Form 10-Q June 30, 2013
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2013
OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-11312
COUSINS PROPERTIES INCORPORATED
(Exact name of registrant as specified in its charter)
GEORGIA
(State or other jurisdiction of
incorporation or organization)
58-0869052
(I.R.S. Employer
Identification No.)
191 Peachtree Street, Suite 500, Atlanta, Georgia
(Address of principal executive offices)
30303-1740
(Zip Code)
(404) 407-1000
(Registrant’s telephone number, including area code)
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 Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding at July 26, 2013
Common Stock, $1 par value per share
 
120,687,641 shares

Table of Contents


 
Page No.
 
 

Table of Contents


FORWARD-LOOKING STATEMENTS

Certain matters contained in this report are “forward-looking statements” within the meaning of the federal securities laws and are subject to uncertainties and risks, as itemized in Item 1A included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. These forward-looking statements include information about possible or assumed future results of the Company's business and the Company's financial condition, liquidity, results of operations, plans and objectives. They also include, among other things, statements regarding subjects that are forward-looking by their nature, such as:
•
the Company's business and financial strategy;
•the Company's ability to obtain future financing arrangements;
•future acquisitions and future dispositions of operating assets;
•future development and redevelopment opportunities;
•future dispositions of land and other non-core assets;
•projected operating results;
•market and industry trends;
•future distributions;
•projected capital expenditures; and
•interest rates.
The forward-looking statements are based upon management's beliefs, assumptions and expectations of the Company's future performance, taking into account information currently available. These beliefs, assumptions and expectations may change as a result of possible events or factors, not all of which are known. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in forward-looking statements. Actual results may vary from forward-looking statements due to, but not limited to, the following:
•
the availability and terms of capital and financing;
•
the ability to refinance indebtedness as it matures;
•
the failure of purchase, sale or other contracts to ultimately close;
•
the potential dilutive effect of common stock offerings;
•
the availability of buyers and adequate pricing with respect to the disposition of assets;
•
risks and uncertainties related to national and local economic conditions, the real estate industry in general and the commercial real estate markets in particular;
•
market conditions and changes to the Company's strategy with regard to land and other non-core holdings that require impairment losses to be recognized;
•
the effects of the sale of the Company's third party management business;
•
leasing risks, including the ability to obtain new tenants or renew expiring tenants, and the ability to lease newly developed, recently acquired or current vacant space;
•
the financial condition of existing tenants;
•
volatility in interest rates and insurance rates;
•
the availability of sufficient investment opportunities;
•
competition from other developers or investors;
•
the risks associated with real estate developments and acquisitions (such as construction delays, cost overruns and leasing risk);
•
the loss of key personnel;
•
the potential liability for uninsured losses, condemnation or environmental issues;
•
the potential liability for a failure to meet regulatory requirements;
•
the financial condition and liquidity of, or disputes with, joint venture partners;
•
any failure to comply with debt covenants under credit agreements; and
•
any failure to continue to qualify for taxation as a real estate investment trust.
The words “believes,” “expects,” “anticipates,” “estimates,” “plans,” “may,” “intend,” “will,” or similar expressions are intended to identify forward-looking statements. Although the Company believes its plans, intentions and expectations reflected in any forward-looking statements are reasonable, the Company can give no assurance that such plans, intentions or expectations will be achieved. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise, except as required under U.S. federal securities laws.

2
Table of Contents


PART I — FINANCIAL INFORMATION
Item 1.    Financial Statements.
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
June 30, 2013
 
December 31, 2012
 
(unaudited)
 
 
ASSETS
 
 
 
PROPERTIES:
 
 
 
Operating properties, net of accumulated depreciation of $221,331 and $255,128 in 2013 and 2012, respectively
$
838,826

 
$
669,652

Projects under development, net of accumulated depreciation of $-0- and $183 in 2013 and 2012, respectively
5,819

 
25,209

Land held
38,039

 
42,187

Other
—

 
151

Total properties
882,684

 
737,199

OPERATING PROPERTIES AND RELATED ASSETS HELD FOR SALE, net of accumulated depreciation of $12,139 and $2,947 in 2013 and 2012, respectively
51,301

 
1,866

CASH AND CASH EQUIVALENTS
4,925

 
176,892

RESTRICTED CASH
3,230

 
2,852

NOTES AND ACCOUNTS RECEIVABLE, net of allowance for doubtful accounts of $1,700 and $1,743 in 2013 and 2012, respectively
8,539

 
9,972

DEFERRED RENTS RECEIVABLE
34,707

 
39,378

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
127,948

 
97,868

OTHER ASSETS
87,454

 
58,215

TOTAL ASSETS
$
1,200,788

 
$
1,124,242

LIABILITIES AND EQUITY
 
 
 
NOTES PAYABLE
$
340,374

 
$
425,410

ACCOUNTS PAYABLE AND ACCRUED EXPENSES
34,433

 
34,751

DEFERRED INCOME
25,785

 
11,888

OTHER LIABILITIES
26,582

 
9,240

TOTAL LIABILITIES
427,174

 
481,289

STOCKHOLDERS’ INVESTMENT:
 
 
 
Preferred stock, 20,000,000 shares authorized, $1 par value:
 
 
 
7.75% Series A cumulative redeemable preferred stock, $25 liquidation preference; -0- and 2,993,090 shares issued and outstanding in 2013 and 2012, respectively
—

 
74,827

7.50% Series B cumulative redeemable preferred stock, $25 liquidation preference; 3,791,000 shares issued and outstanding in 2013 and 2012
94,775

 
94,775

Common stock, $1 par value, 250,000,000 shares authorized, 124,257,723 and 107,660,080 shares issued in 2013 and 2012, respectively
124,258

 
107,660

Additional paid-in capital
825,777

 
690,024

Treasury stock at cost, 3,570,082 shares in 2013 and 2012
(86,840
)
 
(86,840
)
Distributions in excess of cumulative net income
(206,995
)
 
(260,104
)
TOTAL STOCKHOLDERS’ INVESTMENT
750,975

 
620,342

Nonredeemable noncontrolling interests
22,639

 
22,611

TOTAL EQUITY
773,614

 
642,953

TOTAL LIABILITIES AND EQUITY
$
1,200,788

 
$
1,124,242

 
 
 
 
See accompanying notes.
 
