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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002 Commission file number 0-3576
COUSINS PROPERTIES INCORPORATED
A GEORGIA CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 58-0869052
2500 WINDY RIDGE PARKWAY
ATLANTA, GEORGIA 30339
TELEPHONE: 770-955-2200
Securities registered pursuant to
Section 12(b) of the Act: Common Stock ($1 Par Value)
Name of exchange on which registered: New York Stock Exchange
Securities registered pursuant to
Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes X No
--
As of June 28, 2002, the aggregate market value of the common stock of
Cousins Properites Incorporated held by non-affiliates was $929,547,967. As of
March 18, 2003, 48,264,013 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into the
designated Part of this Form 10-K: Registrant's Proxy Statement Part III,
Items 10, 11, 12 and 13
dated March 25, 2003
Registrant's Annual Report to Part II, Items 5, 6, 7 and 8
Stockholders for the year
ended December 31, 2002
PART I
Item 1. Business
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Corporate Profile
Cousins Properties Incorporated (the "Registrant" or "Cousins") is a
Georgia corporation, which since 1987 has elected to be taxed as a real estate
investment trust ("REIT"). Cousins Real Estate Corporation and its subsidiaries
("CREC") is a taxable entity consolidated with the Registrant, which owns,
develops, and manages its own real estate portfolio and performs certain real
estate related services for other parties. CREC II Inc. ("CREC II"), another
taxable entity consolidated with the Registrant, owns a 100% interest in Cousins
Properties Services LP, a full-service real estate company headquartered in
Dallas, Texas that specializes in third party property management, development
and leasing of office buildings. The Registrant, together with CREC and CREC II,
is hereafter referred to as the "Company."
Cousins is an Atlanta-based, fully integrated, self administered equity
REIT. The Company has extensive experience in the real estate industry,
including the acquisition, financing, development, management and leasing of
properties. Cousins has been a public company since 1962, and its common stock
trades on the New York Stock Exchange under the symbol "CUZ." The Company owns a
portfolio of well-located, high-quality office, medical office, retail and land
development projects and holds several tracts of strategically located
undeveloped land. The strategies employed to achieve the Company's investment
goals include the development of properties which are precommitted to quality
tenants; the maintenance of high levels of occupancy within owned properties;
the selective sale of assets; the creation of joint venture arrangements and the
acquisition of quality income-producing properties at attractive prices. The
Company also seeks to be opportunistic and take advantage of normal real estate
business cycles.
Unless otherwise indicated, the notes referenced in the discussion
below are the "Notes to Consolidated Financial Statements" included in the
financial section of the Registrant's 2002 Annual Report to Stockholders, which
are incorporated herein by reference.
Brief Description of Company Investments
Office. As of December 31, 2002, the Company's office portfolio
included the following thirty-eight commercial office buildings:
Company's Percent
Economic Leased
Metropolitan Rentable Ownership (Fully
Property Description Area Square Feet Interest Executed)
-------------------- ----------------- ----------- --------- ---------
Inforum Atlanta, GA 990,000 100% 96%
101 Independence Center Charlotte, NC 526,000 100% 98%
Congress at Fourth Austin, TX 525,000 100% 33% (a)
101 Second Street San Francisco, CA 387,000 100% (b) 83%
55 Second Street San Francisco, CA 379,000 100% (b) 92% (c)
AT&T Wireless Services
Headquarters Los Angeles, CA 222,000 100% 100%
The Points at Waterview Dallas, TX 201,000 100% 82%
