H-62
<PAGE>
FORM 10-K COUSINS PROPERTIES INCORPORATED
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994Commission file number 2-20111
COUSINS PROPERTIES INCORPORATED
A GEORGIA CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 58-086952
2500 WINDY RIDGE PARKWAY
ATLANTA, GEORGIA 30339
TELEPHONE: 404-955-2200
Name of exchange on which registered: New York Stock Exchange
Securities registered pursuant to Section 12(b) of the Act:Common Stock ($1 Par
Value)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
As of March 20, 1995, 27,881,070 common shares were outstanding; and the
aggregate market value of the common shares of Cousins Properties Incorporated
held by nonaffiliates was $352,861,971.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into the
designated Part of this Form 10-K:
Registrant's Proxy Statement Part III, Items 10, 11, 12 and 13
dated March 28, 1995
Registrant's Annual Report to Part II, Items 5, 6, 7 and 8
Stockholders for the year
ended December 31, 1994
<PAGE>
PART I
ITEM 1.BUSINESS
CORPORATE PROFILE
Cousins Properties Incorporated (the "Registrant" or "Cousins") is a
Georgia corporation, which since 1987 has elected to be taxed as a real estate
investment trust ("REIT"). Cousins Real Estate Corporation ("CREC"), a taxable
entity consolidated with the Registrant, owns, develops, leases, and manages a
portion of the Company's real estate portfolio. Cousins/New Market Development
Company, Inc. ("CNM") is a subsidiary of CREC which develops retail shopping
centers. The Registrant, together with CREC, CNM and CREC's other consolidated
entities, is hereafter referred to as the "Company."
Cousins is an Atlanta-based, fully integrated equity real estate investment
trust. The Company has extensive experience in the real estate industry,
including the acquisition, financing, development, management and leasing of
properties. Cousins has been a public company since 1962, and its common stock
trades on the New York Stock Exchange. The Company owns a portfolio of well-
located, high-quality retail and office developments and holds several tracts of
strategically located undeveloped land. The Company's holdings are concentrated
in the southeastern United States, primarily in the Atlanta area. The
strategies employed to achieve the Company's investment goals include the
development of properties which are substantially precommitted to quality
tenants; maintaining high levels of occupancy within owned properties; the
selective sale of assets and the acquisition of quality income-producing
properties at attractive prices. The Company also seeks to be opportunistic and
take advantage of normal real estate business cycles.
The notes referenced in the discussion below are the "Notes to Consolidated
Financial Statements" included in the financial section of the Registrant's 1994
Annual Report to Stockholders.
BRIEF DESCRIPTION OF COMPANY INVESTMENTS
Presently, the Company owns, directly and indirectly, equity interests of
at least 50% in nine high-quality commercial office buildings, primarily in the
Atlanta, Georgia area, with aggregate rentable space of approximately 3.9
million square feet (4.4 million gross square feet). (This total includes the
Wildwood 3100 Windy Hill Road building, from which the Company derives
substantially all of the economic benefits through a ground lease and first
mortgage note (see Note 3)). The Company also owns a 9.8% interest in and
manages a 1.2 million square foot building in Atlanta, Georgia. In addition to
the above completed office buildings, the Company has two office buildings that
are currently under construction totaling 349,000 square feet. The Company
believes that its portfolio of commercial office buildings is currently the
largest (measured by leasable area) in the southeastern United States held by
any publicly-traded REIT.
The weighted average leased percentage of the nine 50% or more owned
buildings which were operational was approximately 92% as of March 15, 1995.
The leases at these major office properties expire as follows:
<TABLE>
<CAPTION>
Square Feet Square Feet Expiring
Expiring as % of Total Leased
----------- --------------------
<S> <C> <C>
1995 247,140 7%(a)
1996 158,610 4%
1997 88,069 2%
1998 536,307 15%(a)
1999 72,441 2%
2000 253,273 7%
2001 and thereafter 2,235,604 63%
--------- ----
3,591,444 100%
========= ====
</TABLE>
(a)Includes 130,847 square feet and 73,896 square feet of leases
which expire in 1995 and 1998, respectively, only if
significant cancellation penalties are paid. Otherwise, the
leases expire 5 years later than shown in the above table.
The weighted average remaining lease term of the nine 50% or more owned
buildings which were operational was approximately 8 years as of December 31,
1994.
All of the Company's major office tenant leases in these buildings provide
for pass through of operating expenses, and base rents which escalate over time.
In the retail area, which is the primary focus of the Company's current
development activity, the Company's holdings at December 31, 1994 include a 50%
interest in a regional mall (currently being expanded), a 100% interest in three
retail power centers, an 82.3% interest in a fourth retail power center, and a
100% interest in one retail strip center. The retail strip center and one of
the retail power centers were under construction at December 31, 1994. The
Company purchased sites for and began development of two additional retail power
centers in February 1995. All of the Company's retail power centers are
significantly preleased to anchor tenants which generally have lease terms of 10
years or more, pass through of operating expenses, and base rents which escalate
over time.
The weighted average leased percentage of the three operational retail
power centers was approximately 98% as of March 15, 1995. The leases at these
retail centers expire as follows:
<TABLE>
<CAPTION>
Square Feet Square Feet Expiring
Expiring as % of Total Leased
----------- --------------------
<S> <C> <C>
1995 - -
1996 - -
1997 2,195 -
1998 6,000 1%
1999 35,074 5%
2000 37,925 6%
2001 and thereafter 595,947 88%
------- ----
677,141 100%
======= ====
</TABLE>
The weighted average remaining lease term of the three operational retail
power centers was approximately 15 years as of December 31, 1994.
The Company's other real estate holdings include equity interests in
approximately 600 acres of strategically located land held for investment and
future development, and two mortgage notes for $28 million which are secured by
a 250,000 square foot office building in Washington, D.C. The terms of these
two notes have some of the characteristics of an equity investment, and should
provide a comparable return on investment (see Note 3).
The Company's joint venture partners include IBM and affiliates of The
Coca-Cola Company ("Coca-Cola"), NationsBank Corporation ("NationsBank"),
Corporate Property Investors, Odyssey Partners, L.P., Temple-Inland Inc., Dutch
Institutional Holding Company ("DIHC"), American General Corporation, and Carr
Realty Corporation.
The success of the Company's operations is dependent upon such
unpredictable factors as the availability of satisfactory financing; general and
local economic conditions; the activity of others developing competitive
projects; and zoning, environmental impact, and other government regulations.
Refer to Item 2 hereof for a more detailed description of the Company's
real estate properties.
SIGNIFICANT CHANGES IN 1994
Significant changes in the Company's business and properties during the
year ended December 31, 1994 were as follows:
During 1994 the Company completed construction of two retail power centers,
North Point Market-Phase I (313,000 square feet) and Presidential Market-Phase I
(320,000 square feet, 204,000 square feet owned). For financial reporting
purposes North Point Market-Phase I and Presidential Market-Phase I became
operational on May 1, 1994 and December 1, 1994, respectively. The Company
began construction of North Point-Phase II, a 173,000 square foot expansion
(57,000 square feet owned), in August 1994. Additional construction started in
1994 included: Lovejoy Station, a 78,000 square foot retail strip center and
Lawrenceville Market, a 519,000 square foot retail power center. Also,
development commenced on two power centers in February 1995, which were in the
predevelopment stage as of December 31, 1994; Colonial Plaza, a 543,000 square
foot retail power center located in Orlando, Florida and Mansell Crossing-Phase
II, a 100,000 square foot retail power center expansion adjacent to the
Company's other North Point properties.
The Company commenced construction of two office buildings during 1994. In
September 1994, the Company formed a joint venture with an affiliate of Carr
Realty Corporation to jointly develop John Marshall-II a 224,000 square foot
building located in suburban Washington, D.C. which is 100% pre-leased. North
Point Center, a 125,000 square foot building located adjacent to the Company's
other North Point properties which will be 100% owned by the Company, was
started in December 1994.
In July 1994, the Company entered into a $100 million line of credit with
two commercial banks. The line bears interest tied to the Federal funds rate,
matures September 30, 1996, and is secured by the Company's partnership interest
in CSC Associates, L.P. In conjunction with obtaining the new line, the Company
paid off its First Union Tower line of credit.
EXECUTIVE OFFICES
The Registrant's executive offices are located at 2500 Windy Ridge Parkway,
Suite 1600, Atlanta, Georgia 30339. At December 31, 1994, the Company employed
113 people.
ITEM 2.PROPERTIES
TABLE OF MAJOR PROPERTIES
The following tables set forth certain information relating to major office
and retail properties, stand alone retail lease sites, and land held for
investment and future development in which the Company has a 50% or greater
ownership interest. All information presented is as of December 31, 1994,
except percentage leased which is as of March 15, 1995. Dollars are stated in
thousands.
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Joint Venture Company's Square Feet as of 1994 Major Tenants (lease
and Completed Partner or Ownership and Acres March 15, Economic expiration/options
Zip Code or Acquired Partners Interest as Noted 1995 Occupancy expiration)
------------ ----------- ------------- --------- ----------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE
Wildwood Office Park:
Suburban Atlanta, GA
2300 Windy
Ridge Parkway
30339-5671 1987 IBM 50% 634,000 94% 95% IBM (2002/2012)
12 Acres Georgia Pacific (2002/2007)
Electrolux (2000/2005)
Computer Associates (1998)(6)
Chevron USA (1998/2001/2005)
2500 Windy
Ridge Parkway
30339-5683 1985 IBM 50% 313,000 89% 84% Coca-Cola Enterprises Inc.
8 Acres (1998/2008)
IBM (1995/2005)
3200 Windy
Hill Road
30339-5609 1991 IBM 50% 681,000 95% 93% IBM (2001/2011)
15 Acres Equifax (4) (1998/2003)
W.H. Smith Inc.
(2002/2007)
3301 Windy Ridge
Parkway
30339-5685 1984 N/A 100% 106,000 70% 64% TSW International, Inc.
10 Acres (2003/2008) (7)
3100 Windy Hill
Road
30339-5605 1983 N/A (1) 188,000 100% 100% IBM (1998/2003)
13 Acres
<CAPTION>
Adjusted
Cost
and
Adjusted
Cost Less Debt
Description, Depreciation 1994 FFO (2) Maturity
Location Tenants' and ----------------- and
and Rentable Amortization Company's Debt Interest
Zip Code Sq. Feet (1) 100% Share Balance Rate (3)
----------- -------- ------------ ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
OFFICE
Wildwood Office Park:
Suburban Atlanta, GA
2300 Windy
Ridge Parkway
30339-5671 252,038 $ 76,390 $ 9,995 $ 4,998 $81,822 8/10/99
63,006 $ 54,795 9.090%
62,576
62,445
59,912
2500 Windy
Ridge Parkway
30339-56831985 139,944 $ 26,864 $ 4,227 $ 2,114 $31,140 6/28/96
$ 18,347 9.125%
47,689
3200 Windy
Hill Road
30339-5609 1991 445,755 $ 78,289 $ 8,592 $ 4,296 $ 9,000 9/01/95
68,642 $ 66,706 Renewable
41,858 Floating
3301 Windy Ridge
Parkway
30339-56851984 73,896 $10,368 $ 446 $ 446 $ 0 N/A
$ 7,514
3100 Windy Hill
Road
30339-5605 188,000 $17,791 $ 2,008 $ 1,964 $ 0 N/A
$17,791
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Joint Venture Company's Square Feet as of 1994 Major Tenants (lease
and Completed Partner or Ownership and Acres March 15, Economic expiration/options
Zip Code or Acquired Partners Interest as Noted 1995 Occupancy expiration)
------------ ----------- ------------- --------- ----------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE (CONTINUED)
NationsBank Plaza
Atlanta, GA
30308-2214 1992 NationsBank(4) 50%(8) 1,256,000 91% 75% NationsBank(4)
4 Acres (2012/2042)
Ernst & Young
(2007/2017)
Troutman Sanders
(2007/2017)
Paul Hastings
(2012/2017)
Hunton & Williams
(2004/2009)
First Union Tower
Greensboro, NC
27401-2167 1990 Weaver 85%(8) 317,000 86% 81% Smith Helms Mullis
Downtown, L.P. 1 Acre Moore (2000/2015)
First Union Bank (4)
(2009/2019)
Halstead Industries
(2000/2005)
Ten Peachtree Place
Atlanta, GA
30309-3814 1991 Coca-Cola (4) 50%(8) 259,000 100% 100% Coca-Cola (2001/2006)
5 Acres
Summit Green
Greensboro, NC
27408-7023 1986 IBM 50% 135,000 100% 100% IBM (1996/2006)
9 Acres(10) Fitech Systems (1999/2004)
Massachusetts Mutual
Life Ins. Co. (1997/2002)
John Marshall-II
Suburban
Washington, D.C
22102-3802 (13) Carr Realty 50% 224,000 100% (13) Booz-Allen & Hamilton
Corporation (4) 3 Acres (2011/2016)(13)
North Point Center
Suburban Atlanta, GA.
30202-4885 (13) N/A 100% 125,000 0% (13) N/A
7 Acres
<CAPTION>
Adjusted
Cost
and
Adjusted
Cost Less Debt
Description, Depreciation 1994 FFO (2) Maturity
Location Tenants' and ----------------- and
and Rentable Amortization Company's Debt Interest
Zip Code Sq. Feet (1) 100% Share Balance Rate (3)
----------- -------- ------------ ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
NationsBank Plaza
Atlanta, GA
30308-2214 572,742 $216,193 $17,075 $ 8,989 $ 0 N/A
$197,632 (8)
188,175
178,459
68,772
43,523
First Union Tower
Greensboro, NC
27401-2167 70,360 $ 32,185 $ 3,660 $ 3,660 $ 0 N/A
$ 25,125 (8)
62,622
60,253
Ten Peachtree Place
Atlanta, GA
30309-3814 259,000 $ 23,474 $ 2,863 $ 301 $21,692 11/30/01(9)
$ 21,523 (8) 8.00%
Summit Green
Greensboro, NC
27408-7023 75,797 $10,667 $ 1,786 $ 893 $10,646 4/01/98
22,688 $ 7,672 9.875%
11,476
John Marshall-II
Suburban
Washington, D.C
22102-3802 224,000 $ 6,629 (13) (13) $ 0 N/A
(13)
North Point Center
Suburban Atlanta, GA.
30202-4885 N/A $ 543 (13) (13) $ 0 N/A
(13)
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Joint Venture Company's Square Feet as of 1994 Major Tenants (lease
and Completed Partner or Ownership and Acres March 15, Economic expiration/options
Zip Code or Acquired Partners Interest as Noted 1995 Occupancy expiration)
------------ ----------- ------------- --------- ----------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RETAIL CENTERS AND MALLS
Haywood Mall
Greenville, SC
29607-2749 1977 Corporate 50% 956,000 98% 93% Sears (5)
Property 86 acres overall of J.C. Penney (5)
Investors (4) of which 93% of Venture Rich's (5)
272,000 and Venture owned Belk (5)
19 acres are owned
owned by joint
venture (10)
Perimeter Expo
Atlanta, GA
30338-1519 1993 N/A 100% 295,000 100% 90% The Home Depot Expo (5)
19 acres overall of Marshalls (2013/2028)
of which 100% of Company Best Buy (2013/2028)
178,000 and Company owned Linens `N Things (2013/2023)
10 acres are owned Office Max (2014/2034)
owned by
the Company
North Point Market-Phase I
Suburban
Atlanta, GA
30202-4889 1994 Coca-Cola (4) 82.3%(8) 313,000 98% 87% Sportstown (2014/2024) (6)
44 Acres (15) (11) Media Play (2009/2024)
Marshalls (2009/2024)
Linens `N Things
(2004/2024)
United Artists (2014/2034)
Circuit City (2014/2029)
PETsMART (2009/2029)
North Point Market-Phase II
Suburban
Atlanta, GA
30202-4885 (13) Coca-Cola (4) 82.3% (8) 173,000 100% (13) Target (5)
16 acres overall Gap's Old Navy Store
of which 100% (2000/2010)(13)
57,000 of Company Rhodes (2010/2020)(13)
and 5 acres owned
are owned by
the Company
<CAPTION>
Adjusted
Cost
and
Adjusted
Cost Less Debt
Description, Depreciation 1994 FFO (2) Maturity
Location Tenants' and ----------------------- and
and Rentable Amortization Company's Debt Interest
Zip Code Sq. Feet (1) 100% Share Balance Rate (3)
----------- -------- ------------ ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
RETAIL CENTERS AND MALLS
Haywood Mall
Greenville, SC
29607-2749 N/A $ 35,760 $ 7,074 $ 3,537 $ 0 N/A
N/A $ 27,076
N/A
N/A
Perimeter Expo
Atlanta, GA
30338-1519 N/A $ 19,209 $ 2,679 $ 2,679 $ 0 N/A
36,598 $ 18,804
36,000
30,351
23,500
North Point Market-Phase I
Suburban
Atlanta, GA
30202-4889 50,275 $ 21,870 $ 1,558(11) $1,398(11) $ 0 N/A
48,884 $ 21,423 (8)
40,000
35,000
34,800
33,000
25,416
North Point Market-Phase II
Suburban
Atlanta, GA
30202-4885 N/A $ 1,219 (13) (13) $ 0 N/A
17,000 (13) (8)
40,000
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Joint Venture Company's Square Feet as of 1994 Major Tenants (lease
and Completed Partner or Ownership and Acres March 15, Economic expiration/options
Zip Code or Acquired Partners Interest as Noted 1995 Occupancy expiration)
------------ ----------- ------------- --------- ----------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RETAIL CENTERS AND MALLS (CONTINUED)
Presidential Market-Phase I
Suburban
Atlanta, GA
30278-2149 1994 N/A 100% 320,000 97% 86% Target (5)
29 acres overall of Publix Super
of which 95% Company Market (2019/2044)
204,000 and of Company owned T.J. Maxx (2004/2014)
19 acres owned Marshalls (2009/2024)
are owned (12)
by the
Company (16)
Lovejoy Station
Suburban
Atlanta, GA
30228 (13) N/A 100% 78,000 63% (13) Publix Super Market
12 Acres (2015/2035)(13)
Lawrenceville Market
Suburban
Atlanta, GA
30243-5420 (13) N/A 100% 519,000 72% (13) Target (2014/2040)(13)
56 Acres Home Depot (2025/2040)
AMC Theater (4)
(2016/2036)(13)
M.J. Designs (2010/2025)
Marshalls (2010/2025)(13)
PETsMART (2011/2031)(13)
Colonial Plaza
Orlando, FL
32803-5029 (17) N/A 100% 543,000 (17) (17) J. Bryons (2007/2027)(17)
49 Acres Circuit City (2015/2035)(17)
Barnes & Noble (2011/2021)(17)
Rhodes (2011/2026)(17)
Linens `N Things
(2011/2026)(17)
Marshalls (2011/2026)(17)
Luria's (2011/2026)(17)
Ross Stores (2006/2026)(17)
Mansell Crossing-Phase II
Suburban
Atlanta, GA
30202-4822 (17) Coca-Cola (4) 82.3% (8) 100,000 (17) (17) Rooms To Go (2015/2035)(17)
13 Acres
<CAPTION>
Adjusted
Cost
and
Adjusted
Cost Less Debt
Description, Depreciation 1994 FFO (2) Maturity
Location Tenants' and ----------------------- and
and Rentable Amortization Company's Debt Interest
Zip Code Sq. Feet (1) 100% Share Balance Rate (3)
----------- -------- ------------ ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
RETAIL CENTERS AND MALLS (CONTINUED)
Presidential Market-Phase I
Suburban
Atlanta, GA
30278-2149 N/A $ 9,580 $ 90(12) $ 90(12) $ 0 N/A
$ 9,549
56,146
32,000
30,000
Lovejoy Station
Suburban
Atlanta, GA
30228 47,955 $ 2,177 (13) (13) $ 0 N/A
(13)
Lawrenceville Market
Suburban
Atlanta, GA
30243-5420 117,000 $ 4,568 (13) (13) $ 0 N/A
103,000 (13)
63,000
35,150
30,000
25,416
Colonial Plaza
Orlando, FL
32803-5029 54,000 (17) (17) (17) $ 0 N/A
43,432
40,450
40,000
35,000
30,400
32,900
28,000
Mansell Crossing-Phase II
Suburban
Atlanta, GA
30202-4822 21,000 (17) (17) (17) $ 0 N/A
(8)
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Joint Venture Company's Square Feet as of 1994 Major Tenants (lease
and Completed Partner or Ownership and Acres March 15, Economic expiration/options
Zip Code or Acquired Partners Interest as Noted 1995 Occupancy expiration)
------------ ----------- ------------- --------- ----------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STAND ALONE RETAIL SITES ADJACENT TO COMPANY'S OFFICE AND RETAIL PROJECTS
Wildwood Office Park
Suburban
Atlanta, GA
30339-5671 1985-1993 IBM 50% 15 Acres 93% 76% N/A
GA Highway 400 Property
Suburban
Atlanta, GA
30202-4885 1993 N/A 100% 30 Acres 60% 30% N/A
<CAPTION>
Adjusted
Cost
and
Adjusted
Cost Less Debt
Description, Depreciation 1994 FFO (2) Maturity
Location Tenants' and ----------------------- and
and Rentable Amortization Company's Debt Interest
Zip Code Sq. Feet (1) 100% Share Balance Rate (3)
----------- -------- ------------ ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
STAND ALONE RETAIL SITES ADJACENT TO COMPANY'S OFFICE AND RETAIL PROJECTS
Wildwood Office Park
Suburban
Atlanta, GA
30339-5671 N/A $ 8,790 $ 887(14) $ 444(14) $ 0 N/A
$ 8,046
GA Highway 400 Property
Suburban
Atlanta, GA
30202-4885 N/A $ 4,559 $ 395(18) $ 395(18) $ 0 N/A
$ 4,548
</TABLE>
(1)Cost as shown in the accompanying table includes deferred leasing and
financing costs and other related assets. For each of the following
projects: 2300 and 2500 Windy Ridge Parkway, 3200 Windy Hill Road, Wildwood
Stand Alone Retail Lease Sites and North Point Market Phases I and II, the
cost shown is what the cost would be if the venture's land cost were adjusted
downward to the Company's lower basis in the land it contributed to the
venture. For 3100 Windy Hill Road, the cost shown is the Company's carrying
value of the land lease and first mortgage note from which it derives
substantially all of the economic benefits of the property.
(2)FFO represents cash flows from operating activities before interest expense
excluding changes in other operating assets and liabilities. FFO should not
be considered an alternative to net income or other measurements under
generally accepted accounting principles as an indicator of operating
performance; or to cash flows from operating, investing, or financing
activities as a measure of liquidity.
(3)Floating rate is .75% over Federal Funds rate; Federal Funds rate averaged
5.45% for the month of December 1994.
(4)Actual office or venture partner is affiliate of entity shown.
(5)This anchor tenant owns its own space.
(6)Currently operating under Chapter 11 bankruptcy proceedings.
(7)Computer Associates, Equifax and TSW International, Inc. have the right to
terminate their leases in 1995, 1995 and 1998, respectively, upon payment of
significant cancellation penalties. The Company is currently negotiating to
extend Computer Associates lease to the year 2005. This extension is
expected to be signed by April 1995.
(8)See "Major Properties - "North Point," "NationsBank Plaza," "First Union
Tower" and "Ten Peachtree Place" where the partnership's preferences are
discussed.
(9)Maturity extendible to December 31, 2008. Rate becomes floating after
November 30, 2001.
(10)Summit Green and a portion of the Haywood Mall parking lot (3 acres) are
subject to long-term ground leases.
(11)North Point Market-Phase I became operational for financial reporting
purposes on May 1, 1994. Thus, FFO and economic occupancy reported for North
Point Market-Phase I represent eight months of operations. FFO (100% share)
is expected to be approximately $3.5 million on an annualized basis when the
center becomes fully operational.
(12)Presidential Market-Phase I became operational for financial reporting
purposes on December 1, 1994. Thus, FFO and economic occupancy reported for
Presidential Market-Phase I represent one month of operations. FFO is
expected to be approximately $1.7 million on an annualized basis when the
center becomes fully operational.
(13)Project was under construction as of December 31, 1994. Lease expiration
dates are based upon estimated commencement dates, and square footage is
estimated.
(14)Approximately 10 acres of the Wildwood Office Park ground lease sites were
generating FFO for the twelve months ended December 31, 1994. Three acres
are leased to a tenant whose rental commencement date began June 1, 1994.
One acre of the remaining 2 acres is leased to a tenant whose rental
commencement begins on April 1, 1995. FFO (100% share) from the total 14
leased acres will be approximately $1 million on an annualized basis. The
remaining acre is currently being marketed to prospective tenants.
(15)North Point Market-Phase I includes approximately 6 outparcels available for
ground lease to freestanding users, of which four are currently leased. The
remaining 2 sites are currently being marketed to prospective tenants.
(16)Presidential Market-Phase I excludes approximately 5 acres developed as
stand alone retail sites held for sale or lease to tenants, which costs are
included in Land Held for Investment and Future Development.
(17)Land was acquired and construction commenced on these properties subsequent
to December 31, 1994. Lease expiration dates are based upon estimated
commencement dates, and square footage is estimated.
(18)During 1994, rentals were received from 13 acres of the GA Highway 400
Property, with 7 of the acres rentals commencing during 1994. To date leases
have been signed for approximately 5 additional acres, with the lease
commencements for these 5 acres beginning in the second quarter of 1995.
