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, 1999 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. Yes X
As of March 10, 2000, 32,325,859 common shares were outstanding; and the
aggregate market value of the common shares of Cousins Properties Incorporated
held by nonaffiliates was $874,194,537.
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 27, 2000
Registrant's Annual Report to Part II, Items 5, 6, 7 and 8
Stockholders for the year
ended December 31, 1999
<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 and its subsidiaries
("CREC") is a taxable entity consolidated with the Registrant, which owns,
develops, and manages a portion of the Registrant's real estate portfolio. CREC
II Inc. and its subsidiaries ("CREC II") is another taxable entity which owns a
50% interest in Cousins Stone LP, an unconsolidated joint venture which is a
full-service real estate company headquartered in Dallas, Texas that specializes
in third party property management and leasing of Class A office buildings. The
Registrant, together with CREC and CREC II, 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 land
development projects and holds several tracts of strategically located
undeveloped land. 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; the creation of joint venture
arrangements 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 1999 Annual Report to Stockholders.
Brief Description of Company Investments
Office. As of March 15, 2000, the Company's office portfolio included
-------
the following thirty-two commercial office buildings:
<TABLE>
<CAPTION>
Company's
Metropolitan Rentable Ownership Percent
Property Description Area Square Feet Interest Leased
-------------------- ------------ ----------- -------- ------
<S> <C> <C> <C> <C>
Inforum Atlanta, GA 987,000 100% 97%
101 Independence Center Charlotte, NC 525,000 100% 97%
101 Second Street San Francisco, CA 388,000 100% (b) 98% (a)
One Second Street San Francisco, CA 374,000 100% (b) (a)
AT&T Wireless Services
Headquarters Los Angeles, CA 222,000 100% (b) 100%
Lakeshore Park Plaza Birmingham, AL 193,000 100% (b) 98%
3100 Windy Hill Road Atlanta, GA 188,000 100% 100%
333 John Carlyle Washington, D.C. 153,000 100% 87%
555 North Point Center East Atlanta, GA 152,000 100% 79% (a)
615 Peachtree Street Atlanta, GA 145,000 100% 84%
333 North Point Center East Atlanta, GA 129,000 100% 100%
600 University Park Place Birmingham, AL 123,000 100% (b) 69% (a)
3301 Windy Ridge Parkway Atlanta, GA 106,000 100% 100%
1900 Duke Street Washington, D.C. 97,000 100% (a)
Bank of America Plaza Atlanta, GA 1,260,000 50% 99%
Gateway Village Charlotte, NC 1,076,000 50% 100% (a)
3200 Windy Hill Road Atlanta, GA 687,000 50% 100%
2300 Windy Ridge Parkway Atlanta, GA 634,000 50% 99%
The Pinnacle Atlanta, GA 423,000 50% 97%
1155 Perimeter Center West Atlanta, GA 361,000 50% 66% (a)
2500 Windy Ridge Parkway Atlanta, GA 314,000 50% 100%
Two Live Oak Center Atlanta, GA 278,000 50% 99%
4200 Wildwood Parkway Atlanta, GA 260,000 50% 100%
Ten Peachtree Place Atlanta, GA 259,000 50% 100%
John Marshall-II Washington, D.C. 224,000 50% 100%
4300 Wildwood Parkway Atlanta, GA 150,000 50% 100%
4100 Wildwood Parkway Atlanta, GA 100,000 50% 100%
First Union Tower Greensboro, NC 320,000 11.50% 90%
Grandview II Birmingham, AL 149,000 11.50% 100%
200 North Point Center East Atlanta, GA 130,000 11.50% 100%
100 North Point Center East Atlanta, GA 128,000 11.50% 100%
One Ninety One Peachtree Tower Atlanta, GA 1,215,000 9.80% 97%
----------
11,750,000
==========
</TABLE>
(a) Under construction and/or in lease-up.
(b) These projects are actually owned in ventures in which a portion of
the upside is shared with the other venturer. See "Major
Properties" - "Cousins/Daniel LLC," "101 Second Street," "One
Second Street" and "CommonWealth/Cousins I, LLC" where discussed.
<PAGE>
The weighted average leased percentage of these office buildings
(excluding all non-operational properties currently under construction and/or in
lease-up and One Ninety One Peachtree Tower, as it is less than 10% owned by the
Company) was approximately 98% as of March 15, 2000 and the leases expire as
follows:
<TABLE>
<CAPTION>
2009
&
2000 2001 2002 2003 2004 2005 2006 2007 2008 Thereafter Total
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- -----
OFFICE
- ------
Consolidated:
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Square Feet
Expiring (d) 173,108 123,796 155,488 368,125 101,007 154,796 270,214 13,301 287,829 894,664 2,542,328 (b)
% of Leased
Space 7% 5% 6% 14% 4% 6% 11% 1% 11% 35% 100%
Annual Base
Rent (a) 2,617,010 2,225,079 2,836,481 4,833,989 1,496,588 2,359,805 4,497,365 279,321 6,365,949 20,191,952 47,703,539
Annual Base Rent/
Sq. Ft. (a) 15.12 17.97 18.24 13.13 14.82 15.24 16.64 21.00 22.12 22.57 18.76
Joint Venture:
- --------------
Square Feet
Expiring (d) 163,709 572,572 487,332 321,536 244,789 643,443 415,184 605,118 39,005 1,694,792 5,187,480 (c)
% of Leased
Space 3% 11% 9% 6% 5% 12% 8% 12% 1% 33% 100%
Annual Base
Rent (a) 3,301,315 8,422,998 10,112,357 5,872,687 5,002,956 13,018,665 7,493,929 15,722,509 832,714 41,090,014 110,870,144
Annual Base Rent/
Sq. Ft.(a) 20.17 14.71 20.75 18.26 20.44 20.23 18.05 25.98 21.35 24.24 21.37
Total (including only Company's % share of Joint Venture Properties):
- ---------------------------------------------------------------------
Square Feet
Expiring (d) 226,305 343,812 385,592 525,267 201,716 434,993 469,369 315,860 292,315 1,684,909 4,880,138
% of Leased
Space 5% 7% 8% 11% 4% 9% 10% 6% 6% 34% 100%
Annual Base
Rent (a) 3,768,435 5,246,885 7,627,430 7,691,923 3,568,087 7,974,613 8,103,602 8,140,575 6,461,711 39,487,910 98,071,171
Annual Base Rent/
Sq. Ft. (a) 16.65 15.26 19.78 14.64 17.69 18.33 17.26 25.77 22.11 23.44 20.10
</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, 2000 out of approximately
2,648,000 total rentable square feet.
(c) Rentable square feet leased as of March 15, 2000 out of approximately
5,316,000 total rentable square feet.
(d) 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.
The weighted average remaining lease term of these twenty-five office
buildings was approximately 7 years as of March 15, 2000. 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, 2000, the Company's retail portfolio included
-------
the following fourteen properties:
<TABLE>
<CAPTION>
Rentable Company's
Metropolitan Square Feet Ownership Percent
Property Description Area (Company Owned) Interest Leased
------------------------------ ------------------------- --------------- -------- -------
<S> <C> <C> <C> <C>
Colonial Plaza MarketCenter Orlando, FL 480,000 100% 96%
Presidential MarketCenter Atlanta, GA 376,000 (b) 100% 86%
The Avenue of the Peninsula Rolling Hills Estates, CA 374,000 100% 61% (a)
The Avenue East Cobb Atlanta, GA 225,000 100% 94% (a)
Perimeter Expo Atlanta, GA 176,000 100% 100%
The Avenue Peachtree City Atlanta, GA 168,000 100% (a)
Laguna Niguel Promenade Laguna Niguel, CA 154,000 100% 94%
Salem Road Station Atlanta, GA 67,000 100% 68% (a)
Mira Mesa MarketCenter San Diego, CA 453,000 88.50% 87% (a)
The Shops at World Golf Village St. Augustine, FL 80,000 50% 60%
Greenbrier MarketCenter Chesapeake, VA 493,000 11.50% 100%
North Point MarketCenter Atlanta, GA 401,000 11.50% 98%
Los Altos MarketCenter Long Beach, CA 157,000 11.50% 100%
Mansell Crossing Phase II Atlanta, GA 103,000 11.50% 100%
---------
3,707,000
=========
(a) Under construction, redevelopment and/or in lease-up.
(b) Includes 22,000 square feet not yet constructed - excluded for
percentage leased calculation.
</TABLE>
<TABLE>
<CAPTION>
The weighted average leased percentage of these retail properties
(excluding all non-operational properties currently under construction,
redevelopment and/or in lease-up) was approximately 93% as of March 15, 2000,
and the leases expire as follows:
2009
&
2000 2001 2002 2003 2004 2005 2006 2007 2008 Thereafter Total
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- -----
RETAIL
- ------
Consolidated:
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Square Feet
Expiring 10,839 28,356 59,202 34,193 76,839 31,129 85,845 39,147 6,280 638,497 1,010,327 (b)
% of Leased
Space 1% 3% 6% 3% 8% 3% 8% 4% 1% 63% 100%
Annual Base
Rent (a) 136,549 504,414 890,494 927,224 1,249,318 478,877 749,128 500,933 236,250 9,373,281 15,046,468
Annual Base Rent/
Sq. Ft.(a) 12.60 17.79 15.04 27.12 16.26 15.38 8.73 12.80 37.62 14.68 14.89
Joint Venture:
- --------------
Square Feet
Expiring 5,111 44,243 56,398 12,800 34,322 35,000 113,000 9,553 4,718 894,757 1,209,902(c)
% of Leased
Space 1% 3% 4% 1% 3% 3% 9% 1% 1% 74% 100%
Annual Base
Rent (a) 109,063 602,526 872,060 149,524 691,433 350,000 1,386,120 299,730 75,504 11,799,356 16,335,316
Annual Base Rent/
Sq. Ft. (a) 21.34 13.62 15.46 11.68 20.15 10.00 12.27 31.38 16.00 13.19 13.50
Total (including only Company's % share of Joint Venture Properties):
- ---------------------------------------------------------------------
Square Feet
Expiring 11,427 33,448 65,688 35,665 82,579 35,154 98,840 40,246 6,823 757,131 1,167,001
% of Leased
Space 1% 3% 6% 3% 7% 3% 8% 3% 1% 65% 100%
Annual Base
Rent (a) 149,091 573,704 990,782 944,419 1,373,495 519,127 908,532 542,223 244,888 10,755,627 17,001,888
Annual Base Rent/
Sq. Ft.(a) 13.05 17.15 15.08 26.48 16.63 14.77 9.19 13.47 35.89 14.21 14.57
</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 estimated rate in the year of expiration. Amounts
disclosed are in dollars.
(b) Gross leasable area leased as of March 15, 2000 out of approximately
1,186,000 total gross leasable area.
(c) Gross leasable area leased as of March 15, 2000 out of approximately
1,234,000 total gross leasable area.
The weighted average remaining lease term of these nine retail
properties was approximately 12 years as of March 15, 2000. All of the major
tenant leases in these retail properties provide for pass through of operating
expenses and base rents which escalate over time.
Medical Office. As of March 15, 2000, the Company's medical office
----------------
portfolio included the following six medical office properties:
<TABLE>
<CAPTION>
Company's
Metropolitan Rentable Ownership Percent
Property Description Area Square Feet Interest Leased
-------------------------- ------------- ----------- -------- ------
<S> <C> <C> <C> <C>
Northside/Alpharetta II Atlanta, GA 198,000 100% 63% (a)
Meridian Mark Plaza Atlanta, GA 159,000 100% 94%
Northside/Alpharetta I Atlanta, GA 106,000 100% 100%
AtheroGenics Atlanta, GA 50,000 100% 100%
Crawford Long Medical
Office Building Atlanta, GA 408,000 50% (b)
Presbyterian Medical Plaza
at University Charlotte, NC 69,000 11.50% 100%
-------
990,000
=======
</TABLE>
(a) Under construction and/or in lease-up.
(b) This project is in a stage of predevelopment, is not yet under
construction, and may not go forward if all criteria for
proceeding with development are not satisfied.
The weighted average leased percentage of these medical office
buildings (excluding all properties currently under construction and/or in
lease-up) was 97% as of March 15, 2000 and the leases expire as follows:
<TABLE>
<CAPTION>
2009
&
2000 2001 2002 2003 2004 2005 2006 2007 2008 Thereafter Total
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- -----
MEDICAL OFFICE
- --------------
Consolidated:
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Square Feet
Expiring 21,777 0 4,290 32,005 33,374 4,677 0 13,000 38,836 152,041 300,000 (b)
% of Leased
Space 7% 0% 1% 11% 11% 2% 0% 4% 13% 51% 100%
Annual Base
Rent (a) 378,897 0 72,415 617,637 639,386 74,598 0 265,470 883,344 3,437,399 6,369,146
Annual Base Rent/
Sq. Ft. (a) 17.40 0 16.88 19.30 19.16 15.95 0 20.42 22.75 22.61 21.23
Joint Venture:
- --------------
Square Feet
Expiring 0 0 1,397 0 0 3,445 0 23,359 0 40,799 69,000 (c)
% of Leased
Space 0% 0% 2% 0% 0% 5% 0% 34% 0% 59% 100%
Annual Base
Rent (a) 0 0 21,095 0 0 56,498 0 390,329 0 772,392 1,240,314
Annual Base Rent/
Sq. Ft. (a) 0 0 15.10 0 0 16.40 0 16.71 0 18.93 17.98
Total (including only Company's % share of Joint Venture Properties):
- ---------------------------------------------------------------------
Square Feet
Expiring 21,777 0 4,451 32,005 33,374 5,073 0 15,686 38,836 156,690 307,892
% of Leased
Space 7% 0% 1% 10% 11% 2% 0% 5% 13% 51% 100%
Annual Base
Rent (a) 378,897 0 74,841 617,637 639,386 81,095 0 310,358 883,344 3,526,224 6,511,782
Annual Base Rent/
Sq. Ft.(a) 17.40 0 16.81 19.30 19.16 15.99 0 19.79 22.75 22.50 21.15
</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, 2000 out of approximately
315,000 total rentable square feet.
(c) Rentable square feet leased as of March 15, 2000 out of approximately 69,000
total rentable square feet.
The weighted average remaining lease term of these four medical office
buildings was approximately 9 years as of March 15, 2000. The Company's leases
in these medical office buildings provide for pass through of operating expenses
and base rents which escalate over time.
Other. The Company's other real estate holdings include equity
------
interests in approximately 410 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 10,300 acres of land
through its Temco Associates joint venture, and two mortgage notes for
approximately $24 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 either the company a
named or an affiliate of the company named and are as follows: IBM, The Coca-
Cola Company ("Coca-Cola"), Bank of America Corporation ("Bank of America"),
The Prudential Insurance Company of America ("Prudential"), Temple-Inland Inc.,
Cornerstone Properties, Inc., 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 1999
Significant changes in the Company's business and properties during the
year ended December 31, 1999 were as follows:
Office Division. In January 1999, the Company purchased the land for
-----------------
and commenced construction of 1900 Duke Street, an approximately 97,000 rentable
square foot office building in suburban Washington, D.C. In March 1999, 285
Venture, Ltd. began construction of 1155 Perimeter Center West, an approximately
361,000 rentable square foot office building in Atlanta, Georgia (see Note 5).
In May 1999, 333 John Carlyle, an approximately 153,000 rentable square foot
office building in suburban Washington, D.C., became partially operational for
financial reporting purposes. In June 1999, the Company acquired Inforum, a
987,000 rentable square foot office building in downtown Atlanta, Georgia, for
$71 million by completing a tax-deferred exchange with the proceeds ($69
million) from the sale of the Company's 50% interest in Haywood Mall. In
September 1999, AT&T Wireless Services Headquarters, an approximately 222,000
rentable square foot office building in suburban Los Angeles, California, became
partially operational for financial reporting purposes.
Retail Division. On February 1, 1999, CREC sold Abbotts Bridge Station,
----------------
an approximately 83,000 square foot neighborhood retail center in suburban
Atlanta, Georgia for $15.7 million, which was approximately $5.2 million over
the cost of the center. Including depreciation recapture of approximately $.3
million and net of an income tax provision of approximately $2.0 million, the
net gain on the sale was approximately $3.5 million.
In April 1999, The Shops at World Golf Village, an approximately 80,000
square foot retail center owned by Brad Cous (see Note 5), became partially
operational for financial reporting purposes. In June 1999, CP Venture Three LLC
purchased the land for and commenced construction of Mira Mesa MarketCenter, an
approximately 453,000 square foot retail center in San Diego, California (see
Note 5). In September 1999, The Avenue East Cobb, an approximately 225,000
square foot retail specialty center in suburban Atlanta, Georgia, became
partially operational for financial reporting purposes. Also in September 1999,
the Company purchased the land for and commenced construction of Salem Road
Station, an approximately 67,000 square foot neighborhood retail center in
suburban Atlanta, Georgia.
Medical Office Division. In March 1999, AtheroGenics, an approximately
------------------------
50,000 rentable square foot office building and laboratory in suburban Atlanta,
Georgia, became fully operational for financial reporting purposes. In April
1999, Meridian Mark Plaza, an approximately 159,000 rentable square foot medical
office building in Atlanta, Georgia, became partially operational for financial
reporting purposes. In September 1999, Northside/Alpharetta II, an approximately
198,000 rentable square foot medical office building in suburban Atlanta,
Georgia, became partially operational for financial reporting purposes.
Land Division. The Company is currently developing five residential
--------------
communities in suburban Atlanta, Georgia, including three in which development
commenced in 1994, one in 1995 and one in 1996. These developments currently
include land on which approximately 1,632 lots are being or were developed, of
which 292, 344 and 260 lots were sold in 1999, 1998 and 1997, respectively.
In November 1998, Temco Associates began development of the Bentwater
residential community, which will consist of approximately 1,750 lots on
approximately 1,083 acres (see Note 5). Temco Associates sold 106 lots in 1999.
Financings. In August 1999, the Company renewed and modified its $150
-----------
million unsecured credit facility which matures August 27, 2002. On December 31,
1999, the credit facility was temporarily increased to $225 million, which
increase expires April 27, 2000 (see Note 4).
In December 1998, Charlotte Gateway Village, LLC completed construction
financing of up to $190 million for Gateway Village. The note bears an interest
rate of LIBOR (adjusted for certain reserve requirements) plus .50% and matures
January 2, 2002. No amounts were drawn on the note until 1999.
Environmental Matters
Under various federal, state and local laws, ordinances and
regulations, an owner or operator of real estate is generally liable for the
costs of removal or remediation of certain hazardous or toxic substances on or
in such property. Such laws often impose liability without regard to whether the
owner knew of, or was responsible for, the presence of such hazardous or toxic
substances. The presence of such substances, or the failure to remediate such
substances properly, may subject the owner to substantial liability and may
adversely affect the owner's ability to develop the property or to borrow using
such real estate as collateral. The Company is not aware of any environmental
liability that the Company's management believes would have a material adverse
effect on the Company's business, assets or results of operations.
Certain environmental laws impose liability on a previous owner of
property to the extent that hazardous or toxic substances were present during
the prior ownership period. A transfer of the property does not relieve an owner
of such liability. Thus, although the Company is not aware of any such
situation, the Company may be liable in respect of properties previously sold.
In connection with the development or acquisition of certain
properties, the Company obtained Phase One environmental audits (which generally
involve inspection without soil sampling or ground water analysis) from
independent environmental consultants. The remaining properties (including most
of the Company's land held for investment) have not been so examined. No
assurance can be given that no environmental liabilities exist, that the reports
reviewed all environmental liabilities, or that no prior owner created any
material environmental condition not known to the Company.
The Company believes that it and its properties are in compliance in
all material respects with all federal, state and local laws, ordinances and
regulations regarding hazardous or toxic substances.
Competition
Our properties compete for tenants with similar properties located in
our markets primarily on the basis of location, rent charged, services provided
and the design and condition of the facilities. We also compete with other
REITs, financial institutions, pension funds, partnerships, individual investors
and others when attempting to acquire and develop properties.
Subsequent Events
Financings. On February 24, 2000, the Company received a commitment for
-----------
the financing of the 101 Second Street office building which should fund no
later than April 30, 2000. The $90 million non-recourse mortgage note payable
has an interest rate of 8.33% and term of 10 years.
Dispositions. On March 28, 2000, the Company sold Laguna Niguel
-------------
Promenade, an approximately 154,000 square foot retail center located in Laguna
Niguel, California for $ 26.7 million, which was approximately $6.4 million
over the cost of the center. Including depreciation recapture of approximately
$.8 million, the net gain on the sale was approximately $7.2 million. The net
proceeds from the sale were placed in escrow pending a tax-deferred exchange by
the Company.
Executive Offices; Employees
The Registrant's executive offices are located at 2500 Windy Ridge
Parkway, Suite 1600, Atlanta, Georgia 30339-5683. At December 31, 1999, the
Company employed approximately 430 people.
<PAGE>
Item 2. Properties
- ----------------------
Table of Major Properties
The following tables set forth certain information relating to major
office, retail and medical office properties, stand alone retail lease sites,
and land held for investment and future development in which the Company has a
10% or greater ownership interest. All information presented is as of December
31, 1999, except leasing information which is as of March 15, 2000. Dollars are
stated in thousands.
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Office
- ------
<S> <C> <C> <C> <C> <C> <C>
Inforum
Atlanta, GA
30303-1032 1999 N/A 100% 987,000 97% 79%
4 Acres (2)
101 Independence Center
Charlotte, NC
28246-1000 1996 N/A 100% 525,000 97% 97%
2 Acres
101 Second Street
San Francisco, CA
94105-3601 (5) Myers Second 100%(6) 388,000 98%(5) (5)
Street Company 1 Acre
LLC
One Second Street
San Francisco, CA
94105-3601 (5) Myers Bay 100%(6) 374,000 (5) (5)
Area Company LLC 1 Acre
AT&T Wireless Services
Headquarters
Suburban Los Angeles, CA
90703-8573 1999 CommonWealth 100%(6) 222,000 100% 29%(8)
Pacific, LLC 9 Acres (7)
</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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Office
- ------
<S> <C> <C> <C> <C> <C>
Inforum
Atlanta, GA
30303-1032 BellSouth Corporation (3)(2009) 277,744 $ 72,596 $ 0 N/A
Georgia Lottery Corp. (2003/2013) 127,827 $ 69,327
Lockwood Greene Engineers, Inc. 122,860
(2002/2102)
Co Space Services, LLC 110,797
(2020/2025)
Sapient Corporation (2009/2019) 57,689
Turner Broadcasting (2006/2016) 50,724
101 Independence Center
Charlotte, NC
28246-1000 Bank of America (3) 359,796 $ 75,439 $ 47,522 12/1/07
(2008/2028)(4) $ 66,407 8.22%
Robinson Bradshaw & Hinson, 82,218
P.A. (2004/2009)
Ernst & Young LLP (2001/2006) 45,060
101 Second Street
San Francisco, CA
94105-3601 Arthur Andersen LLP 147,986 $ 85,175 $ 0 N/A
(2009/2014) (5)
Thelen, Reid & Priest 120,629
(2012/2022)
One Second Street
San Francisco, CA
94105-3601 (5) (5) $ 22,375 $ 0 N/A
(5)
AT&T Wireless Services
Headquarters
Suburban Los Angeles, CA
90703-8573 AT&T Wireless Services 222,000 $ 51,603 $ 0 N/A
(2014/2029) $ 50,931
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Office (Continued)
- ------
<S> <C> <C> <C> <C> <C> <C>
Lakeshore Park Plaza
Birmingham, AL
35209-6719 1998 Daniel Realty 100%(6) 193,000 98% 100%
Company 12 Acres
600 University Park Place
Birmingham, AL
35209-6774 (5) Daniel Realty 100%(6) 123,000 69%(5) (5)
Company 10 Acres
333 North Point Center East
Suburban Atlanta, GA
30022-8274 1998 N/A 100% 129,000 100% 97%
9 Acres
555 North Point Center East
Suburban Atlanta, GA
30022-8274 (5) N/A 100% 152,000 79%(5) (5)
10 Acres
615 Peachtree Street
Atlanta, GA
30308-2312 1996 N/A 100% 145,000 84% 66%
2 Acres
333 John Carlyle
Suburban Washington, D.C.
22314-9998 1999 N/A 100% 153,000 87% 52%(10)
1 Acre
1900 Duke Street
Suburban Washington, D.C.
22314-9998 (5) N/A 100% 97,000 (5) (5)
1 Acre
Wildwood Office Park:
Atlanta, GA
2300 Windy
Ridge Parkway
30339-5671 1987 IBM 50% 634,000 99% 100%
12 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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Office (Continued)
- ------------------
<S> <C> <C> <C> <C> <C>
Lakeshore Park Plaza
Birmingham, AL
35209-6719 Infinity Insurance (2005/2015) 95,459 $ 15,902 $ 10,683 11/1/08
TCI Southeast (2003/2008) 20,625 $ 15,267 6.78%
600 University Park Place
Birmingham, AL
35209-6774 Southern Company, Inc. (3) 41,000 (5) $ 16,884 $ 0 N/A
(2005/2011)(5) (5)
333 North Point Center East
Suburban Atlanta, GA
30022-8274 Alltel Telecom Information 48,559 $ 13,289 $ 0 N/A
Services, Inc. (2003) $ 11,909
J.C. Bradford (2005/2010) 22,222
555 North Point Center East
Suburban Atlanta, GA
30022-8274 Regus Business Centre 89,688 (5) $ 14,158 $ 0 N/A
(2011/2016)(5)(9) (5)
615 Peachtree Street
Atlanta, GA
30308-2312 Wachovia (3)(2001/2007) 50,073 $ 12,393 $ 0 N/A
$ 10,614
333 John Carlyle
Suburban Washington, D.C.
22314-9998 A.T. Kearney (2009/2019) 94,115 $ 28,075 $ 0 N/A
$ 27,521
1900 Duke Street
Suburban Washington, D.C.
22314-9998 American Society of Clinical 28,700 (5) $ 6,750 $ 0 N/A
Oncology (2010/2015)(5) (5)
Wildwood Office Park:
Atlanta, GA
2300 Windy
Ridge Parkway
30339-5671 IBM (2002/2012) 240,430 $ 77,282 $ 65,611 12/1/05
Profit Recovery Group 73,626 $ 50,472 7.56%
(2005/2010)(11)
Manhattan Associates, LLC 63,296
(2002/2007)
Computer Associates 62,445
(2005/2010)
Financial Services Corporation 56,932
(2006/2011)(11)
Chevron USA (2005) 51,415
</TABLE>
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Office (Continued)
- ------
<S> <C> <C> <C> <C> <C> <C>
2500 Windy
Ridge Parkway
30339-5683 1985 IBM 50% 314,000 100% 95%
8 Acres
3200 Windy
Hill Road
30339-5609 1991 IBM 50% 687,000 100% 90%
15 Acres
4100 and 4300
Wildwood Parkway
30339-8400 1996 IBM 50% 250,000 100% 100%
13 Acres
4200 Wildwood Parkway
30339-8402 1997 IBM 50% 260,000 100% 90%(15)
8 Acres
3301 Windy Ridge
Parkway
30339-5685 1984 N/A 100% 106,000 100% 100%
10 Acres
3100 Windy Hill
Road
30339-5605 1983 N/A 100%(16) 188,000 100% 100%
13 Acres
Bank of America Plaza
Atlanta, GA
30308-2214 1992 Bank of America (3) 50% 1,260,000 99% 97%
4 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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Office (Continued)
- ------------------
<S> <C> <C> <C> <C> <C>
2500 Windy
Ridge Parkway
30339-5683 Coca-Cola Enterprises Inc. 165,180 $ 29,931 $ 23,368 12/15/05
(2003/2008) $ 18,270 7.45%
Cousins Properties Incorporated 43,888
(2000)
3200 Windy
Hill Road
30339-5609 IBM (2001/2011)(12) 440,139 $ 84,464 $ 67,884 1/1/07
PriceWaterhouseCoopers 69,108 $ 60,425 8.23%
(2009/2014)
W.H. Smith Inc. 41,858
(2002/2007)
4100 and 4300
Wildwood Parkway
30339-8400 Georgia-Pacific 250,000 $ 29,914 $ 28,783 4/1/12
Corporation (2012/2017) $ 26,493 7.65%
(13)(14)
4200 Wildwood Parkway
30339-8402 General Electric (3)(2014/2024) 260,000 $ 36,341 $ 43,534 3/31/14
$ 34,844 6.78%
3301 Windy Ridge
Parkway
30339-5685 Indus International, Inc. 106,000 $ 10,543 $ 0 N/A
(2003/2008) $ 5,842
3100 Windy Hill
Road
30339-5605 IBM (2006) 188,000 $ 17,005 (16) $ 0 N/A
$ 14,965 (16)
Bank of America Plaza
Atlanta, GA
30308-2214 Bank of America (3) 572,742 $222,436 $ 0(18) N/A (18)
(2012/2042) $170,422
Troutman Sanders 224,181
(2007/2017)
Ernst & Young LLP 211,211
(2007/2017)(17)
Hunton & Williams 93,489
(2004/2009)
Paul Hastings (2012/2017)(17) 92,224
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Office (Continued)
- ------
<S> <C> <C> <C> <C> <C> <C>
Gateway Village
Charlotte, NC
28202-1125 (5) Bank of America (3) 50% 1,076,000 100% (5)
8 Acres
The Pinnacle
Atlanta, GA
30326-1234 1999 LORET 50% 423,000 97% 69%(19)
Holdings, L.L.L.P. 4 Acres
Two Live Oak Center
Atlanta, GA
30326-1234 1997 LORET 50% 278,000 99% 98%
Holdings, L.L.L.P. 2 Acres
1155 Perimeter Center West
Atlanta, GA
30338-5416 (5) J. P. Morgan (3) 50% 361,000 66% (5) (5)
6 Acres
Ten Peachtree Place
Atlanta, GA
30309-3814 1991 Coca-Cola (3) 50%(6) 259,000 100% 100%
5 Acres
John Marshall-II
Suburban Washington, D.C.
