Cousins Properties Inc. (CUZ, Financial) filed Quarterly Report for the period ended 2009-03-31.
Cousins Properties Inc. is an Atlanta-based fully integrated self administered equity REIT. 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. Cousins Properties Inc. has a market cap of $408.3 million; its shares were traded at around $7.95 with a P/E ratio of 6.7 and P/S ratio of 2. The dividend yield of Cousins Properties Inc. stocks is 12.6%. Cousins Properties Inc. had an annual average earning growth of 0.3% over the past 10 years.
Other Expense. Other expense decreased approximately $209,000 (12%) between the three month 2009 and 2008 periods. The expenses incurred by the Company when pursuing a potential development project are recorded in this category. In the 2008 period, approximately $1.1 million was expensed for a retail project no longer probable of development, and in the 2009 period, approximately $800,000 was expensed for a retail project no longer probable of being developed.
Gain on Sale of Investment Properties. Gain on sale of investment properties increased $163.6 million between the three month 2009 and 2008 periods. The increase is attributable to the recognition of $167.2 million in deferred gain related to the 2006 venture formation with Prudential. When the Company and Prudential formed the venture, the Company contributed properties and Prudential contributed cash. The Company accounted for the transaction as a sale in accordance with SFAS No. 66, Accounting for Sales of Real Estate, but deferred the related gain because the consideration received was a partnership interest as opposed to cash. In the 2009 period, the Company and Prudential made a pro rata distribution of cash from the venture that caused the Company to recognize all of the gain that was deferred in 2006.
In April 2009, the Company repaid the San Jose MarketCenter note in full for approximately $70.1 million, which represents a discount from the face amount. The Company expects to record a gain on extinguishment of debt, net of unamortized loan closing costs and fees, of approximately $12.7 million in the second quarter of 2009 related to this repayment.
The Company has an interest rate swap agreement with a notional amount of $100 million in order to manage its interest rate risk under the Term Facility. The Company designated this swap as a cash flow hedge, and this swap effectively fixes the underlying LIBOR rate of the Term Facility at 5.01%. The Company also has two interest rate swap agreements with notional amounts of $75 million each in order to manage interest rate risk associated with floating-rate, LIBOR-based borrowings. The Company designated these swaps as cash flow hedges, and these swaps effectively fix a portion of the underlying LIBOR rate on $150 million of Company borrowings at an average rate of 2.84%. For the three months ended March 31, 2009 and the year ended December 31, 2008, there was no ineffectiveness under any of the Companys interest rate swaps. The fair value calculation for the swaps is deemed to be a Level 2 calculation under the guidelines as set forth in SFAS No. 157. The Company obtains a third party valuation utilizing estimated future LIBOR rates to calculate fair value. The fair values of the interest rate swap agreements were recorded in accounts payable and accrued liabilities and accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets, detailed as follows (in thousands):
As of March 31, 2009, the Company had $322.0 million drawn on its $500 million credit facility and had $59.7 million in cash and cash equivalents. The amount available under this credit facility is reduced by outstanding letters of credit, which were $4.2 million at March 31, 2009. These amounts are available to fund operations, ongoing development activities and capital expenditures, among other things. The Companys interest rate on its credit facility is LIBOR plus a spread based on certain of the Companys ratios and other factors, and interest is due periodically as defined by the loan agreement. As of March 31, 2009, the spread over LIBOR for the credit facility was 1.10%, and the spread over LIBOR for the Term Facility was 1.05%. The Company is currently in compliance with its financial covenants.
Read the The complete ReportCUZ is in the portfolios of Third Avenue Management, Chris Davis of Davis Selected Advisers, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
Cousins Properties Inc. is an Atlanta-based fully integrated self administered equity REIT. 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. Cousins Properties Inc. has a market cap of $408.3 million; its shares were traded at around $7.95 with a P/E ratio of 6.7 and P/S ratio of 2. The dividend yield of Cousins Properties Inc. stocks is 12.6%. Cousins Properties Inc. had an annual average earning growth of 0.3% over the past 10 years.
Highlight of Business Operations:
third party owners and the development and leasing needs at the underlying properties. Amounts could vary in future periods based on volume and composition of activities at the underlying properties. Between the 2009 and 2008 periods, management fee income, including salary and expense reimbursements, increased approximately $814,000, due to higher average projects under management between the periods. This amount was partially offset by a decrease in leasing fee income of approximately $261,000, mainly due to timing of lease rollovers at the properties.Other Expense. Other expense decreased approximately $209,000 (12%) between the three month 2009 and 2008 periods. The expenses incurred by the Company when pursuing a potential development project are recorded in this category. In the 2008 period, approximately $1.1 million was expensed for a retail project no longer probable of development, and in the 2009 period, approximately $800,000 was expensed for a retail project no longer probable of being developed.
Gain on Sale of Investment Properties. Gain on sale of investment properties increased $163.6 million between the three month 2009 and 2008 periods. The increase is attributable to the recognition of $167.2 million in deferred gain related to the 2006 venture formation with Prudential. When the Company and Prudential formed the venture, the Company contributed properties and Prudential contributed cash. The Company accounted for the transaction as a sale in accordance with SFAS No. 66, Accounting for Sales of Real Estate, but deferred the related gain because the consideration received was a partnership interest as opposed to cash. In the 2009 period, the Company and Prudential made a pro rata distribution of cash from the venture that caused the Company to recognize all of the gain that was deferred in 2006.
In April 2009, the Company repaid the San Jose MarketCenter note in full for approximately $70.1 million, which represents a discount from the face amount. The Company expects to record a gain on extinguishment of debt, net of unamortized loan closing costs and fees, of approximately $12.7 million in the second quarter of 2009 related to this repayment.
The Company has an interest rate swap agreement with a notional amount of $100 million in order to manage its interest rate risk under the Term Facility. The Company designated this swap as a cash flow hedge, and this swap effectively fixes the underlying LIBOR rate of the Term Facility at 5.01%. The Company also has two interest rate swap agreements with notional amounts of $75 million each in order to manage interest rate risk associated with floating-rate, LIBOR-based borrowings. The Company designated these swaps as cash flow hedges, and these swaps effectively fix a portion of the underlying LIBOR rate on $150 million of Company borrowings at an average rate of 2.84%. For the three months ended March 31, 2009 and the year ended December 31, 2008, there was no ineffectiveness under any of the Companys interest rate swaps. The fair value calculation for the swaps is deemed to be a Level 2 calculation under the guidelines as set forth in SFAS No. 157. The Company obtains a third party valuation utilizing estimated future LIBOR rates to calculate fair value. The fair values of the interest rate swap agreements were recorded in accounts payable and accrued liabilities and accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets, detailed as follows (in thousands):
As of March 31, 2009, the Company had $322.0 million drawn on its $500 million credit facility and had $59.7 million in cash and cash equivalents. The amount available under this credit facility is reduced by outstanding letters of credit, which were $4.2 million at March 31, 2009. These amounts are available to fund operations, ongoing development activities and capital expenditures, among other things. The Companys interest rate on its credit facility is LIBOR plus a spread based on certain of the Companys ratios and other factors, and interest is due periodically as defined by the loan agreement. As of March 31, 2009, the spread over LIBOR for the credit facility was 1.10%, and the spread over LIBOR for the Term Facility was 1.05%. The Company is currently in compliance with its financial covenants.
Read the The complete ReportCUZ is in the portfolios of Third Avenue Management, Chris Davis of Davis Selected Advisers, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