Leases on the 18 leased acres will generate FFO of approximately $700,000 per
year. The remaining acres are currently being marketed to prospective
tenants.
LAND HELD FOR INVESTMENT AND FUTURE DEVELOPMENT
<TABLE>
<CAPTION>
Adjusted
Cost (2)
Less
Developable Company's Depreciation
Land Area Joint Venture Ownership and Debt
Description, Location and Zoned Use Year Acquired (Acres)(1) Partner Interest Amortization Balances
----------------------------------- ------------- ----------- ------------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Wildwood Office Park
Suburban Atlanta, Georgia
Office and Commercial 1971-1987 151 N/A 100% $ 7,005 $ 0
Office and Commercial 1971-1982 52 IBM 50% $14,739 $ 0
Georgia Highway 400 Land
(Georgia Highway 400 & Haynes Bridge Road) (3)
Suburban Atlanta, Georgia
Office and Commercial - East 1970-1985 70 N/A 100% $ 2,599 $ 0
Office and Commercial - West 1970-1985 230 N/A 100% $ 4,260 $ 0
Midtown Atlanta
Office and Commercial 1984 2 N/A 100% $ 2,957 $145(4)
Office and Commercial 1985-1989 11 Coca-Cola(5) 50% $ 2,928 $ 0
Temco Associates
(Paulding County)
Suburban Atlanta, Georgia 1991 -(6) Temple-Inland 50% -(6) $ 0
Inc. (5)
Presidential Market
Suburban Atlanta, Georgia
Retail (Outparcels) - Phase I 1993 5 N/A 100% $ 2,202 $ 0
Retail - Phase II 1994 9 N/A 100% $ 2,236 $ 0
Retail (Outparcels) - Phase II 1994 3 NA 100% $ 159 $ 0
Lawrenceville
Gwinnett County
Suburban Atlanta, Georgia
Multi-Family and Single-Family
Residential, Commercial,
and Retail (Outparcels) 1994 110 N/A 100% $ 5,549 $ 0
</TABLE>
(1)Based upon management's estimates.
(2)For the portion of the Wildwood Office Park land and Midtown Atlanta land
owned by joint ventures, the cost shown is what the cost would be if the
venture's land cost were adjusted downward to the Company's lower basis in
the land it contributed to the venture. For the 50%-owned Wildwood Office
Park land, the adjusted cost excludes building predevelopment costs of
$1,282,000.
(3)The Georgia Highway 400 property is located both east and west of Georgia
Highway 400. Currently, only the land which is located east of Georgia
Highway 400 is being developed. This land surrounds North Point Mall, a 1.1
million square foot regional mall (currently being expanded to 1.3 million
square feet) on a 100 acre site which the Company sold in 1988 to a joint
venture of Homart Development Co. and JMB/Federated Realty Associates, Ltd.
(4)This note bears interest at 8.5% and amortizes in equal monthly installments
through October 1997. There is a 15% penalty for prepayment of this loan.
(5)Joint venture partner is an affiliate of the entity shown.
(6)Temco Associates has an option through March 2006, with no carrying costs, to
acquire approximately 35,000 acres in Paulding County, Georgia (northwest of
Atlanta, Georgia), of which approximately 13,000 acres would be a fee simple
interest and approximately 22,000 acres would be a timber rights interest
only. The option may be exercised in whole or in part over the option
period. Temco Associates has engaged in certain sales of land as to which it
simultaneously exercised its purchase option. During 1993 and 1994,
approximately 1,100 and 72 acres, respectively of the option related to the
fee simple interest was exercised and simultaneously sold for gross profits
of $305,000 and $243,000, respectively.
MAJOR PROPERTIES
GENERAL
This section describes the major operating properties in which the Company
has an interest either directly or indirectly through joint venture
arrangements. A "negative investment" in a joint venture results from
distributions of capital to the Company, if any, exceeding the sum of (i) the
Company's contributions of capital and (ii) reported earnings (losses) of the
joint venture allocated to the Company. "Investment" in a joint venture means
the book value of the Company's investment in the joint venture.
WILDWOOD OFFICE PARK
Wildwood Office Park is a 289 acre Class A commercial development in
suburban Atlanta master planned by I.M. Pei, including 5 office buildings
containing 1,922,000 rentable square feet. The property is zoned for office,
institutional, and commercial use, with over 7 million additional gross square
feet of office and commercial space planned for the park. Approximately 104
acres in the park are owned by, or committed to be contributed to, Wildwood
Associates (see below), including approximately 52 acres of land held for future
development. The Company owns 100% of the 151 acre balance of the land
available for future development.
Located in Atlanta's northwest commercial district, just north of the
Interstate 285/Interstate 75 intersection, Wildwood features convenient access
to all of Atlanta's major office, commercial and residential districts. The
Wildwood complex overlooks the Chattahoochee River and borders 1,200 acres of
national forest, thus providing an urban office facility in a forest setting.
Wildwood Associates. Wildwood Associates is a joint venture between the
Company and IBM formed in 1985. The Company and IBM each have a 50% interest in
Wildwood Associates. At December 31, 1994, the Company's investment in Wildwood
Associates and a related partnership (see "Summit Green") was approximately $3.3
million, which included the cost of the land the Company is committed to
contribute to Wildwood Associates. In addition, the Company has severally
guaranteed one-half of a $50,000,000 bank line of credit to Wildwood Associates
related to the 3200 Windy Hill Road Building, under which $9.0 million was drawn
at December 31, 1994.
Wildwood Associates owns the 3200 Windy Hill Road Building (681,000
rentable square feet), the 2300 Windy Ridge Parkway Building (634,000 rentable
square feet) and the 2500 Windy Ridge Parkway Building (313,000 rentable square
feet). At March 15, 1995, these three buildings were 95%, 94% and 89% leased,
respectively. Wildwood Associates also owns 14 acres leased to two banking
facilities and five restaurants (one under development); an additional one acre
retail site currently being marketed to prospective users, and a child care
facility.
The 3200 Windy Hill Road Building was financed primarily with equity, and
at December 31, 1994 had $9 million outstanding debt related to it. The 2300
Windy Ridge Parkway Building and the 2500 Windy Ridge Parkway Building were
financed primarily with debt and, at December 31, 1994, had $81.8 million and
$31.1 million of outstanding debt related to them, respectively.
Other Buildings in Wildwood Office Park. Wildwood Office Park also
contains the 3301 Windy Ridge Parkway Building, a 106,000 rentable square foot
office building located on approximately 10 acres which is wholly owned by the
Company. Commencing January 1994, a single tenant, TSW International, Inc.,
leased the building for a term of ten years. The lease was initially for 60% of
the building with options permitting the tenant to expand its occupancy to the
remainder of the building over the next several years; the first such option for
an additional 10% of the space was exercised in the fourth quarter of 1994. In
addition, the 3100 Windy Hill Road Building, a 188,000 rentable square foot
corporate training facility occupies a 13-acre parcel of land which is wholly
owned by the Company. The training facility improvements were sold in 1983 to a
limited partnership of private investors, at which time the Company received a
leasehold mortgage note. The training facility land was simultaneously leased
to the partnership for thirty years, along with certain equipment for varying
periods. The training facility was 100% leased by the partnership to IBM
through November 1993. In January 1993, the IBM lease was extended through
November 30, 1998. Concurrently with the IBM extension, the mortgage note and
related leases were also modified (see Note 3).
NORTH POINT
North Point is a mixed-use commercial development located in north central
suburban Atlanta, Georgia off of Georgia Highway 400, a six lane state highway
that runs from downtown Atlanta to the northern Atlanta suburbs. The Company
owns either directly or indirectly, approximately 169 and 230 acres located on
the east and west sides of Georgia Highway 400, respectively. Currently, only
the land which is located east of Georgia Highway 400 is being developed. The
Company previously sold 100 acres of its holdings located on the east side of
Georgia Highway 400 in 1988 to a joint venture of Homart Development Co. and
JMB/Federated Realty Associates, Ltd. This joint venture constructed North
Point Mall, a 1.1 million square foot regional mall which opened in October 1993
and will be expanded to 1.3 million square feet with the addition of a sixth
anchor store (Dillard's). The following describes the various components of
North Point.
North Point Market Associates, L.P. ("NPMA"). NPMA is a limited
partnership between Cousins (82.3%) and an affiliate of Coca-Cola (17.7%). The
venture was formed in September 1993 when the Georgia Highway 400 land owned
through Spring/Haynes Associates (see Note 5) was distributed to its partners,
with each partner concurrently recontributing certain acres of the land to NPMA.
Additionally, Cousins contributed certain acres of its wholly owned Georgia
Highway 400 land to the new venture.
NPMA developed North Point Market-Phase I, a 313,000 square foot retail
power center located adjacent to North Point Mall, which became operational for
financial reporting purposes in May 1994. The center also includes six
outparcels available for ground lease to freestanding users, of which four are
currently leased. Construction commenced on North Point Market-Phase II
(173,000 square feet, 57,000 square feet owned) in August 1994. In connection
with the commencement of construction, NPMA sold 10.8 acres of land in Phase II
to Dayton Hudson Corporation, which is developing a Target store on the site.
This sale was treated as a tax-free exchange, and in February 1995 the proceeds
were swapped into the purchase of land adjacent to the Company's other North
Point properties. The Company plans to use this land for Mansell Crossing-Phase
II, an approximately 100,000 square foot expansion of an existing retail power
center previously developed by the Company for a third party.
North Point Market-Phase I was financed partially with equity contributions
from both partners, with the remainder financed by a note payable to Cousins
which bears interest at the Prime rate plus 1%. The balance of this note
payable is $17.7 million at December 31, 1994. The extent to which Cousins
receives interest income from the note (which is eliminated in consolidation)
creates a preferential return from the Partnership to Cousins. The improvements
at North Point Market-Phase II are being financed 100% through this note payable
to Cousins. The construction costs of Mansell Crossing-Phase II, however, will
be financed 100% through equity contributions from Cousins, thus creating an
additional preferential return to Cousins.
Wholly Owned North Point Property. In December 1994, the Company commenced
construction on North Point Center, a 125,000 square foot office building,
located on half of a 14 acre site of the North Point land adjacent to North
Point Mall. North Point Center is scheduled to be completed in the first
quarter of 1996 at a total cost of approximately $16 million.
Approximately 30 acres of the North Point land are being ground leased in 1
to 2 acre sites to freestanding users. The carrying value of this land was
transferred to Operating Properties in September 1993. Approximately 18 acres
are leased as of March 15, 1995.
The remaining approximately 300 developable acres at North Point are 100%
owned by the Company. Approximately 70 acres of this land are located on the
east side of Georgia Highway 400 and are zoned for mixed-use development
including retail and office space. Approximately 230 acres of the land are
located on the west side of Georgia Highway 400 and are zoned for office,
institutional and light industrial use.
OTHER OFFICE PROPERTIES
NationsBank Plaza. NationsBank Plaza is a Class A, 55-story, 1.3 million
rentable square foot office tower designed by Kevin Roche and is located on
approximately 4 acres of land between the midtown and downtown districts of
Atlanta, Georgia. The building, which was completed in 1992, was approximately
91% leased at March 15, 1995. An affiliate of NationsBank, the fourth largest
bank in the United States, leases 46% of the rentable square feet.
NationsBank Plaza was developed by CSC Associates, L.P. ("CSC"), a joint
venture formed by the Company and C&S Premises, Inc., an affiliate of
NationsBank. The Company and C&S Premises, Inc. each have a 50% interest in
CSC.
In October 1993, the partnership fully repaid all of its debt with equity
contributions of $86.7 million made by each partner. At December 31, 1994, the
Company's investment in CSC was approximately $105,239,000. The Company has
guaranteed one-half of a $5,000,000 bank line of credit under which there was no
outstanding balance at December 31, 1994.
CSC's net income or loss and cash distributions are allocated to the
partners based on their percentage interests (50% each), subject to a preference
to Cousins. The Cousins preference is $2.5 million (giving Cousins an
additional $1.25 million over what it would otherwise receive), and accrues to
Cousins, with interest at 9% to the extent unpaid, over the period February 1,
1992 through January 31, 1995. Following repayment of the partnership's debt in
October 1993, Cousins began recognizing its accrued preference currently in
income, which resulted in Cousins recognizing $874,000 and $451,000 in income
over what it would have otherwise recognized in the years ended December 31,
1993 and 1994, respectively. During the year ended December 31, 1994, Cousins
received distributions of the preference and accrued interest of approximately
$2.65 million. The remaining preference amount of $71,000 was distributed in
January 1995. Amounts above the preference amount are allocated based on the
partners' percentage interests.
First Union Tower. First Union Tower is a Class A office building
containing approximately 317,000 rentable square feet. The property is located
on approximately one acre of land in downtown Greensboro, North Carolina. First
Union Tower opened in the first quarter of 1990 and at March 15, 1995 was
approximately 86% leased.
First Union Tower is owned by North Greene Associates Limited Partnership
("NGA"), which was formed in 1987 as a joint venture of Cousins and Weaver
Downtown Limited Partnership. Cousins has an 85% ownership interest in NGA, and
accounts for it as a consolidated entity. Cousins is recognizing 100% of the
income or losses from NGA until cumulative retained earnings exceed zero or
partnership distributions commence, at which time Cousins will recognize 85% of
the income or losses, subject to the preference discussed below.
Cousins has made a $36 million secured line of credit available to NGA
which matures December 31, 1996. At December 31, 1994, the line had a balance
of $29.8 million and an interest rate equal to the Federal funds rate plus 1%.
Under terms of the line, partnership distributions are prohibited and 100% of
the project's operating cash flows have been paid to Cousins. The extent to
which Cousins receives interest income from the partnership effectively creates
a preferential return to Cousins.
One Ninety One Peachtree Tower. One Ninety One Peachtree Tower is a 50-
story, Class A office tower located in downtown Atlanta, Georgia that was
completed in December 1990. One Ninety One Peachtree Tower, which contains 1.2
million rentable square feet, was designed by John Burgee Architects, with
Phillip Johnson as design consultant.
One Ninety One Peachtree Tower was developed on approximately 2 acres of
land, of which approximately 1.5 acres is owned and approximately one-half acre
under the parking facility is leased for a 99-year term expiring in 2088 with a
99-year renewal option. One Ninety One Peachtree Tower was approximately 94%
leased at March 15, 1995.
C-H Associates, Ltd. ("C-H Associates"), a partnership formed in 1988
between CREC (49%), Hines Peachtree Associates Limited Partnership (49%) and
Peachtree Palace Hotel, Ltd. (2%), owns a 20% interest in the partnership that
owns One Ninety One Peachtree Tower. C-H Associates' 20% ownership of One
Ninety One Peachtree Tower results in an effective 9.8% ownership interest by
CREC in the One Ninety One Peachtree Tower project. The balance of the One
Ninety One Peachtree Tower project is owned by DIHC Peachtree Associates, an
affiliate of DIHC.
Through C-H Associates, CREC received 50% of the development fees from the
One Ninety One Peachtree Tower project. In addition, CREC owns a 50% interest
in two general partnerships which receive fees from leasing and managing the One
Ninety One Peachtree Tower project.
The One Ninety One Peachtree Tower project was funded substantially by debt
until March 1993, at which time DIHC Peachtree Associates contributed equity in
the amount of $145,000,000. Subsequent to the equity contribution, C-H
Associates is entitled to a priority distribution of $250,000 per year (of which
the Company is entitled to receive $112,500) for seven years beginning in 1993.
The equity contributed by DIHC Peachtree Associates is entitled to a preferred
return at a rate increasing over the first 14 years from 5.5% to 11.5% (payable
after the Company's priority return); at December 31, 1994, the cumulative
undistributed preferred return was $3,006,562. Thereafter, the partners will
share in any distributions in accordance with their percentage interests. At
December 31, 1994, the Company had a negative investment of $90,000 in the One
Ninety One Peachtree Tower project.
Ten Peachtree Place. Ten Peachtree Place is a 20-story, 259,000 rentable
square foot Class A office building located in midtown Atlanta, Georgia.
Completed in 1991, this structure was designed by Michael Graves and is
currently 100% leased to Coca-Cola. Approximately four acres of adjacent land,
currently used for surface parking, are available for future development.
Ten Peachtree Place is owned by Ten Peachtree Place Associates, a general
partnership between the Company (50%) and a wholly owned subsidiary of Coca-Cola
(50%). The partnership acquired the property in 1991 for a nominal cash invest
ment, subject to a ten-year purchase money note. This 8% purchase money note
had an outstanding balance of $21.7 million at December 31, 1994. If the
purchase money note is paid in accordance with its terms, it will amortize to
approximately $15.3 million ($59 per rentable square foot) over the ten-year
term of the Coca-Cola lease, at which time Coca-Cola is entitled to receive the
preferred return described below and the property may be sold, released, or
returned to the lender under the purchase money note for $1.00 without penalty
or any further liability to the Company for the indebtedness. At December 31,
1994, the Company had a negative investment in Ten Peachtree Place Associates of
$75,000.
The Company anticipates that Ten Peachtree Place Associates will generate
approximately $400,000 per year of cash flows from operating activities net of
note principal amortization during the ten-year lease. The partnership
agreement generally provides that each of the partners is entitled to receive
50% of cash flows from operating activities net of note principal amortization
(excluding any sale proceeds) for ten years, after which time the Company is
entitled to 15% of cash flows (including any sale proceeds) and its partner is
entitled to receive 85% of cash flows (including any sale proceeds), until the
two partners have received a combined distribution of $15.3 million, after which
time each partner is entitled to receive 50% of cash flows (including any sale
proceeds).
Summit Green. Summit Green, a 21-acre office park located in Greensboro,
North Carolina, is owned by Wildwood Associates (the partnership with IBM) and a
related partnership. The park contains a 135,000 rentable square foot mid-rise
office building which was 100% leased at March 15, 1995. The Summit Green land
is leased from an unrelated third party for a 99-year term expiring in 2084.
Space exists for two additional office buildings, but the Company has no plans
to commence additional development without prior leasing commitments.
CC-JM II Associates. This joint venture was formed in 1994 between the
Company and an affiliate of Carr Realty Corporation, each as 50% general
partners, to develop and own a 224,000 square foot office building in suburban
Washington, D.C. The building will be 100% leased for 15 years to Booz-Allen &
Hamilton, an international consulting firm, as a part of its corporate
headquarters campus, and is scheduled to be completed in 1996 at a total cost of
approximately $32 million. Each partner contributed $2.7 million to the venture
during 1994.
OTHER RETAIL PROPERTIES
Haywood Mall. Haywood Mall is an enclosed regional shopping center located
5 miles southeast of downtown Greenville, South Carolina, which was developed
and opened in 1980. Haywood Mall Associates, a joint venture arrangement formed
in 1979 by the Company and Bellwether Properties of South Carolina, L.P., an
affiliate of Corporate Properties Investors, owns the mall which is currently
being expanded from 956,000 gross leasable square feet ("GLA") (of which the
venture's ownership is approximately 272,000 GLA) to 1,256,000 GLA (of which the
venture's ownership will be approximately 329,000). The balance of the mall is
owned by the mall's major department stores (four prior to the expansion and
five afterwards). The portion of Haywood Mall owned by Haywood Mall Associates
was developed on approximately 19 acres of land, of which approximately 16 acres
is owned and approximately 3 acres (of parking area) is leased under a ground
lease expiring in 2067. The portion of Haywood Mall owned by the joint venture
was approximately 93% leased as of March 15, 1995 and has been at least 90%
leased since 1986.
The Company has a 50% interest in Haywood Mall Associates. The Company
originally had only a nominal cash investment, but funded an aggregate of $2.8
million in 1988 through 1990 as its 50% share of capital improvements made to
the mall, including a new food court area. Additionally, the Company
contributed $16.1 million during 1994 to fund its share of the expansion and the
prepayment of an existing 9.37% first mortgage in May 1994. The venture intends
to continue funding the expansion with additional equity contributions of
approximately $6 million from each partner. At December 31, 1994, the Company's
investment was $15,985,000.
Perimeter Expo Associates, L.P. In June 1993, Perimeter Expo Associates,
L.P. (90% owned by Cousins and 10% owned by CNM) purchased the land for and
began construction of a retail power center adjacent to Perimeter Mall in
Atlanta, Georgia. Perimeter Expo features a new concept called The Home Depot
Expo, which was separately developed by The Home Depot as an upscale interior
design center. Perimeter Expo contains approximately 295,000 square feet, of
which approximately 178,000 square feet are owned by the Company and the balance
of the center, 117,000 square feet, owned by The Home Depot. The center opened
in November 1993 and became operational for financial reporting purposes on
December 1, 1993.
Presidential Market. In December 1994, Presidential Market-Phase I, an
approximately 320,000 square foot retail power center, located in northeast
suburban Atlanta became operational for financial reporting purposes. Cousins
owns approximately 204,000 square feet of the center, with the remaining 116,000
square feet separately developed as a Target store which is owned by Dayton
Hudson Corporation. In November 1994, Cousins and CNM purchased an additional
14 acres of land adjacent to Presidential Market, of which 2 acres were sold by
CNM in December 1994. The Company plans to commence construction on
Presidential Market-Phase II on the balance of this land during the first half
of 1995. Presidential Market-Phase II is classified as Land Held for Investment
or Future Development on the Consolidated Balance Sheets as of December 31,
1994.
Lovejoy Station. In September 1994, CREC commenced construction of Lovejoy
Station, a 78,000 square foot retail strip center in south central suburban
Atlanta. Publix is the anchor tenant of this center, which is scheduled to open
in late 1995 at a total cost of approximately $6 million.
Lawrenceville Market. In December 1994, Cousins acquired the land for and
commenced construction of Lawrenceville Market, a 519,000 square foot retail
power center in northeast suburban Atlanta. The center is scheduled to open in
late 1995 at a total cost of approximately $23 million. Additionally, CREC and
CNM own approximately 110 acres adjacent to Lawrenceville Market which are zoned
for various purposes including commercial, retail, single-family and multi-
family residential. Approximately 7 of the acres adjacent to Lawrenceville
Market that are zoned retail are actively being marketed as stand alone retail
sites to either be sold or ground leased to tenants. The remaining acreage is
being held for investment or future development.
Colonial Plaza. In February 1995, Cousins commenced construction of
Colonial Plaza, a 543,000 square foot retail power center in suburban north
central Orlando, Florida. The center is scheduled to be completed in the first
half of 1996 at a total cost of approximately $45 million.
RESIDENTIAL LOT DEVELOPMENTS
As of December 31, 1994, CREC owned the following parcels of land which are
being developed into residential communities ($ in thousands):
<TABLE>
<CAPTION>
Estimated
Total Lots Purchase
on Land Money
Year Currently Lots Carrying Debt
Description Acquired Owned (1) Sold to Date Value Balances
----------- -------- --------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Brown's Farm 1993 108 56 $1,150 $0
West Cobb County
Suburban Atlanta, GA
Apalachee River Club 1994 185 36 $2,607 $0
Gwinnett County
Suburban Atlanta, GA
Echo Mill 1994 218 24 $1,581 $454
West Cobb County
Suburban Atlanta, GA
Barrett Downs 1994 76 - (2) $1,271 $0
Forsyth County
Suburban Atlanta, GA
Bradshaw Farms 1994 119 - (2) $1,993 $0
Cherokee County
Suburban Atlanta, GA
</TABLE>
(1) Additional lots may be developed on adjacent land on which CREC holds
purchase options.
(2) Lot sales activity in Barrett Downs and Bradshaw Farms will commence in
mid-1995.
LAND HELD FOR INVESTMENT AND FUTURE DEVELOPMENT
In addition to the various land located adjacent to operating properties or
projects under construction discussed above, the Company owns the following
significant land holdings either directly or indirectly through joint venture
arrangements. The Company intends to convert its land holdings to income-
producing usage or to sell portions of land holdings as opportunities present
themselves over time.
Spring/Haynes Associates. This general partnership was formed in 1985
between the Company and a wholly owned subsidiary of Coca-Cola, each as 50%
general partners, to jointly own and develop real estate. The Company
contributed 40 acres of undeveloped land at Georgia Highway 400 and Haynes
Bridge Road in north central suburban Atlanta, Georgia. Coca-Cola contributed
11 acres of property in midtown Atlanta. In September 1993, the undeveloped
land at Georgia Highway 400 was distributed to the partners who concurrently
recontributed certain areas of the land into North Point Market Associates,
L.P., a consolidated partnership formed between the partners (see above).
The Company's remaining investment in Spring/Haynes Associates is
$1,603,000 at December 31, 1994.
Temco Associates. Temco Associates was formed in March 1991 as a
partnership between CREC (50%) and a subsidiary of Temple-Inland Inc. (50%).
Temco Associates has an option through March 2006, with no carrying costs, to
acquire approximately 35,000 acres in Paulding County, Georgia (northwest of
Atlanta, Georgia), of which approximately 13,000 acres would be a fee simple
interest and approximately 22,000 acres would be a timber rights interest only.
The option may be exercised in whole or in part over the option period and the
option price of this fee simple land was $655 per acre at December 31, 1994,
escalating at 6% per year during the term of the option. The Temco Associates
property has the potential for future residential, industrial and commercial
development. Temco Associates has to date sold parcels of land as to which it
simultaneously exercised its purchase option. During 1993 and 1994,
approximately 1,100 and 72 acres, respectively of the option related to the fee
simple interest was exercised and simultaneously sold for gross profits of
$305,000 and $243,000, respectively.