Lakeshore Park Plaza Birmingham, AL 190,000 100% (b) 82%
3100 Windy Hill Road Atlanta, GA 188,000 100% 100%
333 John Carlyle Washington, D.C. 153,000 100% 96%
555 North Point Center East Atlanta, GA 152,000 100% 91%
615 Peachtree Street Atlanta, GA 148,000 100% 91%
333 North Point Center East Atlanta, GA 129,000 100% 93%
600 University Park Place Birmingham, AL 123,000 100% (b) 95%
3301 Windy Ridge Parkway Atlanta, GA 107,000 100% 100%
Cerritos Corporate Center -
Phase II Los Angeles, CA 105,000 100% 100%
1900 Duke Street Washington, D.C. 97,000 100% 100%
One Georgia Center Atlanta, GA 363,000 88.50% 78%
Bank of America Plaza Atlanta, GA 1,261,000 50% 100%
Gateway Village Charlotte, NC 1,065,000 50% 100%
3200 Windy Hill Road Atlanta, GA 687,000 50% 95%
2300 Windy Ridge Parkway Atlanta, GA 635,000 50% 88%
The Pinnacle Atlanta, GA 424,000 50% 98%
1155 Perimeter Center West Atlanta, GA 362,000 50% 99%
2500 Windy Ridge Parkway Atlanta, GA 315,000 50% 89%
Two Live Oak Center Atlanta, GA 279,000 50% 80%
4200 Wildwood Parkway Atlanta, GA 260,000 50% 100%
Ten Peachtree Place Atlanta, GA 260,000 50% 100%
John Marshall - II Washington, D.C. 224,000 50% 100%
Austin Research Park -
Building IV Austin, TX 184,000 50% 100%
Austin Research Park -
Building III Austin, TX 174,000 50% 100%
4300 Wildwood Parkway Atlanta, GA 150,000 50% 100%
4100 Wildwood Parkway Atlanta, GA 100,000 50% 100%
First Union Tower Greensboro, NC 323,000 11.50% 66%
Grandview II Birmingham, AL 149,000 11.50% 100%
200 North Point Center East Atlanta, GA 130,000 11.50% 47%
100 North Point Center East Atlanta, GA 128,000 11.50% 70%
One Ninety One Peachtree Tower Atlanta, GA 1,215,000 9.80% 97%
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13,310,000
==========
(a) Under construction and in lease-up.
(b) These projects are owned through joint ventures with third
parties, and a portion of the upside is shared with the other
venturer. See "Item 2, Major Properties" - "101 Second Street,"
"55 Second Street" and "Cousins/Daniel LLC."
(c) Effective January 31, 2003, a tenant occupying 158,000 rentable
square feet terminated their lease. See "Item 1, Subsequent Event"
for more information.
The weighted average leased percentage of these office buildings
(excluding the property currently under construction and in lease-up and One
Ninety One Peachtree Tower, in which the Company owns less than 10%) was
approximately 94% as of December 31, 2002, and the leases expire as follows:
2012
&
2003 2004 2005 2006 2007 2008 2009 2010 2011 Thereafter Total
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- -----
OFFICE
- ------
Consolidated:
- -------------
Square Feet
Expiring (a) 123,660 157,592 330,557 356,900 161,531 388,970 554,319 266,561 225,779 1,272,408 3,838,277(b)
% of Leased
Space 3% 4% 9% 9% 4% 10% 15% 7% 6% 33% 100%
Annual Base
Rent (c) 2,023,808 2,756,542 5,672,451 5,530,032 2,596,271 8,310,884 9,684,456 7,496,350 5,566,717 39,303,896 88,941,407
Annual Base
Rent/Sq.
Ft. (c) 16.37 17.49 17.16 15.49 16.07 21.37 17.47 28.12 24.66 30.89 23.17
Joint Venture:
- --------------
Square Feet
Expiring (a) 288,041 394,004 424,473 607,136 698,753 168,103 428,434 225,191 244,171 3,483,400 6,961,706(d)
% of Leased
Space 4% 6% 6% 9% 10% 2% 6% 3% 4% 50% 100%
Annual Base
Rent (c) 4,731,379 5,427,619 7,191,479 10,913,350 16,878,496 2,983,343 9,662,815 5,073,409 4,868,076 74,259,074 141,989,040
Annual Base
Rent/Sq.
Ft. (c) 16.43 13.78 16.94 17.98 24.16 17.75 22.55 22.53 19.94 21.32 20.40
Total (including only Company's % share of Joint Venture Properties):
- --------------------------------- -----------------------------------
Square Feet
Expiring (a) 266,833 411,253 508,389 637,992 488,278 460,984 763,258 327,958 351,319 3,014,193 7,230,457
% of Leased
Space 4% 6% 7% 9% 7% 6% 10% 4% 5% 42% 100%
Annual Base
Rent (c) 4,325,978 5,790,583 8,667,331 10,567,630 10,605,612 9,599,312 14,423,492 9,030,044 8,003,070 76,433,433 157,446,485
Annual Base
Rent/Sq.
