quarter of 2014.  FFO was $143.6 million, or $0.66 per share, for the nine months ended September 30, 2015, compared with $113.6 million, or $0.57 per share, for the same period in 2014.

Net income available to common stockholders was $53.6 million, or $0.25 per share, for the third quarter of 2015, compared with   $19.3 million, or $0.09 per share, for the third quarter of 2014.  Net income available to common stockholders  was $68.8 million, or $0.32 per share, for the nine months ended September 30, 2015, compared with $22.3 million, or $0.11 per share, for the same period in 2014.

2015 FFO Guidance

For the year ending December 31, 2015, the Company expects to report FFO in the range of $0.85 to $0.87 per share. This guidance reflects management's view of current and future market conditions, as well as the earnings impact of events referenced in this release and during our scheduled conference call. This guidance does not include the operational or capital impact of any future unannounced acquisition or disposition activity. This guidance also excludes the operational or capital impact of any development activity other than Research Park V, Carolina Square, and the NCR project.

The Company leaves unchanged previously provided components of its 2015 FFO guidance, except for the following:

  • General and administrative expenses of $19 million to $21 million, net of capitalized salaries.

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 Daylight Time) on Wednesday, October 28, 2015, to discuss the results of the quarter ended September 30, 2015. The number to call for this interactive teleconference is (877) 247-1056.  A replay of the conference call will be available for 14 days by dialing (877) 344-7529 and entering the passcode 10073456. The replay can be accessed on the Company's website, www.cousins.com, through the "Q3 2015 Cousins Properties Incorporated Earnings Conference Call" link on the Investor Relations page.  A copy of Cousins Properties third quarter 2015 "Supplement Information" can be found in the Investor Relations section of the Company's website at www.cousins.com.  The information in this update is for informational purposes based on current plans and assumptions and is subject to change.  The Company undertakes no obligation to update this information.

Cousins Properties Incorporated 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.

The Consolidated Statements of Operations, Consolidated Balance Sheets, a schedule entitled Funds From Operations, which reconciles Net Income (Loss) Available to FFO, and a schedule entitled Same Property Information, which reconciles cash basis same property net operating income to rental property revenues and rental property expenses, are attached to this press release. The change in second generation net rent per square foot on a cash basis represents the aggregate net rent (base rent less operating expense reimbursements and leasing costs) paid by prior tenants compared to the aggregate net rent paid by current tenants for spaces that have been re-leased in the office portfolio. More detailed information on Net Income (Loss) Available and FFO results is included in the "Net Income and Funds From Operations - Supplemental Detail" schedule, which is included along with other supplemental information in the Company's Current Report on Form 8-K, which the Company is furnishing to the Securities and Exchange Commission ("SEC"), and which can be viewed through the "Supplemental Information" and "SEC Filings" links on the "Investor Information & Filings" link of the Investor Relations page of the Company's website at www.cousins.com. This information may also be obtained by calling the Company's Investor Relations Department at (404) 407-1898.

Certain matters discussed in this news release are "forward-looking statements" within the meaning of the federal securities laws. Examples of such statements in this news release include the Company's estimated ranges of FFO per share and the assumptions related thereto. Such statements are subject to uncertainties and risk including, but not limited to, 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 and investments or from dispositions; the potential dilutive effect of common stock offerings; the failure to achieve benefits from any repurchase of the Company's common stock; the availability of buyers and adequate pricing with respect to the disposition of assets; risks related to the geographic concentration of our portfolio, including, but not limited to, metropolitan Houston and Atlanta; risk related to the industry concentration of our portfolio, including, but not limited to, the energy industy; 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 adverse change in the financial condition of one or more of its major 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 (such as zoning approval, receipt 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; any failure to continue to qualify for taxation as a real estate investment trust; and other risks detailed from time to time in the Company's filings with the SEC, including those described in Part I, Item 1A of the Company's Annual Report on Form 10-K/A for the year ended December 31, 2014. The words "believes," "expects," "anticipates," "estimates," "plans," "may," "intend," "will," or similar expressions are intended to identify forward-looking statements. Although the Company believes that its plans, intentions and expectations reflected in any forward-looking statement are reasonable, the Company can give no assurance that such plans, intentions or expectations will be achieved. Such forward-looking statements are based on current expectations and speak as of the date of such statements. The Company undertakes 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 INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share amounts)

               
 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2015

 

2014

 

2015

 

2014

Revenues:

             

Rental property revenues

$         96,016

 

$         86,857

 

$       282,226

 

$       244,375

Fee income

1,686

 

1,802

 

5,206

 

6,165

Other

444

 

439

 

593

 

4,786

 

98,146

 

89,098

 

288,025

 

255,326

Costs and expenses:

             

Rental property operating expenses

41,331

 

38,685

 

120,672

 

109,501

Reimbursed expenses

686

 

783

 

2,514

 