 
 

3
Table of Contents
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)


 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2013
 
2012
 
2013
 
2012
REVENUES:
 
 
 
 
 
 
 
Rental property revenues
$
38,729

 
$
28,922

 
$
73,477

 
$
57,221

Fee income
2,931

 
2,786

 
6,511

 
5,642

Land sales
433

 
535

 
1,396

 
1,484

Other
2,065

 
253

 
2,668

 
1,526

 
44,158

 
32,496

 
84,052

 
65,873

COSTS AND EXPENSES:
 
 
 
 
 
 
 
Rental property operating expenses
18,576

 
12,521

 
34,406

 
24,370

Reimbursed expenses
1,359

 
1,357

 
3,268

 
2,732

Land cost of sales
433

 
416

 
1,396

 
980

General and administrative expenses
4,552

 
5,644

 
10,622

 
12,267

Interest expense
4,241

 
5,875

 
9,176

 
12,143

Depreciation and amortization
15,450

 
9,783

 
27,240

 
19,796

Separation expenses
—

 
79

 
—

 
292

Other
631

 
566

 
1,358

 
1,246

 
45,242

 
36,241

 
87,466

 
73,826

LOSS ON EXTINGUISHMENT OF DEBT
—

 
—

 
—

 
(94
)
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES, UNCONSOLIDATED JOINT VENTURES AND SALE OF INVESTMENT PROPERTIES
(1,084
)
 
(3,745
)
 
(3,414
)
 
(8,047
)
PROVISION FOR INCOME TAXES FROM OPERATIONS
(1
)
 
(33
)
 
(2
)
 
(60
)
INCOME FROM UNCONSOLIDATED JOINT VENTURES
1,132

 
9,762

 
2,784

 
11,948

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES
47

 
5,984

 
(632
)
 
3,841

GAIN ON SALE OF INVESTMENT PROPERTIES
406

 
29

 
57,583

 
86

INCOME FROM CONTINUING OPERATIONS
453

 
6,013

 
56,951

 
3,927

INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
 
 
 
 
 
 
 
Income (loss) from discontinued operations
280

 
3,543

 
593

 
(5,811
)
Gain on sale of investment properties
86

 
674

 
181

 
760

 
366

 
4,217

 
774

 
(5,051
)
NET INCOME (LOSS)
819

 
10,230

 
57,725

 
(1,124
)
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(515
)
 
(602
)
 
(1,022
)
 
867

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST
304

 
9,628

 
56,703

 
(257
)
PREFERRED SHARE ORIGINAL ISSUANCE COSTS
(2,656
)
 
—

 
(2,656
)
 
—

DIVIDENDS TO PREFERRED STOCKHOLDERS
(3,227
)
 
(3,227
)
 
(6,454
)
 
(6,454
)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
$
(5,579
)
 
$
6,401

 
$
47,593

 
$
(6,711
)
PER COMMON SHARE INFORMATION — BASIC AND DILUTED:
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to controlling interest
$
(0.05
)
 
$
0.02

 
$
0.42

 
$
(0.01
)
Income (loss) from discontinued operations
—

 
0.04

 
0.01

 
(0.05
)
Net income (loss) available to common stockholders
$
(0.05
)
 
$
0.06

 
$
0.43

 
$
(0.06
)
WEIGHTED AVERAGE SHARES — BASIC
118,661

 
104,165

 
111,430

 
104,082

WEIGHTED AVERAGE SHARES — DILUTED
118,661

 
104,165

 
111,593

 
104,082

DIVIDENDS PER COMMON SHARE
$
0.045

 
$
0.045

 
$
0.09

 
$
0.09


See accompanying notes.

4
Table of Contents


COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Six Months Ended June 30, 2013 and 2012
(unaudited, in thousands)
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Treasury
Stock
 
Distributions in
Excess of
Net Income
 
Stockholders’
Investment
 
Nonredeemable
Noncontrolling
Interests
 
Total
Equity
Balance December 31, 2012
 
$
169,602

 
$
107,660

 
$
690,024

 
$
(86,840
)
 
$
(260,104
)
 
$
620,342

 
$
22,611

 
$
642,953

Net income
 
—

 
—

 
—

 
—

 
56,703

 
56,703

 
970

 
57,673

Common stock issued pursuant to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Director stock grants
 
 
 
50

 
494

 
—

 
—

 
544

 
—

 
544

Stock option exercises
 
 
 
22

 
(143
)
 
—

 
—

 
(121
)
 
—

 
(121
)
Common stock offering, net of issuance costs
 
—

 
16,507

 
148,593

 
—

 
—

 
165,100

 
—

 
165,100

Restricted stock grants, net of amounts withheld for income taxes
 
—

 
30

 
(1,209
)
 
—

 
—

 
(1,179
)
 
—

 
(1,179
)
Amortization of stock options and restricted stock, net of forfeitures
 
—

 
(11
)
 
998

 
—

 
—

 
987

 
—

 
987

Distributions to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

 
—

 
(942
)
 
(942
)
Redemption of preferred shares
 
(74,827
)
 
—

 
(12,980
)
 
—

 
12,980

 
(74,827
)
 
—

 
(74,827
)
Cash preferred dividends paid
 
—

 
—

 
—

 
—

 
(6,454
)
 
(6,454
)
 
—

 
(6,454
)
Cash common dividends paid
 
—

 
—

 
—

 
—

 
(10,120
)
 
