COUSINS PROPERTIES INC
10-K, 1997-03-25
REAL ESTATE INVESTMENT TRUSTS
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                       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, 1996      Commission file number 2-20111

                         COUSINS PROPERTIES INCORPORATED
                              A GEORGIA CORPORATION
                  I.R.S. EMPLOYER IDENTIFICATION NO. 58-0869052
                            2500 WINDY RIDGE PARKWAY
                             ATLANTA, GEORGIA 30339
                             TELEPHONE: 770-955-2200

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 X   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 11, 1997,  29,076,420 common shares were  outstanding;  and the
aggregate market value of the common shares of Cousins  Properties  Incorporated
held by nonaffiliates was $568,218,327.

               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, 1997
     Registrant's Annual Report to               Part II, Items 5, 6, 7 and 8
        Stockholders for the year
        ended December 31, 1996

<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,  and manages a portion
of the Company's real estate portfolio. Cousins MarketCenters, Inc. ("CMC") is a
subsidiary of CREC which  develops  retail  shopping  centers.  The  Registrant,
together with CREC,  CMC and CREC's other  consolidated  entities,  is hereafter
referred to as the "Company."
         Cousins is an Atlanta-based, fully integrated, self administered 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,  office,  medical office and residential
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.
         Unless  otherwise  indicated,  the notes  referenced in the  discussion
below are the  "Notes to  Consolidated  Financial  Statements"  included  in the
financial section of the Registrant's 1996 Annual Report to Stockholders.
         Brief Description of Company Investments
         Office.  As  of  March  15,  1997,  the  Company  owns,   directly  and
indirectly,  equity  interests  of at  least  50%  in  the  following  seventeen
commercial office buildings:
<TABLE>
<CAPTION>
                                                                                                    Company's
                                                  Metropolitan       Rentable              Ownership
 Property Description               Area           Square Feet       Interest
 --------------------               ----           -----------       --------
<S>                              <C>                  <C>              <C>
One Independence Center          Charlotte, NC        522,000          100%
First Union Tower                Greensboro, NC       319,000          100%
3100 Windy Hill Road             Atlanta              188,000          100% (a)
615 Peachtree Street             Atlanta              147,000          100%
200 North Point Center East      Atlanta              129,000          100%
100 North Point Center East      Atlanta              128,000          100%
333 North Point Center East      Atlanta              128,000          100% (b)
3301 Windy Ridge Parkway         Atlanta              106,000          100%
NationsBank Plaza                Atlanta            1,260,000           50%
3200 Windy Hill Road             Atlanta              685,000           50%
2300 Windy Ridge Parkway         Atlanta              634,000           50%
2500 Windy Ridge Parkway         Atlanta              313,000           50%
Ten Peachtree Place              Atlanta              259,000           50%
4200 Wildwood Parkway            Atlanta              250,000           50% (b)
John Marshall-II                 Washington, D.C.     224,000           50%
4300 Wildwood Parkway            Atlanta              150,000           50%
4100 Wildwood Parkway            Atlanta              100,000           50%
One Ninety One Peachtree         Atlanta            1,215,000          9.8%
                                                    ---------
                                                    6,757,000
                                                    =========
</TABLE>
         (a)  See Item 2. Properties footnote (7) where ownership is discussed.
         (b)  Under construction or in early stages of leaseup.

         The  weighted  average  leased  percentage  of these  office  buildings
(excluding  333 North Point Center East and 4200 Wildwood  Parkway both of which
are currently  under  construction  and One Ninety One Peachtree  Tower as it is
less than 50% owned by the Company) was  approximately  96% as of March 15, 1997
and the leases expire as follows:
<TABLE>
<CAPTION>
                                                                                                               2006
                                                                                                                 &
                     1997      1998      1999      2000      2001      2002      2003      2004      2005   Thereafter  Total
                     ----      ----      ----      ----      ----      ----      ----      ----      ----   ----------  -----


<S>               <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
OFFICE
Consolidated:
- -------------
Square Feet
  Expiring (d)       71,380   302,697    61,652   267,068   205,583    30,419    80,256    96,477         0    342,389  1,457,921(b)
% of Leased Space        5%       21%        4%       18%       14%        2%        6%        7%        0%        23%       100%
Annual Base
  Rent (a)          830,088 3,623,661   998,923 3,306,215 3,275,072   452,852   736,262 1,304,769         0  7,003,144 21,530,986
Annual Base Rent/
  Sq. Ft. (a)         11.63     11.97     16.20     12.38     15.93     14.89      9.17     13.52         0      20.45      14.77

Joint Venture:
- --------------
Square Feet
  Expiring (d)      113,117   287,584    47,514   162,293   450,062   289,180    70,726    65,019   353,539  1,675,539  3,514,573(c)
% of Leased Space        3%        8%        1%        5%       13%        8%        2%        2%       10%        48%       100%
Annual Base
  Rent (a)        1,342,829 4,073,307   497,185 3,138,232 5,994,914 5,105,217 1,082,084 1,352,068 6,845,063 38,970,677 68,401,576
Annual Base Rent/
  Sq. Ft. (a)         11.87     14.16     10.46     19.34     13.32     17.65     15.30     20.79     19.36      23.26      19.46

Total (including only Company's 50% share of Owned Properties):
- ----------------------------------------------------------------
Square Feet
  Expiring (d)      127,939   446,489    85,409   348,215   430,614   175,009   115,619   128,987   176,770  1,180,159  3,215,210
% of Leased Space        4%       14%        3%       11%       13%        5%        3%        4%        6%        37%       100%
Annual Base
  Rent (a)        1,501,503 5,660,315 1,247,516 4,875,331 6,272,529 3,005,461 1,277,304 1,980,803 3,422,532 26,488,483 55,731,777
Annual Base Rent/
  Sq. Ft. (a)         11.74     12.68     14.61     14.00     14.57     17.17     11.05     15.36     19.36      22.44      17.33
</TABLE>

(a)  Annual base rent excludes the operating  expense  reimbursement  portion of
     the rent  payable.  If the lease does not provide for pass  through of such
     operating  expense  reimbursements,  an estimate of  operating  expenses is
     deducted  from the rental  rate  shown.  The base  rental rate shown is the
     estimated rate in the year of expiration. Amounts disclosed are in dollars.

(b)  Rentable  square feet leased as of March 15,  1997 out of  1,539,000  total
     rentable square feet.

(c)  Rentable  square feet leased as of March 15,  1997 out of  3,625,000  total
     rentable square feet.

(d)  Except as  follows,  where a tenant  has the  option  to  cancel  its lease
     without penalty, the lease expiration date used in the table above reflects
     the cancellation  option date rather than the lease expiration date. One of
     the joint venture  leases  (50,242  square feet) has the right to terminate
     during 1998,  if notice is given by April 1, 1997. As of March 23, 1997, no
     notice had been received.

         The  weighted  average  remaining  lease term of these  fifteen  office
buildings was  approximately 8 years as of March 31, 1997. Most of the Company's
leases in these buildings  provide for pass through of operating  expenses,  and
base rents which escalate over time.
         Retail.  As of March 15, 1997, the Company's retail portfolio includes 
the following eleven properties:
<TABLE>
<CAPTION>
                                                      Rentable       Company's
                               Metropolitan        Square Feet       Ownership
   Property Description            Area          (Company Owned)      Interest
   --------------------        ------------      ---------------      --------
<S>                           <C>                  <C>                 <C>
Colonial Plaza MarketCenter    Orlando, FL           493,000           100% (a)
Greenbrier MarketCenter        Chesapeake, VA        479,000           100%
North Point MarketCenter       Atlanta               398,000           100%
Presidential MarketCenter      Atlanta               362,000           100% (b)
Perimeter Expo                 Atlanta               171,000           100%
Los Altos MarketCenter         Long Beach, CA        157,000           100%
Mansell Crossing Phase II      Atlanta               103,000           100% (c)
Rivermont Station              Atlanta                90,000           100%
Abbotts Bridge Station         Atlanta                85,000           100% (d)
Lovejoy Station                Atlanta                77,000           100%
Haywood Mall                   Greenville, SC        330,000            50%
                                                   ---------
                                                   2,745,000
                                                   =========
</TABLE>

         (a)  Includes 16,000 square feet not yet under construction.
         (b)  Includes 82,000 square feet currently under construction.
         (c)  Includes 32,000 square feet currently under construction.
         (d)  Under construction.


<PAGE>


         The  weighted   average  leased   percentage  of  these  eleven  retail
properties  (excluding the properties  under  construction and Haywood Mall) was
approximately  99% as of  March  15,  1997,  and  the  leases  of  these  eleven
properties (excluding only Haywood Mall) expire as follows:
<TABLE>
<CAPTION>
                                                                                                   2006
                                                                                                     &
                   1997   1998      1999    2000      2001      2002    2003     2004    2005   Thereafter   Total
                   ----   ----      ----    ----      ----      ----    ----     ----    ----   ----------   -----
<S>               <C>    <C>     <C>       <C>     <C>       <C>       <C>      <C>     <C>     <C>        <C>
RETAIL
- ------
Square Feet
  Expiring         2,195  13,780    60,322  33,981   108,743    88,799   9,300   85,267  46,097  1,770,227  2,218,711(b)
% of Leased Space     0%      1%        3%      2%        5%        4%      0%       4%      2%        79%       100%
Annual Base
  Rent (a)        41,486 216,421 1,096,851 537,784 1,675,072 1,374,159 134,950  941,311 532,730 21,981,131 28,531,895
Annual Base Rent
  /Sq. Ft. (a)     18.90   15.71     18.18   15.83     15.40     15.47   14.51    11.04   11.56      12.42      12.86
</TABLE>

(a)  Annual base rent excludes the operating  expense  reimbursement  portion of
     the rent  payable  and any  percentage  rents  due.  If the lease  does not
     provide  for pass  through of such  operating  expense  reimbursements,  an
     estimate of operating  expenses is deducted from the rental rate shown. The
     base  rental  rate  shown is the rate in the  year of  expiration.  Amounts
     disclosed are in dollars.

(b)  Gross  leasable  area  leased as of March 15, 1997 out of  2,414,000  total
     gross leasable area.

         The  weighted  average  remaining  lease  term of these  eleven  retail
properties  (excluding only Haywood Mall) was approximately 14 years as of March
15, 1997. All of the major tenant leases in these retail  properties  have lease
terms of 10 years or more from the date of initial  occupancy  and  provide  for
pass through of operating expenses and base rents which escalate over time.

     Medical.  As of March 15, 1997,  the Company  owned the  following  medical
office property:
                                                                  Company's
                               Metropolitan        Rentable       Ownership
Property Description               Area           Square Feet      Interest
- --------------------           ------------       -----------     ---------

Presbyterian Medical Center
  at University                Charlotte, NC         67,000         100% (a)

         (a) Under construction and in early stages of lease-up.

         Other.   The  Company's  other  real  estate  holdings  include  equity
interests  in  approximately  472 acres of  strategically  located land held for
investment and future  development at North Point and Wildwood  Office Park, the
option to acquire the fee simple interest in approximately  11,300 acres of land
through its Temco  Associates  joint  venture,  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
CarrAmerica 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;  the  cyclical  nature  of  the  real  estate  industry;  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 1996 Significant changes
         in the Company's business and properties during the year ended December
         31, 1996
were as follows:

         Retail  Properties.  In March  1996,  Colonial  Plaza  MarketCenter,  a
493,000 square foot retail power center in Orlando, Florida and Mansell Crossing
Phase II, a 103,000 square foot retail expansion adjacent to the Company's other
North Point  properties,  became partially  operational for financial  reporting
purposes.  In June 1996,  Presidential  MarketCenter  Phase II, an 82,000 square
foot  retail  power  center  expansion  in  northeast  suburban  Atlanta  became
partially  operational  for  financial  reporting  purposes.  In  October  1996,
Greenbrier   MarketCenter,   a  479,000  square  foot  retail  power  center  in
Chesapeake,  Virginia  became  partially  operational  for  financial  reporting
purposes. In November 1996, Los Altos MarketCenter, a 157,000 square foot retail
power center located in Long Beach,  California became partially operational for
financial reporting purposes (construction commenced on this retail power center
in January 1996).
         In November  1996,  Lawrenceville  MarketCenter,  a 500,000 square foot
retail power center located in northeast  suburban Atlanta was sold to Equitable
Real Estate Investment Management, Inc., acting on behalf of its client, a major
state pension fund for a purchase  price of  $34,605,000.  The gain on the sale,
net of applicable income tax provision was approximately  $10,651,000 (including
depreciation recapture of approximately $715,000). The net proceeds were swapped
in a  tax-deferred  exchange into the purchase of One  Independence  Center (see
discussion below).
         Office Properties. Two office buildings, 100 and 200 North Point Center
East,  consisting  of 128,000 and 129,000  rentable  square feet,  respectively,
located  adjacent to North Point Mall and the  Company's  retail  properties  in
north  central  suburban  Atlanta  became  partially  operational  for financial
reporting purposes in April 1996 and November 1996, respectively. In March 1996,
4100 and 4300 Wildwood  Parkway,  two office  buildings  with a total of 250,000
rentable square feet owned by Wildwood Associates and located in Wildwood Office
Park became partially operational for financial reporting purposes.
         In October 1996,  Wildwood  Associates  commenced  construction on 4200
Wildwood Parkway, a 250,000 square foot office building located adjacent to 4100
and 4300 Wildwood Parkway. In December 1996, the Company commenced  construction
on 333 North Point Center East, a 128,000  rentable square foot office building,
adjacent to 100 and 200 North Point Center East.
         In May 1996,  pursuant  to the  third  amendment  to the  North  Greene
Associates partnership agreement,  Weaver Downtown,  L.P., the minority partner,
sold its partnership interest to Cousins for $999,000. As a result, Cousins owns
100% of the First Union Tower, a 319,000 rentable square foot office building in
Greensboro, North Carolina.
         During 1996  Cousins  acquired  two office  buildings.  In August 1996,
Cousins  acquired 615 Peachtree  Street, a 147,000 rentable square foot downtown
Atlanta office  building,  located across from  NationsBank  Plaza. The 12-story
office building was purchased for $11.1 million plus a contingent future payment
of up to an  additional  $1 million.  In December  1996,  Cousins  acquired  One
Independence  Center, a 522,000 rentable square foot office building  (including
an  underground  parking  garage and an adjacent  parking  deck)  located at the
intersection of Trade and Tryon in the central  business  district of Charlotte,
North Carolina for a purchase  price of  approximately  $70.6  million.  Cousins
purchased the office building using  approximately  $34,612,000 of proceeds from
the  tax-deferred  exchanges of  Lawrenceville  MarketCenter and an outparcel at
North  Point,  $30,879,000  from the  assumption  of a  mortgage  note  payable,
$18,621,000  from an  additional  amount drawn down on the mortgage note payable
(to bring the mortgage note payable to a total of $49,500,000)  (see Note 4) and
$2,426,000 of cash.  Cousins also assumed  $1,300,000 of municipal bonds related
to the underground parking garage.
         Medical  Properties.  In July 1996, Cousins acquired the medical office
building  development and management  operations of The Lea Richmond Company and
The Richmond  Development  Company.  The purchase price for the  acquisition was
$1.8 million plus  contingent  future payments of up to an additional $1 million
(of which $200,000 was paid through December 31, 1996),  subject to commencement
of development  of certain  medical  office  projects.  This new division of the
Company commenced  construction in July 1996 on the Presbyterian  Medical Center
at  University,  a 67,000  rentable  square  foot  medical  office  building  in
Charlotte, North Carolina.
         Financings. On February 6, 1996, CSC Associates,  L.P. ("CSC"), a joint
venture formed by the Company and a wholly owned subsidiary of NationsBank, each
as 50%  partners,  issued  $80  million  of  6.377%  collateralized  notes  (the
"Notes").  The Notes amortize in equal monthly installments of $590,680 based on
a 20 year  amortization  schedule,  and mature  February 15, 2011. The Notes are
non-recourse  obligations  of CSC and are secured by a Deed to Secure  Debt,  an
Assignment  of Rents and  Security  Agreement  covering  CSC's  interest  in the
NationsBank Plaza building and related leases and agreements.
         CSC has loaned the $80  million  proceeds  of the Notes to the  Company
under a non-recourse loan (the "Cousins Loan") secured by the Company's interest
in CSC under the same payment terms as those of the Notes.  The Company paid all
costs of issuing the Notes and the Cousins Loan,  including a $400,000 fee to an
affiliate of NationsBank Corporation.  In addition, the Company pays a fee to an
affiliate  of  NationsBank  Corporation  of .3%  per  annum  of the  outstanding
principal balance of the Notes.  Because CSC has loaned the $80 million proceeds
of the Notes to the Company,  the Notes and their related  interest  expense and
maturities are disclosed as an obligation of the Company and are not included in
the share of unconsolidated  joint venture balances as disclosed in Note 4 or in
Note 5. (The related note  receivable and interest  income are also not included
in Note 4.)
         Effective  July 1, 1996,  the Company  amended and extended its line of
credit. The line amount was $50 million through December 31, 1996, and increased
to $100 million on January 1, 1997.  The line is unsecured,  bears interest tied
to the Federal Funds rate and matures June 30, 1997.
         On April 1, 1996, CC-JM II Associates completed a $24,675,000,  17 year
fully  amortizing  non-recourse  mortgage note payable at a 7% interest rate. On
December 16, 1996, Wildwood Associates completed the financing of the 3200 Windy
Hill Road Building with a $70 million mortgage note payable at an 8.23% interest
rate and maturity of January 1, 2007.  Concurrent  with the financing,  Wildwood
Associates  paid down its line of credit to $0 and on January 16,  1997,  made a
cash distribution of $10 million to each partner.
         On January 7, 1997,  WWA received a commitment for the financing of the
4100 and 4300 Wildwood Parkway Buildings which funded on March 20, 1997. The $30
million  non-recourse  mortgage  note payable has an interest  rate of 7.65% and
term of fifteen years.
         Executive Offices
         The  Registrant's  executive  offices  are  located at 2500 Windy Ridge
Parkway,  Suite 1600,  Atlanta,  Georgia  30339-5683.  At December 31, 1996, the
Company employed 150 people.
<PAGE>
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,  medical  office
properties  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, 1996,  except  percentage  leased which is as of March 15, 1997.
Dollars are stated in thousands.
<TABLE>
<CAPTION>



                                                                                  Percentage
Description,               Year                               Rentable              Leased      Average
 Location               Development               Company's  Square Feet             as of       1996
 Zip Code               or Acquired   Partner     Interest    as Noted               1997      Occupancy
- ------------            -----------   -------     ---------  -----------          ----------   ---------
<S>                      <C>          <C>          <C>       <C>                  <C>          <C>
Office
- ------
Wildwood Office Park:
  Suburban Atlanta, GA
   2300 Windy
   Ridge Parkway
   30339-5671              1987          IBM          50%      634,000                98%           95%
                                                              12 Acres






   2500 Windy
   Ridge Parkway
   30339-5683              1985          IBM          50%      313,000                97%           85%
                                                               8 Acres
   3200 Windy
   Hill Road
   30339-5609              1991          IBM          50%      685,000                97%           96%
                                                              15 Acres


   3301 Windy Ridge
   Parkway
   30339-5685              1984          N/A         100%      106,000                80%           80%
                                                              10 Acres
   3100 Windy Hill
   Road
   30339-5605              1983          N/A          (7)      188,000               100%          100%
                                                              13 Acres

</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                   Adjusted
                                                                   Cost and
                                                                   Adjusted
                                                                   Cost Less                  Debt
Description,                                          Major     Depreciation               Maturity
 Location                 Major Tenants (lease       Tenants'        and                      and
    and                    expiration/options        Rentable   Amortization       Debt     Interest
 Zip Code                      expiration)           Sq. Feet        (1)          Balance     Rate
- ------------              --------------------       --------   ------------      -------   --------
<S>                       <C>                         <C>         <C>             <C>       <C> 
Office
- ------
Wildwood Office Park:
  Suburban Atlanta, GA
   2300 Windy
   Ridge Parkway
   30339-5671             IBM (2002/2012)             240,430      $ 77,058       $ 71,078     12/1/05
                          Georgia-Pacific Corporation  63,006      $ 52,998                      7.56%
                            (1997)
                          Electrolux (2000/2005)       62,576
                          Computer Associates          62,445
                            (2005/2010)
                          Financial Services Corporation
                            (2006/2011)(3)             55,604
                          Chevron USA (2005)(2)        50,242

   2500 Windy
   Ridge Parkway
   30339-5683             Coca-Cola Enterprises Inc.  165,180      $ 28,378       $ 25,412    12/15/05
                            (1998/2008)                            $ 18,252                      7.45%
   3200 Windy
   Hill Road
   30339-5609             IBM (2001/2011)(4)          436,539      $ 80,463       $ 70,000      1/1/07
                          Equifax (5) (1998/2003)      68,402      $ 62,521                      8.23%
                          W.H. Smith Inc.              41,858
                            (2002/2007)
   3301 Windy Ridge
   Parkway
   30339-5685             TSW International, Inc.      84,104      $ 10,377       $      0         N/A
                            (2003/2008) (6)                        $  6,854
   3100 Windy Hill
   Road
   30339-5605             IBM (1998/2003)             188,000      $17,416 (7)   $      0         N/A
                                                                   $17,416 (7)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                                  Percentage
Description,               Year                               Rentable              Leased      Average
 Location               Development               Company's  Square Feet             as of       1996
 Zip Code               or Acquired   Partner     Interest    as Noted               1997      Occupancy
- ------------            -----------   -------     ---------  -----------          ----------   ---------
<S>                      <C>          <C>          <C>       <C>                  <C>          <C>
Office (Continued)
- ------------------
   4100 and 4300
   Wildwood Parkway
   30339-9999              1996          IBM          50%      250,000             100%           51%
                                                              13 Acres

   4200 Wildwood Parkway
   30339-9999              (10)          IBM          50%      250,000             (10)          (10)
                                                               8 Acres
NationsBank Plaza
  Atlanta, GA
  30308-2214               1992    NationsBank(5)     50% (11)1,260,000             92%           92%
                                                               4 Acres







First Union Tower
  Greensboro, NC
  27401-2167               1990          N/A         100%      319,000              94%           90%
                                                                1 Acre




Ten Peachtree Place
  Atlanta, GA
  30309-3814               1991     Coca-Cola (5)     50% (11) 259,000             100%          100%
                                                               5 Acres
John Marshall-II
  Suburban
   Washington, D.C.
   22102-3802              1996  CarrAmerica Realty   50%      224,000             100%           92%
 .                                  Corporation (5)             3 Acres

100 North Point Center East
  Suburban Atlanta, GA
  30202-4885               1995          N/A         100%      128,000             100%           63%
                                                               7 Acres



</TABLE>
<TABLE>
<CAPTION>



                                                                   Adjusted
                                                                   Cost and
                                                                   Adjusted
                                                                   Cost Less                  Debt
Description,                                           Major    Depreciation                Maturity
 Location                 Major Tenants (lease       Tenants'        and                      and
    and                    expiration/options        Rentable   Amortization       Debt     Interest
 Zip Code                      expiration)           Sq. Feet        (1)          Balance     Rate
- ------------              --------------------       --------   ------------      -------   --------
<S>                       <C>                         <C>         <C>             <C>       <C> 
Office (Continued)
- ------------------
   4100 and 4300
   Wildwood Parkway
   30339-9999             Georgia-Pacific             250,000      $ 26,426       $      0(9) N/A (9)
                            Corporation (2012/2017)                $ 25,899
                            (6)(8)
   4200 Wildwood Parkway
   30339-9999             (10)                             (10)    $ 19,670       $      0         N/A
                                                                       (10)
NationsBank Plaza
  Atlanta, GA
  30308-2214              NationsBank(5)              572,742      $223,393       $   0(26)   N/A (26)
                            (2012/2042)                            $189,440
                          Ernst & Young LLP           188,175
                            (2007/2017)
                          Troutman Sanders            178,459
                            (2007/2017)
                          Paul Hastings (2012/2017)    68,980
                          Hunton & Williams            56,560
                            (2004/2009)
First Union Tower
  Greensboro, NC
  27401-2167              Smith Helms Mullis &         70,360      $ 33,594       $      0         N/A
                          Moore (2000/2015)                        $ 24,055
                          First Union Bank (5)         62,622
                            (2009/2019)
                          Halstead Industries          60,253
                            (2000/2005)
Ten Peachtree Place
  Atlanta, GA
  30309-3814              Coca-Cola (5) (2001/2006)   259,000      $ 23,474       $ 20,19611/30/01(12)
                                                                   $ 20,290                      8.00%
John Marshall-II
  Suburban
   Washington, D.C.
   22102-3802             Booz-Allen & Hamilton       224,000      $ 29,917       $ 24,288      4/1/13
 .                           (2011/2016)                            $ 28,889                      7.00%

100 North Point Center East
  Suburban Atlanta, GA
  30202-4885              Schweitzer-Mauduit           30,728      $ 12,935       $      0         N/A
                            International, Inc.                    $ 12,497
                            (2001/2007) 
                          Green Tree Financial         21,914
                            (2006/2011)(6)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                                                                                  Percentage
Description,               Year                               Rentable              Leased      Average
 Location               Development               Company's  Square Feet             as of       1996
 Zip Code               or Acquired   Partner     Interest    as Noted               1997      Occupancy
- ------------            -----------   -------     ---------  -----------          ----------   ---------
<S>                      <C>          <C>          <C>       <C>                  <C>          <C>
Office (Continued)
- ------------------
200 North Point Center East
   Suburban Atlanta, GA
   30202-4885              1996          N/A         100%      129,000              93%           30%
                                                               7 Acres



333 North Point Center East
  Suburban Atlanta, GA
  30202-9999               (10)          N/A         100%      128,000             (10)          (10)
                                                               8 Acres
615 Peachtree Street
  Atlanta, GA
  30308-2312               1996          N/A         100%      147,000              89%      30% (13)
                                                               2 Acres
One Independence Center
  Charlotte, NC
  28246-1000               1996          N/A         100%      522,000              99%        8%(14)
                                                               2 Acres



Retail Centers and Malls
Haywood Mall
  Greenville, SC
  29607-2749             1977/1995    Corporate       50%    1,256,000              92%           86%
                                      Property                86 acres            overall          of
                                    Investors (5)             of which            84% of        owned
                                                           330,000 and              owned
                                                          21 acres are
                                                            owned (16)
Perimeter Expo
  Atlanta, GA
  30338-1519               1993          N/A         100%      291,000             100%           95%
                                                              19 acres            overall          of
                                                              of which            100% of     Company
                                                           171,000 and            Company       owned
                                                          10 acres are             owned
                                                              owned by
                                                           the Company


</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                  Adjusted
                                                                  Cost and
                                                                  Adjusted
                                                                  Cost Less                   Debt
Description,                                          Major     Depreciation                Maturity
 Location                 Major Tenants (lease       Tenants'        and                      and
    and                    expiration/options        Rentable   Amortization       Debt     Interest
 Zip Code                      expiration)           Sq. Feet        (1)          Balance     Rate
- ------------              --------------------       --------   ------------      -------   --------
<S>                       <C>                         <C>         <C>             <C>       <C> 
Office (Continued)
- ------------------
200 North Point Center East
   Suburban Atlanta, GA
   30202-4885             Alltel Telecom Information   48,168      $ 10,868       $      0         N/A
                            Services, Inc. (1999/2000)             $ 10,802
                          Motorola, Inc. (2001/2011)   26,897
                          APAC Teleservices, Inc.      22,409
                            (2004/2009)
333 North Point Center East
  Suburban Atlanta, GA
  30202-9999              N/A                             N/A      $  1,233       $      0         N/A
                                                                       (10)
615 Peachtree Street
  Atlanta, GA
  30308-2312              Wachovia (5)(1998/2007)      44,881      $ 11,725       $      0         N/A
                          McCann Erickson (1998)       28,967      $ 11,553
One Independence Center
  Charlotte, NC
  28246-1000              NationsBank (5)(2008/2028)  357,390 (15) $ 70,759       $ 49,500     11/1/07
                          Robinson Bradshaw & Hinson,  64,893      $ 70,538                      8.22%
                            P.A. (2004/2009)
                          Ernst & Young LLP (2001/2006)33,962
                          Transamerica (5)(1997)       30,736
Retail Centers and Malls
Haywood Mall
  Greenville, SC
  29607-2749              Sears (17)                      N/A      $ 49,716       $      0         N/A
                          J.C. Penney (17)                N/A      $ 37,573
                          Rich's (17)                     N/A
                          Belk (17)                       N/A
                          Dillard's (17)                  N/A

