Edgar Filing: COUSINS PROPERTIES INC

Form 10-K December 31, 2013

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________________________

FORM 10-K



ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013



¨	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	58-0869052
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

191 Peachtree Street NE, Suite 500, Atlanta, Georgia	30303-1740
(Address of principal executive offices)	(Zip Code)

(404) 407-1000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Name of Exchange on which registered
Common Stock ($1 par value)	New York Stock Exchange

7.50% Series B Cumulative Redeemable Preferred Stock ($1 par value)	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

___________________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No ý

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 (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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý 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. ý

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	o (Do not check if a smaller reporting company)	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 ¨ No ý

As of June 28, 2013, the aggregate market value of the common stock of Cousins Properties Incorporated held by non-affiliates was $1,138,511,259 based on the closing sales price as reported on the New York Stock Exchange. As of February 6, 2014, 189,746,659 shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s proxy statement for the annual stockholders meeting to be held on May 6, 2014 are incorporated by reference into Part III of this Form 10-K.

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PART I
Item 1.	Business	2

Item 1A.	Risk Factors	4

Item 1B.	Unresolved Staff Comments	13

Item 2.	Properties	13

Item 3.	Legal Proceedings	17

Item 4.	Mine Safety Disclosures	18

Item X.	Executive Officers of the Registrant	18

PART II
Item 5.	Market for Registrant’s Common Stock and Related Stockholder Matters	19

Item 6.	Selected Financial Data	20

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 7A.	Quantitative and Qualitative Disclosure about Market Risk	39

Item 8.	Financial Statements and Supplementary Data	40

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	41

Item 9A.	Controls and Procedures	41

Item 9B.	Other Information	43
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	43

Item 11.	Executive Compensation	44

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	44

Item 13.	Certain Relationships and Related Transactions, and Director Independence	44

Item 14.	Principal Accountant Fees and Services	44

PART IV
Item 15.	Exhibits and Financial Statement Schedules	44

SIGNATURES		49

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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 this Form 10-K. 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 acquisitions of land;

•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 failure to achieve anticipated benefits from acquisitions or dispositions;


•	the potential dilutive effect of common stock offerings;


•	the availability of buyers and adequate pricing with respect to the disposition of assets;


•	risks related to the geographic concentration of our portfolio;


•	risks and uncertainties related to national and local economic conditions, the real estate industry in general, and the commercial real estate markets in particular;


•	changes to the Company's strategy with regard to land and other non-core holdings that require impairment losses to be recognized;


•	the effect of the sale of the Company's third party management and leasing business;


•	leasing risks, including the ability to obtain new tenants or renew expiring tenants, and the ability to lease newly developed and/or recently acquired 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 zoning approval, receipts of required permits, 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.

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PART I


Item 1.	Business

Corporate Profile

Cousins Properties Incorporated (the “Registrant” or “Cousins”) is a Georgia corporation, which, since 1987, has elected to be taxed as a real estate investment trust (“REIT”). Cousins Real Estate Corporation (“CREC”), including its subsidiaries, is a taxable entity wholly-owned by the Registrant, which is consolidated with the Registrant. CREC owns, develops, and manages its own real estate portfolio and performs certain real estate related services for other parties. The Registrant, its subsidiaries, and CREC combined are hereafter referred to as the “Company.” The Company has been a public company since 1962, and its common stock trades on the New York Stock Exchange under the symbol “CUZ.”

Company Strategy

The Company’s strategy is to create value for its stockholders through the acquisition, development, ownership, and management of top-tier urban office assets and opportunistic mixed-use developments in Sunbelt markets, with a particular focus on Georgia, Texas, and North Carolina. The Company’s strategy is based on a simple platform, trophy assets, opportunistic investments, and a strong balance sheet. This approach enables the Company to maintain a targeted, asset-specific approach to investing where it seeks to leverage its acquisition and development skills, relationships, market knowledge, and operational expertise. The Company expects to generate returns and create stockholder value through the lease up of its existing portfolio, the execution of its development pipeline, and through opportunistic acquisition and development investments within its core markets.

2013 Activities

During 2013, the Company engaged in several transactions that (1) further simplified its business platform by selling substantially all of its lifestyle and power center retail assets; (2) increased its exposure to the Texas markets through its acquisition activities; (3) maintained its strong balance sheet through equity and debt activities; and (4) increased occupancy at its existing assets through its leasing activities. The following is a summary of the significant 2013 activities of the Company.

Acquisition Activity


•	Purchased the remaining 80% interest in Terminus 200 that it did not already own from a fund managed by Morgan Stanley Real Estate Investing in a transaction that valued the property at $164.0 million and simultaneously formed a 50/50 joint venture with institutional investors advised by J.P. Morgan Asset Management for both Terminus 100 and Terminus 200.


•	Purchased Post Oak Central, a Class-A office complex in the Galleria submarket of Houston, from an affiliate of J.P. Morgan Asset Management for $230.9 million.


•	Purchased 816 Congress, a Class-A office tower in downtown Austin, for $102.4 million.


•	Purchased Greenway Plaza, a 4.3 million square-foot 10-building office portfolio in Houston, and 777 Main, a 980,000 square-foot office tower in Fort Worth, Texas. The total purchase price for these assets was $1.1 billion.

Development Activity


•	Commenced construction of Colorado Tower, a Class-A office tower in downtown Austin, which is expected to have 373,000 square feet of space, with a total projected cost of $126.1 million.


•	Commenced construction of the second phase of Emory Point, which is expected to consist of 307 apartments and 43,000 square feet of retail space, with a total projected cost of $73.3 million.

Disposition Activity


•	Sold Tiffany Springs MarketCenter for $53.5 million.


•	Sold the Company’s interest in CP Venture Two LLC and CP Venture Five LLC in a transaction that valued its interest at $57.4 million prior to the allocation of property level debt.


•	Sold the The Avenue Murfreesboro, which was held through CF Murfreesboro Associates, in a transaction that valued the Company's interest at $82.0 million.

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•	Sold the Inhibitex office building for $8.3 million prior to the allocation of free rent credits.


•	Sold all remaining land at the Company’s Jefferson Mill project for $2.9 million.


•	Sold nine acres of land in Round Rock, Texas for $2.8 million.

Financing Activity


•	Issued 85.5 million shares of common stock in two offerings at an average price of $10.09 per share, generating net proceeds of $826.2 million.


•	Redeemed all outstanding shares of the Company’s Series A Cumulative Redeemable Preferred Stock for $74.8 million.


•	Closed a non-recourse mortgage loan on Promenade with a principal balance of $114.0 million, a fixed interest rate of 4.27%, and a term of nine years.


•	Closed a non-recourse mortgage loan on Post Oak Central with a principal balance of $188.8 million, a fixed interest rate of 4.26%, and a term of seven years.


•	Closed a construction loan on Emory Point Phase II with an available balance of $46.0 million, a variable interest rate of one-month LIBOR plus 1.85%, and a term of three years with two one-year extension options.


•	Refinanced the mortgage loan on Emory University Hospital Midtown Medical Office Tower, lowering the interest rate to 3.5% from 5.9%.

Portfolio Activity


•	Leased or renewed 1,720,000 square feet of office and retail space.


•	On a same property basis, increased percent weighted average occupied from 89.0% in the fourth quarter of 2012 to 90.4% in the fourth quarter of 2013.


•	Cash-basis second generation net effective rent for the fourth quarter was up 11.3% over the prior year.

Other Activity


•	Recognized an additional gain of $4.6 million associated with the 2012 sale of the Company’s third party management business. This amount was based upon the performance of the management and leasing contracts for the year following the sale.

Effect of 2013 Activities

As a result of the significant 2013 activity discussed above, the Company is larger, has more assets in Texas, is more focused on the office sector, is less leveraged, and is more efficiently managed. Below are certain metrics that demonstrate these changes:



	December 31,
	2012			2013
Total market capitalization (in billions)	$	1.6		$	2.9
Texas square footage to total square footage	8.9		%	51.5		%
Office square footage to total square footage	65.6		%	93.8		%
Debt to total market capitalization	36.5		%	29.5		%
Same property weighted average occupancy (fourth quarter)	89.0		%	90.4		%
Land as percentage of undepreciated assets	3.5		%	1.6		%
Annualized general and administrative expense as a percentage of undepreciated assets (fourth quarter)	1.3		%	0.7		%

Environmental Matters

The Company’s business operations are subject to various federal, state, and local environmental laws and regulations governing land, water, and wetlands resources. Among these are certain laws and regulations under which an owner or operator

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of real estate could become liable for the costs of removal or remediation of certain hazardous or toxic substances present 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 properly remediate such substances, 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 typically manages this potential liability through performance of Phase I Environmental Site Assessments and, as necessary, Phase II environmental sampling, on properties it acquires or develops, although no assurance can be given that environmental liabilities do not exist, that the reports revealed all environmental liabilities or that no prior owner created any material environmental condition not known to the Company. In certain situations, the Company has also sought to avail itself of legal and regulatory protections offered by federal and state authorities to prospective purchasers of property. Where applicable studies have resulted in the determination that remediation was required by applicable law, the necessary remediation is typically incorporated into the acquisition or development activity of the relevant property. 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 a property to the extent that hazardous or toxic substances were present during the prior ownership period. A transfer of the property does not necessarily relieve an owner of such liability. Thus, although the Company is not aware of any such situation, the Company may be liable in respect to properties previously sold. The Company believes that it and its properties are in compliance in all material respects with all applicable federal, state, and local laws, ordinances, and regulations governing the environment.

Competition

The Company competes with other real estate owners with similar properties located in its markets, and distinguishes itself to tenants/buyers primarily on the basis of location, rental rates/sales prices, services provided, reputation, and the design and condition of the facilities. The Company also competes with other real estate companies, financial institutions, pension funds, partnerships, individual investors, and others when attempting to acquire and develop properties.

Executive Offices; Employees

The Registrant’s executive offices are located at 191 Peachtree Street, Suite 500, Atlanta, Georgia 30303-1740. On December 31, 2013, the Company employed 237 people.

Available Information

The Company makes available free of charge on the “Investor Relations” page of its website, www.cousinsproperties.com, its filed and furnished reports on Forms 10-K, 10-Q, and 8-K, and all amendments thereto, as soon as reasonably practicable after the reports are filed with or furnished to the Securities and Exchange Commission (the “SEC”).

The Company’s Corporate Governance Guidelines, Director Independence Standards, Code of Business Conduct and Ethics, and the Charters of the Audit Committee, the Investment Committee, and the Compensation, Succession, Nominating and Governance Committee of the Board of Directors are also available on the “Investor Relations” page of the Company’s website. The information contained on the Company’s website is not incorporated herein by reference. Copies of these documents (without exhibits, when applicable) are also available free of charge upon request to the Company at 191 Peachtree Street, Suite 500, Atlanta, Georgia 30303-1740, Attention: Marli Quesinberry, Investor Relations. Ms. Quesinberry may also be reached by telephone at (404) 407-1898 or by facsimile at (404) 407-1899. In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC at www.sec.gov.


Item 1A.	Risk Factors

Set forth below are the risks we believe investors should consider carefully in evaluating an investment in the securities of Cousins Properties Incorporated.

General Risks of Owning and Operating Real Estate

Our ownership of commercial real estate involves a number of risks, the effects of which could adversely affect our business.

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General economic and market risks. In periods during, or following, a general economic decline or recessionary climate, our assets may not generate sufficient cash to pay expenses, service debt, or cover maintenance, and, as a result, our results of operations and cash flows may be adversely affected. Several factors may adversely affect the economic performance and value of our properties. These factors include, among other things:


•	changes in the national, regional and local economic climate;


•	local real estate conditions such as an oversupply of rentable space or a reduction in demand for rentable space;


•	the attractiveness of our properties to tenants or buyers;


•	competition from other available properties;


•	changes in market rental rates and related concessions granted to tenants including, but not limited to, free rent, tenant allowances, and tenant improvement allowances; and


•	the need to periodically repair, renovate, and re-lease buildings.

Uncertain economic conditions may adversely impact current tenants in our various markets and, accordingly, could affect their ability to pay rents owed to us pursuant to their leases. In periods of economic uncertainty, tenants are more likely to close less profitable locations and/or to declare bankruptcy; and, pursuant to various bankruptcy laws, leases may be rejected and thereby terminated. Furthermore, our ability to sell or lease our properties at favorable rates, or at all, may be negatively impacted by general or local economic conditions.