(10,120
)
 
—

 
(10,120
)
Balance June 30, 2013
 
$
94,775

 
$
124,258

 
$
825,777

 
$
(86,840
)
 
$
(206,995
)
 
$
750,975

 
$
22,639

 
$
773,614

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance December 31, 2011
 
$
169,602

 
$
107,272

 
$
687,835

 
$
(86,840
)
 
$
(274,177
)
 
$
603,692

 
$
33,703

 
$
637,395

Net income (loss)
 
—

 
—

 
—

 
—

 
(257
)
 
(257
)
 
1,157

 
900

Common stock issued pursuant to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Director stock grants
 
—

 
72

 
468

 
—

 
—

 
540

 
—

 
540

Restricted stock grants, net of amounts withheld for income taxes
 
—

 
448

 
(617
)
 
—

 
—

 
(169
)
 
—

 
(169
)
Amortization of stock options and restricted stock, net of forfeitures
 
—

 
(7
)
 
1,217

 
—

 
—

 
1,210

 
—

 
1,210

Distributions to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

 
—

 
(1,152
)
 
(1,152
)
Cash preferred dividends paid
 
—

 
—

 
—

 
—

 
(6,454
)
 
(6,454
)
 
—

 
(6,454
)
Cash common dividends paid
 
—

 
—

 
—

 
—

 
(9,373
)
 
(9,373
)
 
—

 
(9,373
)
Balance June 30, 2012
 
$
169,602

 
$
107,785

 
$
688,903

 
$
(86,840
)
 
$
(290,261
)
 
$
589,189

 
$
33,708

 
$
622,897

See accompanying notes.

5
Table of Contents
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)


 
Six Months Ended June 30,
 
2013
 
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income (loss)
$
57,725

 
$
(1,124
)
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Gain on sale of investment properties, including discontinued operations
(57,764
)
 
(846
)
Loss on extinguishment of debt
—

 
94

Impairment loss included in discontinued operations
—

 
12,233

Depreciation and amortization, including discontinued operations
27,113

 
27,006

Amortization of deferred financing costs
524

 
512

Amortization of stock options and restricted stock, net of forfeitures
987

 
1,210

Effect of certain non-cash adjustments to rental revenues
(2,673
)
 
(2,108
)
Income from unconsolidated joint ventures
(2,784
)
 
(11,948
)
Operating distributions from unconsolidated joint ventures
2,942

 
9,857

Land and multi-family cost of sales, net of closing costs paid
904

 
1,057

Land and multi-family acquisition and development expenditures
—

 
(46
)
Changes in other operating assets and liabilities:
 
 
 
Change in other receivables and other assets, net
(1,511
)
 
(1,759
)
Change in operating liabilities
(4,295
)
 
1,092

Net cash provided by operating activities
21,168

 
35,230

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Proceeds from investment property sales
116,006

 
63,236

Property acquisition, development and tenant asset expenditures
(410,807
)
 
(18,558
)
Investment in unconsolidated joint ventures
(98
)
 
(6,235
)
Distributions from unconsolidated joint ventures
54,116

 
25,188

Collection of notes receivable
681

 
821

Change in notes receivable and other assets
(1,930
)
 
(1,866
)
Change in restricted cash
(378
)
 
12

Net cash provided by (used in) investing activities
(242,410
)
 
62,598

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from credit facility
174,925

 
273,100

Repayment of credit facility
(123,925
)
 
(430,850
)
Proceeds from other notes payable
1,292

 
105,949

Repayment of notes payable
(75,722
)
 
(26,620
)
Payment of loan issuance costs
—

 
(3,419
)
Common stock issued, net of issuance costs
165,100

 
—

Redemption of preferred shares
(74,827
)
 
—

Common dividends paid
(10,120
)
 
(9,373
)
Preferred dividends paid
(6,454
)
 
(6,454
)
Distributions to noncontrolling interests
(994
)
 
(2,010
)
Net cash provided by (used in) financing activities
49,275

 
(99,677
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(171,967
)
 
(1,849
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
176,892

 
4,858

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
4,925

 
$
3,009

INTEREST PAID, NET OF AMOUNTS CAPITALIZED
$
9,719

 
$
11,853

SIGNIFICANT NON-CASH TRANSACTIONS:
 
 
 
Transfer from operating properties to operating properties and related assets held for sale
$
49,435

 
$
—

Transfer from projects under development to operating properties
25,629

 
—

Transfer from other assets to projects under development
3,062

 
—


See accompanying notes.

6
Table of Contents


COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements included herein include the accounts of Cousins Properties Incorporated (“Cousins”) and its consolidated subsidiaries, including Cousins Real Estate Corporation and its subsidiaries (“CREC”). All of the entities included in the consolidated financial statements are hereinafter referred to collectively as the “Company.”
The Company develops, acquires, leases, manages and owns primarily Class-A office and retail real estate properties. Cousins has elected to be taxed as a real estate investment trust (“REIT”) and intends to, among other things, distribute 90% of its net taxable income to stockholders, thereby eliminating any liability for federal income taxes under current law. Therefore, the results included herein do not include a federal income tax provision for Cousins. CREC operates as a taxable REIT subsidiary and is taxed separately from Cousins as a C-Corporation. Accordingly, if applicable, the consolidated statements of operations include a provision for, or benefit from, CREC's income taxes.
The condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these financial statements reflect all adjustments necessary (which adjustments are of a normal and recurring nature) for the fair presentation of the Company's financial position as of June 30, 2013 and the results of operations for the three and six months ended June 30, 2013 and 2012. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of results expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. The accounting policies employed are substantially the same as those shown in note 2 to the consolidated financial statements included in such Form 10-K.
For the three and six months ended June 30, 2013 and 2012, there were no items of other comprehensive income. Therefore, the Company did not present a statement of comprehensive income.
2. EARNINGS PER SHARE
Net income (loss) per share-basic is calculated as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding during the period, including nonvested restricted stock which has nonforfeitable dividend rights. Net income (loss) per share-diluted is calculated as net income (loss) available to common stockholders divided by the diluted weighted average number of common shares outstanding during the period. Diluted weighted average number of common shares uses the same weighted average share number as in the basic calculation and adds the potential dilution, if any, that would occur if stock options (or any other contracts to issue common stock) were exercised and resulted in additional common shares outstanding, calculated using the treasury stock method. Weighted average shares-basic and diluted for the three and six months ended June 30, 2013 and 2012 are as follows (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Weighted average shares — basic
118,661