Perimeter Expo
  Atlanta, GA
  30338-1519              The Home Depot Expo (17)        N/A      $ 19,772       $ 21,259     8/15/05
                          Marshalls (2014/2029)        36,598      $ 18,458                      8.04%
                          Best Buy (2014/2029)         36,000
                          Linens `N Things (2014/2024) 30,351
                          Office Max (2013/2033)       23,500
                          The Sport Shoe (2004/2014)   14,348
                          Gap's Old Navy Store         13,939
                            (2002/2012)
</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                                                                  Percentage
Description,               Year                               Rentable              Leased      Average
 Location               Development               Company's  Square Feet             as of       1996
 Zip Code               or Acquired   Partner     Interest    as Noted               1997      Occupancy
- ------------            -----------   -------     ---------  -----------          ----------   ---------
<S>                      <C>          <C>          <C>       <C>                  <C>          <C>
Retail Centers and Malls (Continued)
- ------------------------------------
North Point MarketCenter
  Suburban
   Atlanta, GA
   30202-4889            1994/1995       N/A         100%      514,000             100%           93%
                                                          60 Acres (18)
                                                              of which
                                                            398,000 and
                                                          49 acres are
                                                              owned by
                                                           the Company





Presidential MarketCenter
  Suburban
   Atlanta, GA
   30278-2149            1994/1996       N/A         100% 478,000 (19)           99% (19)    99% (19)
                                                              66 acres            overall          of
                                                              of which           99% (19)     Company
                                                          362,000 (19)           of Company     owned
                                                          and 49 acres           owned
                                                             are owned
                                                                by the
                                                               Company


Lovejoy Station
  Suburban
   Atlanta, GA
   30228-0458              1995          N/A         100%       77,000              95%           89%
                                                              12 Acres
Colonial Plaza MarketCenter
  Orlando, FL
   32803-5029              1996          N/A         100%      493,000              97%       67%(20)
                                                              49 Acres








</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                  Adjusted
                                                                  Cost and
                                                                  Adjusted
                                                                  Cost Less                   Debt
Description,                                          Major     Depreciation                Maturity
 Location                 Major Tenants (lease       Tenants'        and                      and
    and                    expiration/options        Rentable   Amortization       Debt     Interest
 Zip Code                      expiration)           Sq. Feet        (1)          Balance     Rate
- ------------              --------------------       --------   ------------      -------   --------
<S>                       <C>                         <C>         <C>             <C>       <C> 
Retail Centers and Malls (Continued)
- ------------------------------------
North Point MarketCenter
  Suburban
   Atlanta, GA
   30202-4889             Target (17)                     N/A      $ 27,021       $ 29,477     7/15/05
                          Babies "R" Us (2011/2031)    50,275      $ 24,847                      8.50%
                          Media Play (2010/2025)       48,884
                          Marshalls (2010/2025)        40,000
                          Rhodes (2011/2021)           40,000
                          Linens `N Things             35,000
                            (2005/2025)
                          United Artists (2014/2034)   34,733
                          Circuit City (2015/2030)     33,420
                          PETsMART (2009/2029)         25,465
                          Gap's Old Navy Store         17,000
                            (2001/2011)
Presidential MarketCenter
  Suburban
   Atlanta, GA
   30278-2149             Target (17)                     N/A      $ 19,588       $      0         N/A
                          Publix Super Market          56,146      $ 18,634
                            (2019/2044)
                          Carmike Cinemas(5)(2002/2032)44,565
                          HomeGoods, Inc. (2004/2014)  35,000
                          T.J. Maxx (2004/2014)        32,000
                          Marshalls (2010/2025)        30,000
                          MJDesigns (5) (2011/2026)    37,957
                          Office Depot, Inc.           31,628
                            (2011/2026)
Lovejoy Station
  Suburban
   Atlanta, GA
   30228-0458             Publix Super Market          47,955      $  6,033       $      0         N/A
                            (2016/2036)                            $  5,837
Colonial Plaza MarketCenter
  Orlando, FL
   32803-5029             Circuit City (2017/2037)     43,936      $ 37,899       $      0         N/A
                          Rhodes (2011/2026)           40,000      $ 37,299
                          Baby Superstore, Inc. 
                            (2006/2021)                40,000
                          Stein Mart, Inc. (2007/2027) 36,000
                          Linens `N Things             35,458
                            (2012/2027)
                          Barnes & Noble Superstores   35,131
                            Inc. (2011/2021)               
                          Luria's (2012/2027)          32,900
</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                                                                  Percentage
Description,               Year                               Rentable              Leased      Average
 Location               Development               Company's  Square Feet             as of       1996
 Zip Code               or Acquired   Partner     Interest    as Noted               1997      Occupancy
- ------------            -----------   -------     ---------  -----------          ----------   ---------
<S>                      <C>          <C>          <C>       <C>                  <C>          <C>
Retail Centers and Malls (Continued)
- ------------------------------------
Colonial Plaza MarketCenter (Continued)





Mansell Crossing Phase II
  Suburban
   Atlanta, GA
   30202-4822              1996          N/A         100%      103,000             100%      74% (21)
                                                              13 Acres



Greenbrier MarketCenter
  Chesapeake, VA
   23327-2840              1996          N/A         100%      479,000              99%      38% (22)
                                                              44 Acres













Los Altos MarketCenter
  Long Beach, CA
   90815-3126              1996          N/A         100%      258,000             100%      16% (23)
                                                           19 Acres of
                                                          which 157,000
                                                          and 17 Acres
                                                          are owned by
                                                           the Company
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                 Adjusted
                                                                 Cost and
                                                                 Adjusted
                                                                 Cost Less                  Debt
Description,                                          Major     Depreciation                Maturity
 Location                 Major Tenants (lease       Tenants'        and                      and
    and                    expiration/options        Rentable   Amortization       Debt     Interest
 Zip Code                      expiration)           Sq. Feet        (1)          Balance     Rate
- ------------              --------------------       --------   ------------      -------   --------
<S>                       <C>                         <C>         <C>             <C>       <C> 
Retail Centers and Malls (Continued)
- ------------------------------------
Colonial Plaza MarketCenter (Continued)                                                          Marshalls (2011/2026)        30,400
                          Ross Stores (2011/2026)      28,000
                          Just For Feet,Inc.(2012/2027)26,667
                          Walgreen Co. (2017)          18,614
                          Gap's Old Navy Store         18,073
                            (2002/2012)
Mansell Crossing Phase II
  Suburban
   Atlanta, GA
   30202-4822             Bed Bath & Beyond            40,787      $  7,403       $      0         N/A
                            (2012/2027)                            $  7,286
                          Goody's Family Clothing,
                            Inc. (2009/2027)           32,144
                          Rooms To Go (2016/2036)      21,000
Greenbrier MarketCenter
  Chesapeake, VA
   23327-2840             Target (2016/2046)          117,220      $ 32,749       $      0         N/A
                          Harris Teeter, Inc.          50,000      $ 32,558
                            (2016/2036)
                          Bed Bath & Beyond            40,484
                            (2012/2027)
                          Baby Superstore, Inc.        42,296
                            (2006/2021)
                          Stein Mart, Inc. (2006/2026) 36,000
                          Kinetex, Inc. (2012/2027)    33,000
                          Barnes & Noble Superstores,  29,974
                            Inc. (2012/2027)
                          PETsMART (2011/2031)         26,052
                            Office Max (2011/2026)     23,484
                          Gap's Old Navy Store         14,000
                            (2002/2012)
Los Altos MarketCenter
  Long Beach, CA
   90815-3126             Sears (17)                      N/A      $ 19,413       $      0         N/A
                          Circuit City (5)(2016/2036)  38,541      $ 19,282
                          Borders, Inc. (2017/2037)    30,000
                          Bristol Farms (5)(2012/2032) 28,200
                          CompUSA, Inc. (2011/2021)    25,620
                          Savon Drugs (5)(2016/2026)   16,914

</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                                  Percentage
Description,               Year                               Rentable              Leased      Average
 Location               Development               Company's  Square Feet             as of       1996
 Zip Code               or Acquired   Partner     Interest    as Noted               1997      Occupancy
- ------------            -----------   -------     ---------  -----------          ----------   ---------
<S>                      <C>          <C>          <C>       <C>                  <C>          <C>
Retail Centers and Malls (Continued)
- ------------------------------------
  Rivermont Station
   Suburban
   Atlanta, Ga.
   30076-9999              (10)          N/A         100%       90,000             100%          (10)
                                                              19 Acres


Abbotts Bridge Station
  Suburban Atlanta, GA
   30155-9999              (24)          N/A         100%       85,000              (24)          (24)
                                                              17 Acres


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             100%           95%

North Point
  Suburban Atlanta, GA
   30202-4885              1993          N/A         100%     24 Acres             100%          100%

Medical Office
Presbyterian Medical Center
  at University
  Charlotte, NC
  28233-3549               (10)          N/A         100%       67,000            73%(10)        (10)    
                                                           1 Acre (25)                             
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                  Adjusted
                                                                  Cost and
                                                                  Adjusted
                                                                  Cost Less                  Debt
Description,                                          Major     Depreciation                Maturity
 Location                 Major Tenants (lease       Tenants'        and                      and
    and                    expiration/options        Rentable   Amortization       Debt     Interest
 Zip Code                      expiration)           Sq. Feet        (1)          Balance     Rate
- ------------              --------------------       --------   ------------      -------   --------
<S>                       <C>                         <C>         <C>             <C>       <C> 
Retail Centers and Malls (Continued)
- ------------------------------------
 Rivermont Station
   Suburban
   Atlanta, Ga.
   30076-9999             Harris Teeter, Inc.          58,261      $ 10,116       $      0         N/A
                            (2015/2035)(10)                           (10)
                          CVS Drug Store (5)            8,775
                            (2007/2022)(10)
Abbotts Bridge Station
  Suburban Atlanta, GA
   30155-9999             Harris Teeter, Inc.          41,813         (24)        $      0         N/A
                            (2018/2038)(24)
                          Eckerd Corporation           10,909
                            (2017/2037)(24)
Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects
- -------------------------------------------------------------------------
Wildwood Office Park
  Suburban Atlanta, GA
   30339-5671             N/A                             N/A      $  8,763       $      0         N/A
                                                                   $  7,673
North Point
  Suburban Atlanta, GA
   30202-4885             N/A                             N/A      $  3,819       $      0         N/A
                                                                   $  3,769
Medical Office
Presbyterian Medical Center
  at University
  Charlotte, NC
  28233-3549              Presbyterian Health Services 49,291      $  1,949       $   0     N/A
                            Corporation (2012)
</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, 4100 and
     4300  Wildwood  Parkway,  4200  Wildwood  Parkway and Wildwood  Stand Alone
     Retail  Lease  Sites,  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.
  
(2)  Chevron USA has the right to  terminate  its lease during 1998 if notice is
     given by April 1, 1997. As of March 23, 1997, no notice had been received.
 
(3)  1,556 square feet expires in 2001.

(4)  115,944 square feet expires in 2001, and the balance expires in 2006.

(5)  Actual tenant or venture partner is affiliate of entity shown.

(6)  TSW   International,   Inc.,  Green  Tree  Financial  and   Georgia-Pacific
     Corporation  have the right to  terminate  their  leases in 1998,  2001 and
     2007, respectively, upon payment of significant cancellation penalties.

(7)  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.

(8)  Tenant has the option to purchase the building on its lease expiration date
     for a price of $33,750,000.

(9)  On January 7,  1997,  Wildwood  Associates  received a  commitment  for the
     financing of the 4100 and 4300 Wildwood  Parkway  Buildings which funded on
     March 20, 1997. The $30 million  non-recourse  mortgage note payable has an
     interest  rate of 7.65% and term of fifteen  years.  

(10) Project was under  construction as of December 31, 1996.  Lease  expiration
     dates are based upon estimated  commencement  dates,  and square footage is
     estimated.  

(11) See  "Major  Properties"  -  "NationsBank  Plaza" and "Ten
     Peachtree Place" where the  partnership's  preferences are discussed. 

(12) Maturity of the Ten Peachtree Place mortgage debt is extendible to December
     31, 2008. Rate becomes floating after November 30, 2001.

(13) 615 Peachtree  Street was acquired in July 1996. Thus,  economic  occupancy
     for 615 Peachtree Street does not include a full year of operations.

(14) One  Independence  Center was  acquired in December  1996.  Thus,  economic
     occupancy  for One  Independence  Center  does not  include  a full year of
     operations.
     
(15) 101,250 square feet expires in 2000.

(16) A portion  of the  Haywood  Mall  parking  lot (3 acres)  is  subject  to a
     long-term ground lease expiring in 2017, with five 10-year renewal options.

(17) This anchor tenant owns its own space.

(18) North Point  MarketCenter  includes  approximately  4 outparcels  which are
     ground leased to freestanding users.

(19) Includes  82,000 square feet under  development  as of March 15, 1997 which
     were excluded from  calculation  of percentage  leased and the average 1996
     economic occupancy.

(20) Colonial  Plaza  MarketCenter  became  partially
     operational in March 1996 for financial reporting purposes.  Thus, economic
     occupancy for Colonial Plaza  MarketCenter  does not include a full year of
     operations.  

(21) Mansell  Crossing Phase II became  partially  operational in March 1996 for
     financial reporting purposes. Thus, economic occupancy for Mansell Crossing
     Phase II does not include a full year of operations.

(22) Greenbrier  MarketCenter  became partially  operational in October 1996 for
     financial  reporting  purposes.  Thus,  economic  occupancy for  Greenbrier
     MarketCenter does not include a full year of operations.

(23) Los Altos  MarketCenter  became partially  operational in November 1996 for
     financial  reporting  purposes.  Thus,  economic  occupancy  for Los  Altos
     MarketCenter  does not  include  a full year of  operations.  

(24) Land was acquired and  construction  commenced  on Abbotts  Bridge  Station
     subsequent  to December 31,  1996.  Lease  expiration  dates are based upon
     estimated commencement dates, and square footage is estimated.

(25) Presbyterian  Medical  Center at  University  is located on 1 acre which is
     subject to a ground lease expiring in 2057.

(26) See "Major  Properties"  -  "NationsBank  Plaza" where debt on  NationsBank
     Plaza is discussed.



<PAGE>


Land Held for Investment and Future Development (excluding Retail Outparcels)
<TABLE>
<CAPTION>

                                                                                               Adjusted
                                                                                                 Cost
                                                                                                 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        147         N/A         100%      $  7,005     $  0
     Office and Commercial                  1971-1982         36         IBM          50%      $ 10,610(2)  $  0

North Point Land
   (Georgia Highway 400 & Haynes Bridge Road) (3)
   Suburban Atlanta, Georgia
     Office and Commercial - East           1970-1985         59         N/A         100%      $  1,853     $  0
     Office and Commercial - West           1970-1985        230         N/A         100%      $  4,511     $  0

Midtown Atlanta
   Office and Commercial                    1984               2         N/A         100%      $  1,398     $  0

Temco Associates
   (Paulding County)
       Suburban Atlanta, Georgia            1991              --(5) Temple-Inland     50%            --(5)  $  0
                                                                      Inc. (4)

Lawrenceville
   Gwinnett County
     Suburban Atlanta, Georgia
       Single-Family Residential
         and Commercial                     1994              84         N/A         100%      $  1,487     $  0
</TABLE>

(1)  Based upon management's estimates.
(2)  For the portion of the Wildwood  Office Park land owned by a joint venture,
     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. The adjusted cost excludes building predevelopment costs of
     $1,217,000.
(3)  The North Point  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,  but planning has begun for additional  development on
     the west side property. This land surrounds North Point Mall, a 1.3 million
     square  foot  regional  mall on a 100 acre site which the  Company  sold in
     1988.
(4)  Joint venture partner is an affiliate of the entity shown.
(5)  Temco  Associates has an option through March 2006, with no carrying costs,
     to  acquire  the fee  simple  interest  in  approximately  11,300  acres in
     Paulding County,  Georgia (northwest of Atlanta,  Georgia). The partnership
     also  has  an  option  to  acquire  a  timber   rights   interest  only  in
     approximately  22,000  acres.  The options 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
     1994 and 1996, approximately 72 and 375 acres, respectively,  of the option
     related to the fee simple  interest was exercised and  simultaneously  sold
     for gross  profits of $243,000 and  $1,427,000,  respectively.  None of the
     option was exercised in 1995.



<PAGE>


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 8 office  buildings (of
which 1 is under  construction)  containing  2,426,000 rentable square feet. The
property is zoned for office,  institutional  and commercial use.  Approximately
109 acres in the park are owned by, or committed to be contributed  to, Wildwood
Associates (see below), including approximately 36 acres of land held for future
development. The Company owns 100% of the 147 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 formed in
1985  between the Company and IBM.  The Company and IBM each have a 50% interest
in Wildwood  Associates.  At December  31, 1996,  the  Company's  investment  in
Wildwood  Associates and a related  partnership was approximately  $2.5 million,
which  included the cost of the land the Company is committed to  contribute  to
Wildwood Associates.
         Wildwood  Associates  owns the 3200 Windy Hill Road  Building  (685,000
rentable square feet), the 2300 Windy Ridge Parkway Building  (634,000  rentable
square feet),  the 2500 Windy Ridge Parkway  Building  (313,000  rentable square
feet), the 4100 and 4300 Wildwood  Parkway  Buildings  (250,000  rentable square
feet in total) and the 4200 Wildwood Parkway Building  (250,000  rentable square
feet, which is under construction). At March 15, 1997, these buildings were 97%,
98%, 97%, 100% and 0% leased,  respectively.  Wildwood  Associates  also owns 15
acres leased to two banking facilities and five restaurants.
         On December 16, 1996,  Wildwood  Associates  completed the financing of
the 3200 Windy Hill Road Building with a $70 million mortgage note payable at an
8.23%  interest  rate and  maturity  of  January 1,  2007.  Concurrent  with the
financing, Wildwood Associates paid down its line of credit to $0 and on January
16, 1997, made a cash distribution of $10 million to each partner.
         On January 7, 1997,  Wildwood  Associates received a commitment for the
financing of the 4100 and 4300 Wildwood Parkway  Buildings which funded on March
20, 1997.  The $30 million  non-recourse  mortgage  note payable has an interest
rate of 7.65% and term of fifteen years.      
     Wildwood  Associates  has a $10 million  bank line of credit  (the  Company
severally guarantees one-half) under which $0 was drawn at December 31, 1996.
     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 and
the second option for another 10% of the space was exercised  effective December
15, 1996, bringing the building to 80% leased as of March 15, 1997. 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  approximately 167 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,  but  planning  has begun for
additional  development  on the west side property.  This land  surrounds  North
Point Mall, a 1.3 million square foot regional mall on a 100 acre site which the
Company sold in 1988.  The following  describes the various  components of North
Point.
         North  Point  MarketCenter  and  Mansell  Crossing  Phase  II.  Through
December 31, 1995, these two retail  properties were owned by North Point Market
Associates,  L.P. ("NPMA") a limited  partnership between Cousins (82.3%) and an
affiliate of  Coca-Cola  (17.7%).  At December 31, 1995,  Cousins also had a 50%
interest  with an affiliate of Coca-Cola in another  partnership,  Spring/Haynes
Associates,  which  owned  approximately  11 acres of land in  midtown  Atlanta.
Effective  January 1, 1996,  Cousins and Coca-Cola entered into a transaction to
exchange their interests in these two partnerships,  which effectively  resulted
in  Coca-Cola  receiving  100% of the  Spring/Haynes  Associates'  property  and
Cousins receiving  $1,092,000 in cash and 100% of North Point Market Associates,
L.P.'s properties (North Point  MarketCenter and Mansell Crossing Phase II). The
net amount of Coca-Cola's  minority interest of $3,825,000 in North Point Market
Associates,  L.P. and the Company's  investment in  Spring/Haynes  Associates of
$1,688,000 as of December 31, 1995 were credited  against the carrying values of
North Point Market Associates, L.P.'s properties.
         North Point MarketCenter, which is 100% leased as of March 15, 1997, is
a 514,000  square foot retail  power  center (of which  398,000  square feet are
owned by Cousins) located  adjacent to North Point Mall.  Mansell Crossing Phase
II,  which is 100%  leased as of March 15,  1997,  is an  approximately  103,000
square foot expansion of an existing retail power center,  previously  developed
by the  Company  for a third  party,  which  became  partially  operational  for
financial  reporting purposes in March 1996. These two centers are located on 49
(Company owned) and 13 acres of land, respectively, at North Point.
         North Point  Center  East.  The  Company  owns three  office  buildings
located  adjacent to North Point Mall and the Company's retail  properties.  100
North Point  Center East and 200 North Point  Center  East,  128,000 and 129,000
rentable square feet,  respectively,  became partially operational for financial
reporting purposes in April 1996 and November 1996,  respectively.  Construction
commenced in December 1996 on the third office building,  333 North Point Center
East, a 128,000 square foot office building, adjacent to 100 and 200 North Point
Center  East.  These three office  buildings  are located on 22 acres of land at
North Point and are 100%, 93% and 0% leased as of March 15, 1997.
         Other North Point  Property.  Approximately  24 acres of the North 
Point land are ground leased in 1 to 5 acre sites to freestanding  users.  These
24 acres were 100% leased as of March 15, 1997.
         The remaining  approximately  289 developable  acres at North Point are
100% owned by the  Company.  Approximately  59 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
92% leased at March 15,  1997.  An affiliate  of  NationsBank  leases 46% of the
rentable  square feet.  NationsBank  Plaza was developed by CSC, a joint venture
formed by the Company and a wholly owned subsidiary of NationsBank,  each as 50%
partners.
         In  October  1993,  CSC  fully  repaid  all of  its  debt  with  equity
contributions  of $86.7 million made by each partner.  On February 6, 1996,  CSC
issued $80 million of 6.377%  collateralized notes and simultaneously loaned the
$80 million  proceeds to the Company (see Note 4 where  discussed).  At December
31, 1996, the Company's investment in CSC was approximately $102,904,000.
         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,  which  preference  resulted  in Cousins  recognizing  $451,000  and
$36,000 in income  over what it would  have  otherwise  recognized  in the years
ended December 31, 1994 and 1995, respectively.  No additional preference is due
to Cousins.
         First  Union  Tower.  First  Union  Tower is a Class A office  building
containing  approximately  319,000 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,  1997 was
approximately 94% leased.
         In May 1996,  pursuant  to the  third  amendment  to the  North  Greene
Associates partnership agreement,  Weaver Downtown,  L.P., the minority partner,
sold its partnership interest to Cousins for $999,000. As a result, Cousins owns
100% of the First Union Tower.
         615  Peachtree  Street.  In  August  1996,  the  Company  acquired  615
Peachtree  Street,  a 147,000  rentable  square  foot  downtown  Atlanta  office
building,  located across from  NationsBank  Plaza. The 12-story office building
was  purchased for $11.1  million plus a contingent  future  payment of up to an
additional $1 million. 615 Peachtree Street was 89% leased as of March 15, 1997.
         One  Independence  Center.  In December 1996, the Company  acquired One
Independence  Center, a 522,000 rentable square foot office building  (including
an  underground  parking  garage and an adjacent  parking  deck)  located at the
intersection of Trade and Tryon in the central  business  district of Charlotte,
North Carolina for a purchase price of approximately $70.6 million.  The Company
purchased the office building using  approximately  $34,612,000 of proceeds from
the  tax-deferred  exchanges of  Lawrenceville  MarketCenter and an outparcel at
North  Point,  $30,879,000  from the  assumption  of a  mortgage  note  payable,
$18,621,000  from an  additional  amount drawn down on the mortgage note payable
(to bring the mortgage note payable to a total of $49,500,000)  (see Note 4) and
$2,426,000  of cash.  The Company also  assumed  $1,300,000  of municipal  bonds
related to the  underground  parking  garage.  One  Independence  Center was 99%
leased as of March 15, 1997.
         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
92% leased at March 15, 1997.
         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,
subject to a preference in favor of the majority partner,  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 which repaid approximately  one-half of the
debt.  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, 1996, the cumulative undistributed preferred return was
$10,325,065.  The  project is  subject  to  long-term  debt of  $145,000,000  at
December  31,  1996.  Thereafter,  the  partners  will  share in any  cash  flow
distributions  in accordance with their  percentage  interests.  At December 31,
1996,  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  investment,  subject to a ten-year  purchase money note.  This 8% purchase
money note had an outstanding  balance of $20.2 million at December 31, 1996. 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,
1996, the Company had a negative investment in Ten Peachtree Place Associates of
$4,000.
         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).
         CC-JM II Associates.  This joint venture was formed in 1994 between the
Company and an affiliate of CarrAmerica 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  is 100%  leased for 15 years to  Booz-Allen  &
Hamilton,  an  international  consulting  firm,  as  a  part  of  its  corporate
headquarters  campus.  Rent  commenced on January 21, 1996.  In April 1996,  the
venture  completed  the financing of the building  with a  $24,675,000,  17 year
fully amortizing  non-recourse mortgage note at a 7% interest rate. 

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,  and is owned by the  Company  and  Bellwether
Properties of South  Carolina,  L.P.  ("Bellwether"),  an affiliate of Corporate
Properties  Investors.  Expansion of the mall from 956,000 gross leasable square
feet ("GLA") (of which ownership is approximately  272,000 GLA) to 1,256,000 GLA
(of which ownership is  approximately  330,000) was  substantially  completed in
1995.  The  balance  of the mall is owned by the mall's  five  major  department
stores.  The portion of Haywood  Mall owned by the Company  and  Bellwether  was
developed on approximately 21 acres of land, of which  approximately 18 acres is
owned and approximately 3 acres (of parking area) is leased under a ground lease
expiring in 2017, with five 10-year renewal options. The portion of Haywood Mall
owned by the Company and Bellwether was approximately 84% leased as of March 15,
1997.
         The Company has a 50% interest in Haywood  Mall.  The Company  
contributed  $5.8 million  during 1995 to fund its share of the  expansion of 
the mall.  At December 31, 1996, the Company's investment was $20,743,000.
         Other Fully Operational Retail  Properties.  In addition to North Point
MarketCenter  and  Mansell  Crossing  Phase II which are  discussed  above,  the
Company  owns four  other  retail  centers  which  were  fully  operational  for
financial  reporting  purposes  as of December  31,  1996.  Perimeter  Expo is a
291,000  square foot retail  power  center (of which the  Company  owns  171,000
square feet) which is located in Atlanta,  Georgia and was 100% leased  (Company
owned) as of March 15, 1997. Presidential  MarketCenter is a 478,000 square foot
retail power  center (of which the Company  owns  362,000  square feet) which is
located in suburban  Atlanta,  Georgia and was 99% leased  (Company owned) as of
March 15, 1997.  Lovejoy  Station is a 77,000  square foot  neighborhood  retail
center  which is located in suburban  Atlanta and was 95% leased as of March 15,
1997. Greenbrier MarketCenter is a 479,000 square foot retail power center which
is located in Chesapeake, Virginia and was 99% leased as of March 15, 1997.
         Partially  Operational Retail  Properties.  The Company owns two retail
properties which were partially  operational for financial reporting purposes as
of December 31,  1996.  Colonial  Plaza  MarketCenter  is a 493,000  square foot
retail power  center which is located in Orlando,  Florida and was 97% leased as
of March 15, 1997. Los Altos  MarketCenter is a 258,000 square foot retail power
center (of which the Company owns 157,000  square feet) which is located in Long
Beach, California and was 100% leased as of March 15, 1997.
         Retail Projects Under  Construction.  The Company owns two neighborhood
retail centers one of which was under  construction as of December 31, 1996; the
land was  purchased  and  construction  commenced  in January 1997 for the other
center.  Rivermont  Station is a 90,000 square foot  neighborhood  retail center
which is located in  suburban  Atlanta,  100% leased as of March 15,  1997,  and
expected  to be  completed  in early 1997 at a total cost of  approximately  $10
million.  The  Company  purchased  the land for and  commenced  construction  on
Abbotts Bridge Station,  an 85,000 square foot neighborhood  retail center which
is located in suburban  Atlanta and is expected to be completed in early 1998 at
a total cost of approximately $11 million. Abbotts Bridge Station was 62% leased
as of March 15, 1997. 