22102-3802 1996 CarrAmerica Realty 50% 224,000 100% 100%
Corporation (3) 3 Acres
First Union Tower
Greensboro, NC
27401-2167 1990 Prudential 11.50%(6) 320,000 90% 95%
1 Acre
</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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Office (Continued)
- ------------------
<S> <C> <C> <C> <C> <C>
Gateway Village
Charlotte, NC
28202-1125 Bank of America (2015/2035)(5) 1,076,000 $ 86,652 $ 57,008 1/2/02
(5) LIBOR
(as defined)
+.50%
The Pinnacle
Atlanta, GA
30326-1234 Merrill Lynch (2010/2011) 72,866 $ 90,128 $ 70,000 12/31/09
A.T. Kearney (2009/2019) 47,866 $ 87,172 7.11%
PaineWebber (2013/2018)(13) 47,631
Two Live Oak Center
Atlanta, GA
30326-1234 IMS Health Incorporated 75,484 $ 48,430 $ 29,492 12/31/09
(2007/2017) $ 43,117 7.90%
Chubb & Son, Inc. (3) 48,520
(2007/2017)
1155 Perimeter Center West
Atlanta, GA
30338-5416 Southern Energy, Inc. 236,606 $ 33,880 $ 0 N/A
(2010/2015) (5)
Ten Peachtree Place
Atlanta, GA
30309-3814 Coca-Cola (3)(2001/2006) 259,000 $ 22,902 $ 17,456 11/30/01(20)
$ 18,590 8.00%
John Marshall-II
Suburban Washington, D.C.
22102-3802 Booz-Allen & Hamilton 224,000 $ 29,212 $ 23,307 4/1/13
(2011/2016) $ 24,978 7.00%
First Union Tower
Greensboro, NC
27401-2167 Smith Helms Mullis & 70,360 $ 53,155 $ 0 N/A
Moore (2010/2015) $ 44,999
First Union Bank (3) 62,622
(2009/2019)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Office (Continued)
- ------
<S> <C> <C> <C> <C> <C> <C>
100 North Point Center East
Suburban Atlanta, GA
30022-4885 1995 Prudential 11.50%(6) 128,000 100% 100%
7 Acres
200 North Point Center East
Suburban Atlanta, GA
30022-4885 1996 Prudential 11.50%(6) 130,000 100% 100%
9 Acres
Grandview II
Birmingham, AL
35243-1930 1998 Prudential 11.50%(6) 149,000 100% 97%
8 Acres
Retail Centers
- --------------
Colonial Plaza MarketCenter
Orlando, FL
32803-5029 1996 N/A 100% 480,000 96% 93%
49 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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Office (Continued)
- ------------------
<S> <C> <C> <C> <C> <C>
100 North Point Center East
Suburban Atlanta, GA
30022-4885 Schweitzer-Mauduit 39,739 $ 24,327 $ 12,089(21) 8/1/07
International, Inc. $ 21,112 7.86%
(2001/2007)
Green Tree Financial 21,914
(2006/2011)(13)
200 North Point Center East
Suburban Atlanta, GA
30022-4885 Alltel Telecom Information 60,029 $ 21,716 $ 12,089(21) 8/1/07
Services, Inc. (2000/2001) $ 19,114 7.86%
Motorola, Inc. (2001/2011) 26,897
APAC Teleservices, Inc. 22,409
(2004/2009)
Grandview II
Birmingham, AL
35243-1930 Protective Life (2005/2011)(22) 65,164 $ 23,094 $ 0 N/A
Daniel Realty Company (2008) 23,440 $ 21,460
Retail Centers
- --------------
Colonial Plaza MarketCenter
Orlando, FL
32803-5029 Circuit City (2017/2037) 43,936 $ 41,578 $ 0 N/A
Rhodes (2012/2027) 42,376 $ 36,946
Babies "R" Us (2006/2021) 40,000
Stein Mart, Inc. (2006/2026) 36,000
Barnes & Noble Superstores, Inc. 35,131
(2012/2022)
Linens `N Things 35,000
(2012/2027)
Marshalls (2012/2027) 30,400
Ross Stores (2007/2022) 28,000
Staples (2015/2030) 26,781
Just For Feet, Inc. (2012/2027)(23) 26,667
Gap's Old Navy Store 17,920
(2002/2012)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Retail Centers (Continued)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Presidential MarketCenter
Suburban
Atlanta, GA
30278-2149 1994/1996 N/A 100% 493,000 (24) 89% (24) 92% (24)
66 acres overall of
of which 86% (24) Company
376,000 (24) of Company owned
and 49 acres owned
are owned
by the
Company
The Avenue of the Peninsula
Rolling Hills Estates, CA
90274-3664 (5) N/A 100% 374,000 61%(5) (5)
14 Acres
Perimeter Expo
Atlanta, GA
30338-1519 1993 N/A 100% 291,000 100% 100%
19 acres overall of
of which 100% of Company
176,000 and Company owned
10 acres are owned
owned by
the Company
The Avenue East Cobb
Suburban Atlanta, GA
30062-8197 1999 N/A 100% 225,000 94%(5) 25%(26)
30 Acres
The Avenue Peachtree City
Suburban Atlanta, GA
30269-9999 (5) N/A 100% 168,000 (5) (5)
18 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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Retail Centers (Continued)
- --------------------------
<S> <C> <C> <C> <C> <C>
Presidential MarketCenter
Suburban
Atlanta, GA
30278-2149 Target (25) N/A $ 25,957 $ 0 N/A
Publix Super Market 56,146 $ 22,828
(2019/2044)
Carmike Cinemas (3)(2023/2033) 44,565
Bed, Bath & Beyond (2008/2024) 35,127
T.J. Maxx (2004/2014) 32,000
Office Depot, Inc. 31,628
(2011/2026)
Marshalls (2010/2025) 30,000
The Avenue of the Peninsula
Rolling Hills Estates, CA
90274-3664 Regal Cinema (2015/2030) 56,815 $ 65,672 $ 0 N/A
Saks & Company (2019/2055) 42,404
Ice Chalet (2001) 14,068
Restoration Hardware (2010/2020) 11,000
Banana Republic (3)(2005/2015) 9,705
Gap (2005/2015) 9,000
Perimeter Expo
Atlanta, GA
30338-1519 The Home Depot Expo (25) N/A $ 19,756 $ 20,613 8/15/05
Marshalls (2014/2029) 36,598 $ 17,304 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)
The Avenue East Cobb
Suburban Atlanta, GA
30062-8197 Borders, Inc. (2015/2030) 24,882 $ 35,682 $ 0 N/A
Bed, Bath & Beyond (2010/2025) 21,007 $ 35,126
Gap (2005/2015) 19,434
Talbot's (2010/2020) 12,905
Pottery Barn (3)(2006/2012) 10,000
Banana Republic (3)(2005/2015) 8,009
The Avenue Peachtree City
Suburban Atlanta, GA
30269-9999 (5) (5) (5) $ 0 N/A
18 Acres
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Retail Centers (Continued)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Laguna Niguel Promenade
Laguna Niguel, CA
92677-3920 (27) 1998 N/A 100% 154,000 94% 93%
13 Acres
Salem Road Station
Suburban Atlanta, GA
30016-9999 (5) N/A 100% 67,000 68%(5) (5)
13 Acres
Mira Mesa MarketCenter
Suburban San Diego, CA
92126-9999 (5) Prudential 88.50%(6) 453,000 87%(5) (5)
40 Acres
The Shops at World Golf Village
St. Augustine, FL
32092-2724 1999 W.C. Bradley Co. 50% 80,000 60% 48%
3 Acres
North Point MarketCenter
Suburban Atlanta, GA
30202-4889 1994/1995 Prudential 11.50%(6) 517,000 98% 100%
60 Acres (28)
of which
401,000 and
49 acres are
owned by
the Venture
</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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Retail Centers (Continued)
- --------------------------
<S> <C> <C> <C> <C> <C>
Laguna Niguel Promenade
Laguna Niguel, CA
92677-3920 (27) Orchard's Supply Hardware (3) 63,811 $ 19,091 $ 0 N/A
(2018/2033) $ 18,394
Ralph's Grocery Company 51,028
(2018/2043)
Salem Road Station
Suburban Atlanta, GA
30016-9999 Publix Super Market 44,270(5) (5) $ 0 N/A
(2020/2040)(5)
Mira Mesa MarketCenter
Suburban San Diego, CA
92126-9999 Home Depot (2020/2045)(5) 105,764(5) $ 28,977 $ 0 N/A
Edwards Theaters (2020/2035)(5) 94,041(5) (5)
Albertsons (2020/2060)(5) 55,489(5)
Ross (2010/2025)(5) 30,187(5)
Barnes & Noble Superstores, Inc. 26,566(5)
(2015/2030)(5)
The Shops at World Golf Village
St. Augustine, FL
32092-2724 Bradley Specialty Retailing, 31,044 $ 10,773 $ 0 N/A
Inc. (2013/2023) $ 10,578
North Point MarketCenter
Suburban Atlanta, GA
30202-4889 Target (25) N/A $ 56,787 $ 28,138 7/15/05
Babies "R" Us (2011/2031) 50,275 $ 53,853 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 20,000
(2001/2011)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Retail Centers (Continued)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Greenbrier MarketCenter
Chesapeake, VA
23327-2840 1996 Prudential 11.50%(6) 493,000 100% 96%
44 Acres
Los Altos MarketCenter
Long Beach, CA
90815-3126 1996 Prudential 11.50%(6) 258,000 100% 100%
19 Acres of
which 157,000
and 17 Acres
are owned by
the Venture
Mansell Crossing Phase II
Suburban Atlanta, GA
30202-4822 1996 Prudential 11.50%(6) 103,000 100% 100%
13 Acres
Medical Office
- --------------
Northside/Alpharetta I
Atlanta, GA
30005-3707 1998 N/A 100% 106,000 100% 100%
1 Acre (29)
Northside/Alpharetta II
Atlanta, GA
30005-3707 1999 N/A 100% 198,000 63%(5) 14%(30)
2 Acres (29)
</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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Retail Centers (Continued)
- --------------------------
<S> <C> <C> <C> <C> <C>
Greenbrier MarketCenter
Chesapeake, VA
23327-2840 Target (2016/2046) 117,220 $ 51,208 $ 0 N/A
Harris Teeter, Inc. 51,806 $ 49,027
(2016/2036)
Best Buy (2015/2030) 45,106
Bed, Bath & Beyond 40,484
(2012/2027)
Babies "R" Us (2006/2021) 40,000
Stein Mart, Inc. (2006/2026) 36,000
Barnes & Noble Superstores, 29,974
Inc. (2011/2026)
PETsMART (2011/2031) 26,040
Office Max (2011/2026) 23,484
Gap's Old Navy Store 14,000
(2002/2012)
Los Altos MarketCenter
Long Beach, CA
90815-3126 Sears (25) N/A $ 32,806 $ 0 N/A
Circuit City (3)(2017/2037) 38,541 $ 31,493
Borders, Inc. (2017/2037) 30,000
Bristol Farms (3)(2012/2032) 28,200
CompUSA, Inc. (2011/2021) 25,620
Sav-on Drugs (3)(2016/2026) 16,914
Mansell Crossing Phase II
Suburban Atlanta, GA
30202-4822 Bed Bath & Beyond 40,787 $ 12,350 $ 0 N/A
(2012/2027) $ 11,897
Goody's Family Clothing, 32,144
Inc. (2009/2027)
Rooms To Go (2016/2036) 21,000
Medical Office
- --------------
Northside/Alpharetta I
Atlanta, GA
30005-3707 Northside Hospital (3)(2013) 37,387 $ 15,577 $ 10,401 1/1/06
$ 14,619 7.70%
Northside/Alpharetta II
Atlanta, GA
30005-3707 Northside Hospital (3)(2019) 63,321 $ 15,997 $ 0 N/A
$ 15,896
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 1999
and Completed Joint Venture Ownership and Acres March 15, Economic
Zip Code or Acquired Partner Interest as Noted 2000 Occupancy
- ----------- ----------- ------------- --------- ----------- ---------- ---------
Medical Office (Continued)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Meridian Mark Plaza
Atlanta, GA
30342-1613 1999 N/A 100% 159,000 94% 65%(31)
3 Acres
AtheroGenics
Suburban Atlanta, GA
30004-2148 1999 N/A 100% 50,000 100% 83%(32)
4 Acres
Crawford Long Medical
Office Building
Atlanta, GA
30308-9999 (33) Emory University 50% 408,000 (33) (33)
(34)
Presbyterian Medical Plaza
at University
Charlotte, NC
28233-3549 1997 Prudential 11.50%(6) 69,000 100% 100%
1 Acre (35)
Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects
- -------------------------------------------------------------------------
Wildwood Office Park
Suburban Atlanta, GA
30339-5671 1985-1993 IBM 50% 14 Acres 100% 100%
North Point
Suburban Atlanta, GA
30202-4885 1993 N/A 100% 24 Acres 100% 100%
</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 expirations) Sq. Feet (1) Balance Rate
- ----------- --------------------- -------- ------------ ------- ---------
Medical Office (Continued)
- ---------------------------
<S> <C> <C> <C> <C> <C>
Meridian Mark Plaza
Atlanta, GA
30342-1613 Northside Hospital (3) 39,071 $ 23,357 $ 0 N/A
(2013/2023) $ 22,936
Scottish Rite Hospital for 22,035
Crippled Children, Inc.
(2003/2008)
AtheroGenics
Suburban Atlanta, GA
30004-2148 AtheroGenics (2019/2029) 50,000 $ 7,316 $ 0 N/A
$ 7,011
Crawford Long Medical
Office Building
Atlanta, GA
30308-9999 (33) (33) (33) $ 0 N/A
Presbyterian Medical Plaza
at University
Charlotte, NC
28233-3549 Novant Health, Inc. 63,862 $ 8,600 $ 0 N/A
(2012/2027)(36) $ 8,132
Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects
- -------------------------------------------------------------------------
Wildwood Office Park
Suburban Atlanta, GA
30339-5671 N/A N/A $ 8,723 $ 0 N/A
$ 7,158
North Point
Suburban Atlanta, GA
30202-4885 N/A N/A $ 3,716 $ 0 N/A
$ 3,591
</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) Approximately .18 acres of the total 4 acres of land at Inforum is under a
ground lease expiring 2068.
(3) Actual tenant or venture partner is affiliate of entity shown.
(4) 103,656 square feet of this lease of 101 Independence Center expires in
November 2000. The renewal of this lease is currently being negotiated.
(5) Project was under construction, redevelopment and/or lease-up as of
December 31, 1999. In certain situations, lease expiration dates are based
upon estimated commencement dates and square footage is estimated.
(6) See "Major Properties" - "Ten Peachtree Place," "Cousins/Daniel, LLC,"
"CommonWealth/Cousins I, LLC ," "CP Venture Two LLC," "CP Venture Two LLC
and CP Venture Three LLC," "101 Second Street" and "One Second Street"
where these ventures' preferences and terms are discussed.
(7) AT&T Wireless Services Headquarters is located on 9 acres which are
subject to a ground lease expiring in 2034, with an option to renew
through 2087.
(8) AT&T Wireless Services Headquarters became partially operational in
September 1999 and fully operational in October 1999. Thus, economic
occupancy for AT&T Wireless Services Headquarters does not include a full
year of operations.
(9) 44,844 square feet of this lease at 555 North Point Center East expires in
2009, with an option to extend the lease to 2014.
(10) 333 John Carlyle became partially operational in May 1999. Thus, economic
occupancy for 333 John Carlyle does not include a full year of operations.
(11) 11,050 square feet of the Profit Recovery Group lease of 2300 Windy Ridge
Parkway expires in 2002 and 1,556 square feet of the Financial Services
Corporation lease of 2300 Windy Ridge Parkway expires in 2001.
(12) 119,544 square feet of this lease of 3200 Windy Hill Road expires in 2001,
and the balance expires in 2006.
(13) Georgia-Pacific Corporation, PaineWebber and Green Tree Financial have
the right to terminate their leases in 2007, 2008 and 2001, respectively,
upon payment of significant cancellation penalties.
(14) Georgia-Pacific Corporation has the option to purchase the building on its
lease expiration date for a price of $33,750,000.
(15) 4200 Wildwood Parkway became partially operational in June 1998 and fully
operational in April 1999. Thus economic occupancy for 4200 Wildwood
Parkway does not include a full year of operations.
(16) See "Major Properties" - "Wildwood Office Park" where the accounting for
the 3100 Windy Hill Road Building is discussed.
(17) Ernst & Young LLP has a cancellation right on 23,036 square feet of this
lease of Bank of America Plaza in 2003, if notice is received in 2002,
and Paul Hastings has a cancellation right on 12,812 square feet and
20,574 square feet in 2005 and 2006, respectively.
(18) See "Major Properties" - "Bank of America Plaza" where debt on Bank of
America Plaza is discussed.
(19) The Pinnacle became partially operational in November 1998 and remained
so during a portion of 1999. Thus, economic occupancy for The Pinnacle
does not include a full year of operations.
(20) Maturity of the Ten Peachtree Place mortgage debt is extendible to
December 31, 2008. Rate becomes floating after November 30, 2001.
(21) 100 North Point Center East and 200 North Point Center East were financed
together with one non-recourse mortgage note payable. For purposes of
this schedule the total debt has been allocated 50% to each building.
(22) Protective Life has the right to cancel 13,052 square feet of this lease
of Grandview II in 2003.
(23) Just For Feet, Inc. was acquired by Foot Star, Inc.subsequent to year-end
but its stores will continue to operate under the Just For Feet name.
(24) Includes 22,000 square feet not yet constructed as of March 15, 2000
which was excluded from the calculation of percentage leased and
average 1999 economic occupancy.
(25) This anchor tenant owns its own space.
(26) The Avenue East Cobb became partially operational in September 1999. Thus,
economic occupancy for The Avenue East Cobb does not include a full year
of operations.
(27) Laguna Niguel Promenade was sold on March 28, 2000. See "Major Properties-
Other Retail Properties" where the sale is discussed.
(28) North Point MarketCenter includes approximately 4 outparcels which are
ground leased to freestanding users.
(29) Northside/Alpharetta I and II are located on 1 acre and 2 acres subject
to ground leases, which expire in 2058 and 2060, respectively.
(30) Northside/Alpharetta II became partially operational in September 1999.
Thus, economic occupancy for Northside/Alpharetta II does not include a
full year of operations.
(31) Meridian Mark Plaza became partially operational in April 1999. Thus,
economic occupancy for Meridian Mark Plaza does not include a full year of
operations.
(32) The AtheroGenics building became fully operational in March 1999. Thus,
economic occupancy for AtheroGenics does not include a full year of
operations.
(33) This project is in a stage of predevelopment, is not yet under
construction, and may not go forward if all criteria for proceeding with
development are not satisfied.
(34) The Crawford Long Medical Office Building will be developed on top of a
building within the rawford Long Hospital campus. The Company has
received a fee simple interest in the air rights above this building in
order to develop the medical office building.
(35) Presbyterian Medical Plaza at University is located on 1 acre which is
subject to a ground lease expiring in 2057.
(36) Novant Health, Inc. has the option to renew 23,359 rentable square feet
through 2027 of this lease of Presbyterian Medical Plaza at University,
with the option to renew the balance through 2022.
<PAGE>
Land Held for Investment and Future Development (excluding Retail Outparcels)
<TABLE>
<CAPTION>
Developable Company's
Land Area Joint Venture Ownership Adjusted Debt
Description, Location and Zoned Use Year Acquired (Acres)(1) Partner Interest Cost Balances
- ----------------------------------- ------------- ----------- ------------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Wildwood Office Park
Suburban Atlanta, Georgia
Office and Commercial 1971-1987 146 N/A 100% $ 7,157 $ 0
Office and Commercial 1971-1982 34 IBM 50% $10,082(2) $ 0
North Point Land
(Georgia Highway 400 & Haynes Bridge Road) (3)
Suburban Atlanta, Georgia
Office and Commercial - East 1970-1985 13 N/A 100% $ 1,020 $ 0
Office and Commercial - West 1970-1985 217 N/A 100% $ 4,535 $ 0
Temco Associates
(Paulding County)
Suburban Atlanta, Georgia 1991 (5) Temple-Inland 50% $ 6,464(5) $ 0
Inc. (4)
</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,
net, of $1,113,000.
(3) The North Point property is located both east and west of Georgia Highway
400. Development had been mainly concentrated on the land located east of
Georgia Highway 400, until July 1998 when the Company commenced
construction of the first building, AtheroGenics, on the west side. The
land located east of Georgia Highway 400 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 10,300 acres in
Paulding County, Georgia (northwest of Atlanta, Georgia). The partnership
also has an option to acquire interests in a timber rights only lease
covering approximately 22,000 acres. This option also expires in March
2006, with the underlying lease expiring in 2025. The options may be
exercised in whole or in part over the option period and the option price
on the fee simple land is $929 per acre on January 1, 2000, escalating at
6% on January 1 of each succeeding year during the term of the option.
During 1999, approximately 640 acres of the option related to the fee
simple interest was exercised. Approximately 466 acres were simultaneously
sold for gross profits of $2,458,000. Approximately 174 acres were acquired
for development of the Bentwater residential community. Approximately 1,750
lots will be developed ithin Bentwater on an approximate total of 1,083
acres, the remainder of which will be acquired as needed through exercises
of the option related to the fee simple interest. During 1998,
approximately 328 acres of the option related to the fee simple interest
was exercised. Approximately 83 acres were simultaneously sold for gross
profits of approximately $192,000. The Cobb County, Georgia YMCA had a
three year option to purchase approximately 38 acres out of the options
exercised in 1998, which they exercised in December 1999. The remaining
acreage (approximately 207 acres) was deeded in early 1999 to a golf course
developer who is developing the golf course within Bentwater. None of the
option was exercised in 1997.
<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 285 acre Class A commercial development in
Atlanta master planned by I.M. Pei, including 8 office buildings containing
2,439,000 rentable square feet. The property is zoned for office, institutional,
commercial and residential use. Approximately 105 acres in the park are owned
by, or committed to be contributed to, Wildwood Associates (see below),
including approximately 34 acres of land held for future development. The
Company owns 100% of the 146 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, 1999, the Company's investment in
Wildwood Associates and a related partnership, which included the cost of the
land the Company is committed to contribute to Wildwood Associates, was a
negative investment of approximately $36,900,000 due to partnership
distributions.
Wildwood Associates owns the 3200 Windy Hill Road Building (687,000
rentable square feet), the 2300 Windy Ridge Parkway Building (634,000 rentable
square feet), the 2500 Windy Ridge Parkway Building (314,000 rentable square
feet), the 4100 and 4300 Wildwood Parkway Buildings (250,000 rentable square
feet in total) and the 4200 Wildwood Parkway Building (260,000 rentable square
feet). As of March 15, 2000, these buildings were all 100% leased, with the
exception of the 2300 Windy Ridge Parkway Building which was 99% leased.
Wildwood Associates also owns 14 acres leased to two banking facilities and five
restaurants.
Wildwood Associates has a $2 million bank line of credit (the Company
severally guarantees one-half) under which $0 was drawn as of December 31, 1999.
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. The 3301 Windy Ridge Parkway Building was 100% leased as of March 15,
2000.
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 had been leased by the
partnership to IBM through November 30, 1998.
Effective January 1, 1997, the IBM lease was extended eight years
beyond its previous expiration, to November 30, 2006. Based on the economics of
the lease, the Company will receive substantially all of the economic risks and
rewards from the property through the term of the IBM lease. In addition, the
Company will receive substantially all of the future economic risks and rewards
from the property beyond the IBM lease because of the short term remaining on
the land lease (7 years) and the large mortgage note balance ($25.9 million)
that would have to be paid off, with interest, in that 7 year period before the
limited partnership would receive any significant benefit. Therefore, effective
January 1, 1997, the $17,005,000 balance of the mortgage note and land was
reclassified to Operating Properties, and revenues and expenses (including
depreciation) from that point forward have been recorded as if the building were
owned by the Company.
North Point
- -----------
North Point is a mixed-use commercial development located in north
central suburban Atlanta, Georgia, off of Georgia Highway 400, a six lane state
highway that runs from downtown Atlanta to the northern Atlanta suburbs. The
Company owns either directly or through a joint venture approximately 134 and
221 acres located on the east and west sides of Georgia Highway 400,
respectively. Development had been mainly concentrated on the land located east
of Georgia Highway 400 until July 1998 when the Company commenced construction
of the first building, AtheroGenics, on the west side. Planning and
infrastructure work has also begun for additional development on the west side
property. The east side 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. North Point
MarketCenter, which is 98% leased as of March 15, 2000, is a 517,000 square foot
retail power center (of which 401,000 square feet are owned by Cousins) located
adjacent to North Point Mall. Mansell Crossing Phase II, which was 100% leased
as of March 15, 2000, is an approximately 103,000 square foot expansion of an
existing retail power center, previously developed by the Company for a third
party. These two centers are located on 49 and 13 acres of land, respectively,
at North Point. Both of these properties were contributed to the Prudential
venture in November 1998 (see Note 5).
North Point Center East. The Company owns either directly or indirectly
through a joint venture four Class A office buildings located adjacent to North
Point Mall and the retail properties discussed above. 100 North Point Center
East, 200 North Point Center East and 333 North Point Center East which were
completed in 1995, 1996 and 1998, are 128,000, 130,000 and 129,000 rentable
square feet, respectively. Construction commenced in May 1998 on the fourth
office building, 555 North Point Center East, a 152,000 rentable square foot
building also adjacent to the other buildings. These four office buildings are
located on 35 acres of land at North Point and 100, 200 and 333 North Point
Center East were all 100% leased as of March 15, 2000 and 555 North Point Center
East was 79% leased as of March 15, 2000. 100 and 200 North Point Center East
were contributed to the Prudential venture in November 1998 (see Note 5).
AtheroGenics. In July 1998, the Company commenced construction of
AtheroGenics, an approximately 50,000 rentable square foot office and laboratory
building. This building is located on a 4 acre site on the west side of Georgia
Highway 400. AtheroGenics is 100% leased as of March 15, 2000 and became fully
operational for financial reporting purposes in March 1999.
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, 2000.
The remaining approximately 230 developable acres at North Point are
100% owned by the Company. Approximately 13 acres of this land are located on
the east side of Georgia Highway 400 and are zoned for office use. Approximately
217 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
- ------------------------
Bank of America Plaza. Bank of America Plaza is a Class A, 55-story,
approximately 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 99% leased as of March 15, 2000. An affiliate of Bank of America
leases approximately 45% of the rentable square feet. Bank of America Plaza was
developed by CSC Associates, L.P. ("CSC"), a joint venture formed by the Company
and a wholly owned subsidiary of Bank of America, each as 50% partners.
CSC's net income or loss and cash distributions are allocated to the
partners based on their percentage interests (50% each). At December 31, 1999,
the Company's investment in CSC was approximately $94,347,000.
Cousins LORET Venture, L.L.C.("Cousins LORET"). Effective July 31,
1997, Cousins LORET was formed between the Company and LORET Holdings, L.L.L.P.
("LORET"), each as 50% members. LORET contributed Two Live Oak Center, a 278,000
rentable square foot office building located in Atlanta, Georgia, which was
renovated in 1997, and was 99% leased as of March 15, 2000. Two Live Oak Center
was contributed subject to a 7.90% $30 million non-recourse ten year mortgage
note payable. LORET also contributed an adjacent 4 acre site on which
construction of The Pinnacle, a 423,000 rentable square foot Class A office
building, commenced in August 1997 and was completed in November 1998. The
Pinnacle became partially operational for financial reporting purposes in March
1999 and as of March 15, 2000 was 97% leased. In May 1998, Cousins LORET
completed the $70 million non-recourse financing of The Pinnacle at an interest
rate of 7.11% and a term of twelve years. This financing was completely funded
on December 30, 1998. The Company contributed $25 million of cash to Cousins
LORET to match the value of LORET's agreed-upon equity. At December 31, 1999,
the Company had an investment in Cousins LORET of approximately $16,222,000.