 
104,165

 
111,430

 
104,082

Dilutive potential common shares — stock options
—

 
—

 
163

 
—

Weighted average shares — diluted
118,661

 
104,165

 
111,593

 
104,082

Weighted average anti-dilutive stock options
2,942

 
4,953

 
3,129

 
4,953

Stock options are dilutive when the average market price of the Company's stock during the period exceeds the option exercise price. However, in periods where the Company is in a net loss position, the dilutive effect of stock options is not included in the diluted weighted average shares total.
Anti-dilutive stock options represent stock options which are outstanding but which are not exercisable during the period because the exercise price exceeded the average market value of the Company's stock. These anti-dilutive stock options are not included in the current calculation of dilutive weighted average shares, but could be dilutive in the future.



7
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3. NOTES PAYABLE
The following table summarizes the terms and amounts of the Company’s notes payable at June 30, 2013 and December 31, 2012 ($ in thousands):
Description
 
Interest Rate
 
Maturity
 
June 30, 2013
 
December 31, 2012
The American Cancer Society Center mortgage note
 
6.45
%
 
2017
 
$
133,479

 
$
134,243

191 Peachtree Tower mortgage note (interest only until May 1, 2016)
 
3.35
%
 
2018
 
100,000

 
100,000

Credit Facility, unsecured
 
1.69
%
 
2016
 
51,000

 
—

Meridian Mark Plaza mortgage note
 
6.00
%
 
2020
 
26,006

 
26,194

The Points at Waterview mortgage note
 
5.66
%
 
2016
 
15,399

 
15,651

Mahan Village construction facility
 
1.84
%
 
2014
 
14,316

 
13,027

Callaway Gardens
 
4.13
%
 
2013
 
174

 
172

Terminus 100 mortgage note
 
5.25
%
 
2023
 
—

 
136,123

 
 
 
 
 
 
$
340,374

 
$
425,410


In February 2013, the Company effectively sold 50% of its interest in Terminus 100 to a third party. Based upon the ownership and management structure of the joint venture that owns Terminus 100 after this transaction, the Company accounts for its investment in this entity under the equity method. Therefore, the Terminus 100 mortgage note is no longer consolidated. See note 7 for further details.
Fair Value
At June 30, 2013 and December 31, 2012, the aggregate estimated fair values of the Company's notes payable were $359.6 million and $456.0 million, respectively, calculated by discounting contractual cash flows at estimated rates at which similar loans could have been obtained at those respective dates. The estimate of the current market rate, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. These fair value calculations are considered to be Level 2 under the guidelines as set forth in ASC 820 as the Company utilizes market rates for similar type loans from third party brokers.
Other Information
For the three and six months ended June 30, 2013 and 2012, interest expense was as follows (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Total interest incurred
$
4,298

 
$
6,364

 
$
9,334

 
$
13,058

Interest capitalized
(57
)
 
(489
)
 
(158
)
 
(915
)
Total interest expense
$
4,241

 
$
5,875

 
$
9,176

 
$
12,143

The real estate and other assets of The American Cancer Society Center (the “ACS Center”) are restricted under the ACS Center loan agreement in that they are not available to settle debts of the Company. However, provided that the ACS Center loan has not incurred any uncured event of default, as defined in the loan agreement, the cash flows from the ACS Center, after payments of debt service, operating expenses and reserves, are available for distribution to the Company.

4. COMMITMENTS AND CONTIGENCIES

Commitments
At June 30, 2013, the Company had outstanding letters of credit and performance bonds totaling $2.2 million. At June 30, 2013, the Company had estimated development commitments of $120.3 million. As a lessor, the Company has $26.8 million in future obligations under leases to fund tenant improvements as of June 30, 2013. As a lessee, the Company has future obligations under ground and office leases of approximately $146.1 million at June 30, 2013.
Litigation
The Company is subject to various legal proceedings, claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The

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Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. The Company does not disclose information with respect to litigation where an unfavorable outcome is considered to be remote or where the estimated loss would not be material. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company.

5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
The Company describes its investments in unconsolidated joint ventures in note 5 of notes to consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2012. The following table summarizes balance sheet data of the Company's unconsolidated joint ventures as of June 30, 2013 and December 31, 2012 (in thousands):
 