Medical Properties
- ------------------
         In July 1996, Cousins acquired the medical office building  development
and  management  operations  of  The  Lea  Richmond  Company  and  The  Richmond
Development  Company.  The purchase price for the  acquisition  was $1.8 million
plus  contingent  future  payments of up to an  additional  $1 million (of which
$200,000  was paid  through  December  31,  1996),  subject to  commencement  of
development of certain medical office projects. This new division of the Company
commenced  construction  in July  1996 on the  Presbyterian  Medical  Center  at
University,  a 67,000 rentable square foot medical office building in Charlotte,
North Carolina, which was 73% leased as of March 15, 1997.



<PAGE>


Residential Lot Developments

         As of December 31, 1996, CREC owned the following parcels of land which
are being developed into residential communities ($ in thousands):
<TABLE>
<CAPTION>
                                                      Estimated
                                                     Total Lots                                          Purchase
                                        Initial        on Land                                             Money
                                         Year         Currently       Lots       Remaining    Carrying     Debt
            Description                Acquired       Owned (1)   Sold to Date     Lots        Value     Balances
            -----------                --------       ---------   ------------   ---------    ---------  --------

         <S>                             <C>              <C>        <C>             <C>      <C>         <C>   
         Brown's Farm                    1993             160        116             44       $ 2,298     $    0
           West Cobb County
           Suburban Atlanta, GA
         Apalachee River Club            1994             186         74            112         2,992          0
           Gwinnett County
           Suburban Atlanta, GA
         Echo Mill                       1994             542        137            405         4,912        423
           West Cobb County
           Suburban Atlanta, GA
         Barrett Downs                   1994             143         41            102         1,850          0
           Forsyth County
           Suburban Atlanta, GA
         Bradshaw Farms                  1994             230        157             73         1,856          0
           Cherokee County
           Suburban Atlanta, GA
         Alcovy Woods
           Gwinnett County
           Suburban Atlanta, GA          1996             121                       121         1,275      1,005
                                                        -----        ---            ---       -------     ------
              Total                                     1,382        525            857       $15,183     $1,428
                                                        =====        ===            ===       =======     ======
</TABLE>

     (1)  Includes  lots  sold to  date.  Additional  lots may be  developed  on
          adjacent land on which CREC holds purchase options.

Land Held for Investment and Future Development
- -----------------------------------------------
         In addition to the various land parcels  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.
         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  the fee simple  interest  in  approximately  11,300  acres in  Paulding
County,  Georgia  (northwest of Atlanta,  Georgia).  The partnership also has an
option to acquire a timber rights interest only in  approximately  22,000 acres.
The options may be exercised in whole or in part over the option  period and the
option  price of the fee  simple  land was $780  per acre at  January  1,  1997,
escalating  at 6% on January 1 of each  succeeding  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 1994
and 1996, approximately 72 and 375 acres, respectively, of the option related to
the fee simple interest was exercised and simultaneously  sold for gross profits
of $243,000 and  $1,427,000,  respectively.  None of the option was exercised in
1995. 

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  partnership  received a
$8,325,000 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,
and in July 1996 the Company sold its 50% interest for $2 million,  resulting in
a profit to the Company of  approximately  $408,000 which is included in Gain on
Sale of Investment Properties in the 1996 Consolidated Statement of Income.
         At December 31, 1996,  the Company had an  investment  of $2,091,000 in
NHA. The Company has also  guaranteed a $2.1 million line of credit to NHA under
which $2.0  million  had been drawn at  December  31,  1996 and its  partner has
guaranteed  an equal line of credit  under which $2.0  million had been drawn at
December 31, 1996.
         On February 14, 1997,  the mortgage  note with a balance of  $8,325,000
was repaid in full. A portion of the proceeds  from the  repayment  were used to
pay off the partnership's  lines of credit,  with the balance distributed to the
partners. It is anticipated that this partnership will be liquidated in 1997.
         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% leased 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 jointly  developed the building.  Due
to the  release  of  certain  completion  guarantees  related  to the  building,
approximately  $2.6 million of  development  income was  recognized in September
1995  ($931,000  of  which  had been  deferred  as of  December  31,  1994).  An
additional $777,000 of development income was received and recognized in 1996.
         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,
1996 was $993,000.
         Air Rights 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 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.


<PAGE>


Supplemental Financial and Leasing Information

     Depreciation and amortization  expense include the following components for
the years ended December 31, 1995 and 1996 ($ in thousands):
<TABLE>
<CAPTION>

                                              1995                                        1996
                            --------------------------------------     ---------------------------------------
                                            Share of                                    Share of
                                         Unconsolidated                              Unconsolidated
                            Consolidated Joint Ventures     Total      Consolidated  Joint Ventures     Total
                            ------------ --------------    -------     ------------  --------------    -------
<S>                           <C>           <C>            <C>            <C>           <C>            <C>
Furniture, fixtures and
   equipment                  $   389       $   123        $   512        $  306        $     40       $   346
Deferred financing costs           --            80             80            --              16            16
Goodwill and related business
   acquisition costs              229            41            270           363              44           407
Real estate related:
   Building (including tenant
     first generation)          3,578         8,142         11,720         6,336           8,958        15,294
   Tenant second generation       144           655            799           214             979         1,193
                              -------       -------        -------        ------        --------       -------
                              $ 4,340       $ 9,041        $13,381        $7,219        $ 10,037       $17,256
                              =======       =======        =======        ======        ========       =======
</TABLE>


         Exclusive of new developments and purchases of furniture,  fixtures and
equipment,  the Company had the  following  capital  expenditures  for the years
ended December 31, 1995 and 1996,  including its share of  unconsolidated  joint
ventures ($ in thousands):
<TABLE>
<CAPTION>
                                                     1995                                 1996
                                       -------------------------------       -------------------------------- 
                                       Office      Retail       Total        Office       Retail        Total
                                       ------      ------       -----        ------       ------        -----
                                       
     <S>                                <C>          <C>        <C>           <C>          <C>         <C>   
     Second generation related costs    $1,316       $  --      $1,316        $1,892       $  --       $1,892
     Building improvements                  28          23          51             3          --            3
                                        ------       -----      ------        ------       -----       ------
         Total                          $1,344       $  23      $1,367        $1,895       $  --       $1,895
                                        ======       =====      ======        ======       =====       ======
</TABLE>


<PAGE>


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, 1996.
Item X.     Executive Officers of the Registrant

         The Executive  Officers of the  Registrant as of the date hereof are as
follows:
        Name                   Age                  Office Held
        ----                   ---                  -----------

Thomas G. Cousins               65      Chairman of the Board of Directors
                                          and Chief Executive Officer
Daniel M. DuPree                50      President and Chief Operating Officer
George J. Berry                 59      Senior Vice President
Tom G. Charlesworth             47      Senior Vice President, Secretary and 
                                          General Counsel
Craig B. Jones                  46      Senior Vice President
Joel T. Murphy                  38      Senior Vice President and President of 
                                          the Retail Division (Cousins 
                                          MarketCenters, Inc.)
John L. Murphy                  51      Senior Vice President - Marketing
W. James Overton                50      Senior Vice President - Development
Lea Richmond III                49      Senior Vice President and President of 
                                          the Medical Office Division (Cousins/
                                          Richmond)
Peter A. Tartikoff              55      Senior Vice President and Chief 
                                          Financial Officer
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. DuPree joined the Company in October 1992, became Senior Vice President
in April 1993,  Senior  Executive Vice President in April 1995 and President and
Chief Operating  Officer in November 1995. Prior to that he was President of New
Market Companies, Inc. and affiliates since 1984.

         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.  Jones  joined  the  Company in October  1992 and  became  Senior  Vice
President  in  November  1995.  From 1987  until  joining  the  Company,  he was
Executive Vice President of New Market Companies, Inc. and affiliates.

     Mr. Joel Murphy  joined the Company in October 1992 and became  Senior Vice
President of the Company and President of the Retail  Division in November 1995.
From 1988 until joining the Company,  he was Senior Vice President of New Market
Companies, Inc. and affiliates.

     Mr. John 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.  Richmond  has been  Senior Vice  President  and  President  of the
Medical Office Division since he joined the Company in July 1996.  Prior to that
he was  President  of The Lea  Richmond  Company  and The  Richmond  Development
Company from 1975 to 1996.

     Mr. Tartikoff has been Senior Vice President and Chief Financial Officer of
the Company since February 1986.



<PAGE>



                                     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 44 of the  Registrant's  1996  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  38  of  the  Registrant's   1996  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 39 through 43 of the Registrant's  1996 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 38 of the Registrant's 1996 Annual
Report to Stockholders are incorporated herein by reference.
         
     The information  appearing under the caption "Selected  Quarterly Financial
Information  (Unaudited)" on page 45 of the  Registrant's  1996 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.


<PAGE>




                                    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 through 4 and "Compliance with Section 16(a)
of the Securities  Exchange Act of 1934" on page 13 of the Proxy Statement dated
March  28,  1997  relating  to the  1997  Annual  Meeting  of  the  Registrant's
Stockholders, and is incorporated herein by reference.

Item 11.    Executive Compensation
- ----------------------------------

         The information appearing under the caption "Executive Compensation" on
pages 7  through  9 and  "Compensation  of  Directors"  on page 12 of the  Proxy
Statement  dated  March 28,  1997  relating  to the 1997  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 through 6 and
"Principal  Stockholders"  on pages 16 and 17 of the Proxy Statement dated March
28, 1997 relating to the 1997 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, 1997 relating to the 1997 Annual Meeting of
the Registrant's Stockholders, and is incorporated herein by reference.


<PAGE>




                                     PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>

(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  36  of  the  Registrant's  1996  Annual  Report  to
                    Stockholders and are incorporated herein by reference:

                                                                                                     Page Number
                                                                                                  in Annual Report
                                                                                                  ----------------

                   <S>                                                                                    <C> 
                    Consolidated Balance Sheets - December 31, 1995
                        and 1996                                                                          19
                    Consolidated Statements of Income for the Years Ended
                       December 31, 1994, 1995 and 1996                                                   20
                    Consolidated Statements of Stockholders' Investment for the
                       Years Ended December 31, 1994, 1995 and 1996                                       21
                    Consolidated Statements of Cash Flows for the Years Ended
                       December 31, 1994, 1995 and 1996                                                   22
                    Notes to Consolidated Financial Statements
                       December 31, 1994, 1995 and 1996                                                   23
                    Report of Independent Public Accountants                                              38

              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>
<TABLE>
<CAPTION>

                                                                                                     Page Number
                                                                                                    in Form l0-K
                                                                                                    ------------
                   <S>                                                                                <C> 
                    Report of Independent Public Accountants                                              F-1
                    Combined Balance Sheets - December 31, 1995 and 1996                                  F-2
                    Combined Statements of Income for the Years
                       Ended December 31, 1994, 1995 and 1996                                             F-3
                    Combined Statements of Partners' Capital for the Years
                       Ended December 31, 1994, 1995 and 1996                                             F-4
                    Combined Statements of Cash Flows for the Years Ended
                       December 31, 1994, 1995 and 1996                                                   F-5
                    Notes to Combined Financial Statements
                       December 31, 1994, 1995 and 1996                                               F-6 through
                                                                                                         F-12
</TABLE>





Item 14.    Continued
- ---------------------
<TABLE>
<CAPTION>

              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.

                                                                                                     Page Number
                                                                                                    in Form l0-K
                                                                                                    ------------

                   <S>                                                                                <C> 
                    Report of Independent Auditors                                                        G-1
                    Balance Sheets - December 31, 1995 and 1996                                           G-2
                    Statements of Operations for the Years Ended
                       December 31, 1994, 1995 and 1996                                                   G-3
                    Statements of Partners' Capital for the Years Ended
                       December 31, 1994, 1995 and 1996                                                   G-4
                    Statements of Cash Flows for the Years Ended
                       December 31, 1994, 1995 and 1996                                                   G-5
                    Notes to Financial Statements                                                     G-6 through
                       December 31, 1994, 1995 and 1996                                                   G-9
</TABLE>
<TABLE>
<CAPTION>

              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.

                                                                                                     Page Number
                                                                                                    in Form l0-K
                                                                                                    ------------

                   <S>                                                                                <C> 
                    Report of Independent Auditors                                                        H-1
                    Balance Sheets - December 31, 1996 and 1995                                           H-2
                    Statements of Income for the Years Ended
                       December 31, 1996, 1995 and 1994                                                   H-3
                    Statements of Cash Flows for the Years Ended
                       December 31, 1996, 1995 and 1994                                                   H-4
                    Statements of Venturers' Equity for the Three Years
                       Ended December 31, 1996                                                            H-5
                    Notes to Financial Statements                                                     H-6 through
                       December 31, 1996, 1995 and 1994                                                   H-7


</TABLE>

<PAGE>
<TABLE>
<CAPTION>


        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.
                                                                                                     Page Number
                                                                                                    in Form l0-K
                                                                                                    ------------

                   <S>                                                                                <C> 
                    A.     Cousins Properties Incorporated and Consolidated Entities:
                               Report of Independent Public Accountants on Schedules                      S-1
                               Schedule III- Real Estate and Accumulated
                                    Depreciation - December 31, 1996                                  S-2 through
                                                                                                          S-6

                    B.     Wildwood Associates and Green Valley Associates II
                               Schedule III - Real Estate and Accumulated
                               Depreciation - December 31, 1996                                          F-13

                    C.     CSC Associates, L.P.
                               Schedule III- Real Estate and Accumulated
                               Depreciation - December 31, 1996                                          G-10

                    D.     Haywood Mall Associates
                               Schedule III- Real Estate and Accumulated
                               Depreciation - December 31, 1996                                           H-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 the
                             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,  as further amended by the  Stockholders
                             on  May  6,  1996,   filed  as  Exhibit  A  to  the
                             Registrant's Proxy Statement dated May 6, 1996, 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(b)(i)       Cousins Properties Incorporated Profit Sharing Plan
                             as amended and restated effective as of January 1, 
                             1996.

              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(c)          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.

              10(d)          Cousins Properties Incorporated Stock Plan for 
                             Outside Directors, as amended by the Stockholders 
                             on May 6, 1996, filed on page 24 of the 
                             Registrant's Proxy Statement dated May 6, 1996, and
                             incorporated herein by reference.

Item 14.    Continued
- ---------------------

              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, 1996.

              13             Annual Report to Stockholders for the year ended 
                             December 31, 1996.

              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.
        --------------------------

              A Form 8-K was filed on  December  20,  1996 and a Form  8-K/A was
filed on February 18, 1997.


<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 21, 1997



                                        BY:    /s/ Kelly H. Barret
                                               Kelly H. Barrett
                                               Vice President and Controller
                                               (Authorized Officer)
                                               (Principal Accounting 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.
Signature                      Capacity                           Date
- ---------                      --------                           ----
Principal Executive Officer:
                               Chairman of the Board,            March 21, 1997
                               Chief Executive Officer
/s/ T.G. Cousins               and Director
- ----------------------------
    T. G. Cousins

Principal Financial and Accounting Officer:

                               Senior Vice President and         March 21, 1997
/s/ Peter A. Tartikoff         Chief Financial Officer
- ----------------------------
    Peter A. Tartikoff

Additional Directors:

/s/ Richard W. Courts           Director                         March 21, 1997
- ----------------------------
    Richard W. Courts, II


/s/ Boone A. Knox                Director                        March 21, 1997
- ----------------------------
    Boone A. Knox


/s/ William Porter Payne         Director                        March 21, 1997
- ----------------------------
    William Porter Payne






              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 14, 1997. 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 14, 1997



<PAGE>



                                                                    SCHEDULE III
                                                                   (Page 1 of 5)
            COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1996
                                ($ 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 Acquisition                   December 31, 1996
                                           -------------------   ------------------------   -----------------------------------   
                                                                                                                                 
                                                                                                                               
                                                                                Carrying                                        
                                                                                  Costs                                            
                                                    Buildings                   Less Cost       Land        Buildings               
                                                       and       Improve-       of Sales      and Land         and       Total   
Description                  Encumbrances  Land   Improvements     ments        and Other   Improvements  Improvements  (a),(b)  
- -----------                  ------------  ----   ------------     -----        ---------   ------------  ------------  -------  
<S>                           <C>         <C>        <C>        <C>             <C>           <C>           <C>         <C>
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
- ----------------------------------------------
   Wildwood - Atlanta, GA     $     --    $ 11,156   $    --    $  4,737        $ (8,888)     $  7,005      $     --    $  7,005    
   North Point Property -
     Fulton Co., GA                 --      10,294        --      12,213         (16,521)        5,986            --       5,986    
   Midtown - Atlanta, GA            --       2,949        --          56          (1,607)        1,398            --       1,398   
   McMurray - Cobb Co., GA.         --       1,015        --         172          (1,092)           95            --          95   
   Presidential MarketCenter
     Outparcels - Gwinnett
     Co., GA                        --       2,939        --         603          (2,629)          913            --         913   
   Lawrenceville -
     Gwinnett Co., GA               --       5,543        --         536          (3,798)        2,281            --       2,281   
   Colonial Plaza MarketCenter
     Orlando, FL                    --       1,649        --         183            (186)        1,646            --       1,646   
   Greenbrier MarketCenter
     Outparcels
     Chesapeake, VA                 --       3,191        --         194          (2,511)          874            --         874   
   Lovejoy Station Outparcels
     Clayton Co., GA                --         575        --          --              --           575            --         575  
   Rivermont Station Outparcels
     Fulton Co., GA                 --         794        --          --            (474)          320            --         320   
   Miscellaneous Investments -
     Atlanta, GA                    --         120        --          --              --           120            --         120   
                              --------    --------   -------    --------        --------      --------      --------     -------
                                    --      40,225        --      18,694         (37,706)       21,213            --      21,213   
                              --------    --------   -------    --------        --------      --------      --------     -------
</TABLE>


<PAGE>

                                Column G    Column G    Column H    Column I
                                --------    --------    --------    --------
<TABLE>
<CAPTION>
                                                                    
                                                             
                                                      
                                                                     Life on
                                                                    Which De-
                                                                   preciation
                               Accumu-                               In 1996
                                lated      Date of                   Income
                               Deprecia-  Construc-      Date       Statement
Description                    tion (a)     tion       Acquired    Is Computed
- -----------                    --------   ---------    --------    -----------
<S>                            <C>         <C>      <C>             <C> 
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
- ----------------------------------------------
   Wildwood - Atlanta, GA      $    --        --    1971-1982,1989          --
   North Point Property -
     Fulton Co., GA                  --       --         1970-1985          --
   Midtown - Atlanta, GA             --       --              1984          --
   McMurray - Cobb Co., GA.          --       --              1981          --
   Presidential MarketCenter
     Outparcels - Gwinnett
     Co., GA                         --       --              1993          --
   Lawrenceville -
     Gwinnett Co., GA                --       --              1994          --
   Colonial Plaza MarketCenter
     Orlando, FL                     --       --              1995          --
   Greenbrier MarketCenter
     Outparcels
     Chesapeake, VA                  --       --              1995          --
   Lovejoy Station Outparcels
     Clayton Co., GA                 --       --              1995          --
   Rivermont Station Outparcels
     Fulton Co., GA                  --                       1996          --
   Miscellaneous Investments -
     Atlanta, GA                     --       --         1972-1984          --
                                -------
                                     --
                                -------
</TABLE>





                                                                  SCHEDULE III 
                                                                 (Page 2 of 5)
            COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1996
                                ($ 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 Acquisition                   December 31, 1996
                                           -------------------   ------------------------   -----------------------------------   
                                                                                                                                
                                                                                                                                
                                                                                Carrying                                        
                                                                                  Costs                                            
                                                    Buildings                   Less Cost       Land        Buildings               
                                                       and       Improve-       of Sales      and Land         and       Total   
Description                  Encumbrances  Land   Improvements     ments        and Other   Improvements  Improvements  (a),(b)  
- -----------                  ------------  ----   ------------     -----        ---------   ------------  ------------  -------  
<S>                           <C>         <C>        <C>        <C>             <C>           <C>           <C>         <C>
OPERATING PROPERTIES
- --------------------
   First Union Tower -
     Greensboro, N.C.        $     --     $  1,394   $    --     $ 30,229        $  1,971      $  1,399      $ 32,195    $ 33,594  
   Wildwood - 3301 Windy  
     Ridge - Atlanta., GA          --           20        --        8,838           1,519         1,237         9,140      10,377  
   Kennesaw - Cobb Co., GA         --           --        --        2,337              --            --         2,337       2,337  
   615 Peachtree Street
     Atlanta, GA                   --        4,740     6,985          --               --         4,740         6,985      11,725  
   100 North Point Center East
     Fulton Co., GA                --          441        --      11,990              504           441        12,494      12,935 
   One Independence Center
     Charlotte, NC             50,800       11,096    59,663          --               --        11,096        59,663      70,759  
   Perimeter Expo -
     Atlanta, GA               21,259        8,564        --      11,137               71         8,564        11,208      19,772 
   North Point
     Stand Alone Retail Sites -
     Fulton Co., GA                 --       4,559        --         164             (904)        3,819            --       3,819 
   North Point MarketCenter
     Fulton Co., GA             29,477       8,500        --      18,015              506         8,500        18,521      27,021  
   Presidential MarketCenter
     Gwinnett Co., GA               --       3,956        --      11,363              599         3,956        11,962      15,918  
   Mansell Crossing Phase II
     Fulton Co., GA                 --       2,172        --       2,994              348         2,172         3,342       5,514  
   Lovejoy Station
     Clayton Co., GA                --       1,387        --       4,315              332           812         5,222       6,034  
</TABLE>

<TABLE>
<CAPTION>
                                                                    
                                                             
                                                      
                                                                     Life on
                                                                    Which De-
                                                                   preciation
                               Accumu-                               In 1996
                                lated      Date of                   Income
                               Deprecia-  Construc-      Date       Statement
Description                    tion (a)     tion       Acquired    Is Computed
- -----------                    --------   ---------    --------    -----------
<S>                            <C>         <C>      <C>             <C> 
OPERATING PROPERTIES
- --------------------
   First Union Tower -
     Greensboro, N.C.          $ 9,539     1988-1990        1987    40 Years  
   Wildwood - 3301 Windy
     Ridge - Atlanta., GA        3,523          1984        1984    30 Years  
   Kennesaw - Cobb Co., GA       1,344          1974        1973    30 Years  
   615 Peachtree Street           
     Atlanta, GA                   172            --        1996    15 Years                       
  100 North Point Center East
     Fulton Co., GA                438          1994        1994    40 Years       
   One Independence Center
     Charlotte, NC                 221            --        1996    25 Years       
   Perimeter Expo -
     Atlanta, GA                 1,313          1993        1993    30 Years     
   North Point
     Stand Alone Retail Sites -
     Fulton Co., GA                 50            --   1970-1985          --       
   North Point MarketCenter
     Fulton Co., GA              2,174     1993-1994   1970-1985    30 Years     
   Presidential MarketCenter
     Gwinnett Co., GA              954     1993-1994        1993    30 Years  
   Mansell Crossing Phase II
     Fulton Co., GA                117          1995        1995    30 Years      
   Lovejoy Station
     Clayton Co., GA               196          1994        1994    30 Years      

</TABLE>

<PAGE>




                                                                   SCHEDULE III 
                                                                  (Page 3 of 5)
            COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1996
                                ($ 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 Acquisition                   December 31, 1996
                                           -------------------   ------------------------   ----------------------------------- 
                                                                                                                                  
                                                                                                                             
                                                                                Carrying                                       
                                                                                  Costs                                            
                                                    Buildings                   Less Cost       Land        Buildings               
                                                       and       Improve-       of Sales      and Land         and       Total   
Description                  Encumbrances  Land   Improvements     ments        and Other   Improvements  Improvements  (a),(b)  
- -----------                  ------------  ----   ------------     -----        ---------   ------------  ------------  -------  
<S>                           <C>         <C>        <C>        <C>             <C>           <C>           <C>         <C>
OPERATING PROPERTIES (Continued)
- --------------------------------
   Greenbrier MarketCenter
     Chesapeake, VA           $     --    $  5,500   $    --    $ 25,665        $  1,584      $  5,500      $ 27,249    $ 32,749    
   Miscellaneous                    --         398       145          77            (475)           --           145         145  
                              --------    --------   -------    --------        --------      --------      --------     -------
                               101,536      52,727    66,793     127,124           6,055        52,236       200,463     252,699    
                              --------    --------   -------    --------        --------      --------      --------     -------

PROJECTS UNDER CONSTRUCTION
- ---------------------------
   Mansell Crossing Phase II-Expansion
     Fulton Co., GA          $      --       1,100        --         725              64         1,100           789       1,889   
   200 North Point Center East
     Fulton County, GA              --         441        --       9,998             363           441        10,361      10,802  
   333 North Point Center East
     Fulton County, GA              --         618        --         605              10           618           615       1,233  
   Presbyterian Medical 
     Center at University
     Charlotte, NC                  --          --        --       1,935              14            --         1,949       1,949  
   Colonial Plaza MarketCenter
     Orlando, FL                    --       8,500        --      26,894           1,905         8,500        28,799      37,299  
   Presidential MarketCenter-Expansion
     Gwinnett Co., GA               --       1,968        --       1,579             123         1,968         1,702       3,670    
   Rivermont Station
     Fulton Co., GA                 --       2,050        --       7,262             421         2,050         7,683       9,733   
   Los Altos MarketCenter
     Long Beach, CA                 --       4,900        --      13,803             580         4,900        14,383      19,283   
   Other                            --       2,578        --          85              47         2,578           132       2,710  
                                    --      22,155        --      62,886           3,527        22,155        66,413      88,568 
</TABLE>
<TABLE>
<CAPTION>
                                                                    
                                                             
                                                      
                                                                     Life on
                                                                    Which De-
                                                                   preciation
                               Accumu-                               In 1996
                                lated      Date of                   Income
                               Deprecia-  Construc-      Date       Statement
Description                    tion (a)     tion       Acquired    Is Computed
- -----------                    --------   ---------    --------    -----------
<S>                            <C>         <C>      <C>             <C> 
OPERATING PROPERTIES (Continued)
- --------------------------------
   Greenbrier MarketCenter
     Chesapeake, VA            $    191        1995           1995  30 Years
   Miscellaneous                    107          --      1977-1984  Various
                               --------
                                 20,339
                               --------
PROJECTS UNDER CONSTRUCTION
- ---------------------------
   Mansell Crossing Phase II-Expansion
     Fulton Co., GA                 --         1995           1995        --
   200 North Point Center East
     Fulton County, GA              --         1995           1995        --
   333 North Point Center East
     Fulton County, GA              --         1996           1996        --
   Presbyterian Medical
     Center at University
     Charlotte, NC                  --         1996           1996        --
   Colonial Plaza MarketCenter
     Orlando, FL                    --         1995           1995        --
   Presidential MarketCenter-Expansion
     Gwinnett Co., GA               --         1995           1995        --
   Rivermont Station
     Fulton Co., GA                 --         1995           1995        --
   Los Altos MarketCenter
     Long Beach, CA                 --         1996           1996        --
   Other                            --         1996           1996        --
                               -------
                                    --
                               -------
</TABLE>

<PAGE>


                                                                   SCHEDULE III 
                                                                  (Page 4 of 5)
            COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1996
                                ($ 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 Acquisition                   December 31, 1996
                                           -------------------   ------------------------   -----------------------------------
                                                                                                                                 
                                                                                                                                 
                                                                                Carrying                                         
                                                                                  Costs                                            
                                                    Buildings                   Less Cost       Land        Buildings               
                                                       and       Improve-       of Sales      and Land         and       Total   
Description                  Encumbrances  Land   Improvements     ments        and Other   Improvements  Improvements  (a),(b)  
- -----------                  ------------  ----   ------------     -----        ---------   ------------  ------------  -------  
<S>                           <C>         <C>        <C>        <C>             <C>           <C>           <C>         <C>
RESIDENTIAL LOTS UNDER DEVELOPMENT
- ----------------------------------
   Brown's Farm -
     Cobb Co., GA                  --        3,154        --       3,883          (4,739)        2,298          --         2,298  
   Apalachee River Club
     Gwinnett Co., GA              --        1,820        --       3,240          (2,068)        2,992          --         2,992   
   Echo Mill
     Cobb Co., GA                 423        5,298        --       3,907          (4,293)        4,912          --         4,912 
   Barrett Downs
     Forsyth Co., GA               --        1,489        --       1,742          (1,381)        1,850          --         1,850  
   Bradshaw Farms
     Cherokee Co., GA              --        3,246        --       5,887          (7,277)        1,856          --         1,856  
   Alcovy Woods
     Gwinnett Co., GA           1,005        1,142        --         108              25         1,275          --         1,275 
                                1,428       16,149        --      18,767         (19,733)       15,183          --        15,183
                             --------     --------   -------    --------        --------      --------     --------
                             $102,964     $131,256   $66,793    $227,471        $(47,857)     $110,787     $266,876     $377,663    
                             ========     ========   =======    ========        ========      ========     ========     ========    
</TABLE>
<TABLE>
<CAPTION>
                                                                    
                                                             
                                                      
                                                                     Life on
                                                                    Which De-
                                                                   preciation
                               Accumu-                               In 1996
                                lated      Date of                   Income
                               Deprecia-  Construc-      Date       Statement
Description                    tion (a)     tion       Acquired    Is Computed
- -----------                    --------   ---------    --------    -----------
<S>                            <C>         <C>      <C>             <C> 
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         --
   Alcovy Woods
     Gwinnett Co., GA               --          1996           1996         --
                               -------
                                    --
                               -------
                               $20,339
                               =======
</TABLE>


<PAGE>



                                                                  SCHEDULE III
                                                                 (Page 5 of 5)
            COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1996
                                ($ in thousands)
<TABLE>
<CAPTION>

NOTES:
      (a)  Reconciliations of total real estate carrying value and accumulated 
           depreciation for the three years ended December 31, 1996 are as 
           follows:
                                                        Real Estate                Accumulated Depreciation
                                              ------------------------------      --------------------------
                                                1994       1995       1996          1994     1995      1996
                                                ----       ----       ----          ----     ----      ----
 
           <S>                                <C>        <C>        <C>           <C>       <C>       <C>    
           Balance at beginning of period     $108,252   $149,242   $235,344      $ 9,418   $12,112   $15,483
              Additions during the period:
                Improvements and other
                  capitalized costs             53,580     97,036    181,682           --        --        --
                Provision for depreciation          --         --         --        2,694     3,371     5,571
                                              --------   --------   --------      -------   -------   ------- 
                                                53,580     97,036    181,682        2,694     3,371     5,571
                                              --------   --------   --------      -------   -------   ------- 


              Deductions during the period:
              Cost of real estate sold         (12,590)   (10,934)   (39,363)          --        --     (715)
                                              --------   --------   --------      -------   -------   ------- 
                                               (12,590)   (10,934)   (39,363)          --        --        --
                                              --------   --------   --------      -------   -------   ------- 

           Balance at close of period         $149,242   $235,344   $377,663      $12,112   $15,483   $20,339
                                              ========   ========   ========      =======   =======   =======

      (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.