OTHER REAL PROPERTY INVESTMENTS
Omni Norfolk Hotel. Norfolk Hotel Associates ("NHA") is a general
partnership formed in 1978 between the Company and an affiliate of Odyssey
Partners, L.P. (an investment partnership), each as 50% partners, which held a
mortgage note on and owned the land under the 442-room Omni International Hotel
in downtown Norfolk, Virginia. In January 1992, NHA terminated the land lease
and became the owner of the hotel and a long-term parking agreement with an
adjacent building owner. In April 1993, the partnership sold the hotel, but
retained its interest in the parking agreement. The Company's share of the gain
on this transaction was approximately $.5 million and is included in Income From
Joint Ventures in the 1993 Consolidated Statement of Income. The partnership
received a mortgage note for a portion of the sales proceeds. In July 1994, NHA
distributed to each partner a 50% interest in the parking agreement held by NHA.
The Company currently receives payments of approximately $206,000 per year for
its 50% interest in the agreement, and has entered into an agreement to sell its
interest for $2 million in July 1996, which would result in a profit to the
Company of approximately $411,000. Additionally, in July 1994, each partner
contributed $2 million to NHA to pay down $4 million in debt.
At December 31, 1994, the Company had an investment of $1,572,000 in NHA.
The Company has also guaranteed a $2.6 million line of credit to NHA under which
$2.4 million had been drawn at December 31, 1994, and its partner has guaranteed
an equal line of credit under which $2.4 million had been drawn at December 31,
1994.
Dusseldorf Joint Venture. In 1992, Cousins entered into a joint venture
agreement for the development of a 133,000 rentable square foot office building
in Dusseldorf, Germany which is 34% preleased to IBM. Cousins' venture partners
are IBM and Multi Development Corporation International B.V. ("Multi"), a Dutch
real estate development company. In December 1993, the building was presold to
an affiliate of Deutsche Bank. CREC and Multi are jointly developing the
building, with CREC receiving fees of approximately $1.4 million ratably over
the development period of January 1994 through June 1995; through December 31,
1994 approximately $931,000 of fees have been received. In addition, the
Company will recognize 30% of the venture's profit or 50% of the venture's loss.
Due to the Company's continuing involvement in the project (see Notes 4 and 5),
all fees and profits are being deferred.
Kennesaw Crossings. The Company owns Kennesaw Crossings, a 116,000 square
foot shopping center in suburban Atlanta, Georgia. The center was constructed
in 1974 on 14 acres of land leased from an unrelated party through 2068. The
Company's net carrying value in Kennesaw Crossings as of December 31, 1994 was
$1.2 million.
Air Rights and Other Property Near the CNN Center. The Company owns a
leasehold interest in the air rights over the approximately 365,000 square foot
CNN Center parking facility in Atlanta, Georgia, adjoining the world
headquarters of Turner Broadcasting System, Inc. and Cable News Network. The
air rights are developable for additional parking or office use. The Company's
net carrying value of this property is $0. The Company also owns 0.8 acres of
additional land proximate to the CNN Center which is currently being used for
surface parking and has a net carrying value of $408,000.
SUPPLEMENTAL FINANCIAL AND LEASING INFORMATION
Depreciation and amortization expense include the following components ($
in thousands):
<TABLE>
<CAPTION>
1993 1994
Share of Share of
Consolidated Unconsolidated Total Consolidated Unconsolidated Total
------------ -------------- ------ ------------ -------------- -------
<S> <C> <C> <C> <C> <C> <C>
General and administrative $ 411 $ 205 $ 616 $ 444 $ 202 $ 646
Deferred financing costs 35 80 115 119(1) 80 199
Goodwill and related business
acquisition costs 873 503 1,376 441(2) 37 478
Real estate related:
Building (including tenant
first generation) 1,788 7,517 9,305 2,598 7,724 10,322
Tenant second generation 57 481 538 140 509 649
------ ------ ------- ------ ------ -------
$3,164 $8,786 $11,950 $3,742 $8,552 $12,294
====== ====== ======= ====== ====== =======
</TABLE>
(1) This amount relates to the First Union Tower line of credit which was
paid off in July 1994 and includes accelerated amortization of the
unamortized balance of $84 at the time of payoff.
(2) Of this amount, $211 relates to costs which were fully amortized during
1994.
Exclusive of new developments, the Company had the following capital
expenditures during 1994, including its share of unconsolidated joint ventures
($ in thousands):
<TABLE>
<CAPTION>
Office Retail Other Total
------ ------ ----- -----
<S> <C> <C> <C> <C>
Second generation related costs $381 $272 $ - $653
Building improvements 62 - - 62
Furniture, fixtures and equipment 31 - 102(1) 133
---- ---- ---- ----
Total $474 $272 $102 $848
==== ==== ==== ====
</TABLE>
(1) Excludes net expenditure of $522 on trade for a new airplane (50%
interest).
ITEM 3.LEGAL PROCEEDINGS
No material legal proceedings are presently pending by or against the
Company.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the Registrant's fiscal year ended December 31, 1994.
ITEM X.EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of the Registrant as of the date hereof are as
follows:
<TABLE>
<CAPTION>
Name Age Office Held
---- --- -----------
<S> <C> <C>
Thomas G. Cousins 63 Chairman of the Board of Directors,
President, and Chief Executive Officer
Vipin L. Patel 52 Senior Executive Vice President
George J. Berry 57 Senior Vice President
Tom G. Charlesworth 45 Senior Vice President, Secretary, and General
Counsel
Daniel M. DuPree 48 Senior Vice President and President of the Retail
Division (Cousins/New Market Development
Company, Inc.)
John L. Murphy 49 Senior Vice President - Marketing
W. James Overton 48 Senior Vice President - Development
William C. Smith 49 Senior Vice President - Management and
Acquisitions
Peter A. Tartikoff 53 Senior Vice President and Chief Financial
Officer
Roy I. Wood, Jr. 73 Senior Vice President - Management
(Retiring in April 1995)
</TABLE>
Relationships:
There are no family relationships among the Executive Officers or
Directors.
Term of Office:
The term of office for all officers expires at the annual directors'
meeting, but the Board has the power to remove any officer at any time.
Business Experience:
Mr. Cousins has been the Chief Executive Officer of the Company since its
inception.
Mr. Patel has been Senior Executive Vice President of the Company since
March 1991. He joined the Company in December 1982 and was Executive Vice
President from March 1983 through February 1991.
Mr. Berry has been Senior Vice President since joining the Company in
September 1990. Prior to that he was Commissioner of the State of Georgia's
Department of Industry, Trade and Tourism from 1983 to 1990.
Mr. Charlesworth joined the Company in October 1992 and became Senior Vice
President, Secretary, and General Counsel in November 1992. Prior to that he
worked for certain affiliates of Thomas G. Cousins as Chief Financial Officer
and Legal Counsel.
Mr. DuPree joined the Company in October 1992 and became Senior Vice
President in April 1993. Prior to that he was President of New Market
Companies, Inc. and affiliates since 1984.
Mr. Murphy has been Senior Vice President since joining the Company in
December 1987.
Mr. Overton has been Senior Vice President since joining the Company in
September 1989. Prior to that he was employed by Hardin Construction Group,
Inc. from 1972 to 1989, where he served as President from 1985 to 1989.
Mr. Smith has been Senior Vice President since joining the Company in
September 1993. Prior to that he was employed as the Chief Operating Officer
and Senior Vice President of The John Akridge Company, an office development
company headquartered in Washington, D.C. since 1978.
Mr. Tartikoff has been Senior Vice President and Chief Financial Officer of
the Company since February 1986.
Mr. Wood has been a Senior Vice President of the Company since September
1992 and a Senior Vice President of Cousins Real Estate Corporation since
January 1990. From January 1987 to November 1992, he was principally employed
as President of Cousins Management, Inc.
PART II
ITEM 5.MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The information concerning the market prices for the Registrant's common
stock and related stockholder matters appearing under the caption "Market and
Dividend Information" on page 40 of the Registrant's 1994 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 6.SELECTED FINANCIAL DATA
The information appearing under the caption "Five Year Summary of Selected
Financial Data" on page 35 of the Registrant's 1994 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations which appears on pages 36 through 39 of the Registrant's 1994 Annual
Report to Stockholders is incorporated herein by reference.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Notes to Consolidated Financial
Statements of the Registrant and Report of Independent Public Accountants which
appear on pages 19 through 35 of the Registrant's 1994 Annual Report to
Stockholders are incorporated herein by reference.
The information appearing under the caption "Selected Quarterly Financial
Information (Unaudited)" on page 41 of the Registrant's 1994 Annual Report to
Stockholders is incorporated herein by reference.
Other financial statements and financial statement schedules required under
Regulation S-X are filed pursuant to Item 14 of Part IV of this report.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL
DISCLOSURE
Not applicable.
PART III
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Directors and Executive Officers of the
Registrant that is required by this Item 10, except that which is presented in
Item X in Part I above, is included under the captions "Directors and Executive
Officers of the Company" on pages 2 and 3 of the Proxy Statement dated March 28,
1995 relating to the 1995 Annual Meeting of the Registrant's Stockholders, and
is incorporated herein by reference.
ITEM 11.EXECUTIVE COMPENSATION
The information appearing under the captions "Executive Compensation" on
pages 7 through 12 of the Proxy Statement dated March 28, 1995 relating to the
1995 Annual Meeting of the Registrant's Stockholders is incorporated herein by
reference.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information concerning security ownership of certain beneficial owners
and management required by this Item 12 is included under the captions
"Directors and Executive Officers of the Company" on pages 2 and 3 and
"Principal Stockholders" on pages 16 and 17 of the Proxy Statement dated March
28, 1995 relating to the 1995 Annual Meeting of the Registrant's Stockholders,
and is incorporated herein by reference.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information concerning certain transactions required by this Item 13 is
included under the caption "Certain Transactions" on pages 13 and 14 of the
Proxy Statement dated March 28, 1995 relating to the 1995 Annual Meeting of the
Registrant's Stockholders, and is incorporated herein by reference.
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
A. The following Consolidated Financial Statements of the Registrant,
together with the applicable Report of Independent Public
Accountants, are contained on pages 19 through 35 of the
Registrant's 1994 Annual Report to Stockholders and are incorporated
herein by reference:
<TABLE>
<CAPTION>
Page Number
in Annual Report
----------------
<S> <C>
Consolidated Balance Sheets - December 31, 1993
and 1994 19
Consolidated Statements of Income for the Years Ended
December 31, 1992, 1993 and 1994 20
Consolidated Statements of Stockholders' Investment for the
Years Ended December 31, 1992, 1993 and 1994 21
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1992, 1993 and 1994 22
Notes to Consolidated Financial Statements
December 31, 1992, 1993 and 1994 23
Report of Independent Public Accountants 35
</TABLE>
B. The following Combined Financial Statements, together with the
applicable Report of Independent Public Accountants, of Wildwood
Associates and Green Valley Associates II, joint ventures of the
Registrant meeting the criteria for significant subsidiaries under
the rules and regulations of the Securities and Exchange Commission,
are filed as a part of this report.
<TABLE>
<CAPTION>
Page Number
in Form l0-K
------------
<S> <C>
Report of Independent Public Accountants F-1
Combined Balance Sheets - December 31, 1993 and 1994 F-2
Combined Statements of Income for the Years
Ended December 31, 1992, 1993 and 1994 F-3
Combined Statements of Partners' Capital for the Years
Ended December 31, 1992, 1993 and 1994 F-4
Combined Statements of Cash Flows for the Years Ended
December 31, 1992, 1993 and 1994 F-5
Notes to Combined Financial Statements
December 31, 1992, 1993 and 1994 F-6 through
F-12
</TABLE>
ITEM 14.CONTINUED
C. The following Financial Statements, together with the applicable
Report of Independent Auditors, of CSC Associates, L.P., a joint
venture of the Registrant meeting the criteria for a significant
subsidiary under the rules and regulations of the Securities and
Exchange Commission, are filed as a part of this report.
<TABLE>
<CAPTION>
Page Number
in Form l0-K
------------
<S> <C>
Report of Independent Auditors G-1
Balance Sheets - December 31, 1993 and 1994 G-2
Statements of Operations for the Years Ended
December 31, 1992, 1993 and 1994 G-3
Statements of Partners' Capital for the Years Ended
December 31, 1992, 1993 and 1994 G-4
Statements of Cash Flows for the Years Ended
December 31, 1992, 1993 and 1994 G-5
Notes to Financial Statements G-6 through
December 31, 1992, 1993 and 1994 G-9
</TABLE>
D. The following Financial Statements, together with the applicable
Report of Independent Auditors, of Haywood Mall Associates, a joint
venture of the Registrant meeting the criteria for a significant
subsidiary under the rules and regulations of the Securities and
Exchange Commission, are filed as part of this report.
<TABLE>
<CAPTION>
Page Number
in Form l0-K
------------
<S> <C>
Report of Independent Auditors H-1
Balance Sheets - December 31, 1994 and 1993 H-2
Statements of Income for the Years Ended
December 31, 1994, 1993 and 1992 H-3
Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 H-4
Statements of Venturers' Equity for the Three Years
Ended December 31, 1994 H-5
Notes to Financial Statements H-6 through
December 31, 1994, 1993 and 1992 H-7
</TABLE>
2. Financial Statement Schedules
The following financial statement schedules, together with the
applicable report of independent public accountants are filed as a part
of this report.
<TABLE>
<CAPTION>
Page Number
in Form l0-K
------------
<S> <C> <C>
A. Cousins Properties Incorporated and Consolidated
Entities:
Report of Independent Public Accountants on SchedulesS-
1
III- Real Estate and Accumulated Depreciation -
December 31, 1994S-
2 through
S-5
B. Wildwood Associates and Green Valley Associates II:
III - Real Estate and Accumulated Depreciation -
December 31, 1994F-
13
C. CSC Associates, L.P.
III- Real Estate and Accumulated Depreciation -
December 31, 1994G-
10
D. Haywood Mall Associates
III- Real Estate and Accumulated Depreciation -
December 31, 1994H-
8
</TABLE>
NOTE: Other schedules are omitted because of the absence of conditions under
which they are required or because the required information is given in
the financial statements or notes thereto.
<PAGE>
ITEM 14.CONTINUED
3. Exhibits
3(a)(i) Articles of Incorporation of Registrant, as restated as of
April 29, 1993, filed as Exhibit 4(a) to the Registrant's Form
S-3 dated September 28, 1993, and incorporated herein by
reference.
3(b) By-laws of Registrant, as amended and restated as of November
30, 1989, as further amended by Stockholders on April 30, 1990,
and as further amended by the Stockholders on April 29, 1993,
filed as Exhibit 4(b) to the Registrant's Form S-3 dated
September 28, 1993, and incorporated herein by reference.
4(a) Dividend Reinvestment Plan as restated as of March 27, 1995,
filed in the Registrant's Form S-3 dated March 27, 1995, and
incorporated herein by reference.
10(a)(i) Cousins Properties Incorporated 1989 Stock Option Plan, as
amended on April 26, 1994, filed as Exhibit 99.1 to the
Registrant's Form S-8 dated December 8, 1994, and incorporated
herein by reference.
10(a)(ii)Cousins Real Estate Corporation Stock Appreciation Right Plan,
amended and restated as of March 15, 1993, filed as Exhibit
10(a)(ii) to the Registrant's Form 10-K for the year ended
December 31, 1992, and incorporated herein by reference.
10(a)(iii)Cousins Properties Incorporated Stock Appreciation Right Plan,
dated as of March 15, 1993, filed as Exhibit 10(a)(iii) to the
Registrant's Form 10-K for the year ended December 31, 1992,
and incorporated herein by reference.
10(a)(iv)Cousins Properties Incorporated 1994 Stock Bonus Plan as
effective November 22, 1994, filed as Exhibit 99.2 to the
Registrant's Form S-8 dated December 8, 1994, and incorporated
herein by reference.
10(b)(i) Cousins Properties Incorporated Profit Sharing Plan as
effective as of January 1, 1991, with Amendments Number One and
Two dated as of December 22, 1992 and January 1, 1994,
respectively.
10(b)(ii)Cousins Properties Incorporated Profit Sharing Trust Agreement
as effective as of January 1, 1991, filed as Exhibit 10(b)(ii)
to the Registrant's Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
10(d) Land lease (Kennesaw) dated December 17, 1969, and an amendment
thereto dated December 15, 1977, filed as Exhibit l0(d) to the
Registrant's Form 10-K for the year ended December 31, 1980,
and incorporated herein by reference.
<PAGE>
ITEM 14.CONTINUED
10(f) Cousins Properties Incorporated 1987 Restricted Stock Plan for
Outside Directors, filed as Exhibit A to the Registrant's Proxy
Statement dated March 27, 1987 relating to the 1987 Annual
Meeting of Registrant's Stockholders, and incorporated herein
by reference.
11 Schedule showing computations of weighted average number of
shares of common stock outstanding as used to compute primary
and fully diluted income per share for each of the five years
ended December 31, 1994.
13 Annual Report to Stockholders for the year ended December 31,
1994.
21 Subsidiaries of the Registrant.
23(a) Consent of Independent Public Accountants (Arthur Andersen
LLP).
23(b) Consent of Independent Auditors (Ernst & Young LLP).
27 Financial Data Schedule
(b)Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of the year
ended December 31, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Cousins Properties Incorporated
(Registrant)
Dated: March 24, 1995
BY: --------------------------------------------
Peter A. Tartikoff
Senior Vice President and Chief Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
Chairman of the Board, March 24, 1995
President, and Chief
Executive Officer.
--------------------------- Director
T. G. Cousins
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
Senior Vice President andMarch 24, 1995
--------------------------- Chief Financial Officer
Peter A. Tartikoff
ADDITIONAL DIRECTORS:
-------------------------- Director March 24, 1995
Richard W. Courts, II
-------------------------- Director March 24, 1995
Boone A. Knox
-------------------------- Director March 24, 1995
Richard E. Salomon
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To the Stockholders of Cousins Properties Incorporated:
We have audited in accordance with generally accepted auditing standards,
the financial statements included in the Cousins Properties Incorporated annual
report to stockholders incorporated by reference in this Form l0-K, and have
issued our report thereon dated February 24, 1995. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14, Part (a)2.A. is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February, 24, 1995
<PAGE>
SCHEDULE III
(Page 1 of 4)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
($ in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisitions December 31, 1994
------------------ ----------------- ---------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (3)
----------- ------------ ---- ------------ ------ --------- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
Wildwood -
Cobb Co., GA $ - $11,156 $ - $ 4,737 $ (8,888) $ 7,005 $ - $ 7,005
North Fulton Property -
Fulton Co., GA - 10,294 - 12,353 (15,788) 6,859 - 6,859
Midtown-Atlanta, GA 145 2,949 - 81 (73) 2,957 - 2,957
McMurray -
Cobb Co., GA. - 1,015 - 172 (923) 264 - 264
Presidential Market
Outparcels - Gwinnett
Co., GA - 2,939 - 582 (1,159) 2,362 - 2,362
Lawrenceville -
Gwinnett Co., GA - 5,543 - - 7 5,550 - 5,550
Presidential Market -
Phase II - Gwinnett
Co., GA - 2,170 - 48 18 2,236 - 2,236
Miscellaneous Investments -
Atlanta, GA - 120 - - - 120 - 120
------------------------------------------------------------------------------------
145 36,186 - 17,973 (26,806) 27,353 - 27,353
------------------------------------------------------------------------------------
Column F Column G Column H Column I
Life on
Which De-
preciation
Accumu- In 1994
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (3) tion Acquired Is Computed
----------- --------- --------- -------- -----------
<S> <C> <C> <C> <C>
Wildwood-Cobb Co., GA $ - - 1971-1982,1989 -
North Fulton Property -
Fulton Co., - - 1970-1985 -
Midtown - Atlanta, - - 1984 -
McMurray - Cobb Co., - - 1981 -
Presidential Market
Outparcels - Gwinnett
Co., GA - - 1993 -
Lawrenceville -
Gwinnett Co., - - 1994 -
Presidential Market -
Phase II - Gwinnett
Co., GA - - 1994 -
Miscellaneous Investments -
Atlanta, GA - 1972-1984 -
----
-
----
</TABLE>
<PAGE>
SCHEDULE III
(Page 2 of 4)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
($ in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisitions December 31, 1994
------------------ ----------------- ---------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (3)
----------- ------------ ---- ------------ ------ --------- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING PROPERTIES
First Union Tower -
Greensboro, N.C. $ - $ 1,394 $ - $ 29,083 $ 1,971 $ 1,399 $31,049 $ 32,448
Wildwood - 3301 Windy
Ridge-Cobb Co., GA - 20 - 8,829 1,519 1,237 9,131 10,368
Kennesaw -
Cobb Co., GA - - - 2,337 - - 2,337 2,337
Perimeter Expo -
Fulton Co., GA - 8,564 - 10,574 71 8,564 10,645 19,209
GA Highway 400
Stand Alone Retail Sites -
Fulton Co., GA - 4,559 - - - 4,559 - 4,559
North Point Market-Phase I
Fulton Co., GA - 7,932 - 15,607 394 7,932 16,001 23,933
Presidential Market-Phase I
Gwinnett Co., GA - 1,786 - 7,572 222 1,786 7,794 9,580
Norfolk Parking Agreement - 1,589 - - - 1,589 - 1,589
Miscellaneous - 398 145 77 (67) 408 145 553
--------------------------------------------------------------------------------
- 26,242 145 74,079 4,110 27,474 77,102 104,576
--------------------------------------------------------------------------------
Column F Column G Column H Column I
Life on
Which De-
preciation
Accumu- In 1994
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (3) tion Acquired Is Computed
----------- --------- --------- -------- -----------
<S> <C> <C> <C> <C>
First Union Tower -
Greensboro, N.C. $ 7,119 1988-1990 1987 40 Years
Wildwood - 3301 Windy
Ridge - Cobb Co., GA 2,854 1984 1984 30 Years
Kennesaw -
Cobb Co., GA 1,150 1974 1973 30 Years
Perimeter Expo -
Fulton Co., GA 405 1993 1993 30 Years
GA Highway 400
Stand Alone Retail Sites -
Fulton Co., GA 10 - 1970-1985 -
North Point Market-Phase I
Fulton Co., GA 447 1993-1994 1970-1985 30 Years
Presidential Market-Phase I
Gwinnett Co., GA 32 1993-1994 1993 30 Years
Norfolk Parking
Agreement - - 1994 -
Miscellaneous 95 - 1977-1984 Various
-------
12,112
-------
</TABLE>
<PAGE>
SCHEDULE III
(Page 3 of 4)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
($ in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisitions December 31, 1994
------------------ ----------------- ---------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (3)
----------- ------------ ---- ------------ ------ --------- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PROJECTS UNDER CONSTRUCTION
North Point Market-Phase II -
Fulton Co., GA $ - $ 567 $ - $ 832 $ 24 $ 567 $ 856 $ 1,423
Lawrenceville Market
Gwinnett Co., GA - 3,510 - 1,047 11 3,510 1,058 4,568
North Point Center
Fulton Co., GA - 441 - 101 1 441 102 543
Lovejoy Station -
Clayton Co., GA - 1,387 - 761 29 1,387 790 2,177
--------------------------------------------------------------------------------------
- 5,905 - 2,741 65 5,905 2,806 8,711
--------------------------------------------------------------------------------------
RESIDENTIAL LOTS UNDER DEVELOPMENT
Brown's Farm -
Cobb Co., GA - 1,473 - 1,845 (2,168) 1,150 - 1,150
Apalachee River Club
Gwinnett Co., GA - 1,820 - 2,023 (1,236) 2,607 - 2,607
Echo Mill
Cobb Co., GA 454 1,318 - 1,143 (880) 1,581 - 1,581
Barrett Downs
Forsyth Co., GA - 900 - 341 30 1,271 - 1,271
Bradshaw Farms
Cherokee Co., GA - 1,741 - 237 15 1,993 - 1,993
--------------------------------------------------------------------------------------
454 7,252 5,589 (4,239) 8,602 - 8,602
--------------------------------------------------------------------------------------
$599 $ 75,585 $145 $100,382 $(26,870) $69,334 $79,908 $149,242
======================================================================================
Column F Column G Column H Column I
Life on
Which De-
preciation
Accumu- In 1994
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (3) tion Acquired Is Computed
----------- --------- --------- -------- -----------
<S> <C> <C> <C> <C>
PROJECTS UNDER CONSTRUCTION
North Point Market-Phase II -
Fulton Co., GA $ - 1994 1970-1985 -
Lawrenceville Market
Gwinnett Co., GA - 1994 1994 -
North Point Center
Fulton Co., GA - 1994 1994 -
Lovejoy Station -
Clayton Co., - 1994 1994 -
-------
-
-------
RESIDENTIAL LOTS UNDER DEVELOPMENT
Brown's Farm -
Cobb Co., GA - 1993-1994 1993-1994 -
Apalachee River Club
Gwinnett Co., GA - 1994 1994 -
Echo Mill
Cobb Co., GA - 1994 1994 -
Barrett Downs
Forsyth Co., GA - 1994 1994 -
Bradshaw Farms
Cherokee Co., GA - 1994 1994 -
-------
-
-------
$12,112
=======
</TABLE>
<PAGE>
SCHEDULE III
(Page 4 of 4)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
($ in thousands)
NOTES:
(a) Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended December
31, 1994
are as follows:
<TABLE>
<CAPTION>
Real Estate Accmulated Depreciation
------------------------ -----------------------
1992 1993 1994 1992 1993 1994
------- ------- -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $69,338 $ 71,994 $108,252 $5,703 $7,448 $ 9,418
Additions during the period:
Improvements and other
capitalized costs 6,231 37,851 53,580 - - -
Provision for depreciation - - - 1,974 1,970 2,694
------ -------- ------- ------ ------ -------
6,231 37,851 53,580 1,974 1,970 2,694
------ -------- ------- ------ ------ -------
Deductions during the period:
Cost of real estate sold (3,332) (1,593) (12,590) - - -
Retirement of fully depreciated 243) - - (229) - -
(3,575) (1,593) (12,590) (229) - -
------- -------- -------- ------ ------ -------
Balance at close of period $71,994 $108,252 $149,242 $7,448 $9,418 $12,112
======= ======== ======== ====== ====== =======
</TABLE>
(b)Initial cost for Kennesaw was previously adjusted to reflect a write-
down of $1,430 to state the property at the then realizable value.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Wildwood Associates and Green Valley Associates II:
We have audited the accompanying combined balance sheets of WILDWOOD ASSOCIATES
(a Georgia general partnership) and GREEN VALLEY ASSOCIATES II (a North Carolina
general partnership) as of December 31, 1993 and 1994, and the related combined
statements of income, partners' capital and cash flows for each of the three
years in the period ended December 31, 1994. These financial statements are
the responsibility of the management of the partnerships. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wildwood Associates and Green
Valley Associates II as of December 31, 1993 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule listed in Item 14 is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 24, 1995
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
COMBINED BALANCE SHEETS
DECEMBER 31, 1993 AND 1994
($ in thousands)
<TABLE>
<CAPTION>
1993 1994
ASSETS
<S> <C> <C>
REAL ESTATE ASSETS:
Income producing properties, including land of $36,349
and $37,677 in 1993 and 1994, respectively (Note 7) $215,316 $217,869
Accumulated depreciation and amortization (32,932) (40,009)
-------- --------
182,384 177,860
Land committed to be contributed (Note 3) 20,440 20,440
Land and property predevelopment costs 13,958 12,429
-------- --------
Total real estate assets 216,782 210,729
-------- --------
CASH AND CASH EQUIVALENTS, at cost,
which approximates market 4 4
-------- --------
OTHER ASSETS:
Deferred expenses, net of accumulated amortization of
$4,706 and $6,065 in 1993 and 1994, respectively 5,617 4,892
Receivables (Note 6) 14,201 14,506
Allowance for possible losses (Note 1) (2,619) (2,616)
Furniture, fixtures and equipment, net of accumulated
depreciation of $1,000 and $1,198 in 1993 and 1994,
respectively 501 358
Other 48 2
-------- --------
17,748 17,142
-------- --------
$234,534 $227,875
======== ========
LIABILITIES AND PARTNERS' CAPITAL
NOTES PAYABLE (Note 7) $133,938 $132,608
RETAINAGE, ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES 5,156 2,983
-------- --------
Total liabilities 139,094 135,591
-------- --------
PARTNERS' CAPITAL (Notes 3 and 4):
International Business Machines Corporation 47,720 46,142
Cousins Properties Incorporated 47,720 46,142
-------- --------
Total partners' capital 95,440 92,284
-------- --------
$234,534 $227,875
======== ========
</TABLE>
The accompanying notes are an integral part of these combined balance sheets.