Total Assets
 
Total Debt
 
Total Equity
 
Company’s Investment
 
SUMMARY OF FINANCIAL POSITION:
2013
 
2012
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
 
Terminus Office Holdings LLC (1)
$
298,241

 
$
—

 
$
217,046

 
$
—

 
$
68,280

 
$
—

 
$
34,992

 
$
—

 
EP I LLC
89,604

 
83,235

 
55,482

 
43,515

 
31,902

 
32,611

 
27,321

 
27,864

 
Cousins Watkins LLC
53,133

 
54,285

 
27,990

 
28,244

 
24,206

 
25,259

 
16,944

 
16,692

 
CF Murfreesboro Associates
118,167

 
121,451

 
91,854

 
94,540

 
24,878

 
25,411

 
14,283

 
14,571

 
CP Venture Five LLC
281,447

 
286,647

 
35,096

 
35,417

 
238,305

 
243,563

 
13,584

 
13,884

 
Charlotte Gateway Village, LLC
138,078

 
140,384

 
60,452

 
68,242

 
75,536

 
70,917

 
10,282

 
10,299

 
Temco Associates, LLC
8,547

 
8,409

 
—

 
—

 
8,224

 
8,233

 
4,079

 
4,095

 
CL Realty, L.L.C.
7,797

 
7,549

 
—

 
—

 
7,598

 
7,155

 
3,786

 
3,579

 
CP Venture Two LLC
93,518

 
96,345

 
—

 
—

 
92,103

 
94,819

 
2,614

 
2,894

 
MSREF/ Cousins Terminus 200 LLC (1)
—

 
95,520

 
—

 
74,340

 
—

 
19,659

 
—

 
3,930

 
Wildwood Associates
21,157

 
21,176

 
—

 
—

 
21,088

 
21,173

 
(1,705
)
*
(1,664
)
*
Crawford Long - CPI, LLC
34,133

 
32,818

 
75,000

 
46,496

 
(42,832
)
 
(15,129
)
 
(20,302
)
*
(6,407
)
*
Other
2,146

 
2,194

 
—

 
—

 
1,838

 
1,844

 
63

 
60

 
 
$
1,145,968

 
$
950,013

 
$
562,920

 
$
390,794

 
$
551,126

 
$
535,515

 
$
105,941

 
$
89,797

 
*Negative balances are included in deferred income on the balance sheets.
(1) See note 7 for further discussion of the transactions affecting these entities.

The following table summarizes statement of operations information of the Company's unconsolidated joint ventures for the six months ended June 30, 2013 and 2012 (in thousands):

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Total Revenues
 
Net Income (Loss)
 
Company's Share of Income (Loss)
SUMMARY OF OPERATIONS:
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Terminus Office Holdings LLC (1)
$
14,616

 
$
—

 
$
29

 
$
—

 
$
14

 
$
—

EP I LLC
2,988

 
110

 
(695
)
 
(1
)
 
(521
)
 
(1
)
Cousins Watkins LLC
2,595

 
3,120

 
46

 
(18
)
 
1,159

 
1,219

CF Murfreesboro Associates
6,576

 
6,612

 
(507
)
 
138

 
(379
)
 
(66
)
CP Venture Five LLC
15,140

 
15,097

 
2,193

 
1,758

 
558

 
508

Charlotte Gateway Village, LLC
16,815

 
16,477

 
5,224

 
4,733

 
588

 
588

Temco Associates, LLC
206

 
500

 
18

 
(123
)
 
(15
)
 
(265
)
CL Realty, L.L.C.
373

 
1,997

 
216

 
736

 
206

 
53

CP Venture Two LLC
9,741

 
9,695

 
5,386

 
4,898

 
556

 
507

MSREF/ Cousins Terminus 200 LLC (1)
1,278

 
6,105

 
(161
)
 
(704
)
 
(28
)
 
(141
)
Wildwood Associates
—

 
—

 
(84
)
 
(81
)
 
(42
)
 
(40
)
Crawford Long - CPI, LLC
5,873

 
5,850

 
1,382

 
1,247

 
686

 
620

Palisades West LLC
—

 
8,192

 
(28
)
 
2,885

 
—

 
1,381

Ten Peachtree Place Associates
—

 
2,487

 
—

 
20,897

 
—

 
7,831

Other
1,268

 
24

 
(140
)
 
(119
)
 
2

 
(246
)
 
$
77,469

 
$
76,266

 
$
12,879

 
$
36,246

 
$
2,784

 
$
11,948

(1) See note 7 for further discussion of the transactions affecting these entities.
In the second quarter of 2013, Crawford Long-CPI, LLC refinanced its mortgage debt which was scheduled to mature in June 2013. The new loan, a $75 million 3.5% fixed rate mortgage note, matures in 2023. Upon closing of the new mortgage note, the Company received a distribution of $14.3 million from the joint venture as a result of the financing.
In the second quarter of 2013, CF Murfreesboro Associates entered into a contract to sell The Avenue Murfreesboro, the venture's only asset. The Company expects to receive a distribution from the sale in the second half of 2013 in an amount that exceeds its basis in the venture.

6. EQUITY AND STOCK-BASED COMPENSATION
The Company has several types of stock-based compensation - stock options, restricted stock, long-term incentive awards and restricted stock units (“RSUs”) - which are described in note 7 of notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. The expense related to certain stock-based compensation awards is fixed. The expense related to other awards fluctuates from period to period dependent, in part, on the Company's stock price and performance relative to the performance of certain other real estate companies. The Company recorded stock-based compensation expense, net of forfeitures, of $862,000 and $619,000 for the three months ended June 30, 2013 and 2012, respectively, and $3.6 million and $2.0 million for the six months ended June 30, 2013 and 2012, respectively.
The Company made restricted stock grants in 2013 of 159,782 shares to key employees, which vest ratably over a three-year period. In addition, the Company awarded two types of RSUs to key employees based on the following market and performance metrics, respectively: (1) Total Stockholder Return of the Company, as defined, as compared to the companies in the SNL US REIT Office index (“SNL RSUs”), and (2) the ratio of cumulative funds from operations per share to targeted cumulative funds from operations per share (“FFO RSUs”) as defined in the plan. The performance period for both awards is January 1, 2013 to December 31, 2015, and the targeted units awarded of SNL RSUs and FFO RSUs is 124,992 and 65,347, respectively. The ultimate payout of these awards can range from 0% to 200% of the targeted number of units depending on the achievement of the market and performance metrics described above. Both of these types of RSUs cliff vest on January 30, 2016 and are dependent upon the attainment of required service, market and performance criteria. The number of RSUs vesting will be determined at that date, and the payout per unit will be equal to the average closing price on each trading day during the 30-day period ending on December 31, 2015. The SNL RSUs are valued at each reporting date using a Monte Carlo valuation method. The FFO RSUs are valued at each reporting date based on the fair market value of the Company's stock at the reporting date multiplied by the anticipated number of units to be paid based on the current estimate of the expected ratio upon vesting. The Company records expense for the SNL RSUs and the FFO RSUs each reporting period based on the values calculated and the vesting period of each award.
In April 2013, the Company issued 16.5 million shares of common stock resulting in net proceeds to the Company of $165.1 million. In May 2013, the Company redeemed all outstanding shares of its 7 3/4% Series A Cumulative Redeemable Preferred Stock, par value $1.00 per share, for $25.00 per share or $74.8 million. In connection with the redemption of Preferred Stock, the Company increased net loss available for common shareholders by $2.7 million, which represents the original issuance costs