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 $17,456,000 at December 31, 1999. 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,
1999, the Company had an investment in Ten Peachtree Place Associates of
approximately $175,000.
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 John Marshall-II, a 224,000 square foot Class A
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. At
December 31, 1999, the Company had an investment in CC-JM II Associates of
approximately $2,215,000.
Cousins/Daniel, LLC. Cousins/Daniel, LLC ("Cousins/Daniel") was formed
in 1997 between Cousins, Inc. (a wholly owned subsidiary of Cousins) and Daniel
Realty Company ("Daniel"). The purpose of this venture is to develop certain
projects proposed by Daniel and selected by the Company. Daniel's economic
rights are limited to development fees, leasing fees, management fees and
certain incentive interests. These incentive interests include a residual
interest in the cash flow and a residual interest in capital proceeds. All
projects undertaken within the venture are pooled for purposes of calculating
the aforementioned residuals. This venture is treated as a consolidated entity
in the Company's financial statements.
In June 1998, Cousins/Daniel acquired Lakeshore Park Plaza, an
approximately 193,000 rentable square foot office building and also purchased
the land for and commenced construction of, 600 University Park Place, an
approximately 123,000 rentable square foot Class A office building, which is
still under construction and lease-up as of March 15, 2000. Both of these office
buildings are located in Birmingham, Alabama, and are 98% and 69% leased as of
March 15, 2000, respectively.
CommonWealth/Cousins I, LLC. On November 18, 1998, the Company entered
into Commonwealth/Cousins I, LLC (the "Venture") with CommonWealth Pacific, LLC
("CommonWealth") for the purposes of developing AT&T Wireless Services
Headquarters, a 222,000 rentable square foot Class A office building in suburban
Los Angeles, California, which was 100% leased as of March 15, 2000.
CommonWealth transferred all rights in the project and in exchange
received an initial credit to its capital account of $4,980,039, which is equal
to a 49.9% interest in the Venture. The Company contributed $5,000,000 as its
capital contribution for a 50.1% interest in the Venture. The Venture entered
into a put and call agreement which the Company intends to exercise to buy out
CommonWealth's interest in the Venture for approximately $7.5 million. The
Venture is treated as a consolidated entity in the Company's financial
statements.
CP Venture Two LLC. On November 12, 1998, the Company entered into a
venture agreement with Prudential. On such date the Company contributed its
interest in nine properties to the venture and Prudential contributed cash (see
Note 5). The nine properties contributed included four office properties, 100
and 200 North Point Center East as discussed above, First Union Tower and
Grandview II. First Union Tower is a Class A office building containing
approximately 320,000 rentable square feet, located on one acre of land in
downtown Greensboro, North Carolina. First Union Tower was 90% leased as of
March 15, 2000. Grandview II is an approximately 149,000 rentable square foot
Class A office building in Birmingham, Alabama, which was owned by
Cousins/Daniel, LLC prior to being contributed. Grandview II was approximately
100% leased as of March 15, 2000. See Other Retail Properties and Medical Office
Properties sections where retail and medical office properties contributed to
the Prudential venture are discussed.
333 John Carlyle. In January 1998, the Company purchased the land for
and commenced construction of 333 John Carlyle, an approximately 153,000
rentable square foot Class A office building in suburban Washington, D.C. 333
John Carlyle became partially operational for financial reporting purposes in
May 1999 and was 87% leased as of March 15, 2000.
Inforum. In June 1999, the Company acquired Inforum, a 987,000 rentable
square foot office building in downtown Atlanta, Georgia, for $71 million by
completing a tax-deferred exchange with the proceeds ($69 million) from the sale
of the Company's 50% interest in Haywood Mall. Inforum was 97% leased as of
March 15, 2000.
101 Independence Center. In December 1996, the Company acquired 101
Independence Center, a 525,000 rentable square foot Class A office building
(including an underground parking garage and an adjacent parking deck) located
at the intersection of Trade and Tryon Streets in the central business district
of Charlotte, North Carolina. 101 Independence Center was 97% leased as of March
15, 2000.
615 Peachtree Street. In August 1996, the Company acquired 615
Peachtree Street, a 145,000 rentable square foot 12-story downtown Atlanta
office building, located across from Bank of America Plaza. 615 Peachtree Street
was 84% leased as of March 15, 2000.
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 2087
with a 99-year renewal option. One Ninety One Peachtree Tower was approximately
97% leased at March 15, 2000.
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 was owned by DIHC Peachtree Associates, which was an affiliate of Dutch
Institutional Holding Company, but was acquired by Cornerstone Properties, Inc.
in October 1997.
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 (now Cornerstone
Properties, Inc. as discussed above) 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 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, 1999, the cumulative
undistributed preferred return was $13,235,783. After Cornerstone Properties,
Inc. recovers its preferred return, the partners share in any operating cash
flow distributions in accordance with their percentage interests. The project is
subject to long-term debt of approximately $143,336,000 at December 31, 1999. At
December 31, 1999, the Company had a negative investment of approximately
$91,000 in the One Ninety One Peachtree Tower project.
Office Properties Under Development
- -----------------------------------
101 Second Street. Cousins/Myers Second Street Partners, L.L.C., a
venture formed in 1997 between the Company and Myers Second Street Company LLC
("Myers"), purchased approximately 1 acre of undeveloped land in downtown San
Francisco, California upon which 101 Second Street, an approximately 388,000
rentable square foot Class A office building was developed. 101 Second Street
was 98% leased as of March 15, 2000. Myers' economic rights are limited to
development fees and certain incentive interests, which include a residual
interest in the cash flow and capital proceeds. This venture is treated as a
consolidated entity in the Company's financial statements.
One Second Street. In November 1999, the Company formed Cousins/Myers
II, LLC, a venture with Myers Bay Area Company LLC ("Myers Bay"), which
purchased approximately 1 acre of fully entitled undeveloped land in downtown
San Francisco, California for the development of One Second Street, an
approximately 374,000 rentable square foot Class A office building. Myers Bay's
economic rights are limited to development fees and certain incentive interests,
which include a residual interest in the cash flow and capital proceeds. The
venture is treated as a consolidated entity in the Company's financial
statements.
Charlotte Gateway Village, LLC ("Gateway"). On December 14, 1998, the
Company and a wholly owned subsidiary of Bank of America Corporation formed
Gateway for the purpose of developing and owning Gateway Village, a 1,076,000
rentable square foot Class A office building and parking deck in downtown
Charlotte, North Carolina. Construction of Gateway Village commenced in July
1998, and the project is 100% leased to Bank of America Corporation. In December
1998, Gateway completed construction financing of up to $190 million for Gateway
Village. The note bears an interest rate of LIBOR (adjusted for certain reserve
requirements) plus .50% and matures January 2, 2002. No amounts were drawn on
the note until 1999. This note is fully exculpated and is supported by a lease
to Bank of America Corporation with a term of 15 years. Pursuant to the Gateway
operating agreement, this construction financing will be replaced with permanent
long-term financing which will be fully amortized at the end of the Bank of
America Corporation lease. At December 31, 1999, the Company had an investment
in Gateway of approximately $21,221,000.
Gateway's net income or loss and cash distributions are allocated to
the members as follows: first to the Company so that it receives a cumulative
compound return equal to 11.46% on its capital contributions, second to a wholly
owned subsidiary of Bank of America Corporation until it has received an amount
equal to the aggregate amount distributed to the Company and then to each
member, 50%.
285 Venture, Ltd. In March 1999, the Company and a commingled trust
fund advised by J.P. Morgan Investment Management Inc. (the "J.P. Morgan Fund")
formed 285 Venture, Ltd., each as 50% partners, for the purpose of developing
1155 Perimeter Center West, an approximately 361,000 rentable square foot Class
A office building complex in Atlanta, Georgia. 1155 Perimeter Center West wa
66% leased as of March 15, 2000. The J.P. Morgan Fund contributed the
approximately 6 acre site upon which 1155 Perimeter Center West is being
developed. The land had an agreed-upon value of approximately $5.4
million which the Company matched with a cash contribution. At December
31, 1999, the Company's investment in 285 Venture, Ltd. was approximately
$16,888,000.
1900 Duke Street. In January 1999, the Company purchased the land
for and commenced construction of 1900 Duke Street, an approximately 97,000
rentable square foot Class A office building in suburban Washington, D.C.
Other Retail Properties
- -----------------------
Fully Operational Retail Properties. The Company owns three retail
centers which were fully operational for financial reporting purposes as of
December 31, 1999. Perimeter Expo is a 291,000 square foot retail power center
(of which the Company owns 176,000 square feet) which is located in Atlanta,
Georgia and was 100% leased (Company owned) as of March 15, 2000. Presidential
MarketCenter is a 493,000 square foot retail power center (of which the Company
owns 376,000 square feet) which is located in suburban Atlanta, Georgia and was
86% leased (Company owned) as of March 15, 2000. Colonial Plaza MarketCenter is
a 480,000 square foot retail power center which is located in Orlando, Florida
and was 96% leased as of March 15, 2000. Laguna Niguel Promenade is a 154,000
square foot retail center located in Laguna Niguel, California and was 94%
leased as of March 15, 2000.
CP Venture Two LLC and CP Venture Three LLC. In November 1998, the
Company contributed both Greenbrier MarketCenter and Los Altos MarketCenter in
addition to North Point MarketCenter and Mansell Crossing II (see North Point
discussion) to the aforementioned Prudential venture (see Note 5). Greenbrier
MarketCenter is a 493,000 square foot retail power center which is located in
Chesapeake, Virginia and was 100% leased as of March 15, 2000. Los Altos
MarketCenter is a 258,000 square foot retail power center (of which the
Prudential venture owns 157,000 square feet) which is located in Long Beach,
California and was 100% leased as of March 15, 2000.
The Company is currently developing Mira Mesa MarketCenter, an
approximately 453,000 square foot retail power center in suburban San Diego,
California, which was 87% leased as of March 15, 2000. Mira Mesa MarketCenter is
owned by CP Venture Three LLC (see Note 5). This venture is treated as a
consolidated entity in the Company's financial statements.
Brad Cous Golf Venture, Ltd. Effective January 31, 1998, the Company
formed the Brad Cous Golf Venture, Ltd. with the W.C. Bradley Co., each as 50%
partners, for the purpose of developing and owning The Shops at World Golf
Village, an approximately 80,000 square foot retail center located adjacent to
the PGA Hall of Fame in St. Augustine, Florida. The Shops at World Golf Village
became partially operational for financial reporting purposes in April 1999
and was 60% leased as of March 15, 2000. At December 31, 1999, the Company had
an investment in Brad Cous Golf Venture, Ltd. of approximately $5,257,000.
Other Retail Properties Under Development. In February 1998, the
Company purchased The Shops at Palos Verdes, located in Rolling Hills Estates,
California, in the greater Los Angeles metropolitan area. This 355,000 square
foot center included existing retail space and a parking deck. The Company is
redeveloping and remerchandising the project into The Avenue of the Peninsula,
an approximately 374,000 square foot open-air, retail specialty center which was
61% leased as of March 15, 2000. In April 1998, the Company purchased the land
for and commenced construction of The Avenue East Cobb, an approximately 225,000
square foot open-air, retail specialty center in suburban Atlanta, Georgia. The
Avenue East Cobb became partially operational in September 1999 and was 94%
leased as of March 15, 2000.
In September 1999, the Company purchased the land for and commenced
construction of Salem Road Station, an approximately 67,000 square foot
neighborhood retail center in suburban Atlanta, Georgia. Salem Road Station was
68% leased as of March 15, 2000. In September and October 1999, the Company
purchased the land for The Avenue Peachtree City, an approximately 168,000
square foot retail specialty center in suburban Atlanta, Georgia.
Retail Properties Sold. On February 1, 1999, CREC sold Abbotts Bridge
Station, an approximately 83,000 square foot neighborhood retail center in
suburban Atlanta, Georgia for $15.7 million, which was approximately $5.2
million over the cost of the center. Including depreciation recapture of
approximately $.3 million and net of an income tax provision of approximately
$2.0 million, the net gain on the sale was approximately $3.5 million.
On March 28, 2000, the Company sold Laguna Niguel Promenade, an
approximately 154,000 square foot retail center located in Laguna Niguel,
California for $26.7 million, which was approximately $6.4 million over the cost
of the center. Including depreciation recapture of approximately $.8 million,
the net gain on the sale was approximately $7.2 million. The net proceeds from
the sale were placed in escrow pending a tax-deferred exchang to be identified
by the Company.
Medical Office Properties
- -------------------------
Operational Medical Office Properties. In June 1998, the Company
acquired Northside/Alpharetta I, an approximately 106,000 rentable square foot
medical office building in suburban Atlanta, Georgia. Northside/Alpharetta I was
100% leased as of March 15, 2000.
Medical Office Properties Under Development. Construction commenced in
June 1998 on Northside/Alpharetta II, an approximately 198,000 rentable square
foot medical office building. Northside/Alpharetta II became partially
operational in September 1999 and was 63% leased as of March 15, 2000.
Additionally, Meridian Mark Plaza, a 159,000 rentable square foot medical office
building, became partially operational for financial reporting purposes in April
1999. Meridian Mark Plaza was 94% leased at March 15, 2000.
CP Venture Two LLC. In November 1998, the Company contributed
Presbyterian Medical Plaza at University, an approximately 69,000 rentable
square foot medical office building in Charlotte, North Carolina, to the
Prudential venture (see Note 5). Presbyterian Medical Plaza at University was
approximately 100% leased as of March 15, 2000.
Residential Lots Under Development
- ----------------------------------
As of December 31, 1999, CREC and Temco Associates owned the following
parcels of land which are being developed into residential communities ($ in
thousands):
<TABLE>
<CAPTION>
Estimated
Total Lots
Initial on Land
Year Currently Lots Remaining Carrying
Description Acquired Owned (1) Sold to Date Lots Value
----------- -------- --------- ------------ --------- --------
CREC
----
<S> <C> <C> <C> <C> <C>
Brown's Farm 1993 213 196 17 $ 367
West Cobb County
Suburban Atlanta, GA
Apalachee River Club 1994 186 157 29 867
Gwinnett County
Suburban Atlanta, GA
Echo Mill 1994 539 372 167 2,137
West Cobb County
Suburban Atlanta, GA
Barrett Downs 1994 144 143 1 0
Forsyth County
Suburban Atlanta, GA
Bradshaw Farm 1994 532 514 18 (1,876)
Cherokee County
Suburban Atlanta, GA
Alcovy Woods
Gwinnett County
Suburban Atlanta, GA 1996 162 40 122 3,192
----- ----- --- ------
Total 1,776 1,422 354 $4,687
===== ===== === ======
Temco Associates
Bentwater
Paulding County
Suburban Atlanta, GA 1998 1,750(2) 106 1,644 $6,464
======= ===== ===== ======
(1) Includes lots sold to date.
(2) See discussion of Temco Associates below.
</TABLE>
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 or
controls the following significant land holdings either directly or indirectly
through joint venture arrangements. The Company intends to convert these land
holdings to income-producing usage or to sell portions of land holdings as
opportunities arise 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 10,300 acres in Paulding
County, Georgia (northwest of Atlanta, Georgia). The partnership also has an
option to acquire interests in a timber rights only lease covering approximately
22,000 acres. This option also expires in March 2006, with the underlying lease
expiring in 2025. The options may be exercised in whole or in part over the
option period and the option price on the fee simple land is $929 per acre on
January 1, 2000, escalating at 6% on January 1 of each succeeding year during
the term of the option. During 1999, approximately 640 acres of the option
related to the fee simple interest was exercised. Approximately 466 acres were
simultaneously sold for gross profits of $2,458,000. Approximately 174 acres
were acquired for development of the Bentwater residential community.
Approximately 1,750 lots will be developed within Bentwater on an approximate
total of 1,083 acres, the remainder of which will be acquired as needed through
exercises of the option related to the fee simple interest.
During 1998, approximately 328 acres of the option related to the fee
simple interest was exercised. Approximately 83 acres were simultaneously sold
for gross profits of approximately $192,000. The Cobb County, Georgia YMCA had a
three year option to purchase approximately 38 acres out of the options
exercised in 1998, which they exercised in December 1999. The remaining acreage
(approximately 207 acres) was deeded in early 1999 to a golf course developer
who is developing the golf course within Bentwater. None of the option was
exercised in 1997. At December 31, 1999, the Company had an investment in Temco
Associates of approximately $6,600,000.
Other Investments
- -----------------
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.
Cousins Stone LP. Cousins Stone LP was formed on June 1, 1999 when CREC
II's subsidiaries acquired Faison's 50% interest in Faison-Stone. Cousins Stone
LP is a full-service real estate company headquartered in Dallas, Texas that
specializes in third party property management and leasing of Class A office
properties. At December 31, 1999, the Company had an investment in Cousins Stone
LP of approximately $7,131,000.
Warrants to Purchase Stock in Other Companies
- ---------------------------------------------
Cypress Communications, Inc. In December 1999, the Company executed a
Master Communications License Agreement (the "Agreement") with Cypress
Communications, Inc. ("Cypress") that provides Cypress a non-exclusive right to
access the risers and certain areas of certain of the Company's office and
medical office buildings. The Agreement allows Cypress to install equipment and
wiring, at Cypress' sole cost and expense, and to offer a variety of
telecommunication services to each of the applicable building's tenants. The
Agreement has a term of 5 years with an automatic renewal for another 5 years
unless Cypress elects not to renew or Cypress fails to equip the applicable
building with a server within 18 months of the execution of the Agreement.
Pursuant to the Agreement, the Company will receive a percentage of the
revenue earned by Cypress from tenants and third parties who use the
telecommunication services. In addition, the Company has entered into a Stock
Warrant Agreement with Cypress which provides that Cypress issue to the Company
12,000 warrants per one million gross leasable square feet in the buildings
subject to the agreement or approximately 88,234 warrants to purchase Cypress'
common stock at an exercise price of $4.22 per share. Certain provisions of the
Stock Warrant Agreement result in the return from the transfer of said warrants
or stock upon the sale of the buildings. On February 10, 2000, Cypress completed
its initial public offering of 10 million shares of common stock.
AtheroGenics, Inc. In July 1998, the Company received 50,000 warrants
at an exercise price of $5.00 per share for the purchase of Series C Convertible
Preferred Stock of AtheroGenics, Inc. ("AtheroGenics"), a tenant which leases
100% of a 50,000 rentable square foot office and laboratory building the Company
developed and owns. On March 1, 2000, the Company received notice from
AtheroGenics of its pending registration of its common stock for sale under the
Securities Act of 1933. Supplemental Financial and Leasing Information
<PAGE>
Depreciation and amortization expense, net of minority interest's
share, include the following components for the years ended December 31, 1999
and 1998 ($ in thousands):
<TABLE>
<CAPTION>
1999 1998
--------------------------------------- ---------------------------------------
Share of Share of
Unconsolidated Unconsolidated
Consolidated Joint Ventures Total Consolidated Joint Ventures Total
------------ -------------- ------- ------------ -------------- -------
<S> <C> <C> <C> <C> <C>
Furniture, fixtures and
equipment $ 640 $ 101 $ 741 $ 505 $ 2 $ 507
Deferred financing costs -- 17 17 -- 17 17
Goodwill and related business
acquisition costs 300 19 319 342 228 570
Building (including tenant
first generation) 6,476 11,229 17,705 5,300 6,330 11,630
Tenant second generation 9,108 8,847 17,955 9,026 7,160 16,186
------- ------- ------- ------- ------- -------
$16,524 $20,213 $36,737 $15,173 $13,737 $28,910
======= ======= ======= ======= ======= =======
</TABLE>
Exclusive of new developments and purchases of furniture, fixtures and
equipment, the Company had the following capital expenditures for the years
ended December 31, 1999 and 1998, including its share of unconsolidated joint
ventures ($ in thousands):
<TABLE>
<CAPTION>
1999 1998
---------------------------------- ----------------------------------
Office Retail Medical Total Office Retail Medical Total
------ ------ ------- ----- ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Second generation related costs $1,224 $208 $ -- $1,432 $1,442 $46 $ -- $1,488
Building improvements 220 -- -- 220 -- 1 -- 1
------ ---- ---- ------ ------ --- ---- ------
Total $1,444 $208 $ -- $1,652 $1,442 $47 $ -- $1,489
====== ==== ==== ====== ====== === ==== ======
</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, 1999.
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 68 Chairman of the Board of Directors
and Chief Executive Officer
Daniel M. DuPree 53 President and Chief Operating Officer
Kelly H. Barrett 35 Senior Vice President - Finance
George J. Berry 62 Senior Vice President
Tom G. Charlesworth 50 Senior Vice President, Secretary
and General Counsel
Craig B. Jones 49 Senior Vice President and President
of the Office Division
John S. McColl 37 Senior Vice President - Medical
Office Division
Joel T. Murphy 41 Senior Vice President and President
of the Retail Division
John L. Murphy 54 Senior Vice President - Office
Division
W. James Overton 53 Senior Vice President - Development
Lea Richmond III 52 Senior Vice President and President
of the Medical Office Division
Relationships:
- --------------
Lillian C. Giornelli, Mr. Cousins' daughter, is a director of the
Company. There are no other family relationships among the current 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.
Ms. Barrett joined the Company in October 1992 as Vice President and
Controller and became Senior Vice President - Finance of the Company in August
1997. Prior to that she was employed by Arthur Andersen LLP as an Audit Manager.
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 and President of the Office Division in September
1998. From 1987 until joining the Company, he was Executive Vice President of
New Market Companies, Inc. and affiliates.
Mr. McColl joined the Company in April 1996 as Vice President of the
Office Division. He was promoted in May 1997 to Senior Vice President of the
Medical Office Division. Prior to that he was President of Hutchinson Capital
Group, Inc. and an officer of Quest Capital Corp.
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.
<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 54 of the Registrant's 1999 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 46 of the Registrant's 1999 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 47 through 53 of the Registrant's
1999 Annual Report to Stockholders is incorporated herein by reference.
Item 7a. Quantitative and Qualitative Disclosure about Market Risk
- ------------------------------------------------------------------
Quantitative and Qualitative Disclosures about Market Risk, which
appears on page 53 of the Registrant's 1999 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 25 through 46 of the Registrant's 1999 Annual
Report to Stockholders are incorporated herein by reference.
The information appearing under the caption "Selected Quarterly
Financial Information (Unaudited)" on page 55 of the Registrant's 1999 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 7 and "Section 16(A)
Beneficial Ownership Reporting Compliance" on page 13 of the Proxy Statement
dated March 27, 2000 relating to the 1999 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 (other than the Committee Report on Compensation) and
"Compensation of Directors" on page 13 of the Proxy Statement dated March 27,
2000 relating to the 1999 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 7 and
"Principal Stockholders" on pages 14 and 15 of the Proxy Statement dated March
27, 2000 relating to the 1999 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 27, 2000 relating to the 1999 Annual Meeting of
the Registrant's Stockholders, and is incorporated herein by reference.
<PAGE>
PART IV
<TABLE>
<CAPTION>
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- ----------------------------------------------------------------------------
(a) 1. Financial Statements
--------------------------
A. The following Consolidated Financial Statements of the
Registrant, together with the applicable Report of
Independent Public Accountants, are contained on pages 25
through 47 of the Registrant's 1999 Annual Report to
Stockholders and are incorporated herein by reference:
Page Number
in Annual Report
----------------
<S> <C>
Consolidated Balance Sheets - December 31, 1999
and 1998 25
Consolidated Statements of Income for the Years Ended
December 31, 1999, 1998 and 1997 26
Consolidated Statements of Stockholders' Investment for the
Years Ended December 31, 1999, 1998 and 1997 27
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997 28
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997 29 through 45
Report of Independent Public Accountants 46
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.
Page Number
in Form l0-K
------------
Report of Independent Public Accountants F-1
Combined Balance Sheets - December 31, 1999 and 1998 F-2
Combined Statements of Income for the Years
Ended December 31, 1999, 1998 and 1997 F-3
Combined Statements of Partners' Capital for the Years
Ended December 31, 1999, 1998 and 1997 F-4
Combined Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997 F-5
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997 F-6 through
F-11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item 14. Continued
- ---------------------
C. The following Financial Statements, together with the
applicable Report of Independent Auditors, of CSC
Associates, L.P., a joint venture of the Registrant meeting
the criteria for a significant subsidiary under the rules
and regulations of the Securities and Exchange Commission,
are filed as a part of this report.
Page Number
in Form l0-K
------------
<S> <C>
Report of Independent Auditors G-1
Balance Sheets - December 31, 1999 and 1998 G-2
Statements of Operations for the Years Ended
December 31, 1999, 1998 and 1997 G-3
Statements of Partners' Capital for the Years Ended
December 31, 1999, 1998 and 1997 G-4
Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997 G-5
Notes to Financial Statements G-6 through
December 31, 1999, 1998 and 1997 G-9
</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> <C>
A. Cousins Properties Incorporated and Consolidated Entities:
Report of Independent Public Accountants on Schedule S-7
Schedule III- Real Estate and Accumulated
Depreciation - December 31, 1999 S-8 through
S-12
B. Wildwood Associates and Green Valley Associates II
Schedule III - Real Estate and Accumulated
Depreciation - December 31, 1999 F-12
C. CSC Associates, L.P.
Schedule III- Real Estate and Accumulated
Depreciation - December 31, 1999 G-10
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.
</TABLE>
<PAGE>
Item 14. Continued
- ---------------------
3. Exhibits
--------------
3(a)(i) Articles of Incorporation of Registrant, as
approved by the Stockholders on April 29, 1997,
filed as Exhibit B to the Registrant's Proxy
Statement dated April 29, 1997, and as amended by
the Stockholders on April 21, 1998 as filed in the
Registrant's Proxy Statement dated March 27, 1998,
and incorporated herein by reference.
3(b) By-laws of Registrant, as approved 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 renamed the 1995 Stock Incentive Plan and
approved by the Stockholders on May 6, 1996, filed
as Exhibit A to the Registrant's Proxy Statement
dated May 6, 1996, and as amended by the
Stockholders on April 21, 1998, as filed in the
Registrant's Proxy Statement dated March 27, 1998,
and incorporated herein by reference.
10(a)(ii) Cousins Real Estate Corporation Stock Appreciation
Right Plan, amended and restated as of March 15,
1993, filed as Exhibit 10(a)(ii) to the
Registrant's Form 10-K for the year ended December
31, 1992, and incorporated herein by reference.
10(a)(iii) Cousins Properties Incorporated Stock Appreciation
Right Plan, dated as of March 15, 1993, filed as
Exhibit 10(a)(iii) to the Registrant's Form 10-K
for the year ended December 31, 1992, and
incorporated herein by reference.
10(a)(iv) Cousins Properties Incorporated 1999 Stock
Incentive Plan, as approved by the Stockholders on
May 4, 1999, filed as Exhibit A to the Registrant's
Proxy Statement dated March 29, 1999, 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.
Item 14. Continued
- ---------------------
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 approved by the Stockholders
on April 29, 1997, filed as Exhibit B to the
Registrant's Proxy Statement dated April 29, 1997,
and incorporated herein by reference.
13 Annual Report to Stockholders for the year ended
December 31, 1999.
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.
--------------------------
There were no reports filed on Form 8-K in the quarter ended
December 31, 1999.