Ft. (c) 16.21 14.08 17.05 16.56 21.72 20.82 18.90 27.53 22.78 25.36 21.78
(a) Where a tenant has the option to cancel its lease without penalty, the lease
expiration date used in the table above reflects the cancellation option
date rather than the lease expiration date.
(b) Rentable square feet leased as of December 31, 2002 out of approximately
4,097,000 total rentable square feet.
(c) Annual base rent excludes the operating expense reimbursement portion of the
rent payable. If the lease does not provide for pass through of such
operating expense reimbursements, an estimate of operating expenses is
deducted from the rental rate shown. The base rental rate shown is the
estimated rate in the year of expiration. Amounts disclosed are in dollars.
(d) Rentable square feet leased as of December 31, 2002 out of approximately
7,473,000 total rentable square feet.
The weighted average remaining lease term of these thirty-six office
buildings was approximately eight years as of December 31, 2002. Most of the
Company's leases in these buildings provide for pass through of operating
expenses and base rents which escalate over time.
Medical Office. As of December 31, 2002, the Company's medical office
--------------
portfolio included the following six medical office properties:
Company's Percent
Economic Leased
Metropolitan Rentable Ownership (Fully
Property Description Area Square Feet Interest Executed)
-------------------------- ------------- ----------- -------- ---------
Northside/Alpharetta II Atlanta, GA 198,000 100% 79%
Meridian Mark Plaza Atlanta, GA 161,000 100% 100%
Northside/Alpharetta I Atlanta, GA 103,000 100% 93%
AtheroGenics Atlanta, GA 50,000 100% 100%
Emory Crawford Long Medical
Office Tower Atlanta, GA 358,000 50% 85%
Presbyterian Medical Plaza
at University Charlotte, NC 69,000 11.50% 100%
-------
939,000
=======
The weighted average leased percentage of these medical office
buildings was 89% as of December 31, 2002, and the leases expire as follows:
2012
&
2003 2004 2005 2006 2007 2008 2009 2010 2011 Thereafter Total
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- -----
MEDICAL OFFICE
- --------------
Consolidated:
- -------------
Square Feet
Expiring 8,717 42,669 23,836 9,210 32,538 38,255 130,276 10,535 27,119 139,074 462,229(a)
% of Leased
Space 2% 9% 5% 2% 7% 8% 28% 3% 6% 30% 100%
Annual Base
Rent (b) 165,398 793,546 407,310 166,631 686,517 853,330 2,637,282 202,799 736,974 3,276,120 9,925,907
Annual Base
Rent/Sq.
Ft. (b) 18.97 18.60 17.09 18.09 21.10 22.31 20.24 19.25 27.18 23.56 21.47
Joint Venture:
- --------------
Square Feet
Expiring 3,818 0 3,445 0 70,687 1,017 27,269 3,665 2,354 260,807 373,062(c)
% of Leased
Space 1% 0% 1% 0% 19% 0% 7% 1% 1% 70% 100%
Annual Base
Rent (b) 89,685 0 56,498 0 1,294,383 20,208 609,115 79,493 51,764 6,147,193 8,348,339
Annual Base
Rent/Sq.
Ft. (b) 23.49 0 16.40 0 18.31 19.87 22.34 21.69 21.99 23.57 22.38
Total (including only Company's % share of Joint Venture Properties):
- --------------------------------------------------------------------
Square Feet
Expiring 10,626 42,669 24,232 9,210 58,350 38,764 143,911 12,368 28,296 253,884 622,310
% of Leased
Space 2% 7% 4% 1% 9% 6% 23% 2% 5% 41% 100%
Annual Base
Rent (b) 210,240 793,546 413,807 166,631 1,174,251 863,434 2,941,840 242,545 762,856 6,052,345 13,621,495
Annual Base
Rent/Sq.
Ft. (b) 19.79 18.60 17.08 18.09 20.12 22.27 20.44 19.61 26.96 23.84 21.89
(a) Rentable square feet leased as of December 31, 2002 out of approximately
512,000 total rentable square feet.
(b) Annual base rent excludes the operating expense reimbursement portion of the
rent payable. If the lease does not provide for pass through of such
operating expense reimbursements, an estimate of operating expenses is
deducted from the rental rate shown. The base rental rate shown is the
estimated rate in the year of expiration. Amounts disclosed are in dollars.