</TABLE>

<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, 1995 and 1996, and the related combined
statements  of income,  partners'  capital  and cash flows for each of the three
years in the period ended December 31, 1996. 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, 1995 and 1996, and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1996 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 14, 1997


<PAGE>
<TABLE>
<CAPTION>


               WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
               --------------------------------------------------
                             COMBINED BALANCE SHEETS
                             -----------------------
                           DECEMBER 31, 1995 AND 1996
                           --------------------------
                                ($ in thousands)

                                                             1995       1996
                                                           -------    --------
ASSETS
- ------
<S>                                                        <C>        <C>

REAL ESTATE ASSETS:
    Income producing properties, including land of
        $37,677 and $44,366 in 1995 and 1996,
        respectively (Note 7)                              $217,748   $239,647
    Accumulated depreciation and amortization               (44,900)   (48,699)
                                                           ------------------- 
                                                            172,848    190,948
    Projects under construction                              15,378     19,670
    Land committed to be contributed (Note 3)                13,903      9,405
    Land and property predevelopment costs                   12,399     11,862
                                                           ------------------- 
           Total real estate assets                         214,528    231,885
                                                           ------------------- 
CASH AND CASH EQUIVALENTS                                        --     16,511
                                                           ------------------- 
OTHER ASSETS:
    Deferred expenses, net of accumulated amortization of
      $6,078 and $6,365 in 1995 and 1996, respectively        5,641      7,249
    Receivables (Note 6)                                     14,920     15,330
    Allowance for possible losses (Note 1)                   (2,550)    (2,550)
    Furniture, fixtures and equipment, net of accumulated
        depreciation of $1,276 and $1,153 in 1995 and 1996,
        respectively                                            296        456
    Other                                                        31         29
                                                           -------------------    
                                                             18,338     20,514
                                                           ------------------- 
                                                           $232,866   $268,910
                                                           ===================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------

NOTES PAYABLE (Note 7)                                     $134,855   $166,490
RETAINAGE, ACCOUNTS PAYABLE AND
    ACCRUED LIABILITIES                                       7,843     11,762
                                                           ------------------- 
           Total liabilities                                142,698    178,252
                                                           ------------------- 
PARTNERS' CAPITAL (Notes 3 and 4):
    International Business Machines Corporation              45,084     45,329
    Cousins Properties Incorporated                          45,084     45,329
                                                           ------------------- 
           Total partners' capital                           90,168     90,658
                                                           ------------------- 
                                                           $232,866   $268,910
                                                           ===================
</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, 1994, 1995 and 1996
                                                                            
                                 ($ in thousand)
<TABLE>
<CAPTION>
                                                                            

                                                    1994      1995      1996
                                                    ----      ----      ----

<S>                                                <C>       <C>       <C> 
REVENUES:
    Rental income and recovery of expenses
        charged directly to specific tenants       $36,196   $37,589   $40,351
    Interest                                            27        32        39
    Other                                               82       146       115
                                                   ---------------------------
               Total revenues                       36,305    37,767    40,505
                                                   ---------------------------
EXPENSES:
    Real estate taxes                                2,516     3,032     3,579
    Maintenance and repairs                          1,991     2,207     2,622
    Utilities                                        1,822     1,965     2,182
    Management and personnel costs                   1,794     1,892     2,217
    Contract security                                  745       820     1,094
    Grounds maintenance                                588       646       776
    Expenses charged directly to specific tenants      458       395       417
    Insurance                                          100        98        93
    Interest expense                                11,790    11,478     9,712
    Depreciation and amortization                    8,648     8,353     8,372
    Predevelopment, marketing and other expenses       342       345       293
    Ground lease expense (Note 8)                      322       322       295
    Real estate taxes on undeveloped land (Note 3)     182       163       208
    General and administrative expenses                163       167       155
                                                   ---------------------------
           Total expenses                           31,461    31,883    32,015
                                                   ---------------------------
GAIN ON SALE OF INVESTMENT
    PROPERTIES (Note 8)                                 --        --        --
                                                   ---------------------------
NET INCOME                                         $  4,844  $ 5,884   $ 8,490
                                                   ===========================

</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, 1994, 1995 AND 1996
              ----------------------------------------------------
                                                                           
                                ($ in thousands)
<TABLE>
<CAPTION>

                                   International
                                      Business       Cousins
                                      Machines      Properties
                                    Corporation    Incorporated     Total
                                    -----------    ------------     -----


<S>                                   <C>             <C>          <C>    
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


    Distributions                      (4,000)         (4,000)       (8,000)

 Net income                             2,942           2,942         5,884

                                      -------------------------------------
   
BALANCE, December 31, 1995             45,084          45,084        90,168


    Distributions                      (4,000)         (4,000)       (8,000)


    Net income                          4,245           4,245         8,490
                                      -------------------------------------

BALANCE, December 31, 1996            $45,329         $45,329       $90,658
                                      =====================================

</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, 1994, 1995 AND 1996
              ----------------------------------------------------
                                                                            
                                ($ in thousands)
<TABLE>
<CAPTION>
                                                      1994     1995      1996
                                                      ----     ----      ----


CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                 <C>      <C>       <C>     
    Net income                                      $ 4,844  $  5,884  $  8,490
    Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation and amortization              8,648     8,353     8,372
           Effect of recognizing rental revenues
               on a straight-line basis                (349)     (383)      421
           Change in tenant rental receivables           51       (38)     (562)
           Change in accounts payable and accrued
               liabilities related to operations       (195)   (1,004)    3,557
                                                    ---------------------------
Net cash provided by operating activities            12,999    12,812    20,278
                                                    ---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Property acquisition and development 
      expenditures                                   (3,008)   (4,940)  (34,871)
    Payment for deferred expenses; furniture, 
      fixtures and equipment; and other assets         (661)   (2,123)   (2,978)
                                                    ---------------------------
Net cash used in investing activities                (3,669)   (7,063)  (37,849)
                                                    ---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayment of notes payable                         (630)   (1,063)   (1,610)
    Repayment of long term financing                     --  (111,998)       --
    Proceeds from long term refinancing                  --    98,000    70,000
    Proceeds from line of credit                     12,600    31,212    75,733
    Repayments under line of credit                 (13,300)  (13,904) (102,041)
    Partnership distributions                        (8,000)   (8,000)   (8,000)
                                                    ---------------------------
Net cash provided by (used in) financing activities  (9,330)   (5,753)   34,082
                                                    ---------------------------
NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS                                     --        (4)   16,511

CASH AND CASH EQUIVALENTS AT BEGINNING
    OF YEAR                                               4         4        --
                                                    ---------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR            $     4   $    --  $ 16,511
                                                    ===========================
</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, 1994, 1995 AND 1996
                        --------------------------------




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  receivables and other tenant related assets on WWA's books.  The
allowance  reflects  management's  evaluation  of the exposure to WWA based on a
specific review of its properties and the impact of current economic  conditions
on those properties.







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 ("SFAS")
No. 13, income on leases which include scheduled  increases in rental rates over
the lease term (other  than  scheduled  increases  based on the  Consumer  Price
Index) is recognized on a straight-line basis.

Use of Estimates:

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

Impairment of Long-Lived Assets:

         The  Partnerships  have  adopted  SFAS  No.  121,  "Accounting  for the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of"
which  requires  impairment  losses to be recorded on long-lived  assets used in
operations when indicators of impairment are present and the  undiscounted  cash
flows  estimated  to be  generated  by those  assets  are less than the  assets'
carrying  amount.  SFAS No. 121 also  addresses the  accounting  for  long-lived
assets that are  expected to be disposed of. The adoption of SFAS No. 121 had no
effect on the financial  results of the Partnerships  and the Partnerships  have
recognized no provision for real estate losses for any period presented.

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  selected  property
within Wildwood Office Park  ("Wildwood"),  located in Atlanta,  Georgia and the
Summit Green project located in Greensboro, North Carolina.

         Wildwood  is an office park  containing  a total of  approximately  289
acres,  of which  approximately  94 acres are owned by WWA,  and an estimated 15
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, 1996,
WWA's income producing real estate assets in Wildwood  consisted of: five office
buildings  totaling  1,882,000  rentable  square  feet,  one office  building of
250,000 rentable square feet which is under  construction  (including land under
such  buildings  totaling   approximately  46  acres);   land  parcels  totaling
approximately  15 acres leased to two banking  facilities and five  restaurants;
and a 2 acre site on which a child care  facility is  constructed.  In addition,
WWA's  assets  include  36 acres of land held for future  development,  which is
composed of a 4 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 32 acres of
other  land  to  be  developed  (including   additional  land  committed  to  be
contributed by Cousins) (see Note 3).

         See Note 8 where  the  disposition  of the  Summit  Green  property  is
discussed.

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 by IBM was agreed to by the partners at the time of formation of WWA
and was  recorded  at the cash  amount IBM paid for the  property  just prior to
contributing it to the Partnership. The value of the property contributed and to
be contributed by Cousins was recorded on the  Partnership's  books at an amount
equal to the cash and property contributed by IBM for an equal (50%) partnership
interest.

         The status of  contributions at December 31, 1996, 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      53,853       70,120
         Land committed to be contributed       --       8,920        8,920
                                           --------------------------------
                  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,  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, 1996, Cousins was committed to contribute land on which
an additional  678,051 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  15 acres if the  density  were
similar to that achieved on land contributed to date.

         WWA pays all of the expenses  related to the Land  Committed to be  
Contributed  which were  $182,000,  $163,000 and $208,000 in 1994,  1995 and 
1996, respectively.







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.

5.    FEES TO RELATED PARTIES

     The  Partnerships  engaged  Cousins  to  manage,   develop  and  lease  the
Partnerships'  property.  Fees to Cousins  incurred by the  Partnerships  during
1994, 1995 and 1996 were as follows ($ in thousands):
<TABLE>
<CAPTION>


                                           1994       1995      1996
                                           ----       ----      ----

         <S>                              <C>        <C>        <C>   
         Development and tenant
              construction fees           $   57     $  250     $  604
         Management fees                     909        945      1,032
         Leasing and procurement fees        189        235      1,105
                                          ----------------------------
                                          $1,155     $1,430     $2,741
                                          ============================
</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,  1996,  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>     
         1997              $ 16,371    $ 18,330    $ 34,701
         1998                17,145      17,767      34,912
         1999                16,896      11,937      28,833
         2000                16,673       9,997      26,670
         2001                12,719       7,687      20,406
         Thereafter          31,829      35,902      67,731
                           --------------------------------
                           $111,633    $101,620    $213,253
                           ================================
</TABLE>

         At  December  31,  1995 and  1996,  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
$14,754,000 and $14,331,000,  respectively.  Of the 1996 amount, 57% was related
to leases with IBM.

7.    NOTES PAYABLE

         At December 31, 1996,  notes  payable  consisted of the following ($ in
thousands):
<TABLE>
<CAPTION>

                                                                                    Term/
                                                                                Amortization                  Balance at
                                                                                   Period          Final     December 31,
             Description                                      Rate                 (Years)       Maturity        1996
             -----------                                      ----              ------------     --------    ------------

   <S>                                                   <C>                        <C>           <C>          <C>     
   Line of credit ($10 million maximum)                  Fed Funds + .75%           2/ N/A          9/1/97     $     --
   2300 Windy Ridge Parkway Building mortgage note             7.56%                10/25         12/01/05       71,078
   3200 Windy Hill Road Building mortgage note                 8.23%                10/28           1/1/07       70,000
   2500 Windy Ridge Parkway Building mortgage note             7.45%                10/20         12/15/05       25,412
                                                                                                               --------
                                                                                                               $166,490
                                                                                                               ========
</TABLE>

         On December 16, 1996,  WWA  completed  the  financing of the 3200 Windy
Hill Road Building with a $70 million mortgage note payable at an 8.23% interest
rate and maturity of January 1, 2007.  Concurrent  with the financing,  WWA paid
down its line of credit to $0 and on January 16, 1997, made a cash  distribution
of $10 million to each partner.

         On January 7, 1997,  WWA received a commitment for the financing of the
4100 and 4300 Wildwood Parkway  Buildings which is scheduled to fund by April 1,
1997. The $30 million non-recourse mortgage note payable has an interest rate of
7.65% and a term of fifteen years.

         The 2300 Windy Ridge Parkway Building and 3200 Windy Hill Road Building
mortgage  notes,  as well as the $30  million  mortgage  note on  which  WWA has
received a commitment, provide for additional amortization in the later years of
the  notes  (over  that  required  by  the  amortization  periods  shown  above)
concurrent with scheduled rent increases.

         The line of credit matures September 1, 1997, 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,  without the Lender's  prior  approval.
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.  Assets with net carrying values of $143,775,000 were pledged as
security on the Partnerships' debt.













         The  aggregate  maturities  of the  indebtedness  at December  31, 1996
summarized above are as follows ($ in thousands):
<TABLE>
<CAPTION>

<S>                        <C>                                <C>     
                           1997                               $  2,325
                           1998                                  3,513
                           1999                                  3,791
                           2000                                  4,093
                           2001                                  4,579
                           Thereafter                          148,189
                                                              --------
                                                              $166,490
                                                              ========
</TABLE>

         The  Partnerships   capitalize   interest  expense  to  property  under
development as required by Statement of Financial  Accounting  Standards No. 34.
In the years ended  December  31, 1995 and 1996,  the  Partnerships  capitalized
interest totaling $236,000 and $1,053,000, respectively.

         At December 31, 1995 and 1996, the carrying value of the  Partnerships'
notes payable approximates fair value.

8.    DISPOSITION OF SUMMIT GREEN

         Effective  December 1, 1996,  WWA disposed of its interest in a 144,000
GSF office building at Summit Green in exchange for  cancellation of the related
mortgage debt. In connection with this  disposition,  the Partnerships  also may
dispose of their leasehold interest in land adjacent to the office building. The
Partnerships  anticipate  no  material  gain  or loss  will  result  from  their
disposition of the Summit Green project.

         The land adjacent to the formerly owned office building is subject to a
non-subordinated   ground  lease  expiring  October  31,  2084.  Lease  payments
effective December 1, 1996 are approximately  $256,000 per year, and escalate at
ten year intervals 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). The next escalation date is December 1,
2006.

9.    COMBINED STATEMENTS OF CASH FLOWS-SUPPLEMENTAL INFORMATION

         Interest (net of amounts capitalized) was as follows ($ in thousands):

                                     1994      1995       1996
                                     ----      ----       ----

         Interest paid             $11,780   $12,011     $9,096

     Significant  non-cash  financing  and  investing  activities  included  the
following:

     In 1994, the child care facility under  construction with an aggregate cost
of $1,600,000 was  transferred  from Land and Property  Predevelopment  Costs to
Income Producing Properties.

     In 1995 and 1996,  land parcels with costs of  $6,537,000  and  $4,498,000,
respectively, were transferred from Land Committed To Be Contributed to Land and
Property Predevelopment Cost.

     In 1996,  the  Partnerships  recorded the  disposition  of the Summit Green
project  (including the office building and the  anticipated  disposition of the
leasehold interest in the adjacent land) having a total cost of $10,447,000, and
the cancellation of $10,447,000 of related debt (see Note 8).

     In 1996, two buildings with a total cost of  $29,368,000  were  transferred
from Projects Under Construction to Income Producing Properties.





<PAGE>







                                                                   SCHEDULE III
               WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1996
                                ($ 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 Acquisition                   December 31, 1996
                                           -------------------   ------------------------   -----------------------------------   
                                                                                                                                 
                                                                                                                                 
                                                                                Carrying                                          
                                                                                  Costs                                            
                                                    Buildings                   Less Cost       Land        Buildings               
                                                       and       Improve-       of Sales      and Land         and       Total   
Description                  Encumbrances  Land   Improvements     ments        and Other   Improvements  Improvements  (a),(b)  
- -----------                  ------------  ----   ------------     -----        ---------   ------------  ------------  -------  
<S>                           <C>         <C>        <C>        <C>             <C>           <C>           <C>         <C>
Wildwood Office Park -
   Cobb Co., GA
    2500 Windy Ridge           $ 25,413   $ 4,414   $ 14,814    $  9,904        $   141       $ 4,414       $ 24,859   $ 29,273    
    2300 Windy Ridge             71,077     8,927         --      61,728          5,429         8,927         67,157     76,084    
    Parkside                         --     4,274      2,553      (1,029)           (45)        3,136          2,617      5,753  
    3200 Windy Hill              70,000    10,503         --      67,571          5,470        10,503         73,041     83,544   
    4100/4300 Wildwood Parkway       --     6,689         --      22,541            251         6,689         22,792     29,481    
    4200 Wildwood Parkway            --     4,347         --      14,948            375            --         19,670     19,670   
    Stand Alone Retail Sites         --     7,659      1,234       3,642            123         9,570          3,088     12,658  
    Land committed to
       be contributed                --     9,023         --          --            382         9,405             --      9,405    
    Other land and
       property                      --    11,430         --       3,459           (173)       11,575          3,141     14,716   
                               --------   -------   --------    --------        -------       -------       --------   --------
                               $166,490   $67,266   $ 18,601    $182,764        $11,953       $64,219       $216,365   $280,584   
                               ========   =======   ========    ========        =======       =======       ========   ========   
</TABLE>
<TABLE>
<CAPTION>

NOTE: (a)  Reconciliations of total real estate carrying value and accumulated 
           depreciation for the three years ended December 31, 1996 are as 
           follows:
                                                        Real Estate                     Accumulated Depreciation
                                             ----------------------------------     --------------------------------
                                               1994         1995         1996         1994         1995        1996
                                               ----         ----         ----         ----         ----        ----
<S>                                          <C>          <C>          <C>          <C>          <C>         <C>    
Balance at beginning of period               $249,714     $250,738     $259,428     $32,932      $40,009     $44,900
Additions during the period:
      Improvements, and other
         capitalized costs                      1,058        8,690       32,361          --           --          --
      Provisions for depreciation                  --           --           --       7,111       4,891       7,296
Deductions during the period:
      Retirement of fully depreciated
         assets and writeoffs                     (34)          --           --        (34)           --         (16)
      Disposition of Summit Green
         Office Building                           --           --      (11,205)         --           --      (3,481)
                                             --------     --------     --------     -------      -------     -------
Balance at close of period                   $250,738     $259,428     $280,584     $40,009      $44,900     $48,699
                                             ========     ========     ========      =======     =======     =======
</TABLE>
<TABLE>
<CAPTION>
                                                                    
                                                             
                                                      
                                                                     Life on
                                                                    Which De-
                                                                   preciation
                               Accumu-                               In 1996
                                lated      Date of                   Income
                               Deprecia-  Construc-      Date       Statement
Description                    tion (a)     tion       Acquired    Is Computed
- -----------                    --------   ---------    --------    -----------
<S>                            <C>         <C>      <C>             <C> 
Wildwood Office Park -
   Cobb Co., GA
    2500 Windy Ridge           $ 9,249     1985             1985    40 Years
    2300 Windy Ridge            20,065     1986             1986    40 Years
    Parkside                     1,562     1980             1986    25 Years
    3200 Windy Hill             15,813     1989             1989    40 Years
    4100/4300 Wildwood Parkway     445     1995             1986    40 Years
    4200 Wildwood Parkway           --     1996             1986          --
    Stand Alone Retail Sites     1,027     Various     1985-1995    Various
    Land committed to
       be contributed               --     --          1985-1986          --
    Other land and
       property                    538     Various     1985-1986    Various
                               -------
                               $48,699
</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, 1995 and 1996,  and the related  statements  of
operations, partners' capital, and cash flows for each of the three years in the
period ended December 31, 1996. Our audits also included the financial statement
schedule  of CSC  Associates,  L.P.  listed  in the Index at Item  14(a).  These
financial  statements and schedule are the  responsibility  of the Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements  and  schedule  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, 1995 and 1996, and
the results of its  operations and its cash flows for each of the three years in
the period ended  December 31,  1996,  in  conformity  with  generally  accepted
accounting  principles.  Also, in our opinion,  the related financial  statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.


                                                             ERNST & YOUNG LLP

Atlanta, Georgia
January 31, 1997



<PAGE>



                              CSC ASSOCIATES, L.P.
                                 BALANCE SHEETS
                           DECEMBER 31, 1995 AND 1996
                                ($ in thousands)
<TABLE>
<CAPTION>


                                     ASSETS
                                     ------
                                                          1995         1996
                                                          ----         ----
<S>                                                     <C>          <C>
REAL ESTATE ASSETS:

  Building and improvements, including land and
    land improvements of $22,818 in 1995 and 1996       $208,676     $209,141
  Accumulated depreciation                               (21,232)     (27,621)
                                                        ---------------------
                                                         187,444      181,520
                                                        ---------------------
CASH                                                          97           31
                                                        ---------------------
NOTE RECEIVABLE (Note 4)                                                                      --          78,304

OTHER ASSETS:

  Deferred expenses, net of accumulated amortization
    of $3,664 and $4,779 in 1995 and 1996, respectively    8,306        7,293
  Other receivables (Note 3)                                                            10,142          10,895
  Furniture, fixtures and equipment, net of accumulated
    depreciation of $1,218 and $ 1,553 in 1995 and 1996,
    respectively                                             871          627
  Other (Note 6)                                              29        1,021
                                                        ---------------------
      Total other assets                                  19,348       19,836
                                                        ---------------------
                                                        $206,889     $279,691
                                                        =====================

                        LIABILITIES AND PARTNERS' CAPITAL
                        ---------------------------------

NOTE PAYABLE (Note 4)                                   $     --     $ 78,304

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                   2,951        1,041
                                                        ---------------------
      Total liabilities                                    2,951       79,345
                                                        ---------------------
PARTNERS' CAPITAL (Note 1)                               203,938      200,346
                                                        ---------------------
                                                        $206,889     $279,691
                                                        =====================
</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, 1994, 1995 AND 1996
                                ($ in thousands)
<TABLE>
<CAPTION>

                                                     1994      1995      1996
                                                     ----      ----      ----

<S>                                                <C>       <C>       <C> 
REVENUES:
    Rental income and recovery of expenses
        charged directly to specific tenants       $28,931   $31,195   $33,312
    Interest income (Note 4)                            --        --     4,561
                                                   ---------------------------
        Total revenues                              28,931    31,195    37,873
                                                   ---------------------------
EXPENSES:
    Real estate taxes                                3,493     3,482     3,578
    Utilities                                        1,198     1,103       967
    Management and personnel costs                   1,313     1,403     1,523
    Cleaning                                         1,041     1,086     1,152
    Contract security                                  412       434       640
    Repairs and maintenance                            352       349       408
    Elevator                                           274       305       330
    Parking                                            206       208       245
    Insurance                                          111       116       112
    Grounds maintenance                                105       116       135
    Interest expense (Note 4)                           --        --     4,561
    Depreciation and amortization                    7,222     7,688     7,968
    Marketing and other expenses                       154       164        64
    General and administrative expenses                 41        44        82
                                                   ---------------------------
           Total expenses                           15,922    16,498    21,765
                                                   ---------------------------
NET INCOME                                         $13,009   $14,697   $16,108
                                                   ===========================
The accompanying notes are an integral part of these statements.
</TABLE>





<PAGE>


                              CSC ASSOCIATES, L.P.
                         STATEMENTS OF PARTNERS' CAPITAL
               FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                                ($ in thousands)                               

<TABLE>
<CAPTION>









         <S>                                               <C>     
         BALANCE, December 31, 1993                        $205,853

           Net income                                        13,009
           Distributions                                    (14,150)
                                                           -------- 

         BALANCE, December 31, 1994                         204,712

           Net income                                        14,697
           Distributions                                    (15,471)
                                                           -------- 

         BALANCE, December 31, 1995                         203,938

           Net income                                        16,108
           Distributions                                    (19,700)
                                                           --------
         BALANCE, December 31, 1996                        $200,346
                                                           ========

</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, 1994, 1995 AND 1996
                                ($ in thousands)                              
<TABLE>
<CAPTION>

                                                      1994     1995     1996
                                                      ----     ----     ----
<S>                                                 <C>      <C>      <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                        $13,009  $14,697  $16,108
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Depreciation and amortization                   7,222    7,688    7,968
      Rental revenue recognized on straight-line
        basis in excess of rental revenue
        specified in the lease agreements            (3,156)  (1,148)    (748)
      Change in other receivables and
        other assets                                   (315)       7     (997)
      Change in accounts payable and
        accrued liabilities related to operations        17    1,122   (1,937)
                                                    --------------------------
Net cash provided by operating activities            16,777   22,366   20,394
                                                    --------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to building and improvements             (1,120)  (6,918)    (571)
  Payments for deferred expenses                     (1,060)  (1,285)    (143)
  Investment in note receivable                          --       --  (80,000)
  Collection of note receivable                          --       --    1,696
  Proceeds from (payments for) furniture, fixtures
    and equipment                                       (17)      10      (46)
                                                    --------------------------
Net cash used in investing activities                (2,197)  (8,193)  (79,064)
                                                    --------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from note payable                             --       --    80,000
  Repayment of note payable                              --       --    (1,696)
  Partnership distributions                         (14,150) (15,471)  (19,700)
                                                    --------------------------
Net cash provided by (used in) financing activities (14,150) (15,471)   58,604
                                                    --------------------------
NET INCREASE (DECREASE) IN CASH                         430   (1,298)      (66)

CASH AT BEGINNING OF YEAR                               965    1,395        97
                                                    --------------------------
CASH AT END OF YEAR                                 $ 1,395  $    97  $     31
                                                    ==========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
    Cash paid during the year for interest          $    15  $    --  $  4,339
                                                    ==========================


The accompanying notes are an integral part of these statements.
</TABLE>


<PAGE>


                              CSC ASSOCIATES, L.P.
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1994, 1995 AND 1996




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 Limited  Partnership  Agreement  dated  September 29, 1989 and by the
filing of its  Certificate  of Limited  Partnership  on October  27,  1989.  C&S
Premises, Inc. ("Premises") and Cousins Properties Incorporated ("CPI") each own
a 1%  general  partnership  and  a  49%  limited  partnership  interest  in  the
Partnership.  Premises is a wholly owned  subsidiary of NB Holdings  Corporation
which is a wholly owned subsidiary of NationsBank  Corporation.  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, was equal to the estimated fair market value of the
land at the time of  formation  of the  Partnership.  The value of the  property
contributed  by Premises  was recorded on the  Partnership's  books at an amount
equal to the cash contributed by CPI for an equal (50%) partnership interest. 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  was $2.5 million,  and accrued 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.