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
($ in thousands)
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C>
REVENUES:
Rental income and recovery of expenses
charged directly to specific tenants $34,181 $36,104 $36,196
Interest 25 24 27
Other 75 96 82
-------------------------
Total revenues 34,281 36,224 36,305
-------------------------
OPERATING EXPENSES:
Real estate taxes 2,089 2,785 2,516
Maintenance and repairs 2,171 2,142 1,991
Utilities 1,801 1,737 1,822
Management and personnel costs 1,665 1,805 1,794
Contract security 720 761 745
Grounds maintenance 672 632 588
Expenses charged directly to specific tenants 1,350 852 458
Insurance 98 99 100
-------------------------
Total operating expenses 10,566 10,813 10,014
-------------------------
OTHER EXPENSES:
Interest expense 11,998 11,606 11,790
Depreciation and amortization 8,278 8,336 8,648
Predevelopment, marketing and other expenses 435 489 342
Ground lease expense (Note 8) 322 322 322
Real estate taxes on undeveloped land (Note 4) 194 190 182
General and administrative expenses 184 146 163
-------------------------
Total other expenses 21,411 21,089 21,447
-------------------------
Total expenses 31,977 31,902 31,461
-------------------------
NET INCOME $ 2,304 $ 4,322 $ 4,844
=========================
</TABLE>
The accompanying notes are an integral part of these combined statements.
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
COMBINED STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
($ in thousands)
<TABLE>
<CAPTION>
International
Business Cousins
Machines Properties
Corporation Incorporated Total
------------ ------------ -----
<S> <C> <C> <C>
BALANCE, December 31, 1991 $48,407 $48,407 $96,814
Net income 1,152 1,152 2,304
-------------------------------
BALANCE, December 31, 1992 49,559 49,559 99,118
Distributions (4,000) (4,000) (8,000)
Net income 2,161 2,161 4,322
-------------------------------
BALANCE, December 31, 1993 47,720 47,720 95,440
Distributions (4,000) (4,000) (8,000)
Net income 2,422 2,422 4,844
-------------------------------
BALANCE, December 31, 1994 $46,142 $46,142 $92,284
===============================
</TABLE>
The accompanying notes are an integral part of these combined statements.
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
COMBINED STATEMENTS OF CASH FLOWS (NOTE 9)
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
($ in thousands)
<TABLE>
<CAPTION>
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,304 $ 4,322 $ 4,844
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,278 8,336 8,648
Rental revenue recognized on straight-line
basis in excess of rental revenue
specified in the lease agreements (3,278) (570) (349)
Change in tenant rental receivables 101 (106) 51
Change in accounts payable and accrued
liabilities related to operations 156 24 (195)
-------------------------
Net cash provided by operating activities 7,561 12,006 12,999
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisition and development expenditures (2,389) (3,581) (3,008)
Payment for deferred expenses; furniture, fixtures
and equipment; and other assets (939) (1,617) (661)
-------------------------
Net cash used in investing activities (3,328) (5,198) (3,669)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable (2,735) (413) (630)
Proceeds from line of credit 4,350 11,500 12,600
Repayments under line of credit (5,350) (10,400) (13,300)
Partnership distributions - (8,000) (8,000)
-------------------------
Net cash used in financing activities (3,735) (7,313) (9,330)
-------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 498 (505) -
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 11 509 4
-------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 509 $ 4 $ 4
=========================
</TABLE>
The accompanying notes are an integral part of these combined statements.
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1992, 1993 AND 1994
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION:
The Combined Financial Statements include the accounts of Wildwood
Associates ("WWA") and Green Valley Associates II ("GVA II"), both of which are
general partnerships. Cousins Properties Incorporated (together with its other
consolidated entities hereinafter referred to as "Cousins") and International
Business Machines Corporation ("IBM") each have a 50% general partnership
interest in both partnerships. The financial statements of the partnerships
have been combined because of the common ownership. The combined entities are
hereinafter referred to as the "Partnerships." All transactions between WWA and
GVA II have been eliminated in the Combined Financial Statements.
COST OF PROPERTY CONTRIBUTED BY COUSINS:
The cost of property contributed or committed to be contributed by Cousins
was recorded by WWA based upon the procedure described in Note 3. Such cost
was, in the opinion of the partners, at or below estimated fair market value at
the time of such contribution or commitment, but was in excess of Cousins'
historical cost basis.
COST CAPITALIZATION:
All costs related to planning, development and construction of buildings,
and expenses of buildings prior to the date they become operational for
financial statement purposes, are capitalized. Interest and real estate taxes
are also capitalized to property under development.
DEPRECIATION AND AMORTIZATION:
Buildings are depreciated over 25 to 40 years. Furniture, fixtures, and
equipment are depreciated over 5 years. Leasehold improvements and tenant
improvements are amortized over the life of the leases or useful life of the
assets, whichever is shorter. Deferred expenses - which include organizational
costs, certain marketing and leasing costs, and loan acquisition costs - are
amortized over the period of estimated benefit. The straight-line method is
used for all depreciation and amortization.
ALLOWANCE FOR POSSIBLE LOSSES:
The allowance for possible losses provides for potential writeoffs of
certain tenant related assets on WWA' s books. The allowance reflects
management's evaluation of the credit exposure to WWA based on a specific review
of existing tenants and the impact of current economic conditions on those
tenants.
ALLOCATION OF OPERATING EXPENSES:
In accordance with certain lease agreements, certain management and
maintenance costs incurred by WWA are allocated to individual buildings or
tenants, including buildings not owned by WWA.
INCOME TAXES:
No provision has been made for federal or state income taxes because each
partner's proportionate share of income or loss from the Partnerships is passed
through to be included on each partner's separate tax return.
CASH AND CASH EQUIVALENTS:
Cash and Cash Equivalents includes all cash and highly liquid money market
instruments. Highly liquid money market instruments include securities and
repurchase agreements with original maturities of three months or less, money
market mutual funds, and securities on which the interest rate is adjusted to
market rate at least every three months.
RENTAL INCOME:
In accordance with Statement of Financial Accounting Standards No. 13
("SFAS No. 13"), income on leases which include scheduled increases in rental
rates over the lease term is recognized on a straight-line basis.
2. FORMATION AND PURPOSE OF THE PARTNERSHIPS
WWA and GVA II were formed under the terms of partnership agreements
effective May 30, 1985 and March 31, 1988, respectively. The purpose of the
Partnerships is, among other things, to develop and operate the Summit Green
project located in Greensboro, North Carolina, and selected property within
Wildwood Office Park ("Wildwood"), located in Cobb County, Georgia.
Summit Green is a project consisting of one office building and a parts
distribution center totaling approximately 144,000 gross square feet ("GSF")
which was completed in 1986, and land for two additional office buildings not
yet constructed. The two additional buildings are planned to total approximately
240,000 GSF. The 21 acres in the project are leased from a third party by WWA
(see Note 8). GVA II subleases the undeveloped portion of this land from WWA.
Wildwood is an office park containing a total of approximately 289 acres,
of which approximately 73 acres are owned by WWA, and an estimated 31 acres are
committed to be contributed to WWA by Cousins (see Note 3). Cousins owns the
balance of the developable acreage in the park. At December 31, 1994, WWA's
income producing real estate assets in Wildwood consisted of: one office
building of 338,000 GSF which became operational January 1, 1986, one office
building of 684,000 GSF which became operational December 1, 1987 and one office
building of 757,000 GSF which became operational April 1, 1991 (including land
under such buildings totaling approximately 35 acres); land parcels totaling
approximately 13 acres leased to two banking facilities and four restaurants; a
2 acre site on which a child care facility is constructed, and a 1 acre
restaurant site. In addition, WWA's assets include 52 acres of land held for
future development, which is composed of a 5 acre site with approximately 58,000
square feet of office space which was purchased in 1986 for future development
(classified with income producing properties in the accompanying financial
statements), and 47 acres of other land to be developed (including additional
land committed to be contributed by Cousins) (see Note 3).
3. CONTRIBUTIONS TO THE PARTNERSHIPS
IBM and Cousins have each contributed or committed to contribute
$62,857,000 in cash or properties to the Partnerships. The value of property
contributed was agreed to by the partners at the time of formation of WWA.
The status of contributions at December 31, 1994, was as follows ($ in
thousands):
<TABLE>
<CAPTION>
IBM COUSINS TOTAL
------- ------- --------
<S> <C> <C> <C>
Cash contributed $46,590 $ 84 $ 46,674
Property contributed 16,267 42,817 59,084
Land committed to be contributed - 19,956 19,956
----------------------------
Total $62,857 $62,857 $125,714
============================
</TABLE>
WWA has elected not to take title to the remaining land committed to be
contributed by Cousins until such land is needed for development. However,
Cousins' capital account was previously credited with the amount originally
required to bring it equal to IBM's, and a like amount, plus preacquisition
costs paid by WWA, and condemnation proceeds net of condemnation restoration
costs, were set up as an asset entitled "Land Committed To Be Contributed."
This asset account subsequently has been reduced as land actually has been
contributed, or as land yet to be contributed became associated with a
particular building.
At December 31, 1994, Cousins was committed to contribute land on which an
additional 1,473,691 GSF are developable, provided that regardless of planned
use or density, 38,333 GSF shall be the minimum GSF attributed to each
developable acre contributed. Cousins has also agreed to contribute
infrastructure land in Wildwood, as defined, at no cost to WWA, in order to
provide the necessary land for development of roads and utilities. The ultimate
acreage remaining to be contributed by Cousins will depend upon the actual
density achieved, but would be approximately 31 acres if the density were
similar to that achieved on land contributed to date.
4. OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENTS
Net income or loss and net cash flow, as defined, shall be allocated to the
partners based on their percentage interests (50% each, subject to adjustment as
provided in the partnership agreements).
In the event of dissolution of the Partnerships, the assets will be
distributed as follows:
First, to repay all debts to third parties, including any secured
loans with the partners.
Second, to each partner until each capital account is reduced to zero.
The balance to each partner in accordance with its percentage interest.
WWA pays all real estate taxes on property owned by Cousins which is
subject to future contribution. Such real estate taxes were $194,000, $190,000
and $182,000 in 1992, 1993 and 1994, respectively, all of which were expensed.
5. FEES TO RELATED PARTIES
The Partnerships engaged Cousins to develop and lease the Partnerships'
property, and Cousins Management, Inc. ("CMI"), to manage the Partnerships'
property. In November 1992, Cousins purchased the assets of CMI and assumed all
responsibilities under the management agreement. Fees to Cousins and CMI
incurred by the Partnerships during 1992, 1993 and 1994 were as follows ($ in
thousands):
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Development and tenant
construction fees $ 63 $ 132 $ 57
Management fees 787 902 909
Leasing and procurement fees 331 523 189
------------------------
$1,181 $1,557 $1,155
========================
</TABLE>
6. RENTAL REVENUES
WWA leases property to the partners, as well as to unrelated third parties.
The leases with partners are at rates comparable to those quoted to third
parties. The leases typically contain escalation provisions and provisions
requiring tenants to pay a pro rata share of operating expenses. The leases
typically include renewal options and all are classified and accounted for as
operating leases.
At December 31, 1994, future minimum rentals to be received under existing
non-cancelable leases, including tenants' current pro rata share of operating
expenses are as follows ($ in thousands):
<TABLE>
<CAPTION>
Leases
Leases With
With Third
Partners Parties Total
-------- ------- -----
<S> <C> <C> <C>
1995 $ 21,560 $17,315 $ 38,875
1996 17,776 13,740 31,516
1997 16,216 13,589 29,805
1998 17,128 11,249 28,377
1999 16,983 6,652 23,635
Subsequent to 1999 33,662 35,455 69,117
-----------------------------
$123,325 $98,000 $221,325
=============================
</TABLE>
In the years ended December 31, 1992, 1993 and 1994, income recognized on a
straightline basis exceeded income which would have accrued in accordance with
the lease terms by $3,278,000, $570,000 and $349,000, respectively. At December
31, 1993 and 1994, receivables which related to the cumulative excess of
revenues recognized in accordance with SFAS No. 13 over revenues which accrued
in accordance with the actual lease agreements totaled $14,022,000, and
$14,371,000, respectively. Of the 1994 amount, 60% was related to leases with
IBM.
7. NOTES PAYABLE
At December 31, 1993 and 1994, notes payable consisted of the following ($
in thousands):
<TABLE>
<CAPTION>
Due In
---------------------------------------------------
Six
Year-End Years
Interest One Two Three Four Five or
Description Rate Balance Year Years Years Years Years Later
----------- -------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2300 Windy Ridge
Parkway 9.090% $ 81,822 $ 567 $ 621 $ 679 $ 744 $79,211 $ -
2500 Windy Ridge
Parkway 9.125% 31,140 397 30,743 - - - -
Summit Green 9.875% 10,646 99 109 121 10,317 - -
3200 Windy
Hill Road 6.200% 9,000 9,000 - - - - -
--------------------------------------------------------------
December
31, 1994 $132,608 $10,063 $31,473 $ 800 $11,061 $79,211 $ -
==============================================================
December
31, 1993 $133,938 $10,330 $ 1,063 $31,473 $ 800 $11,061 $79,211
==============================================================
</TABLE>
The 2300 Windy Ridge Parkway Building note is secured by the building and
two additional leased commercial properties in Wildwood, which properties had a
net carrying value of approximately $62,300,000 and $60,000,000 at December 31,
1993 and 1994, respectively. The note had been secured by a bank letter of
credit but the requirement was canceled on December 5, 1994. The note was
payable interest only through August 10, 1994, after which it amortizes in equal
monthly installments of $665,108 based on a 30 year amortization schedule, and
matures August 10, 1999.
The 2500 Windy Ridge Parkway Building note is secured by the building,
which had a net carrying value of approximately $21,300,000 and $20,700,000 at
December 31, 1993 and 1994, respectively. The note amortizes in equal monthly
installments of $268,499 based on a 30 year amortization schedule, and matures
June 28, 1996.
The Summit Green Building note is secured by a leasehold mortgage on the
building, which had a net carrying value of approximately $7,900,000 and
$7,600,000 at December 31, 1993 and 1994, respectively. The note amortizes in
equal monthly installments of $95,517 based on a 30 year amortization schedule,
and matures April 1, 1998.
The note related to the 3200 Windy Hill Road building is an unsecured line
of credit under which up to $50,000,000 may be drawn. As amended and restated
as of August 1, 1990, the line of credit matures September 1, 1995, but will
automatically be renewed from year to year unless the lender provides a notice
of non-renewal at least three months in advance of the annual renewal date. The
line generally prohibits new borrowings other than those under the line, or the
pledging of any assets not pledged as of August 1, 1990. The line bears a
floating interest rate equal to the daily federal funds rate plus 3/4%, and
there are no fees or compensating balance arrangements required under the line.
Cousins and IBM have each severally guaranteed one-half of the line of credit.
The Partnerships capitalize interest expense to property under development
as required by Statement of Financial Accounting Standards No. 34. In the year
ended December 31, 1993, the Partnerships capitalized interest totaling
$108,000. No interest was capitalized during the years ended December 31, 1992
and 1994.
The estimated fair value of the Partnership's $134 million and $133 million
of notes payable at December 31, 1993 and 1994 respectively, is $144 million and
$132 million, respectively, calculated by discounting future cash flows under
the notes payable at estimated rates at which similar notes would be made
currently.
8. GROUND LEASE
All of the land in the Summit Green development is subject to a non-
subordinated ground lease expiring October 31, 2084. Lease payments commenced
December 1, 1986, and are payable in monthly installments at an annual rate of
approximately $322,000 per year for the first ten years. The lease rate
escalates at ten year intervals commencing December 1, 1996, based on the
cumulative increase in the Consumer Price Index ("Index") over the prior ten
year period (subject to a 5% annual cap on the increase in such Index in any one
year); or, at lessor's option, at the end of any ten year interval the property
shall be appraised, and the lessee shall elect to either purchase the land for
the appraised value, or pay annually during the succeeding ten year period 10%
of the appraised fair market value of the land.
9. COMBINED STATEMENTS OF CASH FLOWS-SUPPLEMENTAL INFORMATION
Interest (net of amounts capitalized) was as follows ($ in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Interest paid $12,038 $11,608 $11,780
</TABLE>
Significant non-cash financing and investing activities included the
following:
In 1992, land parcels with an aggregate value of $4,583,000 were
transferred from Land Committed To Be Contributed to Land and Property
Predevelopment Costs.
In 1993, a land parcel with a value of $926,000 was transferred from Land
Committed To Be Contributed to Land and Property Predevelopment Costs. In
September 1993, restaurant site parcels under construction with an aggregate
value of $6,700,000 were transferred from Land and Property Predevelopment Costs
to Income Producing Properties. See Notes 2 and 3.
In 1994, the child care facility under construction with an aggregate value
of $1,600,000 was transferred from Land and Property Predevelopment Costs to
Income Producing Properties. See Notes 2 and 3.
<PAGE>
SCHEDULE III
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
($ in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisitions December 31, 1994
------------------ ----------------- ---------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (3)
----------- ------------ ---- ------------ ------ --------- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood Office Park -
Cobb Co., GA
2500 Windy Ridge $ 31,140 $ 4,414 $14,814 $ 9,010 $ 141 $ 4,414 $ 23,965 $ 28,379
2300 Windy Ridge 81,822 8,927 - 61,548 5,429 8,927 66,977 75,904
Parkside - 4,274 2,553 (1,019) (45) 3,136 2,627 5,763
3200 Windy Hill 9,000 10,503 - 65,993 5,470 10,503 71,463 81,966
Stand Alone Retail
Sites - 7,659 1,234 3,650 123 9,570 3,096 12,666
Land committed to
be contributed - 20,059 - - 381 20,440 - 20,440
Other land and
property - 11,430 - 3,457 (104) 11,645 3,138 14,783
---------------------------------------------------------------------------------------
121,962 67,266 18,601 142,639 11,395 68,635 171,266 239,901
---------------------------------------------------------------------------------------
Summit Green, Greensboro, NC:
Summit Green
Phase I 10,646 - - 10,077 259 - 10,336 10,336
Other property - - - 501 - - 501 501
---------------------------------------------------------------------------------------
10,646 - - 10,578 259 - 10,837 10,837
---------------------------------------------------------------------------------------
$132,608 $67,266 $18,601 $153,217 $11,654 $68,635 $182,103 $250,738
=======================================================================================
Column F Column G Column H Column I
Life on
Which De-
preciation
Accumu- In 1994
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (3) tion Acquired Is Computed
----------- --------- --------- -------- -----------
<S> <C> <C> <C> <C>
Wildwood Office Park -
Cobb Co., GA
2500 Windy Ridge $ 7,714 1985 1985 40 Years
2300 Windy Ridge 17,338 1986 1986 40 Years
Parkside 938 1980 1986 25 Years
3200 Windy Hill 10,198 1989 1989 40 Years
Stand Alone Retail
Sites 727 Various 1985-1992 Various
Land committed to
be contributed - - 1985-1986 -
Other land and
property 329 Various 1985-1986 Various
-------
37,244
-------
Summit Green, Greensboro, NC:
Summit Green Phase I 2,765 1986 1986 40 Years
Other property - 1986 1986 -
-------
2,765
-------
$40,009
=======
NOTE: (a) Reconciliations of total real estate carrying value and
accumulated depreciation for the three years ended December 31, 1994 are
as follows:
Real Estate Accumulated Depreciation
------------------------- ------------------------
1992 1993 1994 1992 1993 1994
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $244,212 $246,472 $249,714 $20,510 $26,039 $32,932
Additions during the period:
Improvements, and other
capitalized costs 3,747 3,242 1,058 - - -
Provisions for depreciation - - - 6,956 6,893 7,111
Deductions during the period:
Retirement of fully depreciated
assets and writeoffs (1,487) - (34) (1,427) - (34)
---------------------------- -------------------------
Balance at close of period $246,472 $249,714 $250,738 $26,039 $32,932 $40,009
============================ =========================
>/TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners of
CSC Associates, L.P. (A Limited Partnership)
We have audited the accompanying balance sheets of CSC Associates, L.P. (the
Partnership) as of December 31, 1993 and 1994, and the related statements of
operations, partners' capital, and cash flows for each of the three years in the
period ended December 31, 1994. Our audits also included the financial
statement schedules of CSC Associates, L.P. listed in the Index at Item 14(a).
These financial statements and schedules are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CSC Associates, L.P. as of
December 31, 1993 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The applicable schedule listed in Item 14 of
Cousins Properties Incorporated Form 10-K for 1994 is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements, and
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ERNST & YOUNG LLP
Atlanta, Georgia
February 3, 1995
<PAGE>
CSC ASSOCIATES, L.P.
BALANCE SHEETS
DECEMBER 31, 1993 AND 1994
($ in thousands)
</TABLE>
<TABLE>
<CAPTION>
ASSETS
1993 1994
-------- --------
<S> <C> <C>
REAL ESTATE ASSETS:
Building and improvements, including land and
land improvements of $22,818 in 1993 and 1994 $200,781 $203,275
Accumulated depreciation (9,176) (14,980)
--------------------
191,605 188,295
--------------------
CASH 965 1,395
--------------------
OTHER ASSETS:
Deferred expenses, net of accumulated amortization
of $1,663 and $2,715 in 1993 and 1994, respectively 8,612 8,170
Receivables (Note 3) 5,522 9,002
Furniture, fixtures and equipment, net of accumulated
depreciation of $502 and $866 in 1993 and 1994,
respectively 1,434 1,167
Other 37 28
--------------------
Total other assets 15,605 18,367
--------------------
$208,175 $208,057
====================
LIABILITIES AND PARTNERS' CAPITAL
NOTES PAYABLE (Note 4) $ - $ -
RETAINAGE, ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 2,322 3,345
--------------------
Total liabilities 2,322 3,345
--------------------
PARTNERS' CAPITAL (Note 1) 205,853 204,712
--------------------
$208,175 $208,057
====================
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE>
CSC ASSOCIATES, L.P.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
($ in thousands)
<TABLE>
<CAPTION>
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
REVENUES:
Rental income and recovery of expenses
charged directly to specific tenants $19,831 $27,810 $28,931
OPERATING EXPENSES:
Real estate taxes 1,468 3,673 3,493
Utilities 1,072 1,317 1,198
Management and personnel costs 1,013 1,311 1,313
Cleaning 763 1,042 1,041
Contract security 360 419 412
Repairs and maintenance 192 258 352
Elevator 11 193 274
Parking 144 186 206
Insurance 101 111 111
Grounds maintenance 41 90 105
-----------------------------
Total operating expenses 5,165 8,600 8,505
-----------------------------
OTHER EXPENSES:
Interest expense 12,318 12,317 -
Depreciation and amortization 4,448 7,182 7,222
Marketing and other expenses 315 174 154
General and administrative expenses 29 8 41
------------------------------
Total other expenses 17,110 19,681 7,417
-----------------------------
Total expenses 22,275 28,281 15,922
-----------------------------
CAPITALIZED OPERATIONS 1,392 - -
-----------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (1,052) (471) 13,009
EXTRAORDINARY ITEM (Note 4) - (723) -
-----------------------------
NET INCOME (LOSS) $(1,052) $(1,194) $13,009
=============================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CSC ASSOCIATES, L.P.