<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 20, 2000
BY: /s/ Kelly H. Barret
-------------------------------
Kelly H. Barrett
Senior Vice President - Finance
(Principal Financial and 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 20, 2000
Chief Executive Officer
/s/ T.G. Cousins and Director
- ---------------------------
T. G. Cousins
Principal Financial and
Accounting Officer:
Senior Vice President - Finance March 20, 2000
/s/ Kelly H. Barrett
- ---------------------------
Kelly H. Barrett
Additional Directors:
/s/ Richard W. Courts Director March 20, 2000
- ---------------------------
Richard W. Courts, II
/s/ Boone A. Knox Director March 20, 2000
- ---------------------------
Boone A. Knox
/s/ William Porter Payne Director March 20, 2000
- ---------------------------
William Porter Payne
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
----------------------------------------------------
To 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 8, 2000. 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 8, 2000
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 1 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
($ in thousands)
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, 1999
------------------- -------------------- -----------------------------------
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)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood - Atlanta, GA $ -- $ 11,156 $ -- $ 4,889 $ (8,888) $ 7,157 $ -- $ 7,157
North Point Property -
Fulton Co., GA -- 10,294 -- 12,298 (17,037) 5,555 -- 5,555
Lawrenceville -
Gwinnett Co., GA -- 5,543 -- 715 (5,863) 395 -- 395
Greenbrier MarketCenter
Outparcels -
Chesapeake, VA -- 3,191 -- 204 (2,987) 408 -- 408
Salem Road Station
Outparcels -
Newton Co., GA -- 611 -- -- -- 611 -- 611
----------------------------------------------------------------------------------------------
-- 30,795 -- 18,106 (34,775) 14,126 -- 14,126
----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1999
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
<S> <C> <C> <C> <C>
Wildwood - Atlanta, GA $ -- -- 1971-1982,1989 --
North Point Property -
Fulton Co., GA -- -- 1970-1985 --
Lawrenceville -
Gwinnett Co., GA -- -- 1994 --
Greenbrier MarketCenter
Outparcels -
Chesapeake, VA -- -- 1995 --
Salem Road Station
Outparcels -
Newton Co., GA -- -- 1999 --
-------
--
-------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 2 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
($ in thousands)
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, 1999
------------------- -------------------- -----------------------------------
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)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
OPERATING PROPERTIES
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood - 3301 Windy
Ridge Parkway -
Atlanta, GA $ -- $ 20 $ -- $ 9,007 $ 1,516 $ 1,237 $ 9,306 $ 10,543
Wildwood - 3100 Windy Hill
Road - Atlanta, GA -- -- 17,005 -- -- -- 17,005 17,005
Atlanta, GA -- 4,740 7,229 424 -- 4,740 7,653 12,393
333 North Point Center East -
Fulton Co., GA -- 551 -- 11,929 809 551 12,738 13,289
Lakeshore Park Plaza -
Birmingham, AL 10,683 3,362 12,261 279 -- 3,362 12,540 15,902
101 Independence Center -
Charlotte, NC 47,522 11,096 62,824 1,519 -- 11,096 64,343 75,439
Perimeter Expo -
Atlanta, GA 20,613 8,564 -- 11,121 71 8,564 11,192 19,756
North Point -
Stand Alone Retail Sites -
Fulton Co., GA -- 4,559 -- 451 (1,294) 3,716 -- 3,716
Northside/Alpharetta I -
Fulton Co., GA 10,401 -- 15,577 -- -- -- 15,577 15,577
Presidential MarketCenter -
Gwinnett Co., GA -- 3,956 -- 21,184 817 3,956 22,001 25,957
Inforum -
Atlanta, GA -- 5,226 67,370 -- -- 5,226 67,370 72,596
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1999
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
OPERATING PROPERTIES
- --------------------
<S> <C> <C> <C> <C>
Wildwood - 3301 Windy
Ridge Parkway -
Atlanta, GA $ 4,700 1984 1984 30 Years
Wildwood - 3100 Windy Hill
Road - Atlanta, GA 2,041 1997 1997 25 Years
615 Peachtree Street -
Atlanta, GA 1,779 -- 1996 15 Years
333 North Point Center East -
Fulton Co., GA 1,380 1996 1996 30 Years
Lakeshore Park Plaza -
Birmingham, AL 635 -- 1998 30 Years
101 Independence Center -
Charlotte, NC 9,032 -- 1996 25 Years
Perimeter Expo -
Atlanta, GA 2,452 1993 1993 30 Years
North Point -
Stand Alone Retail Sites -
Fulton Co., GA 125 -- 1970-1985 Various
Northside/Alpharetta I -
Fulton Co., GA 958 -- 1998 25 Years
Presidential MarketCenter -
Gwinnett Co., GA 3,129 1993-1995 1993 30 Years
Inforum -
Atlanta, GA 3,269 -- 1999 25 Years
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 3 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
($ in thousands)
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, 1999
------------------- -------------------- -----------------------------------
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)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
OPERATING PROPERTIES (continued)
- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Colonial Plaza MarketCenter -
Orlando, FL -- 8,500 -- 31,173 1,905 8,500 33,078 41,578
AtheroGenics -
Fulton Co., GA -- 200 -- 7,035 80 200 7,115 7,315
Laguna Niguel Promenade -
Laguna Niguel, CA -- 5,578 -- 12,774 739 5,578 13,513 19,091
AT&T Wireless Services
Headquarters -
Los Angeles, CA -- -- -- 50,260 1,343 -- 51,603 51,603
Miscellaneous -- 398 145 76 (474) -- 145 145
----------------------------------------------------------------------------------------------
89,219 56,750 182,411 157,232 5,512 56,726 345,179 401,905
==============================================================================================
PROJECTS UNDER CONSTRUCTION
- ---------------------------
101 Second Street -
San Francisco, CA $ -- $ 11,698 $ -- $ 68,035 $ 5,331 $ 11,698 $ 73,366 $ 85,064
The Avenue East Cobb -
Cobb Co., GA -- 7,205 -- 26,246 1,675 7,205 27,921 35,126
333 John Carlyle -
Washington, D.C. -- 5,371 -- 20,692 1,458 5,371 22,150 27,521
1900 Duke Street -
Washington, D.C. -- 3,469 -- 2,999 298 3,469 3,297 6,766
Meridian Mark Plaza -
Atlanta, GA -- 2,200 -- 19,582 1,712 2,200 21,294 23,494
600 University Park Place -
Birmingham, AL -- 1,899 -- 13,788 1,197 1,899 14,985 16,884
555 North Point Center East -
Fulton Co., GA -- 368 -- 12,814 976 368 13,790 14,158
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1999
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
OPERATING PROPERTIES
- --------------------
<S> <C> <C> <C> <C>
OPERATING PROPERTIES (continued)
- --------------------------------
Colonial Plaza MarketCenter -
Orlando, FL 4,632 1995 1995 30 Years
AtheroGenics -
Fulton Co., GA 305 1998 1998 30 Years
Laguna Niguel Promenade -
Laguna Niguel, CA 696 1997 1997 30 Years
AT&T Wireless Services
Headquarters -
Los Angeles, CA 672 1998 1998 30 Years
Miscellaneous 124 -- 1977-1984 Various
-------
35,929
=======
PROJECTS UNDER CONSTRUCTION
- ---------------------------
101 Second Street -
San Francisco, CA $ -- 1998 1997 --
The Avenue East Cobb -
Cobb Co., GA -- 1998 1998 --
333 John Carlyle -
Washington, D.C. -- 1998 1998 --
1900 Duke Street -
Washington, D.C. -- 1998 1998 --
Meridian Mark Plaza -
Atlanta, GA -- 1997 1997 --
600 University Park Place -
Birmingham, AL -- 1998 1998 --
555 North Point Center East -
Fulton Co., GA -- 1998 1998 --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 4 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
($ in thousands)
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, 1999
------------------- -------------------- -----------------------------------
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)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
PROJECTS UNDER CONSTRUCTION (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Avenue of the Peninsula -
Rolling Hills
Estates, CA $ -- $ 4,338 $ 17,152 $ 40,034 $ 4,148 $ 4,338 $ 61,334 $ 65,672
Northside/Alpharetta II -
Fulton Co., GA -- -- -- 15,195 702 -- 15,897 15,897
The Avenue Peachtree City -
Fayette Co., GA -- 3,510 -- 1,179 78 3,510 1,257 4,767
One Second Street -
San Francisco, CA -- 22,141 -- 23 211 22,141 234 22,375
Salem Road Station -
Newton Co., GA -- 396 -- 942 33 396 975 1,371
Mira Mesa MarketCenter -
San Diego, CA -- 14,465 -- 13,519 993 14,465 14,512 28,977
----------------------------------------------------------------------------------------------
-- 77,060 17,152 235,048 18,812 77,060 271,012 348,072
==============================================================================================
RESIDENTIAL LOTS UNDER DEVELOPMENT
- ----------------------------------
Browns Farm -
Cobb Co., GA $ -- $ 3,154 $ -- $ 5,823 $ (8,610) $ 367 $ -- $ 367
Apalachee River Club -
Gwinnett Co., GA -- 1,820 -- 4,265 (5,218) 867 -- 867
Echo Mill -
Cobb Co., GA -- 5,298 -- 8,467 (11,628) 2,137 -- 2,137
Bradshaw Farm -
Cherokee Co., GA -- 5,100 -- 14,820 (21,796) (1,876) -- (1,876)
Alcovy Woods -
Gwinnett Co., GA -- 1,142 -- 2,719 (669) 3,192 -- 3,192
----------------------------------------------------------------------------------------------
-- 16,514 -- 36,094 (47,921) 4,687 -- 4,687
----------------------------------------------------------------------------------------------
$ 89,219 $ 181,119 $199,563 $446,480 $(58,372) $152,599 $616,191 $768,790
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1999
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
PROJECTS UNDER CONSTRUCTION (continued)
- ---------------------------------------
<S> <C> <C> <C> <C>
The Avenue of the Peninsula -
Rolling Hills Estates, CA $ -- 1998 1998 --
Northside/Alpharetta II -
Fulton Co., GA -- 1998 1998 --
The Avenue Peachtree City -
Fayette Co., GA -- 1999 1999 --
One Second Street -
San Francisco, CA -- 1999 1999 --
Salem Road Station -
Newton Co., GA -- 1999 1999 --
Mira Mesa MarketCenter -
San Diego, CA -- 1999 1999 --
-------
--
=======
RESIDENTIAL LOTS UNDER DEVELOPMENT
- ----------------------------------
Browns Farm -
Cobb Co., GA $ -- 1993-1994 1993-1994 --
Apalachee River Club -
Gwinnett Co., GA -- 1994 1994 --
Echo Mill -
Cobb Co., GA -- 1994 1994 --
Bradshaw Farm -
Cherokee Co., GA -- 1994 1994 --
Alcovy Woods -
Gwinnett Co., GA -- 1996 1996 --
-------
--
-------
$35,929
=======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 5 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
($ in thousands)
NOTES:
(a) Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended December 31, 1999 are as
follows:
Real Estate Accumulated Depreciation
------------------------------ ---------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $462,047 $449,619 $377,663 $23,422 $33,617 $20,339
Additions during the period:
Improvements and other
capitalized costs 350,121 213,495 100,395 -- -- --
Provision for depreciation -- -- -- 12,507 13,648 13,278
------------------------------ ---------------------------
350,121 213,495 100,395 12,507 13,648 13,278
------------------------------ ---------------------------
Deductions during the period:
Cost of real estate contributed -- (185,044) -- -- (23,843) --
Cost of real estate sold (43,378) (16,023) (28,439) -- -- --
------------------------------ ---------------------------
(43,378) (201,067) (28,439) -- (23,843) --
------------------------------ ---------------------------
Balance at close of period $768,790 $462,047 $449,619 $35,929 $23,422 $33,617
============================== ===========================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To 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, 1999 and 1998, and the related combined
statements of income, partners' capital and cash flows for each of the three
years in the period ended December 31, 1999. 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 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 8, 2000
<PAGE>
<TABLE>
<CAPTION>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
COMBINED BALANCE SHEETS
-----------------------
DECEMBER 31, 1999 AND 1998
--------------------------
($ in thousands)
1999 1998
-------- --------
ASSETS
- ------
<S> <C> <C>
REAL ESTATE ASSETS:
Income producing properties, including land of
$49,457 in 1999 and 1998 (Note 7) $279,994 $276,137
Accumulated depreciation and amortization (72,702) (64,254)
-------------------
207,292 211,883
Land committed to be contributed (Note 3) 8,301 8,301
Land and property predevelopment costs, net of
accumulated depreciation of $277 and $242
in 1999 and 1998, respectively 11,759 11,794
-------------------
Total real estate assets 227,352 231,978
-------------------
CASH AND CASH EQUIVALENTS 3,422 3,945
-------------------
OTHER ASSETS:
Deferred expenses, net of accumulated amortization of
$9,421 and $7,896 in 1999 and 1998, respectively 8,162 8,867
Receivables (Note 6) 9,385 7,805
Allowance for possible losses (Note 1) (1,950) (2,250)
Furniture, fixtures and equipment, net of accumulated
depreciation of $706 and $426 in 1999 and 1998,
respectively 1,399 1,192
Other 64 8
-------------------
17,060 15,622
-------------------
$247,834 $251,545
===================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
NOTES PAYABLE (Note 7) $229,182 $233,914
RETAINAGE, ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES 9,560 7,445
-------------------
Total liabilities 238,742 241,359
-------------------
PARTNERS' CAPITAL (Notes 3 and 4):
International Business Machines Corporation 4,546 5,093
Cousins Properties Incorporated 4,546 5,093
-------------------
Total partners' capital 9,092 10,186
-------------------
$247,834 $251,545
===================
The accompanying notes are an integral part of these combined balance sheets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
COMBINED STATEMENTS OF INCOME
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
($ in thousands)
1999 1998 1997
------ ------- -------
<S> <C> <C> <C>
REVENUES:
Rental income and recovery of expenses
charged directly to specific tenants $47,721 $41,897 $38,507
Interest 116 208 474
Other 182 179 134
---------------------------
Total revenues 48,019 42,284 39,115
---------------------------
EXPENSES:
Real estate taxes 3,436 3,317 3,471
Cleaning, maintenance and repairs 3,432 3,069 2,791
Utilities 2,699 2,409 2,031
Management and personnel costs 2,805 2,522 2,262
Contract security 1,306 1,183 1,051
Grounds maintenance 854 888 823
Expenses charged directly to specific tenants 481 375 444
Insurance 103 95 93
Interest expense 17,858 15,215 12,972
Depreciation and amortization 9,867 9,161 8,798
Real estate taxes on undeveloped land (Note 3) 82 87 143
Other expense 190 27 430
---------------------------
Total expenses 43,113 38,348 35,309
---------------------------
INCOME BEFORE GAIN ON
CONDEMNATION AWARD 4,906 3,936 3,806
Gain on condemnation award -- 220 --
---------------------------
NET INCOME $ 4,906 $ 4,156 $ 3,806
===========================
The accompanying notes are an integral part of these combined statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
COMBINED STATEMENTS OF PARTNERS' CAPITAL
----------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
($ in thousands)
International
Business Cousins
Machines Properties
Corporation Incorporated Total
----------- ------------ -----
<S> <C> <C> <C>
BALANCE, December 31, 1996 $45,329 $45,329 $90,658
Distributions (17,000) (17,000) (34,000)
Net income 1,903 1,903 3,806
---------------------------------------
BALANCE, December 31, 1997 30,232 30,232 60,464
Distributions (27,217) (27,217) (54,434)
Net income 2,078 2,078 4,156
---------------------------------------
BALANCE, December 31, 1998, 5,093 5,093 10,186
Distributions (3,000) (3,000) (6,000)
Net income 2,453 2,453 4,906
---------------------------------------
BALANCE, December 31, 1999 $ 4,546 $ 4,546 $ 9,092
=======================================
The accompanying notes are an integral part of these combined statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
COMBINED STATEMENTS OF CASH FLOWS (Note 9)
------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
($ in thousands)
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,906 $ 4,156 $ 3,806
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 9,867 9,161 8,798
Effect of recognizing rental revenues
on a straight-line basis 1,529 3,780 3,311
Change in tenant rental receivables and
other assets (3,465) (434) 297
Change in accounts payable and accrued
liabilities related to operations 2,115 2 (423)
---------------------------
Net cash provided by operating activities 14,952 16,665 15,789
---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from condemnation -- 2,246 --
Property acquisition and development
expenditures (3,857) (6,112) (15,501)
Payment for deferred expenses and
furniture, fixtures and equipment (886) (3,886) (757)
---------------------------
Net cash used in investing activities (4,743) (7,752) (16,258)
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable (4,732) (3,947) (2,629)
Proceeds from long term financing -- 44,000 30,000
Proceeds from line of credit 5,771 -- --
Repayments under line of credit (5,771) -- --
Partnership distributions (6,000) (54,434) (34,000)
---------------------------
Net cash used in financing activities (10,732) (14,381) (6,629)
---------------------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (523) (5,468) (7,098)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 3,945 9,413 16,511
---------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,422 $ 3,945 $ 9,413
===========================
The accompanying notes are an integral part of these combined statements.
</TABLE>
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------
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:
Real estate assets are stated at depreciated cost. Buildings are
depreciated over 25 to 40 years. Furniture, fixtures, and equipment are
depreciated over 3 to 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 certain marketing and
leasing costs, loan acquisition costs and deferred operating expenses which are
being passed through to tenants - 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.
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 (see Note 8).
Wildwood is an office park containing a total of approximately 285
acres, of which approximately 92 acres are owned by WWA, and an estimated 13
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, 1999,
WWA's income producing real estate assets in Wildwood consisted of: six office
buildings totaling 2,132,000 rentable square feet (including land under such
buildings totaling approximately 56 acres); land parcels totaling approximately
14 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 34 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 30 acres of other land
to be developed (including additional land committed to be contributed by
Cousins) (see Note 3).
3. CONTRIBUTIONS TO THE PARTNERSHIPS
IBM and Cousins have each contributed or committed to contribute
$62,857,000 in cash or properties to the Partnerships. The value of property
contributed by IBM was agreed to by the partners at the time of formation of WWA
and was recorded at the cash amount IBM paid for the property just prior to
contributing it to the Partnership. The value of the property contributed and to
be contributed by Cousins was recorded on the Partnership's books at an amount
equal to the cash and property contributed by IBM for an equal (50%) partnership
interest.
The status of contributions at December 31, 1999, was as follows ($ in
thousands):
IBM COUSINS TOTAL
------- ------- -------
Cash contributed $46,590 $ 84 $ 46,674
Property contributed 16,267 54,472 70,739
Land committed to be contributed -- 8,301 8,301
--------------------------------
Total $62,857 $ 62,857 $125,714
================================
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, 1999, Cousins was committed to contribute land on which
an additional 598,493 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 13 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 approximately $82,000, $87,000 and $143,000 in 1999, 1998
and 1997, respectively.
4. OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENTS
Net income or loss and net cash flow, as defined, shall be allocated to
the partners based on their percentage interests (50% each, subject to
adjustment as provided in the partnership agreements).
In the event of dissolution of the Partnerships, the assets will be
distributed as follows:
o First, to repay all debts to third parties, including any secured loans with
the partners.
o Second, to each partner until each capital account is reduced to zero.
o The balance to each partner in accordance with its percentage interest.
5. FEES TO RELATED PARTIES
The Partnerships engaged Cousins to manage, develop and lease the
Partnerships' property. Fees to Cousins incurred by the Partnerships during
1999, 1998 and 1997 were as follows ($ in thousands):
1999 1998 1997
------ ------ ------
Development and tenant
construction fees $ 246 $ 123 $ 406
Management fees 1,227 1,139 1,047
Leasing and procurement fees 246 1,224 223
----------------------------
$1,719 $2,486 $1,676
============================
6. RENTAL REVENUES
WWA leases property to the partners, as well as to unrelated third
parties. The leases with partners are at rates comparable to those quoted to
third parties. The leases typically contain escalation provisions and provisions
requiring tenants to pay a pro rata share of operating expenses. The leases
typically include renewal options and all are classified and accounted for as
operating leases.
At December 31, 1999, future minimum rentals to be received under
existing non-cancelable leases, including tenants' current pro rata share of
operating expenses are as follows ($ in thousands):
Leases
Leases With
With Third
Partners Parties Total
-------- ------- -----
2000 $ 9,946 $ 36,755 $ 46,701
2001 8,271 34,458 42,729
2002 8,555 34,388 42,943
2003 5,771 27,116 32,887
2004 5,771 23,428 29,199
Thereafter 6,732 106,649 113,381
---------------------------------
$45,046 $262,794 $307,840
=================================
At December 31, 1999 and 1998, receivables which related to the
cumulative excess of revenues recognized in accordance with SFAS No. 13 over
revenues which accrued in accordance with the actual lease agreements totaled
$5,711,000 and $7,240,000, respectively. Of the 1999 amount, 41% was related to
leases with IBM.
<TABLE>
<CAPTION>
7. NOTES PAYABLE
At December 31, 1999, notes payable included the following ($ in
thousands):
Term/
Amortization Balance at
Period Final December 31,
Description Rate (Years) Maturity 1999
----------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C>
Line of credit ($2 million maximum) LIBOR + .75% 1/ N/A 9/1/00 $ --
2300 Windy Ridge Parkway Building mortgage note 7.56% 10/25 12/1/05 65,612
3200 Windy Hill Road Building mortgage note 8.23% 10/28 1/1/07 67,884
4200 Wildwood Parkway Building mortgage note 6.78% 15.75/18 3/31/14 43,534
4100/4300 Wildwood Parkway Buildings mortgage note 7.65% 15/25 4/1/12 26,784
2500 Windy Ridge Parkway Building mortgage note 7.45% 10/20 12/15/05 23,368
--------
$229,182
========
</TABLE>
The 2300 Windy Ridge Parkway Building, the 3200 Windy Hill Road
Building, the 4100/4300 Wildwood Parkway Buildings, and 4200 Wildwood Parkway
mortgage notes 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, 2000, 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 London Interbank
Offering Rate ("LIBOR") 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
approximately $190,504,000 were pledged as security on the Partnerships' debt.
The aggregate maturities of the indebtedness at December 31, 1999
summarized above are as follows ($ in thousands):
2000 $ 5,352
2001 6,037
2002 6,746
2003 7,412
Thereafter 203,635
--------
$229,182
========
The Partnerships capitalize interest expense to property under
development as required by SFAS No. 34. In the year ended December 31, 1998, the
Partnerships capitalized interest totaling $1,463,000. No interest was
capitalized in 1999.
The estimated fair value of the notes payable at December 31, 1999 was
approximately $221 million, which was calculated by discounting future cash
flows under the notes at estimated rates at which similar notes would be made
currently.
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 $256,000 per year, and escalate at
ten year intervals based on the cumulative increase in the Index over the prior
ten year period (subject to a 5% annual cap on the increase in such Index in any
one year). The next escalation date is December 1, 2006.
9. COMBINED STATEMENTS OF CASH FLOWS-SUPPLEMENTAL INFORMATION
Interest paid (net of amounts capitalized) was as follows ($ in
thousands):
1999 1998 1997
---- ---- ----
Interest paid $17,861 $14,987 $12,700
In 1997, one building with a total cost of $29,807,000 was transferred
from Projects Under Construction to Income Producing Properties.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
($ in thousands)
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, 1999
------------------- -------------------- -----------------------------------
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)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood Office Park -
Cobb Co., GA
2500 Windy Ridge $ 23,368 $ 4,414 $ 14,814 $ 10,562 $ 141 $ 4,414 $ 25,517 $ 29,931
2300 Windy Ridge 65,612 8,927 -- 62,926 5,429 8,927 68,355 77,282
Parkside -- 3,161 2,553 (610) (45) 2,440 2,619 5,059
3200 Windy Hill 67,884 10,503 -- 68,491 5,470 10,503 73,961 84,464
4100/4300 Wildwood Parkway 28,784 6,689 -- 22,975 251 6,689 23,226 29,915
4200 Wildwood Parkway 43,534 4,347 -- 31,619 375 4,347 31,994 36,341
Stand Alone Retail Sites -- 8,752 1,234 2,372 123 9,344 3,137 12,481
Land committed to
be contributed -- 7,919 -- -- 382 8,301 -- 8,301
Other land and
property -- 11,547 -- 4,524 209 13,415 2,865 16,557
--------------------------------------------------------------------------------------------
$229,182 $66,259 $ 18,601 $202,859 $ 12,335 $68,380 $231,674 $300,331
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1999
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
OPERATING PROPERTIES
- --------------------
<S> <C> <C> <C> <C>
Wildwood Office Park -
Cobb Co., GA
2500 Windy Ridge $11,662 1985 1985 40 Years
2300 Windy Ridge 26,810 1986 1986 40 Years
Parkside 2,606 1980 1986 25 Years
3200 Windy Hill 24,039 1989 1989 40 Years
4100/4300 Wildwood Parkway 3,422 1995 1986 30 Years
4200 Wildwood Parkway 1,496 1996 1986 30 Years
Stand Alone Retail Sites 1,486 Various 1985-1995 Various
Land committed to
be contributed -- -- 1985-1986 --
Other land and
property 1,458 Various 1985-1986 Various
-------
$72,979
=======
</TABLE>
<TABLE>
<CAPTION>
NOTE: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31,
1999 are as follows:
Real Estate Accumulated Depreciation
---------------------------------- -------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $296,474 $292,666 $280,790 $64,496 $56,560 $48,905
Additions during the period:
Improvements, and other
capitalized costs 3,857 5,834 11,876 -- -- --
Provisions for depreciation -- -- -- 8,483 7,936 7,655
Deductions during the period:
Condemnation of land -- (2,026) -- -- -- --
---------------------------------- -------------------------------
Balance at close of period $300,331 $296,474 $292,666 $72,979 $64,496 $56,560
================================== ===============================
</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, 1999 and 1998, and the related statements of
operations, partners' capital, and cash flows for each of the three years in the
period ended December 31, 1999. Our audits also include 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
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
February 4, 2000
<PAGE>
<TABLE>
<CAPTION>
CSC ASSOCIATES, L.P.
--------------------
BALANCE SHEETS
--------------
DECEMBER 31, 1999 AND 1998
--------------------------
($ in thousands)
ASSETS
------
1999 1998
-------- --------
<S> <C> <C>
REAL ESTATE ASSETS:
Building and improvements, including land and
land improvements of $22,818 in 1999 and 1998 $212,308 $212,334
Accumulated depreciation (46,795) (40,033)
---------------------
165,513 172,301
---------------------
CASH 2,269 1,741
---------------------
NOTE RECEIVABLE (Note 4) 71,399 73,849
---------------------
OTHER ASSETS:
Deferred expenses, net of accumulated amortization
of $5,156 and $4,280 in 1999 and 1998, respectively 6,418 6,789
Straight-line rent, interest and other receivables
(Note 3) 11,674 11,518
Furniture, fixtures and equipment, net of accumulated
depreciation of $63 and $40 in 1999 and 1998,
respectively 76 56
Other, net of accumulated amortization of $139 and
$97 in 1999 and 1998 (Note 6) 884 927
---------------------
Total other assets 19,052 19,290
---------------------
$258,233 $267,181
=====================
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
NOTE PAYABLE (Note 4) $ 71,399 $ 73,849
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 3,149 3,122
---------------------
Total liabilities 74,548 76,971
---------------------
PARTNERS' CAPITAL (Note 1) 183,685 190,210
---------------------
$258,233 $267,181
=====================
The accompanying notes are an integral part of these balance sheets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CSC ASSOCIATES, L.P.
--------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
-----------------------------------------------------
($ in thousands)
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
REVENUES:
Rental income and recovery of expenses
charged directly to specific tenants $38,585 $36,956 $35,159
Interest income (Note 4) 4,639 4,790 4,931
-----------------------------
Total revenues 43,224 41,746 40,090
-----------------------------
EXPENSES:
Real estate taxes 3,856 3,407 3,349
Management and personnel costs 1,762 1,686 1,546
Cleaning 1,453 1,352 1,253
Utilities 874 811 887
Contract security 536 485 474
Repairs and maintenance 465 512 461
Elevator 340 309 325
Parking 286 299 260
Grounds maintenance 138 164 129
Insurance 103 106 106
General and administrative expenses 80 73 77
Marketing and other expenses 43 114 37
Interest expense (Note 4) 4,639 4,790 4,931
Depreciation and amortization 7,694 7,444 7,535
-----------------------------
Total expenses 22,269 21,552 21,370
-----------------------------
NET INCOME $20,955 $20,194 $18,720
=============================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CSC ASSOCIATES, L.P.
---------------------
STATEMENTS OF PARTNERS' CAPITAL
-------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
($ in thousands)
<S> <C>
BALANCE, December 31, 1996 $200,346
Net income 18,720
Distributions (25,350)
--------
BALANCE, December 31, 1997 193,716
Net income 20,194
Distributions (23,700)
--------
BALANCE, December 31, 1998 190,210
Net income 20,955
Distributions (27,480)
--------
BALANCE, December 31, 1999 $183,685
========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CSC ASSOCIATES, L.P.
--------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
($ in thousands)
1999 1998 1997
------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $20,955 $20,194 $18,720
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,694 7,444 7,535
Rental revenue recognized on straight-line
basis different from rental revenue
specified in the lease agreements 15 (164) (238)
Change in other receivables and
other assets (170) (207) (90)
Change in accounts payable and accr ued
accrued liabilities related to operations 27 1,640 454
-------------------------
Net cash provided by operating activities 28,521 28,907 6,381
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to building and improvements (99) (3,480) (433)
Payments for deferred expenses (371) (458) (112)
Collection of note receivable 2,450 2,298 2,157
Payments for furniture, fixtures and equipment (43) (15) (30)
-------------------------
Net cash provided by (used in) investing activities 1,937 (1,655) 1,582
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable (2,450) (2,298) (2,157)
Partnership distributions (27,480) (23,700) (25,350)
-------------------------
Net cash used in financing activities (29,930) (25,998) 27,507)
-------------------------
NET INCREASE IN CASH 528 1,254 456
CASH AT BEGINNING OF YEAR 1,741 487 31
-------------------------
CASH AT END OF YEAR $ 2,269 $ 1,741 $ 487
=========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for interest $ 4,646 $ 4,802 $ 4,937
=========================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
CSC ASSOCIATES, L.P.