Our ability to collect rent from tenants may affect our ability to pay for adequate maintenance, insurance, and other operating costs (including real estate taxes). Also, the expense of owning and operating a property is not necessarily reduced when circumstances such as market factors cause a reduction in income from the property. If a property is mortgaged and we are unable to meet the mortgage payments, the lender could foreclose on the mortgage and take title to the property. In addition, interest rate levels, the availability of financing, changes in laws, and governmental regulations (including those governing usage, zoning and taxes) may adversely affect our financial condition.

Impairment risks. We regularly review our real estate assets for impairment; and based on these reviews, we may record impairment losses that have an adverse effect on our results of operations. Negative or uncertain market and economic conditions, as well as market volatility, increase the likelihood of incurring impairment losses. If management decides to sell a real estate asset rather than holding it for long term investment or reduces its estimates of future cash flows on a real estate asset, the risk of impairment increases. The magnitude of and frequency with which these charges occur could materially and adversely affect our business, financial condition, and results of operations.

Leasing risk. Our operating revenues are dependent upon entering into leases with, and collecting rents from, our tenants. Tenants whose leases are expiring may desire to decrease the space they lease and/or may be unwilling to continue their lease. When leases expire or are terminated, replacement tenants may not be available upon acceptable terms and market rental rates may be lower than the previous contractual rental rates. Also, our tenants may approach us for additional concessions in order to remain open and operating. The granting of these concessions may adversely affect our results of operations and cash flows to the extent that they result in reduced rental rates, additional capital improvements, or allowances paid to, or on behalf of, the tenants.

Tenant and property concentration risk. As of December 31, 2013, our top 20 tenants represented 41% of our annualized base rental revenues. While no single tenant accounts for more than 7% of our annualized base rental revenues, the loss of one or more of these tenants could have a significant negative impact on our results of operations or financial condition if a suitable replacement tenant is not secured in a timely fashion.

For the three months ended December 31, 2013, 32% of our net operating income was derived from the metropolitan Atlanta area and 49% was derived from the metropolitan Houston area. In addition, as of December 31, 2013, 21% of our total square footage was leased to tenants in the energy sector. Any adverse economic conditions impacting Atlanta, Houston, or any of their submarkets or the energy industry could adversely affect our overall results of operations and financial condition.

Uninsured losses and condemnation costs. Accidents, earthquakes, terrorism incidents, and other losses at our properties could adversely affect our operating results. Casualties may occur that significantly damage an operating property, and insurance proceeds may be less than the total loss incurred by us. Although we maintain casualty insurance under policies we believe to be adequate and appropriate, including rent loss insurance on operating properties, some types of losses, such as those related to the termination of longer-term leases and other contracts, generally are not insured. Certain types of insurance may not be available or may be available on terms that could result in large uninsured losses. Property ownership also involves potential liability to third parties for such matters as personal injuries occurring on the property. Such losses may not be fully insured. In

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addition to uninsured losses, various government authorities may condemn all or parts of operating properties. Such condemnations could adversely affect the viability of such projects.

Environmental issues. Environmental issues that arise at our properties could have an adverse effect on our financial condition and results of operations. Federal, state, and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at a property. If determined to be liable, the owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination, or perform such investigation and clean-up itself. Although certain legal protections may be available to prospective purchasers of property, these laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the regulated substances. Even if more than one person may have been responsible for the release of regulated substances at the property, each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from regulated substances emanating from that site. We are not currently aware of any environmental liabilities at locations that we believe could have a material adverse effect on our business, assets, financial condition, or results of operations. Unidentified environmental liabilities could arise, however, and could have an adverse effect on our financial condition and results of operations.

Joint venture structure risks. Similar to other real estate companies, we have interests in various joint ventures (including partnerships and limited liability companies) and may in the future invest in real estate through such structures. Our venture partners may have rights to take actions over which we have no control, or the right to withhold approval of actions that we propose, either of which could adversely affect our interests in the related joint ventures and in some cases our overall financial condition and results of operations. These structures involve participation by other parties whose interests and rights may not be the same as ours. For example, a venture partner might have economic and/or other business interests or goals which are incompatible with our business interests or goals and that venture partner may be in a position to take action contrary to our interests. In addition, such venture partners may default on their obligations, which could have an adverse impact on the financial condition and operations of the joint venture. Such defaults may result in our fulfilling their obligations that may, in some cases, require us to contribute additional capital to the ventures. Furthermore, the success of a project may be dependent upon the expertise, business judgment, diligence, and effectiveness of our venture partners in matters that are outside our control. Thus, the involvement of venture partners could adversely impact the development, operation, ownership, or disposition of the underlying properties.

Liquidity risk. Real estate investments are relatively illiquid and can be difficult to sell and convert to cash quickly. As a result, our ability to sell one or more of our properties, whether in response to any changes in economic or other conditions or in response to a change in strategy, may be limited. In the event we want to sell a property, we may not be able to do so in the desired time period, the sales price of the property may not meet our expectations or requirements, and we may be required to record an impairment loss on the property as a result.

Compliance or failure to comply with federal, state and local regulatory requirements could result in substantial costs.

Our properties are subject to various federal, state, and local regulatory requirements, such as the Americans with Disabilities Act and state and local fire, health, and life safety requirements. Compliance with these regulations may involve upfront expenditures and/or ongoing costs. If we fail to comply with these requirements, we could incur fines or other monetary damages. We do not know whether existing requirements will change or whether compliance with existing or future requirements will require significant unanticipated expenditures that will affect our cash flows and results of operations.

Any failure to timely sell land holdings could result in additional impairment charges and adversely affect our results of operations.

We maintain holdings of non-income producing land, some of which we may liquidate to generate capital as opposed to holding the land for future development or capital appreciation. The liquidation of our land holdings carries the risk that we will sell the land for less than our basis requiring us to record impairment losses.

Financing Risks

At certain times, interest rates and other market conditions for obtaining capital are unfavorable, and, as a result, we may be unable to raise the capital needed to invest in acquisition or development opportunities, maintain our properties, or otherwise satisfy our commitments on a timely basis, or we may be forced to raise capital at a higher cost or under restrictive terms, which could adversely affect returns on our investments, our cash flows, and results of operations.

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We finance our acquisition and development projects through one or more of the following: our Credit Facility, permanent mortgages, the sale of assets, construction loans, joint venture equity, issuance of common stock, and issuance of preferred stock. Each of these sources may be constrained from time to time because of market conditions, and the related cost of raising this capital may be unfavorable at any given point in time. These sources of capital, and the risks associated with each, include the following:

•

Credit facilities. Terms and conditions available in the marketplace for credit facilities vary over time. We can provide no assurance that the amount we need from our Credit Facility will be available at any given time, or at all, or that the rates and fees charged by the lenders will be reasonable. We incur interest under our Credit Facility at a variable rate. Variable rate debt creates higher debt service requirements if market interest rates increase, which would adversely affect our cash flow and results of operations. Our Credit Facility contains customary restrictions, requirements and other limitations on our ability to incur indebtedness, including restrictions on total debt outstanding, restrictions on secured recourse debt outstanding, and requirements to maintain minimum fixed charge coverage ratios. Our continued ability to borrow under our Credit Facility is subject to compliance with these covenants.

•

Mortgage financing. The availability of financing in the mortgage markets is dependent upon various conditions, including the willingness of mortgage lenders to lend at any given point in time. Interest rates and loan-to-value ratios may also be volatile, and we may from time to time elect not to proceed with mortgage financing due to unfavorable terms offered by lenders. This could adversely affect our ability to finance acquisition or development activities. In addition, if a property is mortgaged to secure payment of indebtedness and we are unable to make the mortgage payments, the lender may foreclose, resulting in loss of income and asset value. We may not be able to refinance debt secured by our properties at the same levels or on the same terms, which could adversely affect our business, financial condition and results of operations. Further, at the time a loan matures, the property may be worth less than the loan amount and, as a result, the Company may determine not to refinance the loan and permit foreclosure, generating a loss to the Company and defaults on other loans.

•

Property sales. Real estate markets tend to experience market cycles. Because of such cycles, the potential terms and conditions of sales, including prices, may be unfavorable for extended periods of time. In addition, our status as a REIT limits our ability to sell properties, and this may affect our ability to liquidate an investment. As a result, our ability to raise capital through property sales in order to fund our acquisition and development projects or other cash needs could be limited. In addition, mortgage financing on a property may prohibit prepayment and/or impose a prepayment penalty upon the sale of that property, which may decrease the proceeds from a sale or refinancing or make the sale or refinancing impractical.

•

Construction loans. Construction loans generally relate to specific assets under construction and fund costs above an initial equity amount deemed acceptable to the lender. Terms and conditions of construction facilities vary, but they generally carry a term of two to five years, charge interest at variable rates, require the lender to be satisfied with the nature and amount of construction costs prior to funding and require the lender to be satisfied with the level of pre-leasing prior to closing. Construction loans frequently require a portion of the loan to be recourse to the Company in addition to being recourse to the the equity in the asset. While construction lending is generally competitive and offered by many financial institutions, there may be times when these facilities are not available or are only available upon unfavorable terms which could have an adverse effect on our ability to fund development projects or on our ability to achieve the returns we expect.


•	Joint ventures. Joint ventures, including partnerships or limited liability companies, tend to be complex arrangements, and there are only a limited number of parties willing to undertake such investment structures. There is no guarantee that we will be able to undertake these ventures at the times we need capital.

•

Common stock. We have sold common stock from time to time to raise capital. Common stock offerings may have a dilutive effect on our earnings per share and funds from operations per share after giving effect to the issuance of our common stock in an offering and the receipt of the expected net proceeds. The actual amount of dilution, if any, from any future offering of common stock will be based on numerous factors, particularly the use of proceeds and any return generated thereby, and cannot be determined at this time. The per share trading price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market in connection with an offering, or otherwise, or as a result of the perception or expectation that such sales could occur. We can also provide no assurance that conditions will be favorable for future issuances of common stock when we need the capital, which could have an adverse effect on our ability to fund acquisition and development activities.

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•

Preferred stock. The availability of preferred stock at favorable terms and conditions is dependent upon a number of factors including the general condition of the economy, the overall interest rate environment, the condition of the capital markets and the demand for this product by potential holders of the securities. We can provide no assurance that conditions will be favorable for future issuances of preferred stock when we need the capital, which could have an adverse effect on our ability to fund acquisition and development activities.

As a result of any additional indebtedness incurred to consummate acquisitions, we may experience a potential material adverse effect on our financial condition and results of operations.

The incurrence of new indebtedness could have adverse consequences on our business, such as:


•	requiring us to use a substantial portion of our cash flow from operations to service our indebtedness, which would reduce the available cash flow to fund working capital, capital expenditures, development projects and other general corporate purposes and reduce cash for distributions;


•	limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or other debt service requirements or for other purposes;


•	increasing the costs of incurring additional debt;


•	increasing our exposure to floating interest rates;


•	limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions;


•	restricting us from making strategic acquisitions, developing properties or exploiting business opportunities;


•	restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness;


•	exposing us to potential events of default (if not cured or waived) under covenants contained in our debt instruments that could have a material adverse effect on our business, financial condition and operating results;


•	increasing our vulnerability to a downturn in general economic conditions; and


•	limiting our ability to react to changing market conditions in our industry.

The impact of any of these potential adverse consequences could have a material adverse effect on our results of operations, financial condition, and liquidity.

Covenants contained in our Credit Facility and mortgages could restrict or hinder our operational flexibility, which could adversely affect our results of operations.

Our Credit Facility imposes financial and operating covenants on us. These covenants may be modified from time to time, but covenants of this type typically include restrictions and limitations on our ability to incur debt, as well as limitations on the amount of our unsecured debt, limitations on distributions to stockholders, and limitations on the amount of joint venture activity in which we may engage. These covenants may limit our flexibility in making business decisions. In addition, our Credit Facility contains financial covenants that, among other things, require that our earnings, as defined, exceed our fixed charges, as defined, by a specified amount and a covenant that requires our net worth, as defined, to be above a specified dollar amount. If we fail to comply with these covenants, our ability to borrow may be impaired, which could potentially make it more difficult to fund our capital and operating needs. Our failure to comply with such covenants could cause a default, and we may then be required to repay our outstanding debt with capital from other sources. Under those circumstances, other sources of capital may not be available to us or may be available only on unattractive terms, which could materially and adversely affect our financial condition and results of operations. In addition, the cross default provision on the Credit Facility may affect business decisions on other mortgage debt.

Some of our property mortgages contain customary negative covenants, including limitations on our ability, without the lender’s prior consent, to further mortgage that property, to enter into new leases, to modify existing leases, or to sell that property. Compliance with these covenants and requirements could harm our operational flexibility and financial condition.

Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our securities.

Total debt as a percentage of either total asset value or total market capitalization is often used by analysts to gauge the financial health of equity REITs such as us. If our degree of leverage is viewed unfavorably by lenders or potential joint venture partners, it could affect our ability to obtain additional financing. In general, our degree of leverage could also make us more

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vulnerable to a downturn in business or the economy. In addition, changes in our debt to market capitalization ratio, which is in part a function of our stock price, or to other measures of asset value used by financial analysts, may have an adverse effect on the market price of common stock.

Real Estate Acquisition and Development Risks

We face risks associated with the development of real estate, such as delay, cost overruns and the possibility that we are unable to lease a portion of the space that we build, which could adversely affect our results.

Development activities contain certain inherent risks. Although we seek to minimize risks from commercial development through various management controls and procedures, development risks cannot be eliminated. Some of the key factors affecting development of commercial property are as follows:

•

The availability of sufficient development opportunities. Absence of sufficient development opportunities could result in our experiencing slower growth in earnings and cash flows. Development opportunities are dependent upon a wide variety of factors. Availability of these opportunities can be volatile as a result of, among other things, economic conditions and product supply/demand characteristics in a particular market.

•

Abandoned predevelopment costs. The development process inherently requires that a large number of opportunities be pursued with only a few actually being developed and constructed. We may incur significant costs for predevelopment activity for projects that are later abandoned, which would directly affect our results of operations. For projects that are later abandoned, we must expense certain costs, such as salaries, that would have otherwise been capitalized. We have procedures and controls in place that are intended to minimize this risk, but it is likely that we will incur predevelopment expense on subsequently abandoned projects on an ongoing basis.

•

Project costs. Construction and leasing of a project involves a variety of costs that cannot always be identified at the beginning of a project. Costs may arise that have not been anticipated or actual costs may exceed estimated costs. These additional costs can be significant and could adversely impact our return on a project and the expected results of operations upon completion of the project. Also, construction costs vary over time based upon many factors, including the demand for building materials. We attempt to mitigate the risk of unanticipated increases in construction costs on our development projects through guaranteed maximum price contracts and pre-ordering of certain materials, but we may be adversely affected by increased construction costs on our current and future projects.

•

Leasing risk. The success of a commercial real estate development project is heavily dependent upon entering into leases with acceptable terms within a predefined lease-up period. Although our policy is to achieve pre-leasing goals (which vary by market, product type and circumstances) before committing to a project, it is expected that not all the space in a project will be leased at the time we commit to the project. If the additional space is not leased on schedule and upon the expected terms and conditions, our returns, future earnings and results of operations from the project could be adversely impacted. Whether or not tenants are willing to enter into leases on the terms and conditions we project and on the timetable we expect will depend upon a number of factors, many of which are outside our control. These factors may include:


•	general business conditions in the local or broader economy or in the tenants’ or prospective tenants’ industries;


•	supply and demand conditions for space in the marketplace; and


•	level of competition in the marketplace.

•

Reputation risks. We have historically developed and managed a significant portion of our real estate portfolio and believe that we have built a positive reputation for quality and service with our lenders, joint venture partners and tenants. If we were viewed as developing underperforming properties, suffered sustained losses on our investments, defaulted on a significant level of loans or experienced significant foreclosure or deed in lieu of foreclosure of our properties, our reputation could be damaged. In addition, our strategic disposition of many of our retail projects may negatively impact our relationships with retail tenants in other parts of our portfolio. Damage to our reputation could make it more difficult to successfully develop or acquire properties in the future and to continue to grow and expand our relationships with our lenders, joint venture partners and tenants, which could adversely affect our business, financial condition, and results of operations.

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•	Governmental approvals. All necessary zoning, land-use, building, occupancy and other required governmental permits and authorization may not be obtained, may only be obtained subject to onerous conditions or may not be obtained on a timely basis resulting in possible delays, decreased profitability, and increased management time and attention.

We may face risks associated with property acquisitions, including the acquisition of Greenway Plaza and 777 main (the "Texas Acquisition") and other recent acquisition.

The risks associated with property acquisitions are similar to those described above for real estate development. However, certain additional risks may be present for property acquisitions and redevelopment projects. These risks may include:


•	difficulty finding properties that are consistent with our strategy and that meet our standards;


•	difficulty negotiating with new or existing tenants;


•	the extent of competition for a particular market for attractive acquisitions may hinder our desired level of property acquisitions or redevelopment projects;


•	the actual costs and timing of repositioning or redeveloping acquired properties may be greater than our estimates;


•	the occupancy levels, lease-up timing and rental rates may not meet our expectations;


•	the acquired properties may fail to meet internal projections or otherwise fail to perform as expected;


•	the acquired property may be in a market that is unfamiliar to us and could present additional unforeseen business challenges;


•	the timing of property acquisitions may lag the timing of property dispositions, leading to periods of time where projects' proceeds are not invested as profitably as we desire;


•	the inability to obtain financing for acquisitions on favorable terms or at all;


•	the inability to successfully integrate the operations, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of acquisitions within the anticipated time frames or at all;


•	the inability to effectively monitor and manage our expanded portfolio of properties, retain key employees or attract highly qualified new employees;


•	the possible decline in value of the acquired assets;


•	the diversion of our management’s attention away from other business concerns; and


•	the exposure to any undisclosed or unknown issues, expenses, or potential liabilities relating to acquisitions.

In addition, we may acquire properties subject to liabilities, and with no or limited recourse against the prior owners or other third parties. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it. Any of these risks could cause a failure to realize the intended benefits of our acquisitions and could have a material adverse effect on our financial condition, results of operations, and the market price of our common stock.

The pro forma financial information included in this Form 10-K may not be indicative of our actual financial position or results of operations.

The pro forma financial information contained in this Form 10-K is not necessarily indicative of what our actual financial position or results of operations would have been had the related transactions been completed as of the date indicated. The pro forma financial information reflects adjustments, which are based upon assumptions and preliminary estimates that we believe to be reasonable, but we can provide no assurance that any or all of such assumptions or estimates will turn out to be correct.

General Business Risks

We are dependent upon the services of certain key personnel, the loss of any of whom could adversely impair our ability to execute our business.

One of our objectives is to develop and maintain a strong management group at all levels. At any given time, we could lose the services of key executives and other employees. None of our key executives or other employees is subject to employment contracts. Further, we do not carry key person insurance on any of our executive officers or other key employees. The loss of services of any of our key employees could have an adverse effect upon our results of operations, financial condition and our ability to execute our business strategy.

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Our restated and amended articles of incorporation contain limitations on ownership of our stock, which may prevent a change in control that might otherwise be in the best interests of our stockholders.

Our restated and amended articles of incorporation impose limitations on the ownership of our stock. In general, except for certain individuals who owned stock at the time of adoption of these limitations, and except for persons that are granted waivers by our Board of Directors, no individual or entity may own more than 3.9% of the value of our outstanding stock. The ownership limitation may have the effect of delaying, inhibiting or preventing a transaction or a change in control that might involve a premium price for our stock or otherwise be in the best interest of our stockholders.

We experience fluctuations and variability in our operating results on a quarterly basis and, as a result, our historical performance may not be a meaningful indicator of future results.

Our operating results have fluctuated greatly in the past, due to, among other things, volatility in land sales, property sales, residential lot sales and impairment losses. We are currently engaged in a strategy to simplify our business and focus our resources on Class A office properties in our primary markets which we expect to make our operating results less volatile over time. However, our historical volatility may not allow for predictability in the market by analysts and investors. Therefore, our historical performance may not be a meaningful indicator of our future results.

The market prices of shares of our common stock have been, and may continue to be, subject to fluctuation due to many events and factors such as those described in this report including:


•	actual or anticipated variations in our operating results, funds from operations or liquidity;


•	the general reputation of real estate as an attractive investment in comparison to other equity securities and/or the reputation of the product types of our assets compared to other sectors of the real estate industry;


•	the general stock and bond market conditions, including changes in interest rates or fixed income securities;


•	changes in tax laws;


•	changes to our dividend policy;


•	changes in market valuations of our properties;


•	adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt and our ability to refinance such debt on favorable terms;


•	any failure to comply with existing debt covenants;


•	any foreclosure or deed in lieu of foreclosure of our properties;


•	additions or departures of key executives and other employees;


•	actions by institutional stockholders;


•	uncertainties in world financial markets;


•	the realization of any of the other risk factors described in this report; and


•	general market and economic conditions.

Many of the factors listed above are beyond our control. Those factors may cause market prices of shares of our common stock to decline, regardless of our financial performance, condition and prospects. The market price of shares of our common stock may fall significantly in the future, and it may be difficult for our stockholders to resell our common stock at prices they find attractive, or at all.

If our future operating performance does not meet projections of our analysts or investors, our stock price could decline.

Several independent securities analysts publish quarterly and annual projections of our financial performance. These projections are developed independently by third-party securities analysts based on their own analyses, and we undertake no obligation to monitor, and take no responsibility for, such projections. Such estimates are inherently subject to uncertainty and should not be relied upon as being indicative of the performance that we anticipate for any applicable period. Our actual revenues and net income may differ materially from what is projected by securities analysts. If our actual results do not meet analysts’ guidance, our stock price could decline significantly.

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We face risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.

We face risks associated with security breaches or disruptions, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, persons inside our organization, or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants. There can be no assurance that our efforts to maintain the security and integrity of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involving our IT networks and related systems could adversely impact our financial condition, results of operations, cash flows, liquidity, and the market price of our common stock.

Federal Income Tax Risks

Any failure to continue to qualify as a REIT for federal income tax purposes could have a material adverse impact on us and our stockholders.

We intend to operate in a manner to qualify as a REIT for federal income tax purposes. Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code (the “Code”), for which there are only limited judicial or administrative interpretations. Certain facts and circumstances not entirely within our control may affect our ability to qualify as a REIT. In addition, we can provide no assurance that legislation, new regulations, administrative interpretations or court decisions will not adversely affect our qualification as a REIT or the federal income tax consequences of our REIT status.

If we were to fail to qualify as a REIT, we would not be allowed a deduction for distributions to stockholders in computing our taxable income. In this case, we would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. Unless entitled to relief under certain Code provisions, we also would be disqualified from operating as a REIT for the four taxable years following the year during which qualification was lost. As a result, we would be subject to federal and state income taxes which could adversely affect our results of operations and distributions to stockholders. Although we currently intend to operate in a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause us to revoke the REIT election.

In order to qualify as a REIT, under current law, we generally are required each taxable year to distribute to our stockholders at least 90% of our net taxable income (excluding any net capital gain). To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100%, of our other taxable income, we are subject to tax on the undistributed amounts at regular corporate rates. In addition, we are subject to a 4% nondeductible excise tax to the extent that distributions paid by us during the calendar year are less than the sum of the following:


•	85% of our ordinary income;


•	95% of our net capital gain income for that year; and


•	100% of our undistributed taxable income (including any net capital gains) from prior years.

We generally intend to make distributions to our stockholders to comply with the 90% distribution requirement to avoid corporate-level tax on undistributed taxable income and to avoid the nondeductible excise tax. Distributions could be made in cash, stock or in a combination of cash and stock. Differences in timing between taxable income and cash available for distribution could require us to borrow funds to meet the 90% distribution requirement, to avoid corporate-level tax on undistributed taxable income and to avoid the nondeductible excise tax. Satisfying the distribution requirements may also make it more difficult to fund new investment or development projects.

Certain property transfers may be characterized as prohibited transactions, resulting in a tax on any gain attributable to the transaction.

From time to time, we may transfer or otherwise dispose of some of our properties. Under the Code, any gains resulting from transfers or dispositions, from other than our taxable REIT subsidiary, that are deemed to be prohibited transactions would be subject to a 100% tax on any gain associated with the transaction. Prohibited transactions generally include sales of assets that constitute inventory or other property held for sale to customers in the ordinary course of business. Since we acquire properties primarily for investment purposes, we do not believe that our occasional transfers or disposals of property are deemed to be

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prohibited transactions. However, whether or not a transfer or sale of property qualifies as a prohibited transaction depends on all the facts and circumstances surrounding the particular transaction. The Internal Revenue Service may contend that certain transfers or disposals of properties by us are prohibited transactions. While we believe that the Internal Revenue Service would not prevail in any such dispute, if the Internal Revenue Service were to argue successfully that a transfer or disposition of property constituted a prohibited transaction, we would be required to pay a tax equal to 100% of any gain allocable to us from the prohibited transaction. In addition, income from a prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a REIT for federal income tax purposes.