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
($ in thousands)
<TABLE>
<CAPTION>
<S> <C>
BALANCE, December 31, 1991 $ 36,652
Net loss (1,052)
--------
BALANCE, December 31, 1992 35,600
Net loss (1,194)
Capital contributions 173,347
Distributions (1,900)
--------
BALANCE, December 31, 1993 205,853
Net income 13,009
Distributions (14,150)
--------
BALANCE, December 31, 1994 $204,712
========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CSC ASSOCIATES, L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
($ in thousands)
(Note 6)
<TABLE>
<CAPTION>
1992 1993 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,052) $ (1,194) $13,009
Extraordinary item (Note 4) - 723 -
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 4,448 7,182 7,222
Rental revenue recognized on straight-line
basis in excess of rental revenue
specified in the lease agreements (2,047) (3,333) (3,156)
Change in other receivables and
other assets (210) 31 (315)
Change in accounts payable and accrued
liabilities related to operations 2,815 (1,016) 17
----------------------------
Net cash provided by operating activities 3,954 2,393 16,777
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to building and improvements (52,169) (7,242) (1,120)
Payments for deferred expenses (5,829) (1,732) (1,060)
Payments for furniture, fixtures and equipment (1,496) (388) (17)
----------------------------
Net cash used in investing activities (59,494) (9,362) (2,197)
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from construction loan 55,499 4,533 -
Repayment of construction loan - (168,046) -
Capital contributions - 173,347 -
Partnership distributions - (1,900) (14,150)
----------------------------
Net cash provided by (used in) financing activities 55,499 7,934 (14,150)
----------------------------
NET INCREASE (DECREASE) IN CASH (41) 965 430
CASH AT BEGINNING OF YEAR 41 - 965
----------------------------
CASH AT END OF YEAR $ - $ - $1,395
============================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CSC ASSOCIATES, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1992, 1993 AND 1994
1. FORMATION OF THE PARTNERSHIP AND TERMS OF THE PARTNERSHIP AGREEMENT
CSC Associates, L.P. ("CSC," or the "Partnership") was formed under the
terms of a Partnership Agreement effective September 29, 1989. C&S Premises,
Inc. ("Premises"), a wholly owned subsidiary of C&S/Sovran Corporation (the
"Holding Corporation"), and Cousins Properties Incorporated ("CPI"), each own a
1% general partnership and a 49% limited partnership interest in the
Partnership. The Holding Corporation became a wholly owned subsidiary of
NationsBank Corporation on December 31, 1991. The Partnership was formed for the
purpose of developing and owning a 1.4 million gross square foot office tower in
downtown Atlanta, Georgia (the "Building"), which is the Atlanta headquarters of
NationsBank Corporation.
The Partnership Agreement and related documents (the "Agreements") contain
among other provisions, the following:
a. CPI is the Managing Partner.
b. CPI is obligated to contribute a total of $18.2 million cash to the
Partnership, all of which has been contributed. Premises is obligated to
contribute land parcels to the Partnership having an aggregate agreed upon value
of $18.2 million, all of which has been contributed, which property value, in
the opinion of the partners, is equal to the estimated fair market value of the
land at the time of formation of the Partnership. In October 1993, the partners
each contributed an additional $86.7 million.
c. No interest is earned on partnership capital.
d. Net income or loss and cash distributions are allocated to the
partners based on their percentage interests (50% each), subject to a preference
to CPI. The CPI preference is $2.5 million, and accrues to CPI, with interest
at 9% to the extent unpaid, over the period February 1, 1992 through January 31,
1995. During the year ended December 31, 1994, CPI received distributions of
the preference and accrued interest of approximately $2.65 million. The
remaining preference amount of $71,000 was distributed to CPI in January 1995.
Amounts above the preference amount are allocated based on the partners'
percentage interests.
2. SIGNIFICANT ACCOUNTING POLICIES
CAPITALIZATION POLICIES
All costs related to planning, development and construction of the
Building, and expenditures for the Building prior to the date it became
operational for financial statement purposes, have been capitalized. Interest
expense, amortization of financing costs, and real estate taxes were also
capitalized while the Building was under development.
The accompanying financial statements reflect revenues and expenses
subsequent to February 1, 1992, the date the first lease in the building
commenced. For financial reporting purposes, the Building was considered
operational on June 1, 1992. Capitalized operations in the accompanying
statement of operations represent revenues of $4,849,000 and expenses of
$6,241,000 which were capitalized for the period February 1, 1992 through May
31, 1992.
DEPRECIATION AND AMORTIZATION
Depreciation of the Building commenced the date the Building became
operational for financial statement purposes and the Building is being
depreciated over 40 years. Leasehold and tenant improvements are amortized over
the life of the leases or useful life of the assets, whichever is shorter.
Furniture, fixtures, and equipment are depreciated over 5 years. Deferred
expenses which include organizational costs, certain marketing and leasing
costs, and loan acquisition costs are amortized over the period of estimated
benefit. The straight line method is used for all depreciation and
amortization.
INCOME TAXES
No provision has been made for federal or state income taxes because each
partner's proportionate share of income or loss from the Partnership will be
passed through to be included on each partner's separate tax return.
RENTAL INCOME
In accordance with Statement of Financial Accounting Standards No. 13
("SFAS No. 13"), income on leases which include increases in rental rates over
the lease term is recognized on a straight-line basis.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to current
presentation.
3. LEASES
The Partnership has leased office space to the Holding Corporation, as well
as to unrelated third parties. The lease with the Holding Corporation is at
rates comparable to those quoted to third parties. The leases contain
escalation provisions and provisions requiring tenants to pay a pro rata share
of operating expenses. The leases typically include renewal options and all are
classified and accounted for as operating leases.
At December 31, 1994, future minimum rentals to be received under existing
non-cancelable leases, including tenants' current pro rata share of operating
expenses, are as follows ($ in thousands):
<TABLE>
<CAPTION>
Lease Leases
With With
Holding Third
Corporation Parties Total
----------- -------- --------
<S> <C> <C> <C>
1995 $ 14,979 $ 13,990 $ 28,969
1996 15,091 15,205 30,296
1997 15,091 15,216 30,307
1998 15,091 15,506 30,597
1999 15,091 15,416 30,507
Subsequent to 1998 187,385 114,696 302,081
---------------------------------
$262,728 $190,029 $452,757
================================
</TABLE>
In the years ended December 31, 1993 and 1994, income recognized on a
straight-line basis exceeded income which would have accrued in accordance with
the lease terms by $3,333,000 and $3,156,000, respectively. At December 31,
1993 and 1994, receivables which related to the cumulative excess of revenues
recognized in accordance with SFAS No. 13 over revenues which accrued in
accordance with the actual lease agreements totaled $5,380,000, and $8,536,000,
respectively. Of that amount, 27% was related to leases with the Holding
Corporation.
4. NOTES PAYABLE
At December 31, 1992, notes payable consisted solely of the amount borrowed
under a Construction Loan Agreement with six banks under which a maximum of $210
million could have been drawn. On October 29, 1993, using capital contributions
made by each partner, the Partnership paid off this note payable, which had an
outstanding balance of $168 million. Approximately $723,000 of deferred loan
costs were written off due to the early extinguishment of this note payable and
is classified as an Extraordinary Item in the accompanying Statements of
Operations. The Construction Loan was payable interest only monthly and had a
floating interest rate equal to LIBOR plus the Applicable Spread Rate. The
Applicable Spread Rate was .85% through May 29, 1992, and .70% through December
31, 1992. The Applicable Spread Rate was reduced to .65% effective January 1,
1993 and .60% effective February 1, 1993 to maturity.
The Partnership entered into an interest rate swap agreement with an
affiliate of Premises which effectively fixed LIBOR at 8.45% through September
1993. The face amount of the swap increased over time in amounts corresponding
to the projected increases in the Construction Loan balance.
The Partnership has an unsecured $5 million line of credit provided by an
affiliate of Premises. Interest on the line is paid at a floating rate (6.3%
weighted average rate in December 1994), and interest only is payable through
July 31, 1995, at which time the entire outstanding balance is due. There were
no borrowings under the line as of December 31, 1993 and 1994.
For the year ended December 31, 1992, the Partnership capitalized interest
expense totaling $4,591,000, including $3,853,000 capitalized as part of
capitalized operations in 1992.
5. RELATED PARTIES
The Partnership engaged an affiliate of CPI, Cousins Real Estate
Corporation ("CREC"), to develop and lease the Building and engaged Cousins
Management, Inc. ("CMI") to manage the Building. In November 1992, CPI
purchased the assets of CMI and assumed all responsibilities under the
management agreement. During 1992, 1993 and 1994, fees to CREC, CMI, and CPI
incurred by the Partnership were as follows ($ in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
------ ------ -----
<S> <C> <C> <C>
Development and tenant construction fees $1,547 $ 58 $ 25
Leasing and procurement fees 1,145 684 230
Management fees 444 610 640
---------------------
$3,136 $1,352 $ 895
=====================
</TABLE>
6. STATEMENT OF CASH FLOWS - SIGNIFICANT NON-CASH
TRANSACTIONS
In February 1992, the office building under construction with a book value
of $167,511,000 was transferred to Buildings and Improvements. In 1993 and
1994, there were no significant non-cash transactions. Interest paid net of
amounts capitalized was $13,387,000 and $15,000 in 1993 and 1994, respectively.
SCHEDULE III
<PAGE>
CSC ASSOCIATES, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
($ in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisitions December 31, 1994
------------------ ----------------- ---------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (3)
----------- ------------ ---- ------------ ------ --------- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NationsBank Plaza
Atlanta, Georgia $ - $18,200 $ - $174,626 $10,449 $18,777 $184,498
$203,275
=====================================================================================
Column F Column G Column H Column I
Life on
Which De-
preciation
Accumu- In 1994
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (3) tion Acquired Is Computed
----------- --------- --------- -------- -----------
<S> <C> <C> <C> <C>
NationsBank Plaza $14,980 1990-1992 1990 40
Atlanta, Georgia =======
NOTE: (a) Reconciliations of total real estate carrying value and
accumulated depreciation for the three years ended December 31, 1994 are
as follows:
Real Estate Accumulated Depreciation
------------------------- ------------------------
1992 1993 1994 1992 1993 1994
------- ------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $164,997 $195,681 $200,781 $ - $3,463 $ 9,176
Improvements and other capitalized costs 30,684 5,100 2,494 - - -
Provision for depreciation - - - 3,463 5,713 5,804
-------------------------- -----------------------
Balance at close of period $195,681 $200,781 $203,275 $3,463 $9,176 $14,980
========================== =======================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
Haywood Mall Associates
(A South Carolina Joint Venture)
We have audited the accompanying balance sheets of Haywood Mall Associates (A
South Carolina Joint Venture) as of December 31, 1994 and 1993, and the related
statements of income, cash flows and venturers' equity for each of the three
years in the period ended December 31, 1994. Our audits also included the
financial statement schedules of Haywood Mall Associates listed in the Index at
Item 14(a). These financial statements and schedules are the responsibility of
the Management of the Joint Venture. Our responsibility is to express an opinion
on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Haywood Mall Associates (A
South Carolina Joint Venture) at December 31, 1994 and December 31, 1993, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles. Also, in our opinion the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
ERNST & YOUNG LLP
New York, NY
February 13, 1995
<PAGE>
HAYWOOD MALL ASSOCIATES
(A SOUTH CAROLINA JOINT VENTURE)
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
ASSETS
Shopping center:
Land $ 3,353,335 $ 3,353,335
Building and improvements 19,339,940 19,333,257
--------------------------
22,693,275 22,686,592
Less: accumulated depreciation 7,412,999 6,827,743
--------------------------
15,280,276 15,858,849
Construction-in-progress 11,862,132 16,747
Cash 1,630,497 1,574,870
Receivables (principally rentals) less
allowance of $249,291 and $268,090 1,988,716 1,739,790
Other assets 2,063,948 1,883,676
--------------------------
$32,825,569 $21,073,932
==========================
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $ - $19,528,977
Accounts payable and
accrued liabilities 956,553 898,031
Venturers' equity:
Cousins Properties, Inc. 15,891,995 323,462
Bellwether Properties of
South Carolina, L.P. 15,977,021 323,462
--------------------------
$32,825,569 $21,073,932
==========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HAYWOOD MALL ASSOCIATES
(A SOUTH CAROLINA JOINT VENTURE)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
---------- --------- ----------
<S> <C> <C> <C>
INCOME
Rental income:
Minimum $ 6,050,650 $6,064,131 $5,632,562
Overage 568,546 435,082 526,333
Real estate taxes 418,166 408,422 350,415
Utility charges and
other operating expense recoveries 3,287,614 3,044,326 2,995,808
Interest income 45,655 27,320 33,111
-----------------------------------
10,370,631 9,979,281 9,538,229
-----------------------------------
EXPENSES
Mortgage interest 598,389 1,842,232 1,865,533
Repairs and maintenance 882,580 916,474 887,892
Utilities 820,798 806,911 865,129
Managing agent's costs
(principally payroll) 840,149 817,137 779,267
Depreciation 597,732 598,780 608,865
Other 486,981 477,501 561,022
Real estate taxes 450,338 444,642 383,427
Leasehold rent 64,765 61,984 61,984
-----------------------------------
4,741,732 5,965,661 6,013,119
-----------------------------------
INCOME BEFORE
EXTRAORDINARY ITEMS 5,628,899 4,013,620 3,525,110
Extraordinary loss from
prepayment of mortgage debt 680,277 - -
-----------------------------------
NET INCOME $ 4,948,622 $4,013,620 $3,525,110
===================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HAYWOOD MALL ASSOCIATES
(A SOUTH CAROLINA JOINT VENTURE)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
---------- --------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 4,948,622 $4,013,620 $3,525,110
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 597,732 598,780 608,865
Amortization of deferred charges 363,230 338,069 340,192
Straight line adjustment for
step lease rentals (114,085) (255,254) (271,143)
Loss from prepayment of
mortgage debt 680,277 - -
Change in operating assets and
liabilities:
Decrease(increase) in receivables (134,841) 53,552 195,514
Increase in other assets (543,502) (138,880) (228,522)
(Decrease)/increase in accounts payable
and accrued liabilities 58,522 17,915 (25,011)
-----------------------------------
Net Cash Provided by
Operating Activities 5,855,955 4,627,802 4,145,005
-----------------------------------
INVESTING ACTIVITIES
Investments in shopping center (11,864,544) (27,247) (7,909)
-----------------------------------
Cash Used in Investing Activities (11,864,544) (27,247) (7,909)
FINANCING ACTIVITIES
Principal payments on mortgages (92,492) (260,913) (237,791)
Prepayment of mortgage debt (20,116,762) - -
Cash distributions (5,758,268) (4,105,000) (3,898,000)
Partners' capital contribution 32,031,738 - -
-----------------------------------
Cash Used in Financing Activities 6,064,216 (4,365,913) (4,135,791)
-----------------------------------
Increase in cash 55,627 234,642 1,305
Cash at beginning of year 1,574,870 1,340,228 1,338,923
-----------------------------------
Cash at end of year $ 1,630,497 $1,574,870 $1,340,228
===================================
SUPPLEMENTAL DISCLOSURE
Interest paid during the year $ 750,964 $1,844,258 $1,867,378
===================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HAYWOOD MALL ASSOCIATES
(A SOUTH CAROLINA JOINT VENTURE)
STATEMENTS OF VENTURERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
BELLWETHER COUSINS
PROPERTIES OF PROPERTIES,
SOUTH CAROLINA, L.P. INC. TOTAL
-------------------- ----------- -----------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 $ 555,597 $ 555,597 $ 1,111,194
Net income 1,762,555 1,762,555 3,525,110
Cash distributions (1,949,000) (1,949,000) (3,898,000)
----------------------------------------------
BALANCE AT DECEMBER 31, 1992 369,152 369,152 738,304
Net income 2,006,810 2,006,810 4,013,620
Cash distributions. (2,052,500) (2,052,500) (4,105,000)
----------------------------------------------
BALANCE AT DECEMBER 31, 1993 323,462 323,462 646,924
Net income 2,474,311 2,474,311 4,948,622
Cash distributions (2,879,134) (2,879,134) (5,758,268)
Capital contributions 16,058,382 15,973,356 32,031,738
----------------------------------------------
BALANCE AT DECEMBER 31, 1994 $15,977,021 $15,891,995 $31,869,016
==============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HAYWOOD MALL ASSOCIATES
(A SOUTH CAROLINA JOINT VENTURE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
NOTE A - JOINT VENTURE AGREEMENT
Haywood Mall Associates (the "Venture") is a South Carolina Joint Venture
between Bellwether Properties of South Carolina, L.P. ("BP"), a South Carolina
Limited Partnership, and Cousins Properties, Inc. (hereinafter collectively
referred to as the "Venturers") formed for the purpose of owning and operating a
regional shopping center in Greenville, South Carolina.
Under the terms of the joint venture agreement, the Venturers share equally in
the cash flow and the profits and losses of the Venture.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
Shopping Center: Land and building and improvements are stated at cost.
Depreciation of the building and improvements is computed on the straight-line
method over an estimated useful life of 35 years. The tenants' alterations are
amortized over the life of the related leases. Construction-in-progress at
December 31, 1994 represents costs incurred in connection with expanding the
shopping center which is anticipated to be completed during 1995.
Taxes: No provision has been made for income taxes, since any taxes which may
be payable are the liability of the individual Venturers.
NOTE C - MORTGAGES PAYABLE
The mortgage notes which bore interest at 9% and 10-l/2% and matured in 2000
were prepaid as of April 29, 1994. A prepayment fee equal to 3-1/2% of the
outstanding principal balance was paid in the amount of $680,277.
NOTE D - LEASES
The Venture has a land lease with a base period that extends through the year
2017. Future lease payments due under the lease, at December 31, 1994, are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 - $ 67,000
1996 - 67,000
1997 - 67,000
1998 - 67,000
1999 - 70,000
Thereafter - 1,346,000
</TABLE>
There are five 10-year renewal option periods available beginning in the year
2017. Annual payments during the renewal periods are based upon fair market
value as determined at each renewal date.
Space in the shopping center is leased to retail tenants. Leases generally
provide for minimum rentals plus overage rentals based on the tenants' sales
volume, and also require tenants to pay a portion of real estate taxes and other
property operating expenses. Lease periods generally range from 5 to 15 years
and contain various renewal options.
Future minimum rentals (excluding expenses billable to tenants) to be received
under leases, all of which are classified and accounted for as operating leases
at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Year Ending December 31:
Amount*
----------
<S> <C>
1995 $ 5,856,757
1996 5,661,736
1997 5,624,127
1998 5,464,690
1999 4,545,167
Thereafter 12,066,167
-----------
TOTAL $39,218,644
===========
</TABLE>
<PAGE>
SCHEDULE III
HAYWOOD MALL ASSOCIATES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
($ in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisitions December 31, 1994
------------------ ----------------- ---------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (3)
----------- ------------ ---- ------------ ------ --------- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Haywood Mall
Greenville, S.C. $ - $3,598 $9,630 $10,669 $0 $3,353 $20,544 $23,897
====================================================================================
Column F Column G Column H Column I
Life on
Which De-
preciation
Accumu- In 1994
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (3) tion Acquired Is Computed
----------- --------- --------- -------- -----------
<S> <C> <C> <C> <C>
Haywood Mall
Greenville, S.C. $7,722 1979-1980 1979 35(1)
====== 7(2)
NOTES:(1) Estimated useful life for Buildings and Improvements.
(2) Estimated useful life for Property Equipment.
(3) Reconciliations of total real estate carrying value and
accumulated depreciation for the three years ended December 31, 1994 are
as follows:
Real Estate Accumulated Depreciation
------------------------- ------------------------
1992 1993 1994 1992 1993 1994
------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $23,328 $23,291 $23,392 $5,704 $6,321 $7,017
Improvements and other capitalized costs (37) 101 505 - - -
Provision for depreciation - - - 617 696 705
------------------------- ----------------------
Balance at close of period $23,291 $23,392 $23,897 $6,321 $7,017 $7,722
========================= ======================
</TABLE>
EXHIBIT 11
<TABLE>
<CAPTION>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK USED TO COMPUTE
PRIMARY AND FULLY DILUTED INCOME PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1994
1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Shares outstanding at beginning of year 17,336,364 17,337,364 17,341,364 21,716,911 27,830,631
Weighted average number of shares
issued during the year 921 3,235 910,631 1,064,574 14,151
Weighted average number of share
acquired during the year - (195) (2,689) - (441)
Dilutive effect of outstanding options and
warrants (as determined by the application
of the Treasury Stock Method) - - - - -
--------------------------------------------------------------
Weighted average number of shares
outstanding, as adjusted 17,337,285 17,340,404 18,249,306 22,781,485 27,844,341
==============================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Income from operations before gain on sale
of investment properties (000's) $12,802 $ 9,108 $ 9,069 $10,038 $20,539
Gain on sale of investment properties, net of
applicable income tax provision (000's) 5,006 - 6,644 1,927 6,356
-----------------------------------------------------------
Net income (000's) $17,808 $ 9,108 $15,713 $11,965 $26,895
===========================================================
Income per share:
From operations before gain on
sale of investment properties $ .74 $ .53 $ .50 $ .44 $ .74
From gain on sale of investment properties,
net of applicable income tax provision .29 - .36 .09 .23
-----------------------------------------------------------
Net income per share $ 1.03 $ .53 $ .86 $ .53 $ .97
===========================================================
</TABLE>
53
[DESCRIPTION] ANNUAL REPORT DATED 12/31/94
<PAGE>
[CAPTION]
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31,
---------------
1993 1994
------- -------
<S>
ASSETS <C> <C>
PROPERTIES (Notes 4 and 8):
Operating properties, net of accumulated depreciation of
$9,418 in 1993 and $12,112 in 1994 $ 59,361 $ 92,464
Land held for investment or future development 23,877 27,353
Projects under construction 14,556 8,711
Residential lots under development 1,040 8,602
------------------
Total properties 98,834 137,130
------------------
CASH AND CASH EQUIVALENTS, at cost, which
approximates market 31,684 3,407
NOTES AND OTHER RECEIVABLES (Note 3) 69,455 52,571
INVESTMENT IN UNCONSOLIDATED JOINT
VENTURES (Notes 4 and 5) 115,252 130,838
OTHER ASSETS 4,477 6,871
------------------
TOTAL ASSETS $319,702 $330,817
==================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
NOTES PAYABLE (Note 4) $ 35,151 $ 41,799
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 9,925 11,144
MINORITY INTERESTS IN CONSOLIDATED ENTITIES 3,648 3,631
DEPOSITS AND DEFERRED INCOME 421 1,345
------------------
TOTAL LIABILITIES 49,145 57,919
------------------
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4)
STOCKHOLDERS' INVESTMENT (Note 6):
Common stock, $1 par value, authorized
50,000,000 shares; issued 27,830,631 in
1993 and 27,863,741 in 1994 27,831 27,864
Additional paid-in capital 147,018 147,495
Cumulative undistributed net income 95,708 97,539
------------------
TOTAL STOCKHOLDERS' INVESTMENT 270,557 272,898
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $319,702 $330,817
==================
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
-------------------------
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
REVENUES:
Rental property revenues (Note 10) $ 6,933 $ 6,687 $13,150
Development and construction fees 1,744 898 1,020
Management fees (Note 2) 498 1,999 2,061
Leasing and other fees 2,711 3,006 1,942
Residential lot and outparcel sales - - 6,132
Interest and other 6,989 6,456 6,801
-------------------------
18,875 19,046 31,106
-------------------------
INCOME FROM UNCONSOLIDATED JOINT VENTURES
(Note 5) 2,573 5,516 12,580
-------------------------
COSTS AND EXPENSES:
Rental property operating expenses 2,354 2,310 3,338
General and administrative expenses 4,585 7,336 7,538
Depreciation and amortization 2,345 3,164 3,742
Leasing and other commissions 404 193 82
Stock appreciation right expense (Note 6) 860 721 433
Residential lot and outparcel cost of sales - - 5,762
Interest expense (Note 4) 820 - 411
Property taxes on undeveloped land 488 537 1,085
Other 163 1,058 922
-------------------------
12,019 15,319 23,313
-------------------------
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND GAIN ON SALE OF INVESTMENT PROPERTIES 9,429 9,243 20,373
PROVISION (BENEFIT) FOR INCOME TAXES FROM
OPERATIONS (Note 7) 360 (795) (166)
-------------------------
INCOME BEFORE GAIN ON SALE OF INVESTMENT
PROPERTIES 9,069 10,038 20,539
-------------------------
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
APPLICABLE INCOME TAX PROVISION (Note 7) 6,644 1,927 6,356
-------------------------
NET INCOME $15,713 $11,965 $26,895
=========================
INCOME PER SHARE (Note 6)
From operations before gain on sale of
investment properties $ .50 $ .44 $ .74
From gain on sale of investment properties,
net of applicable income tax provision .36 .09 .23
-------------------------
NET INCOME PER SHARE $ .86 $ .53 $ .97
=========================
CASH DIVIDENDS DECLARED PER SHARE (Note 6) $ .62 $ .73 $ .90
=========================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
($ IN THOUSANDS)
ADDITIONAL CUMULATIVE
COMMON PAID-IN UNDISTRIBUTED TREASURY
STOCK CAPITAL NET INCOME STOCK TOTAL
--------- --------- ------------- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1991 $20,237 $ 7,421 $107,458 $(21,016) $114,100
Net income, 1992 - - 15,713 -
15,713
Cancellation of
treasury stock (2,896) (7,421) (10,699) 21,016 -
Common stock issued pursuant to:
4,375,000 share stock offering,
net of expenses 4,375 53,389 - - 57,764
Exercise of options 9 101 - - 110
Common stock acquired (8) (63) (29) - (100)
Dividends declared - - (11,496) - (11,496)
--------------------------------------------------
BALANCE, December 31, 1992 21,717 53,427 100,947 - 176,091
--------------------------------------------------
Net income, 1993 - - 11,965 - 11,965
Common stock issued pursuant to:
6,100,000 share stock offering,
net of expenses 6,100 93,401 - - 99,501
Exercise of options and
Director stock plan 14 190 - - 204
Dividends declared - - (17,204) - (17,204)
--------------------------------------------------
BALANCE, December 31, 1993 27,831 147,018 95,708 - 270,557
--------------------------------------------------
Net income, 1994 - - 26,895 - 26,895
Common stock issued pursuant to:
Exercise of options and
Director stock plan 12 169 - - 181
Compensation plan, in lieu
of cash 21 308 - - 329
Dividends declared - - (25,064) - (25,064)
--------------------------------------------------
BALANCE, December 31, 1994 $27,864 $147,495 $ 97,539 $ - $272,898
==================================================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 9)
($ IN THOUSANDS)
YEARS ENDED DECEMBER 31,
-------------------------
1992 1993 1994
------- -------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before gain on sale of investment properties $ 9,069 $ 10,038 $20,539
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization, net of minority
interests' share 2,345 3,164 3,662
Stock appreciation right expense 860 721 433
Cash charges to expense accrual for stock
appreciation rights (123) (147) (49)
Other non-cash charges (credits) - 310 (623)
Rental revenue recognized on straight-line
basis in excess of rental revenue specified
in lease agreements (804) (391) (209)
Deferred income received 284 297 1,131
Deferred income recognized (703) (252) (301)
Income from unconsolidated joint ventures (2,573) (5,516)(12,580)
Operating distributions from unconsolidated
joint ventures 2,370 7,507 15,665
Compensation paid in stock in lieu of cash - - 329
Residential lot and outparcel cost of sales - - 5,667
Changes in other operating assets and
liabilities:
Change in other receivables (237) 440 (606)
Change in accounts payable and accrued
liabilities 945 (1,068) 2,549
--------------------------
Net cash provided by operating activities 11,433 15,103 35,607
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gain on sale of investment properties, net of
applicable income tax provision 6,644 1,927 6,356
Adjustments to reconcile gain on sale of
investment properties to net cash provided
by sales activities:
Cost of sales 3,483 1,444 6,923
Deposits and deferred income received 358 - -
Deposits and deferred income recognized (9,118) (3,370) -
Property acquisition and development
expenditures (6,038) (31,358)(53,573)
Collection of notes receivable 294 386 45,011
Investment in notes receivable - (5,524)(28,039)
Investment in unconsolidated joint ventures,
including interest capitalized to equity
investments (725) (87,180)(20,844)
Change in other assets, net (95) (458) (2,601)
Principal payments received on government
agency securities 648 585 636
Non-operating distributions from unconsolidated
joint ventures - - 586
Non-property acquisitions, net of cash
acquired (Note 9) (2,003) - -
--------------------------
Net cash used in investing activities (6,552) (123,548)(45,545)
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit 788 3,499 73,287
Repayment of lines of credit (34,525) - (50,138)
Dividends paid (11,496) (17,204)(25,064)
Repayment of other notes payable (480) (43)(16,976)
Proceeds from other notes payable 8,616 22,306 475
Common stock sold, net of expenses 57,788 99,564 77
Investment in joint venture by minority interest - 974 -
Common stock acquired (100) - -
--------------------------
Net cash (used in) provided by financing activities 20,591 109,096 (18,339)
--------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 25,472 651 (28,277)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,561 31,033 31,684
--------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $31,033 $ 31,684 $ 3,407
==========================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1992, 1993 AND 1994
1.SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION AND PRESENTATION:
The Consolidated Financial Statements include the accounts of Cousins
Properties Incorporated ("Cousins") and its majority owned partnerships, as well
as Cousins Real Estate Corporation ("CREC") and its subsidiaries. All of the
entities included in the Consolidated Financial Statements are hereinafter
referred to collectively as the "Company." The Company's investments in its
non-majority owned joint ventures are recorded using the equity method of
accounting. However, the recognition of losses is limited to the amount of
direct or implied financial support. Information regarding the non-majority
owned joint ventures is included in Note 5.