2,703

General and administrative expenses

2,971

 

5,021

 

12,502

 

16,388

Interest expense

7,673

 

6,817

 

23,219

 

20,954

Depreciation and amortization

32,538

 

32,704

 

103,564

 

101,979

Acquisition and related costs

19

 

644

 

104

 

815

Other

175

 

481

 

873

 

1,936

 

85,393

 

85,135

 

263,448

 

254,276

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

12,753

 

3,963

 

24,577

 

1,050

Benefit for income taxes from operations

-

 

(1)

 

-

 

20

Income from unconsolidated joint ventures

3,716

 

2,030

 

7,088

 

5,343

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

16,469

 

5,992

 

31,665

 

6,413

Gain (loss) on sale of investment properties

37,145

 

81

 

37,674

 

1,569

Income from continuing operations

53,614

 

6,073

 

69,339

 

7,982

Income (loss)  from discontinued operations:

             

Income (loss) from discontinued operations

6

 

348

 

(14)

 

1,806

Gain (loss) on sale from discontinued operations

-

 

12,993

 

(551)

 

19,372

 

6

 

13,341

 

(565)

 

21,178

Net income

53,620

 

19,414

 

68,774

 

29,160

Net income attributable to noncontrolling interests

-

 

(92)

 

-

 

(376)

Net income attributable to controlling interests

53,620

 

19,322

 

68,774

 

28,784

Dividends to preferred stockholders

-

 

-

 

-

 

(2,955)

Preferred share original issuance costs

-

 

-

 

-

 

(3,530)

Net income (loss) available to common stockholders

$         53,620

 

$         19,322

 

$         68,774

 

$         22,299

Per common share information — basic and diluted:

             

Income (loss) from continuing operations attributable to controlling interest

$             0.25

 

$             0.03

 

$             0.32

 

$                   -

Income from discontinued operations

-

 

0.06

 

-

 

0.11

Net income (loss) available to common stockholders

$             0.25

 

$             0.09

 

$             0.32

 

$             0.11

Weighted average shares — basic

216,261

 

209,839

 

216,485

 

200,073

Weighted average shares — diluted

216,374

 

210,111

 

216,625

 

200,325

Dividends declared per common share

$           0.080

 

$           0.075

 

$           0.240

 

$           0.225

 

 

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

FUNDS FROM OPERATIONS

(unaudited; in thousands, except per share amounts)

               
 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2015

 

2014

 

2015

 

2014

Net Income Available to Common Stockholders

$         53,620

 

$         19,322

 

$         68,774

 

$         22,299

    Depreciation and amortization of real estate assets:

             

         Consolidated properties

32,123

 

32,473

 

102,353

 

101,361

         Share of unconsolidated joint ventures

2,891

 

2,874

 

8,406

 

8,958

    (Gain) loss on sale of depreciated properties:

             

         Consolidated properties

(36,167)

 

 

(35,893)

 

         Discontinued properties

 

(12,993)

 

 

(19,362)

         Share of unconsolidated joint ventures

 

 

 

387

Funds From Operations Available to Common Stockholders

$         52,467

 

$         41,676

 

$       143,640

 

$       113,643

Per Common Share — Basic and Diluted:

             

Net Income Available

$             0.25

 

$             0.09

 

$             0.32

 

$             0.11

Funds From Operations

$             0.24

 

$             0.20

 

$             0.66

 

$             0.57

Weighted Average Shares — Basic

216,261

 

209,839

 

216,485

 

200,073

Weighted Average Shares — Diluted

216,374

 

210,111

 

216,625

 

200,325

               

     The table above shows Funds From Operations Available to Common Stockholders ("FFO") and the related reconciliation to Net Income Available to Common Stockholders for Cousins Properties Incorporated and Subsidiaries.  The Company calculated FFO in accordance with the National Association of Real Estate Investment Trusts' ("NAREIT") definition, which is net income (loss) available to common stockholders (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding extraordinary items, cumulative effect of change in accounting principle and gains or losses from sales of depreciable property, plus depreciation and amortization of real estate assets, impairment losses on depreciable investment property and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis. 

     FFO is used by industry analysts and investors as a supplemental measure of an equity REIT's operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.  Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.  Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income.  Management believes that the use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful.  Company management evaluates operating performance in part based on FFO.  Additionally, the Company uses FFO along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and other key employees.