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.

Allowance for Doubtful Accounts
- -------------------------------

         From time to time, the  Partnership  evaluates the need to establish an
allowance for doubtful accounts based on a review of specific receivables. As of
December 31, 1995 and 1996, there is no allowance for doubtful accounts included
in the accompanying balance sheet.

Use of Estimates
- ----------------

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from these estimates.

Impairment of Long-Lived Assets
- -------------------------------

         In 1995,  the  Partnership  adopted SFAS No. 121,  "Accounting  for the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of"
which  requires  impairment  losses to be recorded on long-lived  assets used in
operations when indicators of impairment are present and the  undiscounted  cash
flows  estimated  to be  generated  by those  assets  are less than the  assets'
carrying  amount.  SFAS No. 121 also  addresses the  accounting  for  long-lived
assets that are  expected to be disposed of. The adoption of SFAS No. 121 had no
effect on the financial results of the Partnership.

3.       LEASES
         ------
         The Partnership has leased office space to NB Holdings Corporation,  as
well as to unrelated third parties.  The lease with NB Holdings  Corporation was
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,  1996,  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
                                NB Holdings        Third
                                Corporation       Parties          Total
                                -----------       -------          -----

        <S>                      <C>             <C>             <C>     
        1997                     $ 16,563        $ 16,324        $ 32,887
        1998                       16,762          16,563          33,325
        1999                       16,762          16,366          33,128
        2000                       16,762          16,358          33,120
        2001                       16,762          16,195          32,957
        Subsequent to 2001        197,679          98,668         296,347
                                 ----------------------------------------
                                 $281,290        $180,474        $461,764
                                 ========================================
</TABLE>

         In the years ended December 31, 1995 and 1996,  income  recognized on a
straight-line  basis exceeded income which would have accrued in accordance with
the lease terms by $1,148,000 and $748,000,  respectively.  At December 31, 1995
and 1996,  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 $9,684,000 and $10,432,000,
respectively.  Of that  amount,  20% was  related  to  leases  with NB  Holdings
Corporation.  At December  31,  1996,  two  professional  services  firms leased
approximately  15% and  14%,  respectively,  of the net  rentable  space  of the
Building.

4.       NOTE PAYABLE AND NOTE RECEIVABLE
         --------------------------------

         On  February  6, 1996,  the  Partnership  issued $80  million of 6.377%
collateralized  notes  (the  "Notes").  The  Notes  amortize  in  equal  monthly
installments of $590,680 based on a 20 year  amortization  schedule,  and mature
February 15, 2011. The Notes are non-recourse obligations of the Partnership and
are secured by a Deed to Secure Debt, Assignment of Rents and Security Agreement
covering the  Partnership's  interest in the Building.  In conjunction with this
financing,  Premises  transferred  its 1% general  partnership  interest  in the
partnership to C&S Premises-SPE, Inc., a wholly owned subsidiary of Premises.

         The Partnership has loaned the $80 million proceeds of the Notes to CPI
under a  non-recourse  loan  (the  "CPI  Loan")  secured  by  CPI's  Partnership
interests under the same payment terms as those of the Notes. CPI paid all costs
of issuing the Notes and the CPI Loan,  including a $400,000 fee to an affiliate
of NationsBank Corporation.  In addition, CPI pays a monthly fee to an affiliate
of NationsBank  Corporation of .025% of the outstanding principal balance of the
Notes which totaled approximately $220,000 in 1996.

         The  estimated  fair value of both the note  payable and  related  note
receivable  at  December  31,  1996 was $74  million  which  was  calculated  by
discounting  future  cash  flows  under  the notes at  estimated  rates at which
similar notes would be made currently.

         The  Partnership  also  has an  unsecured  $3  million  line of  credit
provided by an affiliate of Premises. Interest on the line is paid at a floating
rate (6.14% weighted average rate in December 1996) and interest only is payable
quarterly through July 31, 1997, at which time the entire outstanding balance is
due. There were no borrowings under the line as of December 31, 1995 and 1996.

         The  maturities  of the Notes at  December  31, 1996 are as follows (in
thousands):
<TABLE>
<CAPTION>

                           <S>                        <C>    
                           1997                       $ 2,157
                           1998                         2,298
                           1999                         2,450
                           2000                         2,610
                           2001                         2,782
                           Subsequent to 2001          66,007
                                                      -------
                                                      $78,304
</TABLE>
                                                      =======
5.       RELATED PARTIES
         ---------------

     The Partnership engaged CPI and an affiliate of CPI to manage,  develop and
lease the Building.  During 1994,  1995 and 1996,  fees to CPI and its affiliate
incurred by the Partnership were as follows ($ in thousands):
<TABLE>
<CAPTION>

                                                 1994     1995     1996
                                                 ----     ----     ----

<S>                                              <C>     <C>       <C> 
Development and tenant construction fees         $ 25    $   88    $ 13
Leasing and procurement fees                      230       229     101
Management fees                                   640       744     815
                                                 ----------------------
                                                 $895    $1,061    $929
                                                 ======================
</TABLE>

6.       PARKING AGREEMENT
         -----------------

         On February 7, 1996,  CSC entered into a 25 year Cross Parking  License
Agreement  ("Parking  Agreement")  with the  North  Avenue  Presbyterian  Church
("NAPC")  which allows CSC the use of 200 parking  spaces in NAPC's parking deck
which is located  adjacent to NAPC. The agreement  commenced on October 1, 1996.
CSC paid a $1,000,000  contribution  toward the construction cost of the parking
deck as consideration for the Parking Agreement.  The $1,000,000 contribution is
included  in Other  Assets and is being  amortized  over the 25 year life of the
Parking Agreement. NAPC may reduce the number of parking spaces available to the
Partnership  or may terminate  the Parking  Agreement  under certain  conditions
after the sixth year, at which time a partial refund of the $1,000,000  would be
due to CSC. In addition,  CSC is responsible  for the maintenance of the parking
deck and the payment of the related operating expenses.





<PAGE>








                                                                   SCHEDULE III

                              CSC ASSOCIATES, L.P.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1996
                                ($ 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 Acquisition                   December 31, 1996
                                           -------------------   ------------------------   -----------------------------------
                                                                                                                                 
                                                                                                                                 
                                                                                Carrying                                        
                                                                                  Costs                                            
                                                    Buildings                   Less Cost       Land        Buildings               
                                                       and       Improve-       of Sales      and Land         and       Total   
Description                  Encumbrances  Land   Improvements     ments        and Other   Improvements  Improvements  (a),(b)  
- -----------                  ------------  ----   ------------     -----        ---------   ------------  ------------  -------  
<S>                           <C>         <C>        <C>        <C>             <C>           <C>           <C>         <C>
NationsBank Plaza
   Atlanta, Georgia           $     --    $18,200    $  --      $180,492        $10,449       $22,818       $186,323   $209,141  
                              =================================================================================================



NOTE: (a)  Reconciliations of total real estate carrying value and accumulated 
           depreciation for the three years ended December 31, 1996 are as 
           follows:

                                                        Real Estate                     Accumulated Depreciation
                                             ----------------------------------     --------------------------------
                                               1994         1995         1996         1994         1995        1996
                                               ----         ----         ----         ----         ----        ----
<S>                                          <C>          <C>          <C>          <C>          <C>         <C>    

Balance at beginning of period               $200,781     $203,275     $208,676     $ 9,176      $14,980     $21,232
Improvements and other capitalized costs        2,494        5,401          465          --           --         --
Provision for depreciation                         --           --           --       5,804        6,252       6,389
                                             ----------------------------------     --------------------------------
Balance at close of period                   $203,275     $208,676     $209,141     $14,980      $21,232     $27,621
                                             ==================================     ================================
</TABLE>
<TABLE>
<CAPTION>


                                                                    
                                                             
                                                      
                                                                     Life on
                                                                    Which De-
                                                                   preciation
                               Accumu-                               In 1996
                                lated      Date of                   Income
                               Deprecia-  Construc-      Date       Statement
Description                    tion (a)     tion       Acquired    Is Computed
- -----------                    --------   ---------    --------    -----------
<S>                            <C>         <C>           <C>           <C> 
NationsBank Plaza
   Atlanta, Georgia           $27,621      1990-1992     1990          5-40
                              =======
</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, 1996 and 1995, and the related
statements  of income,  cash flows and  venturers'  equity for each of the three
years in the period  ended  December  31,  1996.  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, 1996 and December 31, 1995, and
the results of its  operations and its cash flows for each of the three years in
the period ended  December 31,  1996,  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 6, 1997



<PAGE>


                             HAYWOOD MALL ASSOCIATES
                        (A South Carolina Joint Venture)

                                 BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1995


<TABLE>
<CAPTION>




                                                        1996           1995
                                                    -----------     -----------
ASSETS
- ------

Shopping center:
<S>                                                 <C>             <C>        
   Land                                             $ 3,353,335     $ 3,353,335
   Building and improvements                         38,648,103      38,861,068
                                                    ---------------------------
                                                     42,001,438      42,214,403
   Less: accumulated depreciation                     9,806,074       8,550,512
                                                    ---------------------------
                                                     32,195,364      33,663,891
Cash                                                  1,304,867       2,971,993
Receivables (principally rentals) less
   allowance of $395,440 and $428,094                 2,551,788       2,716,834
Other assets                                          5,477,821       5,178,154
                                                    ---------------------------
                                                    $41,529,840     $44,530,872
                                                    ===========================
LIABILITIES AND VENTURERS' EQUITY
- ---------------------------------

Accounts payable and
   accrued liabilities                              $   589,218     $ 1,237,422
Venturers' equity:
   Cousins Properties Incorporated                   19,895,026      21,268,088
   Bellwether Properties of
     South Carolina, L.P.                            21,045,596      22,025,362
                                                    ---------------------------
                                                    $41,529,840     $44,530,872
                                                    ===========================


</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, 1996, 1995 AND 1994
<TABLE>
<CAPTION>


                                            1996          1995         1994
                                            ----          ----         ----
INCOME
<S>                                      <C>          <C>          <C>        
Rental income:
   Minimum                               $ 8,400,211  $ 6,667,505  $ 6,050,650
   Overage                                   317,372      261,214      568,546
   Real estate taxes                         752,816      459,222      418,166
   Utility charges and
     other operating expense recoveries    3,935,100    3,776,482    3,287,614
                                         -------------------------------------
   Interest income                           121,265      104,741       45,655
                                         -------------------------------------
                                          13,526,764   11,269,164   10,370,631
                                         -------------------------------------

EXPENSES

Mortgage interest                                 --           --      598,389
Repairs and maintenance                    1,030,119    1,014,931      882,580
Utilities                                    900,046      917,881      820,798
Managing agent's costs
   (principally payroll)                   1,096,696      924,208      840,149
Depreciation                               1,539,387    1,137,513      597,732
Other                                        898,518      742,457      486,981
Real estate taxes                            874,778      539,020      450,338
Leasehold rent                                66,752       66,752       64,765
                                         -------------------------------------
                                           6,406,296    5,342,762    4,741,732
                                         -------------------------------------
INCOME BEFORE
   EXTRAORDINARY ITEM                      7,120,468    5,926,402    5,628,899

Extraordinary loss from
   prepayment of mortgage debt                    --           --      680,277
                                         -------------------------------------
         NET INCOME                      $ 7,120,468  $ 5,926,402  $ 4,948,622
                                         =====================================
</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, 1996, 1995 AND 1994
<TABLE>
<CAPTION>

                                               1996        1995        1994
                                               ----        ----        ----
OPERATING ACTIVITIES
<S>                                         <C>        <C>          <C>        
 Net income                                 $7,120,468 $ 5,926,402  $ 4,948,622
 Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation                            1,539,387   1,137,513      597,732
     Amortization of deferred charges          632,203     482,746      363,230
     Straight line adjustment for
       step lease rentals                     (47,352)   (209,567)     (114,085)
     Loss from prepayment of
       mortgage debt                               --          --       680,277
     Change in operating assets and
       liabilities:
         Decrease/(increase) in receivables   212,398    (518,551)     (134,841)
         Increase in other assets, principally
            deferred leasing costs           (931,870) (3,596,952)     (543,502)
         (Decrease)/increase in accounts payable
            and accrued liabilities          (648,204)    280,869        58,522
                                           ------------------------------------
Net Cash Provided by
  Operating Activities                      7,877,030   3,502,460     5,855,955
                                           ------------------------------------
INVESTING ACTIVITIES
   Investments in shopping center             (70,860)  (7,658,996) (11,864,544)
                                           ------------------------------------
Cash Used in Investing Activities             (70,860)  (7,658,996) (11,864,544)
                                           ------------------------------------
FINANCING ACTIVITIES
   Principal payments on mortgages                 --           --      (92,492)
   Prepayment of mortgage debt                     --           --  (20,116,762)
   Cash distributions                      (9,530,000)  (6,698,000)  (5,758,268)
   Partners' capital contributions             56,704   12,196,032   32,031,738
                                           ------------------------------------
Net Cash (Used in)/Provided by
   Financing Activities                    (9,473,296)   5,498,032    6,064,216
                                           ------------------------------------
   (Decrease)/increase in cash             (1,667,126)   1,341,496       55,627
   Cash at beginning of year                2,971,993    1,630,497    1,574,870
                                           ------------------------------------
Cash at end of year                        $1,304,867  $ 2,971,993  $ 1,630,497
                                           ====================================
SUPPLEMENTAL DISCLOSURE
   Interest paid during the year           $       --  $        --  $   750,964
                                           ====================================
</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, 1996

<TABLE>
<CAPTION>




                                  Bellwether           Cousins
                                Properties of         Properties
                              South Carolina, L.P.   Incorporated     Total
                              --------------------   ------------     -----

<S>                              <C>                  <C>           <C>        
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
                                 ----------------------------------------------
     Net income                    2,963,201            2,963,201     5,926,402
     Cash distributions           (3,349,000)          (3,349,000)   (6,698,000)
     Capital contributions         6,434,140            5,761,892    12,196,032
                                 ----------------------------------------------
Balance at December 31, 1995      22,025,362           21,268,088    43,293,450

     Net income                    3,560,234            3,560,234     7,120,468
     Cash distributions           (4,540,000)          (4,990,000)   (9,530,000)
     Cash contributions                   --               56,704        56,704
                                 ----------------------------------------------
Balance at December 31, 1996     $21,045,596          $19,895,026   $40,940,622
                                 ==============================================
</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, 1996, 1995 AND 1994





NOTE A - JOINT VENTURE AGREEMENT

Haywood Mall  Associates  (the  "Venture")  is a South  Carolina  Joint  Venture
between Bellwether Properties of South Carolina,  L.P., a South Carolina Limited
Partnership,  and  Cousins  Properties  Incorporated  (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.

On January 1, 1996,  the  Venture  adopted  Statement  of  Financial  Accounting
Standards No. 121  "Accounting  for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets to Be Disposed Of" (the  Statement).  The Statement  requires
impairment losses to be recognized for long-lived assets used in operations when
indicators of  impairment  are present and the  undiscounted  cash flows are not
sufficient  to recover the  assets'  carrying  amount.  The  impairment  loss is
measured by comparing  the fair value of the asset to its carrying  amount.  The
adoption  of  the  Statement  had no  effect  on the  Venture's  1996  financial
statements.

Taxes: No provision has been made for income taxes, since any taxes which may be
payable are the liability of the individual Venturers.

Use of Estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NOTE C - MORTGAGES PAYABLE

The  mortgage  notes  which bore  interest at 9% and 10-1/2% 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, 1996, are as
follows:

                           1997            -         $   67,000
                           1998            -             67,000
                           1999            -             70,000
                           2000            -             72,000
                           2001            -             72,000
                        Thereafter         -          1,202,000

There are five l0-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, 1996 are as follows:

               Year Ending December 31:
                                                       Amount*
                                                       -------

                         1997                        $ 8,090,150
                         1998                          8,154,996
                         1999                          7,264,576
                         2000                          6,446,833
                         2001                          5,829,049
                      Thereafter                      16,882,032
                                                     -----------
                         TOTAL                       $52,667,636
                                                     ===========

        *Does not include rentals applicable to renewal options.

At  December  31, 1996 and 1995,  receivables  which  related to the  cumulative
excess  of  revenues  recognized  in  accordance  with  Statement  of  Financial
Accounting  Standards No. 13 "Accounting for Leases" over revenues which accrued
in  accordance  with the  actual  lease  agreements  aggregates  $1,992,734  and
$1,945,382, respectively.

NOTE E - RELATED PARTY TRANSACTIONS

The Venture pays Corporate Property  Investors,  which has an ownership interest
in one of the  Venturers,  a leasing  fee of 1% of gross  rentals  received,  as
defined.  During the years ended  December 31, 1996,  1995 and 1994, the Venture
incurred  leasing  fees of $94,310,  $61,601  and  $62,405,  respectively.  Such
amounts are included in managing agent's costs on the statements of income.





<PAGE>






                                                                  SCHEDULE III
                             HAYWOOD MALL ASSOCIATES
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 1996
                                ($ 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 Acquisition                   December 31, 1996
                                           -------------------   ------------------------   -----------------------------------   
                                                                                                                                  
                                                                                                                                 
                                                                                Carrying                                          
                                                                                  Costs                                            
                                                    Buildings                   Less Cost       Land        Buildings               
                                                       and       Improve-       of Sales      and Land         and       Total   
Description                  Encumbrances  Land   Improvements     ments        and Other   Improvements  Improvements  (a),(b)  
- -----------                  ------------  ----   ------------     -----        ---------   ------------  ------------  -------  
<S>                           <C>         <C>        <C>        <C>             <C>           <C>           <C>         <C>
Haywood Mall
   Greenville, S.C.           $     --    $ 3,598    $ 9,630    $ 10,669        $  0          $  3,353     $44,344      $47,697  
                              =================================================================================================


NOTES:  (1) Estimated useful life for Buildings and Improvements.
        (2) Estimated useful life for Property Equipment.
        (3) Amounts will not tie to Property totals on Balance Sheet as some
            real estate assets are classified as Other Assets.
        (4) Reconciliations of total real estate carrying value and accumulated
            depreciation for the three years ended December 31, 1996 are as 
            follows:
</TABLE>
<TABLE>
<CAPTION>

                                                        Real Estate                     Accumulated Depreciation
                                             ----------------------------------     --------------------------------
                                               1994         1995         1996         1994         1995        1996
                                               ----         ----         ----         ----         ----        ----
<S>                                          <C>          <C>          <C>          <C>          <C>         <C>    

Balance at beginning of period               $23,392      $23,897      $46,976      $7,017       $7,722      $ 9,108
Improvements and other capitalized costs         505       23,079          721          --           --          --
Provision for depreciation                        --           --           --         705        1,386        1,670
                                             ---------------------------------      --------------------------------
Balance at close of period                   $23,897      $46,976      $47,697      $7,722       $9,108      $10,778
                                             =================================      ================================
</TABLE>
<TABLE>
<CAPTION>
                                                                    
                                                             
                                                      
                                                                     Life on
                                                                    Which De-
                                                                   preciation
                               Accumu-                               In 1996
                                lated      Date of                   Income
                               Deprecia-  Construc-      Date       Statement
Description                    tion (a)     tion       Acquired    Is Computed
- -----------                    --------   ---------    --------    -----------
<S>                            <C>         <C>           <C>           <C> 

Haywood Mall
   Greenville, S.C.            $10,778     1979-1980     1979          35 (1)

NOTES:  (1) Estimated useful life for Buildings and Improvements.
        (2) Estimated useful life for Property Equipment.
        (3) Amounts will not tie to Property totals on Balance Sheet as some
            real estate assets are classified as Other Assets.
        (4) Reconciliations of total real estate carrying value and accumulated
            depreciation for the three years ended December 31, 1996 are as 
            follows:                                                     

</TABLE>





            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, 1996
<TABLE>
<CAPTION>

                                                     1992              1993             1994              1995             1996
                                                  ----------        ----------       ----------        ----------       ----------
<S>                                               <C>               <C>              <C>               <C>              <C>       
Shares outstanding at beginning of year           17,341,364        21,716,911       27,830,631        27,863,741       28,222,639
Weighted average number of shares
    issued during the year                           910,631         1,064,574           14,151           119,439          297,539
Weighted average number of shares
    acquired during the year                          (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                      18,249,306        22,781,485       27,844,341        27,983,180       28,520,128
                                                  ================================================================================
Income before gain on sale of investment
    properties (000's)                               $ 9,069           $10,038          $20,539           $24,480          $28,212
Gain on sale of investment properties, net of
    applicable income tax provision (000's)            6,644             1,927            6,356             1,862           12,804
                                                     -----------------------------------------------------------------------------
Net income (000's)                                   $15,713           $11,965          $26,895           $26,342          $41,016
                                                     =============================================================================

Net income per share                                 $   .86           $   .53          $   .97           $   .94          $  1.44
                                                     =============================================================================
</TABLE>






Cousins Properties Incorporated and Consolidated Entities

FUNDS FROM OPERATIONS
- -------------------------------------------------------------------------------

   
     The table below shows Funds From Operations  ("FFO") for Cousins Properties
Incorporated and Consolidated Entities and its unconsolidated joint ventures. On
a consolidated  basis, FFO includes the Company's FFO and the Company's share of
FFO of its  unconsolidated  joint ventures,  but excludes the Company's share of
distributions  from such  ventures.  The  Company  calculates  its FFO using the
National  Association of Real Estate Investment Trusts ("NAREIT")  definition of
FFO  adjusted  to  (i)  eliminate  the  recognition  of  rental  revenues  on  a
straight-line  basis,  (ii) reflect stock  appreciation  right expense on a cash
basis and (iii)  recognize  certain fee income as cash is  received  rather than
when  recognized  in the  financial  statements.  The Company  believes  its FFO
presentation     more    properly     reflects    its     operating     results.

     Management  believes the Company's FFO is not directly  comparable to other
REITs which own a portfolio of mature  income-producing  properties  because the
Company  develops  projects through a development and lease-up phase before they
reach their targeted cash flow returns.  Furthermore,  the Company eliminates in
consolidation   fee  income  for  developing  and  leasing   projects  owned  by
consolidated  entities,  while capitalizing a smaller amount of related internal
costs.  In  addition,  unlike many REITs,  the  Company  has  considerable  land
holdings  which provide a strong base for future FFO growth as land is developed
or sold in  future  years.  Property  taxes  on the  land,  which  are  expensed
currently,  reduce current FFO. 

     As indicated  above, the Company does not include  straight-lined  rents in
its FFO, as it could under the NAREIT  definition of FFO.  Furthermore,  most of
the Company's leases are also escalated periodically based on the Consumer Price
Index, which unlike fixed escalations, do not require rent to be straight-lined;
under NAREIT's  definition  straight-lining  of rents produces higher FFO in the
early years of a lease and lower FFO in the later years of a lease.  

     FFO is used by  industry  analysts as a  supplemental  measure of an equity
REIT's performance. 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.
<TABLE>
<CAPTION>

                                      ($ in thousands, except per share amounts)
                                      ------------------------------------------
                                              Years Ended December 31,
                                           1994         1995         1996
                                           ----         ----         ----
<S>                                      <C>          <C>           <C> 
Income before gain on sale of 
  investment properties                  $20,539      $24,480       $28,212

Depreciation and amortization             12,032       13,381        17,256
Amortization of deferred financing 
  costs and depreciation of furniture, 
  fixtures and equipment                    (844)        (592)         (362)
Elimination of the recognition of rental 
  revenues on a straight-line basis       (2,100)      (1,053)         (311)
Adjustment to reflect stock appreciation 
  right expense on a cash basis              384        1,166          (567)
Deferred income received net of deferred
  income recognized                          830       (1,127)           --
                                         -------      -------       -------       
Consolidated Funds From Operations       $30,841      $36,255       $44,228
                                         =======      =======       =======
Weighted Average Shares Outstanding       27,844       27,983        28,520
                                          ======       ======        ======
Consolidated Funds From Operations 
  Per Share                              $  1.11      $  1.30       $  1.55
                                         =======      =======       =======
</TABLE>

- -------------------------------------------------------------------------------


<PAGE>

Cousins Properties Incorporated and Consolidated Entities
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS

($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                              December 31,
                                                          -------------------
                                                            1995       1996
                                                          --------   --------
<S>                                                      <C>        <C> 

ASSETS
- ------
PROPERTIES (Notes 4 and 8):
  Operating properties, net of accumulated 
    depreciation of $15,483 in 1995 and 
    $20,339 in 1996                                       $ 93,871   $232,360
   Land held for investment or future development           27,035     21,213
   Projects under construction                              87,503     88,568
   Residential lots under development                       11,452     15,183
                                                          -------------------
     Total properties                                      219,861    357,324

CASH AND CASH EQUIVALENTS, at cost, which 
  approximates market                                        1,552      1,598

NOTES AND OTHER RECEIVABLES (Note 3)                        53,868     56,497

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 
  (Notes 4 and 5)                                          137,260    132,262

OTHER ASSETS                                                 5,465      8,963
                                                          -------------------
       TOTAL ASSETS                                       $418,006   $556,644
                                                          ===================

LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
NOTES PAYABLE  (Note 4)                                   $113,434   $231,831

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                    22,681     25,293

MINORITY INTERESTS IN CONSOLIDATED ENTITIES                  3,837          9

DEPOSITS AND DEFERRED INCOME                                   376        327
                                                          -------------------
       TOTAL LIABILITIES                                   140,328    257,460
                                                          -------------------
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4)

STOCKHOLDERS' INVESTMENT (Note 6):
  Common stock, $1 par value, authorized 
    50,000,000 shares; issued 28,222,639 
    in 1995 and 28,920,122 in 1996                          28,223     28,920
   Additional paid-in capital                              153,265    164,970
   Cumulative undistributed net income                      96,190    105,294
                                                          -------------------
       TOTAL STOCKHOLDERS' INVESTMENT                      277,678    299,184
                                                          -------------------
       TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT     $418,006   $556,644
                                                          ===================
</TABLE>


The  accompanying  notes  are an  integral  part of these  consolidated  balance
sheets.


<PAGE>


Cousins Properties Incorporated and Consolidated Entities

CONSOLIDATED STATEMENTS OF INCOME
- -------------------------------------------------------------------------------
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
<S>                                              <C>       <C>         <C>

                                                   Years Ended December 31,
                                                 -----------------------------
                                                  1994       1995       1996
                                                 -------    -------    -------
REVENUES:
   Rental property revenues (Note 10)            $13,150    $19,348    $33,112
   Development and construction fees               1,020      3,515      1,660
   Management fees                                 2,061      2,213      2,801
   Leasing and other fees                          1,942      2,156      1,558
   Residential lot and outparcel sales             6,132      9,040     14,145
   Interest and other                              6,801      4,764      5,256
                                                 -----------------------------
                                                  31,106     41,036     58,532
                                                 -----------------------------
INCOME FROM UNCONSOLIDATED JOINT VENTURES 
  (Note 5)                                        12,580     14,113     17,204
                                                 -----------------------------
COSTS AND EXPENSES:
   Rental property operating expenses              3,338      4,681      7,616
   General and administrative expenses             7,538      7,648      9,080
   Depreciation and amortization                   3,742      4,516      7,219
   Leasing and other commissions                      82         20         68
   Stock appreciation right expense (Note 6)         433      1,298      2,154
   Residential lot and outparcel cost of sales     5,762      8,407     13,676
   Interest expense (Note 4)                         411        687      6,546
   Property taxes on undeveloped land              1,085        977      1,301
   Other                                             922      1,688      1,567
                                                 -----------------------------
                                                  23,313     29,922     49,227
                                                 -----------------------------
INCOME FROM OPERATIONS BEFORE INCOME TAXES
   AND GAIN ON SALE OF INVESTMENT PROPERTIES      20,373     25,227     26,509
PROVISION (BENEFIT) FOR INCOME TAXES FROM
   OPERATIONS (Note 7)                              (166)       747     (1,703)
                                                 -----------------------------
INCOME BEFORE GAIN ON SALE OF INVESTMENT
   PROPERTIES                                     20,539     24,480     28,212
                                                 -----------------------------
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
   APPLICABLE INCOME TAX PROVISION (Note 7)        6,356      1,862     12,804
                                                 -----------------------------
NET INCOME                                       $26,895    $26,342    $41,016
                                                 =============================
NET INCOME PER SHARE                             $   .97    $   .94    $  1.44
                                                 =============================
CASH DIVIDENDS DECLARED PER SHARE (Note 6)       $   .90    $   .99     $  1.12
                                                 =============================
WEIGHTED AVERAGE SHARES OUTSTANDING               27,844     27,983      28,520
                                                 =============================
</TABLE>

The accompanying notes are an integral part of these consolidated statements.