--------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------
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 Bank of America. In 1996 Premises
transferred its 1% general partnership interest in the partnership to C&S
Premises-SPE, Inc., a wholly owned subsidiary of Premises. 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 Bank of America 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).
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Capitalization Policies
- -----------------------
All costs related to planning, developing and constructing the Building
plus 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
- -----------------------------
Real estate assets are carried at cost. Depreciation of the Building
commenced on 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 related lease or the
useful life of the asset, whichever is shorter. Furniture, fixtures, and
equipment are depreciated over 5 years. Deferred expenses, which include certain
marketing and leasing costs and deferred operating expenses which are being
passed through to the tenants, 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 (other than scheduled increases based on the Consumer Price
Index) 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, 1999 and 1998, there is no allowance for doubtful accounts included
in the accompanying balance sheets.
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.
Reclassifications
- -----------------
Certain 1998 amounts have been reclassified to conform with 1999
presentation.
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
negotiated 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, 1999, 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):
Lease Leases
With With
NB Holdings Third
Corporation Parties Total
----------- -------- --------
2000 $ 16,762 $ 19,829 $ 36,591
2001 16,762 20,032 36,794
2002 16,785 20,678 37,463
2003 16,788 21,040 37,828
2004 16,788 19,332 36,120
Subsequent to 2004 124,598 57,334 181,932
---------------------------------------
$208,483 $158,245 $366,728
=======================================
In the year ended December 31, 1999, income which would have accrued in
accordance with the lease terms exceeded income recognized on a straight-line
basis by $15,000. In the year ended December 31, 1998, income recognized on a
straight-line basis exceeded income which would have accrued in accordance with
the lease terms by approximately $164,000. At December 31, 1999 and 1998,
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 approximately $10,819,000 and $10,834,000,
respectively. Of that amount, 16% was related to leases with NB Holdings
Corporation and approximately 37% and 33% was related to each of two
professional services firms, respectively. At December 31, 1999 NB Holdings
Corporation leased approximately 46% and two professional services firms leased
approximately 17% and 16%, 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.
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 Bank of America. In addition, CPI pays a monthly fee to an affiliate of Bank
of America of .025% of the outstanding principal balance of the Notes. These
fees totaled approximately $218,000 and $225,000 in 1999 and 1998, respectively.
The estimated fair value of both the note payable and related note
receivable at December 31, 1999 was $64 million which was calculated by
discounting future cash flows under the notes at estimated rates at which
similar notes would be made currently.
The maturities of the Notes at December 31, 1999 are as follows (in
thousands):
2000 $ 2,610
2001 2,782
2002 2,965
2003 3,159
2004 3,367
Subsequent to 2004 56,516
-------
$71,399
=======
5. RELATED PARTIES
---------------
The Partnership engaged CPI and an affiliate of CPI to manage, develop
and lease the Building. During 1999, 1998 and 1997, fees to CPI and its
affiliate incurred by the Partnership were as follows ($ in thousands):
1999 1998 1997
------ ------ ----
Development and tenant construction fees $ 27 $ 38 $ 17
Leasing and procurement fees 63 399 32
Management fees 959 917 870
---------------------------
$1,049 $1,354 $919
===========================
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
plus additional costs of approximately $23,000 are included in Other Assets and
are 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 $1,000,000 would be due to CSC. In
addition, CSC is responsible for the maintenance of the parking deck and the
payment of the related operating expenses.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
CSC ASSOCIATES, L.P
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
($ in thousands)
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, 1999
------------------- -------------------- -----------------------------------
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)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bank of America Plaza
Atlanta, Georgia $ -- $ 18,200 $ -- $183,659 $ 10,449 $ 22,818 $189,490 $212,308
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1999
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
<S> <C> <C> <C> <C>
Bank of America Plaza
Atlanta, Georgia $46,795 1990-1992 1990 5-40
</TABLE>
<TABLE>
<CAPTION>
NOTE: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31,
1999 are as follows:
Real Estate Accumulated Depreciation
----------------------------------- -------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $212,334 $209,120 $209,141 $40,033 $33,621 $27,621
Improvements and other capitalized costs 99 3,480 420 -- -- --
Write offs of improvements and other capitalized costs (125) (266) (441) (125) (266) (441)
Provision for depreciation -- -- -- 6,887 6,678 6,441
----------------------------------- -------------------------------
Balance at close of period $212,308 $212,334 $209,120 $46,795 $40,033 $33,621
=================================== ===============================
</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 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.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
($ in thousands, except
per share amounts)
Years Ended December 31,
--------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Income before gain on sale of investment properties $45,315 $41,355 $31,305
Depreciation and amortization 36,737 28,910 24,397
Amortization of deferred financing costs and
depreciation of furniture, fixtures and equipment (758) (524) (452)
Elimination of the recognition of rental revenues on
a straight-line basis (142) 1,119 998
Adjustment to reflect stock appreciation right
expense on a cash basis (101) (8) (702)
Consolidated Funds From Operations $81,051 $70,852 $55,546
Weighted Average Shares 32,092 31,602 29,267
Consolidated Funds From Operations Per Share - Basic $ 2.53 $ 2.24 $ 1.90
Adjusted Weighted Average Shares 32,687 32,040 29,693
Consolidated Funds From Operations Per Share - Diluted $ 2.48 $ 2.21 $ 1.87
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
($ in thousands, except share and per share amounts)
December 31,
---------------------
1999 1998
-------- --------
ASSETS
- ------
<S> <C> <C>
PROPERTIES (Notes 4 and 8):
Operating properties, net of accumulated
depreciation of $35,929 in 1999 and $23,422
in 1998 $365,976 $235,588
Land held for investment or future development 14,126 15,530
Projects under construction 348,072 178,736
Residential lots under development 4,687 8,771
---------------------
Total properties 732,861 438,625
CASH AND CASH EQUIVALENTS, at cost, which
approximates market 1,473 1,349
NOTES AND OTHER RECEIVABLES (Note 3) 37,303 39,470
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
(Notes 4 and 5) 151,737 264,648
OTHER ASSETS 9,558 8,766
---------------------
TOTAL ASSETS $932,932 $752,858
=====================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
NOTES PAYABLE (Note 4) $312,257 $198,858
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 34,827 36,104
DEPOSITS AND DEFERRED INCOME 861 928
---------------------
TOTAL LIABILITIES 347,945 235,890
---------------------
DEFERRED GAIN (Note 5) 115,576 120,038
MINORITY INTERESTS 31,689 17,065
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4)
STOCKHOLDERS' INVESTMENT (Note 6):
Common stock, $1 par value; authorized 50,000,000
shares, issued 32,328,135 in 1999 and 31,887,298
in 1998 32,328 31,887
Additional paid-in capital 256,988 244,778
Treasury stock at cost, 153,600 shares in 1999 (4,990) --
Cumulative undistributed net income 153,396 103,200
---------------------
TOTAL STOCKHOLDERS' INVESTMENT 437,722 379,865
---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $932,932 $752,858
=====================
The accompanying notes are an integral part of these consolidated balance
sheets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
($ in thousands, except per share amounts)
Years Ended December 31,
------------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
REVENUES:
Rental property revenues (Note 10) $ 62,480 $67,726 $62,252
Development income 6,165 3,007 3,123
Management fees 4,743 3,761 3,448
Leasing and other fees 2,991 2,810 720
Residential lot and outparcel sales 17,857 16,732 12,847
Interest and other 3,588 4,275 3,609
------------------------------
97,824 98,311 85,999
------------------------------
INCOME FROM UNCONSOLIDATED JOINT VENTURES
(Note 5) 19,637 18,423 15,461
COSTS AND EXPENSES:
Rental property operating expenses 19,087 17,702 15,371
General and administrative expenses 14,961 13,087 12,717
Depreciation and amortization 16,859 15,173 14,046
Stock appreciation right expense (Note 6) 108 330 204
Residential lot and outparcel cost of sales 14,897 15,514 11,917
Interest expense (Note 4) 600 11,558 14,126
Property taxes on undeveloped land 811 900 606
Other 2,381 1,263 2,695
------------------------------
69,704 75,527 71,682
------------------------------
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND GAIN ON SALE OF INVESTMENT PROPERTIES 47,757 41,207 29,778
PROVISION (BENEFIT) FOR INCOME TAXES FROM
OPERATIONS (Note 7) 2,442 (148) (1,527)
------------------------------
INCOME BEFORE GAIN ON SALE OF INVESTMENT
PROPERTIES 45,315 41,355 31,305
------------------------------
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
APPLICABLE INCOME TAX PROVISION (Note 7) 58,767 3,944 5,972
------------------------------
NET INCOME $104,082 $45,299 $37,277
==============================
WEIGHTED AVERAGE SHARES 32,092 31,602 29,267
==============================
BASIC NET INCOME PER SHARE $ 3.24 $ 1.43 $ 1.27
==============================
ADJUSTED WEIGHTED AVERAGE SHARES 32,687 32,040 29,693
==============================
DILUTED NET INCOME PER SHARE $ 3.18 $ 1.41 $ 1.26
==============================
CASH DIVIDENDS DECLARED PER SHARE (Note 6) $ 1.68 $ 1.49 $ 1.29
==============================
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
- --------------------------------------------------------------------------------
Years Ended December 31, 1999, 1998 and 1997
($ in thousands)
Additional Cumulative
Common Paid-In Treasury Undistributed
Stock Capital Stock Net Income Total
----- ---------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 $28,920 $164,970 $ -- $105,294 $299,184
Net income, 1997 -- -- -- 37,277 37,277
Common stock issued pursuant to:
2,150,000 share stock offering,
net of expenses 2,150 61,993 -- -- 64,143
Exercise of options and
director stock plan 223 2,946 -- -- 3,169
Dividend reinvestment plan 179 4,328 -- -- 4,507
Dividends declared -- -- -- (37,606) (37,606)
--------------------------------------------------------------
BALANCE, December 31, 1997 31,472 234,237 -- 104,965 370,674
Net income, 1998 -- -- -- 45,299 45,299
Common stock issued pursuant to:
Exercise of options and
director stock plan 43 506 -- -- 549
Dividend reinvestment plan 372 10,035 -- -- 10,407
Dividends declared -- -- -- (47,064) (47,064)
--------------------------------------------------------------
BALANCE, December 31, 1998 31,887 244,778 -- 103,200 379,865
Net income, 1999 -- -- -- 104,082 104,082
Common stock issued pursuant to:
Exercise of options and
director stock plan 78 1,269 -- -- 1,347
Dividend reinvestment plan 363 10,941 -- -- 11,304
Dividends declared -- -- -- (53,886) (53,886)
Purchase of treasury stock -- -- (4,990) -- (4,990)
--------------------------------------------------------------
BALANCE, December 31, 1999 $32,328 $256,988 $(4,990) $153,396 $437,722
==============================================================
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 9)
- --------------------------------------------------------------------------------
($ in thousands)
Years Ended December 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before gain on sale of investment properties $ 45,315 $ 41,355 $ 31,305
Adjustments to reconcile income before gain on sale of investment
properties to net cash provided by operating activities:
Depreciation and amortization, net of minority interest's share 16,658 15,173 14,046
Stock appreciation right expense 108 330 204
Cash charges to expense accrual for stock appreciation rights (209) (338) (906)
Effect of recognizing rental revenues on a straight-line basis (1,064) (347) (440)
Income from unconsolidated joint ventures (19,637) (18,423) (15,461)
Operating distributions from unconsolidated joint ventures 36,051 23,612 21,707
Residential lot and outparcel cost of sales 13,802 14,759 11,398
Changes in other operating assets and liabilities:
Change in other receivables (1,903) (1,986) 2,592
Change in accounts payable and accrued liabilities 2,706 15,939 (6,492)
--------------------------------
Net cash provided by operating activities 91,827 90,074 57,953
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gain on sale of investment properties, net of applicable income tax provision 58,767 3,944 5,972
Adjustments to reconcile gain on sale of investment properties
to net cash provided by sales activities:
Cost of sales 29,576 1,264 17,041
Deferred income recognized (4,123) (536) --
Property acquisition and development expenditures (337,961) (194,253) (80,628)
Non-operating distributions from unconsolidated joint ventures 3,635 22,617 14,681
Investment in unconsolidated joint ventures, including interest
capitalized to equity investments (36,195) (34,712) (8,863)
Investment in notes receivable (1,191) (33,345) (5,593)
Collection of notes receivable 6,258 30,528 3,472
Change in other assets, net (3,112) 976 (1,645)
Net cash received in formation of venture 125,469 103,025 --
--------------------------------
Net cash used in investing activities (158,877) (100,492) (55,563)
--------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of credit facility (253,023) (231,115) (138,430)
Proceeds from credit facility 372,554 242,235 114,631
Common stock sold, net of expenses 12,651 10,956 71,795
Purchase of treasury stock (4,990) -- --
Dividends paid (53,886) (47,064) (37,606)
Proceeds from other notes payable -- 10,870 25,000
Repayment of other notes payable (6,132) (6,809) (6,684)
--------------------------------
Net cash provided by (used in) financing activities 67,174 (20,927) 28,706
--------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 124 (31,345) 31,096
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,349 32,694 1,598
--------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,473 $ 1,349 $ 32,694
================================
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
<PAGE>
Cousins Properties Incorporated and Consolidated Entities
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1999, 1998 and 1997
<PAGE>
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, Cousins Real Estate Corporation ("CREC") and its subsidiaries
and CREC II Inc. ("CREC II") 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
the consolidated taxable income of CREC and its wholly owned subsidiaries and
CREC II and its wholly owned subsidiaries) 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 and CREC II and its wholly owned subsidiaries each file a
consolidated federal income tax return.
Depreciation and Amortization:
Real estate assets are stated at depreciated cost. Buildings are
depreciated over 30 to 40 years. Buildings that were acquired are depreciated
over 15, 25 and 30 years. Furniture, fixtures and equipment are depreciated over
3 to 5 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. These fees totaled $4,676,000, $3,104,000 and
$1,510,000 in 1999, 1998 and 1997, respectively. Management fees received from
consolidated entities are shown as a reduction in rental property operating
expenses. Costs related to planning, development, leasing and construction of
properties (including related general and administrative expenses) are
capitalized.
Interest, real estate taxes, and rental property revenues and expenses of
properties prior to the date they become operational for financial reporting
purposes are also capitalized. Interest is 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.
Cash and Cash Equivalents:
Cash and cash equivalents include 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, 1999, cash
and cash equivalents included $379,000 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.
Derivative Instruments and Hedging Activities:
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," (the
"Statement") which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. The Statement, as amended in June 1999 by
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133," is effective for
fiscal years beginning after June 15, 2000. The Statement requires companies to
record derivatives on the balance sheet as assets and liabilities at fair value.
The Statement also requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. The Company does not expect the adoption of this statement will have a
material impact on the financial statements or results of operations of the
Company.
Reclassifications:
Certain 1998 amounts have been reclassified to conform with the 1999
presentation.
2. CREC AND CREC II
CREC conducts certain development and leasing activities for real estate
projects. CREC also manages a joint venture property in which it has an
ownership interest. At December 31, 1999, 1998 and 1997, Cousins owned 100% of
CREC's $5,025,000 par value 8% cumulative preferred stock and 100% of CREC's
nonvoting common stock, which 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 ($9,849,000 in
aggregate) exceeds CREC's $7,804,625 of equity.
CREC II owns the Company's investment in Cousins Stone LP (see Note 5).
Cousins owns 100% of CREC II's $835,000 par value, 10% cumulative preferred
stock and 100% of CREC II's non-voting common stock, which is entitled to 95% of
any dividends of CREC II after preferred dividend requirements. Mr. Cousins owns
100% of the voting common stock of CREC II, which voting common stock is
entitled to 5% of any dividends of CREC II after preferred dividend
requirements. CREC II is included in the Company's Consolidated Financial
Statements, but is taxed as a regular corporation. CREC II has paid no preferred
or common dividends to date and as of December 31, 1999 undistributed cumulative
preferred dividends are $49,636. Minority interest expense has been recognized
for Mr. Cousins' ownership.
<PAGE>
<TABLE>
<CAPTION>
3. NOTES AND OTHER RECEIVABLES
At December 31, 1999 and 1998, notes and other receivables included the
following ($ in thousands):
1999 1998
------- -------
<S> <C> <C>
650 Massachusetts Avenue Mortgage Notes $24,332 $25,053
Daniel Realty Company Note Receivable 2,610 3,336
Miscellaneous Notes 1,342 608
Cumulative rental revenue recognized on a straight-
line basis in excess of revenue accrued in
accordance with lease terms (see Note 1) 2,135 1,071
Other Receivables 6,884 9,402
-----------------
Total Notes and Other Receivables $37,303 $39,470
=================
</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 $28.9 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. Amounts in excess of the minimum required payments
($721,000 and $908,000 in 1999 and 1998, respectively) are treated as a
reduction of principal.
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 focuses on the
development and acquisition of commercial office properties. The arrangement
with Daniel included a loan to Daniel of up to $9.5 million which had an
interest rate of 11%, required semiannual principal payments commencing February
1, 1998 and matured on December 31, 2003. The Company also obtained an option to
acquire certain segments of Daniel's business.
On December 31, 1997, upon paydown of the outstanding balance of the note
receivable to $4 million, the Company amended the note, which reduced the
interest rate to 9% and requires quarterly payments of principal and interest,
which commenced April 1, 1998, in the amount of $250,568. The loan will fully
amortize over 5 years.
Fair Value - The estimated fair value of the Company's $28.3 million and
$29.0 million of notes receivable at December 31, 1999 and 1998, respectively,
was $35.2 million and $35.9 million, respectively, calculated by discounting
future cash flows from the notes receivable at estimated rates at which similar
loans would be made currently.
<TABLE>
<CAPTION>
4. NOTES PAYABLE, COMMITMENTS, AND CONTINGENT LIABILITIES
At December 31, 1999 and 1998, notes payable included the following ($ in
thousands):
December 31, 1999 December 31, 1998
------------------------------------ -------------------------------------
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
and Construction Loans $130,651 $ 28,504 $159,155 $ 11,120 $ -- $ 11,120
Other Debt (primarily non-recourse
fixed rate mortgages) 181,606 190,235 371,841 187,738 221,498 409,236
-----------------------------------------------------------------------------
$312,257 $218,739 $530,996 $198,858 $221,498 $420,356
=============================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The following table summarizes the terms of the debt outstanding at
December 31, 1999 ($ in thousands):
Term/
Amortization Balance at
Period Final December 31,
Description Rate (Years) Maturity 1999
----------- -------------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Company Debt:
- -------------
Credit facility (a maximum of $225 million Floating based
through 4/27/00 and $150 million through on LIBOR 3/N/A 8/27/02 $130,651
8/27/02), unsecured
Note secured by Company's interest in
CSC Associates, L.P. 6.677% 15/20 2/15/11 71,399
Perimeter Expo mortgage note 8.04% 10/30 8/15/05 20,613
Note secured by Company's interest in 650
Massachusetts Avenue mortgage notes (see Note 3) 6.53% 5/N/A 10/01/00 20,571
101 Independence Center mortgage note 8.22% 11/25 12/1/07 47,522
Lakeshore Park Plaza mortgage note 6.78% 10/30 11/1/08 10,683
Northside/Alpharetta I mortgage note 7.70% 8/28 1/1/06 10,401
Other miscellaneous notes Various Various Various 417
--------
312,257
--------
Share of Unconsolidated Joint Venture Debt:
- -------------------------------------------
Wildwood Associates:
Line of credit ($2 million maximum) LIBOR + .75% 1/N/A 9/30/00 --
2300 Windy Ridge Parkway mortgage note 7.56% 10/25 12/01/05 32,806
2500 Windy Ridge Parkway mortgage note 7.45% 10/20 12/15/05 11,684
3200 Windy Hill Road mortgage note 8.23% 10/28 1/1/07 33,942
4100/4300 Wildwood Parkway mortgage note 7.65% 15/25 4/1/12 14,392
4200 Wildwood Parkway mortgage note 6.78% 15.75/18 3/31/14 21,767
Cousins LORET Venture, L.L.C.:
Two Live Oak Center mortgage note 7.90% 12/30 12/31/09 14,746
The Pinnacle mortgage note 7.11% 12/30 12/31/09 35,000
CP Venture Two LLC:
North Point MarketCenter mortgage note 8.50% 10/25 7/15/05 3,236
100/200 North Point Center East mortgage note 7.86% 10/25 8/1/07 2,780
Ten Peachtree Place Associates mortgage note 8.00% 10/18 11/30/01 8,728
CC-JM II Associates mortgage note 7.00% 17/17 4/1/13 11,154
Charlotte Gateway Village, LLC construction loan LIBOR + .50% 3/N/A 1/2/02 28,504
--------
218,739
--------
$530,996
========
</TABLE>
<PAGE>
In 1996, CSC Associates, L.P. ("CSC") issued $80 million of 6.377%
collateralized non-recourse mortgage notes (the "Notes") secured by CSC's
interest in the Bank of America Plaza building and related leases and
agreements. CSC 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 Bank of America Corporation. In addition, the Company pays a fee to
an affiliate of Bank of America 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 unconsolidated joint venture balances disclosed in the above table or in
Note 5. (The related note receivable and interest income are also not included
in Note 5.)
In August 1999, the Company renewed and modified its $150 million credit
facility which matures August 27, 2002. On December 31, 1999, the credit
facility was temporarily increased to $225 million, which increase expires April
27, 2000. The credit facility is unsecured and bears an interest rate equal to
the London Interbank Offering Rate ("LIBOR") plus a spread which is based on the
ratio of total debt to total assets according to the following table:
Ratio of Total Debt
To Total Assets Basis Points
------------------- ------------
<=35% 90
>35% <= 45% 100
>45% <= 50% 110
>50% <= 55% 125
In December 1998, Charlotte Gateway Village, LLC completed construction
financing of up to $190 million for Gateway Village. The note bears an interest
rate of LIBOR (adjusted for certain reserve requirements) plus .50% and matures
January 2, 2002. No amounts were drawn on the note until 1999.
The Wildwood Associates 2300 Windy Ridge Parkway, 3200 Windy Hill Road,
4100/4300 Wildwood Parkway and 4200 Wildwood Parkway 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
disclosed in the table) 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 disclosed in the table. The difference between fixed and
variable interest amounts calculated by reference to the principal notional
amount (which was $19,275,000 at December 31, 1999) is recognized as an
adjustment to interest expense over the life of the swap. If the Company settled
the swap as of December 31, 1999, it would receive $86,000.
At December 31, 1999, the Company had outstanding letters of credit
totaling $9,683,000, and assets, including the Company's share of joint venture
assets, with carrying values of $479,666,000 were pledged as security on the
debt of the Company and its share of unconsolidated joint venture debt. The
fixed rate long-term mortgage debt of the Company and its unconsolidated joint
ventures is non-recourse to the Company.
As of December 31, 1999, the weighted average maturity of the Company's
debt, including its share of unconsolidated joint ventures, was 9 years.
The aggregate maturities of the indebtedness at December 31, 1999
summarized above are as follows ($ in thousands):
<TABLE>
<CAPTION>
Share of
Unconsolidated
Company Joint Ventures Total
------- -------------- --------
<S> <C> <C> <C>
2000 $ 24,756 $ 4,252 $ 29,008
2001 4,298 12,369 16,667
2002 135,256 33,591 168,847
2003 4,937 5,078 10,015
2004 5,291 5,594 10,885
Thereafter 137,719 157,855 295,574
--------------------------------------
$312,257 $218,739 $530,996
======================================
</TABLE>
<TABLE>
<CAPTION>
For each of the years ended December 31, 1999, 1998 and 1997, interest
expense was recorded as follows ($ in thousands):
Share of Unconsolidated
Company Joint Ventures Total
------------------------------- ------------------------------- -------------------------------
Year Expensed Capitalized Total Expensed Capitalized Total Expensed Capitalized Total
- ---- -------- ----------- ------- -------- ----------- ------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $ 600 $16,155 $16,755 $14,473 $ 1,513 $15,986 $15,073 $17,668 $32,741
1998 11,558 7,470 19,028 9,902 2,173 12,075 21,460 9,643 31,103
1997 14,126 3,167 17,293 8,281 1,123 9,404 22,407 4,290 26,697
</TABLE>
The Company has future lease commitments under land leases aggregating
$48.0 million over an average remaining term of 60 years. The Company has
entered into construction and design contracts for real estate projects, of
which approximately $191 million remains committed at December 31, 1999. At
December 31, 1999 and 1998, the estimated fair value of the Company's notes
payable, including its share of unconsolidated joint ventures, was $517 million
and $445 million, respectively.
<PAGE>
<TABLE>
<CAPTION>
5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
The following information summarizes financial data and principal
activities of unconsolidated joint ventures in which the Company had ownership
interests ($ in thousands). Audited financial statements for Wildwood Associates
and CSC Associates, L.P. are included in the Company's Form 10-K.
Company's
Total Assets Total Debt Total Equity Investment
---------------------- ------------------ ------------------ ------------------
1999 1998 1999 1998 1999 1998 1999 1998
---------- ---------- -------- -------- -------- -------- -------- --------
SUMMARY OF FINANCIAL POSITION:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood Associates $ 247,834 $ 251,545 $229,182 $233,914 $ 9,092 $ 10,186 $(36,913) $(36,364)
CSC Associates, L.P. 186,638 193,129 -- -- 183,685 190,210 94,347 97,685
Ten Peachtree Place Associates 19,077 19,718 17,456 18,444 1,375 936 175 104
Haywood Mall -- 39,792 -- -- -- 37,937 -- 19,656
CC-JM II Associates 26,779 29,231 22,308 23,014 3,758 4,841 2,215 2,660
Cousins LORET Venture, L.L.C. 134,732 163,320 99,492 104,196 32,730 50,374 16,222 25,202
Brad Cous Golf Venture, Ltd. 10,661 10,687 -- -- 10,514 9,924 5,257 4,962
Charlotte Gateway Village, LLC 86,933 15,433 57,008 -- 6,400 15,000 21,221 11,781
CP Venture LLC -- -- -- -- -- -- 16,259 135,519
CP Venture Two LLC 263,450 285,372 52,313 53,141 208,130 230,468 2,090 2,308
285 Venture, Ltd. 34,254 -- -- -- 32,448 -- 16,888 --
Cousins Stone LP 14,733 -- -- -- 14,562 -- 7,131 --
Temco Associates 13,854 2,397 -- -- 12,975 2,164 6,600 1,082
Other 722 163 -- -- 1,234 151 245 53
---------------------- ------------------ ------------------ ------------------
$1,039,667 $1,010,787 $477,759 $432,709 $516,903 $552,191 $151,737 $264,648
====================== ================== ================== ==================
</TABLE>
<TABLE>
<CAPTION>
Company's Share
Total Revenues Net Income of Net Income
--------------------------- ------------------------- -------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
-------- -------- ------- ------- ------- ------- ------- ------- -------
SUMMARY OF OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood Associates $ 48,019 $ 42,284 $39,115 $ 4,906 $ 4,156 $ 3,806 $ 2,453 $ 1,968 $ 1,903
CSC Associates, L.P. 38,585 36,956 35,159 20,955 20,194 18,720 10,402 10,021 9,284
Ten Peachtree Place Associates 4,356 4,396 4,295 872 803 718 271 261 248
Haywood Mall 8,730 17,049 13,820 4,910 9,465 7,382 2,433 4,614 3,648
CC-JM II Associates 4,161 4,070 3,860 420 469 261 248 213 113
Cousins LORET Venture, L.L.C. 16,673 6,810 1,885 106 1,747 135 53 672 68
Brad Cous Golf Venture, Ltd. 779 -- -- 168 -- -- 84 -- --
CP Venture LLC -- -- -- -- -- -- 82 280 --
CP Venture Two LLC 33,856 4,384 -- 893 335 -- 9 4 --
Cousins Stone LP 5,071 -- -- 2,562 -- -- 1,892 -- --
Temco Associates 7,087 361 104 2,540 194 23 1,270 97 11
Other 1,124 813 439 878 589 388 440 293 186
--------------------------- ------------------------- -------------------------
$168,441 $117,123 $98,677 $39,210 $37,952 $31,433 $19,637 $18,423 $15,461
=========================== ========================= =========================
</TABLE>
<TABLE>
<CAPTION>
Company's Share Of
----------------------------------------------------
Cash Flows From Cash Flows From Operating
Operating Activities Operating Activities Cash Distributions
------------------------- ------------------------- -------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
------- ------- ------- ------- ------- ------- ------- ------- -------
SUMMARY OF OPERATING CASH FLOWS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood Associates $14,952 $16,665 $15,789 $ 7,476 $ 8,333 $ 7,894 $ 1,000 $ 4,600 $ 4,500
CSC Associates, L.P. 28,521 28,907 26,381 14,260 14,454 13,191 13,740 11,850 12,675
Ten Peachtree Place Associates 1,027 1,358 1,205 354 343 321 200 200 200
Haywood Mall 6,158 11,571 9,795 3,079 5,786 4,897 4,068 5,585 3,895
CC-JM II Associates 1,666 1,551 1,222 833 775 611 693 324 324
Cousins LORET Venture, L.L.C. 5,442 3,968 768 2,721 1,984 384 7,240 703 --
Brad Cous Golf Venture, Ltd. 362 -- -- 181 -- -- 50 -- --
CP Venture LLC -- -- -- -- -- -- 8,303 -- --
CP Venture Two LLC 21,239 2,576 -- 6,989 2,154 -- 226 -- --
Cousins Stone LP 1,631 -- -- -- -- -- -- -- --
Temco Associates 2,540 194 28 1,270 97 16 -- -- --
Other 882 589 339 441 294 168 531 350 113
------------------------- ------------------------- -------------------------
$84,420 $67,379 $55,527 $37,604 $34,220 $27,482 $36,051 $23,612 $21,707
========================= ========================= =========================
</TABLE>
<PAGE>
Wildwood Associates - Wildwood Associates was formed in 1985 between the
Company and IBM, each as 50% partners. The partnership owns six office buildings
totaling 2.1 million rentable square feet, other income-producing commercial
properties, and additional developable land in Wildwood Office Park ("Wildwood")
in Atlanta, Georgia. Wildwood is an office park containing a total of
approximately 285 acres, of which approximately 92 acres are owned by Wildwood
Associates and an estimated 13 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 13 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.