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applicable to the shares redeemed. In addition, the Company reclassified these costs as well as the basis difference in the Preferred Stock repurchased by the Company in 2008 from Additional Paid-In Capital to Distributions in Excess of Net Income within the Company's statements of equity.
7. PROPERTY TRANSACTIONS

Discontinued Operations
Accounting rules require that the historical operating results of held-for-sale or sold assets which meet certain accounting rules be included in a separate section, discontinued operations, in the statements of operations for all periods presented. If the asset is sold, the related gain or loss on sale is also included in discontinued operations. In addition, assets and liabilities of held-for-sale properties, as defined, are required to be separately categorized on the balance sheet.
In the second quarter of 2013, the Company entered into a contract to sell Tiffany Springs MarketCenter and the Company, therefore, reclassified the results of operations of Tiffany Springs MarketCenter to discontinued operations and reclassified the related assets to Operating Properties and Related Assets Held for Sale on the balance sheet.
The following properties which were held-for-sale in 2013 or sold in 2012 met the criteria for discontinued operations presentation ($ in thousands):
Property
 
Property Type
 
Location
 
Square Feet
 
Sales Price
2013:
 
 
 
 
 
 
 
 
Tiffany Springs MarketCenter
 
Retail
 
Kansas City, MO
 
238,000

 
Held-for-sale

Inhibitex
 
Office
 
Atlanta, GA
 
51,000

 
Held-for-sale

2012:
 
 
 
 
 
 
 
 
The Avenue Forsyth
 
Retail
 
Atlanta, GA
 
524,000

 
$
119,000

The Avenue Collierville
 
Retail
 
Memphis, TN
 
511,000

 
55,000

The Avenue Webb Gin
 
Retail
 
Atlanta, GA
 
322,000

 
59,600

Galleria 75
 
Office
 
Atlanta, GA
 
111,000

 
9,200

Cosmopolitan Center
 
Office
 
Atlanta, GA
 
51,000

 
7,000

Inhibitex
 
Office
 
Atlanta, GA
 
51,000

 
Held-for-sale

In addition, the Company sold its third party management and leasing business in 2012.  As a result, the operations of this business are presented as discontinued operations in the accompanying statements of operations.
The components of discontinued operations and the gains and losses on property sales for the three and six months ended June 30, 2013 and 2012 are as follows (in thousands):

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Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Income (loss) from discontinued operations:
 
 
 
 
 
 
 
Rental property revenues
$
1,311

 
$
7,753

 
$
2,687

 
$
16,946

Fee income
3

 
6,029

 
77

 
10,740

Other income
—

 
13

 
—

 
205

Rental property operating expenses
(474
)
 
(2,663
)
 
(1,046
)
 
(5,318
)
Reimbursed expenses
—

 
(2,354
)
 
—

 
(4,656
)
General and administrative expenses
(27
)
 
(2,254
)
 
(79
)
 
(4,253
)
Depreciation and amortization
(524
)
 
(2,967
)
 
(1,033
)
 
(7,210
)
Impairment losses
—

 
—

 
—

 
(12,233
)
Other expenses
(9
)
 
(14
)
 
(13
)
 
(32
)
Income (loss) from discontinued operations
$
280

 
$
3,543

 
$
593

 
$
(5,811
)
 

 

 
 
 
 
Gain on sale of discontinued operations:
 
 
 
 
 
 
 
King Mill
$
89

 
$
88

 
$
208

 
$
175

Galleria 75
—

 
547

 
—

 
546

The Avenue Collierville
—

 
86

 
—

 
86

Lakeside
—

 
(51
)
 
—

 
(51
)
Other
(3
)
 
4

 
(27
)
 
4

Gain on sale of discontinued operations
$
86

 
$
674

 
$
181

 
$
760


816 Congress Avenue Acquisition
In April 2013, the Company acquired 816 Congress Avenue, a 435,000 square-foot Class-A office property located in the central business district of Austin, Texas. The purchase price for this property, net of rent credits, was $102.4 million. The Company incurred $342,000 in acquisition costs related to this acquisition, which were recorded in other expense in the statements of operations.
The following table summarizes the preliminary allocations of the estimated fair values of the assets and liabilities of 816 Congress Avenue (in thousands):
Tangible assets:
 
 
Land and improvements
 
$
6,817

Building
 
86,391

Tenant improvements
 
3,500

Tangible assets
 
96,708

 
 
 
Intangible assets:
 
 
Above-market leases
 
89

In-place leases
 
8,222

Ground lease purchase option
 
2,403

Total intangible assets
 
10,714

 
 
 
Intangible Liabilities:
 
 
Below-market leases
 
(2,820
)
  Above-market ground lease
 
(1,981
)
Total intangible liabilities
 
(4,801
)
 
 
 