Disclosure Controls and Internal Control over Financial Reporting Risks

Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives at all times. Deficiencies, including any material weakness, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.


Item 1B.	Unresolved Staff Comments

Not applicable.


Item 2.	Properties

The following table sets forth certain information related to operating properties in which the Company has an ownership interest. Information presented in note 5 to the consolidated financial statements provides additional information related to the Company’s joint ventures. Except as noted, all information presented is as of December 31, 2013 ($ in thousands):

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						Company's Share
	Property Description	Metropolitan Area	Rentable Square Feet	Financial Statement Presentation	Company's Ownership Interest	End of Period Leased	Weighted Average Occupancy (1)	% of Total Net Operating Income (2)	Property Level Debt ($000)	Annualized Base Rents (3)
I.	OFFICE PROPERTIES
	191 Peachtree Tower	Atlanta	1,225,000	Consolidated	100%	86.6%	86.5%	12%	100,000
	The American Cancer Society Center	Atlanta	996,000	Consolidated	100%	82.4%	82.8%	9%	132,714
	Promenade	Atlanta	777,000	Consolidated	100%	89.2%	69.1%	7%	113,573
	Terminus 100	Atlanta	656,000	Unconsolidated	50%	98.3%	95.7%	7%	66,971
	North Point Center East (6)	Atlanta	540,000	Consolidated	100%	94.4%	91.3%	5%	—
	Terminus 200	Atlanta	566,000	Unconsolidated	50%	88.4%	87.9%	3%	41,000
	Meridian Mark Plaza	Atlanta	160,000	Consolidated	100%	99.0%	97.6%	3%	25,813
	Emory University Hospital Midtown Medical Office Tower	Atlanta	358,000	Unconsolidated	50%	98.1%	98.5%	3%	37,500
	GEORGIA		5,278,000					49%	517,571

	Greenway Plaza (4)	Houston	4,348,000	Consolidated	100%	95.4%	95.1%	19%	—
	Post Oak Central (5)	Houston	1,280,000	Consolidated	100%	94.5%	92.0%	12%	188,310
	777 Main	Fort Worth	980,000	Consolidated	100%	73.9%	88.9%	2%	—
	2100 Ross Avenue	Dallas	844,000	Consolidated	100%	79.2%	61.7%	4%	—
	816 Congress	Austin	435,000	Consolidated	100%	76.6%	81.1%	3%	—
	The Points at Waterview	Dallas	203,000	Consolidated	100%	89.6%	89.6%	1%	15,139
	TEXAS		8,090,000					41%	203,449

	Lakeshore Park Plaza (7)	Birmingham	197,000	Consolidated	(8)	97.7%	97.2%	2%	—
	600 University Park Place (7)	Birmingham	123,000	Consolidated	(8)	98.2%	98.2%	1%	—
	ALABAMA		320,000					3%	—

	Gateway Village (9)	Charlotte	1,065,000	Unconsolidated	50%	100.0%	100.0%	1%	26,204
	NORTH CAROLINA		1,065,000					1%	26,204

	TOTAL OFFICE PROPERTIES		14,753,000					94%	747,224	$	211,779

II.	RETAIL PROPERTIES
	Mt. Juliet Village (9)	Nashville	91,000	Unconsolidated	50.5%	75.3%	76.1%	1%	3,055
	The Shops of Lee Village (9)	Nashville	74,000	Unconsolidated	50.5%	91.0%	87.8%	—%	2,757
	Creek Plantation Village (9)	Chattanooga	78,000	Unconsolidated	50.5%	96.4%	96.0%	—%	3,005
	TENNESSEE		243,000					1%	8,817

	Emory Point (Phase I)	Atlanta	80,000	Unconsolidated	75%	86.7%	77.3%	1%	7,078
	GEORGIA		80,000					1%	7,078

	Mahan Village	Tallahassee	147,000	Consolidated	(10)	90.5%	89.3%	1%	14,470
	Highland City Town Center (9)	Lakeland	96,000	Unconsolidated	50.5%	82.9%	85.3%	1%	5,177
	FLORIDA		243,000					2%	19,647

	TOTAL RETAIL PROPERTIES		566,000					4%	35,542	$	4,343

III.	APARTMENTS
	Emory Point (Phase I) (11)	Atlanta	404,000	Unconsolidated	75%	96.8%	68.6%	2%	35,741
	GEORGIA

	TOTAL PORTFOLIO		15,723,000					100%	818,507


(1)	Weighted average economic occupancy represents an average of the square footage occupied at the property during the year. If the property was purchased during the year, average economic occupancy is calculated from the date of purchase forward.


(2)	Net operating income represents rental property revenues less rental property operating expenses for the year ended December 31, 2013.


(3)	Annualized base rents represents the sum of the annualized rent each tenant is paying as of the end of the reporting period. If a tenant is not paying rent due to a free rent concession, annualized base rent is calculated based on the annualized base rent the tenant will pay in the first period it is required to pay rent.


(4)	Contains ten buildings - One Greenway Plaza, Two Greenway Plaza, Three Greenway Plaza, Four Greenway Plaza, Five Greenway Plaza, 3800 Buffalo Speedway, Eight Greenway Plaza, Nine Greenway Plaza, Eleven Greenway Plaza, and Twelve Greenway Plaza.


(5)	Contains three buildings - Post Oak Central I, Post Oak Central II, and Post Oak Central III.


(6)	Contains four buildings - 100 North Point Center East, 200 North Point Center East, 333 North Point Center East, and 555 North Point Center East.


(7)	This property is classified as held for sale as of December 31, 2013.


(8)	The Company received all operating cash flows until the preferred return is met and receives all capital proceeds. No minority interest is currently recorded.


(9)	This property is owned through a joint venture with a third party who has contributed equity, but the equity ownership and the allocation of the results of operations and/or gain on sale may be disproportionate.


(10)	The Company receives all operating cash flows until it meets a preferred return of 9% and receives 87% of the remainder after its partner meets a preferred return of 9%. The Company receives all capital proceeds until it meets a leveraged IRR of 16% and receives 75% of the remainder after its partner receives its investment and a preferred return of 9%.

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(11)	This property consists of 443 units.

Lease Expirations

OFFICE

As of December 31, 2013, the Company’s office portfolio included 17 operating office properties. The weighted average remaining lease term of these office properties was approximately seven years as of December 31, 2013. Most of the major tenant leases in these properties provide for pass through of operating expenses and contractual rents which escalate over time. The leases expire as follows:



Company Share	2014			2015			2016			2017			2018			2019			2020			2021			2022			2023 & Thereafter			Total
Square Feet Expiring	775,135			920,155			1,424,355			1,448,891			1,224,965			687,206			789,999			877,178			822,830			3,177,550			12,148,264
% of Leased Space	6		%	7		%	12		%	12		%	10		%	6		%	6		%	7		%	7		%	27		%	100		%
Annual Contractual Rent ($000s) (1)	$	14,540		$	18,508		$	27,017		$	29,273		$	25,803		$	15,542		$	18,271		$	21,055		$	16,797		$	79,521		$	266,327
Annual Contractual Rent per Square Foot (1)	$	18.76		$	20.11		$	18.97		$	20.20		$	21.06		$	22.62		$	23.13		$	24.00		$	20.41		$	25.03		$	21.92

RETAIL

As of December 31, 2013, the Company's retail portfolio included 6 operating retail properties. The weighted average remaining lease term of these retail properties was approximately thirteen years as of December 31, 2013. Most of the major tenant leases in these properties provide for pass through of operating expenses and contractual rents which escalate over time. The leases expire as follows:



Company Share	2014			2015			2016			2017			2018			2019			2020			2021			2022			2023 & Thereafter			Total
Square Feet Expiring (2)	12,896			6,666			6,048			16,265			18,739			5,015			4,546			8,545			15,026			238,513			332,259
% of Leased Space	4		%	2		%	2		%	4		%	6		%	2		%	1		%	3		%	5		%	71		%	100		%
Annual Contractual Rent ($000s) (1)	$	234		$	131		$	112		$	422		$	450		$	115		$	99		$	244		$	479		$	3,243		$	5,529
Annual Contractual Rent per Square Foot (1)	$	18.16		$	19.64		$	18.48		$	25.92		$	24.04		$	23.02		$	21.74		$	28.50		$	31.91		$	13.60		$	16.64


(1)	Annual Contractual Rent shown is the estimated rate in the year of expiration. It includes the minimum contractual rent paid by the tenant which, in most of the office leases, includes a base year of operating expenses.


(2)	Certain leases contain termination options, with or without penalty, if co-tenancy clauses or sales volume levels are not achieved. The expiration date per the lease is used for these leases in the above table, although early termination is possible.

Development Pipeline (1)

As of December 31, 2013, the Company had the following projects under development ($ in thousands):



Project	Type	Metropolitan Area	Company's Ownership Interest		Project Start Date	Number of Apartment Units/Square Feet	Estimated Project Cost (2)	Project Cost Incurred to Date (2)	Percent Leased		Percent Occupied		Initial Occupancy			Estimated Stabilization (5)

Colorado Tower	Office	Austin, TX	100	%	2Q13	373,000	$126,100	$21,681	22	%	—	%	4Q14	(3	)	4Q15

Emory Point (Phase II)	Mixed	Atlanta, GA	75	%	4Q13		$73,300	$13,378

Apartments						307			—	%	—	%	1Q15	(4	)	1Q16
Retail						43,000			—	%	—	%	2Q15	(4	)	3Q15


(1)	This schedule shows projects currently under active development through the point of stabilization. Amounts included in the estimated project cost column represent the estimated costs of the project through stabilization. Significant estimation

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is required to derive these costs and the final costs may differ from these estimates. The projected stabilization dates are also estimates and are subject to change as the project proceeds through the development process.

(2)

Amount represents 100% of the estimated project cost. Colorado Tower is being funded 100% by the Company and Emory Point Phase II is being funded with a combination of equity from the partners and a $46 million construction loan. Emory Point Phase II will initially be funded by equity contributions until the partners have contributed their required equity amounts. All subsequent funding is expected to come from the Emory Point Phase II construction loan. As of December 31, 2013, $1,000 was outstanding on the Emory Point Phase II construction loan.


(3)	Represents the estimated quarter within which the Company estimates the first office square feet to be occupied.


(4)	Represents the estimated quarter within which the first apartment/retail is expected to be occupied.


(5)	Stabilization represents the quarter within which the Company estimates it will achieve 90% economic occupancy or one year from Initial Occupancy.

Inventory of Land

As of December 31, 2013, the Company owned the following land holdings either directly or indirectly through joint ventures:

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	Metropolitan Area	Company's Ownership Interest	Developable Land Area (Acres)
COMMERCIAL

Wildwood Office Park	Atlanta	50.00%	42
North Point	Atlanta	100.00%	35
Wildwood Office Park	Atlanta	100.00%	18
The Avenue Forsyth-Adjacent Land	Atlanta	100.00%	11
549 / 555 / 557 Peachtree Street	Atlanta	100.00%	1
Georgia			107

Round Rock	Austin	100.00%	51
Research Park V	Austin	100.00%	6
Texas			57

Highland City Town Center-Outparcels, Adjacent Land (1) (2) (3)	Lakeland	50.50%	55
Florida			55

The Shops of Lee Village-Outparcels (2) (3)	Nashville	50.50%	5
Tennessee			5

TOTAL COMMERCIAL LAND ACRES HELD			224

COMPANY'S SHARE OF TOTAL ACRES HELD			172

COST BASIS OF COMMERCIAL LAND HELD			$	49,831

COMPANY'S SHARE OF COST BASIS OF COMMERCIAL LAND HELD			$	25,181

RESIDENTIAL (4)

Paulding County	Atlanta	50.00%	5,458
Blalock Lakes	Atlanta	100.00%	2,660
Callaway Gardens (5)	Atlanta	100.00%	218
Georgia			8,336

Padre Island	Corpus Christi	50.00%	15
Texas			15

TOTAL RESIDENTIAL LAND ACRES HELD			8,351

COMPANY'S SHARE OF TOTAL ACRES HELD			5,614

COST BASIS OF RESIDENTIAL LAND HELD			$	25,704

COMPANY'S SHARE OF COST BASIS OF RESIDENTIAL LAND HELD			$	19,605

GRAND TOTAL COMPANY'S SHARE OF ACRES			5,786

GRAND TOTAL COMPANY'S SHARE OF COST BASIS OF LAND HELD			$	44,786


(1)	Land is adjacent to an existing retail center and is anticipated to either be sold to a third party or developed as an additional phase of the retail center.