<PAGE>


Cousins Properties Incorporated and Consolidated Entities

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
- -------------------------------------------------------------------------------
Years Ended December 31, 1994, 1995 and 1996
($ in thousands)
<TABLE>
<CAPTION>
                                              Additional   Cumulative
                                      Common   Paid-In   Undistributed
                                       Stock   Capital     Net Income   Total
                                      ------- ---------- ------------- --------
<S>                                   <C>      <C>          <C>        <C> 

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 paid in stock 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

   Net income, 1995                        --         --      26,342     26,342
   Common stock issued pursuant to:
     Exercise of options and
       Director stock plan                 42        638          --        680
     Dividend reinvestment plan           307      4,956          --      5,263
     Compensation paid in stock in 
       lieu of cash                        10        176          --        186
   Dividends declared                      --         --     (27,691)   (27,691)
                                      -----------------------------------------
BALANCE, December 31, 1995             28,223    153,265      96,190    277,678

   Net income, 1996                        --         --      41,016     41,016
   Common stock issued pursuant to:
     Exercise of options and
       Director stock plan                307      4,344          --      4,651
     Dividend reinvestment plan           390      7,361          --      7,751
   Dividends declared                      --         --     (31,912)   (31,912)
                                      -----------------------------------------
BALANCE, December 31, 1996            $28,920   $164,970    $105,294   $299,184
                                      =========================================
</TABLE>




The accompanying notes are an integral part of these consolidated statements.

<PAGE>



Cousins Properties Incorporated and Consolidated Entities


CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 9)
- -------------------------------------------------------------------------------
($ in thousands)
<TABLE>
<CAPTION>
                                                                                    Years Ended December 31,
                                                                                  ---------------------------
<S>                                                                               <C>       <C>       <C> 
                                                                                   1994      1995       1996
                                                                                  -------   -------   --------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Income before gain on sale of investment properties                            $20,539   $24,480   $ 28,212
   Adjustments to reconcile income before gain on sale of investment
   properties to net cash provided by operating activities:
       Depreciation and amortization, net of minority interests' share              3,662     4,340      7,219
       Stock appreciation right expense                                               433     1,298      2,154
       Cash charges to expense accrual for stock appreciation rights                  (49)     (132)    (2,721)
       Other non-cash credits                                                        (623)       --         --
       Effect of recognizing rental revenues on a straight-line basis                (209)     (107)        (4)
       Deferred income received                                                     1,131     1,673         --
       Deferred income recognized                                                    (301)   (2,800)        --
       Income from unconsolidated joint ventures                                  (12,580)   14,113)   (17,204)
       Operating distributions from unconsolidated joint ventures                  15,665    15,786     19,382
       Compensation paid in stock in lieu of cash                                     329       186         --
       Residential lot and outparcel cost of sales                                  5,667     8,065     13,111
       Changes in other operating assets and liabilities:
         Change in other receivables                                                 (606)   (1,018)    (3,420)
         Change in accounts payable and accrued liabilities                         2,549        62     10,375
                                                                                  ----------------------------
Net cash provided by operating activities                                          35,607    37,720     57,104
                                                                                  ----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Gain on sale of investment properties, net of applicable income tax provision    6,356     1,862     12,804
   Adjustments to reconcile gain on sale of investment properties
     to net cash provided by sales activities:
       Cost of sales                                                                6,923     2,869     26,252
       Note received as sales consideration                                            --      (500)      (365)
   Property acquisition and development expenditures                              (53,573)  (87,234)  (162,154)
   Collection of notes receivable                                                  45,011       841     27,703
   Investment in notes receivable                                                 (28,039)      (18)   (27,115)
   Change in other assets, net                                                     (2,601)      802     (4,170)
   Non-operating distributions from unconsolidated joint ventures                     586     1,226      1,408
   Cash portion of exchange transaction                                                --        --      1,092
   Investment in unconsolidated joint ventures, including interest
     capitalized to equity investments                                            (20,844)   (9,318)      (268)
   Principal payments received on government agency securities                        636       103         75
                                                                                  ----------------------------
Net cash used in investing activities                                             (45,545)  (89,367)  (124,738)
                                                                                  ----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from other notes payable                                                  475    80,116    131,844
   Repayment of line of credit                                                    (50,138)  (86,336)   (87,627)
   Proceeds from line of credit                                                    73,287    78,575     47,677
   Dividends paid                                                                 (25,064)  (27,691)   (31,912)
   Common stock sold, net of expenses                                                  77     5,848     12,074
   Repayment of other notes payable                                               (16,976)     (720)    (4,376)
                                                                                  ----------------------------
Net cash (used in) provided by financing activities                               (18,339)   49,792     67,680
                                                                                  ----------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                         (28,277)   (1,855)        46
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                     31,684     3,407      1,552
                                                                                  ----------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                          $ 3,407   $ 1,552   $  1,598
                                                                                  ============================
</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, 1994, 1995 and 1996


1.   SIGNIFICANT ACCOUNTING POLICIES

     Consolidation and Presentation:
     The  Consolidated  Financial  Statements  include  the  accounts of Cousins
Properties Incorporated ("Cousins"),  its majority owned partnerships and wholly
owned subsidiary,  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.
     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. Buildings that were acquired
are  depreciated  over 15 and 25 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 between consolidated entities
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>
<S>                           <C>     <C>     <C> 

                               1994    1995    1996
                              ------  ------  ------
Fees eliminated in
   consolidation              $3,019  $5,479  $3,400
Internal costs capitalized
   in consolidation to
   projects on which
   fees were eliminated       $1,508  $2,552  $2,135
Internal costs capitalized
   to CREC residential
   developments               $  292  $  498  $  500
</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, 1996, cash
and cash  equivalents  included  $582,000  from a  property  sale held in escrow
pending  reinvestment  in  a  tax-deferred  exchange  and  $1,016,000  which  is
restricted under a municipal bond indenture.
     Rental Property Revenues:
     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
13, income on leases which include scheduled  increases in rental rates over the
lease term (other than scheduled increases based on the Consumer Price Index) is
recognized on a straight-line basis.
     Use of Estimates:
     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.
     Impairment of Long-Lived Assets:
     The Company has adopted SFAS No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of" which requires
impairment  losses to be recorded on long-lived  assets used in operations  when
indicators of impairment are present and the  undiscounted  cash flows estimated
to be generated by those assets are less than the assets' carrying amount.  SFAS
No. 121 also addresses the accounting for long-lived assets that are expected to
be  disposed  of. The  adoption  of SFAS No. 121 had no effect on the  financial
results of the Company.

2.   RELATIONSHIP WITH DEVELOPMENT AND LEASING ENTITY

     CREC conducts  certain  development and leasing  activities for real estate
projects. A wholly owned subsidiary of CREC, Cousins MarketCenters, Inc. ("CMC")
develops retail power centers for the Company. CREC also manages a joint venture
property in which it has an ownership  interest.  At December 31, 1994, 1995 and
1996 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
($8,643,000 in aggregate) exceeds CREC's $1,341,825 of equity.


<PAGE>




3.   NOTES AND OTHER RECEIVABLES

     At December  31,  1995 and 1996,  notes and other  receivables  include the
following ($ in thousands):
<TABLE>
<CAPTION>
                                                             1995        1996
                                                           -------     -------
     <S>                                                   <C>         <C>    
     650 Massachusetts Avenue Mortgage Notes               $27,574     $26,786
     Wildwood Training Facility Mortgage Note               17,416      17,005
     Daniel Realty Company Note Receivable                      --       1,080
     Miscellaneous Notes                                     1,082         903
     Cumulative rental revenue recognized on a straight-
       line basis in excess of revenue which accrued in
       accordance with lease terms (see Note 1)              4,052       4,056
     Other Receivables                                       3,744       6,667
                                                           -------------------
     Total Notes and Other Receivables                     $53,868     $56,497
                                                           ===================
</TABLE>


     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 $31.3 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 to
the extent of the minimum required payments,  with the minimum required payments
treated as interest income at a rate of approximately  10%. Amounts in excess of
the  minimum  required  payments  ($465,000  and  $787,970  in  1995  and  1996,
respectively)     are     treated    as    a     reduction     of     principal.
     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 building is
100% leased to  International  Business  Machines  Corporation  ("IBM")  through
November 30, 1998. The IBM lease generates net cash flow of  approximately  $2.4
million annually to the limited partnership, of which approximately $2.3 million
is 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 and the remaining $2.0 million is treated as
principal  amortization  over the  remaining  ground  lease term and interest at
9.235% on the  carrying  value of the note.  The leased land is carried at $0 in
the accompanying  financial statements.  
     Daniel Realty  Company Note  Receivable - On December 27, 1996, the Company
entered into a venture with Daniel Realty Company  ("Daniel"),  a privately-held
real estate company  headquartered in Birmingham,  Alabama,  which will focus on
the development and acquisition of commercial office properties. The arrangement
with  Daniel  includes  a loan to  Daniel  of up to  $9.5  million  under  which
approximately  $1.08  million was advanced on December 27, 1996.  The loan bears
interest at 11%, requires semi-annual  principal payments commencing February 1,
1998 and matures on December  31, 2003.  The Company also  obtained an option to
acquire certain segments of Daniel's  business.  
     Fair Value - The estimated  fair value of the  Company's  $46.1 million and
$45.8 million of notes  receivable at December 31, 1995 and 1996,  respectively,
is $52.1 million and $51.9  million,  respectively,  calculated  by  discounting
future  cash flows from the notes  receivable  at the  estimated  rates at which
similar loans would be made currently.

<PAGE>



4.   NOTES PAYABLE, COMMITMENTS, AND CONTINGENT LIABILITIES

     At December  31, 1995 and 1996,  the  composition  of notes  payable was as
follows ($ in thousands):
<TABLE>
<CAPTION>

                                                  December 31, 1995                      December 31, 1996
                                         -----------------------------------    ------------------------------------
                                                      Share of                               Share of
                                                   Unconsolidated                         Unconsolidated
                                         Company   Joint Ventures    Total      Company   Joint Ventures      Total
                                         -------- ----------------- --------    -------- ----------------- ---------
<S>                                      <C>          <C>           <C>         <C>          <C>            <C>
   Floating Rate Lines of Credit         $ 32,870     $23,153       $ 56,023    $ 25,100     $  2,025       $ 27,125

   Fixed Rate Mortgages (primarily
     non-recourse)                         80,564      64,759        145,323     206,731      105,487        312,218
                                         --------     -------       --------    --------     --------       --------
                                         $113,434     $87,912       $201,346    $231,831     $107,512       $339,343
                                         ========     =======       ========    ========     ========       ========
</TABLE>

     The  following  table  summarizes  the  terms  of the debt  outstanding  at
December 31, 1996 ($ in thousands):
<TABLE>
<CAPTION>
                                                                                   Term/
                                                                                Amortization                  Balance at
                                                                                   Period          Final     December 31,
             Description                                      Rate                 (Years)       Maturity        1996
             -----------                                 ----------------       ------------     --------    ------------
<S>                                                      <C>                       <C>            <C>          <C>
Company Debt: 
   Line of credit ($100 million maximum) unsecured       Fed Funds + .88%           1/N/A        6/30/97       $ 23,800
   Note secured by Company's interest in
     CSC Associates, L.P.                                     6.677%                15/20         2/15/11        78,304
   One Independence Center mortgage note                       8.22%                11/25         11/1/07        49,500
   North Point MarketCenter mortgage note                      8.50%                10/25         7/15/05        29,477
   Note secured by Company's interest in 650
     Massachusetts Avenue mortgage notes (see Note 3)          6.53%                5/ N/A       10/01/00        26,180
   Perimeter Expo mortgage note                                8.04%                10/30         8/15/05        21,259
   Other miscellaneous notes                                0% to 9.4%              Various       Various         3,311
                                                                                                               --------
                                                                                                                231,831
                                                                                                               ========

Share of Unconsolidated Joint Venture Debt:
   Wildwood Associates:
     Line of credit ($5 million maximum)                 Fed Funds + .75%           2/N/A          9/1/97
     2300 Windy Ridge mortgage note                            7.56%                10/25        12/01/05        35,539
     3200 Windy Hill mortgage note                             8.23%                10/28          1/1/07        35,000
     2500 Windy Ridge mortgage note                            7.45%                10/20        12/15/05        12,706
   CC-JM II Associates mortgage note                           7.00%                17/17          4/1/13        12,144
   Ten Peachtree Place Associates mortgage note                8.00%                10/18        11/30/01        10,098
   Norfolk Hotel Associates ($2.1 million line 
     of credit)                                          Fed Funds + .85%           1/N/A        10/31/97         2,025
                                                                                                                107,512
                                                                                                               --------
                                                                                                               $339,343
                                                                                                               ========
</TABLE>


     On February 6, 1996,  CSC  Associates,  L.P.  ("CSC") issued $80 million of
6.377%  collateralized notes (the "Notes").  The Notes amortize in equal monthly
installments of $590,680 based on a 20 year  amortization  schedule,  and mature
February 15, 2011. The Notes are non-recourse obligations of CSC and are secured
by a Deed to Secure Debt, an Assignment of Rents and Security Agreement covering
CSC's  interest  in the  NationsBank  Plaza  building  and  related  leases  and
agreements.
     CSC has loaned the $80 million proceeds of the Notes to the Company under a
non-recourse loan (the "Cousins Loan") secured by the Company's  interest in CSC
under the same payment  terms as those of the Notes.  The Company paid all costs
of issuing  the Notes and the  Cousins  Loan,  including  a  $400,000  fee to an
affiliate of NationsBank Corporation.  In addition, the Company pays a fee to an
affiliate  of  NationsBank  Corporation  of .3%  per  annum  of the  outstanding
principal balance of the Notes.  Because CSC has loaned the $80 million proceeds
of the Notes to the Company,  the Notes and their related  interest  expense and
maturities are disclosed as an obligation of the Company and are not included in
the share of  unconsolidated  joint venture balances as disclosed in this Note 4
or in Note 5. (The related  note  receivable  and  interest  income are also not
included in this Note 4.)
     Effective  July 1, 1996,  the  Company  amended  and  extended  its line of
credit. The line amount was $50 million through December 31, 1996, and increased
to $100 million on January 1, 1997.  The line is unsecured,  bears interest tied
to the Federal Funds rate and matures June 30, 1997.
     On April 1, 1996,  CC-JM II  Associates  completed a  $24,675,000,  17 year
fully  amortizing  mortgage note payable at a 7% interest  rate. On December 16,
1996,  Wildwood  Associates  completed the financing of the 3200 Windy Hill Road
Building with a $70 million  mortgage note payable at an 8.23% interest rate and
maturity of January 1, 2007. Concurrent with the financing,  Wildwood Associates
paid  down  its  line  of  credit  to $0 and on  January  6,  1997,  made a cash
distribution of $10 million to each partner.
     On January 7, 1997, WWA received a commitment for the financing of the 4100
and 4300 Wildwood Parkway Buildings which is scheduled to fund by April 1, 1997.
The $30 million non-recourse mortgage note payable has an interest rate of 7.65%
and term of fifteen years.
     The Wildwood  Associates 2300 Windy Ridge and 3200 Wildwood  mortgage notes
and the CC-JM II Associates mortgage note provide for additional amortization in
the later years of the notes (over that  required  by the  amortization  periods
shown above) concurrent with scheduled rent increases.
     The Company has  entered  into an interest  rate swap in order to hedge its
exposure  to  fluctuations  in the  interest  rate on the  note  secured  by the
Company's  interest in the 650  Massachusetts  Avenue mortgage  notes.  The note
actually floats at LIBOR + 1%, but as of January 10, 1996, was effectively fixed
at the 6.53%  rate  shown  above.  The  difference  between  fixed and  variable
interest amounts calculated by reference to the principal notional amount (which
was $25,700,000 at December 31, 1996) is recognized as an adjustment to interest
expense  over the life of the swap.  The fair value of the swap was  $400,600 at
December 31, 1996.
     The Company has guaranteed its share of the Wildwood Associates and Norfolk
Hotel Associates short-term credit facilities. At December 31, 1996, the Company
had outstanding  letters of credit totaling  $459,000,  and assets with carrying
values  of  $253,847,000  and  $185,248,000  were  pledged  as  security  on the
Company's and its unconsolidated joint ventures' debt,  respectively.  The fixed
rate  long-term  mortgage  debt  of the  Company  and its  unconsolidated  joint
ventures is non-recourse to the Company.
     As of December 31, 1996,  the weighted  average  maturity of the  Company's
debt, including its share of unconsolidated joint ventures, was 8 years.
    The  aggregate   maturities  of  the  indebtedness  at  December  31,  1996
summarized above are as follows ($ in thousands):
<TABLE>
<CAPTION>

                                                   Share of
                                                Unconsolidated
                                Company         Joint Ventures        Total
                                --------        --------------       --------
          <S>                   <C>                <C>               <C>     
          1997                  $ 29,821           $  3,916          $ 33,737
          1998                     7,035              2,542             9,577
          1999                     6,413              2,743             9,156
          2000                    24,582              3,019            27,601
          2001                     4,508             10,990            15,498
          Thereafter             159,472             84,302           243,774
                                --------           --------          --------
                                $231,831           $107,512          $339,343
                                ========           ========          ========
</TABLE>

     For each of the years ended  December  31,  1994,  1995 and 1996,  interest
expense was recorded as follows ($ in thousands):
<TABLE>
<CAPTION>

                                                    Share of Unconsolidated
                           Company                      Joint Ventures                           Total
              ------------------------------    ------------------------------    -------------------------------
Year          Expensed   Capitalized   Total    Expensed   Capitalized   Total    Expensed   Capitalized   Total
- ----          --------   ----------- -------    --------   -----------  ------    --------   -----------  -------
<C>            <C>         <C>       <C>         <C>          <C>       <C>        <C>          <C>       <C>     
1994           $  411      $1,118    $ 1,529     $7,262       $ --      $7,262     $ 7,673      $1,118    $ 8,791 
1995              687       5,073      5,760      6,760        302       7,062       7,447       5,375     12,822
1996            6,546       5,648     12,194      6,599        557       7,156      13,145       6,205     19,350
</TABLE>


     The Company had future  lease  commitments  under a land lease  aggregating
$7.3 million over its remaining term of 72 years.  Current annual lease payments
are approximately  $63,000. The Company has entered into construction and design
contracts for real estate projects, of which approximately $12.2 million remains
committed  at December 31,  1996.  At December  31, 1995 and 1996,  the carrying
value of the Company's notes payable approximates fair value.

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 are included in the Company's
Form 10-K.
<TABLE>
<CAPTION>
                                                                                                        Company's
                                        Total Assets           Total Debt           Total Equity         Investment
                                     -------------------   -------------------   -------------------   -------------------
                                       1995       1996       1995       1996       1995       1996       1995       1996
                                     --------   --------   --------   --------   --------   --------   --------   --------

SUMMARY OF FINANCIAL POSITION:
<S>                                  <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>     
Wildwood Associates                  $232,866   $268,910   $134,855   $166,490   $ 90,168   $ 90,658   $  2,231   $  2,476
CSC Associates, L.P.                  206,889    201,387         --         --    203,938    200,346    104,776    102,904
Ten Peachtree Place Associates         21,173     20,811     20,971     20,196        (17)       215        (39)        (4)
Haywood Mall                           44,531     41,530         --         --     43,293     40,941     21,961     20,743
Spring/Haynes Associates               16,527         --         --         --     16,502         --      1,688         --
Norfolk Hotel Associates                8,169      8,283      4,480      4,050      3,631      4,182      1,815      2,091
CC-JM II Associates                    27,253     30,351     15,518     24,288      8,034      5,211      4,393      2,981
Other                                   1,183      2,365         --         --        882      2,144        435      1,071
                                     --------   --------   --------   --------   --------   --------   --------   --------
                                     $558,591   $573,637   $175,824   $215,024   $366,431   $343,697   $137,260   $132,262
                                     ========   ========   ========   ========   ========   ========   ========   ========
</TABLE>
<TABLE>
<CAPTION>

                                                                                      Company's Share
                                      Total Revenues         Net Income (Loss)      of Net Income (Loss)
                                -----------------------  -----------------------  -----------------------
                                  1994    1995    1996     1994    1995    1996     1994    1995    1996
                                ------- ------- -------  ------- ------- -------  ------- ------- -------
                                   

SUMMARY OF OPERATIONS:
<S>                             <C>     <C>     <C>      <C>     <C>     <C>      <C>     <C>     <C>    
Wildwood Associates             $36,305 $37,767 $40,505  $ 4,844 $ 5,884 $ 8,490  $ 2,422 $ 2,942 $ 4,245
CSC Associates, L.P.             28,931  31,195  33,312   13,009  14,697  16,108    6,880   7,308   7,978
Ten Peachtree Place Associates    4,228   4,276   4,284      461     523     632      192     236     235
Haywood Mall                     10,371  11,269  13,527    4,949   5,926   7,120    2,474   2,963   3,538
Spring/Haynes Associates             63     289      --      (66)    171     --       (33)     86      --
Norfolk Hotel Associates          1,029     804     820      664     486     552      332     243     276
CC-JM II Associates                  --      --   3,489       --      --     316       --      --     141
Other                               999   1,215    2,08      627     675   1,586      313     335     791
                                ------- ------- -------  ------- ------- -------  ------- ------- -------
                                $81,926 $86,815 $97,955  $24,488 $28,362 $34,804  $12,580 $14,113 $17,204
                                ======= ======= =======  ======= ======= =======  ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>

                                                                      Company's Share Of
                                                        ------------------------------------------------
                                      Cash Flows From      Cash Flows From             Operating
                                   Operating Activities  Operating Activities      Cash Distributions
                                ----------------------- -----------------------  -----------------------
                                  1994    1995    1996    1994    1995    1996     1994    1995    1996
                                ------- ------- ------- ------- ------- -------  ------- ------- -------

SUMMARY OF OPERATING CASH FLOWS:
<S>                             <C>     <C>     <C>     <C>     <C>     <C>      <C>     <C>     <C>    
Wildwood Associates             $12,999 $12,812 $20,278 $ 6,500 $ 6,406 $10,139  $ 4,000 $ 4,000 $ 4,000
CSC Associates, L.P.             16,777  22,366  20,394   8,840  11,219  10,197    8,400   7,771   9,850
Ten Peachtree Place Associates    1,165   1,100   1,360     315     305     344      200     200     200
Haywood Mall                      5,856   3,502   7,877   2,928   1,751   3,939    2,879   3,349   4,990
Spring/Haynes Associates            (83)    122      --     (42)     61      --       --      --      --
Norfolk Hotel Associates            470     338     428     235     169     214       --      --      --
CC-JM II Associates                  --      --  (1,655)     --      --    (828)      --      --     162
Other                               619     721   1,378     310     361     689      186     466     180
                                ------- ------- ------- ------- ------- -------  ------- ------- -------
                                $37,803 $40,961 $50,060 $19,086 $20,272 $24,694  $15,665 $15,786 $19,382
                                ======= ======= ======= ======= ======= =======  ======= ======= =======
</TABLE>



     Wildwood  Associates - Wildwood  Associates  was formed in 1985 between the
Company  and  IBM,  each as 50%  partners.  The  partnership  owns  five  office
buildings  totaling 1.9 million  rentable square feet, one office building under
construction   totaling  250,000  rentable  square  feet  (see  Note  8),  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 94
acres are owned by Wildwood  Associates  and an estimated 15 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.  The 15 acres of land
which are committed to be contributed to Wildwood  Associates by the Company are
included in Wildwood  Associates'  financial  statements under the caption "Land
Committed to be  Contributed"  and are not included in "Land Held for Investment
or  Future  Development"  in  the  Company's  financial  statements.  All  costs
associated with the land are borne by Wildwood Associates.

     Effective December 1, 1996, Wildwood Associates disposed of its interest in
an office  building at Summit Green in exchange for  cancellation of the related
mortgage debt.  Summit Green is an office project situated on 21 acres of leased
land in  Greensboro,  North  Carolina  and  includes  sites  for two  additional
buildings.  In  connection  with  the  office  building  disposition,   Wildwood
Associates and a related partnership also may dispose of a leasehold interest in
the  sites  for  the  two  additional  buildings.  No  material  gain or loss is
anticipated to result from the disposition of the Summit Green project.
     Through  December 31, 1996, 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 $49.3  million  for its  one-half  interest  in the
partnership,  and is obligated to contribute the aforesaid estimated 15 acres of
additional land with an agreed value of $13.5 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
($2.5 million at December 31, 1996) 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 ($45.3 million at December 31, 1996) 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.
     CSC's  net  income  or loss and cash  distributions  are  allocated  to the
partners based on their  percentage  interests (50% each),  subject to (prior to
1996) a preference to Cousins.  The Cousins  preference was $2.5 million (giving
Cousins an additional $1.25 million over what it would otherwise  receive),  and
accrued to Cousins,  with interest at 9% to the extent  unpaid,  over the period
February 1, 1992 through  January 31, 1995.  In October  1993,  the  partnership
fully repaid all of its debt with equity  contributions of $86.7 million made by
each  partner.  Following  repayment of the  partnership's  debt,  Cousins began
recognizing  its  accrued  preference  currently  in income,  which  resulted in
Cousins  recognizing  $451,000  and  $36,000  in income  over what it would have
otherwise   recognized   in  the  years  ended   December  31,  1994  and  1995,
respectively.  During  the years  ended  December  31,  1994 and  1995,  Cousins
received  distributions  of the preference and accrued interest of approximately
$2.65 million and $71,000, respectively. Amounts above the preference amount are
allocated  based  on  the  partners'  percentage  interests.  See  Note  4 for a
discussion of the presentation of certain CSC assets, liabilities and revenues.
     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 - Haywood Mall, a regional shopping center on 86 acres 5 miles
southeast of downtown Greenville, South Carolina, is owned by the Company and an
affiliate of Corporate  Property  Investors.  Expansion of the mall from 956,000
gross  leaseable  square  feet  ("GLA") (of which  approximately  272,000 GLA is
owned)  to  1,256,000  GLA (of which  approximately  330,000  GLA is owned)  was
substantially  completed in 1995. The balance of the mall is owned by the mall's
five major  department  stores.  During the year ended  December 31,  1995,  the
Company  contributed  $5.8  million to fund its share of the  completion  of the
expansion.
     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
MarketCenter  and Mansell  Crossing  Phase II.  Effective  January 1, 1996,  the
Company and Coca-Cola  entered into an exchange  transaction  which  effectively
resulted in Coca-Cola receiving 100% of the Spring/Haynes  Associates'  property
and the Company  receiving  $1,092,000  in cash and 100% of North  Point  Market
Associates,  L.P.'s  properties  (North Point  MarketCenter and Mansell Crossing
Phase II). The net amount of  Coca-Cola's  minority  interest of  $3,825,000  in
North  Point  Market   Associates,   L.P.  and  the   Company's   investment  in
Spring/Haynes  Associates  of  $1,688,000  as of December  31, 1995 was credited
against the carrying values of North Point Market Associates, L.P.'s properties.
     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 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, and in July 1996 the Company sold
its 50%  interest  for $2  million,  resulting  in a profit  to the  Company  of
approximately  $408,000  which  is  included  in  Gain  on  Sale  of  Investment
Properties in the accompanying Consolidated Statements of Income.
     CC-JM II  Associates  - This joint  venture was formed in 1994  between the
Company and an affiliate of CarrAmerica Realty Corporation,  each as 50% general
partners,  to develop and own a 224,000  rentable square foot office building in
suburban Washington, D.C. The building is 100% leased for 15 years to Booz-Allen
&  Hamilton,  an  international  consulting  firm,  as a part  of its  corporate
headquarters  campus.  Rent  commenced on January 21, 1996.  In April 1996,  the
venture  completed  the financing of the building  with a  $24,675,000,  17 year
fully amortizing non-recourse mortgage note (see Note 4).
     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,
subject to a  preference  in favor of the  majority  partner.  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
the fee simple  interest  in  approximately  11,300  acres in  Paulding  County,
Georgia (northwest of Atlanta,  Georgia).  The partnership also has an option to
acquire a timber rights interest only in approximately 22,000 acres. The options
may be  exercised  in whole or in part over the  option  period,  and the option
price of the fee simple land was $780 per acre at January 1, 1997, escalating at
6% on January 1 of each  succeeding  year during the term of the option.  During
1994 and 1996,  approximately  72 and 375  acres,  respectively,  of the  option
related to the fee simple  interest was  exercised and  simultaneously  sold for
gross profits of approximately  $243,000 and $1,427,000,  respectively.  None of
the option was exercised in 1995.
     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% leased 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 jointly  developed the
building.  Due to the release of certain  completion  guarantees  related to the
building,  approximately  $2.6 million of  development  income was recognized in
September 1995 ($931,000 of which had been deferred as of December 31, 1994). An
additional $777,000 of development income was received and recognized in 1996.
     Additional Information - The Company recognized $2,539,000,  $5,780,000 and
$4,926,000 of  development,  construction,  leasing,  and  management  fees from
unconsolidated joint ventures in 1994, 1995 and 1996, respectively.