Total net assets acquired
 
$
102,621


12
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Post Oak Central/ Terminus Transactions
In February 2013, the Company purchased the 80% interest in MSREF/ Cousins Terminus 200 LLC it did not already own for $53.8 million and simultaneously repaid the mortgage loan secured by the Terminus 200 property in the amount of $74.6 million. The Company recognized a gain of $19.7 million on this acquisition achieved in stages. Immediately thereafter, the Company contributed its interest in the Terminus 200 property and its interest in the Terminus 100 property, together with the existing mortgage loan secured by the Terminus 100 property, to a newly-formed entity, Terminus Office Holdings LLC (“TOH”), and sold 50% of TOH to institutional investors advised by J.P. Morgan Asset Management for $112.2 million. The Company recognized a gain of $37.1 million on this transaction. In March 2013, Terminus Venture T200 LLC, an affiliate of TOH, closed a new mortgage loan on the Terminus 200 property in the amount of $82.0 million, and the Company received a distribution of $39.2 million from TOH as a result. The Company accounts for its interest in TOH under the equity method because both partners have the ability to participate in and approve major decisions of the venture and, therefore, have substantive participating rights in the venture. 
Concurrently, the Company purchased Post Oak Central, a 1.3 million square-foot, Class-A office complex in the Galleria district of Houston, Texas for $230.9 million, net of rent credits, from an affiliate of J.P. Morgan Asset Management. The Company incurred $231,000 in acquisition costs related to this purchase, which were recorded in other expense on the statements of operations.
The following tables summarize preliminary allocations of the estimated fair values of the assets and liabilities of Terminus 200 and Post Oak Central acquired in this series of transactions (in thousands):
 
Post Oak Central
 
Terminus 200
Tangible assets:
 
 
 
Land and improvements
$
88,406

 
$
25,040

Building
118,470

 
101,472

Tenant improvements
10,877

 
17,600

Other assets
—

 
101

Deferred rents receivable
—

 
44

Tangible assets
217,753

 
144,257

 
 
 
 
Intangible assets:
 
 
 
Above-market leases
995

 
1,512

In-place leases
26,968

 
14,355

Total intangible assets
27,963

 
15,867

 
 
 
 
Intangible Liabilities:
 
 
 
Below-market leases
(14,792
)
 
(9,273
)
 
 
 
 
Total net assets acquired
$
230,924

 
$
150,851

The following supplemental pro forma information is presented for the three and six months ended June 30, 2013 and 2012, respectively. The pro forma information is based upon the Company's historical consolidated statements of operations, adjusted as if the Post Oak Central and Terminus transactions discussed above had occurred at the beginning of each of the periods presented. The supplemental pro forma information is not necessarily indicative of future results or of actual results that would have been achieved had the transactions been consummated at the beginning of each period.

13
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Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012

(in thousands, except per share amounts)
Revenues
$
44,158

 
$
34,845

 
$
85,263

 
$
70,572

Income (loss) from continuing operations
453

 
6,632

 
57,618

 
5,163

Net income (loss)
819

 
10,849

 
58,415

 
113

Net income (loss) available to common stockholders
(5,579
)
 
7,020

 
48,283

 
(5,474
)
Per share information:
 
 
 
 
 
 
 
Basic
$
(0.05
)
 
$
0.07

 
$
0.43

 
$
(0.05
)
Diluted
$
(0.05
)
 
$
0.07

 
$
0.43

 
$
(0.05
)
8. OTHER ASSETS
Other assets on the balance sheets as of June 30, 2013 and December 31, 2012 included the following (in thousands):
 
 
June 30, 2013
 
December 31, 2012
Lease inducements, net of accumulated amortization of $3,632 and $4,718 in 2013 and 2012, respectively
 
$
9,955

 
$
11,089

FF&E and leasehold improvements, net of accumulated depreciation of $19,406 and $18,877 in 2013 and 2012, respectively
 
4,985

 
4,814

Prepaid expenses and other assets
 
6,373

 
2,044

Predevelopment costs and earnest money
 
1,881

 
3,284

Loan closing costs, net of accumulated amortization of $2,530 and $2,624 in 2013 and 2012, respectively
 
2,940

 
3,704

Intangible Assets:
 
 
 
 
In-place leases, net of accumulated amortization of $11,432 and $5,729 in 2013 and 2012, respectively
 
50,006

 
21,637

Above market leases, net of accumulated amortization of $10,233 and $9,424 in 2013 and 2012, respectively
 
7,167

 
6,892

Goodwill
 
4,147

 
4,751

 
 
$
87,454

 
$
58,215


Goodwill relates entirely to the office reportable segment. As office assets are sold, either by the Company or by joint ventures in which the Company has an ownership interest, goodwill is reduced. The following is a summary of goodwill activity for the six months ended June 30, 2013 and 2012 (in thousands):
 
Six Months Ended June 30,
 
2013
 
2012
Beginning balance
$
4,751

 
$
5,155

Allocated to property sales
(604
)
 
(116
)
Ending balance
$
4,147

 
$
5,039

9. NONCONTROLLING INTERESTS
The Company consolidates various joint ventures that are involved in the ownership and/or development of real estate. The following table details the components of redeemable noncontrolling interests in consolidated entities for the six months ended June 30, 2013 and 2012 (in thousands):

14
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Six Months Ended June 30,
 
 
2013
 
2012
Beginning balance
 
$
—

 
$
2,763

Net income (loss) attributable to redeemable noncontrolling interests
 
52

 
(2,024
)
Distributions to redeemable noncontrolling interests
 
(52
)
 
(858
)
Other
 
—

 
119

Ending balance
 
$
—

 
$
—

The following reconciles the net income or loss attributable to nonredeemable noncontrolling interests as shown in the statements of equity to the net income or loss attributable to noncontrolling interests as shown in the statements of operations, which includes both redeemable and nonredeemable interests, for the six months ended June 30, 2013 and 2012 (in thousands):
 
 
Six Months Ended June 30,
 
 
2013
 
2012
Net income attributable to nonredeemable noncontrolling interests
 
$
(970
)
 
$
(1,157
)
Net (income) loss attributable to redeemable noncontrolling interests
 
(52
)
 
