Press Release: Second Quarter 2014 Results

Cousins Properties Reports Second Quarter 2014 Results

Highlights

  • Funds From Operations for the second quarter was $0.18 per share, or $0.20 per share before non-cash preferred share original issuance charge.
  • Cash basis same property net operating income for the second quarter was up 15.0% over the prior year.
  • Subsequent to quarter end, entered into an agreement to acquire Fifth Third Center in Charlotte, North Carolina for $215.0 million.

ATLANTA (July 29, 2014) - Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the quarter ended June 30, 2014.

“We took advantage of our recovering Sunbelt office markets by signing a significant number of new leases during the second quarter at improving economics to us,” said Larry Gellerstedt, President and Chief Executive Officer of Cousins. “In addition, our pending purchase of Fifth Third Center is an exceptional strategic fit for us. We are purchasing this Class A office tower below replacement cost and with a real value creation opportunity through the lease-up of vacant space.”

Portfolio Activity

  • Leased or renewed 416,000 square feet of office and retail space during the second quarter.

Transaction Activity

  • Sold all remaining land at the Round Rock, Texas site for $10.0 million and recognized a gain of $1.3 million.
  • Subsequent to quarter end, entered into an agreement to acquire Fifth Third Center, a 698,000 square foot Class A office tower located in Uptown Charlotte, North Carolina, for a gross purchase price of $215.0 million. The Company expects Fifth Third Center to be 82% leased upon closing.

Financing Activity

  • Recast the credit facility to, among other things, increase the size to $500 million, extend the maturity to May 28, 2019, and reduce the per annum variable interest rate spread and other fees. At current leverage levels, the reduction in the spread and other fees resulted in a savings of 45 basis points.
  • Redeemed all outstanding shares of the Company’s Series B Cumulative Redeemable Preferred Stock for $94.8 million, excluding accrued dividends. The Company has no preferred stock outstanding.

Financial Results

FFO was $35.8 million, or $0.18 per share, for the second quarter of 2014, compared with $14.2 million, or $0.12 per share, for the second quarter of 2013. FFO was $72.0 million, or $0.37 per share, for the six months ended June 30, 2014, compared with $25.6 million, or $0.23 per share, for same period in 2013. In connection with the redemption of preferred stock, the Company decreased net income available for common shareholders by $3.5 million (non-cash), or $0.02 per share, which represents the original issuance costs applicable to the shares redeemed. FFO per share before the effect of this reduction was $0.20 and $0.39 for the three and six months ended June 30, 2014, respectively.

Net loss available to common stockholders was $(2.2) million, or $(0.01) per share, for the second quarter of 2014, compared with $(5.6) million, or $(0.05) per share, for the second quarter of 2013. Net income available to common stockholders was $3.0 million, or $0.02 per share, for the six months ended June 30, 2014, compared with $47.6 million, or $0.43 per share, for same period in 2013. The six months ended June 30, 2013 included  $56.8 million in gains recognized on the sale of 50% of the Company’s interest in Terminus 100 and on the acquisition of Terminus 200, which was achieved in stages.

The Company customarily provides net operating income guidance for specific assets where historical performance may not exist, or where historical performance may not be a good guidepost for future performance, along with guidance on fee income and general and administrative expenses. No update on previously provided guidance is necessary for this quarter.

Investor Conference Call and Webcast

The Company will conduct a conference call at 1 p.m. (Eastern Time) on Wednesday, July 30, 2014, to discuss the results of the quarter ended June 30, 2014. The number to call for this interactive teleconference is (212) 231-2920. 

A replay of the conference call will be available for 14 days by dialing (402) 977-9140 and entering the passcode 21728998. The replay can be accessed on the Company's website, www.cousinsproperties.com, through the “Q2 2014 Cousins Properties Incorporated Earnings Conference Call” link on the Investor Relations page.

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 defines net effective rent, 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.  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.cousinsproperties.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 and are subject to uncertainties and risk. These include, but are 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 availability of buyers and adequate pricing with respect to the disposition of assets; risks related to the geographic concentration of our portfolio; risks and uncertainties related to national and local economic conditions, the real estate industry in general, and the commercial real estate markets in particular; changes to the Company's strategy with regard to land and other non-core holdings that require impairment losses to be recognized; leasing risks, including the ability to obtain new tenants or renew expiring tenants, and the ability to lease newly developed and/or recently acquired space;  the financial condition of existing tenants; volatility in interest rates and insurance rates; the availability of sufficient investment opportunities; competition from other developers or investors; the risks associated with real estate developments (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 Securities and Exchange Commission, including those described in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. 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.