Certain 1992 and 1993 amounts have been reclassified to conform with the 1994
presentation.
INCOME TAXES:
Since 1987, Cousins has elected to be taxed as a real estate investment trust
("REIT"). As a REIT, Cousins is not subject to corporate federal income taxes
to the extent that it distributes 100% of its taxable income (excluding CREC's
and its wholly owned subsidiaries' consolidated taxable income) to stockholders,
which is Cousins' current intention. The Company computes taxable income on a
basis different from that used for financial reporting purposes (see Note 7).
CREC and its wholly owned subsidiaries file a consolidated federal income tax
return.
DEPRECIATION AND AMORTIZATION:
Buildings are depreciated over 30 to 40 years. Furniture, fixtures and
equipment are depreciated over 5 to 15 years. Leasehold improvements and tenant
improvements are amortized over the life of the applicable leases or the
estimated useful life of the assets, whichever is shorter. Deferred expenses
are amortized over the period of estimated benefit. The straight-line method is
used for all depreciation and amortization.
FEE INCOME AND COST CAPITALIZATION:
Development, construction, management, and leasing fees received from
unconsolidated joint ventures are recognized as earned. A portion of these fees
may be capitalized by the joint ventures; however, the Company expenses salaries
and other direct costs related to this income. The Company classifies its share
of fee income earned by unconsolidated joint ventures as fee income rather than
joint venture income for those ventures where the related expense is borne
primarily by the Company rather than the venture.
Development, construction, and leasing fees received by CREC and its
subsidiaries from Cousins and Cousins' majority owned joint ventures are
eliminated in consolidation. Costs related to planning, development, leasing and
construction of properties (including related general and administrative
expenses) are capitalized. The table below shows the fees eliminated, the
internal costs capitalized related to these fees, and the additional internal
costs capitalized by CREC to its own residential developments ($ in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Fees eliminated in consolidation $94 $ 918 $3,019
Internal costs capitalized to projects
on which fees were eliminated $67 $1,107 $1,508
Internal costs capitalized to CREC
residential developments $ - $ 39 $ 292
</TABLE>
Interest, real estate taxes, and rental revenues and expenses of properties
prior to the date they become operational are also capitalized for financial
reporting purposes. Interest is also capitalized to investments accounted for
by the equity method when the investee has property under development with a
carrying value in excess of the investee's borrowings. Deferred leasing and
other capitalized costs associated with a particular property are classified
with Properties in the Consolidated Balance Sheets.
Management fees received from consolidated entities are shown as a reduction
in rental property operating expenses.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents includes cash and highly liquid money market
instruments. Highly liquid money market instruments include securities and
repurchase agreements with original maturities of three months or less, money
market mutual funds, and securities on which the interest or dividend rate is
adjusted to market rate at least every three months. At December 31, 1994, cash
and cash equivalents included $3 million from a property sale held in escrow
pending reinvestment in a tax free exchange.
RENTAL PROPERTY REVENUES:
In accordance with Statement of Financial Accounting Standards No. 13, income
on leases which include scheduled increases in rental rates over the lease term
is recognized on a straight-line basis.
2.RELATIONSHIP WITH MANAGEMENT ENTITY AND DEVELOPMENT AND LEASING ENTITY
DEVELOPMENT AND LEASING ACTIVITIES - CREC conducts development and leasing
activities for real estate projects. A wholly owned subsidiary of CREC,
Cousins/New Market Development Company, Inc. ("CNM"), develops retail power
centers for the Company. CREC also manages a joint venture property in which it
has an ownership interest. At December 31, 1992, 1993 and 1994 Cousins owned
100% of CREC's $5,025,000 par value 8% cumulative preferred stock and 100% of
CREC's nonvoting common stock, which common stock is entitled to 95% of any
dividends of CREC after preferred dividend requirements. Thomas G. Cousins,
Chairman of the Board of Cousins, owns 100% of the voting common stock of CREC,
which voting common stock is entitled to 5% of any dividends of CREC after
preferred dividend requirements. CREC is included in the Company's Consolidated
Financial Statements, but is taxed as a regular corporation. CREC has paid no
common dividends to date, and for financial reporting purposes, none of CREC's
income is attributable to Mr. Cousins' minority interest because the face amount
of CREC's preferred stock plus accumulated dividends thereon ($7,839,000 in
aggregate) exceed CREC's $2,627,680 of equity.
PROPERTY MANAGEMENT ACTIVITIES - Through November 19, 1992, Cousins
Management, Inc. ("CMI") conducted property management activities for Cousins
and certain of its joint ventures. A charitable foundation was the owner of
100% of the nonvoting common stock of CMI, which stock was entitled to 99% of
any dividends. Vipin L. Patel, Senior Executive Vice President of Cousins, was
the owner of 100% of the voting common stock of CMI, which stock was entitled to
1% of any dividends. CMI was an independent contractor and was not included in
the Company's Consolidated Financial Statements. CMI received $1,338,000 of
management fees from the Company and its joint ventures in 1992. All personnel
and other costs associated with generating these management fees were absorbed
by CMI.
On November 20, 1992, after receiving a ruling from the Internal Revenue
Service that Cousins' performance of the management activities which had been
conducted by CMI would not affect the status, as qualifying REIT income, of the
rents received from real property owned by Cousins or its joint ventures,
Cousins acquired the assets of CMI and began directly managing properties owned
by Cousins and certain of its joint ventures.
3.NOTES AND OTHER RECEIVABLES
At December 31, 1993 and 1994, notes and other receivables include the
following ($ in thousands):
<TABLE>
<CAPTION>
1993 1994
------- -------
<S> <C> <C>
Wildwood Training Facility Mortgage Note $ 18,208 $17,791
9.1% Mortgage Notes 39,927 -
650 Massachusetts Avenue Mortgage Notes - 28,039
Norfolk Hotel Associates Line of Credit 4,624 -
Miscellaneous Notes 80 36
Cumulative rental revenue recognized on a straight-
line basis in excess of revenue which accrued in
accordance with lease terms (see Note 1) 3,735 3,945
Other Receivables 1,612 2,127
Investment in Government Agency Securities 1,269 633
-----------------
Total Notes and Other Receivables $69,455 $52,571
=================
</TABLE>
WILDWOOD TRAINING FACILITY MORTGAGE NOTE - This note, which has a face amount
of $25.9 million and matures November 30, 2013, is collateralized by a building
located on land owned by the Company and leased to a limited partnership through
November 30, 2013, with no renewal option. The limited partnership also leased
certain equipment from the Company. The building was 100% leased to
International Business Machines Corporation ("IBM") through November 30, 1993.
In January 1993, the IBM lease was extended through November 30, 1998.
Concurrently with the IBM lease extension, the mortgage note and leases were
also modified, and the Company funded an additional $900,000 under the modified
note during 1993 for building improvements.
The IBM lease generated net cash flow of approximately $3.7 million annually
to the limited partnership through December 31, 1992, of which approximately
$3.6 million was paid to the Company as note and lease payments. Effective
January 1, 1993, the IBM lease generated net cash flow of approximately $2.4
million annually to the limited partnership, of which approximately $2.3 million
was paid to the Company as note and lease payments. Of these amounts, ground
lease payments of $304,000 per year have been treated as rental income in the
accompanying financial statements. The leased land is carried at $0 in the
accompanying financial statements.
For financial reporting purposes, the following accounting treatment was
applied. During the years ended on and before December 31, 1992, payments from
the limited partnership in excess of the ground lease payments were treated as
interest (at 12.7%), principal amortization and deferred income. Cumulative
deferred income of $3.6 million was applied against the note balance at December
31, 1992. During the years ended December 31, 1993 and 1994, the Company
recognized payments as principal amortization over the remaining ground lease
term and interest at 9.235% on the carrying value of the note.
IBM has an option to extend its Training Facility lease from December 1, 1998
through November 30, 2003 on terms that would generate net cash flow to the
limited partnership of approximately $3.1 million annually, of which
approximately $3.0 million would be paid to the Company as note and ground lease
payments.
9.1% MORTGAGE NOTES - These notes, which represented a portion of the sales
proceeds received by the Company on shopping centers it developed and then sold
in 1984, were repaid in full on June 30, 1994. The notes were collateralized by
the shopping center properties, guaranteed by the AT&T Master Pension Trust, and
payable interest only until maturity.
During 1992 and 1993, CREC purchased $8.1 million and $21.7 million
participations, respectively, in the 9.1% mortgage notes from Cousins. These
purchases resulted in Cousins' recognition of gains for tax purposes in 1992 and
1993 of $7.7 million and $20.0 million, respectively, including installment
gains in 1992 and 1993 of $7.2 million and $19.5 million, respectively, which
had been deferred for tax purposes in 1984. Cousins recognized additional
installment gains for tax purposes of approximately $5.0 million upon repayment
of the 9.1% mortgage notes in June 1994.
650 MASSACHUSETTS AVENUE MORTGAGE NOTES - On March 10, 1994, the Company
purchased from the Resolution Trust Corporation ("RTC") two notes aggregating
$37 million at a total cost of approximately $28 million. The two notes, which
resulted from the RTC's restructuring in December 1993 of a $53 million note,
are secured by a first deed of trust on an office building containing
approximately 250,000 square feet located at 650 Massachusetts Avenue, NW, in
Washington, D.C. The notes mature December 31, 2003, at which time their
unamortized balance will be a maximum of approximately $33 million. The notes
require minimum monthly payments totaling $2,818,000 annually, which through the
year 2000, are supported by a U.S. government agency lease. For financial
reporting purposes, the discounted notes are treated as non-amortizing notes,
with the monthly payments treated as interest income at a rate of approximately
10%.
NORFOLK HOTEL ASSOCIATES LINE OF CREDIT - This $4.75 million line of credit,
which was repaid in full on April 25, 1994, was due from Norfolk Hotel
Associates (see Note 5). The interest rate on the line was the daily Federal
funds rate plus 75 basis points with payments of interest only until maturity.
This line of credit had been used by Cousins for temporary investment of excess
cash. Norfolk Hotel Associates repaid the line of credit in full using its
Cousins guaranteed bank line of credit (see Note 4).
FAIR VALUE - The estimated fair value of the Company's $62.8 million and $45.9
million of notes receivable at December 31, 1993 and 1994, respectively, is
$63.8 million and $48.7 million, respectively, calculated by discounting future
cash flows from the notes receivable at the estimated rates at which similar
loans would be made currently.
4.NOTES PAYABLE, COMMITMENTS, AND CONTINGENT LIABILITIES
At December 31, 1993 and 1994, the composition and scheduled maturities of
notes payable were as follows ($ in thousands):
<TABLE>
<CAPTION>
DUE IN
------------------------------------------
YEAR-END ONE TWO THREE FOUR FIVE SIX YEARS
INTEREST RATE BALANCE YEAR YEARS YEARS YEARS YEARS OR LATER
------------- ------- ------- ------- ------ ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Line of Credit 6.3% $40,631 $ - $40,631 $ - $ - $ - $ -
Land Mortgages 2.0% 600 502 52 46 - - -
Unsecured Note 10.0% 298 34 35 35 36 37 121
Life Insurance Loans 8.0% 270 - - - - - 270
------------------------------------------------
December 31, 1994 $41,799 $ 536 $40,718 $ 81 $36 $37 $391
================================================
December 31, 1993 $35,151 $30,983 $ 81 $3,587 $81 $36 $383
================================================
</TABLE>
At December 31, 1993 and 1994, the carrying value of notes payable
approximates fair value. Interest expense as reported in the Consolidated
Statements of Income included herein is net of interest capitalized of $571,000,
$346,000 and $1,118,000 in 1992, 1993 and 1994, respectively.
The Line of Credit was entered into in July 1994. The line is secured by
Cousins' partnership interest in CSC Associates, L.P., which had a net carrying
value of $105,239,000 at December 31, 1994 (see Note 5). The line bears
interest at the daily Federal funds rate plus .85%, and is payable interest only
through September 30, 1996, at which time the outstanding balance is due. At
December 31, 1994, up to $100,000,000 may be borrowed under the line, which
amount will be reduced by any letters of credit outstanding under the line
($3,200,000 at December 31, 1994).
Certain property (carrying value of $991,000 and $2,563,000 in 1993 and 1994,
respectively), and cash surrender value of life insurance ($311,000 and $328,000
in 1993 and 1994, respectively), are pledged as collateral on the Land Mortgages
and Life Insurance Loans, respectively.
In addition to the above indebtedness, at December 31, 1994, Cousins had
future lease commitments under a land lease aggregating $7.5 million over its
remaining term of 74 years. Current annual lease payments are approximately
$63,000.
Cousins has guaranteed the following debt obligations related to its
unconsolidated joint ventures (see Note 5):
a. Wildwood Associates - One half of a $50 million bank line of credit, under
which $9,000,000 was drawn at December 31, 1994. The line of credit matures
September 1, 1995 but is renewable on an annual basis at the lender's
discretion.
b. Norfolk Hotel Associates - $2,600,000 bank line of credit under which
$2,405,000 was drawn at December 31, 1994. The line of credit matures October
31, 1995.
c. CSC Associates, L.P. - One half of a $5 million bank line of credit used
for working capital under which there was no outstanding balance at December 31,
1994.
d. Dusseldorf Joint Venture - A DEM 4,750,000 (approximately $3.2 million)
letter of credit guaranteeing certain obligations related to the Dusseldorf
project.
The Company has entered into construction and design contracts for real estate
projects, of which approximately $9.0 million remains committed at December 31,
1994.
5.INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
The following information summarizes financial data and principal activities
of unconsolidated joint ventures in which the Company had ownership interests ($
in thousands). Audited financial statements for Wildwood Associates, CSC
Associates, L.P., and Haywood Mall Associates are included in the Company's Form
10-K.
<TABLE>
<CAPTION>
COMPANY'S
TOTAL ASSETS TOTAL DEBT TOTAL EQUITY INVESTMENT
------------------ ------------------ ------------------ ------------------
1993 1994 1993 1994 1993 1994 1993 1994
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL POSITION:
Wildwood Associates $234,534 $ 227,875 $133,938 $132,608 $ 95,440 $ 92,284 $ 4,867 $ 3,289
CSC Associates, L.P. 208,175 208,057 - - 205,853 204,712 106,759 105,239
Ten Peachtree Place Associates 22,320 21,814 22,342 21,692 (201) (140) (66) (75)
Haywood Mall Associates 21,074 32,826 19,529 - 647 31,869 323 15,985
Spring/Haynes Associates 16,333 16,344 - - 16,267 16,331 1,571 1,603
Norfolk Hotel Associates 11,051 8,011 9,250 4,810 1,659 3,144 830 1,572
CC-JM II Associates - 7,351 - - - 5,281 - 2,711
Other 2,164 2,781 1,101 - 884 1,095 968 514
------------------ ------------------ ------------------ ------------------
$515,651 $525,059 $186,160 $159,110 $320,549 $354,576 $115,252 $ 30,838
================== ================== ================== ==================
/TABLE>
</TABLE>
<TABLE>
<CAPTION>
COMPANY'S SHARE
TOTAL REVENUES NET INCOME (LOSS) OF NET INCOME (LOSS
------------------------- ---------------------- ---------------------
1992 1993 1994 1992 1993 1994 1992 1993 1994
------- ------- ------- ----- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Wildwood Associates $3 4,281 $36,224 $36,305 $2,304 $4,322 $ 4,844 $1,152 $2,161 $ 2,422
CSC Associates, L.P. 19,831 27,810 28,931 (1,052) (1,194) 13,009 (526) 201 6,880
Ten Peachtree Place Associates 4,425 4,263 4,228 166 411 461 92 240 192
Haywood Mall Associates 9,538 9,979 10,371 3,525 4,014 4,949 1,763 2,007 2,474
Spring/Haynes Associates 32 57 63 (162) (214) (66) (81) (107) (33)
Norfolk Hotel Associates 10,698 12,680 1,029 214 1,445 664 107 723 332
CC-JM II Associates - - - - - - - - (1)
Other 1,293 1,784 999 132 582 627 66 291 314
------------------------- ----------------------- -----------------------
$80,098 $92,797 $81,926 $5,127 $9,366 $24,488 $2,573 $5,516 $12,580
========================= ======================= =======================
</TABLE>
<TABLE>
<CAPTION>
COMPANY'S SHARE OF
-------------------------------------------------
CASH FLOWS FROM CASH FLOWS FROM OPERATING
OPERATING ACTIVITIES OPERATING ACTIVITIES CASH DISTRIBUTIONS
------------------------- ------------------------ -----------------------
1992 1993 1994 1992 1993 1994 1992 1993 1994
------------------------- ------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATING CASH FLOWS:
Wildwood Associates $ 7,561 $12,006 $12,999 $ 3,780 $ 6,003 $ 6,500 $ - $4,000 $ 4,000
CSC Associates, L.P. 3,954 2,393 16,777 1,977 2,070 8,840 - 950 8,400
Ten Peachtree Place Associates 828 935 1,165 243 280 315 385 200 200
Haywood Mall Associates 4,146 4,628 5,856 2,073 2,314 2,928 1,949 2,053 2,879
Spring/Haynes Associates (101) (98) (83) (51) (49) (42) - - -
Norfolk Hotel Associates 1,136 33 470 568 17 235 - - -
CC-JM II Associates - - - - - - - - -
Other 192 843 619 96 422 310 36 304 186
------------------------- ------------------------ -----------------------
$17,716 $20,740 $37,803 $8,686 $11,057 $19,086 $2,370 $7,507 $15,665
========================= ======================== =======================
</TABLE>
WILDWOOD ASSOCIATES - Wildwood Associates was formed in 1985 between the
Company and IBM, each as 50% partners. The partnership owns three office
buildings totaling 1.6 million rentable square feet, other income producing
commercial properties, and additional developable land in Wildwood Office Park
("Wildwood") in Atlanta, Georgia. Wildwood is an office park containing a total
of approximately 289 acres, of which approximately 73 acres are owned by
Wildwood Associates and an estimated 31 acres are committed to be contributed to
Wildwood Associates by the Company; the Company owns the balance of the
developable acreage in the office park.
Wildwood Associates and a related partnership (included in the amounts for
Wildwood Associates above) also own one office building at Summit Green, an
office project situated on 21 acres of leased land in Greensboro, North
Carolina. Two additional buildings are planned for the project.
Through December 31, 1994, IBM had contributed $46.6 million in cash plus
properties having an agreed value of $16.3 million for its one-half interest in
Wildwood Associates. The Company has contributed $84,000 in cash plus properties
having an agreed value of $42.8 million for its one-half interest in the
partnership, and is obligated to contribute the aforesaid estimated 31 acres of
additional land with an agreed value of $20.0 million. The Company and IBM each
lease office space from the partnership at rates comparable to those charged to
third parties.
The Company's investment as recorded in the Consolidated Balance Sheets ($3.3
million at December 31, 1994) is based upon the Company's historical cost of the
properties at the time they were contributed or committed to be contributed to
the partnership, whereas its investment as recorded on Wildwood Associates'
books ($46.1 million at December 31, 1994) is based upon the agreed values at
the time the partnership was formed.
CSC ASSOCIATES, L.P. ("CSC") - CSC was formed in 1989 between the Company and
a wholly owned subsidiary of NationsBank Corporation, each as 50% partners. CSC
owns the 1.3 million rentable square foot NationsBank Plaza in Atlanta, Georgia.
The building became operational for financial reporting purposes in June 1992.
In October 1993, the partnership fully repaid all of its debt with equity
contributions of $86.7 million made by each partner.
CSC's net income or loss and cash distributions are allocated to the partners
based on their percentage interests (50% each), subject to a preference to
Cousins. The Cousins preference is $2.5 million (giving Cousins an additional
$1.25 million over what it would otherwise receive), and accrues to Cousins,
with interest at 9% to the extent unpaid, over the period February 1, 1992
through January 31, 1995. Following repayment of the partnership's debt in
October 1993, Cousins began recognizing its accrued preference currently in
income, which resulted in Cousins recognizing $874,000 and $451,000 in income
over what it would have otherwise recognized in the years ended December 31,
1993 and 1994, respectively. During the year ended December 31, 1994, Cousins
received distributions of the preference and accrued interest of approximately
$2.65 million. The remaining preference amount of $71,000 was distributed in
January 1995. Amounts above the preference amount are allocated based on the
partners' percentage interests.
