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 $379.7 million; its shares were traded at around $7.26 with a P/E ratio of 6 and P/S ratio of 1.7. The dividend yield of Cousins Properties Inc. stocks is 6.9%. Cousins Properties Inc. had an annual average earning growth of 0.3% over the past 10 years.
Highlight of Business Operations:Fee Income. Fee income is comprised of management fees, development fees and leasing fees, which the Company performs for third party property owners and joint ventures in which it has an ownership interest. These amounts vary between quarters, due to the number of contracts with ventures and 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. Fee income decreased $12.2 million and $11.4 million between the three and nine month 2009 and 2008 periods, respectively. The majority of the decrease between both periods is due to a development fee of $13.5 million recognized in the third quarter of 2008. This fee was earned on a contract the Company assumed in an acquisition of an entity several years ago. Pursuant to the contract, the Company would share in certain proceeds from the sale of a project that the prior entity developed in Texas. This project was sold in the third quarter of 2008, and the fee earned by the Company. The fee income decrease was partially offset by an increase in leasing fee income of approximately $1.4 million in both 2009 periods from leases obtained by the Companys third party management arm.
Multi-family Residential Unit Sales and Cost of Sales. Multi-family sales increased $3.8 million and $5.0 million in the three month and nine month 2009 periods, respectively. Cost of sales increased approximately $2.7 million and $3.8 million in the three and nine month 2009 periods, respectively. The Company closed 14 units in the third quarter of 2009 at The Brownstones at Habersham project, which it purchased in the second quarter of 2009. This caused a $6.4 million increase in sales for both periods and a $4.9 million increase in cost of sales for both periods. The Company expects to complete the sell-out of The Brownstones at Habersham in the fourth quarter of 2009 by selling the remaining five pad sites. The Company closed five units at its 10 Terminus Place project in the third quarter of 2009, compared to nine closings in the third quarter of 2008, which decreased sales by $3.6 million and cost of sales by $3.1 million. The Company closed seven units in the nine month 2009 period at 10 Terminus Place compared to nine in the nine month 2008 period, which decreased sales by $2.4 million and cost of sales by $1.9 million. The units range in size at the project, which also affects the change in sales and cost of sales. In addition, the Company took title to 60 North Market, a multi-family project in Asheville, North Carolina, in the third quarter of 2009 in satisfaction of a note receivable from the developer. The Company closed one unit at this project in the third quarter of 2009, which increased sales by $965,000 and cost of sales by $868,000.
Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and outparcel sales decreased $2.6 million between the three month 2009 and 2008 periods and increased $280,000 between the nine month 2009 and 2008 periods. Residential lot and outparcel cost of sales decreased $938,000 in the three month 2009 period compared to the same 2008 period and increased $1.0 million in the nine month 2009 period compared to the same 2008 period.
Outparcel Sales and Cost of Sales Outparcel sales decreased $2.2 million in the three month 2009 period compared to the same 2008 period and increased $825,000 in the nine month 2009 period compared to the same 2008 period. There were three outparcel sales in 2009, one of which was in the third quarter, compared to three outparcel sales in 2008, two of which were in the third quarter. Outparcel cost of sales decreased $770,000 in the three month 2009 period compared to the same 2008 period, and increased $1.3 million in the nine month 2009 period compared to the same 2008 period, due to the aforementioned outparcel sales, and the varying levels of profits associated with each sale.
General and Administrative Expenses. General and administrative expense decreased $3.8 million in the both 2009 periods compared to the same 2008 periods. The decrease was partially due to a decrease in salaries and benefits for employees of approximately $2.6 million and $7.7 million in the three and nine month periods, respectively. This decrease is based in part on a decrease in the number of employees at the Company between the periods. The decrease is also due to a decrease in stock-based compensation expense, a portion of which fluctuates with the Companys stock price. Leasing commission expense also decreased approximately $2.9 million and $2.7 million in the three
and nine month 2009 periods, respectively. The Company recognized a development fee of $13.5 million in the third quarter 2008 (see Fee Income section above). In conjunction with this, a $3.4 million employee leasing commission was recognized in the third quarter of 2008 as a cost of earning this development income. In addition, contributions to charitable organizations decreased approximately $1.0 million in both the 2009 periods compared to the same 2008 periods, as the Company funded $1.0 million to its charitable foundation in the third quarter of 2008. The decrease in general and administrative expenses is partially offset by a decrease of $2.7 million and $8.1 million in the three and nine month periods, respectively, of capitalized salaries and related benefits for personnel involved in the development and leasing of certain projects, due to a decrease in the number of projects under construction in 2009.
Read the The complete ReportCUZ is in the portfolios of Chris Davis of Davis Selected Advisers, Third Avenue Management, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.