6.   STOCKHOLDERS' INVESTMENT, STOCK APPRECIATION RIGHT EXPENSE AND
     PER SHARE DATA

General:
     The Company has elected to account for its stock-based  compensation  plans
under APB Opinion No. 25,  "Accounting  for Stock  Issued to  Employees,"  which
requires  the  recording  of  compensation   expense  for  some,  but  not  all,
stock-based  compensation,  rather than the alternative  accounting permitted by
SFAS No. 123, "Accounting for Stock-Based  Compensation".  Had compensation cost
for stock-based compensation plans been determined consistent with SFAS No. 123,
the  Company's  earnings  and  earnings  per share would have been as  disclosed
below. 

Options and Stock Appreciation Rights:
     The Company has a stock incentive plan for key employees which provides for
the  granting  of both stock and stock  option  awards  under the plan (see also
"Stock  Grants"  below).  The Company  also has  adopted a similar  plan for its
outside directors.  Under both plans, stock options have been granted for a term
of 10 years, and the vesting period for all options outstanding is 5 years and 1
year under the key  employee  and  outside  director  plans,  respectively.  All
options were awarded at the then current market price.
     At December 31, 1996,  1,506,980 stock options to key employees and outside
directors were outstanding  (including 43,500 shares under a predecessor  plan),
and the Company is authorized to award an additional  1,099,445 stock options or
shares of stock.  Prior to 1991,  the Company  included a provision  in each key
employee 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;  all of those options
were exercised prior to December 31, 1996.
     Separately  from the stock  incentive  plan,  the Company has issued  stock
appreciation  rights ("SARs") to certain  employees under two plans. At December
31, 1996, 184,500 SARs were outstanding,  and the Company is authorized to award
an additional 1,109,354 SARs.
     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.
     The Company  accounts for stock options which have a cash payment  election
option 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,  vesting,
changes in the market value of the common stock between periods,  and forfeiture
of non-vested SARs of terminated employees.


<PAGE>


     The following is a summary of stock option  activity under the stock option
plans and SAR plans (in thousands, except per share amounts):

<TABLE>
<CAPTION>


                                     Number of             Weighted Average
                                      Shares           Exercise Price Per Share
                                --------------------   ------------------------
                                1994   1995     1996    1994     1995     1996
                                ----   ----     ----    ----     ----     ----
Stock Option Plans
- ------------------
<S>                              <C>   <C>     <C>     <C>      <C>      <C>
Outstanding, beginning 
  of year                        911   1,184   1,413   $14.27   $14.74   $15.42
Granted                          284     300     436   $15.75   $18.00   $22.75
Exercised                        (11)    (42)   (340)  $ 3.19   $13.30   $13.61
Forfeited                         --     (29)     (2)      --   $16.99   $16.77
                               ---------------------
Outstanding, end of year       1,184   1,413   1,507   $14.74   $15.42   $17.95
                               =====================   
Shares exercisable at 
  end of year                    567     805     601   $13.75   $13.68   $15.29
                               =====================   

SARs
- ----
Outstanding, beginning 
  of year                        382     369     344   $13.26   $13.21   $13.21
Granted                           --      --      --       --       --       --
Exercised                         (6)    (23)   (159)  $12.17   $13.03   $11.44
Forfeited                         (7)     (2)     (1)  $16.74   $13.91   $13.59
                               ---------------------
Outstanding, end of year         369     344     184   $13.21   $13.21   $14.74
                               =====================   
Shares exercisable at 
  end of year                    225     272     145   $12.25   $12.44   $14.21
                               =====================   
</TABLE>

     The  following  table  provides a breakdown by exercise  price range of the
number of shares,  weighted average  exercise price,  and remaining  contractual
lives for all stock  options  and SARs  outstanding  at  December  31,  1996 (in
thousands,     except     per    share     amounts     and     option     life):
<TABLE>
<CAPTION>


                                                   For Outstanding Options/SARs
                                                   ----------------------------
     Exercise                                       Weighted   Weighted Average
       Price                                        Average    Contractual Life
       Range           Outstanding   Exercisable     Price        (in years)
     --------          -----------   -----------    --------   ----------------

Stock Option Plans
- ------------------
<C>                      <C>             <C>         <C>             <C>
$10.78 to $14.50           283           260         $13.87          3.0
$14.51 to $20.00           803           341         $16.80          7.4
$20.01 to $23.00           421            --         $22.87          9.9
                         -----------------------------------------------
Total                    1,507           601         $17.95          7.3
                         ===============================================
SARs
- ----
$10.78 to $14.49            94            91         $12.62          3.6
$14.50 to $16.875           90            54         $16.88          6.1
                         -----------------------------------------------
Total                      184           145         $14.21          4.8
                         ===============================================
</TABLE>

<PAGE>

     At December 31, 1995 and 1996,  the total amount accrued for stock options,
SARs,  and  Deferred   Payment   Agreements   was  $3,367,000  and   $2,472,000,
respectively.
     Stock Grants:
     As indicated  above the key employee  stock  incentive plan and the outside
director stock plan provide for stock awards in addition to stock option awards.
The  stock  awards  may  be  subject  to  specified   performance   and  vesting
requirements. Under the outside director stock plan, since April 1995 a director
could elect to receive any portion of his director fees in stock,  and since May
1996 the amount of stock received has been based on 95% of the market price.  As
of December 31, 1996, 110,400 shares of common stock have been awarded under the
key employee incentive plan, of which 10,400 shares were awarded in lieu of 1995
cash  bonuses,  and 100,000  shares were  awarded in 1995  subject to  specified
performance and vesting requirements.  The estimated cost of the 100,000 shares,
which will not be issued until all requirements  have been met, is being accrued
over the five year performance and vesting period,  and at December 31, 1995 and
1996, $44,000 and $654,000 was accrued, respectively.  Outside directors elected
to receive 307 and 2,260  shares of stock in lieu of cash for  director  fees in
1995 and 1996, respectively. 
     SFAS No. 123 Pro Forma Disclosures: 
     For  purposes of the pro forma  disclosures  required by SFAS No. 123,  the
Company has computed the value of all stock option  awards  granted  during 1995
and 1996  using  the  Black-Scholes  option  pricing  model  with the  following
weighted-average  assumptions  and  results:  
<TABLE>
<CAPTION>

                                        1995      1996
                                        ----      ----  
Assumptions
- -----------
<S>                                    <C>        <C>   
Risk-free interest rate                5.94%      6.26% 
Assumed  dividend  yield               6.00%      5.34% 
Assumed lives of option awards         8 years    8 years 
Assumed volatility                     0.173      0.171

Results
- -------
Weighted average fair
  value of options granted             $1.98      $3.08
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective assumptions.  In the Company's opinion, because the Company's options
have  characteristics  significantly  different from traded options, and because
changes  in the  subjective  assumptions  can  materially  affect the fair value
estimate,  the results  obtained  from the  valuation  model do not  necessarily
provide a reliable single measure of its option awards.
    
     If the  Company  had  accounted  for its option  awards in 1995 and 1996 in
accordance with SFAS No. 123, pro forma results would have been as follows ($ in
thousands,  except per share  amounts):  1995 1996 ------- ------- Pro forma net
income $26,297 $40,978 Pro forma net income per share $ .94 $ 1.44

Because  the SFAS No. 123 method of  accounting  has not been  applied to awards
granted prior to January 1, 1995, the pro forma compensation adjustments used to
derive the above  results are not likely to be  representative  of the pro forma
compensation adjustments to be reported in future years.
     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.  Fully  diluted  income per share does not differ  materially  from
primary income per share in 1994, 1995 and 1996.
     Ownership Limitations:
     In order to maintain Cousins' qualification 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 1994 and 1995 and estimated to be applied in 1996 to meet REIT 
distribution requirements ($ in thousands):
<TABLE>
<CAPTION>
 
                                                    1994      1995      1996
                                                    ----      ----      ----
<S>                                               <C>       <C>       <C>    
Dividends declared                                $25,064   $27,691   $31,912
Additional dividends paid deduction due to 5% 
  discount on dividends reinvested                     --       277       407
That portion of dividends declared in current 
  year, and paid in current year, which was 
  applied to the prior year distribution 
  requirements                                       (161)   (3,048)   (2,197)
That portion of dividends declared in subsequent
  year, and paid in subsequent year, which will 
  apply to current year                             3,048     2,197     4,314
                                                  ---------------------------
Dividends applied to meet current year REIT 
  distribution requirements                       $27,951   $27,117   $34,436
                                                  ===========================
</TABLE>

     Tax Status of Dividends:
     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.
     In 1996, the Company  designated as capital gain  dividends  16.778% of the
dividend  paid  February 22, 1996 and 30.6774% of the dividend paid December 23,
1996. In 1995, the Company  designated as capital gain dividends  2.4815% of the
dividend paid December 21, 1995. All other  dividends paid in 1994 and 1995 were
taxable  as  ordinary  dividends.  In  addition,  in 1995  and  1996  an  amount
calculated  as  3.25%  and  1.95%  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.

7.   INCOME TAXES

     In 1994, 1995 and 1996, 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 1994 and 1995 and estimated 1996) and  Consolidated Net Income as
reported herein are as follows ($ in thousands):
<TABLE>
<CAPTION>

                                                        1994     1995     1996
                                                        ----     ----     ----
<S>                                                   <C>      <C>      <C>    
Consolidated net income                               $26,895  $26,342  $41,016
Consolidating adjustments                              (1,875)     348   (2,754)
Less CREC net loss (income)                               394   (1,652)   2,937
                                                      -------------------------
Cousins net income for financial reporting purposes    25,414   25,038   41,199
                                                      -------------------------
Adjustments arising from:
  Sales of investment properties                        3,909   (1,633) (12,175)
  Income from unconsolidated joint ventures 
    (principally depreciation, revenue recognition, 
    and operational timing differences)                (2,361)  (1,891)   2,429
  Rental income recognition                              (111)    (130)     137
  Interest income recognition                             198      305      448
  Wildwood Training Facility differences                  342      375      411
  Interest expense                                        297    2,830    3,000
  Compensation expense under stock option and SAR plans    92      312   (2,893)
  Depreciation                                            336      245      657
  Net operating loss utilized                            (295)      --       --
  Other                                                   130    1,666    1,223
                                                      -------------------------
    Cousins taxable income                            $27,951  $27,117  $34,436
                                                      =========================
</TABLE>

     The  consolidated  provision  (benefit) for income taxes is composed of the
following ($ in thousands):
<TABLE>
<CAPTION>

                                                                                          1994       1995       1996
CREC and its wholly owned subsidiaries:
Currently payable (refundable):
<S>                                                   <C>      <C>      <C>     
  Federal                                             $    --  $   574  $(1,141)
  State                                                    --       17     (185)
                                                      -------------------------
                                                           --      591   (1,326)
                                                      -------------------------
Adjustments arising from:
  Income from unconsolidated joint ventures               411      171      298
  Operating loss carryforward                             (94)     323      193
  Stock appreciation right expense                       (111)    (324)    (185)
  Fee income                                             (361)     354       --
  Other                                                   (33)     (49)    (776)
                                                      -------------------------
                                                         (188)     475     (470)
                                                      -------------------------
CREC provision (benefit) for income taxes                (188)   1,066   (1,796)
Cousins provision (benefit) for state income taxes         22     (228)     680
Less provision applicable to gain on sale of investment 
  properties                                               --      (91)    (587)
                                                      -------------------------
Consolidated provision (benefit) applicable to income 
  from operations                                      $ (166) $   747  $(1,703)
                                                       ========================
</TABLE>

     The Cousins  provision  (benefit)  for state income taxes in 1995 is net of
$252,000 of state income tax refunds related to a successful  judicial appeal by
Cousins of an assessment paid in 1992.


     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>
                                            1994          1995         1996
                                      ------------  ------------  ------------ 
                                      Amount  Rate  Amount  Rate  Amount  Rate
                                      ------  ----  ------  ----  ------  ----
<S>                                    <C>      <C> <C>       <C> <C>       <C>
Federal income tax provision (benefit) $(198)   34% $  924    34% $(1,609)  34%
State income tax provision (benefit), 
  net of federal income tax effect       (23)    4     109     4     (189)   4
Other                                     33    (5)     33     1        2   --
                                       ----------------------------------------
CREC provision (benefit) for income 
  taxes                                 (188)   33%  1,066    39%  (1,796)  38%
                                                ---           ---           ---
Cousins provision (benefit) for 
  income taxes                            22          (228)           680
Less provision applicable to gain on 
  sale of investment properties           --           (91)          (587)
                                       -----        ------        -------
Consolidated provision (benefit) 
  applicable to income from operations $(166)       $  747        $(1,703)
                                       =====        ======        ======= 
</TABLE>


     The  components  of CREC's net deferred tax  liability are as follows ($ in
thousands):
<TABLE>
<CAPTION>

                                  1995       1996
                                  ----       ----
<S>                              <C>        <C>    
Deferred tax assets              $ 1,616    $ 3,684
Deferred tax liabilities          (3,398)    (4,148)
                                 ------------------
Net deferred tax liability       $(1,782)   $  (464)
                                 ==================
</TABLE>
     The tax effect of significant  temporary  differences  representing  CREC's
deferred tax assets and liabilities are as follows ($ in thousands):
<TABLE>
<CAPTION>

                                  1995       1996
                                  ----       ----
<S>                              <C>        <C>    
Operating loss carryforward      $ 1,168    $ 1,749
Income from unconsolidated
   joint ventures                 (3,188)    (3,485)
Stock appreciation right expense     754        939
Fee income                             7          7
Other                               (523)       326
                                 ------------------
                                 $(1,782)   $  (464)
                                 ==================
</TABLE>

8.   PROPERTY TRANSACTIONS

     Retail Properties
     In March 1996,  Colonial Plaza  MarketCenter,  a 493,000 square foot retail
power center in Orlando, Florida and Mansell Crossing Phase II, a 103,000 square
foot retail  expansion  adjacent to the Company's other North Point  properties,
became partially  operational for financial  reporting  purposes.  In June 1996,
Presidential  MarketCenter  Phase II, an 82,000  square foot retail power center
expansion  in  northeast  suburban  Atlanta  became  partially  operational  for
financial  reporting  purposes.  In October  1996,  Greenbrier  MarketCenter,  a
479,000 square foot retail power center in Chesapeake, Virginia became partially
operational  for  financial  reporting  purposes.  In November  1996,  Los Altos
MarketCenter,  a 157,000  square foot retail power center located in Long Beach,
California  became  partially   operational  for  financial  reporting  purposes
(construction commenced on this retail power center in January 1996).
     In November 1996, Lawrenceville MarketCenter,  a 500,000 square foot retail
power center  located in northeast  suburban  Atlanta was sold to Equitable Real
Estate  Investment  Management,  Inc.,  acting on behalf of its client,  a major
state pension fund for a purchase  price of  $34,605,000.  The gain on the sale,
net of applicable income tax provision was approximately  $10,651,000 (including
depreciation recapture of approximately $715,000). The net proceeds were swapped
in a  tax-deferred  exchange into the purchase of One  Independence  Center (see
discussion below).
     Office Properties
     Two office  buildings,  100 and 200 North Point  Center  East,  128,000 and
129,000 rentable square feet, respectively, located adjacent to North Point Mall
and the Company's  retail  properties in north central  suburban  Atlanta became
partially  operational  for  financial  reporting  purposes  in  April  1996 and
November 1996, respectively.  In March 1996, 4100 and 4300 Wildwood Parkway, two
office  buildings with a total of 250,000 rentable square feet owned by Wildwood
Associates and located in Wildwood Office Park became partially  operational for
financial reporting purposes.
     In  October  1996,  Wildwood  Associates  commenced  construction  on  4200
Wildwood Parkway, a 250,000 square foot office building located adjacent to 4100
and 4300 Wildwood Parkway. In December 1996, the Company commenced  construction
on 333 North Point Center East, a 128,000  rentable square foot office building,
adjacent to 100 and 200 North Point Center East.
     In May 1996, pursuant to the third amendment to the North Greene Associates
partnership  agreement,  Weaver Downtown,  L.P., the minority partner,  sold its
partnership interest to Cousins for $999,000. As a result,  Cousins owns 100% of
the First  Union  Tower,  a 319,000  rentable  square  foot  office  building in
Greensboro, North Carolina.
     During 1996 Cousins acquired two office buildings.  In August 1996, Cousins
acquired 615 Peachtree  Street,  a 147,000 rentable square foot downtown Atlanta
office  building,  located across from  NationsBank  Plaza.  The 12-story office
building was purchased for $11.1 million plus a contingent  future payment of up
to an additional $1 million. In December 1996, Cousins acquired One Independence
Center, a 522,000 rentable square foot office building (including an underground
parking  garage and an adjacent  parking  deck) located at the  intersection  of
Trade and Tryon in the central  business  district of Charlotte,  North Carolina
for a purchase  price of  approximately  $70.6  million.  Cousins  purchased the
office   building   using   approximately   $34,612,000  of  proceeds  from  the
tax-deferred  exchanges of Lawrenceville  MarketCenter and an outparcel at North
Point,  $30,879,000 from the assumption of a mortgage note payable,  $18,621,000
from an additional  amount drawn down on the mortgage note payable (to bring the
mortgage note payable to a total of $49,500,000)  (see Note 4) and $2,426,000 of
cash.  Cousins  also  assumed  $1,300,000  of  municipal  bonds  related  to the
underground parking garage.
     Medical Properties
     In July 1996, Cousins acquired the medical office building  development and
management  operations of The Lea Richmond Company and The Richmond  Development
Company. The purchase price for the acquisition was $1.8 million plus contingent
future  payments of up to an additional  $1 million (of which  $200,000 was paid
through  December 31, 1996),  subject to  commencement of development of certain
medical office projects. This new division of the Company commenced construction
in July 1996 on the Presbyterian Medical Center at University, a 67,000 rentable
square foot medical office building in Charlotte, North Carolina.
     Residential Lots
     The Company is currently developing six residential communities in suburban
Atlanta,  including four in which development commenced in 1994, one in 1995 and
one in 1996. These  developments  currently include land on which  approximately
1,382 lots are being  developed (with  additional  lots  developable on adjacent
land under option),  of which 116, 183 and 226 lots were sold in 1994,  1995 and
1996,  respectively.  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>

                                    1994     1995    1996
                                    ----     ----    ----

<S>                                 <C>      <C>    <C>   
Interest paid                       $ 336    $846   $5,753
Income taxes paid
   (refunded), net of $577,
   $252 and $511 refunded
   in 1994, 1995 and
   1996, respectively               $(549)   $376   $   54
</TABLE>

     Significant non-cash financing and investing included the following:
     a. In 1994,  1995  and  1996,  approximately  $27,602,000,  $2,860,000  and
$78,169,000,  respectively, were transferred from Projects Under Construction to
Operating Properties.
     b. In 1994 and 1995,  approximately $941,000 and $2,970,000,  respectively,
were transferred from Land Held for Investment or Future Development to Projects
Under Construction.  In 1996, approximately $3,246,000 was transferred from Land
Held for Investment or Future Development to Operating Properties.
     c. 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).
     d. In January 1996, in conjunction with the exchange of certain partnership
interests (see Note 5),  approximately  $3,825,000 was transferred from Minority
Interests in  Consolidated  Entities to Operating  Properties  ($3,283,000)  and
Projects  Under  Construction  ($542,000);   and  approximately  $1,688,000  was
transferred  from  Investment  in  Unconsolidated  Joint  Ventures to  Operating
Properties.
     e.  In  December  1996,  in  conjunction   with  the   acquisition  of  One
Independence Center (see Notes 4 and 8) a mortgage note payable of approximately
$30,879,000 was assumed.

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, 1996, future minimum rentals to be received by consolidated
entities under existing  non-cancelable  leases,  excluding tenants' current pro
rata share of operating expenses, are as follows ($ in thousands):
<TABLE>
<CAPTION>

                        Retail      Office      Total
                        ------      ------      -----
<C>                    <C>         <C>         <C>     
1997                   $ 26,340    $ 18,754    $ 45,094
1998                     26,437      17,664      44,101
1999                     26,272      17,090      43,362
2000                     25,595      15,711      41,306
2001                     25,244      10,302      35,546
Subsequent to 2002      256,786      52,926     309,712
                       --------------------------------
                       $386,674    $132,447    $519,121
                       ================================
</TABLE>

<PAGE>




Cousins Properties Incorporated and Consolidated Entities

FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
- -------------------------------------------------------------------------------
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                    1992     1993     1994     1995     1996
                                    ----     ----     ----     ----     ----
<S>                               <C>      <C>      <C>      <C>      <C>     
Rental property revenues          $  6,933 $  6,687 $ 13,150 $ 19,348 $ 33,112
Fees                                 4,953    5,903    5,023    7,884    6,019
Residential lot and outparcel 
  sales                                 --       --    6,132    9,040   14,145
Interest and other                   6,989    6,456    6,801    4,764    5,256
                                  --------------------------------------------
Total revenues                      18,875   19,046   31,106   41,036   58,532
                                  --------------------------------------------
Income from unconsolidated joint 
  ventures                           2,573    5,516   12,580   14,113   17,204
Rental property operating expenses   2,354    2,310    3,338    4,681    7,616
Depreciation and amortization        2,345    3,164    3,742    4,516    7,219
Stock appreciation right expense       860      721      433    1,298    2,154
Residential lot and outparcel cost 
  of sales                              --       --    5,762    8,407   13,676
Interest expense                       820       --      411      687    6,546
General, administrative, and other
  expenses                           5,640    9,124    9,627   10,333   12,016
                                  --------------------------------------------
Total expenses                       2,019   15,319   23,313   29,922   49,227
Provision (benefit) for income taxes
  from operations                      360     (795)    (166)     747   (1,703)
Gain on sale of investment properties,
  net of applicable income tax 
  provision                          6,644    1,927    6,356    1,862   12,804
                                  --------------------------------------------
Net income                        $ 15,713 $ 11,965 $ 26,895 $ 26,342 $ 41,016
                                  ============================================
Net income per share              $    .86 $    .53 $    .97 $   .94  $   1.44
                                  ============================================
Cash dividends declared per share $    .62 $    .73 $    .90 $   .99  $   1.12
                                  ============================================
Total assets                      $195,791 $319,702 $330,817 $418,006 $556,644
Notes payable                        9,079   35,151   41,799  113,434  231,831
Stockholders' investment           176,091  270,557  272,898  277,678  299,184
Shares outstanding at year-end      21,717   27,831   27,864   28,223   28,920
</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, 1995 and 1996, and the related  consolidated  statements of income,
stockholders'  investment  and cash  flows  for each of the  three  years in the
period  ended   December  31,  1996.   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 which statements
combined  reflect  assets  of 45% and 42% of the  joint  ventures  totals  as of
December 31, 1995 and 1996 and  revenues of 48%,  49% and 48% of the 1994,  1995
and 1996 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, 1995
and 1996 and for each of the three years in the period ended  December 31, 1996,
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, 1995 and 1996,  and the results of their  operations
and their cash flows for each of the three  years in the period  ended  December
31, 1996 in conformity with generally accepted accounting principles.
                                    ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 14, 1997