TEN PEACHTREE PLACE ASSOCIATES ("TPPA") - TPPA is a general partnership
between the Company (50%) and a wholly owned subsidiary of The Coca-Cola Company
("Coca-Cola") (50%). The venture owns Ten Peachtree Place, a 259,000 rentable
square foot building located in midtown Atlanta, Georgia. The building is 100%
leased to Coca-Cola through November 30, 2001.
The TPPA partnership agreement generally provides that each of the partners is
entitled to receive 50% of cash flows from operating activities net of note
principal amortization through the term of the Coca-Cola lease, after which the
Company and its partner are entitled to receive 15% and 85% of the cash flows
(including any sales proceeds), respectively, until the two partners have
received a combined distribution of $15.3 million. Thereafter, each partner is
entitled to receive 50% of cash flows.
HAYWOOD MALL ASSOCIATES - Haywood Mall Associates is a joint venture between
the Company and an affiliate of Corporate Property Investors. The venture owns
Haywood Mall, a regional shopping center on 86 acres 5 miles southeast of
downtown Greenville, South Carolina. The mall is currently being expanded from
956,000 gross leaseable square feet ("GLA") (of which the venture's ownership is
approximately 272,000 GLA) to 1,256,000 GLA (of which the venture's ownership
will be approximately 329,000 GLA). The balance of the mall is owned by the
mall's major department stores (four prior to the expansion and five
afterwards).
During the year ended December 31, 1994, the Company contributed $16.1 million
to fund its share of the expansion and the prepayment of an existing 9.37% first
mortgage in May 1994. The venture intends to continue funding the expansion
with additional equity contributions of approximately $6 million from each
partner.
SPRING/HAYNES ASSOCIATES - This general partnership was formed in 1985 between
the Company and a wholly owned subsidiary of Coca-Cola, each as 50% general
partners, to jointly own and develop real estate. The Company contributed 40
acres of undeveloped land at Georgia Highway 400 and Haynes Bridge Road in north
central suburban Atlanta, Georgia. Coca-Cola contributed 11 acres of property
in midtown Atlanta. In September 1993, the undeveloped land at Georgia Highway
400 was distributed to the partners who concurrently recontributed certain acres
of the land into North Point Market Associates, L.P., a consolidated partnership
formed between the partners to own North Point Market (see Note 8). The
Company's remaining investment in Spring/Haynes Associates as recorded in the
Consolidated Balance Sheets ($1.6 million at December 31, 1994) is based upon
the Company's historical cost, whereas its investment as recorded on the
partnership's books ($8.2 million at December 31, 1994) is based upon the agreed
values of the properties at the time they were contributed to the partnership.
NORFOLK HOTEL ASSOCIATES ("NHA") - NHA is a partnership between the Company
and an affiliate of Odyssey Partners, L.P., each as 50% partners, which held a
mortgage note on and owned the land under the Omni International Hotel in
Norfolk, Virginia. In January 1992, NHA terminated the land lease and became
the owner of the hotel and a long-term parking agreement with an adjacent
building owner. In April 1993, the partnership sold the hotel, but retained its
interest in the parking agreement. The Company's share of the gain on this
transaction was approximately $.5 million and is included in Income From
Unconsolidated Joint Ventures in the accompanying Consolidated Statements of
Income. The partnership received a mortgage note for a portion of the sales
proceeds. In July 1994, NHA distributed to each partner a 50% interest in the
parking agreement held by NHA. The Company currently receives payments of
approximately $206,000 per year for its 50% interest in the agreement, and has
entered into an agreement to sell its interest for $2 million in July 1996,
which would result in a profit to the Company of approximately $411,000.
Additionally, in July 1994, each partner contributed $2 million to NHA to pay
down $4 million in debt.
CC-JM II ASSOCIATES - This joint venture was formed in 1994 between the
Company and an affiliate of Carr Realty Corporation, each as 50% general
partners, to develop and own a 224,000 square foot office building in suburban
Washington, D.C. The building will be 100% leased for 15 years to Booz-Allen &
Hamilton, an international consulting firm, as a part of its corporate
headquarters campus, and is scheduled to be completed in 1996 at a total cost of
approximately $32 million. Each partner contributed $2.7 million to the venture
during 1994.
OTHER - This category consists of several other joint ventures including:
COUSINS-HINES PARTNERSHIPS - Through the Cousins-Hines partnerships, CREC
effectively owns 9.8% of the One Ninety One Peachtree Tower in Atlanta, Georgia.
This 1.2 million rentable square foot office building, which opened in December
1990, was developed in partnership with the Hines Interests Limited Partnership
and the Dutch Institutional Holding Company. Because CREC's effective ownership
of this building is less than 20%, the Company accounts for its investment using
the cost method of accounting, and therefore the above tables do not include the
Company's share of One Ninety One Peachtree Tower.
TEMCO ASSOCIATES - Temco Associates was formed in 1991 as a partnership
between the Company (50%) and a subsidiary of Temple-Inland Inc. (50%). Temco
Associates has an option through March 2006, with no carrying costs, to acquire
approximately 35,000 acres in Paulding County, Georgia (northwest of Atlanta,
Georgia), of which approximately 13,000 acres would be a fee simple interest and
approximately 22,000 acres would be a timber rights interest only. The option
may be exercised in whole or in part over the option period, and the option
price of the fee simple land was $655 per acre at December 31, 1994, escalating
at 6% per year during the term of the option. During 1993 and 1994,
approximately 1,100 and 72 acres, respectively, of the option related to the fee
simple interest was exercised and simultaneously sold for gross profits of
$305,000 and $243,000, respectively.
DUSSELDORF JOINT VENTURE - In 1992, the Company entered into a joint venture
agreement for the development of a 133,000 rentable square foot office building
in Dusseldorf, Germany which is 34% preleased to IBM. Cousins' venture partners
are IBM and Multi Development Corporation International B.V. ("Multi"), a Dutch
real estate development company. In December 1993, the building was presold to
an affiliate of Deutsche Bank. CREC and Multi are jointly developing the
building, with CREC receiving fees of approximately $1.4 million ratably over
the development period of January 1994 through June 1995; through December 31,
1994 approximately $931,000 of fees have been received. In addition, the
Company will recognize 30% of the venture's profit or 50% of the venture's loss.
Due to the Company's continuing involvement in the project (see Note 4), all
fees and profits are being deferred until the project's completion and leaseup.
ADDITIONAL INFORMATION - At December 31, 1994, total assets of joint ventures
included in the above tables include $469 million of real estate properties
financed by $145 million of mortgage notes.
The Company received $4,342,000, $3,106,000 and $2,539,000 of development,
construction, leasing, and management fees from unconsolidated joint ventures in
1992, 1993 and 1994, respectively.
At December 31, 1993 and 1994, the composition and scheduled maturities of the
Company's 50% share of joint venture debt were as follows ($ in thousands):
<TABLE>
<CAPTION>
DUE IN
----------------------------------------------------
YEAR-END ONE TWO THREE FOUR FIVE SIX YEARS
INTEREST RATE BALANCE YEAR YEARS YEARS YEARS YEARS OR LATER
------------- ------- ------- ------- ------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate Mortgages
(non-recourse) 9.0% $72,650 $ 892 $16,124 $ 820 $5,986 $40,099 $ 8,729
Floating Rate Lines of Credit 6.2% 6,905 6,905 - - - - -
-------------------------------------------------------------
December 31, 1994 $79,555 $ 7,797 $16,124 $ 820 $5,986 $40,099 $ 8,729
=============================================================
December 31, 1993 $93,080 $10,809 $1,048 $16,296 $1,010 $ 6,193 $57,724
-------------------------------------------------------------
</TABLE>
The Company's share of interest expense on joint venture debt was $14,334,000,
$13,990,000 and $7,262,000 in 1992, 1993 and 1994, respectively.
6.STOCKHOLDERS' INVESTMENT, STOCK APPRECIATION RIGHT EXPENSE AND
PER SHARE DATA
COMMON STOCK ISSUANCE:
In October 1992 and October 1993, Cousins issued 3,975,000 and 5,800,000
shares of common stock, respectively, through public offerings at prices of
$14.00 and $17.25 per share, respectively. Concurrently with the public
offerings, an additional 400,000 and 300,000 shares, respectively, were
purchased at the public offering price by Thomas G. Cousins, Chairman of the
Board of Cousins.
OPTIONS:
The Company has a stock option plan for key employees. At December 31, 1994,
the Company had granted options to key employees to purchase 1,183,557 shares of
the Company's common stock (including 270,557 shares under a predecessor plan),
and was authorized under the plan to grant an additional 1,084,000 stock
options. The Company may incorporate a provision in each stock option agreement
to allow the option holder to surrender options and request a cash payment for
the difference between the fair market value of the shares at the date of
surrender and the option price. Separately from the stock option plan, the
Company has issued stock appreciation rights ("SARs") to certain employees.
In order to compensate the holders of unexercised stock options for decreases
in the underlying value of shares subject to the options resulting from certain
capital gain distributions to stockholders, the Company issued Deferred Payment
Agreements from 1988 through 1991 to holders of unexercised stock options at the
time of such distributions. These Deferred Payment Agreements provided for a
fixed cash payment to stock option holders upon exercise of the options in an
amount approximately equal to the amount of the capital gain distribution that
would have been payable on the shares subject to the options if the options had
been exercised prior to the record date for the distributions. Holders of SARs
were similarly compensated by a downward adjustment in the price of SARs held by
them.
Financial Accounting Standards Board pronouncements require that all stock
options which have a cash payment election option be accounted for as SARs.
Accordingly, included in the Consolidated Statements of Income under the heading
"stock appreciation right expense" are increases or reductions in accrued
compensation expense to reflect the issuance of new SARs or stock options with
cash payment provisions, vesting, changes in the market value of the common
stock from the dates of grant, and expirations of non-vested options or SARs of
terminated employees. In the first quarter of 1993, the cash payment provision
associated with 374,341 stock options was given up by certain of the option
holders, thereby reducing stock appreciation right expense for 1993 by
approximately $502,000.
The following is a summary of stock option activity under the stock option
plan (amounts in thousands, except per share amounts):
<TABLE>
<CAPTION>
NUMBER OF TOTAL OPTION
SHARES PRICE OPTION PRICE PER SHARE
---------- ---------------- -----------------------------------
1993 1994 1993 1994 1993 1994
---- ---- ------- ------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 658 911 $ 9,221 $13,503 $ 4.82 to $17.25 $ 4.82 TO $17.75
Terminated - - - $ - $ -
Exercised (11) (11) (51) (57) $ 4.82 $ 4.82
Granted 264 284 4,333 4,473 $16.125 to $17.75 $15.75
----------------------------
Outstanding, end of year 911 1,184 $13,503 $17,919 $ 4.82 to $17.75 $ 8.11 to $17.75
============================
Shares exercisable
at end of year 455 567
==========
</TABLE>
At December 31, 1993, the Company had 382,605 SARs outstanding (of which
142,015 were exercisable) at prices ranging from $9.87 per share to $16.875 per
share. At December 31, 1994, the Company had 369,215 SARs outstanding (of which
225,360 were exercisable) at prices ranging from $10.78 per share to $16.875 per
share.
At December 31, 1993 and 1994, the total amount accrued for stock options,
SARs, and Deferred Payment Agreements was $2,026,000 and $2,296,000,
respectively.
PER SHARE DATA:
Primary income per share is computed by dividing income by the weighted
average number of shares of common stock and dilutive common stock equivalents
outstanding (18,249,306, 22,781,485 and 27,844,341 in 1992, 1993 and 1994,
respectively). Fully diluted income per share does not differ materially from
primary income per share in 1992, 1993 and 1994.
OWNERSHIP LIMITATIONS:
In order to maintain Cousins' qualifications as a REIT, Cousins' Articles of
Incorporation include certain restrictions on the ownership of more than 3.9% of
the Company's common stock.
DISTRIBUTION OF REIT TAXABLE INCOME:
The following is a reconciliation between dividends declared and dividends
applied in 1992 and 1993 and estimated to be applied in 1994 to meet REIT
distribution requirements ($ in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
Dividends declared $11,496 $17,204 $25,064
That portion of dividends declared in current year, and paid in current
year, which was applied to the prior year distribution requirements (136) (665) (161)
That portion of dividends declared in subsequent year, and paid in
subsequent year, which will apply to current year 665 161 2,905
-------------------------
Dividends applied to meet current year REIT distribution requirements $12,025 $16,700 $27,808
=========================
</TABLE>
Dividends applied to meet REIT distribution requirements were equal to
Cousins' taxable income (see Note 7). Since electing to qualify as a REIT in
1987, Cousins has had no accumulated undistributed taxable income.
7.INCOME TAXES
In 1992, 1993 and 1994, because Cousins qualified as a REIT and distributed
all of its taxable income (see Note 6), it incurred no federal income tax
liability. The differences between taxable income as reported on Cousins' tax
return (actual 1992 and 1993 and estimated 1994) and Consolidated Net Income as
reported herein are as follows ($ in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
Consolidated net income $15,713 $11,965 $26,895
Consolidating adjustments 178 515 (1,875)
Less CREC net loss (income) (366) 1,413 394
Cousins net income for financial reporting purposes 15,525 13,893 25,414
Adjustments arising from:
Sales of investment properties 1,085 17,563 3,805
Income from unconsolidated joint ventures (principally depreciation,
revenue recognition, and operational timing differences (4,829) (7,529) (2,374)
Rental income recognition (726) (403) (127)
Interest income recognition - - 343
Wildwood Training Facility differences 765 (7,664) 175
Interest expense (320) 194 400
Compensation expense under stock option and SAR plans 397 138 92
Depreciation 37 59 175
Net operating loss generated (utilized) - 295 (295)
Other 91 154 200
-------------------------
Cousins taxable income $12,025 $16,700 $27,808
=========================
The consolidated provision (benefit) for income taxes is composed of the
following ($ in thousands):
1992 1993 1994
------- ------- -------
CREC and its wholly owned subsidiaries:
Currently payable (refundable):
Federal $ 542 $ (577) $ -
State (37) (157) -
--------------------------
505 (734) -
--------------------------
Adjustments arising from:
Income from unconsolidated joint ventures (153) 687 408
Operating loss carryforward - (628) (75)
Stock appreciation right expense (127) (166) (111)
Fee income - - (354)
Other - 16 (56)
--------------------------
(280) (91) (188)
--------------------------
CREC provision (benefit) for income taxes 225 (825) (188)
Cousins provision for state income taxes 205 30 22
Less provision applicable to gain on sale of
investment properties (70) - -
--------------------------
Consolidated provision (benefit) applicable to income
from operations $ 360 $ (795) $ (166)
==========================
</TABLE>
The Cousins provision for state income taxes in 1992 included $185,000 for
settlement of prior years' income taxes.
The net income tax provision (benefit) differs from the amount computed by
applying the statutory federal income tax rate to CREC's income (loss) before
taxes as follows ($ in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
------------ ------------ ------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Federal income tax provision (benefit) $201 34% $(761) 34% $(198) 34%
State income tax provision (benefit), net of
federal income tax effect 24 4 (90) 4 (23) 4
Other - - 26 (1) 33 (5)
-----------------------------------------
CREC provision (benefit) for income taxes 225 38% (825) 37% (188) 33%
=== === ===
Cousins provision for income taxes 205 30 22
Less provision applicable to gain on sale of
investment properties (70) - -
----- ---- -----
Consolidated provision (benefit) applicable to income
from operations $360 $(795) $(166)
==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
The components of CREC's net deferred tax liability are as follows ($ in
thousands):
1993 1994
------- -------
<S> <C> <C>
Deferred tax assets $ 1,109 $ 1,702
Deferred tax liabilities (2,622) (3,008)
-----------------
Net deferred tax liability $(1,513) $(1,306)
==================
The tax effect of significant temporary differences representing CREC's
deferred tax assets and liabilities are as follows ($ in thousands):
1993 1994
------- -------
Operating loss carryforward $ 628 $ 703
Income from unconsolidated joint ventures (2,365) (2,773)
Stock appreciation right expense 319 430
Fee income - 354
Other (95) (20)
------------------
$(1,513) $(1,306)
==================
</TABLE>
8.PROPERTY TRANSACTIONS
RETAIL PROPERTIES
In May 1994, North Point Market Phase I, a 313,000 square foot retail power
center in north central suburban Atlanta, became operational for financial
reporting purposes. Construction began on North Point Market Phase II (173,000
square feet, 57,000 square feet owned) in August 1994.
In December 1994, Presidential Market, a 320,000 square foot retail power
center (204,000 square feet owned) in northeast suburban Atlanta became
operational for financial reporting purposes. In November 1994, additional
adjacent acreage was purchased for Phase II of this center, with construction
expected to commence in 1995.
Additional construction started in 1994 included: Lovejoy Station, a 78,000
square foot retail strip center in south central suburban Atlanta, in September
1994; and Lawrenceville Market, a 519,000 square foot retail power center in
northeast suburban Atlanta, in December 1994. In February 1995, the Company
purchased sites for Colonial Plaza, a 543,000 square foot retail power center in
suburban north central Orlando, Florida, and for Mansell Crossing Phase II, a
100,000 square foot retail power center expansion adjacent to the Company's
other North Point properties.
OFFICE PROPERTIES
In December 1994, construction commenced on a 125,000 rentable square foot
building at North Point, adjacent to North Point Mall and the Company's retail
properties in north central suburban Atlanta. In September 1994, an
unconsolidated joint venture commenced construction on a 224,000 square foot
office building in suburban Washington, D.C. (see Note 5).
RESIDENTIAL LOTS
The Company is currently developing five residential communities in suburban
Atlanta, including four in which development commenced in 1994. These
developments currently include approximately 450 lots (with additional lots
developable on adjacent land under option), of which 116 lots were sold in 1994.
9. CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL INFORMATION
Interest (net of amounts capitalized) (see Note 4) and income taxes paid (net
of refunds) were as follows ($ in thousands):
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Interest paid $957 $ - $ 336
Income taxes paid (refunded), net of $565 and
$577 refunded in 1992 and 1994, respectively $163 $ 68 $(549)
</TABLE>
Significant non-cash financing and investing activities included the
following:
a. In May 1994, North Point Market Phase I (approximately $18,641,000) was
transferred from Projects Under Construction to Operating Properties.
b. In July 1994, Norfolk Hotel Associates distributed a 50% interest
(approximately $1,589,000) in a long-term parking agreement with an adjacent
building owner (see Note 5).
c. In August 1994, North Point Market Phase II (approximately $941,000) was
transferred from Land Held for Investment or Future Development to Projects
Under Construction.
d. In December 1994, Presidential Market (approximately $8,961,000) was
transferred from Projects Under Construction to Operating Properties.
e. In September 1993, the carrying value of the Company's land and
infrastructure costs for North Point Market (approximately $7,933,000) was
transferred from Land Held for Investment or Future Development to Projects
Under Construction. Included in the $7,933,000 of costs transferred to Projects
Under Construction was the Company's carrying value (approximately $495,000) of
a concurrent land distribution from Spring/Haynes Associates. Also
concurrently, an affiliate of Coca-Cola contributed the land it previously held
in Spring/Haynes Associates for a 17.7% minority interest in the North Point
Market project, which was recorded at a value of $2,658,000 (see Note 5).
f. In December 1993, the $4,709,000 carrying value of approximately 30 acres
of the Georgia Highway 400 land being ground leased to freestanding users was
transferred from Land Held For Investment or Future Development to Operating
Properties.
g. Effective June 30, 1992, the Company elected to cancel its outstanding
treasury stock. The carrying value of the 2,896,000 shares of treasury stock in
excess of $1 per share was charged to additional paid-in capital ($7,421,000)
and cumulative undistributed net income ($10,699,000). This transaction had no
effect on stockholders' investment.
h. In 1992, the Company purchased certain assets of CMI (see Note 2) and New
Market Companies, Inc. and affiliates. The assets were acquired subject to
certain liabilities as follows ($ in thousands):
<TABLE>
<CAPTION>
<S> <C>
Assets acquired (including cash of $609) $3,508
Liabilities 896
Cash paid for assets $2,612
</TABLE>
i. In December 1992, cumulative deferred income of $3.6 million was applied
against the Wildwood Training Facility Mortgage Note (see Note 3).
10. RENTAL PROPERTY REVENUES
The Company's leases typically contain escalation provisions and provisions
requiring tenants to pay a pro rata share of operating expenses. The leases
typically include renewal options and all are classified and accounted for as
operating leases.
At December 31, 1994, future minimum rentals to be received by consolidated
entities under existing non-cancelable leases, including tenants' current pro
rata share of operating expenses, are as follows ($ in thousands):
<TABLE>
<CAPTION>
Retail Office Total
------- ------- --------
<S> <C> <C> <C>
1995 $ 11,818 $ 6,510 $ 18,328
1996 11,964 6,952 18,916
1997 12,135 6,377 18,512
1998 12,207 6,117 18,324
1999 11,961 6,089 18,050
Subsequent to 1999 135,843 22,823 158,666
-----------------------------
$195,928 $54,868 $250,796
=============================
</TABLE>
For the years ended December 31, 1992, 1993 and 1994, income recognized on a
straight-line basis for financial reporting purposes exceeded income which
accrued in accordance with the lease terms by $804,000, $391,000, and $210,000,
respectively (see Notes 1 and 3). Of the future minimum office rentals, 86% are
attributable to the three major tenants of the Company's First Union Tower
project in Greensboro, North Carolina.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
<TABLE>
<CAPTION>
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
($ in thousands, except per share amounts)
1990 1991 1992 1993 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Rental property revenues $ 4,917 $ 6,728 $ 6,933 $ 6,687 $ 13,150
Fees 5,512 4,855 4,953 5,903 5,023
Residential lot and outparcel sales - - - - 6,132
Interest and other 7,794 7,127 6,989 6,456 6,801
------------------------------------------------
TOTAL REVENUES 18,223 18,710 18,875 19,046 31,106
------------------------------------------------
INCOME FROM UNCONSOLIDATED JOINT VENTURES 880 2,434 2,573 5,516 12,580
------------------------------------------------
Rental property operating expenses 1,890 2,456 2,354 2,310 3,338
Depreciation and amortization 1,911 2,236 2,345 3,164 3,742
Stock appreciation right expense (credit) (1,272) 378 860 721 433
Residential lot and outparcel cost of sales - - - - 5,762
Interest expense 1,376 1,149 820 - 411
General, administrative, and other expenses 4,743 5,573 5,640 9,124 9,627
------------------------------------------------
TOTAL EXPENSES 8,648 11,792 12,019 15,319 23,313
------------------------------------------------
PROVISION (BENEFIT) FOR INCOME TAXES
FROM OPERATIONS (2,347) 244 360 (795) (166)
GAIN ON SALE OF INVESTMENT PROPERTIES,
NET OF APPLICABLE INCOME TAX PROVISION 5,006 - 6,644 1,927 6,356
------------------------------------------------
NET INCOME $ 17,808 $ 9,108 $ 15,713 $ 11,965 $ 26,895
================================================
INCOME PER SHARE:
From operations before gain on
sale of investment properties $ .74 $ .53 $ .50 $ .44 $ .74
From gain on sale of investment proper-
ties, net of applicable tax provision .29 - .36 .09 .23
------------------------------------------------
Net income per share $ 1.03 $ .53 $ .86 $ .53 $ .97
================================================
CASH DIVIDENDS DECLARED PER SHARE $ .60 $ .60 $ .62 $ .73 $ .90
================================================
Total assets $168,358 $169,406 $195,791 $319,702 $330,817
Notes payable 34,285 34,680 9,079 35,151 41,799
Stockholders' investment 115,345 114,100 176,091 270,557 272,898
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE STOCKHOLDERS OF COUSINS PROPERTIES INCORPORATED:
We have audited the accompanying consolidated balance sheets of Cousins
Properties Incorporated (a Georgia corporation) and consolidated entities as of
December 31, 1993 and 1994, and the related consolidated statements of income,
stockholders' investment and cash flows for each of the three years in the
period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of CSC Associates, L.P. and Haywood Mall Associates which
statements combined reflect assets of 44% and 46% of the joint ventures totals
as of December 31, 1993 and 1994 and revenues of 37%, 41% and 48% of the 1992,
1993 and 1994 joint ventures totals, respectively. Those statements were
audited by other auditors whose reports have been furnished to us and our
opinion, insofar as it relates to the amounts included for those entities as of
December 31, 1993 and 1994 and for each of the three years in the period ended
December 31, 1994, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Cousins Properties Incorporated and consolidated
entities as of December 31, 1993 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 24, 1995
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1994
GENERAL. Historically, the Company's financial results have been
significantly affected by sale transactions and the fees generated by, and
start-up operations of, major real estate developments, which transactions and
developments do not necessarily recur. Accordingly, the Company's historical
financial statements may not be indicative of future operating results. For
information as to certain factors which may affect future income and cash flow,
see "Additional Prospective Information." The notes referenced in the
discussion below are the "Notes to Consolidated Financial Statements" included
in this annual report.
RENTAL PROPERTY REVENUES AND OPERATING EXPENSES. Rental property revenues
decreased from $6,933,000 in 1992 to $6,687,000 in 1993, and then increased to
$13,150,000 in 1994. The increase in 1994 was primarily due to rental property
revenues from Perimeter Expo ($3,022,000 increase), North Point Market Phase I
($1,958,000 increase), and Presidential Market ($117,000 increase). These
retail power centers became operational in December 1993, May 1994 and December
1994, respectively. Also, $400,000 of the increase in 1994 was due to revenue
from 13 acres of the Georgia Highway 400 land being ground leased to
freestanding users. Approximately 6 acres of leases began generating income
during the fourth quarter of 1993, with the remaining 7 acres of leases
beginning throughout 1994.