Through December 31, 1999, 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 13 acres of
additional land with an agreed value of $8.3 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,
which was a negative investment of $36.9 million at December 31, 1999 due to
partnership distributions, 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 ($4.5 million at December 31, 1999) is based on the agreed-upon 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 Bank of America Corporation, each as 50%
partners. CSC owns the 1.3 million rentable square foot Bank of America 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). 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, was owned by the Company and
Simon Property Group. The mall has 1,256,000 gross leaseable square feet ("GLA")
(of which approximately 330,000 GLA was owned). The balance of the mall is owned
by the mall's five major department stores. The Company sold its 50% interest to
Simon Property Group in June 1999 for $69 million, resulting in a gain of $50.1
million which is included in Gain on Sale of Investment Properties in the
accompanying Consolidated Statements of Income. The proceeds from the sale were
re-deployed through a tax-deferred exchange into Inforum, a 987,000 rentable
square foot office building located in downtown Atlanta, Georgia.
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 until January 2011 to
Booz-Allen & Hamilton, an international consulting firm, as a part of its
corporate headquarters campus.
Cousins LORET Venture, L.L.C. ("Cousins LORET") - Effective July 31, 1997,
Cousins LORET was formed between the Company and LORET Holdings, L.L.L.P.
("LORET"), each as 50% members. LORET contributed Two Live Oak Center, a 278,000
rentable square foot office building located in Atlanta, Georgia, which was
renovated in 1997. Two Live Oak Center became partially operational for
financial reporting purposes in October 1997. Two Live Oak Center was
contributed subject to a 7.90% $30 million non-recourse ten year mortgage note
payable (see Note 4). LORET also contributed an adjacent 4 acre site on which
construction of The Pinnacle, a 423,000 rentable square foot office building,
commenced in August 1997 and was completed in November 1998. The Pinnacle became
partially operational for financial reporting purposes in March 1999. The
Company contributed $25 million of cash to Cousins LORET to match the value of
LORET's agreed-upon equity. In May 1998, Cousins LORET completed the $70 million
non-recourse financing of The Pinnacle at an interest rate of 7.11% and a term
of twelve years, which was completely funded on December 30, 1998.
Brad Cous Golf Venture, Ltd. ("Brad Cous") - Effective January 31, 1998,
the Company formed the Brad Cous Golf Venture, Ltd. with the W.C. Bradley Co.,
each as 50% partners, for the purpose of developing and owning The Shops at
World Golf Village, an approximately 80,000 square foot retail center located
adjacent to the PGA Hall of Fame in St. Augustine, Florida. The Shops at World
Golf Village became partially operational for financial reporting purposes in
April 1999.
Charlotte Gateway Village, LLC ("Gateway") - On December 14, 1998, the
Company and a wholly owned subsidiary of Bank of America Corporation formed
Gateway for the purpose of developing and owning Gateway Village, a 1,076,000
rentable square foot office building and parking deck in downtown Charlotte,
North Carolina. Construction of Gateway Village commenced in July 1998. The
project is 100% leased to Bank of America Corporation. Gateway's net income or
loss and cash distributions are allocated to the members as follows: first to
the Company so that it receives a cumulative compounded return equal to 11.46%
on its capital contributions, second to a wholly owned subsidiary of Bank of
America Corporation until it has received an amount equal to the aggregate
amount distributed to the Company and then to each member, 50%. In December
1998, Gateway completed construction financing of up to $190 million for Gateway
Village. The note bears an interest rate of LIBOR (adjusted for certain reserve
requirements) plus .50% and matures January 2, 2002. No amounts were drawn on
the note until 1999. This note is fully exculpated and is supported by a lease
to Bank of America Corporation with a term of 15 years. Pursuant to the Gateway
operating agreement, this construction financing will be replaced with permanent
long-term financing which will be fully amortized at the end of the Bank of
America Corporation lease.
CP Venture LLC, CP Venture Two LLC and CP Venture Three LLC - On November
12, 1998 (the "Closing Date"), the Company entered into a venture arrangement
(the "Venture") with The Prudential Insurance Company of America ("Prudential").
On such date the Company contributed its interest in nine properties (the
"Properties") to the Venture. At the time of contribution, the Properties were
valued by the Company and Prudential based on arm's length negotiations at a
total gross value of $283,750,000 subject to mortgages in the principal amount
of $53,281,219. The following table details the values allocated to each of the
Properties and the mortgages to which certain Properties were subject:
<TABLE>
<CAPTION>
Allocated Value Mortgage Net Value
--------------- ----------- ------------
<S> <C> <C> <C>
First Union Tower $ 53,000,000 $ -- $ 53,000,000
Grandview II 23,000,000 -- 23,000,000
100 North Point Center East and
200 North Point Center East 46,050,000 24,581,670 21,468,330
Presbyterian Medical Plaza 8,600,000 -- 8,600,000
North Point MarketCenter 56,750,000 28,699,549 28,050,451
Mansell Crossing II 12,350,000 -- 12,350,000
Greenbrier MarketCenter 51,200,000 -- 51,200,000
Los Altos MarketCenter 32,800,000 -- 32,800,000
------------ ----------- ------------
$283,750,000 $53,281,219 $230,468,781
============ =========== ============
</TABLE>
Under the Venture arrangements, Prudential committed to contribute cash to
the Venture equal to the agreed upon net value of the Properties ($230,468,781)
at dates specified in the agreements, although Prudential could have accelerated
such funding had the Company so requested. The following table details the dates
on which the cash was contributed and the percentages (including both direct and
indirect interests) the Company and Prudential had, respectively, in the
economics of the Properties following each contribution:
<TABLE>
<CAPTION>
Total Cumulative Cousins Prudential
Date Cash Contribution Percentage Percentage
- ------------ ----------------- ---------- ----------
<S> <C> <C> <C>
Closing Date $ 40 million 84.64% 15.36%
12/30/98 $105 million 59.68% 40.32%
3/30/99 $155 million 40.48% 59.52%
6/29/99 $205 million 21.28% 78.72%
9/29/99 $230.469 million 11.50% 88.50%
</TABLE>
The structure of the Venture is as follows: CP Venture LLC, the parent
entity, owns a 99% interest in each of CP Venture Two LLC ("Property Activity
LLC") and CP Venture Three LLC ("Development Activity LLC"). The Company owns a
1% direct interest in Property Activity LLC and Prudential owns a 1% direct
interest in Development Activity LLC. The contributed properties are owned and
operated by Property Activity LLC. The Company has a 10.6061% interest in CP
Venture LLC's 99% interest in Property Activity LLC, which, combined with its 1%
direct interest, gives it a net interest of 11.5% in the economics of Property
Activity LLC. Prudential has the remaining net interest of 88.5% in the
economics of Property Activity LLC. Unless both parties agree otherwise,
Property Activity LLC may not sell the contributed properties until the end of
lock-out periods (generally three years for retail properties and four years for
office and medical office properties).
The cash contributed by Prudential was contributed to Development Activity
LLC. To the extent such funds are not yet needed for development activity,
Development Activity LLC can temporarily invest such funds; such potential
investments may include temporary loans to the Company. As of December 31, 1999,
the Venture had a note receivable from the Company of approximately $211
million. The Venture earns interest on the outstanding balance at the same rate
of the Company's credit facility. Prudential is entitled to 10.6061% of CP
Venture LLC's 99% share of the economics of Development Activity LLC, which
combined with its 1% direct interest, entitles it to an overall net interest of
11.5% in the economics of Development Activity LLC. Prudential first receives a
priority current return of 9.5% per annum on its share (11.5%) of the initial
capital ($230.469 million) ("Initial Capital") of Development Activity LLC.
Prudential also receives a liquidation preference whereby it is first entitled
to, subject to capital account limitations, sufficient proceeds to allow it to
achieve an overall 11.5% internal rate of return on its share of the Initial
Capital of Development Activity LLC. After these preferences to Prudential, the
Company has certain preferences, with the residual interests in the development
activity being shared according to the interests of the parties. All Prudential
priority current returns have been distributed to Prudential during the year.
The cumulative priority current return of approximately $15.2 million to the
Company has not been distributed as of December 31, 1999.
CP Venture LLC has appointed the Company to serve as Development Manager
and in such capacity to act for it in connection with its ownership of
Development Activity LLC. CP Venture LLC has also appointed Prudential to serve
as Property Manager and in such capacity to act for it in connection with its
ownership of Property Activity LLC. Prudential appointed the Company to serve as
property manager of the Properties for Property Activity LLC. The Company also
serves as Administrative Manager of CP Venture LLC. Property Activity LLC is
expected to continue to operate the contributed Properties. Development Activity
LLC is expected to develop commercial real estate projects over time, as
selected by the Development Manager. Development Activity LLC may also make
acquisitions, which are anticipated to be redevelopment or value-added
opportunities. Development Activity LLC is currently developing Mira Mesa
MarketCenter, a 453,000 square foot retail center in San Diego, California. The
parties anticipate that some of the projects currently under consideration by
the Company will be undertaken by Development Activity LLC, although the Company
has no obligation to make any particular opportunity available to Development
Activity LLC.
For financial reporting purposes, the Properties were deconsolidated and
contributed to Property Activity LLC. Both Property Activity LLC and CP Venture
LLC are being treated as unconsolidated joint ventures. Development Activity LLC
is treated as a consolidated entity in the Company's financial statements. The
Company has deferred the net gain on the contributed Properties and is
recognizing this net gain as Gain on Sale of Investment Properties, Net of
Applicable Income Tax Provision in the accompanying Consolidated Statements of
Income as capital distributions of cash are made from Development Activity LLC
to the Company or when the Properties initially contributed to Property Activity
LLC are liquidated by Property Activity LLC. The liquidation of the Properties
may be in the form of actual sales of the Properties or in the form of the
depreciation of the Properties which have an average remaining life of 30 years.
The total net deferred gain on the contributed Properties on the Closing Date
was approximately $96.8 million over the cost of the Properties. Including
depreciation recapture of $23.8 million, the total net deferred gain on the
Closing Date was approximately $120.6 million which has been reduced by
$4,123,000 and $536,000 in 1999 and 1998, respectively, and is included in
Deferred Gain in the accompanying Consolidated Balance Sheets.
285 Venture, Ltd. - In March 1999, the Company and a commingled trust fund
advised by J.P. Morgan Investment Management Inc. (the "J.P. Morgan Fund")
formed 285 Venture, Ltd., each as 50% partners, for the purpose of developing
1155 Perimeter Center West, an approximately 361,000 rentable square foot office
building complex in Atlanta, Georgia. The J.P. Morgan Fund contributed the
approximately 6 acre site upon which 1155 Perimeter Center West is being
developed. The land had an agreed-upon value of approximately $5.4 million which
the Company matched with a cash contribution.
Cousins Stone LP - Cousins Stone LP was formed on June 1, 1999 when CREC
II's subsidiaries acquired Faison's 50% interest in Faison-Stone. Cousins Stone
LP is a full-service real estate company headquartered in Dallas, Texas that
specializes in third party property management and leasing of Class "A" office
properties.
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 10,300 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 $929 per acre at January 1, 2000, escalating at
6% on January 1 of each succeeding year during the term of the option. During
1999, approximately 640 acres of the option related to the fee simple interest
was exercised. Approximately 466 acres were simultaneously sold for gross
profits of $2,458,000. Approximately 174 acres were acquired for development of
the Bentwater residential community. Approximately 1,750 lots will be developed
within Bentwater on an approximate total of 1,083 acres, the remainder of which
will be acquired as needed through exercises of the option related to the fee
simple interest.
During 1998, approximately 328 acres of the option related to the fee
simple interest was exercised. Approximately 83 acres were simultaneously sold
for gross profits of approximately $192,000. The Cobb County YMCA had a three
year option to purchase approximately 38 acres out of the total acres of the
options exercised in 1998, which they exercised in December 1999. The remaining
207 acres were deeded in early 1999 to a golf course developer who is developing
the golf course within Bentwater.
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 ("DIHC"). In October 1997, Cornerstone
Properties, Inc. purchased DIHC's interest in the partnership. 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.
Additional Information - The Company recognized $9,362,000, $7,426,000 and
$4,398,000 of development, construction, leasing, and management fees from
unconsolidated joint ventures in 1999, 1998 and 1997, respectively.
<PAGE>
6. STOCKHOLDERS' INVESTMENT
1999 Incentive Stock Plan:
In May 1999, the stockholders of the Company approved the adoption of the
1999 Incentive Stock Plan (the "1999 Plan"), which plan, upon adoption, covered
the issuance of 895,525 shares of common stock, all of which shares had been
available for use under the 1995 Stock Incentive Plan, the Stock Plan for
Outside Directors and the Stock Appreciation Right Plan (collectively the
"Predecessor Plans"). As of December 31, 1999, 183,335 of these shares remain
authorized to be awarded pursuant to the 1999 Plan, which allows awards of stock
options, restricted stock ("stock grants") or stock appreciation rights
("SARs"). Upon adoption of the 1999 Plan, no additional shares of common stock
can be issued under the Predecessor Plans.
Stock Options - At December 31, 1999, 2,979,349 of stock options awarded to
key employees and outside directors pursuant to both the 1999 Plan and the
Predecessor Plans were outstanding. All stock options have a term of 10 years.
Key employee stock options have a vesting period of 5 years under both the 1999
Plan and the Predecessor Plans. Outside director stock options are fully vested
on the grant date under the 1999 Plan, but have a vesting period of 1 year under
the Predecessor Plans.
SARs - The Company has issued SARs to certain employees under one of the
Predecessor Plans and the CREC Stock Appreciation Plan (the "SAR plans"). At
December 31, 1999, 86,650 SARs were outstanding, and the Company is authorized
to award an additional 1,110,354 SARs.
Included in the Consolidated Statements of Income under the heading
"stock appreciation right expense" are increases or decreases 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.
At December 31, 1999 and 1998, the total amount accrued for SARs was
$1,637,000 and $1,738,000, respectively.
<PAGE>
The following is a summary of stock option activity under the 1999 Plan,
the Predecessor Plans and the SAR plans (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Number of Weighted Average
Shares Exercise Price Per Share
--------------------------- ---------------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
1999 Plan and Predecessor Plans
- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 2,419 1,841 1,507 $ 24.56 $ 22.23 $ 17.95
Granted 697 678 580 $ 34.14 $ 30.31 $ 30.15
Exercised (83) (52) (231) $ 18.40 $ 17.12 $ 14.67
Forfeited (54) (48) (15) $ 25.15 $ 24.26 $ 19.01
---------------------------
Outstanding, end of year 2,979 2,419 1,841 $ 26.97 $ 24.56 $ 22.23
===========================
Shares exercisable at end of year 1,275 918 630 $ 21.74 $ 19.20 $ 17.04
===========================
SARs
- ----
Outstanding, beginning of year 98 121 184 $ 14.88 $ 15.05 $ 14.74
Exercised (10) (23) (62) $ 13.52 $ 15.81 $ 14.09
Forfeited (1) -- (1) $ 13.72 $ -- $ 16.88
---------------------------
Outstanding, end of year 87 98 121 $ 15.05 $ 14.88 $ 15.05
===========================
Shares exercisable at end of year 87 98 103 $ 15.05 $ 14.88 $ 14.74
===========================
</TABLE>
<PAGE>
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, 1999 (in
thousands, except per share amounts and option life):
<PAGE>
<TABLE>
<CAPTION>
For Outstanding Options/SARs
Exercise Weighted Weighted Average
Price Average Contractual Life
Range Outstanding Exercisable Exercise Price (in years)
----- ----------- ----------- -------------- ----------------
1999 Plan and Predecessor Plans
- -------------------------------
<S> <C> <C> <C> <C>
$13.25 to $16.30 446 446 $ 15.50 4.0
$16.31 to $23.00 627 432 $ 20.82 6.5
$23.01 to $30.375 1,229 393 $ 30.22 8.4
$30.376 to $35.00 677 4 $ 34.29 9.9
----------------------------------------------------
Total 2,979 1,275 $ 26.97 7.7
====================================================
SARs
- ----
$10.78 to $13.75 33 33 $ 12.74 1.7
$13.76 to $16.875 54 54 $ 16.47 3.0
----------------------------------------------------
Total 87 87 $ 15.05 2.5
====================================================
</TABLE>
<PAGE>
Stock Grants - As indicated above, the 1999 Plan provides for stock grants
in addition to awards of stock options and SARs. The stock grants may be subject
to specified performance and vesting requirements.
As of December 31, 1999, 125,190 stock grants have been awarded, of which
10,400 shares were awarded in lieu of 1995 cash bonuses, 100,000 shares were
awarded in 1995 subject to specified performance and vesting requirements, and
14,790 shares were awarded in 1999 subject to specified 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, 1999 and 1998, $2,618,000 and $1,914,000 was
accrued, respectively. The estimated cost of the 14,790 shares is being accrued
over the 3 year vesting period, and at December 31, 1999, $83,000 was accrued.
Outside directors can elect to receive any portion of their director fees
in stock, based on 95% of the market price. Outside directors elected to receive
3,526, 3,882 and 4,638 shares of stock in lieu of cash for director fees in
1999, 1998 and 1997, respectively.
SFAS No. 123 Pro Forma Disclosures:
The Company has elected to account for its stock-based compensation plans
under Accounting Principles Board 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."
For purposes of the pro forma disclosures required by SFAS No. 123, the
Company has computed the value of all stock and stock option awards granted
during 1999, 1998 and 1997 using the Black-Scholes option pricing model with the
following weighted-average assumptions and results:
1999 1998 1997
------- ------- -------
Assumptions
- -----------
Risk-free interest rate 6.36% 4.96% 5.93%
Assumed dividend yield 5.28% 5.36% 4.80%
Assumed lives of option
awards 8 years 8 years 8 years
Assumed volatility 0.201 0.191 0.202
Results
- -------
Weighted average
fair value of
options granted $ 5.49 $ 3.75 $ 5.12
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 stock-based compensation awards 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 the
value of its stock-based compensation awards.
If the Company had accounted for its stock-based compensation awards in
1999, 1998 and 1997 in accordance with SFAS No. 123, pro forma results would
have been as follows ($ in thousands, except per share amounts):
1999 1998 1997
---- ---- ----
Pro forma net income $102,577 $43,834 $36,769
Pro forma basic net
income per share $ 3.20 $ 1.39 $ 1.26
Pro forma diluted net
income per share $ 3.14 $ 1.37 $ 1.24
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.
Purchase of Treasury Stock:
In February 1999, the Board of Directors of the Company authorized the
Company to repurchase up to 1 million shares of common stock prior to January 1,
2001. During 1999, the Company repurchased 153,600 shares of common stock for
$4,990,000.
<TABLE>
<CAPTION>
Per Share Data:
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Weighted average shares 32,092 31,602 29,267
Dilutive potential common shares 595 438 426
------------------------
Adjusted weighted average shares 32,687 32,040 29,693
========================
Anti-dilutive options not included 677 1,207 565
========================
</TABLE>
Ownership Limitations:
In order to maintain Cousins' qualification as a REIT, Cousins' Articles of
Incorporation include certain restrictions on the ownership of more than 3.9% of
the Company's common stock.
<PAGE>
<TABLE>
<CAPTION>
Distribution of REIT Taxable Income:
The following is a reconciliation between dividends declared and dividends
applied in 1998 and 1997 and estimated to be applied in 1999 to meet REIT
distribution requirements ($ in thousands):
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Dividends declared $53,886 $47,064 $37,606
Additional dividends paid deduction
due to 5% discount on dividends
reinvested 570 549 257
That portion of dividends declared in
current year, and paid in current
year, which was applied to the prior
year distribution requirements (10,146) (7,644) (4,816)
That portion of dividends declared in
subsequent year, and paid in subsequent
year, which will apply to current year 6,238 10,146 7,644
---------------------------
Dividends applied to meet current year
REIT distribution requirements $50,548 $50,115 $40,691
===========================
</TABLE>
<PAGE>
Tax Status of Dividends:
Dividends applied to meet REIT distribution requirements were equal to
Cousins' taxable income (see Note 7). Since electing to qualify as a REIT in
1987, Cousins has had no accumulated undistributed taxable income.
In 1999, the Company designated as 20% capital gain dividends 1% of the
dividend paid December 22, 1999. In 1998, the Company designated as 20% capital
gain dividends 5% of the dividend paid December 22, 1998. In 1997, the Company
designated as 28% capital gain dividends 49% of the dividend paid February 10,
1997. All other dividends paid in 1999, 1998 and 1997 were taxable as ordinary
income dividends. In addition, in 1999, 1998 and 1997 an amount calculated as
1.54%, 1.74% and 1.91% of total dividends, respectively, was an "adjustment
attributed to depreciation of tangible property placed in service after 1986"
for alternative minimum tax purposes. This amount was passed through to
stockholders and must be used as an item of adjustment in determining each
stockholder's alternative minimum taxable income.
<PAGE>
<TABLE>
<CAPTION>
7. INCOME TAXES
In 1999, 1998 and 1997, because Cousins qualified as a REIT and distributed
all of its taxable income (see Note 6), it incurred no federal income tax
liability. The differences between taxable income as reported on Cousins' tax
return (estimated 1999 and actual 1998 and 1997) and Consolidated Net Income as
reported herein are as follows ($ in thousands):
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Consolidated net income $104,082 $45,299 $37,277
Consolidating adjustments (24,231) (2,759) (1,218)
Less CREC net (income) loss (6,485) 540 (482)
Less CREC II net income (937) -- --
--------------------------------
Cousins net income for financial reporting purposes 72,429 43,080 35,577
Adjustments arising from:
Sales of investment properties (56,315) (3,940) 1,606
Income from unconsolidated joint ventures (principally depreciation,
revenue recognition, and operational timing differences) 12,656 (453) 1,112
Rental income recognition 731 209 438
Interest income recognition 359 372 566
Property taxes deferred 1,060 1,096 --
Interest expense 11,447 4,934 1,401
Compensation expense under stock option and SAR plans (538) 19 (2,578)
Depreciation 6,650 4,913 4,809
Other 2,069 (115) (2,240)
--------------------------------
Cousins taxable income $ 50,548 $50,115 $40,691
================================
The consolidated provision (benefit) for income taxes is composed of the
following ($ in thousands):
1999 1998 1997
-------- ------- -------
CREC and CREC II and their wholly owned subsidiaries: Currently
payable:
Federal $ 2,778 $ 33 $ 46
State 282 -- --
--------------------------------
3,060 33 46
--------------------------------
Adjustments arising from:
Income from unconsolidated joint ventures (298) 356 304
Operating loss carryforward 1,405 574 751
Stock appreciation right expense 4 (132) 119
Other 340 (1,347) (922)
--------------------------------
1,451 (549) 252
--------------------------------
CREC and CREC II provision (benefit) for income taxes 4,511 (516) 298
Cousins (benefit) provision for state income taxes (40) 379 72
Less provision applicable to gain on sale of investment properties (2,029) (11) (1,897)
--------------------------------
Consolidated provision (benefit) applicable to income from operations $ 2,442 $ (148) $(1,527)
================================
</TABLE>
<TABLE>
<CAPTION>
The net income tax provision (benefit) differs from the amount computed by
applying the statutory federal income tax rate to CREC's and CREC II's income
(loss) before taxes as follows ($ in thousands):
1999 1998 1997
--------------- --------------- ---------------
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Federal income tax provision (benefit) $4,058 34% $(359) 34% $ 265 34%
State income tax provision (benefit), net of
federal income tax effect 477 4 (42) 4 31 4
Other (24) -- (115) 11 2 --
-------------------------------------------------------
CREC and CREC II provision (benefit) for income taxes 4,511 38% (516) 49% 298 38%
=== === ===
Cousins (benefit) provision for state income taxes (40) 379 72
Less provision applicable to gain on sale of
investment properties (2,029) (11) (1,897)
------ ----- -------
Consolidated provision (benefit) applicable to income
from operations $2,442 $(148) $(1,527)
====== ===== =======
</TABLE>
<PAGE>
The components of CREC and CREC II's net deferred tax liability are as follows
($ in thousands):
CREC and CREC II
-----------------
1999 1998
------- ------
Deferred tax assets $ 4,112 $5,638
Deferred tax liabilities (6,206) (5,819)
-----------------
Net deferred tax liability $(2,094) $ (181)
=================
The tax effect of significant temporary differences representing CREC and
CREC II's deferred tax assets and liabilities are as follows ($ in thousands):
CREC and CREC II
----------------
1999 1998
------- ------
Operating loss carryforward $ - $1,877
Income from unconsolidated
joint ventures (3,759) (4,058)
Stock appreciation right expense 949 952
Residential lot sales, net 2,198 1,674
Interest capitalization (1,510) (1,464)
Other 28 838
-----------------
$(2,094) $ (181)
=================
<PAGE>
8. PROPERTY TRANSACTIONS
Office Division
In January 1999, the Company purchased the land for and commenced
construction of 1900 Duke Street, an approximately 97,000 rentable square foot
office building in suburban Washington, D.C. In March 1999, 285 Venture, Ltd.
began construction of 1155 Perimeter Center West, an approximately 361,000
rentable square foot office building in Atlanta, Georgia (see Note 5). In May
1999, 333 John Carlyle, an approximately 153,000 rentable square foot office
building in suburban Washington, D.C., became partially operational for
financial reporting purposes. In June 1999, the Company acquired Inforum, a
987,000 rentable square foot office building in downtown Atlanta, Georgia, for
$71 million by completing a tax-deferred exchange with the proceeds ($69
million) from the sale of the Company's 50% interest in Haywood Mall. In
September 1999, AT&T Wireless Services Headquarters, an approximately 222,000
rentable square foot office building in suburban Los Angeles, California, became
partially operational for financial reporting purposes.
Retail Division
On February 1, 1999, CREC sold Abbotts Bridge Station, an approximately
83,000 square foot neighborhood retail center in suburban Atlanta, Georgia for
$15.7 million, which was approximately $5.2 million over the cost of the center.
Including depreciation recapture of approximately $.3 million and net of an
income tax provision of approximately $2.0 million, the net gain on the sale was
approximately $3.5 million.
In April 1999, The Shops at World Golf Village, an approximately 80,000
square foot retail center owned by Brad Cous (see Note 5), became partially
operational for financial reporting purposes. In June 1999, CP Venture Three LLC
purchased the land for and commenced construction of Mira Mesa MarketCenter, an
approximately 453,000 square foot retail center in San Diego, California (see
Note 5). In September 1999, The Avenue East Cobb, an approximately 225,000
square foot retail specialty center in suburban Atlanta, Georgia, became
partially operational for financial reporting purposes. Also in September 1999,
the Company purchased the land for and commenced construction of Salem Road
Station, an approximately 67,000 square foot neighborhood retail center in
suburban Atlanta, Georgia.
Medical Office Division
In March 1999, AtheroGenics, an approximately 50,000 rentable square foot
office building and laboratory in suburban Atlanta, Georgia, became fully
operational for financial reporting purposes. In April 1999, Meridian Mark
Plaza, an approximately 159,000 rentable square foot medical office building in
Atlanta, Georgia, became partially operational for financial reporting purposes.