(2)	Land relates to outparcels available for sale or ground lease.


(3)	This project is owned through a joint venture with a third party who has contributed equity, but the equity ownership and the allocation of the results of operations and/or gain on sale most likely will be disproportionate.


(4)	Residential represents land that may be sold to third parties as lots or in large tracts for residential or commercial development.


(5)	Company's ownership interest is shown at 100% as Callaway Gardens is owned in a joint venture which is consolidated with the Company. The partner is entitled to a share of the profits after the Company's capital is recovered.


Item 3.	Legal Proceedings

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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 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.


Item 4.	Mine Safety Disclosures

Not applicable.


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
Lawrence L. Gellerstedt III	57	President, Chief Executive Officer
Gregg D. Adzema	49	Executive Vice President, Chief Financial Officer
John S. McColl	51	Executive Vice President
M. Colin Connolly	37	Senior Vice President, Chief Investment Officer
J. Thad Ellis	53	Senior Vice President
John D. Harris, Jr.	54	Senior Vice President, Chief Accounting Officer and Assistant Secretary
Pamela F. Roper	40	Senior Vice President, General Counsel and Corporate Secretary

Family Relationships

There are no family relationships among the Executive Officers or Directors.

Term of Office

The term of office for all officers expires at the annual stockholders’ meeting. The Board retains the power to remove any officer at any time.

Business Experience

Mr. Gellerstedt was appointed President and Chief Executive officer and Director in July 2009. From February 2009 to July 2009, Mr. Gellerstedt served as President and Chief Operating Officer. From May 2008 to February 2009, Mr. Gellerstedt served as Executive Vice President and Chief Development Officer.

Mr. Adzema was appointed Executive Vice President and Chief Financial Officer in November 2010. Prior to joining the Company, Mr. Adzema served as Chief Investment Officer of Hayden Harper Inc., an investment advisory and hedge fund company, from October 2009 to November 2010.

Mr. McColl was appointed Executive Vice President in December 2011. From February 2010 to December 2011, Mr. McColl served as Executive Vice President-Development, Office Leasing and Asset Management. From May 1997 to February 2010, Mr. McColl served as Senior Vice President.

Mr. Connolly was appointed Senior Vice President and Chief Investment Officer in May 2013. From September 2011 to May 2013, Mr. Connolly served as Senior Vice President. Prior to joining the Company, Mr. Connolly served as Executive

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Director with Morgan Stanley from December 2009 to August 2011 and as Vice President with Morgan Stanley from December 2006 to December 2009.

Mr. Ellis was appointed Senior Vice President in December 2011. From August 2006 to December 2011, Mr. Ellis served as Senior Vice President-Client Services.

Mr. Harris was appointed Senior Vice President and Chief Accounting Officer in February 2005. In May 2005, Mr. Harris was appointed Assistant Secretary.

Ms. Roper was appointed Senior Vice President, General Counsel, and Corporate Secretary in October 2012. From February 2008 to October 2012, Ms. Roper served as Senior Vice President, Associate General Counsel, and Assistant Secretary.

PART II

Item 5. Market for Registrant’s Common Stock and Related Stockholder Matters

Market Information

The high and low sales prices for the Company’s common stock and dividends declared per common share were as follows:



	2013 Quarters								2012 Quarters
	First		Second		Third		Fourth		First		Second		Third		Fourth
High	$	10.84	$	11.28	$	10.87	$	11.45	$	7.81	$	8.05	$	8.49	$	8.57
Low	$	8.34	$	9.30	$	9.59	$	9.94	$	6.37	$	6.85	$	7.44	$	7.67
Dividends	$	0.045	$	0.045	$	0.045	$	0.045	$	0.045	$	0.045	$	0.045	$	0.045
Payment Date	2/22/2013		5/29/2013		8/26/2013		12/20/2013		2/23/2012		5/30/2012		8/24/2012		12/21/2012

Holders

The Company’s common stock trades on the New York Stock Exchange (ticker symbol CUZ). On February 6, 2014, there were 800 common stockholders of record.

Purchases of Equity Securities

For information on the Company’s equity compensation plans, see note 13 of the accompanying consolidated financial statements, which is incorporated herein.

The Company purchased the following common shares during the fourth quarter of 2013:



	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)
October 1 - 31	3,016	$	10.80
November 1 - 30	25	$	10.74
December 1 - 31	54	$	10.11
	3,095	$	10.79


(1)	All activity for the fourth quarter of 2013 related to the remittances of shares for income taxes associated with option exercises.

Performance Graph

The following graph compares the five-year cumulative total return of the Company’s Common Stock with the NYSE Composite Index, the FTSE NAREIT Equity Index and the SNL US REIT Office Index. The graph assumes a $100 investment in each of the indices on December 31, 2008 and the reinvestment of all dividends.

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COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE COMPANIES, PEER

GROUPS, INDUSTRY INDICES AND/OR BROAD MARKETS



	Fiscal Year Ended
Index	12/31/2008	12/31/2009	12/31/2010	12/31/2011	12/31/2012	12/31/2013
Cousins Properties Incorporated	100.00	60.06	68.93	54.30	72.39	90.90
NYSE Composite Index	100.00	128.58	146.07	140.71	163.43	206.56
FTSE NAREIT Equity Index	100.00	127.99	163.78	177.36	209.39	214.56
SNL US REIT Office Index	100.00	137.08	166.26	164.77	188.77	201.17


Item 6.	Selected Financial Data

The following selected financial data sets forth consolidated financial and operating information on a historical basis. This data has been derived from the Company’s consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto. The data below has been restated for discontinued operations detailed in note 3 of the consolidated financial statements.

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	For the Years Ended December 31,
	2013			2012			2011			2010			2009
	($ in thousands, except per share amounts)
Rental property revenues	$	194,420		$	114,208		$	94,704		$	90,373		$	89,141
Fee income	10,891			17,797			13,821			14,442			11,837
Other	5,430			4,841			9,600			38,008			35,318
Total revenues	210,741			136,846			118,125			142,823			136,296
Rental property operating expenses	90,498			50,329			40,817			39,133			41,751
Reimbursed expenses	5,215			7,063			6,208			6,303			5,382
General and administrative expenses	21,940			23,208			24,166			28,679			27,550
Depreciation and amortization	76,277			39,424			30,666			32,602			30,058
Interest expense	21,709			23,933			26,677			35,136			37,677
Impairment losses	—			488			96,818			2,554			40,512
Other	11,697			7,922			9,951			34,142			42,724
Total expenses	227,336			152,367			235,303			178,549			225,654
Loss on extinguishment of debt and interest rate swaps	—			(94		)	—			(9,827		)	(2,766		)
Benefit (provision) for income taxes from operations	23			(91		)	186			1,079			(4,341		)
Income (loss) from unconsolidated joint ventures	67,325			39,258			(18,299		)	9,493			(68,697		)
Gain on sale of investment properties	61,288			4,053			3,494			1,946			168,687
Income (loss) from continuing operations	112,041			27,605			(131,797		)	(33,035		)	3,525
Discontinued operations	14,788			20,314			8,330			21,002			26,022
Net income (loss)	126,829			47,919			(123,467		)	(12,033		)	29,547
Net income attributable to noncontrolling interests	(5,068		)	(2,191		)	(4,958		)	(2,540		)	(2,252		)
Preferred share original issuance costs	(2,656		)	—			—			—			—
Preferred dividends	(10,008		)	(12,907		)	(12,907		)	(12,907		)	(12,907		)
Net income (loss) available to common stockholders	$	109,097		$	32,821		$	(141,332	)	$	(27,480	)	$	14,388
Net income (loss) from continuing operations attributable to controlling interest per common share—basic and diluted	$	0.66		$	0.12		$	(1.44	)	$	(0.48	)	$	(0.18	)
Net income (loss) per common share—basic and diluted	$	0.76		$	0.32		$	(1.36	)	$	(0.27	)	$	0.22
Dividends declared per common share	$	0.18		$	0.18		$	0.18		$	0.36		$	0.74
Total assets (at year-end)	$	2,273,206		$	1,124,242		$	1,235,535		$	1,371,282		$	1,491,552
Notes payable (at year-end)	$	630,094		$	425,410		$	539,442		$	509,509		$	590,208
Stockholders’ investment (at year-end)	$	1,457,401		$	620,342		$	603,692		$	760,079		$	787,411
Common shares outstanding (at year-end)	189,666			104,090			103,702			103,392			99,782


Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the selected financial data and the consolidated financial statements and notes.

Overview of 2013 Performance and Company and Industry Trends

The Company executed its strategy of creating value for its stockholders through the acquisition, development, ownership, and management of top-tier urban office assets and opportunistic mixed-use developments in Sunbelt markets, with a particular focus on Georgia, Texas, and North Carolina. During 2013, the Company made significant progress on its goals of simplifying its business platform, enhancing and growing a portfolio of trophy assets, and making opportunistic investments, while maintaining a strong balance sheet. Highlighting these efforts was the transformative acquisition of a portfolio of assets in Texas and the disposition of substantially all of its lifestyle and power center retail holdings.

Investment Activity

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The Company’s investment strategy is to purchase top-tier office assets or locate opportunistic development or redevelopment projects in its core markets to which it can add value through relationships, capital, or market expertise. During 2013, the Company purchased assets totaling 7.0 million square feet in the Texas markets of Dallas/Fort Worth, Houston, and Austin.

The Company’s first acquisition of 2013 was Post Oak Central, a 1.3 million square-foot, Class-A office complex in the Galleria submarket of Houston. This property was acquired from an affiliate of J.P. Morgan Asset Management for $230.9 million and represented the Company’s first investment in the Houston market. This asset has three buildings and a two acre development parcel on which the Company is contemplating future development activities. This project is 94.5% leased at year end. In connection with the Post Oak Central acquisition, the Company acquired the interest of its joint venture partner in Terminus 200 then contributed Terminus 100 and Terminus 200 to a new joint venture with JP Morgan.

The Company also purchased 816 Congress, a 435,000 square-foot, Class-A office tower in downtown Austin for $102.4 million. This building is 76.6% leased at year end and the Company expects to utilize its market expertise and strong local relationships to drive new leasing activity.

The Company’s largest acquisition in 2013 was the purchase of Greenway Plaza, a 4.3 million square-foot 10-building office portfolio in Houston, and 777 Main, a 980,000 square-foot office tower in Fort Worth, Texas. Total purchase price for these assets was $1.1 billion. This acquisition significantly expanded the Company’s operating platform in Texas.

The Company’s development activities in 2013 consisted of the commencement of two projects, one in Austin and one in Atlanta. The Austin project, Colorado Tower, represents a 373,000 square foot, Class-A office tower in downtown Austin with a total projected cost of $126.1 million. The Atlanta project is the second phase of Emory Point which is expected to consist of 307 apartments and 43,000 square feet of retail space with a total projected cost of $73.3 million. The Company expects these two development projects to become operational in late 2014 and 2015.

Disposition Activity

The Company disposed of $138.2 million in non-core assets during 2013 in order to further simplify its business platform and be more focused on top-tier office assets and opportunistic mixed-use developments within its core markets. These dispositions included the sale of all of its lifestyle retail assets as well as interests in power centers within joint ventures.

The Company sold its interests in Tiffany Springs MarketCenter, a 238,000 square foot power center in Kansas City; its 50% interest in The Avenue Murfreesboro, a 751,000 square foot lifestyle center in Murfreesboro, Tennessee; and its minority interests in eight retail properties in two joint ventures with Prudential. The Company also sold its Inhibitex building, a medical research office building in Atlanta. Prior to the sale of Inhibitex, the Company leased the building to a single user under an eleven-year lease.

Throughout the year, the Company reduced its land holdings by selling 431 acres of land, including 140 acres at Blalock Lakes, nine acres in Round Rock, Texas, and 123 acres representing its remaining land holdings in its Jefferson Mill industrial development. These land sales reduced the Company’s share of the net book value of its land holdings by $14.6 million.

Financing Activity

The Company entered 2013 with a strong balance sheet and one of its ongoing objectives is to maintain a conservative balance sheet that provides it with the flexibility to act on opportunities as they arise. The Company acquired the properties discussed above and reduced its overall leverage by funding the acquisitions with a combination of common equity issuances, asset sales, and new indebtedness.