<PAGE>


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, 1996
     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.  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
increased from  $13,150,000 in 1994 to $19,348,000  and  $33,112,000 in 1995 and
1996, respectively.  The increases in 1995 and 1996 were primarily due to rental
property revenues from the Company's retail power centers.  The increase in 1996
was  due  in  part  to  rental  property  revenues  from  five  retail  centers,
Lawrenceville  MarketCenter ($2,714,000),  Lovejoy Station ($712,000),  Colonial
Plaza MarketCenter  ($3,366,000),  Presidential MarketCenter Phase II ($727,000)
and Greenbrier  MarketCenter  ($872,000),  which became partially operational in
October  1995,   December  1995,   March  1996,  June  1996  and  October  1996,
respectively.  Three other centers also  favorably  impacted  1996  results,  by
somewhat less than the  aforementioned  five retail  centers:  Mansell  Crossing
Phase II rental  property  revenues  increased  $571,000 as it became  partially
operational in March 1996,  North Point  MarketCenter  rental property  revenues
increased   $518,000  due  to  increases  from  Phase  II  which  was  partially
operational in July 1995, and Los Altos  MarketCenter  rental property  revenues
increased  $336,000 as it became partially  operational in November 1996. Rental
property revenues were negatively impacted by approximately $278,000 in 1996 due
to the  termination  of one tenant at Perimeter  Expo in February 1996 which was
replaced by a better credit tenant whose lease commenced in August 1996.
     Two new office  buildings and two acquisitions of existing office buildings
also favorably  impacted 1996 rental  property  revenues.  The 100 and 200 North
Point Center East office buildings which became  partially  operational in April
1996  and  November  1996,  respectively,  increased  rental  property  revenues
$1,554,000 and $270,000,  respectively. The acquisitions of 615 Peachtree Street
and One Independence Center in August 1996 and December 1996, respectively, (see
Note  8)  also   contributed   to  the  increase  by  $1,057,000  and  $886,000,
respectively.
     The increase in rental property  revenues in 1995 was  attributable to four
of the Company's retail centers.  Perimeter Expo and  Presidential  MarketCenter
Phase  I  which  became   operational   in  December  1993  and  December  1994,
respectively,  increased  rental  property  revenues  $418,000 and $1,762,000 in
1995. North Point MarketCenter rental property revenues increased  $2,437,000 in
1995 due to increases from Phase II which became  partially  operational in July
1995.  Lawrenceville  MarketCenter  which became  operational  in December  1995
contributed to the increased results in 1995 by $312,000.
     Rental  property  revenues  were also  affected  in 1995 by  changes  which
occurred in the 3301 Windy Ridge Parkway Building, a 107,000 square foot Company
wholly owned office  building in Wildwood Office Park, and the First Union Tower
in Greensboro,  North Carolina.  Commencing  January 1994 a single tenant leased
3301  Windy  Ridge  Parkway  for a term of ten  years for  initially  60% of the
building, with options permitting the expansion 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 the  lease-up of First
Union Tower,  which had rental property  revenues of $5,522,000,  $5,961,000 and
$6,232,000 in 1994, 1995 and 1996, respectively.
     Rental property revenues from 24 acres of the North Point land being ground
leased to  freestanding  users also  increased  in 1995 and 1996 by $429,000 and
$347,000, respectively.  Approximately 6 acres of leases began generating income
during the fourth quarter of 1993, with 7 acres of leases  beginning  throughout
1994 and an additional 11 acres of leases beginning throughout 1995.
     Rental  property  operating  expenses  increased from $3,338,000 in 1994 to
$4,681,000 and $7,616,000 in 1995 and 1996, respectively.  The increases in 1995
and 1996 were primarily related to the occupancy of the retail power centers and
the 100  and 200  North  Point  Center  East  office  buildings,  as well as the
acquisitions  of the 615  Peachtree  Street and One  Independence  Center office
buildings as discussed above.
     Development and Construction Fees.  Development and construction fee income
increased  from  $1,020,000 in 1994 to $3,515,000 in 1995 and then  decreased to
$1,660,000 in 1996.  The decrease in 1996 was due primarily to a decrease in the
recognition of development  income from the Dusseldorf  joint  venture's  office
building  project  ($2,604,000  in 1995 and $777,000 in 1996) (see Note 5). Also
contributing to the decrease in 1996 was a decrease of approximately $140,000 in
development  fees  received  from the Emory  Conference  Center,  a third  party
development.  Partially  offsetting  the  decrease  in 1996 was an  increase  in
development  from Wildwood  Associates fees  (approximately  $334,000) which was
attributed to development of three new office buildings in Wildwood Office Park,
the 4100, 4200 and 4300 Wildwood Parkway Buildings. The increase in 1995 was due
primarily to the recognition of development  income from the Dusseldorf  project
($2,604,000)  and an increase of $244,000 in development  fees  recognized  from
Wildwood  Associates.  This  increase  was  partially  offset by a  decrease  in
development  fees of $313,000  recognized by the Company's  retail division from
third  party  retail  developments.  Development  fees  received  from the Emory
Conference  Center,  a  third  party  development,  also  decreased  in  1995 by
$117,000.
     Management  Fees.  Management  fees  increased  from  $2,061,000 in 1994 to
$2,213,000 and $2,801,000 in 1995 and 1996, respectively. Approximately $395,000
of the increase in 1996 was due to the  acquisition of the management  contracts
of The Lea  Richmond  Company  in July 1996 (see Note 8).  Management  fees also
increased in 1995 and 1996 due to lease-up of the projects from which management
fees are received.
     Leasing and Other Fees. Leasing and other fees increased from $1,942,000 in
1994 to  $2,156,000  in 1995,  and then  decreased to  $1,558,000  in 1996.  The
decrease in 1996 was due  primarily to a decrease of  approximately  $567,000 in
leasing and other fees  recognized by the Company's  retail  division from third
party retail  developments.  Also contributing to the decrease was a decrease of
approximately  $327,000  in leasing  fee  income  from  NationsBank  Plaza and a
decrease  of  approximately  $228,000  in leasing  fee income from a third party
office  project.  Partially  offsetting  the decrease in 1996 was an increase of
approximately $540,000 from leasing fees related to Wildwood Office Park.
     The increase in 1995 was due primarily to a $374,000 third party  incentive
fee and a $276,000  cash flow and sale  participation  received from third party
retail  developments.  Leasing fee income from NationsBank  Plaza also increased
$141,000 in 1995. Partially offsetting these increases was a decrease in leasing
fees received from third party retail  developments as such third party work was
phased out and in-house development increased.
     Residential Lot and Outparcel Sales and Cost of Sales.  Residential lot and
outparcel  sales increased from $6,132,000 in 1994 to $9,040,000 and $14,145,000
in 1995 and 1996, respectively.  Both the increases in 1995 and 1996 were due to
increases in residential  lot sales by CREC from 116 lots in 1994 to 183 and 226
lots in 1995 and 1996, respectively. CMC also recognized $525,000 and $3,951,000
in 1995 and 1996,  respectively,  from one and eight outparcel sales in 1995 and
1996, respectively.
     Residential  lot and outparcel cost of sales  increased from  $5,762,000 in
1994 to $8,407,000 and $13,676,000 in 1995 and 1996, respectively. The increases
in both years were due to the increases in sales discussed above.
     Interest  and Other  Income.  Interest  and  other  income  decreased  from
$6,801,000  in 1994 to  $4,764,000  in 1995 and then  increased to $5,256,000 in
1996.  The increase in 1996 was due to an increase in interest  income  received
from temporary  investments made with proceeds received from the $80 million CSC
Associates, L.P. financing completed in 1996 (see Note 4).
     The decrease in 1995 was due to decreases in interest  income received from
the  9.1%  Mortgage  Notes  ($1,813,000   decrease)  and  temporary  investments
($163,000 decrease).  The 9.1% Mortgage Notes which had a balance of $39,927,000
at  December  31,  1993 were repaid in full on June 30,  1994.  The  decrease in
temporary investment income was primarily due to the Company's investment of its
excess cash in real estate assets in 1995.  Partially offsetting these decreases
was an increase of $533,000  due to the  recognition  of a full year of interest
income from the 650  Massachusetts  Avenue  Notes which were  purchased in March
1994 (see Note 3).
     Income  From  Unconsolidated  Joint  Ventures.  (All  amounts  reflect  the
Company's  share of joint  venture  income.)  Income from  unconsolidated  joint
ventures  increased from  $12,580,000 in 1994 to $14,113,000  and $17,204,000 in
1995 and 1996, respectively.
     Income from CSC  Associates,  L.P.  increased  from  $6,880,000  in 1994 to
$7,308,000 and $7,978,000 in 1995 and 1996, respectively.  The increases in both
1995 and 1996 were due to the  continued  lease-up  of  NationsBank  Plaza.  The
Company's  share of both the 1994 and 1995  results  benefited  by $451,000  and
$36,000 in 1994 and 1995,  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).
     Income  from  Wildwood  Associates  increased  from  $2,422,000  in 1994 to
$2,942,000 and $4,245,000 in 1995 and 1996,  respectively.  Results in 1996 were
favorably  impacted by a decrease in interest expense of approximately  $883,000
in 1996 which was due primarily to increased interest  capitalization and to the
refinancings of two mortgage notes in December 1995. In March 1996, the 4100 and
4300 Wildwood  Parkway  Buildings  became  partially  operational  for financial
reporting purposes which increased income before depreciation,  amortization and
interest  expense  by   approximately   $877,000  in  1996.  The  income  before
depreciation,  amortization and interest expense of the 2500 Windy Ridge Parkway
Building  decreased  approximately  $720,000  in  1996,  primarily  due  to  the
expiration of a tenant's  lease which was replaced with another tenant with less
square  footage  at a lower  rate.  Additionally,  increases  in  income  before
depreciation,  amortization  and  interest  expense  from the 2300  Windy  Ridge
Parkway Building contributed to the increase in 1996 by approximately  $276,000.
The  increase  in 1995 is the result of the  lease-up  of the 2500  Windy  Ridge
Parkway Building,  an increase in income before  depreciation,  amortization and
interest expense of approximately $140,000.  Results in 1995 were also favorably
impacted by lower interest  expense  (approximately  $155,000)  which was due to
increased interest  capitalization and the refinancings of two mortgage notes in
December 1995.  Depreciation  and  amortization  expense which was lower in 1995
(approximately  $147,000) and increased  rental income from certain ground lease
sites (approximately $57,000) also favorably impacted 1995 results.
     Income from Haywood Mall  increased  from  $2,474,000 in 1994 to $2,963,000
and $3,538,000,  in 1995 and 1996, respectively.  The increases in 1995 and 1996
were due to increases of  approximately  $460,000 and $798,000 in 1995 and 1996,
respectively,  in income before depreciation,  amortization and interest expense
resulting from the completion and lease-up of the expansion of Haywood Mall (see
Note 5). These increases were partially  offset by increases in depreciation and
amortization  of   approximately   $270,000  and  $201,000  in  1995  and  1996,
respectively,  which  were  also  due to the  expansion  of  Haywood  Mall.  The
Company's  share  of  the  1995  results  was  also  favorably  impacted  by the
prepayment of the  outstanding  debt through  contributions  of $10 million from
each owner on April 29,  1994.  Results in 1995  reflect no interest  expense as
compared  to four  months of  interest  expense in 1994 (a  decrease in interest
expense of $299,000).
     Income from Temco  Associates  decreased  from $79,000 in 1994 to a loss of
$36,000 in 1995 and then increased to $700,000 in 1996. The decrease in 1995 and
increase  in 1996  were due to the  number  of acres  that  were  purchased  and
simultaneously  sold under the option  related to the fee simple  interest  (see
Note 5).  Approximately 72 acres were purchased and simultaneously sold in 1994,
none in 1995 and 375 acres in 1996.
     Income from Hickory  Hollow  Associates  increased  from $85,000 in 1994 to
$257,000 in 1995 and then  decreased to a loss of $11,000 in 1996.  The increase
in 1995 and decrease in 1996 were due to changes in outparcel  sales from one in
1994 to two in 1995 and none in 1996.
     Income  from  CC-JM  II  Associates  increased  from $0 in 1994 and 1995 to
$141,000 in 1996.  The increase in 1996 was due to the John  Marshall-II  office
building  becoming fully  operational for financial  reporting  purposes in late
January 1996.
     Income from Norfolk  Hotel  Associates  decreased  from $332,000 in 1994 to
$243,000 in 1995 and then  increased  to $276,000 in 1996.  The decrease in 1995
was a result of the July 1994  distribution to each partner of a 50% interest in
the parking  agreement  (see Note 5). The 1994 results  include  seven months of
income from the parking agreement versus none in 1995, a decrease of $121,000.
     General and Administrative  Expenses.  General and administrative  expenses
increased from $7,538,000 in 1994 to $7,648,000 and $9,080,000 in 1995 and 1996,
respectively.  The increase in 1996 was primarily  related to inflationary  cost
increases,  the  Company's  expansion  and the  acquisition  of The Lea Richmond
Company  and The  Richmond  Development  Company  in July 1996 (see Note 8). The
increase in 1995 was  primarily  because of personnel  increases  related to the
Company's  expansion,  offset by an  increase in costs  capitalized  to projects
under development ($3,049,000 in 1995 versus $1,800,000 in 1994).
     Depreciation and Amortization. Depreciation and amortization increased from
$3,742,000 in 1994 to $4,516,000 and $7,219,000 in 1995 and 1996,  respectively.
Both the 1995 and 1996  increases  were  due  primarily  to the  retail  centers
becoming  operational as discussed  above. The 1996 increase was also due to the
100 and 200 North Point Center East office  buildings  becoming  operational and
the acquisitions of the One Independence  Center and 615 Peachtree Street office
buildings as discussed above.
     Stock  Appreciation   Right  Expense.   Stock  appreciation  right  expense
increased  from $433,000 in 1994 to $1,298,000  and $2,154,000 in 1995 and 1996,
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 $17.375,
$20.25 and $28.125 per share at December 31, 1994, 1995 and 1996, respectively.
     Interest  Expense.  Interest  expense  increased  from  $411,000 in 1994 to
$687,000 and $6,546,000 in 1995 and 1996, respectively.  Interest expense before
capitalization  increased from  $1,529,000 in 1994 to $5,760,000 and $12,194,000
in 1995 and 1996,  respectively.  Also contributing to the increases in 1996 and
1995,  approximately  $50  million  of  floating  rate  debt was  replaced  with
long-term  debt at higher  interest  rates during the third quarter of 1995. The
overall  increase in interest  expense in 1996 and 1995 was partially  offset by
increased  interest  capitalization  because of a higher level of projects under
development. The amount of interest capitalized to projects under development (a
reduction of interest  expense)  increased from $1,118,000 in 1994 to $5,073,000
and $5,648,000 in 1995 and 1996, respectively.
     Property Taxes on  Undeveloped  Land.  Property  taxes on undeveloped  land
decreased  from  $1,085,000  in 1994 to $977,000 in 1995 and then  increased  to
$1,301,000  in 1996.  The  increase in 1996 was due  primarily to an increase in
property  taxes on the land the Company  owns in  Wildwood  Office Park due to a
property tax reassessment ($254,000 increase).
     Other  Expenses.   Other  expenses  increased  from  $922,000  in  1994  to
$1,688,000 in 1995 and then  decreased to  $1,567,000  in 1996.  The decrease in
1996 was due to a decrease of approximately $121,000 in predevelopment expenses.
The  increase  in  1995  was  due  primarily  to  an  increase  of  $631,000  in
predevelopment expenses.
     Provision  (Benefit)  For  Income  Taxes  From  Operations.  The  provision
(benefit) for income taxes from operations  increased from a benefit of $166,000
in 1994 to a provision  of  $747,000 in 1995,  which  provision  decreased  to a
benefit of $1,703,000 in 1996. The decrease in the 1996 provision  (benefit) for
income taxes from  operations  was due  primarily to a decrease of $7,229,000 in
CREC  and its  subsidiaries'  income  before  income  taxes  and gain on sale of
investment properties which resulted in a loss for CREC and its subsidiaries and
hence an income tax benefit.  The decrease in CREC and its subsidiaries'  income
before income taxes and gain on sale of investment  properties was due primarily
to a  decrease  in  development  and  leasing  fees  received  by  CREC  and its
subsidiaries  including a decrease in development fee income from the Dusseldorf
project as discussed  above.  In  addition,  CREC and its  subsidiaries'  income
before  income taxes and gain on sale of  investment  properties  was reduced by
increases  in the stock  appreciation  right  expense in 1995 and 1996.  Certain
development  and leasing fees recorded on CREC and its  subsidiaries'  books are
intercompany fee income which is eliminated in consolidation, but the tax effect
is not, and such  intercompany  fees decreased in 1996. The provision  (benefit)
for income taxes from operations increased from 1994 to 1995 due primarily to an
increase of $3,208,000 in CREC and its subsidiaries'  income before income taxes
and gain on sale of investment properties.  The increase in 1995 in CREC and its
subsidiaries'  income  before  income  taxes  and  gain on  sale  of  investment
properties was due to the recognition of certain of the development  income from
the  Dusseldorf  project by CREC (see Note 5) and an  increase  in  intercompany
development and leasing fees recognized from $3,019,000 in 1994 to $5,479,000 in
1995.  The  increase in 1995 in the  provision  (benefit)  for income taxes from
operations was partially offset by $252,000 of state income tax refunds received
related to a  successful  judicial  appeal by Cousins of an  assessment  paid in
1992.
     Gain  on  Sale  of  Investment  Properties.  Gain  on  sale  of  investment
properties,  net of applicable  income tax provision was $6,356,000,  $1,862,000
and $12,804,000 in 1994, 1995 and 1996, respectively. The 1996 gain included the
following:  the November 1996 sale of Lawrenceville  MarketCenter ($10.6 million
gain) (see Note 8),  three North Point land sales in May,  October and  December
1996 ($1.96 million  gain),  the July 1996 sale of the Company's 50% interest in
the Norfolk parking  agreement ($.4 million gain) (see Note 5), and the November
1996 sale of a land parcel located in midtown  Atlanta ($.1 million  loss).  The
1995 gain included the  following:  the August 1995 sale of an  approximately  1
acre parcel  proximate to the CNN Center in downtown Atlanta ($1.6 million gain)
and the  September  1995 sale of a 6.2 acre parcel in West Cobb County,  Georgia
($.5 million gain). 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  MarketCenter  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).  Net proceeds  received from sales were
$13,279,000,  $4,731,000 and $39,056,000 in 1994,  1995 and 1996,  respectively.
Liquidity and Capital Resources
     The Company's debt  (including its pro rata share of  unconsolidated  joint
venture  debt) was 29% of total market  capitalization  at December 31, 1996. As
discussed in Note 4, the Company  amended and extended the maturity  date of its
line of credit to June 30, 1997.
     The Company has development and  acquisition  projects in various  planning
stages.  The Company  currently  intends to finance these  projects and projects
currently under construction discussed in Note 8, by using its existing lines of
credit   (increasing   those  lines  of  credit  as  required),   and  long-term
non-recourse   financing  on  the  Company's   unleveraged  projects  and  other
financings as market conditions  warrant. In September 1996, the Company filed a
shelf registration statement with the Securities and Exchange Commission ("SEC")
for offering from time to time of up to $200 million of common  stock,  warrants
to purchase common stock and debt securities.  The SEC declared the registration
statement effective on October 4, 1996. Cash Flows
     Net cash provided by operating  activities  increased from $35.6 million in
1994 to $37.7  million  and $57.1  million in 1995 and 1996,  respectively.  The
increases  resulted  primarily from an improvement in income before gain on sale
of  investment  properties  of $3.9  million and $3.7  million in 1995 and 1996,
respectively.  Additionally,  non-cash  charges  consisting of depreciation  and
amortization  and residential lot and outparcel cost of sales included in income
before gain on sale of  investment  properties  increased  $3.1 million and $7.9
million  in  1995  and  1996,   respectively.   Operating   distributions   from
unconsolidated  joint  ventures also  favorably  impacted 1996 by an increase of
$3.6 million from 1995.
     Net cash used in investing  activities increased from $45.5 million in 1994
to $89.4 million and $124.7 million in 1995 and 1996, respectively. The increase
in net cash used in investing  activities resulted primarily from an increase in
property acquisition and development expenditures of approximately $33.7 million
and $74.9 million in 1995 and 1996, respectively,  which included the completion
of projects under construction and the acquisitions discussed in Note 8 in 1996.
The  change  in other  assets  also  added to the  increase  in net cash used in
investing  activities  by  approximately  $5.0 million  which was due in part to
goodwill  from the  acquisition  of The Lea  Richmond  Company and The  Richmond
Development Company (see Note 8) and deferred financing costs related to the $80
million  financing  (see Note 4). The  increases  in net cash used in  investing
activities were partially  offset by decreases of $11.5 million and $9.1 million
in 1995 and 1996, respectively,  in investment in unconsolidated joint ventures.
The Company  contributed  $16.0 million and $5.8 million to Haywood Mall in 1994
and 1995,  respectively,  to fund the  expansion of the mall and $2.6 million to
CC-JM  II   Associates  in  1995  to  fund  its  share  of  the  equity  in  the
partnership(see  Note 5).  No  similar  contributions  were  made in 1996.  Also
partially  offsetting  the increase in net cash used in investing  activities in
1996 was an  increase  in the net cash  provided  by sales  activities  of $34.8
million which was primarily related to the sale of Lawrenceville MarketCenter in
December 1996 (see Note 8). 1995 was also impacted by two  transactions  related
to notes  receivable.  In 1995, the Company purchased two notes receivable for a
total of $28 million (see Note 3). In 1994,  the Company  received the scheduled
repayment of $39.9 million of notes receivable.  No similar amount was repaid in
1995.
     Net cash (used in) provided by financing activities increased from net cash
used in financing  activities  in 1994 of $18.3  million to net cash provided by
financing  activities  in 1995 and  1996 of $49.8  million  and  $67.7  million,
respectively.  The increases were  attributable  to an increase in proceeds from
other notes payable of approximately $79.6 million and $51.7 million in 1995 and
1996,  respectively.  In  1995,  the  Company  completed  three  financings  for
approximately   $79.5  million  as  compared  to  two  financings  in  1996  for
approximately  $129.5 million (see Note 4). The proceeds from the line of credit
increased  $5.3 million in 1995 and then  decreased  $30.9 million in 1996.  The
decrease in 1996 was due to the use of the proceeds  from the $129.5  million of
financing  instead of the line of credit.  The  repayment  of the line of credit
increased  $36.2  million  and  $1.3  million  in 1995 and  1996,  respectively.
Dividends  paid  increased  $2.6  million  and $4.2  million  in 1995 and  1996,
respectively,  due to an  increase  in the number of shares  outstanding  and an
increase in the cash dividends per share from $.90 per share in 1994 to $.99 and
$1.12 per share in 1995 and 1996, respectively.  The common stock increased $5.8
million  and $6.2  million  in 1995 and  1996,  respectively,  due to  increased
reinvestment  of  dividends  by  stockholders  through  the  Company's  dividend
reinvestment plan and increased stock option exercises. Repayment of other notes
payable increased $3.7 million in 1996 due to the scheduled  amortization of the
financings  completed in 1995 and 1996. The decrease in repayment of other notes
of $16.3 million in 1995 was due to the  scheduled  repayment of certain debt in
1994. No similar amount of debt was repaid in 1995. 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.



<PAGE>


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>

                          1995 Quarters                  1996 Quarters
               -------------------------------- -------------------------------
                First   Second  Third  Fourth   First   Second   Third  Fourth
               ------- ------- ------- -------- ------- ------- ------- -------
<S>            <C>     <C>     <C>      <C>     <C>     <C>     <C>      <C>
High           $17-3/4 $18-1/8 $18-3/8  $20-1/4 $21     $20-1/4 $24-1/2  $28-1/8
Low             16-1/2  16-1/2  17-1/8   17      18-3/8  18-3/8  18-7/8   21-7/8
Dividends 
  Declared         .24     .24     .24      .27     .27     .27     .27      .31
Payment Date   2/22/95 5/30/95 8/24/95 12/21/95 2/22/96 5/30/96 8/26/96 12/23/96
</TABLE>

     The Company's  stock trades on the New York Stock  Exchange  (ticker symbol
CUZ). At December 31, 1996, there were 1,211 stockholders of record.


ABOUT YOUR DIVIDENDS
- --------------------------------------------------------------------------------
     Timing of Dividends - Cousins  normally pays regular  dividends  four times
each year in February, May, August and December.
     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 1994, 1995 and 1996,
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 in Note 5 of "Notes to Consolidated Financial Statements."
     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.


<PAGE>


Cousins Properties Incorporated and Consolidated Entities

SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
Selected  quarterly  information for the two years ended December 31, 1996 ($ in
thousands, except per share amounts):
<TABLE>
<CAPTION>
                                                          Quarters
                                              --------------------------------
                                              First   Second    Third   Fourth
                                              -----   ------    -----   ------
1995:
<S>                                          <C>      <C>      <C>      <C>    
Revenues                                     $ 8,000  $ 8,409  $15,330  $ 9,297
Income from unconsolidated joint ventures      3,374    3,495    3,467    3,777
Gain on sale of investment properties, 
  net of applicable income tax provision          --       --    1,746      116
Net income                                     5,873    5,441    9,599    5,429
Net income per share                             .21      .20      .34      .19

1996:
Revenues                                      13,223   14,155   12,812   18,342
Income from unconsolidated joint ventures      4,394    4,170    4,362    4,278
Gain on sale of investment properties, net 
  of applicable income tax provision              --      620      397   11,787
Net income                                     7,298    8,549    7,039   18,130
Net income per share                             .26      .30      .25      .63
</TABLE>



INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP



COUNSEL
King & Spalding
Troutman Sanders




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 with purchases at
95% of current  market value.  A copy of the Plan  prospectus  and an enrollment
card 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.


INVESTOR RELATIONS CONTACT
Mark B. Riley, Vice President- Acquisitions
and Investor Relations


Cousins Properties Incorporated and Consolidated Entities


DIRECTORS
T. G. Cousins
Chairman of the Board and
   Chief Executive Officer

Bennett A. Brown
Former Chairman
NationsBank

Richard W. Courts, II
Chairman
Atlantic Investment Company

Terence C. Golden
President and Chief Executive Officer
Host Marriott Corporation

Boone A. Knox
Chairman
Allied Bankshares, Inc. and Merry Land & Investment Company, Inc.

William Porter Payne
Vice Chairman
NationsBank
Richard E. Salomon
Managing Director
Spears, Benzak, Salomon & Farrell

- -------------------

D. W. Brooks
Director Emeritus
Henry C. Goodrich
Director Emeritus

- -------------------

CORPORATE*
T. G. Cousins
Chairman of the Board and
   Chief Executive Officer
Daniel M. DuPree
President and Chief Operating
   Officer
George J. Berry
Senior Vice President
Tom G. Charlesworth
Senior Vice President,
   General Counsel and Secretary
Craig B. Jones
Senior Vice President

Peter A. Tartikoff
Senior Vice President and
   Chief Financial Officer
Kelly H. Barrett
Vice President and Controller
Mark B. Riley
Vice President - Acquisitions and
   Investor Relations
Lisa R. Simmons
Advertising and Public
   Relations Manager
OFFICE DIVISION*
John L. Murphy
Senior Vice President - Marketing
John S. Durham
Vice President - Leasing
Walter L. Fish
Vice President - Leasing
Jack A. LaHue
Vice President - Finance
PROPERTY MANAGEMENT*
Terry M. Hampel
Vice President - Retail Property
   Management
Dara J. Nicholson
Vice President - Office Property
   Management
RESIDENTIAL DIVISION**
(Cousins Neighborhoods)
Bruce E. Smith
President





RETAIL DIVISION**
(Cousins MarketCenters, Inc.)
Joel T. Murphy*
President
Ronald B. Pfohl
Senior Vice President -Leasing
William I. Bassett
Vice President - Development
Michael I. Cohn
Vice President - Development
Michael J. Lant
Vice President - Development
William D. Varner
Vice President - Development
Robert S. Wordes
Vice President - Asset Management
John D. Hopkins
Senior Vice President - Western Region
Robert A. Manarino
Senior Vice President - Western Region
Kevin D. Doherty
Vice President-Development
Western Region
Hans F. Kuhlmann
Vice President - Midwest Region

DEVELOPMENT AND
CONSTRUCTION DIVISION**
W. James Overton*
Senior Vice President -
   Development
James D. Dean
Vice President - Development
James F. George
Vice President - Development
Lloyd P. Thompson, Jr.
Vice President - Development
MEDICAL OFFICE DIVISION***
(Cousins/Richmond)
Lea Richmond III
President
John S. McColl
Senior Vice President
David J. Rubenstein
Senior Vice President
L. Ronald Wyche
Senior Vice President
S. Rox Green
Vice President


<PAGE>


*    Officers of Cousins Properties Incorporated, as well as Cousins Real Estate
     Corporation and/or Cousins MarketCenters, Inc.
     
**   Officers of Cousins Real Estate Corporation  and/or Cousins  MarketCenters,
     Inc. 

***  Officers of Cousins Properties Incorporated






            COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
                         SUBSIDIARIES OF THE REGISTRANT
                                DECEMBER 31, 1996


         At December 31, 1996, the Registrant had no 100% owned subsidiaries.

         At  December  31,  1996,  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 MarketCenters,
                    Inc. (100% owned by Cousins Real Estate Corporation)
                  Rocky Creek Properties, Inc. & MT&E - Macon-Harris (75% owned
                    by Registrant)
                  Perimeter Expo Associates, L.P. (90% owned by Registrant and 
                    10% owned by Cousins MarketCenters, Inc.)
                  Cousins, Inc. (100% owned by Registrant)

         At December 31, 1996, 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)   Wildwood   Associates  (50%  owned  by
                  Registrant)  Ten  Peachtree  Place  Associates  (50%  owned by
                  Registrant) Temco Associates (50% owned by Cousins Real Estate
                  Corporation)













                    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, 33-60350 and 333-12031.







                                           ARTHUR ANDERSEN LLP










Atlanta, Georgia
March 24, 1997





                                                                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.  333-12031)  and  related  Prospectus  of
Cousins Properties  Incorporated,  Amendment No. 1 to the Registration Statement
(Form S-3 No.  33-60350)  and  related  Prospectus  pertaining  to the  Dividend
Reinvestment  Plan  of  Cousins  Properties  Incorporated,  in the  Registration
Statement (Form S-8 No. 33-56787) and related Prospectus  pertaining to the 1989
Stock Option Plan of Cousins  Properties  Incorporated,  and in the Registration
Statement (Form S-8 No. 33-41927) and related Prospectus  pertaining to the 1989
Stock  Option  Plan,  1987  Restricted  Stock  Plan for  Outside  Directors  and
Incentive  Stock Option Plan of Cousins  Properties  Incorporated  of our report
dated January 31, 1997, with respect to the financial statements and schedule of
CSC Associates,  L.P. and our report dated February 6, 1997, with respect to the
financial  statements and schedule of Haywood Mall  Associates,  included in the
Form 10-K of Cousins  Properties  Incorporated  for the year ended  December 31,
1996.




                                                          ERNST & YOUNG LLP





Atlanta, Georgia
March 24, 1997











<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               DEC-31-1996
<CASH>                                           1,598
<SECURITIES>                                         0
<RECEIVABLES>                                   56,497
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                     0
<PP&E>                                         377,663
<DEPRECIATION>                                  20,339
<TOTAL-ASSETS>                                 556,644
<CURRENT-LIABILITIES>                                0
<BONDS>                                        231,831
                                0
                                          0
<COMMON>                                        28,920
<OTHER-SE>                                     270,264
<TOTAL-LIABILITY-AND-EQUITY>                   556,644
<SALES>                                              0
<TOTAL-REVENUES>                                58,532
<CGS>                                                0
<TOTAL-COSTS>                                   49,227
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               6,546
<INCOME-PRETAX>                                 26,509
<INCOME-TAX>                                   (1,703)
<INCOME-CONTINUING>                             28,212
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    41,016
<EPS-PRIMARY>                                     1.44
<EPS-DILUTED>                                     1.44
        

</TABLE>


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