 

 

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

       
       
       
 

September 30, 2015

 

December 31, 2014

 

(unaudited)

   

Assets:

     

Real estate assets:

     

Operating properties, net of accumulated depreciation of $385,657 and $324,543 in 2015 and 2014, respectively

$              2,160,655

 

$               2,181,684

Projects under development

53,118

 

91,615

Land

17,829

 

21,646

 

2,231,602

 

2,294,945

Real estate assets and other assets held for sale, net of accumulated depreciation and amortization of $60,078 in 2015

50,491

 

       

Cash and cash equivalents

5,331

 

Restricted cash

4,486

 

5,042

Notes and accounts receivable, net of allowance for doubtful accounts of $1,736 and $1,643 in 2015 and 2014, respectively

9,513

 

10,732

Deferred rents receivable

63,738

 

57,939

Investment in unconsolidated joint ventures

103,470

 

100,498

Intangible assets, net of accumulated amortization of $96,349 and $76,050 in 2015 and 2014, respectively

131,858

 

163,244

Other assets

37,118

 

34,930

Total assets

$              2,637,607

 

$               2,667,330

Liabilities:

     

Notes payable

$                 779,570

 

$                  792,344

Accounts payable and accrued expenses

66,049

 

76,240

Deferred income

24,132

 

23,277

Intangible liabilities, net of accumulated amortization of $24,464 and $16,897 in 2015 and 2014, respectively

62,019

 

70,020

Other liabilities

30,407

 

31,991

Liabilities of real estate assets held for sale

2,843

 

Total liabilities

965,020

 

993,872

Commitments and contingencies

 

Equity:

     

Stockholders' investment:

     

Common stock, $1 par value, 350,000,000 shares authorized, 220,255,502 and 220,082,610 shares issued in 2015 and 2014, respectively

220,256

 

220,083

Additional paid-in capital

1,721,856

 

1,720,972

Treasury stock at cost, 5,584,743 and 3,570,082 shares in 2015 and 2014, respectively

(105,531)

 

(86,840)

Distributions in excess of cumulative net income

(163,994)

 

(180,757)

Total equity

1,672,587

 

1,673,458

Total liabilities and equity

$              2,637,607

 

$               2,667,330

       

 

 

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

SAME PROPERTY INFORMATION

(unaudited, in thousands)

               
 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2015

 

2014

 

2015

 

2014

Net Operating Income - Consolidated Properties

             

    Rental property revenues

$         96,016

 

$         86,857

 

$       282,226

 

$       244,375

    Rental property expenses

(41,331)

 

(38,685)

 

(120,672)

 

(109,501)

 

54,685

 

48,172

 

161,554

 

134,874

Net Operating Income - Discontinued Operations

             

    Rental property revenues

 

601

 

4

 

2,923

    Rental property expenses

 

(262)

 

(18)

 

(1,126)

 

 

339

 

(14)

 

1,797

Net Operating Income - Unconsolidated Joint Ventures

6,131

 

6,601

 

18,103

 

19,747

    Total Net Operating Income

$         60,816

 

$         55,112

 

$       179,643

 

$       156,418

               

Net Operating Income

             

    Same Property

$         44,647

 

$         44,165

 

$       131,841

 

$       128,476

    Non-Same Property

16,169

 

10,947

 

47,802

 

27,942

 

$         60,816

 

$         55,112

 

$       179,643

 

$       156,418

               

Non-Cash Items

             

    Straight-line rent

$           4,623

 

$           4,169

 

$         16,694

 

$         16,818

    Other

1,526

 

1,554

 

4,460

 

4,763

 

6,149

 

5,723

 

21,154

 

21,581

Cash Basis Property Net Operating Income

             

    Same Property

41,088

 

40,583

 

119,838

 

112,031

    Non-Same Property

13,579

 

8,806

 

38,651

 

22,806

 

$         54,667

 

$         49,391

 

$       158,489

 

$       134,837

               

     This schedule shows same property net operating income and the related reconciliation to rental property revenues and rental property expenses. Net Operating Income is used by industry analysts, investors and Company management to measure operating performance of the Company's properties. Net Operating Income, which is rental property revenues less rental property operating expenses, excludes certain components from net income in order to provide results that are more closely related to a property's results of operations. Certain items, such as interest expense, while included in FFO and net income, do not affect the operating performance of a real estate asset and are often incurred at the corporate level as opposed to the property level. As a result, management uses only those income and expense items that are incurred at the property level to evaluate a property's performance. Depreciation and amortization are also excluded from Net Operating Income. Same Property Net Operating Income includes those office properties that have been fully operational in each of the comparable reporting periods. A fully operational property is one that has achieved 90% economic occupancy for each of the two periods presented or has been substantially complete and owned by the Company for each of the two periods presented and the preceding year. Same Property Net Operating Income allows analysts, investors and management to analyze continuing operations and evaluate the growth trend of the Company's portfolio.

     Cash Basis Same Property Net Operating Income represents Net Operating Income excluding straight-line rents, amortization of lease inducements, and amortization of acquired above and below market rents.

 

   

CONTACT:    

 

Gregg D. Adzema

 

Marli Quesinberry

Executive Vice President and

 

Director, Investor Relations and

Chief Financial Officer

 

Corporate Communications

(404) 407-1116

 

(404) 407-1898

gadzema@cousins.com

 

mquesinberry@cousins.com

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SOURCE Cousins Properties Incorporated