The Company partially funded its 816 Congress acquisition with the issuance of 16.5 million shares of its common stock at $10.45 per share resulting in net proceeds to the Company of $165.1 million. The Company also used a portion of the proceeds from this offering to redeem all outstanding shares of its 7 ¾% Series A Cumulative Redeemable Preferred Stock for $74.8 million.

The Company issued common shares in connection with the acquisition of Greenway Plaza and 777 Main. In this offering, the Company issued 69.0 million shares of common stock at $10.00 per share resulting in net proceeds to the Company of $661.3 million. The Company also placed mortgage debt on two of its existing assets to help fund the Greenway Plaza and 777 Main acquisition. The Post Oak Central loan generated $188.8 in proceeds at a fixed rate of 4.26% and the Promenade loan generated $114.0 million at a fixed rate of 4.27%. The remaining purchase price for the 816 Congress, Greenway Plaza, and 777 Main acquisitions was funded with the asset sales discussed above.

Portfolio Activity

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In 2013, the Company leased or renewed 1,720,000 square feet of office and retail space. Net effective rent, representing base rent less operating expense reimbursements and leasing costs, was $13.46 per square foot in 2013. Net effective rent per square foot increased 13% on spaces that have been previously occupied in the past year. The same property leasing percentage remained stable throughout the year.

Effect of 2013 Activities

As a result of the significant changes in 2013 discussed above, the Company is larger, has more assets in Texas, is more focused on the office sector, is less leveraged, and is more efficiently managed. Below are certain metrics that demonstrate these changes:



	December 31,
	2012			2013
Total market capitalization (in billions)	$	1.6		$	2.9
Texas square footage to total square footage	8.9		%	51.5		%
Office square footage to total square footage	65.6		%	93.8		%
Debt to total market capitalization	36.5		%	29.5		%
Same property weighted average occupancy (fourth quarter)	89.0		%	90.4		%
Land as percentage of undepreciated assets	3.5		%	1.6		%
Annualized general and administrative expense as a percentage of undepreciated assets (fourth quarter)	1.3		%	0.7		%

Market Conditions

The Company continues to target urban high-barrier to entry submarkets in Austin, Dallas-Fort Worth, Houston, Atlanta, Charlotte and Raleigh. Management believes these markets show positive demographic and economic trends compared to the national average.

Houston has emerged into a leading global energy hub with oil and gas jobs peaking at an average annual growth of 16% in 2012. The city has one of the largest medical complexes in the world and stands to reap the economic benefits from the pending expansion of the Panama Canal. Since January 2010, Houston has added 377,000 new jobs, more than two jobs for every one job lost during the recession, and forecasts show Houston employment growing at a rate more than 50% the average market.

Dallas/Fort Worth and Austin represent additional growth prospects in Texas with forecasted employment growth of 2.7% and 3.3% respectively. Dallas/Fort Worth added more than 80,000 jobs in 2013, one of the largest gains of any U.S. metro area. Austin’s affordability, strong population growth and talented workforce continue to fuel future employment with the economy forecasted to grow at nearly double the national average.

The Atlanta metro area, while slower to recover from the recent recession, is showing positive signs of economic growth. Atlanta has reclaimed all of the office jobs it lost during the downturn, and 2013 represents the fourth consecutive year of positive absorption for the office market. The metro area’s diverse economic base coupled with its major research universities provide a platform for positive economic development with job growth forecasted at 2.4% compared to the national average of 1.5%.

The Company’s target markets combined twelve-month job growth was 2.7% compared to a national average of 0.8%. Management believes that it will benefit from these trends in the form of new leasing activity, higher future rents, and more investment opportunities for future value creation.

Going forward, the Company expects to generate returns and create stockholder value through the lease up of its existing portfolio, through the execution of its development pipeline, and through opportunistic acquisition and development investments within its core markets.

Critical Accounting Policies

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as outlined in the Financial Accounting Standards Board’s Accounting Standards Codification, and the notes to consolidated financial statements include a summary of the significant accounting policies for the Company. The preparation of financial statements in accordance with GAAP requires the use of certain estimates, a change in which could materially affect revenues, expenses, assets or liabilities. Some of the Company’s accounting policies are considered to be critical accounting policies, which are ones that are both important to the portrayal of a company’s financial condition and

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results of operations, and ones that also require significant judgment or complex estimation processes. The Company’s critical accounting policies are as follows:

Real Estate Assets

Cost Capitalization. The Company is involved in all stages of real estate ownership, including development. Prior to the point a project becomes probable of being developed (defined as more likely than not), the Company expenses predevelopment costs. After management determines the project is probable, all subsequently incurred predevelopment costs, as well as interest, real estate taxes, and certain internal personnel and associated costs directly related to the project under development, are capitalized in accordance with accounting rules. If the Company abandons development of a project that had earlier been deemed probable, the Company charges all previously capitalized costs to expense. If this occurs, the Company’s predevelopment expenses could rise significantly. The determination of whether a project is probable requires judgment by management. If management determines that a project is probable, interest, general and administrative, and other expenses could be materially different than if management determines the project is not probable.

During the predevelopment period of a probable project and the period in which a project is under construction, the Company capitalizes all direct and indirect costs associated with planning, developing, leasing, and constructing the project. Determination of what costs constitute direct and indirect project costs requires management, in some cases, to exercise judgment. If management determines certain costs to be direct or indirect project costs, amounts recorded in projects under development on the balance sheet and amounts recorded in general and administrative and other expenses on the statements of comprehensive income could be materially different than if management determines these costs are not directly or indirectly associated with the project.

Once a project is constructed and deemed substantially complete and held for occupancy, carrying costs, such as real estate taxes, interest, internal personnel, and associated costs, are expensed as incurred. Determination of when construction of a project is substantially complete and held available for occupancy requires judgment. The Company considers projects and/or project phases to be both substantially complete and held for occupancy at the earlier of the date on which the project or phase reached economic occupancy of 90% or one year after it is substantially complete. The Company’s judgment of the date the project is substantially complete has a direct impact on the Company’s operating expenses and net income for the period.

Operating Property Acquisitions. Upon acquisition of an operating property, the Company records the acquired tangible and intangible assets and assumed liabilities at fair value at the acquisition date. Fair value is based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates as appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an acquired operating property generally include, but are not limited to: land, buildings, and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market leases, and value of acquired in-place lease.

The fair value of land is derived from comparable sales of land within the same submarket and/or region. The fair value of buildings, tenant improvements, and leasing costs are based upon current market replacement costs and other relevant market rate information.

The fair value of the above-market or below-market component of an acquired in-place lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining term and (ii) management’s estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition over the remaining term of the lease. In-place leases at acquired properties are reviewed at the time of acquisition to determine if contractual rents are above or below current market rents for the acquired property, and an identifiable intangible asset or liability is recorded if there is an above-market or below-market lease.

The fair value of acquired in-place leases is derived based on management’s assessment of lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. This fair value is based on a variety of considerations including, but not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases; (2) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Factors considered in performing these analyses include an estimate of the carrying costs during the expected lease-up periods, such as real estate taxes, insurance, and other operating expenses, current market conditions, and costs to execute similar leases, such as leasing commissions, legal, and other related expenses.

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The amounts recorded for above-market and in-place leases are included in other assets on the balance sheets, and the amounts for below-market leases are included in other liabilities on the balance sheets. These amounts are amortized on a straight-line basis as an adjustment to rental income over the remaining term of the applicable leases.

The determination of the fair value of the acquired tangible and intangible assets and assumed liabilities of operating property acquisitions requires significant judgments and assumptions about the numerous inputs discussed above. The use of different assumptions in these fair value calculations could significantly affect the reported amounts of the allocation of the acquisition related assets and liabilities and the related amortization and depreciation expense recorded for such assets and liabilities. In addition, since the value of above-market and below-market leases are amortized as either a reduction or increase to rental income, respectively, the judgments for these intangibles could have a significant impact on reported rental revenues and results of operations.

Depreciation and Amortization. The Company depreciates or amortizes operating real estate assets over their estimated useful lives using the straight-line method of depreciation. Management uses judgment when estimating the life of real estate assets and when allocating certain indirect project costs to projects under development. Historical data, comparable properties, and replacement costs are some of the factors considered in determining useful lives and cost allocations. The use of different assumptions for the estimated useful life of assets or cost allocations could significantly affect depreciation and amortization expense and the carrying amount of the Company's real estate assets.

Impairment. Management reviews its real estate assets on a property-by-property basis for impairment. This review includes the Company’s operating properties and the Company’s land holdings.

The first step in this process is for management to use judgment to determine whether an asset is considered to be held and used or held for sale, in accordance with accounting guidance. In order to be considered a real estate asset held for sale, management must, among other things, have the authority to commit to a plan to sell the asset in its current condition, have commenced the plan to sell the asset and have determined that it is probable that the asset will sell within one year. If management determines that an asset is held for sale, it must record an impairment loss if the fair value less costs to sell is less than the carrying amount. All real estate assets not meeting the held for sale criteria are considered to be held and used.

In the impairment analysis for assets held and used, management must use judgment to determine whether there are indicators of impairment. For operating properties, these indicators could include a decline in a property’s leasing percentage, a current period operating loss or negative cash flows combined with a history of losses at the property, a decline on lease rates for that property or others in the property’s market, or an adverse change in the financial condition of significant tenants. For land holdings, indicators could include an overall decline in the market value of land in the region, a decline in development activity for the intended use of the land or other adverse economic and market conditions.

If management determines that an asset that is held and used has indicators of impairment, it must determine whether the undiscounted cash flows associated with the asset exceed the carrying amount of the asset. If the undiscounted cash flows are less than the carrying amount of the asset, the Company must reduce the carrying amount of the asset to fair value.

In calculating the undiscounted net cash flows of an asset, management must estimate a number of inputs. For operating properties, management must estimate future rental rates, expenditures for future leases, future operating expenses, and market capitalization rates for residual values, among other things. For land holdings, management must estimate future sales prices as well as operating income, carrying costs, and residual capitalization rates for land held for future development. In addition, if there are alternative strategies for the future use of the asset, management must assess the probability of each alternative strategy and perform a probability-weighted undiscounted cash flow analysis to assess the recoverability of the asset. Management must use considerable judgment in determining the alternative strategies and in assessing the probability of each strategy selected.

In determining the fair value of an asset, management exercises judgment on a number of factors. Management may determine fair value by using a discounted cash flow calculation or by utilizing comparable market information. Management must determine an appropriate discount rate to apply to the cash flows in the discounted cash flow calculation. Management must use judgment in analyzing comparable market information because no two real estate assets are identical in location and price.

The estimates and judgments used in the impairment process are highly subjective and susceptible to frequent change. If management determines that an asset is held and used, the results of operations could be materially different than if it determines that an asset is held for sale. Different assumptions management uses in the calculation of undiscounted net cash flows of a project, including the assumptions associated with alternative strategies and the probabilities associated with alternative strategies, could cause a material impairment loss to be recognized when no impairment is otherwise warranted. Management’s assumptions about the discount rate used in a discounted cash flow estimate of fair value and management’s judgment with

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respect to market information could materially affect the decision to record impairment losses or, if required, the amount of the impairment losses.

Revenue Recognition – Valuation of Receivables

Notes and accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The Company reviews its receivables regularly for potential collection problems in computing the allowance to record against its receivables. This review requires management to make certain judgments regarding collectibility, notwithstanding the fact that ultimate collections are inherently difficult to predict. Economic conditions fluctuate over time, and the Company has tenants in many different industries which experience changes in economic health, making collectibility prediction difficult. Therefore, certain receivables currently deemed collectible could become uncollectible, and those reserved could ultimately be collected. A change in judgments made could result in an adjustment to the allowance for doubtful accounts with a corresponding effect on net income.

Investment in Joint Ventures

The Company holds ownership interests in a number of joint ventures with varying structures. Management evaluates all of its joint ventures and other variable interests to determine if the entity is a variable interest entity (“VIE”), as defined in accounting rules. If the venture is a VIE, and if management determines that the Company is the primary beneficiary, the Company consolidates the assets, liabilities and results of operations of the VIE. The Company quarterly reassesses its conclusions as to whether the entity is a VIE and whether consolidation is appropriate as required under the rules. For entities that are not determined to be VIEs, management evaluates whether or not the Company has control or significant influence over the joint venture to determine the appropriate consolidation and presentation. Generally, entities under the Company’s control are consolidated, and entities over which the Company can exert significant influence, but does not control, are accounted for under the equity method of accounting.