Rental property revenues were also affected by changes which occurred in the
3301 Windy Ridge Parkway Building, a 107,000 square foot Company wholly owned
building in Wildwood Office Park, which had rental property revenues of
$713,000, $0 and $876,000 in 1992, 1993 and 1994, respectively. This building
was unoccupied for the first three months of 1991, after which it was 80% leased
to IBM from April 1991 through June 1992. Subsequently, commencing January 1994
a single tenant leased the building for a term of ten years. The lease was
initially for 60% of the building, with options permitting the tenant to expand
its occupancy to the remainder of the building over the next several years; the
first such option for an additional 10% of the space was exercised in the fourth
quarter of 1994. Rental property revenues were also favorably impacted over the
three year period by First Union Tower, which had rental property revenues of
$5,302,000, $5,421,000 and $5,522,000 in 1992, 1993 and 1994, respectively.
Rental property operating expenses decreased from $2,354,000 in 1992 to
$2,310,000 in 1993 and then increased to $3,338,000 in 1994. The increase in
1994 was primarily related to the occupancy of the three retail power centers in
1994 and the decrease in 1993 was primarily related to the 3301 Windy Ridge
Parkway Building being unoccupied in 1993.
DEVELOPMENT AND CONSTRUCTION FEES. Development and construction fee income
decreased from $1,744,000 to $898,000 in 1993 and then increased to $1,020,000
in 1994. The increase in 1994 was primarily related to development fees
received from the Emory Conference Center, a third party development ($235,000
increase). This increase was partially offset by a decrease in office tenant
construction activity ($112,000 decrease). The decrease in 1993 was primarily
due to the number of office buildings under development which decreased from one
in 1992 to none in 1993.
Development fees recognized by CNM from third party retail developments was
$590,000 in both 1993 and 1994, partially offsetting the 1993 decrease in office
related fees.
MANAGEMENT FEES. Management fees increased from $498,000 in 1992 to
$1,999,000 and $2,061,000 in 1993 and 1994, respectively. Beginning in November
1992, additional management fees were received from projects previously managed
by CMI, amounting to $194,000 and $1,673,000 in 1992 and 1993, respectively,
(see Note 2). Management fees increased in 1994 primarily due to lease-up of
the projects from which management fees are received.
LEASING AND OTHER FEES AND LEASING AND OTHER COMMISSIONS EXPENSE. Leasing and
other fees increased from $2,711,000 in 1992 to $3,006,000 in 1993, and then
decreased to $1,942,000 in 1994. Both the decrease in 1994 and the increase in
1993 were primarily the result of acquiring the retail development business of
New Market Companies, Inc. ("NMC") in October 1992, which generated leasing and
other fees from third parties. Such fees increased from $49,000 in 1992 to
$1,598,000 in 1993, and then decreased to $796,000 in 1994 as third party work
was phased out and in-house development increased. The increase in 1993 was
partially offset by a decrease in office leasing fees of $1,255,000 due to no
new office buildings generating major tenant leasing fees in 1993. Office
leasing fees also decreased in 1994 by $262,000.
Changes in leasing commission expense were associated primarily with the
changes in leasing fee income recognized from One Ninety One Peachtree Tower and
retail leasing and other fees received from third parties.
RESIDENTIAL LOT AND OUTPARCEL SALES NET OF COST OF SALES. The Company
recognized $370,000 of income in 1994 from sales of residential lots and
outparcels, including $307,000 from the sale of 116 lots by CREC, and $63,000
from the sale of two outparcel sites by CNM.
INTEREST AND OTHER INCOME. Interest and other income decreased from
$6,989,000 in 1992 to $6,456,000 in 1993 and then increased to $6,801,000 in
1994. The increase in 1994 is primarily due to interest income of $2,285,000
being recognized from the purchase of the 650 Massachusetts Avenue Notes in
March 1994 (see Note 3). Additionally, the Company recognized a gain of
$623,000 on the sale of a non-real estate asset in November 1994. Offsetting
these increases in 1994 were decreases in interest income received from the 9.1%
Mortgage Notes ($1,820,000 decrease) and temporary investments ($511,000
decrease). The 9.1% Mortgage Notes were repaid in full on June 30, 1994 (see
Note 3). The decrease in temporary investment income was primarily due to the
Company's investment of its excess cash in real estate assets during 1994.
Between 1992 and 1993, the decrease was primarily due to a $1,088,000 reduction
in interest recognized on the Wildwood Training Facility Mortgage Note (see Note
3). The decrease in 1993 was partially offset by a $403,000 increase in
temporary investment income due to higher average cash balances.
INCOME FROM UNCONSOLIDATED JOINT VENTURES. (All amounts reflect the Company's
share of joint venture income.) Income from unconsolidated joint ventures
increased from $2,573,000 in 1992 to $5,516,000 and $12,580,000 in 1993 and
1994, respectively.
Income from CSC Associates, L.P. increased from a loss of $526,000 in 1992 to
income of $201,000 and $6,880,000 in 1993 and 1994, respectively. The Company's
share of both the 1993 and 1994 results benefited by $874,000 and $451,000 in
1993 and 1994, respectively, due to recognition by the Company of a partnership
income preference after the partnership's debt was repaid in October 1993 and
net income became positive (see Note 5). In addition, interest expense was
reduced by approximately $1.8 million and $12.3 million in 1993 and 1994,
respectively because of the partnership's debt prepayment (see Note 5).
Partially offsetting the improvement in 1993 was the benefit in 1992 of the
capitalization of $696,000 of startup losses, and the lack of approximately $.7
million of building depreciation until the building became operational in June
1992. Also mitigating the improvement in 1993 was the write-off of $361,000 of
unamortized loan closing costs upon prepayment of the partnership's debt in
October 1993.
Income from Wildwood Associates increased from $1,152,000 in 1992 to
$2,161,000 and $2,422,000 in 1993 and 1994, respectively, primarily because of
leaseup of the 3200 Windy Hill Road Building (increases of $326,000 and
$143,000 in 1993 and 1994, respectively). Results in 1994 were also favorably
impacted by increased rental income (approximately $139,000) from certain ground
lease sites which began generating revenue during the fourth quarter of 1993 and
second quarter of 1994. Additionally, 1993 was favorably impacted by a deferred
rent payment received on the 2500 Windy Ridge Parkway Building ($161,000) and
less interest expense than in 1992 and 1994 ($195,000 and $92,000,
respectively).
Income from Haywood Mall Associates increased from $1,763,000 in 1992 to
$2,007,000 and $2,474,000, in 1993 and 1994, respectively. The Company's share
of the 1994 results was favorably impacted by the venture's prepayment of its
outstanding debt through equity contributions of $10 million from each partner
on April 29, 1994. Results in 1994 reflect four months of interest expense as
compared to twelve months of interest expense in 1993 ($613,000 decrease).
Partially offsetting this favorable impact of reduced interest expense was a
$340,000 charge incurred related to the prepayment of the venture's mortgage
debt.
Income from Norfolk Hotel Associates increased from $107,000 in 1992 to
$723,000 in 1993, and then decreased to $332,000 in 1994. Income in 1993 was
favorably impacted by a $460,000 gain recognized upon the sale of the Omni
International Hotel in April 1993. Subsequent to the sale, the partnership
recognized more net income from the sales proceeds (including a purchase money
first mortgage note) than it was receiving from hotel operations prior to the
sale.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased from $4,585,000 in 1992 to $7,336,000 and $7,538,000 in 1993 and 1994,
respectively. The increase in 1994 was primarily because of personnel increases
related to the Company's expansion, offset by an increase in costs capitalized
to projects under development ($1,800,000 in 1994 versus $1,146,000 in 1993).
The 1993 increase was primarily due to the acquisition in the fourth quarter of
1992 of CMI ($1,029,000 increase over 1992) and the retail development business
of NMC ($1,922,000 increase over 1992 net of costs capitalized to projects under
construction).
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$2,345,000 in 1992 to $3,164,000 and $3,742,000 in 1993 and 1994, respectively.
The 1994 increase is due primarily to three retail power centers, Perimeter
Expo, North Point Market Phase I and Presidential Market, becoming operational
in December 1993, May 1994 and December 1994, respectively ($824,000 increase).
The increase in 1993 was due primarily to an increase of $763,000 in the
amortization of intangible assets acquired from NMC. These intangible assets
are being written off as the related income is recognized. This amortization
decreased in 1994 (approximately $439,000) which partially offset the above
increase in depreciation related to the retail power centers.
STOCK APPRECIATION RIGHT EXPENSE. Stock appreciation right expense decreased
from $860,000 in 1992 to $721,000 and $433,000 in 1993 and 1994, respectively.
This non-cash item is primarily related to the price per share of the common
stock, which increased over the three year period and was $14.50, $16.50 and
$17.375 per share at December 31, 1992, 1993 and 1994, respectively. The cash
payment provision associated with 374,341 stock options was given up by certain
of the option holders in 1993, thereby reducing stock appreciation right expense
by approximately $502,000 (see Note 6).
INTEREST EXPENSE. Interest expense decreased from $820,000 in 1992 to $0 in
1993, and then increased to $411,000 in 1994. All interest was capitalized in
1993. In 1994, interest expense before capitalization increased to $1,529,000
due to higher debt levels, but the increase was partially offset by increased
capitalization because of a higher level of projects under development.
Interest expense was lower in 1993 than in 1992 primarily because the First
Union Tower line of credit was paid down to $1,000 from October 1992 through
December 30, 1993 with the proceeds from a common stock offering. This reduced
interest expense on the line of credit from $1,250,000 in 1992 to $1,000 in
1993. Partially offsetting the decrease in interest expense in 1993 was the
amount of interest capitalized to projects under development (a reduction of
interest expense), which decreased from $571,000 in 1992 to $347,000 in 1993.
PROPERTY TAXES ON UNDEVELOPED LAND. Property taxes on undeveloped land
increased from $488,000 in 1992 to $537,000 and $1,085,000 in 1993 and 1994,
respectively. The increase in 1994 is due primarily to an increase in property
taxes of the Company's Georgia Highway 400 land ($579,000 increase of which
$150,000 related to a 1993 property tax reassessment).
OTHER EXPENSES. Other expenses increased from $163,000 in 1992 to $1,058,000
in 1993, and then decreased to $922,000 in 1994. Other expenses were negatively
impacted in 1993 because of a $310,000 charge made for the present value of an
indemnification an insurance company in rehabilitation had made to the Company
in 1974, but defaulted on in the third quarter of 1993. This obligation is due
in monthly installments of principal and interest of $3,208 through December
2009. Additionally, predevelopment expenses increased $556,000 in 1993 over
1992, and then decreased $244,000 in 1994 from the 1993 level.
PROVISION (BENEFIT) FOR INCOME TAXES FROM OPERATIONS. The provision (benefit)
for income taxes from operations decreased from a provision of $360,000 in 1992
to a benefit of $795,000 in 1993, which benefit decreased in 1994 to $166,000.
The benefit for income taxes from operations decreased from 1993 to 1994 due
primarily to a decrease in CREC and its subsidiaries' net loss before income
taxes from $2,238,000 in 1993 to $582,000 in 1994. The decrease in CREC and its
subsidiaries' net loss before income taxes was due to an increase in
intercompany development and leasing fees recognized, and decreased intangible
amortization. Intercompany fee income is eliminated in consolidation (see Note
1), but the tax effect is not. In 1993, CREC and its subsidiaries had a higher
net loss than in 1992 due to a reduction in CREC's fee income and higher
expenses resulting from the acquisition of the retail development business of
NMC.
GAIN ON SALE OF INVESTMENT PROPERTIES. Gain on sale of investment properties
was $6,644,000, $1,927,000 and $6,356,000 in 1992, 1993 and 1994, respectively.
The 1994 gain included the following: the June 1994 sale of the Company's 9
acre Peachtree Road property ($3.3 million gain), the August 1994 sale of the
10.8 acre site in North Point Market Phase II ($1.8 million gain), and the
November 1994 sale of a 21 acre parcel in West Cobb County, Georgia ($1.3
million gain). The 1993 gain and $6.0 million of the 1992 gain was from profits
recognized on the sale of 100 acres in 1988 at North Point; the Company
recognized profits on this sale based on percentage of completion accounting as
certain infrastructure work required by the sales contract was completed in 1992
and 1993. The balance of the 1992 gain was from the sale of a 27 acre parcel in
West Cobb County Georgia. Net proceeds received from land sales were
$1,084,000, $0 and $9,793,000 in 1992, 1993 and 1994, respectively.
ADDITIONAL PROSPECTIVE INFORMATION
The Company opened two retail power centers during 1994, North Point Market in
May 1994 and Presidential Market in December 1994. Cash flows from operating
activities from these two retail power centers will increase in 1995 as the
Company recognizes a full year of operations.
The Company's share of cash flows from operating activities from CSC
Associates, L.P. will increase in 1995 as leases at NationsBank Plaza executed
in 1994 impact operating results.
Development fees are expected to decrease in 1995 as the Company's involvement
with third party development decreases and its development capacity is shifted
almost entirely to Company owned projects. As the Company begins to increase
the level of work on internal projects, internal fees (which are eliminated in
consolidation) and capitalized development overhead are expected to increase in
1995.
Interest expense will increase in 1995 as projects that have been under
construction become operational and associated interest expense is no longer
capitalized.
In addition to being a 50% partner in Wildwood Associates, IBM is a major
tenant in Wildwood Office Park and Summit Green. IBM has undergone a downsizing
and is making a portion of its leased space available to new tenants. This has
provided Cousins with a marketing advantage by allowing cash flow to be
maintained, while making space available to prospective tenants for extended
leases on very competitive lease terms.
The following is a breakdown as of December 31, 1994, of the office space
leased by IBM (square feet in thousands):
<TABLE>
<CAPTION>
Square Feet Square Feet
Square Feet Primary Re-leased Currently Square Feet
Leased at Lease or Sub-leased to Available Currently
January 1, Expiration Others During for Re-leasing Retained
Building 1993 Date 1993 and 1994 or Sub-leasing by IBM
-------- ----------- ---------- ---------------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Wildwood 2300 315 December 2002* 166 149 -
Wildwood 2500 186 December 1995 144 42 -
Wildwood 3100 188 November 1998 - - 188
Wildwood 3200 446 December 2001 - 226 220
Summit Green 104 November 1996 35 54 15
----- --- --- ---
1,239 345 471 423
===== === === ===
</TABLE>
*12 square feet expired December 1994.
Major tenants in the re-leased space included Coca-Cola Enterprises (140,000
square feet) and Georgia Pacific (63,000 square feet). Letters of intent have
been signed for an additional 70,000 square feet of space, and the Company is
negotiating with two prospective tenants for an additional 140,000 square feet
of space.
LIQUIDITY AND CAPITAL RESOURCES
The Company's debt (including its pro rata share of unconsolidated joint
venture debt) was only 20% of total market capitalization at December 31, 1994,
giving the Company excellent financial flexibility.
The Company has development projects in various planning stages. The Company
currently intends to finance these projects, projects currently under
construction and capital contributions to various joint ventures discussed in
Notes 5 and 8 of "Notes to Consolidated Financial Statements", by using existing
lines of credit, (increasing those lines of credit as required), and long-term
non-recourse financing on the Company's unleveraged projects as market
conditions warrant.
EFFECTS OF INFLATION
The Company attempts to minimize the effect of inflation on income from
operating properties by the use of rents tied to tenants' sales, periodic fixed-
rent increases and increases based on cost-of-living adjustments, and/or pass-
through of operating cost increases to tenants.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
MARKET AND DIVIDEND INFORMATION
The high and low sales prices for the Company's common stock and cash
dividends declared per share were as follows:
<TABLE>
<CAPTION>
1993 QUARTERS 1994 QUARTERS
------------------------------------- -------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
------- ------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High $ 18 $18 $18 1/4 $18 3/8 $17 5/8 $18 $17 3/4 $17 3/8
Low 14 1/4 14 7/8 15 3/8 15 1/2 15 7/8 15 1/8 15 3/4 15 31/4
Dividends Declared .17 .17 .17 .22 .22 .22 .22 .24
Payment Date 2/22/93 5/28/93 8/24/93 12/21/93 2/22/94 5/27/94 8/27/94 12/21/94
</TABLE>
The Company's stock trades on the New York Stock Exchange (ticker symbol CUZ).
At December 31, 1994, there were 1,139 stockholders of record.
In 1993, the Company designated all dividends as capital gain dividends. In
1994, the Company designated as capital gain dividends 42.1818% of the dividend
paid February 22, 1994 and all of the dividends paid May 27, 1994. All other
dividends paid in 1994 were taxable as ordinary dividends. In addition, in 1993
and 1994 an amount calculated as 5.26% and 3.73% of total dividends,
respectively, was an "adjustment attributed to depreciation of tangible property
placed in service after 1986" for alternative minimum tax purposes. This amount
was passed through to stockholders and must be used as an item of adjustment in
determining each stockholder's alternative minimum taxable income.
ABOUT YOUR DIVIDENDS
TIMING OF DIVIDENDS - Cousins normally pays regular dividends four times each
year in February, May, August and December. However, the timing of the last
dividend from year to year may cause stockholders to receive as few as three and
as many as five regular dividends in any year. Depending upon taxable income
(see below), special dividends may also be declared in some years, and may be
payable at the same time or separately from regular dividends.
DIFFERENCES BETWEEN NET INCOME AND CASH DIVIDENDS DECLARED - Cousins' current
intention is to distribute 100% of its taxable income and thus incur no
corporate income taxes. However, Consolidated Net Income for financial
reporting purposes and Cash Dividends Declared will generally not be equal for
the following reasons:
a. There will continue to be considerable differences between Consolidated Net
Income as reported to stockholders (which includes the income of a consolidated
non-REIT entity that pays corporate income taxes) and Cousins' taxable income.
The differences are enumerated in Note 7 of "Notes to Consolidated Financial
Statements."
b. For purposes of meeting REIT distribution requirements, dividends may be
applied to the calendar year before or after the one in which they are declared.
The differences between dividends declared in the current year and dividends
applied to meet current year REIT distribution requirements are enumerated in
Note 6 of "Notes to Consolidated Financial Statements."
CAPITAL GAINS DIVIDENDS - In some years, as it did in 1992, 1993 and 1994,
Cousins will have taxable capital gains, and Cousins currently intends to
distribute 100% of such gains to stockholders. The Form 1099-DIV sent by
Cousins to stockholders of record each January shows total dividends paid
(including the capital gains dividends) as well as that which should be reported
as a capital gain. For individuals, the capital gain portion of the dividends
is subtracted from total dividends on Schedule B of IRS Form 1040 and reported
separately as a capital gain in accordance with the Schedule B instructions.
TAX PREFERENCE ITEMS AND "DIFFERENTLY TREATED ITEMS" - Internal Revenue Code
Section 59(d) requires that certain corporate tax preference items and
"differently treated items" be passed through to a REIT's stockholders and
treated as tax preference items and items of adjustment in determining the
stockholder's alternative minimum taxable income. The amount of this adjustment
is included under "Market and Dividend Information" in this report.
Tax preference items and adjustments are includable in a stockholder's income
only for purposes of computing the alternative minimum tax. These adjustments
will not affect a stockholder's tax filing unless that stockholder's alternative
minimum tax is higher than that stockholder's regular tax. Stockholders should
consult their tax advisors to determine if the adjustment reported by Cousins
affects their tax filing. Many stockholders will find that the adjustment
reported by Cousins will have no effect on their tax filing unless they have
other large sources of alternative minimum tax adjustments or tax preference
items.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
<TABLE>
<CAPTION>
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Selected quarterly information for the two years ended December 31, 1994 ($ in
thousands, except per share amounts):
QUARTERS
FIRST SECOND THIRD FOURTH
----- ------ ----- -------
<S> <C> <C> <C> <C>
1993:
Revenues $4,374 $4,637 $4,986 $ 5,049
Income from unconsolidated joint ventures 441 1,145 494 3,436
Gain on sale of investment properties, net of applicable income
tax provision 230 496 1,201 -
Net income 1,415 3,205 2,913 4,432
Net income per share .07 .15 .13 .17
1994:
REVENUES 5,507 6,751 8,147 10,701
INCOME FROM UNCONSOLIDATED JOINT VENTURES 3,241 2,774 3,335 3,230
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME
TAX PROVISION - 3,242 1,677 1,437
NET INCOME 4,798 8,056 6,134 7,907
NET INCOME PER SHARE .17 .29 .22 .28
</TABLE>
NDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
COUNSEL
King & Spalding
Troutman Sanders
Kilpatrick & Cody
Arrington & Hollowell, P.C.
TRANSFER AGENT AND REGISTRAR
First Union National Bank
Shareholder Services Group
Two First Union Center, M-12
Charlotte, North Carolina 28288-1154
Telephone Number:1-800-829-8432
FAX Number:1-704-374-6987
DIVIDEND REINVESTMENT PLAN
The Company offers its stockholders the opportunity to purchase additional
shares of common stock through the Dividend Reinvestment Plan. Beginning with
the May 1995 dividend, purchases will be at 95% of current market value.
Materials describing this Plan and an enrollment card are included with the
mailing of this Annual Report. A copy of the Plan prospectus may also be
obtained by calling or writing to the Company.
FORM 10-K AVAILABLE
The Company's annual report on Form 10-K and interim reports on Form 10-Q are
filed with the Securities and Exchange Commission. Copies are available without
exhibits free of charge to any person who is a record or beneficial owner of
common stock upon written request to the Company at 2500 Windy Ridge Parkway,
Suite 1600, Atlanta, Georgia 30339-5683.
EXHIBIT 21
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
SUBSIDIARIES OF THE REGISTRANT
DECEMBER 31, 1994
At December 31, 1994, the Registrant had no 100% owned subsidiaries.
At December 31, 1994, the financial statements of the following entities
were consolidated with those of the Registrant in the Consolidated Financial
Statements incorporated herein:
Cousins Real Estate Corporation and subsidiaries (100% of non-
voting common stock and 100% of preferred stock owned by
Registrant); subsidiaries include Cousins/New Market Development
Company, Inc. (100% owned by Cousins Real Estate Corporation)
North Greene Associates Limited Partnership (85% owned by
Registrant)
Rocky Creek Properties, Inc. & MT&E - Macon-Harris (75% owned by
Registrant)
North Point Market Associates, L.P. (82.3% owned by Registrant)
Perimeter Expo Associates, L.P. (90% owned by Registrant and 10%
owned by Cousins/New Market Development Company, Inc.)
At December 31, 1994, the Registrant and its consolidated entities had the
following significant unconsolidated subsidiaries which were not 100% owned:
CC-JM II Associates (50% owned by Registrant)
C-H Associates, Ltd. (49% owned by Cousins Real Estate Corporation)
C-H Leasing Associates (50% owned by Cousins Real Estate
Corporation)
C-H Management Associates (50% owned by Cousins Real Estate
Corporation)
CSC Associates, L.P. (50% owned by Registrant)
Green Valley Associates II (50% owned by Registrant)
Haywood Mall Associates (50% owned by Registrant)
Hickory Hollow Associates (50% owned by Cousins Real Estate
Corporation)
Norfolk Hotel Associates (50% owned by Registrant)
MC Dusseldorf Holding B.V. (10% voting interest owned by Registrant
and 40% voting interest owned by Cousins Real Estate Corporation)
Spring/Haynes Associates (50% owned by Registrant)
Wildwood Associates (50% owned by Registrant)
Ten Peachtree Place Associates (50% owned by Registrant)
Temco Associates (50% owned by Cousins Real Estate Corporation)
West Georgia Commons Associates (50% owned by Cousins Real Estate
Corporation)
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included or incorporated by reference in this Form 10-K, into
Cousins Properties Incorporated's previously filed Registration Statements File
No. 33-41927, 33-56787 and 33-60350.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 27, 1995
EXHIBIT 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement (Form S-3 No. 33-60350) pertaining to the Dividend
Reinvestment Plan of Cousins Properties Incorporated and in the related
Prospectus, in the Registration Statement (Form S-8 No. 33-56787) pertaining to
the 1994 Stock Bonus Plan and the 1989 Stock Option Plan of Cousins Properties
Incorporated and in the related Prospectus, and in the Registration Statement
(Form S-8 No. 33-41927) pertaining to the 1989 Stock Option Plan, 1987
Restricted Stock Plan for Outside Directors and Incentive Stock Option Plan of
Cousins Properties Incorporated and in the related Prospectus, of our report
dated February 3, 1995, with respect to the financial statements and schedules
of CSC Associates, L.P. and our report dated February 13, 1995, with respect to
the financial statements and schedules of Haywood Mall Associates, included in
the Form 10-K of Cousins Properties Incorporated for the year ended December 31,
1994.
ERNST & YOUNG LLP
Atlanta, Georgia
March 27, 1995
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
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<RECEIVABLES> 52,571
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<PP&E> 137,130
<DEPRECIATION> 12,112
<TOTAL-ASSETS> 330,817
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<BONDS> 41,799
<COMMON> 27,864
0
0
<OTHER-SE> 245,034
<TOTAL-LIABILITY-AND-EQUITY> 272,898
<SALES> 0
<TOTAL-REVENUES> 31,106
<CGS> 0
<TOTAL-COSTS> 23,313
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 411
<INCOME-PRETAX> 20,373
<INCOME-TAX> (166)
<INCOME-CONTINUING> 20,539
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<NET-INCOME> 26,895
<EPS-PRIMARY> .97
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