In September 1999, Northside/Alpharetta II, an approximately 198,000 rentable
square foot medical office building in suburban Atlanta, Georgia, became
partially operational for financial reporting purposes.
Land Division
The Company is currently developing five residential communities in
suburban Atlanta, Georgia, including three in which development commenced in
1994, one in 1995 and one in 1996. These developments currently include land on
which approximately 1,632 lots are being or were developed, of which 292, 344
and 260 lots were sold in 1999, 1998 and 1997, respectively.
In November 1998, Temco Associates began development of the Bentwater
residential community, which will consist of approximately 1,750 lots on
approximately 1,083 acres (see Note 5). Temco Associates sold 106 lots in 1999.
9. CONSOLIDATED STATEMENTS OF CASH FLOWS -SUPPLEMENTAL INFORMATION
Interest paid (net of amounts capitalized) (see Note 4) and income taxes
paid (net of refunds) were as follows ($ in thousands):
1999 1998 1997
------ ------- -------
Interest paid $1,147 $11,258 $14,118
Income taxes paid,
net of $110 and $5
refunded in
1999 and 1998,
respectively $1 ,245 $ 110 $ 46
Significant non-cash financing and investing activities included the
following:
a. In 1999, 1998 and 1997, approximately $65,798,000, $29,939,000 and
$87,658,000, respectively, were transferred from Projects Under Construction to
Operating Properties.
b. In 1998 and 1997, approximately $1,229,000 and $1,553,000, respectively,
were transferred from Land Held for Investment or Future Development to
Operating Properties. In 1998 approximately $14,115,000 was transferred from
Land Held for Investment or Future Development to Projects Under Construction.
c. In 1999, approximately $611,000 was transferred from Projects Under
Construction to Land Held for Investment or Future Development.
d. In June 1998, in conjunction with the acquisition of
Northside/Alpharetta I, a mortgage note payable of approximately $10,610,000 was
assumed.
e. In November 1998, in conjunction with the formation of the Venture with
Prudential (see Note 5), the Company contributed nine properties, certain of
which were subject to mortgages, and received net cash of approximately
$125,469,000 and $103,025,000 in 1999 and 1998, respectively. The non-cash
activities related to the formation of the Venture are as follows:
1999 1998
----------- ------------
Decrease in:
Operating properties, net $ -- $137,746,000
Projects under construction -- 19,684,000
Notes and other receivables -- 3,771,000
Notes payable -- (53,281,000)
(Increase) decrease in:
Investment in unconsolidated
joint ventures 111,040,000 (137,544,000)
Minority interests 14,429,000 12,075,000
Deferred gain -- 120,574,000
---------------------------------
Net cash received in formation
of venture $125,469,000 $103,025,000
=================================
10. RENTAL PROPERTY REVENUES
The Company's leases typically contain escalation provisions and provisions
requiring tenants to pay a pro rata share of operating expenses. The leases
typically include renewal options and are classified and accounted for as
operating leases.
At December 31, 1999, future minimum rentals to be received by consolidated
entities under existing non-cancelable leases, excluding tenants' current pro
rata share of operating expenses, are as follows ($ in thousands):
Office and
Medical
Retail Office Total
-------- ---------- ----------
2000 $ 24,609 $ 63,176 $ 87,785
2001 29,037 64,472 93,509
2002 28,348 62,639 90,987
2003 28,343 61,207 89,550
2004 27,017 57,487 84,504
Subsequent to 2004 249,536 328,313 577,849
----------------------------------
$386,890 $637,294 $1,024,184
==================================
<PAGE>
11. REPORTABLE SEGMENTS
The Company has four reportable segments: Office Division, Retail Division,
Medical Office Division and Land Division. The Office Division, Retail Division
and Medical Office Division develop, lease and manage office buildings, retail
centers and medical office buildings, respectively. The Land Division owns
various tracts of strategically located land which are being held for future
development. The Land Division also develops single-family residential
communities which are parceled into lots and sold to various home builders.
The accounting policies of the segments are the same as those described in
Significant Accounting Policies (see Note 1). The management of the Company
evaluates performance of its reportable segments based on Funds From Operations
("FFO"). The Company calculates its FFO using the National Association of Real
Estate Investment Trusts 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. The Company's reportable segments are broken down based on
what type of product the division provides. The divisions are managed separately
because each product they provide has separate and distinct development issues,
leasing and/or sales strategies and management issues. The notations (100%) and
(JV) used in the following tables indicate wholly-owned and unconsolidated joint
ventures, respectively, and all amounts are in thousands.
<TABLE>
<CAPTION>
Office Retail Medical Land Unallocated
1999 Division Division Office Division Division and Other Total
- ---- -------- -------- --------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Rental property revenues (100%) $ 35,318 $ 19,836 $ 6,450 $ -- $ 233 $ 61,837
Rental property revenues (JV) 61,996 10,001 444 -- -- 72,441
Development income, management
fees and leasing and other fees (100%) 10,305 1,112 2,113 369 -- 13,899
Development income, management
fees and leasing and other fees (JV) 3,858 -- -- -- -- 3,858
Other income (100%) -- 4,077 -- 13,780 3,588 21,445
Other income (JV) -- -- -- 3,545 474 4,019
-----------------------------------------------------------------------------
Total revenues 111,477 35,026 9,007 17,694 4,295 177,499
-----------------------------------------------------------------------------
Rental property operating expenses (100%) 13,279 4,285 1,859 -- (23) 19,400
Rental property operating expenses (JV) 17,612 2,374 150 -- -- 20,136
Other expenses (100%) -- 3,366 -- 12,342 21,267 36,975
Other expenses (JV) 1,968 -- -- 2,274 15,695 19,937
-----------------------------------------------------------------------------
Total expenses 32,859 10,025 2,009 14,616 36,939 96,448
-----------------------------------------------------------------------------
Consolidated funds from operations 78,618 25,001 6,998 3,078 (32,644) 81,051
-----------------------------------------------------------------------------
Depreciation and amortization (100%) (10,154) (3,818) (1,638) -- (157) (15,767)
Depreciation and amortization (JV) (17,078) (2,997) (137) -- -- (20,212)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 643 -- -- -- -- 643
Effect of the recognition of rental
revenues on a straight-line basis (JV) (440) (61) -- -- -- (501)
Adjustment to reflect stock appreciation
right expense on an accrual basis -- -- -- -- 101 101
Gain on sale of investment properties, net
of applicable income tax provision -- -- -- -- 58,767 58,767
-----------------------------------------------------------------------------
Net income 51,589 18,125 5,223 3,078 26,067 104,082
-----------------------------------------------------------------------------
Provision for income taxes from operations -- -- -- -- 2,442 2,442
-----------------------------------------------------------------------------
Income from operations before income taxes $ 51,589 $ 18,125 $ 5,223 $ 3,078 $28,509 $106,524
=============================================================================
Total assets $557,473 $240,258 $78,857 $11,496 $44,848 $932,932
=============================================================================
Investment in unconsolidated joint ventures $126,843 $ 17,179 $ 1,111 $ 6,600 $ 4 $151,737
=============================================================================
Capital expenditures $210,828 $ 23,663 $97,535 $ 5,935 $ -- $337,961
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
Reconciliation to Consolidated Revenues
- ---------------------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Rental property revenues (100%) $61,837 $67,378 $61,812
Effect of the recognition of rental
revenues on a straight-line basis (100%) 643 348 440
Development income, management fees
and leasing and other fees 13,899 9,578 7,291
Residential lot and outparcel sales 17,857 16,732 12,847
Interest and other 3,588 4,275 3,609
---------------------------------
Total consolidated revenues $97,824 $98,311 $85,999
=================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Office Retail Medical Land Unallocated
1998 Division Division Office Division Division and Other Total
- ---- -------- -------- --------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Rental property revenues (100%) $ 33,011 $ 31,315 $ 2,579 $ -- $ 473 $ 67,378
Rental property revenues (JV) 49,129 10,168 149 -- -- 59,446
Development income, management
fees and leasing and other fees 7,867 692 1,019 -- -- 9,578
Other income (100%) -- -- -- 16,732 4,275 21,007
Other income (JV) -- -- -- 181 294 475
-----------------------------------------------------------------------------
Total revenues 90,007 42,175 3,747 16,913 5,042 157,884
-----------------------------------------------------------------------------
Rental property operating expenses (100%) 10,319 6,308 913 -- 162 17,702
Rental property operating expenses (JV) 14,111 2,933 52 -- -- 17,096
Other expenses (100%) -- -- -- 16,414 26,602 43,016
Other expenses (JV) -- -- -- 80 9,138 9,218
-----------------------------------------------------------------------------
Total expenses 24,430 9,241 965 16,494 35,902 87,032
-----------------------------------------------------------------------------
Consolidated funds from operations 65,577 32,934 2,782 419 (30,860) 70,852
-----------------------------------------------------------------------------
Depreciation and amortization (100%) (8,040) (5,742) (457) -- (430) (14,669)
Depreciation and amortization (JV) (12,000) (1,670) (47) -- -- (13,717)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 348 -- -- -- -- 348
Effect of the recognition of rental
revenues on a straight-line basis (JV) (1,578) 111 -- -- -- (1,467)
Adjustment to reflect stock appreciation
right expense on an accrual basis -- -- -- -- 8 8
Gain on sale of investment properties, net
of applicable income tax provision -- -- -- -- 3,944 3,944
-----------------------------------------------------------------------------
Net income 44,307 25,633 2,278 419 (27,338) 45,299
-----------------------------------------------------------------------------
Benefit for income taxes from operations -- -- -- -- (148) (148)
-----------------------------------------------------------------------------
Income from operations before income taxes $ 44,307 $ 25,633 $ 2,278 $ 419 $(27,486) $ 45,151
=============================================================================
Total assets $386,414 $255,207 $49,437 $ 9,912 $ 51,888 $752,858
=============================================================================
Investment in unconsolidated joint ventures $158,720 $ 99,661 $ 5,183 $ 1,082 $ 2 $264,648
=============================================================================
Capital expenditures $104,266 $ 55,161 $ 25,811 $ 9,015 $ -- $194,253
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
Office Retail Medical Land Unallocated
1997 Division Division Office Division Division and Other Total
- ---- -------- -------- --------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Rental property revenues (100%) $ 30,353 $ 30,514 $ 476 $ -- $ 469 $ 61,812
Rental property revenues (JV) 44,318 6,892 -- -- -- 51,210
Development income, management
fees and leasing and other fees 5,081 1,310 887 -- 13 7,291
Other income (100%) -- -- -- 12,847 3,609 16,456
Other income (JV) -- -- -- 52 217 269
-----------------------------------------------------------------------------
Total revenues 79,752 38,716 1,363 12,899 4,308 137,038
-----------------------------------------------------------------------------
Rental property operating expenses (100%) 9,286 5,766 145 -- 174 15,371
Rental property operating expenses (JV) 12,143 2,103 -- -- -- 14,246
Other expenses (100%) -- -- -- 12,523 29,352 41,875
Other expenses (JV) -- -- -- 41 9,959 10,000
-----------------------------------------------------------------------------
Total expenses 21,429 7,869 145 12,564 39,485 81,492
-----------------------------------------------------------------------------
Consolidated funds from operations 58,323 30,847 1,218 335 (35,177) 55,546
-----------------------------------------------------------------------------
Depreciation and amortization (100%) (7,465) (5,456) (104) -- (586) (13,611)
Depreciation and amortization (JV) (9,168) (1,159) -- -- (7) (10,334)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 440 -- -- -- -- 440
Effect of the recognition of rental
revenues on a straight-line basis (JV) (1,438) -- -- -- -- (1,438)
Adjustment to reflect stock appreciation
right expense on an accrual basis -- -- -- -- 702 702
Gain on sale of investment properties, net
of applicable income tax provision -- -- -- -- 5,972 5,972
-----------------------------------------------------------------------------
Net income 40,692 24,232 1,114 335 (29,096) 37,277
-----------------------------------------------------------------------------
Benefit for income taxes from operations -- -- -- -- (1,527) (1,527)
-----------------------------------------------------------------------------
Income from operations before income taxes $ 40,692 $ 24,232 $ 1,114 $ 335 $(30,623) $ 35,750
=============================================================================
Total assets $294,306 $212,876 $13,143 $16,407 $ 81,007 $617,739
=============================================================================
Investment in unconsolidated joint ventures $ 98,425 $ 20,784 $ -- $ 985 $ 4 $120,198
=============================================================================
Capital expenditures $ 34,395 $ 29,635 $ 7,516 $ 9,068 $ 14 $ 80,628
=============================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
- -------------------------------------------------------------------------------
($ in thousands, except per share amounts)
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Rental property revenues $ 62,480 $ 67,726 $ 62,252 $ 33,112 $ 19,348
Fees 13,899 9,578 7,291 6,019 7,884
Residential lot and outparcel sales 17,857 16,732 12,847 14,145 9,040
Interest and other 3,588 4,275 3,609 5,256 4,764
----------------------------------------------------------------------
Total revenues 97,824 98,311 85,999 58,532 41,036
----------------------------------------------------------------------
Income from unconsolidated joint ventures 19,637 18,423 15,461 17,204 14,113
----------------------------------------------------------------------
Rental property operating expenses 19,087 17,702 15,371 7,616 4,681
Depreciation and amortization 16,859 15,173 14,046 7,219 4,516
Stock appreciation right expense 108 330 204 2,154 1,298
Residential lot and outparcel cost of sales 14,897 15,514 11,917 13,676 8,407
Interest expense 600 11,558 14,126 6,546 687
General, administrative, and other expenses 18,153 15,250 16,018 12,016 10,333
----------------------------------------------------------------------
Total expenses 69,704 75,527 71,682 49,227 29,922
Provision (benefit) for income taxes from
operations 2,442 (148) (1,527) (1,703) 747
Gain on sale of investment properties,
net of applicable income tax provision 58,767 3,944 5,972 12,804 1,862
----------------------------------------------------------------------
Net income $104,082 $ 45,299 $ 37,277 $ 41,016 $ 26,342
======================================================================
Basic net income per share $ 3.24 $ 1.43 $ 1.27 $ 1.44 $ .94
======================================================================
Diluted net income per share $ 3.18 $ 1.41 $ 1.26 $ 1.43 $ .94
======================================================================
Cash dividends declared per share $ 1.68 $ 1.49 $ 1.29 $ 1.12 $ .99
======================================================================
Total assets $932,932 $752,858 $617,739 $556,644 $418,006
Notes payable 312,257 198,858 226,348 231,831 113,434
Stockholders' investment 437,722 379,865 370,674 299,184 277,678
Shares outstanding at year-end 32,175 31,887 31,472 28,920 28,223
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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<PAGE>
To 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, 1999 and 1998, and the related consolidated statements of income,
stockholders' investment and cash flows for each of the three years in the
period ended December 31, 1999. 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. as of December 31, 1999 and 1998
and for each of the three years in the period ended December 31, 1999 and
Haywood Mall as of December 31, 1998 and for each of the two years in the period
ended December 31, 1998 which statements combined reflect assets of 18% and 23%,
respectively, of the joint venture totals as of December 31, 1999 and 1998 and
revenues of 23%, 46% and 50% of the 1999, 1998 and 1997 joint venture 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, 1999 and 1998 and for each of the
three years in the period ended December 31, 1999, 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, 1999 and 1998 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 8, 2000
<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, 1999
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 $62,252,000 in 1997 to $67,726,000 in 1998 and decreased to
$62,480,000 in 1999. Rental property revenues increased approximately $2,602,000
in 1999 from the Company's office division. The June 1999 acquisition of
Inforum, a 987,000 rentable square foot office building located in downtown
Atlanta, Georgia, increased rental property revenues by approximately
$5,656,000. Two office buildings, 333 John Carlyle and AT&T Wireless Services
Headquarters, became partially operational for financial reporting purposes in
May 1999 and September 1999, respectively, which contributed approximately
$2,178,000 and $2,506,000, respectively, to the increase. 333 North Point Center
East became partially operational in June 1998 which contributed approximately
$1,468,000 to the 1999 increase. The June 1998 acquisition of Lakeshore Park
Plaza increased rental property revenues approximately $1,273,000 in 1999. The
increase in office rental property revenues was partially offset by decreases of
approximately $5,602,000, $2,474,000, $2,528,000 and $499,000, respectively, due
to the contribution of First Union Tower, 100 North Point Center East, 200 North
Point Center East and Grandview II to CP Venture Two LLC in November 1998, which
revenue is included in Income from Unconsolidated Joint Ventures from the date
of contribution (see Note 5).
Rental property revenues from the Company's retail division decreased
approximately $11,479,000 in 1999. The decrease was mainly due to the
contribution of North Point MarketCenter, Greenbrier MarketCenter, Los Altos
MarketCenter and Mansell Crossing Phase II to CP Venture Two LLC in November
1998 (see Note 5), which decreased rental property revenues by approximately
$4,904,000, $4,502,000, $2,990,000 and $1,190,000, respectively, in 1999. Rental
property revenues from these properties are included in Income from
Unconsolidated Joint Ventures from the date of contribution. The sale of Abbotts
Bridge Station in February 1999 also contributed approximately $1,305,000 to the
decrease in 1999. The decrease was partially offset by an increase of
approximately $1,681,000 in rental property revenues from Laguna Niguel
Promenade, which became partially operational for financial reporting purposes
in July 1998, and by approximately $1,431,000 from The Avenue East Cobb, which
became partially operational for financial reporting purposes in September 1999.
Rental property revenues from the Company's medical office division
increased approximately $3,871,000 in 1999. Meridian Mark Plaza became partially
operational for financial reporting purposes in April 1999 which contributed
approximately $2,441,000 to the increase. AtheroGenics and Northside/Alpharetta
II became partially operational for financial reporting purposes in March 1999
and September 1999, respectively, which contributed approximately $780,000 and
$636,000, respectively, to the increase. Northside/Alpharetta I, acquired in
June 1998, contributed approximately $1,152,000 to the increase in 1999. The
increase was partially offset by approximately $1,141,000 due to the
contribution of Presbyterian Medical Plaza at University to CP Venture Two LLC
in November 1998 (see Note 5).
Rental property revenues from the Company's office division increased
approximately $2,566,000 in 1998. The aforementioned June 1998 acquisition of
Lakeshore Park Plaza increased rental property revenues approximately $1,354,000
in 1998. Two office buildings, 333 North Point Center East and Grandview II,
became partially operational for financial reporting purposes in June 1998 and
August 1998, respectively, which contributed approximately $1,499,000 and
$499,000, respectively, to the increase. The increase from Grandview II would
have been higher by approximately $296,000, but this property was contributed to
CP Venture Two LLC in November 1998. Rental property revenues also increased
approximately $242,000 due to increased occupancy during 1998 at 101
Independence Center, which was 94% leased at December 31, 1997 and 98% leased at
December 31, 1998. Partially offsetting the increase in 1998 were decreases in
rental property revenues of approximately $935,000, $266,000 and $97,000 from
the contribution of the other office properties, First Union Tower, 100 North
Point Center East and 200 North Point Center East, respectively, to CP Venture
Two LLC in November 1998.
Rental property revenues from the Company's retail division increased
approximately $801,000 in 1998. Two retail centers, Abbotts Bridge Station and
Laguna Niguel Promenade, which became partially operational for financial
reporting purposes in January 1998 and July 1998, respectively, increased rental
property revenues in 1998 approximately $1,462,000 and $788,000, respectively.
Rental property revenues increased approximately $362,000 from Presidential
MarketCenter in 1998 due to the second expansion of the center in April 1997.
The increase in rental property revenues from the retail division was partially
offset (a decrease of approximately $990,000) by the aforementioned contribution
of four retail properties to CP Venture Two LLC in November 1998. The increase
in rental property revenues was also partially offset by decreases in rental
property revenues of approximately $644,000 and $449,000 from Rivermont Station
and Lovejoy Station, respectively, both of which were sold in July 1997.
Rental property revenues from the Company's medical office division
increased approximately $2,103,000 in 1998 due to the June 1998 acquisition of
Northside/Alpharetta I ($1,438,000) and to Presbyterian Medical Plaza at
University ($665,000), which became partially operational in August 1997. The
increase from Presbyterian Medical Plaza at University would have been higher by
$178,000, but the property was contributed to CP Venture Two LLC in November
1998.
Rental property operating expenses increased from $15,731,000 in 1997 to
$17,702,000 and $19,087,000 in 1998 and 1999, respectively. The increase in 1999
was due primarily to the aforementioned office buildings, medical office
buildings and retail centers becoming partially operational, as well as the
acquisition of Inforum in June 1999. The increase in 1999 was partially offset
by approximately $183,000 due to the February 1999 sale of Abbotts Bridge
Station. The increase in 1998 was primarily related to the aforementioned retail
centers and office buildings becoming operational, as well as the acquisitions
of Lakeshore Park Plaza and Northside/Alpharetta I. The increases in both 1998
and 1999 were partially offset by the contribution of nine properties to CP
Venture Two LLC in November 1998, which rental property operating expenses from
these nine properties was recognized by the Company through Income from
Unconsolidated Joint Ventures from the date of contribution (see Note 5).
Development Income. Development income decreased from $3,123,000 in 1997 to
$3,007,000 in 1998 and then increased in 1999 to $6,165,000. The increase in
development income in 1999 was partially due to development fees recognized from
three of the Company's ventures which are developing Gateway Village ($978,000),
1155 Perimeter Center West ($939,000) and the Bentwater residential development
($369,000). Additionally, development income increased approximately $908,000
from the Crawford Long Hospital campus redevelopment and joint venture medical
office building. The Company also recognized development income of approximately
$706,000 for a build-to-suit for Walgreens on an outparcel at Colonial Plaza
MarketCenter and approximately $323,000 from the third party development of Cox
Enterprises' corporate headquarters. This increase was partially offset by
approximately $605,000 which was recognized in 1998 from Brad Cous for the
development of The Shops at World Golf Village. Development fees from Cousins
LORET for the development of The Pinnacle also decreased by approximately
$310,000, which also partially offset the increase in 1999.
Management Fees. Management fees increased from $3,448,000 in 1997 to
$3,761,000 and $4,743,000 in 1998 and 1999, respectively. Management fees
increased in both 1998 and 1999 due to lease-up of certain properties at several
joint ventures from which management fees are received and from the formation of
CP Venture Two LLC (see Note 5).
Leasing and Other Fees. Leasing and other fees increased from $720,000 in
1997 to $2,810,000 and $2,991,000 in 1998 and 1999, respectively. Leasing fees
increased in 1999 by approximately $987,000 due to a lease signed by CREC for a
lease at the Inforum office building executed prior to the Company's acquisition
of the building. Approximately $616,000 of leasing fees were also recognized in
1999 from 285 Venture, Ltd. for leasing the 1155 Perimeter Center West office
building. Partially offsetting the increase in 1999 was a decrease of
approximately $976,000 from Wildwood Associates, primarily due to leasing fees
recognized in 1998 mainly related to the lease-up of the 4200 Wildwood Parkway
Building. Leasing fees also decreased approximately $367,000 from CSC due to a
higher level of leasing fees recognized in 1998 due to increased occupancy at
Bank of America Plaza.
The increase in 1998 was partially due to an increase of approximately
$1,065,000 of leasing fees related to Wildwood Office Park, primarily due to the
lease-up of the 4200 Wildwood Parkway Building. Leasing fees from Cousins LORET
increased $560,000 in 1998, primarily due to the lease-up of The Pinnacle, which
was under development and in the early stages of lease-up in 1998. Leasing fees
from CSC increased approximately $367,000 primarily due to increased occupancy
at Bank of America Plaza.
Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and
outparcel sales increased from $12,847,000 in 1997 to $16,732,000 and
$17,857,000 in 1998 and 1999, respectively. Residential lot sales decreased from
$15,932,000 in 1998 to $13,779,000 in 1999 due to a decrease in the number of
residential lots sold from 344 lots in 1998 to 292 lots in 1999. This decrease
was more than offset by an increase in outparcel sales by CREC and one of its
subsidiaries from $800,000 in 1998 to $4,078,000 in 1999, mainly due to one
outparcel sale in 1999 for $3,477,000.
Residential lot sales increased from $10,228,000 in 1997 to $15,932,000 in
1998 due to an increase in the number of residential lots sold from 260 lots in
1997 to 344 lots in 1998. The increase was partially offset by a decrease in
outparcel sales by CREC and one of its subsidiaries from $2,619,000 in 1997 to
$800,000 in 1998, resulting from the sale of five outparcels in 1997 and two
outparcels in 1998.
Residential lot and outparcel cost of sales decreased from $15,514,000 in
1998 to $14,897,000 in 1999 partially due to the aforementioned decrease in lot
sales and partially due to an increase in gross profit percentages used to
calculate the cost of sales for residential lot sales in certain of the
residential developments in 1999. The decrease was partially offset by the
increase in outparcel cost of sales mainly due to the aforementioned outparcel
sale, which increased cost of sales approximately $2,857,000.
Residential lot and outparcel cost of sales increased from $11,917,000 in
1997 to $15,514,000 in 1998. The increase in 1998 was due to the aforementioned
increase in the number of residential lot and outparcel sales. The increase in
1998 was also due to a $500,000 writedown of one of the residential developments
due to a change in lot sales price assumptions.
Interest and Other Income. Interest and other income increased from
$3,609,000 in 1997 to $4,275,000 in 1998 and then decreased to $3,588,000 in
1999. The increase in 1998 and decrease in 1999 were both due to interest income
of approximately $714,000 recognized in 1998 from a note receivable from Cousins
LORET. The Company lent funds beginning in June 1998 to Cousins LORET at a
slightly higher rate than its borrowing costs, until December 1998 when Cousins
LORET drew down funds from its $70 million non-recourse financing of The
Pinnacle.
Income From Unconsolidated Joint Ventures. (All amounts reflect the
Company's share of joint venture income.) Income from unconsolidated joint
ventures increased from $15,461,000 in 1997 to $18,423,000 and $19,637,000 in
1998 and 1999, respectively.
Income from CSC increased from $9,284,000 in 1997 to $10,021,000 and
$10,402,000 in 1998 and 1999, respectively. The increases in both 1998 and 1999
were due to the continued lease-up of Bank of America Plaza. The increase in
1998 was also due to the increase in rental revenue from a tenant whose increase
in rental rate did not require straight-lining under Statement of Financial
Accounting Standards No. 13.
Income from Wildwood Associates increased from $1,903,000 in 1997 to
$1,968,000 and $2,453,000 in 1998 and 1999, respectively. Income before
depreciation, amortization and interest expense from the 4200 Wildwood Parkway
Building increased approximately $1,571,000 in 1999 due to the building becoming
partially operational in June 1998. Income before depreciation, amortization and
interest expense from the 2300 and 2500 Windy Ridge Parkway Buildings favorably
impacted results in 1999 by approximately $189,000 and $175,000, respectively,
due to increased average economic occupancy of both of these properties in 1999.
Income before depreciation, amortization and interest expense from the 3200
Windy Hill Road Building favorably impacted results in 1999 by approximately
$415,000 primarily due to an adjustment to straight-line rental revenue in
accordance with SFAS No. 13 which caused a reduction in rental property
revenues.
The increase in 1999 was partially offset by an increase in interest
expense of approximately $732,000 due to the June 1998 non-recourse financing of
the 4200 Wildwood Parkway Building. Capitalized interest decreased (which
increases interest expense) approximately $731,000 due to interest expense no
longer being capitalized to the 4200 Wildwood Parkway Building effective October
1998. Also partially offsetting the increase in 1999 was an increase in
depreciation and amortization of approximately $569,000 due to the 4200 Wildwood
Parkway Building becoming operational in 1998.
Income before depreciation, amortization and interest expense from the 2300
and 2500 Windy Ridge Parkway Buildings favorably impacted results in 1998 by
approximately $215,000 and $184,000, respectively, due to increased average
economic occupancy of both properties in 1998. Income before depreciation,
amortization and interest expense from the aforementioned 4200 Wildwood Parkway
Building increased approximately $581,000 due to the building becoming partially
operational in June 1998. Also favorably impacting 1998 results was the October
1998 condemnation gain of approximately $110,000 related to the proceeds
received due to certain of Wildwood Associates' land being condemned for the
widening of a road.
Results in 1998 were negatively impacted by an increase in interest expense
of approximately $1,121,000. The increase was primarily due to the June 1998
non-recourse financing of the 4200 Wildwood Parkway Building. This financing
increased interest expense approximately $756,000 in 1998. Interest expense on
the 4100 and 4300 Wildwood Parkway Buildings increased approximately $230,000 as
the non-recourse financing of these buildings was completed in March 1997.
Capitalized interest decreased approximately $258,000 due to interest expense no
longer being capitalized to the 4200 Wildwood Parkway Building effective October
1998.
Income from Haywood Mall increased from $3,648,000 in 1997 to $4,614,000 in
1998 and then decreased to $2,433,000 in 1999. The decrease in 1999 was due to
the sale of the Company's 50% interest in the mall in June 1999. The increase in
1998 was due to the lease-up of the expansion of Haywood Mall.