Management uses judgment to determine whether an entity is a VIE, whether the Company is the primary beneficiary of the VIE, and whether the Company exercises control over the entity. If management determines that an entity is a VIE with the Company as primary beneficiary or if management concludes that the Company exercises control over the entity, the balance sheets and statements of comprehensive income would be significantly different than if management concludes otherwise. In addition, VIEs require different disclosures in the notes to the financial statements than entities that are not VIEs. Management may also change its conclusions and, thereby, change its balance sheets, statements of comprehensive income, and notes to the financial statements, based on facts and circumstances that arise after the original consolidation determination is made. These changes could include additional equity contributed to entities, changes in the allocation of cash flow to entity partners, and changes in the expected results within the entity.

Management performs an impairment analysis of the recoverability of its investments in joint ventures on a quarterly basis. As part of this analysis, management first determines whether there are any indicators of impairment in any joint venture investment. If indicators of impairment are present for any of the Company’s investments in joint ventures, management calculates the fair value of the investment. If the fair value of the investment is less than the carrying value of the investment, management must determine whether the impairment is temporary or other than temporary, as defined by GAAP. If management assesses the impairment to be temporary, the Company does not record an impairment charge. If management concludes that the impairment is other than temporary, the Company records an impairment charge.

Management uses considerable judgment in the determination of whether there are indicators of impairment present and in the assumptions, estimations and inputs used in calculating the fair value of the investment. These judgments are similar to those outlined above in the impairment of real estate assets. Management also uses judgment in making the determination as to whether the impairment is temporary or other than temporary. The Company utilizes guidance provided by the SEC in making the determination of whether the impairment is temporary. The guidance indicates that companies consider the length of time that the impairment has existed, the financial condition of the joint venture, and the ability and intent of the holder to retain the investment long enough for a recovery in market value. Management’s judgment as to the fair value of the investment or on the conclusion of the nature of the impairment could have a material impact on the results of operations and financial condition of the Company.

Income Taxes – Valuation Allowance

The Company establishes a valuation allowance against deferred tax assets if, based on the available evidence, it is more likely than not that such assets will not be realized. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in either the carryback or carryforward periods under tax law. The Company periodically assesses the need for valuation allowances for deferred tax assets based on the "more likely than not" realization threshold criterion. In the assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred

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tax assets. This assessment requires considerable judgment by management and includes, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, its experience with operating loss and tax credit carryforwards, and tax planning alternatives. If management determines that the Company requires a valuation allowance on its deferred tax assets, income tax expense or benefit could be materially different than if management determines no such valuation allowance is necessary.

Recoveries from Tenants

Recoveries from tenants for operating expenses are determined on a calendar year and on a lease by lease basis. The most common types of cost reimbursements in our leases are utility expenses, building operating expenses, real estate taxes, and insurance, for which the tenant pays its pro rata share in excess of a base year amount, if applicable. The computation of these amounts is complex and involves numerous judgments, including the interpretation of terms and other customer lease provisions. Leases are not uniform in dealing with such cost reimbursements and there are many variations in the computation. We accrue income related to these payments each month. We make monthly accrual adjustments, positive or negative, to recorded amounts to our best estimate of the annual amounts to be billed and collected with respect to the cost reimbursements. After the end of the calendar year, we compute each customer's final cost reimbursements and, after considering amounts paid by the tenant during the year, issue a bill or credit for the appropriate amount to the tenant. The differences between the amounts billed less previously received payments and the accrual adjustments are recorded as increases or decreases to revenues when the final bills are prepared, which occurs during the first half of the subsequent year.

Stock-based Compensation

The Company has several types of stock-based compensation plans. These are described in note 13, as are the accounting policies by type of award. Compensation cost for all stock-based awards requires measurement at estimated fair value on the grant date and compensation cost is recognized over the service vesting period, which represents the requisite service period. The grant date fair value for compensation plans that contain market measures are performed using complex pricing valuation models that require the input of assumptions, including judgments to estimate expected life, expected stock price volatility, and assumed dividend yield. Specifically, the grant date fair value of performance-based restricted stock units are calculated using a Monte Carlo simulation pricing model and the grant date fair value of stock option grants are calculated using the Black-Scholes valuation model.

Discussion of New Accounting Pronouncements

There are currently no recently issued accounting pronouncements that are expected to have a material effect on our financial condition or results of operations in future periods.

Results of Operations For The Three Years Ended December 31, 2013

General

The Company's financial results have historically been significantly affected by purchase and sale transactions. Accordingly, the Company's historical financial statements may not be indicative of future operating results.

Rental Property Revenues

Rental property revenues increased $80.2 million (70%) between 2013 and 2012 as a result of the following:


•	Increase of $47.9 million as a result of the acquisition of Greenway Plaza and 777 Main ("the Texas Acquisition");


•	Increase of $31.2 million as a result of the Post Oak Central acquisition;


•	Increase of $8.6 million as a result of the 816 Congress acquisition;


•	Increase of $6.5 million as a result of the 2012 acquisition of 2100 Ross;


•	Increase of $1.9 million at 191 Peachtree due to higher economic occupancy;


•	Increase of $1.7 million at Mahan Village as a result of the commencement of operations in late 2012;


•	Increase of $1.3 million at Promenade due to higher economic occupancy; and


•	Decrease of $19.7 million due to the sale of 50% of the Company’s interest in Terminus 100.

Rental property revenues increased $19.5 million (21%) between 2012 and 2011 as a result of the following:

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•	Increase of $15.1 million as a result of the Promenade acquisition in 2011;


•	Increase of $4.8 million as a result of the 2100 Ross acquisition;


•	Increase of $1.4 million at 191 Peachtree Tower due to higher economic occupancy; and


•	Decrease of $2.5 million at 555 North Point as a result of the termination of a lease in 2011. The vacated space was re-leased to a tenant whose lease commenced in the fourth quarter of 2012.

Fee Income

Fee income decreased approximately $6.9 million (39%) between 2013 and 2012. This decrease is primarily due to the receipt of a $4.5 million participation interest in 2012 related to a contract that the Company assumed in the acquisition of an entity several years ago. Under this contract, the Company is entitled to receive a portion of the proceeds from the sale of a project that the entity developed and from payments received from a related seller-financed note. The Company may receive additional proceeds under this contract in future periods. Fee income also decreased as a result of a decrease in reimbursed expenses primarily due to the third quarter 2013 sale of the Company’s interest in two unconsolidated joint ventures, CP Venture Two LLC and CP Venture Five LLC, and the sale of The Avenue Murfreesboro retail center, which was held through the CF Murfreesboro Associates unconsolidated joint venture. The Company was earning management and leasing fees associated with these ventures that ended upon the sale of the Company’s interest in these ventures.

Fee income increased $4.0 million (29%) between 2012 and 2011. This increase is primarily due to the receipt of a $4.5 million participation interest discussed above. Partially offsetting this amount were lower leasing fees earned in 2012 from MSREF/Terminus200 LLC (“MSREF/T200”) and Ten Peachtree Place Associates, which was sold in 2012.

Other Revenues

Other revenues remained relatively stable between 2013 and 2012 and decreased $4.8 million between 2012 and 2011. This decrease is primarily due to multi-family residential unit sales decreasing between 2012 and 2011. The Company liquidated its holdings of for-sale multi-family units over the past three years.

Rental Property Operating Expenses

Rental property operating expenses increased $40.2 million (80%) between 2013 and 2012 as a result of the following:


•	Increase of $20.2 million as a result of the Texas Acquisition;


•	Increase of $15.6 million as a result of the Post Oak Central acquisition;


•	Increase of $4.6 million as a result of the 816 Congress acquisition;


•	Increase of $3.4 million as a result of the 2012 acquisition of 2100 Ross;


•	Increase of $1.1 million at 191 Peachtree due to higher economic occupancy; and


•	Decrease of $5.5 million due to the sale of 50% of the Company’s interest in Terminus 100.

Rental property operating expenses increased $9.5 million (23%) between 2012 and 2011 as a result of the following:


•	Increase of $7.0 million as a result of the 2011 acquisition of Promenade;


•	Increase of $3.3 million as a result of the 2100 Ross acquisition; and


•	Decrease of $670,000 at Terminus 100 as a result of lower bad debt expense and lower utilities.

Reimbursed Expenses

Reimbursed expenses decreased $1.8 million (26%) between 2013 and 2012 and increased $855,000 (14%) between 2012 and 2011. Reimbursed expenses are primarily incurred on projects for which the Company pays management and development expenses and is later reimbursed by our client. The offsetting income related to these expenses is recorded in fee income.

General and Administrative Expenses

General and administrative (G&A) expenses decreased $1.3 million (5%) between 2013 and 2012 as a result of the following:


•	Decrease in employee salaries and benefits, other than stock-based compensation and bonus, of $2.0 million due to a decrease in the number of corporate employees between 2013 and 2012;

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•	Increase in capitalized salaries of $2.3 million as a result of increased development activity;


•	Increase in stock-based compensation expense of $1.7 million primarily due to an increase in the Company's stock price between years; and


•	Increase in bonus expense of $1.2 million as a result of the Company exceeding its bonus goals for 2013.

G&A expense decreased $958,000 (4%) between 2012 and 2011 as a result of the following:


•	Decrease in employee salaries and benefits, other than stock-based compensation, of approximately $3.2 million due to a decrease in the number of corporate employees between 2012 and 2011;


•	Increase in stock-based compensation expense of $3.1 million primarily due to an increase in employee grants between years; and


•	Increase in capitalized salaries of $734,000 as a result of increased development activity.

Interest Expense

Interest expense decreased $2.2 million (9%) between 2013 and 2012 as a result of the following:


•	Lower interest expense of $6.5 million as a result of the sale of 50% of Terminus 100 in 2013;


•	Lower interest expense of $1.5 million related to lower average borrowings under the Credit Facility during the year;


•	Higher interest expense of $2.6 million related to the new Post Oak Central loan in 2013;


•	Higher interest expense of $1.6 million related to the new Promenade loan in 2013;


•	Higher interest expense of $1.1 million due to lower capitalized interest in 2013 as a result of a reduction in development expenditures in 2013; and


•	Higher interest expense of $784,000 related to a new mortgage loan on 191 Peachtree Tower that closed in the first quarter of 2012.

Interest expense decreased $2.7 million (10%) between 2012 and 2011 as a result of the following:


•	Lower interest expense related to lower average borrowings under the Credit Facility during the year;


•	Lower interest expense as a result of the prepayment of the 100/200 North Point mortgage loan in 2012;


•	Lower interest expense as a result of the repayment of the 333/555 North Point mortgage loan in 2011;


•	Lower interest expense due to higher capitalized interest in 2012; and


•	Higher interest expense related to a new mortgage loan on 191 Peachtree Tower that closed in the first quarter of 2012.

Depreciation and Amortization

Depreciation and amortization increased $36.9 million (93%) between 2013 and 2012 as a result of the following:


•	Increase of $21.6 million as a result of the Texas Acquisition;


•	Increase of $11.7 million as a result of the Post Oak Central acquisition;


•	Increase of $4.3 million as a result of the 816 Congress acquisition;


•	Increase of $4.4 million as a result of the 2011 acquisition of 2100 Ross;


•	Increase of $1.2 million at 191 Peachtree due to higher economic occupancy;


•	Increase of $662,000 at Mahan Village as a result of the commencement of operations in late 2012;


•	Increase of $572,000 at Promenade due to higher economic occupancy; and


•	Decrease of $8.0 million due to the sale of 50% of the Company’s interest in Terminus 100.

Depreciation and amortization increased $8.8 million (29%) between 2012 and 2011 as a result of the following:


•	Increase of $6.8 million as a result of the Promenade acquisition in 2011;


•	Increase of $2.3 million as a result of the 2100 Ross acquisition; and

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•	Decrease of $1.0 million at 555 North Point Center East due to accelerated amortization recognized in 2011 of tenant assets for a tenant that terminated its lease prior to the originally scheduled end date.

Impairment Losses

During 2013, the Company did not incur any impairment losses.

During 2012, the Company incurred an impairment loss of $488,000 on its investment in Verde Realty (“Verde”), a cost method investment in a non-public real estate investment trust, as a result of a merger of Verde into another company at a price per share less than the Company's carrying amount.