2,024

Net (income) loss
 
(1,022
)
 
867

10. REPORTABLE SEGMENTS
The Company has five reportable segments: Office, Retail, Land, Third Party Management and Leasing, and Other. These reportable segments represent an aggregation of operating segments reported to the chief operating decision maker based on similar economic characteristics that include the type of product and the nature of service. Each segment includes both consolidated operations and joint ventures, where applicable. The Office and Retail segments show the results for that product type. The Land segment includes results of operations for certain land holdings and single-family residential communities that are sold as developed lots to homebuilders. Fee income and related expenses for the third party-owned properties which are managed or leased by the Company are included in the Third Party Management and Leasing segment. In 2012, the Company sold its third party management and leasing business. The Other segment includes:
•
fee income for third party owned and joint venture properties for which the Company performs management, development and leasing services;
•
compensation for corporate employees, other than those in the Third Party Management and Leasing segment;
•
general corporate overhead costs, interest expense for consolidated and unconsolidated entities;
•
income attributable to noncontrolling interests;
•
income taxes;
•
depreciation; and
•
preferred dividends.
Company management evaluates the performance of its reportable segments in part based on funds from operations available to common stockholders (“FFO”). FFO is a supplemental operating performance measure used in the real estate industry. The Company calculated FFO using the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition of FFO, which is net income (loss) available to common stockholders (computed in accordance with GAAP), excluding extraordinary items, cumulative effect of change in accounting principle and gains on sale or impairment losses on depreciable property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
During the fourth quarter of 2012, the Company changed the format of the information presented to the chief operating decision maker about its segments and revised its presentation of the segment information included in the following tables. These changes did not result in a change in the number of reportable segments. Prior years' amounts were changed to be consistent with the current year's presentation.
FFO is used by industry analysts, investors and the Company as a supplemental measure of a REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of a REIT’s operating performance that excludes historical

15
Table of Contents


cost depreciation, among other items, from GAAP net income. Management believes the use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates operating performance in part based on FFO. Additionally, the Company uses FFO, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and other key employees.
Segment net income, the balance of the Company’s investment in joint ventures and the amount of capital expenditures are not presented in the following tables. Management does not utilize these measures when analyzing its segments or when making resource allocation decisions, and therefore this information is not provided. FFO is reconciled to net income (loss) on a total Company basis (in thousands):
Three Months Ended June 30, 2013
 
Office
 
Retail
 
Land
 
Third Party Management and Leasing
 
Other
 
Total
 Net operating income
 
$
23,894

 
$
4,303

 
$
—

 
$
—

 
$
377

 
$
28,574

 Sales less costs of sales
 
—

 
—

 
276

 
—

 
(8
)
 
268

 Fee income
 
—

 
—

 
—

 
3

 
2,931

 
2,934

 Other income
 
—

 
—

 
—

 
—

 
2,064

 
2,064

 Third party management and leasing expenses
 
—

 
—

 
—

 
(27
)
 
—

 
(27
)
 Separation expenses
 
—

 
—

 
—

 
—

 
—

 
—

 General and administrative expenses
 
—

 
—

 
—

 
—

 
(4,552
)
 
(4,552
)
 Reimbursed expenses
 
—

 
—

 
—

 
—

 
(1,359
)
 
(1,359
)
 Interest expense
 
—

 
—

 
—

 
—

 
(6,573
)
 
(6,573
)
 Other expenses
 
—

 
—

 
—

 
—

 
(1,288
)
 
(1,288
)
 Preferred stock dividends and original issuance costs
 
—

 
—

 
—

 
—

 
(5,883
)
 
(5,883
)
 Funds from operations available to common stockholders
 
$
23,894

 
$
4,303

 
$
276

 
$
(24
)
 
$
(14,291
)
 
14,158

 
 
 
 
 
 
 
 
 
 
 
 
 
 Real estate depreciation and amortization, including Company's share of joint ventures
 
 
 
 
 
 
 
 
 
 
 
(19,953
)
Gain on sale of depreciated investment properties, including Company's share of joint ventures
 
 
 
 
 
 
 
 
 
 
 
216

 Net loss available to common stockholders
 
 
 
 
 
 
 
 
 
 
 
$
(5,579
)

16
Table of Contents


Three Months Ended June 30, 2012
 
Office
 
Retail
 
Land
 
Third Party Management and Leasing
 
Other
 
Total
 Net operating income
 
$
20,013

 
$
7,415

 
$
—

 
$
—

 
$
—

 
$
27,428

 Sales less costs of sales
 
—

 
—

 
90

 
—

 
53

 
143

 Fee income
 
—

 
—

 
—

 
6,029

 
2,786

 
8,815

 Other income
 
—

 
—

 
—

 
—

 
112

 
112

 Third party management and leasing expenses
 
—

 
—

 
—

 
(4,607
)
 
—

 
(4,607
)
 Separation expenses
 
—

 
—

 
—

 
—

 
(79
)
 
(79
)
 General and administrative expenses
 
—

 
—

 
—

 
—

 
(5,646
)
 
(5,646
)
 Reimbursed expenses
 
—

 
—

 
—

 
—

 
(1,357
)
 
(1,357
)
 Interest expense
 
—

 
—

 
—

 
—

 
(6,937
)
 
(6,937
)
 Other expenses
 
—

 
—

 
—

 
—

 
(1,493
)
 
(1,493
)
 Preferred stock dividends
 
—

 
—

 
—

 
—

 
(3,227
)
 
(3,227
)
 Funds from operations available to common stockholders
 
$
20,013

 
$
7,415

 
$
90

 
$
1,422

 
$
(15,788
)
 
13,152

 
 
 
 
 
 
 
 
 
 
 
 
 
 Real estate depreciation and amortization, including Company's share of joint ventures
 
 
 
 
 
 
 
 
 
 
 
(15,022
)