Income from Cousins LORET increased from $68,000 in 1997 to $672,000 in
1998 and then decreased to $53,000 in 1999. The decrease in 1999 was partially
due to an increase in interest expense before capitalization of approximately
$2,123,000 due to the funding of the $70 million non-recourse financing of The
Pinnacle office building on December 30, 1998. Capitalized interest decreased
approximately $369,000 due to The Pinnacle becoming partially operational in
March 1999. Additionally, depreciation and amortization increased approximately
$1,572,000 mainly due to The Pinnacle becoming partially operational. Income
before depreciation, amortization and interest expense from The Pinnacle
partially offset the decrease by approximately $2,672,000, and the decrease was
also partially offset by an increase of approximately $281,000 from the lease-up
of Two Live Oak Center. Also partially offsetting the decrease was an increase
of $485,000 in interest income in 1999. The increase in 1998 was due to the Two
Live Oak Center office building becoming partially operational in October 1997.
Income from Temco Associates increased from $11,000 in 1997 to $97,000 and
$1,270,000 in 1998 and 1999, respectively. During 1999, approximately 466 acres
of the option related to the fee simple interest was exercised and
simultaneously sold. CREC's share of the gain on these sales was approximately
$1,229,000. During 1998, approximately 83 acres of the option related to the fee
simple interest was exercised and simultaneously sold. CREC's share of the gain
on these sales was approximately $96,000. There were no similar sales in 1997.
Income from Cousins Stone LP was $1,892,000 in 1999. This venture was
formed in June 1999 when the Company purchased Faison's 50% interest in
Faison-Stone (see Note 5).
General and Administrative Expenses. General and administrative expenses
increased from $12,717,000 in 1997 to $13,087,000 and $14,961,000 in 1998 and
1999, respectively. General and administrative expenses increased approximately
$2,070,000 and $2,825,000 in 1998 and 1999 due to the Company's continued
expansion. The increases were partially offset by increases in costs capitalized
to projects under development of approximately $1,700,000 and $951,000 in 1998
and 1999, respectively, as the level of projects under development increased in
both years from 1997.
Depreciation and Amortization. Depreciation and amortization increased from
$14,046,000 in 1997 to $15,173,000 and $16,859,000 in 1998 and 1999,
respectively. The increases in both 1998 and 1999 were mainly due to the
aforementioned office buildings, medical office buildings and retail centers
becoming operational. The increase in 1999 was also due to the acquisition of
Inforum in June 1999. The increases in both 1998 and 1999 were also due to the
June 1998 acquisitions of Lakeshore Park Plaza and Northside/Alpharetta I. The
increases in both 1998 and 1999 were partially offset by decreases in
depreciation and amortization due to the contribution of nine properties in
November 1998 to CP Venture Two LLC, which expenses are included in Income from
Unconsolidated Joint Ventures from the date of contribution (see Note 5).
Stock Appreciation Right Expense. Stock appreciation right expense
increased from $204,000 in 1997 to $330,000 in 1998 and then decreased to
$108,000 in 1999. This non-cash item is primarily related to the number of stock
appreciation rights outstanding and the Company's stock price. A reduction in
the number of stock appreciation rights outstanding due to exercises contributed
to the decrease in the stock appreciation right expense in 1999. The Company's
stock price was $33.9375, $32.25 and $29.3125 per share at December 31, 1999,
1998 and 1997, respectively.
Interest Expense. Interest expense decreased from $14,126,000 in 1997 to
$11,558,000 and $600,000 in 1998 and 1999, respectively. Interest expense before
capitalization increased from $17,293,000 in 1997 to $19,028,000 in 1998 and
then decreased to $16,755,000 in 1999. Interest expense before capitalization
decreased in 1999 mainly due to the contributions of North Point MarketCenter
and 100 and 200 North Point Center East, subject to the related mortgage notes
payable, to CP Venture Two LLC in November 1998 (see Note 5). The decrease was
partially offset by increased interest expense from higher amounts outstanding
on the Company's credit facility in 1999. Additionally, the Company assumed the
mortgage note payable of Northside/Alpharetta I when it acquired the property in
June 1998 and completed the financing of Lakeshore Park Plaza in October 1998,
both of which increased interest expense before capitalization in 1998 and 1999.
The amount of interest capitalization (a reduction of interest expense), which
changes parallel to the amount of projects under development, increased from
$3,167,000 in 1997 to $7,470,000 and $16,155,000 in 1998 and 1999, respectively,
which more than offset the increases in interest expense and resulted in net
decreases in interest expense in 1998 and 1999.
Property Taxes on Undeveloped Land. Property taxes on undeveloped land
increased from $606,000 in 1997 to $900,000 in 1998 and then decreased to
$811,000 in 1999. The increase in 1998 from 1997 was primarily due to favorable
settlements of property taxes in 1997 on the Company's land related to 1994,
1995 and 1996 tax years, which had been under appeal.
Other Expenses. Other expenses decreased from $2,695,000 in 1997 to
$1,263,000 in 1998 and then increased to $2,381,000 in 1999. The increase in
1999 was mainly due to an increase of approximately $1,912,000 in Prudential's
minority interest in CP Venture Three LLC (see Note 5). The increase was
partially offset by a decrease in predevelopment expense of approximately
$869,000 in 1999. The decrease in 1998 was due to a decrease in predevelopment
expense.
Provision (Benefit) for Income Taxes From Operations. The benefit for
income taxes from operations decreased from a benefit of $1,527,000 in 1997 to a
benefit of $148,000 in 1998. The benefit for income taxes from operations
increased to a provision for income taxes from operations of $2,442,000 in 1999.
The increase from a benefit in 1998 to a provision in 1999 was due to an
increase of approximately $6,183,000 from a loss before income taxes and gain on
sale of investment properties to income before income taxes and gain on sale of
investment properties of $5,118,000 in 1999 from CREC and its subsidiaries. Such
increase was related to increases in residential lot sales, net of cost of
sales, leasing fees, and income from Temco Associates. A decrease in general and
administrative expenses and a reduction in predevelopment expense also
contributed to the increase in income before income taxes and gain on sale of
investment properties. Additionally, CREC II and its subsidiaries had a
provision for income taxes from operations of approximately $574,000 in 1999
related to the income recognized from Cousins Stone LP which was formed in June
1999.
The decrease in the benefit for income taxes from operations in 1998 was
due to a decrease of approximately $3,148,000 in CREC and its subsidiaries' loss
before income taxes and gain on sale of investment properties, which decrease
was due to the increases in leasing fees and residential lot sales and the
decrease in predevelopment expense.
Gain on Sale of Investment Properties. Gain on sale of investment
properties, net of applicable income tax provision was $5,972,000, $3,944,000
and $58,767,000 in 1997, 1998 and 1999, respectively. The 1999 gain mainly
consists of the January 1999 sale of 3 acres of McMurray land ($.1 million), the
February 1999 sale of Abbotts Bridge Station ($3.5 million), the March 1999 sale
of Kennesaw Crossings shopping center ($.9 million), the May 1999 sale of 2
acres at Hidden Hills ($.1 million), the June 1999 sale of the Company's 50%
interest in Haywood Mall ($50.1 million) (see Note 5), and the amortization of
net deferred gain from the Prudential transaction ($4.1 million) (see Note 5).
The 1998 gain included the March 1998 sale of 6 acres of North Point land
($.6 million), the April 1998 sale of 23 acres of North Point land ($1.0
million), the October 1998 condemnation of land at Wildwood Office Park ($1.5
million), the December 1998 sale of 5 acres of McMurray land ($.2 million) and
the amortization of the net deferred gain from the Prudential transaction ($.5
million).
Liquidity and Capital Resources:
Financial Condition. The Company's adjusted debt (including its pro rata
share of unconsolidated joint venture debt) was 32% of total market
capitalization at December 31, 1999. Adjusted debt is defined as the Company's
debt and the Company's pro rata share of unconsolidated joint venture debt as
disclosed in Note 4, excluding the Charlotte Gateway Village, LLC debt as it is
fully exculpated debt which is supported by a long-term lease to Bank of America
Corporation. As discussed in Note 4, in August 1999, the Company renewed and
modified its $150 million credit facility which matures on April 27, 2002. On
December 31, 1999, the credit facility was temporarily increased to $225
million, which increase expires April 27, 2000. The Company had $130.7 million
drawn on this credit facility as of December 31, 1999.
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 credit
facilities (increasing those credit facilities as required), long-term
non-recourse financing on the Company's unleveraged projects, joint ventures,
project sales 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 the offering from time to time of up to $200
million of common stock, warrants to purchase common stock and debt securities,
of which approximately $132 million remains available at December 31, 1999.
Cash Flows. Net cash provided by operating activities increased from $58.0
million in 1997 to $90.1 million and $91.8 million in 1998 and 1999,
respectively. The increases resulted partially from an improvement in income
before gain on sale of investment properties of $10.1 million and $4.0 million
in 1998 and 1999, respectively. Additionally, depreciation and amortization
increased $1.1 million and $1.5 million in 1998 and 1999, respectively.
Residential lot and outparcel cost of sales, which contributed approximately
$3.4 million of the increase in 1998, partially offset the increase in 1999 by
decreasing approximately $1.0 million. Operating distributions from
unconsolidated joint ventures also favorably impacted 1998 and 1999 with
increases of $1.9 million and $12.4 million, respectively. The increase in 1999
was due to approximately $8.3 million of distributions from CP Venture LLC.
Additionally, distributions from CSC and Cousins LORET increased $1.9 million
and $6.5 million, respectively, in 1999. These increases were partially offset
by a decrease of distributions from Wildwood Associates of $4 million in 1999.
Changes in other operating assets and liabilities, which increased net cash
provided by operating activities in 1998 by approximately $17.9 million,
decreased approximately $13.2 million in 1999, which decrease partially offset
the increase in net cash provided by operating activities in 1999. Increases in
income from unconsolidated joint ventures of approximately $3.0 million and $1.2
million partially offset the increases in net cash provided by operating
activities in 1998 and 1999, respectively.
Net cash used in investing activities increased from $55.6 million in 1997
to $100.5 million in 1998 and $158.9 million in 1999. Property acquisition and
development expenditures increased approximately $143.7 million due to a higher
level of projects under development in 1999. Investment in unconsolidated joint
ventures increased approximately $1.5 million which further increased net cash
used in investing activities. Non-operating distributions from unconsolidated
joint ventures, which reduce net cash used in investing activities, decreased
approximately $19.0 million. The decrease in non-operating distributions from
unconsolidated joint ventures was mainly due to a decrease of distributions of
approximately $21.6 million from Wildwood Associates. The decrease was partially
offset by an increase of approximately $1.6 million of non-operating
distributions from Cousins LORET. Other assets, net, decreased $4.1 million
which further contributed to the increase in net cash used in investing
activities. Net cash provided by sales activities increased $79.5 million mainly
due to the June 1999 sale of the Company's 50% interest in Haywood Mall and to
the February 1999 sale of Abbotts Bridge Station, which partially offset the
increase in net cash used in investing activities. The increase in net cash
provided by sales activities was partially offset by deferred income recognized,
which increased approximately $3.6 million, as the net deferred gain from the
Prudential transaction was amortized into income for the full year of 1999 (see
Note 5). Partially offsetting the increase in net cash used in investing
activities was an increase in net cash received of $22.4 million from the
formation of the Prudential venture as Prudential contributed its remaining
amounts owed (see Notes 5 and 9). Net investment in notes receivable increased
$7.9 million which also partially offset net cash used in investing activities.
The increase in property acquisition and development expenditures of $113.6
million in 1998 was due to the Company having a higher level of projects under
development in 1998. Investment in unconsolidated joint ventures increased by
$25.8 million in 1998 due to the formation of several new ventures, which
contributed to the increase in net cash used in investing activities. Net cash
provided by sales activities decreased $18.3 million in 1998. The 1997 net cash
provided by sales activities was due to the 1997 sales of Rivermont Station and
Lovejoy Station. There were no such significant sales in 1998. Partially
offsetting the 1998 increase in net cash used in investing activities was the
net cash received of $103 million in the formation of the Prudential ventures.
Additionally, non-operating distributions from unconsolidated joint ventures
increased $7.9 million in 1998, primarily due to Wildwood Associates
distributing $22.6 million to each partner from the proceeds of its $44 million
financing of the 4200 Wildwood Parkway Building. In 1997, Wildwood Associates
made non-operating distributions to the partners from the proceeds of the 3200
Wildwood Plaza and the 4100 and 4300 Wildwood Parkway Buildings financings,
which totaled $12.5 million. An increase in the change in other assets of $2.6
million in 1998 also partially offset the increase in the net cash used in
investing activities.
Net cash provided by financing activities decreased from $28.7 million in
1997 to net cash used in financing activities of $20.9 million in 1998, and then
increased to net cash provided by financing activities of $67.2 million in 1999.
The increase in 1999 was mainly due to an increase of $108.4 million in net
amounts drawn on the Company's credit facility. Common stock sold, net of
expenses, increased $1.7 million which further contributed to the change to net
cash provided by financing activities. Partially offsetting the increase in net
cash provided by financing activities was an increase in dividends paid of $6.8
million. Dividends paid per share increased from $1.49 in 1998 to $1.68 in 1999
and the number of shares outstanding increased. The $5.0 million purchase of
treasury stock in 1999 also partially offset the increase in net cash provided
by financing activities. The Company completed one financing in 1998 as compared
to none in 1999. Therefore, proceeds from other notes payable decreased $10.9
million which partially offset the increase in net cash provided by financing
activities.
The decrease in net cash used in financing activities in 1998 was mainly
due to common stock sold, net of expenses, decreasing by $60.8 million in 1998.
The Company sold 2,150,000 shares of stock which raised net proceeds of
approximately $64.1 million in 1997. Further contributing to the decrease was
$14.1 million less proceeds from other notes payable due to the Company
completing one financing for $10.9 million in 1998, as compared to one financing
for $25 million in 1997. Dividends paid increased $9.5 million due to an
increase in dividends paid per share from $1.29 in 1997 to $1.49 in 1998 and an
increase in the number of shares outstanding. Partially offsetting this increase
was an increase in the net amount drawn on the Company's credit facility of
approximately $34.9 million.
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.
Year 2000
The "Year 2000 issue" is the result of certain computer systems, software,
electronic equipment or embedded chips (collectively known as "computer
systems") being written using two digits rather than four to define the
applicable year. Therefore, certain computer systems may not distinguish between
a year that begins with a "20" rather than a "19." This could have resulted in
system failures which could have disrupted operations. No significant delays in
processing or interruption of business have occurred to date due to the start of
the Year 2000.
The Company assessed the impact of the Year 2000 issue on its business and
operations and attempted to identify the areas which rely on computer systems
and could have been potentially impacted, which mainly included the systems
utilized in the operations of its real estate properties and in the processing
of its accounting data.
The Company completed an inventory of the material computer systems being
utilized in its existing operating real estate properties which could have been
adversely affected by the Year 2000 issue. Such systems included, but not
limited to, building control systems, heating and air conditioning controls,
elevator controls, fire alarms and security devices. Certain of these systems
were replaced, upgraded or modified as deemed necessary, the cost of which was
not material.
The Company upgraded its accounting software to a version that its software
vendor has represented to be Year 2000 compliant, as they define it. The
hardware and operating system used to run the accounting software has been
represented to be Year 2000 compliant. The Company has also assessed its
non-financial computer systems, and replaced, upgraded or modified such systems
as needed. The cost of the upgrades to the accounting software and non-financial
computer systems was not material.
The Company completed its survey of all material third party vendors to
determine their Year 2000 compliance status and has received certificates, where
possible, as to their compliancy. No estimates can be made as to any potential
adverse impact resulting from the failure of any third party vendor or service
provider to be Year 2000 compliant. To the extent the Year 2000 issue has a
material adverse effect on the business operations or financial condition of
third parties with which the Company has material relationships, such as
vendors, suppliers, tenants and financial institutions, the Year 2000 issue
could also have a material adverse effect on the Company's business, results of
operations and financial condition. To date, there have been no significant
issues or interruptions of business and, based upon an assessment of the current
compliance by third parties, there appears to be no material business risk posed
by any such non-compliance as a result of a vendor not being Year 2000
compliant.
To date, the cost to analyze and prepare for the Year 2000 issue has not
been material. The Company does not expect to incur any additional costs to
address the Year 2000 issue. There can be no assurance that the Company will be
able to identify and correct all aspects of the effect of the Year 2000 issue on
the Company. However, the Company does not currently expect the Year 2000 issue
will have a material impact on the Company's business, operations or financial
condition.
Quantitative and Qualitative Disclosure about Market Risk
The Company has one mortgage note payable which has a floating interest
rate. The Company mitigates this exposure through the use of an interest rate
swap which effectively fixes the interest rate on this debt. This mortgage note
payable is included in the fixed rate category for purposes of the following
table. The variable rate debt is from the Company's credit facility, which is
drawn on as needed and was renewed and modified on August 27, 1999 (see Note 4),
a construction loan at an unconsolidated joint venture, Charlotte Gateway
Village, LLC, and from a variable rate municipal bond indenture, which is
included with "other miscellaneous notes" in the debt outstanding table in Note
4. Since these rates are floating, the Company is exposed to the impact of
interest rate changes. None of the Company's notes receivable have variable
interest rates. The Company does not enter into contracts for trading purposes
and does not use leveraged instruments. The following table summarizes the
Company's market risk associated with notes payable and notes receivable as of
December 31, 1999. The information presented below should be read in conjunction
with Notes 3 and 4. The table presents principal cash flows and related weighted
average interest rates by expected year of maturity. Variable rate represents
the floating interest rate calculated at December 31, 1999. For the interest
rate swap, the table presents the notional amount and related interest rate by
year of maturity.
<PAGE>
<TABLE>
<CAPTION>
Expected Year of Maturity
---------------------------------------------------------------------------------
Fair
2000 2001 2002 2003 2004 Thereafter Total Value
---------------------------------------------------------------------------------
($ in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Notes Payable (including
share of unconsolidated
joint ventures):
Fixed Rate $28,833 $16,667 $ 9,692 $10,015 $10,885 $295,574 $371,666 $357,256
Average Interest Rate 6.76% 7.65% 7.35% 7.34% 7.34% 7.48% 7.42% --
Variable Rate $ 175 $ -- $159,155 $ -- $ -- $ -- $159,330 $159,330
Average Interest Rate 5.52% -- 6.71% -- -- -- 6.71% --
Interest Rate Swaps:
Notional Amount $19,275 $ -- $ -- $ -- $ -- $ -- $ 19,275 $ 86
Average Interest Rate 6.53% -- -- -- -- -- 6.53% --
Notes Receivable:
Fixed Rate $ 2,630 $ 1,442 $ 1,173 $23,039 $ -- $ -- $ 28,284 $ 35,150
Average Interest Rate 7.88% 9.41% 9.00% 10.00% -- -- 9.73% --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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:
1999 Quarters 1998 Quarters
-------------------------------------------- ---------------------------------------------
First Second Third Fourth First Second Third Fourth
-------- --------- ------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High $32-5/16 $36-1/2 $38-1/4 $35-1/2 $30-7/8 $31-3/4 $32-3/16 $32-9/16
Low 28-7/8 28-15/16 33-1/2 30-5/8 28-3/16 28-11/16 26 24-5/16
Dividends Declared . 41 .41 .41 .45 .36 .36 .36 .41
Payment Date 2/23/99 5/28/99 8/26/99 12/22/99 2/23/98 5/29/98 8/26/98 12/22/98
The Company's stock trades on the New York Stock Exchange (ticker symbol
CUZ). At December 31, 1999, there were 1,564 stockholders of record.
</TABLE>
<PAGE>
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
consolidated non-REIT entities that pay 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 1999, 1998 and 1997,
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 (see Note 6 of "Notes to Consolidated Financial Statements"). For
individuals, the capital gain portion of the dividends is subtracted from total
dividends on Schedule B of IRS Form 1040 and reported separately on Schedule D
of IRS Form 1040 as a capital gain.
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 6 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>
<TABLE>
<CAPTION>
Cousins Properties Incorporated and Consolidated Entities
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
Selected quarterly information for the two years ended December 31, 1999 ($ in
thousands, except per share amounts):
Quarters
----------------------------------------
First Second Third Fourth
------- ------- ------- -------
1999:
<S> <C> <C> <C> <C>
Revenues $18,684 $23,087 $26,437 $29,616
Income from unconsolidated joint ventures 4,107 5,392 4,647 5,491
Gain on sale of investment properties, net of applicable income
tax provision 5,508 51,198 1,029 1,032
Net income 15,002 63,566 12,887 12,627
Basic net income per share .47 1.98 .40 .39
Diluted net income per share .46 1.94 .39 .39
1998:
Revenues $23,854 $ 24,214 $ 27,663 $ 22,580
Income from unconsolidated joint ventures 4,581 4,547 4,406 4,889
Gain on sale of investment properties, net of applicable income
tax provision 771 886 -- 2,287
Net income 11,294 11,777 10,737 11,491
Basic net income per share .36 .37 .34 .36
Diluted net income per share .35 .37 .33 .36
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
COUNSEL
King & Spalding
Troutman Sanders
TRANSFER AGENT AND REGISTRAR
First Union National Bank
Corporate Trust Operations
Shareholder Services Administration
1525 West W.T. Harris Blvd., Building 3C3
Charlotte, North Carolina 28262-1153
Telephone Number: 1-800-829-8432
FAX Number: 1-704-590-7618
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. These items are also posted on the
Company's website at www.cousinsproperties.com.
INVESTOR RELATIONS CONTACT
Carl Y. Dickson, Director of Investor Relations
<PAGE>
Cousins Properties Incorporated and Consolidated Entities
DIRECTORS
T. G. Cousins
Chairman of the Board and
Chief Executive Officer
Richard W. Courts, II
Chairman
Atlantic Investment Company
Lillian C. Giornelli
Chairman and Chief Executive Officer
The Cousins Foundation, Inc.
Terence C. Golden
President, Chief Executive Officer
and Director
Host Marriott Corporation
Boone A. Knox
Chairman
Regions Bank of Central Georgia
William Porter Payne
Vice Chairman and Director
PTEK Holdings, Inc.
Richard E. Salomon
Managing Director
Spears, Benzak, Salomon & Farrell
- ---------------------------------
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
Kelly H. Barrett
Senior Vice President - Finance
George J. Berry
Senior Vice President
Tom G. Charlesworth
Senior Vice President,
General Counsel and Secretary
Dan G. Arnold
Vice President - Director
Information Systems
Patricia A. Isaacs
Vice President and Controller
Kristin R. Myers
Vice President and Director of Tax
Mark A. Russell
Vice President and
Senior Financial Analyst
Lisa R. Simmons
Director of Corporate
Communications
OFFICE DIVISION
Craig B. Jones
President
John L. Murphy
Senior Vice President
W. Henry Atkins
Senior Vice President - Charlotte
Jack A. LaHue
Senior Vice President - Asset
Management
Dara J. Nicholson
Senior Vice President - Office Property
Management
C. David Atkins
Vice President - Charlotte
Alexander H. Chambers
Vice President
John S. Durham
Vice President - Leasing
Walter L. Fish
Vice President - Leasing
Ronald C. Sturgis
Vice President - Office Property
Management
MEDICAL OFFICE DIVISION
(Cousins/Richmond)
Lea Richmond III
President
John S. McColl
Senior Vice President
S. Rox Green
Vice President - Asset Management
Thomas H. Kirbo
Vice President - Leasing
Michael J. Lant
Vice President - Development
RETAIL DIVISION
Joel T. Murphy
President
John D. Hopkins
Senior Vice President - Western Region
Craig N. Kaser
Senior Vice President - Leasing
Thomas D. Lenny
Senior Vice President - Western Region
Robert A. Manarino
Senior Vice President - Western Region
Robert S. Wordes
Senior Vice President - Asset
Management
William I. Bassett
Vice President - Development
Michael I. Cohn
Vice President - Development
Keven D. Doherty
Vice President - Development
Western Region
Terry M. Hampel
Vice President - Asset
Management
Michael J. Quinley
Vice President - Development
DEVELOPMENT AND
CONSTRUCTION DIVISION
W. James Overton
Senior Vice President - Development
James D. Dean
Vice President - Development
James F. George
Vice President - Development
John N. Goff
Vice President - Development
Lloyd P. Thompson, Jr.
Vice President - Development
LAND DIVISION*
(Cousins Neighborhoods)
Bruce E. Smith
President
Craig A. Lacey
Vice President - Development
COUSINS STONE LP**
R. Dary Stone
President
* Officers of Cousins Real Estate Corporation only.
** Officer of CREC II Inc. subsidiary only.
EXHIBIT 21
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
SUBSIDIARIES OF THE REGISTRANT
DECEMBER 31, 1999
At December 31, 1999, the Registrant had the following 100% owned
subsidiary:
Cousins, Inc.; subsidiary includes Cousins/Daniel, LLC*
At December 31, 1999, the financial statements of the following
entities were consolidated with those of the Registrant in the Consolidated
Financial Statements incorporated herein:
CommonWealth/Cousins I, LLC (50.10% owned by Registrant and
49.90% owned by CommonWealth Pacific, LLC)
Cousins/Myers Second Street Partners, L.L.C.*
Cousins/Myers II, LLC*
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)
CP Venture Three LLC (88.50% owned by Registrant and 11.50%
owned by Prudential)
CREC II Inc. and subsidiaries (100% of non-voting commo
stock and 100% of preferred stock owned by Registrant);
subsidiaries include Cousins Stone Texas, Inc. and CS Texas,
Inc.
Perimeter Expo Associates, L.P. (90% owned by Registrant and 10%
owned by Cousins MarketCenters, Inc.)
Rocky Creek Properties, Inc. & MT&E - Macon-Harris (75% owned b
Registrant)
* Minority member receives a portion of residual cash flow and capital proceeds
after a preferred return to Registrant.
At December 31, 1999, the Registrant and its consolidated entities had
the following significant unconsolidated subsidiaries which were not 100% owned:
285 Venture, Ltd. (50% owned by Registrant) Brad Cous Golf
Venture, Ltd. (50% owned by Registrant)
CC-JM II Associates (50% owned by Registrant)
Charlotte Gateway Village, LLC (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)
Cousins LORET Venture, L.L.C. (50% owned by Registrant)
Cousins Stone LP (50% owned by CREC II Inc.'s subsidiaries)
CP Venture LLC (50% owned by Registrant)
CP Venture Two LLC (11.50% owned by Registrant)
Crawford Long-CPI, LLC (50% owned by Registrant)
CSC Associates, L.P. (50% owned by Registrant)
Green Valley Associates II (50% owned by Registrant) Hickory
Hollow Associates (50% owned by Cousins Real Estate
Corporation)
MC Dusseldorf Holding B.V. (10% voting interest owned by
Registrant and 40% voting interest owned by Cousins
Real Estate Corporation)
Ten Peachtree Place Associates (50% owned by Registrant)
Temco Associates (50% owned by Cousins Real Estate Corporation)
Wildwood Associates (50% owned by Registrant)
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation of our reports included in and 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, 333-48841, 333-42007,
333-12031, 333-67887 and 333-92089.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 28, 2000
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, in 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, 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, in the
Registration Statement (Form S-8 No. 333-67887) and related Prospectus
pertaining to the 1995 Stock Incentive Plan of Cousins Properties Incorporated,
in the Registration Statement (Form S-8 No. 333-42007) and related Prospectus
pertaining to the 1995 Stock Incentive Plan of Cousins Properties Incorporated,
in the Registration Statement (Form S-3 No. 333-48841) and related Prospectus
pertaining to the Dividend Reinvestment Plan of Cousins Properties Incorporated,
and in the Registration Statement (Form S-8 No. 333-92089) and related
Prospectus pertaining to the 1999 Incentive Stock Plan of Cousins Properties
Incorporated of our report dated February 4, 2000 with respect to the financial
statements and schedule of CSC Associates, L.P., included in the Form 10-K of
Cousins Properties Incorporated for the year ended December 31, 1999.
ERNST & YOUNG LLP
Atlanta, Georgia
March 28, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,473
<SECURITIES> 0
<RECEIVABLES> 37,303
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,558
<PP&E> 768,790
<DEPRECIATION> 35,929
<TOTAL-ASSETS> 932,932
<CURRENT-LIABILITIES> 35,688
<BONDS> 312,257
0
0
<COMMON> 32,328
<OTHER-SE> 405,394
<TOTAL-LIABILITY-AND-EQUITY> 932,932
<SALES> 0
<TOTAL-REVENUES> 117,461
<CGS> 0
<TOTAL-COSTS> 69,704
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 600
<INCOME-PRETAX> 47,757
<INCOME-TAX> 2,442
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,082
<EPS-BASIC> 3.24
<EPS-DILUTED> 3.18
</TABLE>