During 2011, management began a strategic review and analysis of its residential and land businesses, as well as certain of its operating properties, in an attempt to determine the most effective way to maximize the value of its holdings. In February 2012, the Company determined that it would liquidate its holdings of certain non-core assets in bulk on a more accelerated timeline and at lower prices than initially planned and re-deploy this capital, primarily into office properties within its core markets. As part of this process, in the fourth quarter of 2011, the Company revised the cash flow projections for its residential holdings as well as two operating properties that were being held for long term investment opportunities. The cash flow revisions reflected a higher probability that the Company would sell the assets in the short term than holding them for long term investment and development opportunities. These cash flow revisions indicated that the undiscounted cash flows of 12 residential and land projects, as well as two operating properties, were less than their carrying amounts, and the Company recorded impairment losses of $104.3 million to adjust these carrying amounts to fair value. The Company reclassified $7.6 million of these amounts to discontinued operations in 2012. Earlier in 2011, the Company recorded an other-than-temporary impairment loss of $3.5 million on its investment in Verde to adjust the carrying amount of the Company's investment to fair value, as a result of an analysis performed in connection with Verde's withdrawal of its proposed public offering.

Most of the Company's real estate assets are considered to be held for use pursuant to the accounting rules. If management's strategy changes on any of these assets, the Company may be required to record impairment charges in future periods. Changes that could cause these impairment losses include: (1) a decision by the Company to sell the asset rather than hold for long-term investment or development purposes, or (2) changes in management's estimates of future cash flows from the assets that cause the future undiscounted cash flows to be less than the asset's carrying amount. Given the uncertainties with the economic environment, management cannot predict whether or not the Company will incur impairment losses in the future, and if impairment losses are recorded, management cannot predict the magnitude of such losses.

Separation Expenses

Separation expenses decreased $1.5 million between 2013 and 2012 and increased $1.8 million between 2012 and 2011. The Company had reductions in force in each of the years presented, which varied by number of employees and positions between years.

Acquisition and Related Costs

Acquisition and related costs increased $6.7 million between 2013 and 2012 primarily as a result of the Texas Acquisition. Included in acquisition and related costs in 2013 is $2.6 million in costs associated with a term loan that was obtained in connection with the Texas Acquisition but was terminated unused upon closing of the acquisition. Acquisition and related costs in 2012 and 2011 related primarily to the acquisitions of 2100 Ross and Promenade, respectively.

Other Costs and Expenses

Other costs and expenses decreased $1.5 million between 2013 and 2012 and decreased $4.1 million between 2012 and 2011. These decreases are primarily due to costs associated with land and multi-family residential unit sales. The Company has been liquidating its holdings of unsold land and has liquidated its holdings of multi-family units over the past three years. In each of the three years, there was a decrease in sales and, therefore, a decrease in costs of sales.

Loss on Extinguishment of Debt

In 2012, the Company amended and restated its Credit Facility and as a result, charged $94,000 of unamortized loan costs to expense.

Income (Loss) from Unconsolidated Joint Ventures

In 2013, 2012, and 2011, the Company had a considerable amount of activity that affected income (loss) from unconsolidated joint ventures. In 2013, the Company sold its interests in CP Venture Two LLC and CP Venture Five LLC for $23.3 million and $30.0 million, respectively. The Company recorded gains from unconsolidated joint ventures on these transactions totaling $37.0

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million. In addition, CF Murfreesboro Associates sold The Avenue Murfreesboro, the venture's only asset. The Company received a distribution from this sale of $33.8 million and recognized a gain from unconsolidated joint ventures of $23.5 million associated with this sale.

In 2012, the Company sold its interest in Palisades West LLC for $64.8 million and recognized a gain from unconsolidated joint ventures of $23.3 million associated with this sale. In addition, Ten Peachtree Place Associates sold Ten Peachtree Place to a third party. The Company received proceeds from this sale of $5.1 million and recognized a gain from unconsolidated joint ventures of $7.3 million associated with this sale. CP Venture Two LLC sold Presbyterian Medical Plaza to a third party and the Company received proceeds from the sale of $450,000 and recognized a gain of $167,000 associated with this sale. In addition, the Emory Point Phase I development project became operational within EP I LLC and the Company recorded $330,000 in its share of the losses from the start-up operations.

In 2011, Temco Associates (“Temco”) and CL Realty, L.L.C. (“CL Realty”) recorded impairment losses in income from unconsolidated joint ventures on assets held by each entity. During 2011, Temco and CL Realty updated cash flow projections for its projects and determined the cash flows to be generated by certain projects were less than their carrying amounts. Consequently, Temco and CL Realty recorded impairment losses to record these assets at fair value, the Company's share of which was $14.6 million for Temco and $13.6 million for CL Realty. In the first quarter of 2012, Forestar Realty Inc., the Company's 50% partner in each venture, purchased the majority of the ventures' residential project and land acreage. The Company's share of the proceeds from this transaction was $23.5 million and neither venture recognized a significant gain or loss on the transaction since the purchase price approximated the carrying amounts of the assets sold. Also in 2011, the Company recognized income from the newly-formed Cousins Watkins LLC, which caused income from unconsolidated joint ventures to increase $2.4 million.

Gain on Sale of Investment Properties

Gain on sale of investment properties increased $57.2 million between 2013 and 2012 and increased $559,000 between 2012 and 2011. The 2013 amount includes a gain on the sale of Terminus 100 of $37.1 million, a gain on the acquisition of Terminus 200, which was acquired in stages, of $19.7 million, and the recognition of a deferred gain associated with CP Venture Two LLC of $3.6 million that was recognized when the Company sold its interest in CP Venture Two LLC. The 2012 and 2011 amounts include gains recognized on the sale of various land tracts during those years.

Discontinued Operations

In 2013, the Company sold Tiffany Springs MarketCenter, a 238,000 square foot center in Kansas City, Missouri, for a sales price of $53.5 million, which represented a 7.9% capitalization rate. In the fourth quarter of 2013, the Company sold the Inhibitex building, a 51,000 square foot medical office building in Atlanta, for $8.3 million, prior to the allocation of free rent credits, which represented a 9.1% capitalization rate. In the fourth quarter of 2013, the Company determined that Lakeshore Park Plaza, a 197,000 square foot office building in Birmingham, Alabama, and 600 University Park Place, a 123,000 square foot office building in Birmingham, Alabama, were held for sale.

Included in discontinued operations for 2013 were the operations of the properties sold or held for sale as of December 31, 2013, the gains recognized on the sale of the assets sold in 2013 and an additional gain of $4.6 million recognized on the 2012 sale of the Company’s third party management and leasing business. The Company recognized this additional gain based on the performance of the business for the year subsequent to the sale.

In 2012, the Company sold the following retail assets: The Avenue Collierville, a 511,000 square foot center in Memphis, Tennessee, for a sales price of $55.0 million; The Avenue Forsyth, a 524,000 square foot center in Atlanta, Georgia for a sales price of $119.0 million; and The Avenue Webb Gin, a 322,000 square foot center in Atlanta, Georgia for a sales price of $59.6 million. The weighted average capitalization rates for these three retail projects was 7.8%. The Company also sold Galleria 75, a 111,000 square foot office building in Atlanta, Georgia, for a sales price of $9.2 million and a capitalization rate of 9.5%. In 2012, the Company also sold Cosmopolitan Center, a 51,000 square foot office building for a sales price of $7.0 million. The capitalization rate of Cosmopolitan Center was not a significant determinant of the sales price as it was being sold for its underlying land value as opposed to its in-place income stream. In the fourth quarter of 2012, the Company determined that Inhibitex, a 51,000 square foot office building in Atlanta, Georgia, met the requirements for discontinued operations.

Included in discontinued operations for 2012 were impairment losses recorded on The Avenue Collierville and Inhibitex in the amounts of $12.2 million and $1.6 million, respectively. The Company sold The Avenue Collierville for an amount lower than its carrying value and recorded the impairment loss as a result. When the Company determined that Inhibitex was held for sale in accordance with applicable accounting rules, it determined that the fair value of the asset less expected closing costs were lower than the carrying amount and recorded an impairment loss as a result.

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Included in discontinued operations for 2011 were impairment losses on Cosmopolitan Center and Galleria 75 in the amounts of $4.7 million and $2.9 million, respectively. The Company recorded this impairment loss in connection with the strategic review of its land and other holdings discussed in note 15 of notes to consolidated financial statements included in this Annual Report on Form 10-K. The Company reclassified this impairment loss to discontinued operations in 2012 when the related assets qualified for discontinued operations treatment.

In 2012, the Company also sold its third party management and leasing business to Cushman & Wakefield and recognized an initial gain of $7.5 million. As a result of this sale, the operations of the Company's third party management and leasing business were reclassified to discontinued operations.

In 2011, the Company sold One Georgia Center, a 376,000 square foot office building in Atlanta, Georgia, for a sales price of $48.6 million, which corresponded to a capitalization rate of 8.0%. Also in 2011, the Company sold Jefferson Mill, a 459,000 square foot industrial property in suburban Atlanta, Georgia for a sales price of $22.0 million, and King Mill, a 796,000 square foot industrial property in suburban Atlanta, Georgia for a sales price of $28.3 million. The weighted average capitalization rate for these two industrial projects combined was 7.6%. The Company also sold Lakeside in 2011, a 749,000 square foot industrial property in Dallas, Texas for a sales price of $28.4 million. The capitalization rate of this property was not a significant determinant of the sales price, partly due to the fact that the transaction included related tracts of undeveloped land. Capitalization rates are generally calculated by dividing projected annualized net operating income by the sales price.

Net Income Attributable to Noncontrolling Interest

The Company consolidates certain entities and allocates the partner's share of those entities' results to net income attributable to noncontrolling interests on the statements of comprehensive income. The noncontrolling interests' share of the Company's net income increased $2.9 million between 2013 and 2012, and decreased $2.8 million between 2012 and 2011. In 2013, $3.4 million was allocated to the noncontrolling partner in CP Venture Six LLC in connection with the Company's purchase of the partner's interest. In 2012, $2.1 million was allocated to the noncontrolling partner in the entity which owned the property in connection with the sale of The Avenue Collierville. Also in 2012, $1.8 million of the gain on the sale of The Avenue Forsyth was allocated to the noncontrolling partner in the entity which owned the property. In 2011, $1.6 million of the gain on sale of One Georgia Center was allocated to the noncontrolling partner in the entity which owned the property. Also in 2011, $1.4 million of the gain on sale of King Mill was allocated to the noncontrolling partner in the entity which owned the property.

Funds from Operations

The table below shows Funds from Operations Available to Common Stockholders (“FFO”) and the related reconciliation to net income (loss) available to common stockholders for the Company. The Company calculates FFO in accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, which is net income 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.

FFO is used by industry analysts and investors 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 REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. 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. The reconciliation of net income (loss) available to common stockholders to FFO is as follows for the years ended December 31, 2013, 2012, and 2011 (in thousands, except per share information):

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	Year Ended December 31,
	2013			2012			2011
Net Income (Loss) Available to Common Stockholders	$	109,097		$	32,821		$	(141,332	)
Depreciation and amortization:
Consolidated properties	75,524			38,349			28,978
Discontinued properties	3,083			13,479			23,395
Share of unconsolidated joint ventures	13,434			10,215			10,337
Impairment losses on depreciable investment properties, net of amounts attributable to noncontrolling interests	—			11,748			7,632
Gain on sale of investment properties:
Consolidated properties	(60,587		)	(334		)	(624		)
Discontinued properties	(6,469		)	(10,948		)	(8,519		)
Share of unconsolidated joint ventures	(60,345		)	(30,662		)	—
Other	3,397			1,824			3,258
Funds From Operations Available to Common Stockholders	$	77,134		$	66,492		$	(76,875	)
Per Common Share—Basic and Diluted:
Net Income (Loss) Available	$	0.76		$	0.32		$	(1.36	)
Funds From Operations	$	0.53		$	0.64		$	(0.74	)
Weighted Average Shares—Basic	144,255			104,117			103,651
Weighted Average Shares—Diluted	144,420			104,125			103,651

Same Property Net Operating Income

Net Operating Income is used by industry analysts, investors and Company management to measure operating performance of the Company's properties. Net Operating Income, which is rental property revenues less rental property operating expenses, excludes certain components from net income in order to provide results that are more closely related to a property's results of operations. Certain items, such as interest expense, while included in FFO and net income, do not affect the operating performance of a real estate asset and are often incurred at the corporate level as opposed to the property level. As a result, management uses only those income and expense items that are incurred at the property level to evaluate a property's performance. Depreciation and amortization are also excluded from Net Operating Income. Same Property Net Operating Income includes those office properties that have been fully operational in each of the comparable reporting periods. A fully operational property is one that has achieved 90% economic occupancy for each of the two periods presented or has been substantially complete and owned by the Company for each of the two periods presented and the preceding year. Same Property Net Operating Income allows analysts, investors and management to analyze continuing operations and evaluate the growth trend of the Company's portfolio.