(c) Rentable square feet leased as of December 31, 2002 out of approximately
427,000 total rentable square feet.
The weighted average remaining lease term of these six medical office
buildings was approximately nine years as of December 31, 2002. The Company's
leases in these medical office buildings provide for pass through of operating
expenses and base rents which escalate over time. Retail. As of December 31,
2002, the Company's retail portfolio included the following thirteen properties:
Company's
Percent
Economic
Leased
Metropolitan Rentable Ownership (Fully
Property Description Area Square Feet Interest Executed)
--------------------------- ------------------------- ----------- -------- ---------
The Avenue of the Peninsula Rolling Hills Estates, CA 375,000 100% 91%
Presidential MarketCenter Atlanta, GA 374,000 100% 100%
The Avenue East Cobb Atlanta, GA 225,000 100% 100%
The Avenue West Cobb Atlanta, GA 206,000 100% 28% (a)
Perimeter Expo Atlanta, GA 176,000 100% 92%
The Shops of Lake Tuscaloosa Tuscaloosa, AL 70,000 100% 63% (a)
Mira Mesa MarketCenter San Diego, CA 480,000 88.50% 100%
The Avenue Peachtree City Atlanta, GA 169,000 88.50% (b) 98%
The Shops at World Golf Village St. Augustine, FL 80,000 50% 74%
Greenbrier MarketCenter Chesapeake, VA 493,000 11.50% 100%
North Point MarketCenter Atlanta, GA 401,000 11.50% 100%
Los Altos MarketCenter Long Beach, CA 157,000 11.50% 100%
Mansell Crossing Phase II Atlanta, GA 103,000 11.50% 100%
---------
3,309,000
---------
(a) Under construction and in lease-up.
(b) This property is subject to a contractual participation in which a
portion of the upside is shared with a third party.
The weighted average leased percentage of these retail properties
(excluding the properties currently under construction and in lease-up) was
approximately 96% as of December 31, 2002, and the leases expire as follows:
2012
&
2003 2004 2005 2006 2007 2008 2009 2010 2011 Thereafter Total
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- -----
RETAIL
- ------
Consolidated:
- -------------
Square Feet
Expiring 21,417 75,653 121,850 88,980 42,922 36,187 21,530 143,557 108,951 439,654 1,100,701(a)
% of Leased Space 2% 7% 11% 8% 4% 3% 2% 13% 10% 40% 100%
Annual Base
Rent (b) 414,335 1,393,451 2,946,291 2,066,634 929,298 327,838 733,820 2,988,238 2,215,151 7,781,304 21,796,360
Annual Base
Rent/Sq.
Ft. (b) 19.35 18.42 24.18 23.23 21.65 9.06 34.08 20.82 20.33 17.70 19.80
Joint Venture:
- --------------
Square Feet
Expiring 13,111 34,343 88,402 178,400 85,968 46,361 38,602 140,895 173,056 1,059,128 1,858,266(c)
% of Leased Space 1% 2% 5% 10% 5% 2% 2% 7% 9% 57% 100%
Annual Base
Rent (b) 213,996 717,124 1,584,126 2,639,475 1,887,378 883,778 528,429 2,104,236 2,546,229 14,619,722 27,724,493
Annual Base
Rent/Sq.
Ft. (b) 16.32 20.88 17.92 14.80 21.95 19.06 13.69 14.93 14.71 13.80 14.92
Total (including only Company's % share of Joint Venture Properties):
- ---------------------------------------------------------------------
Square Feet
Expiring 22,925 82,225 162,591 137,894 80,082 73,583 31,455 194,555 160,817 888,001 1,834,128
% of Leased Space 1% 4% 9% 8% 4% 4% 2% 11% 9% 48% 100%
Annual Base
Rent (b) 438,944 1,536,695 3,827,593 3,144,155 1,808,886 1,051,843 932,149 4,081,380 3,042,547 14,465,649 34,329,841
Annual Base
Rent/Sq.
Ft.(b) 19.15 18.69 23.54 22.80 22.59 14.29 29.63 20.98 18.92 16.29 18.72
(a) Gross leasable area leased as of December 31, 2002 out of approximately
1,150,000 total gross leasable area.
(b) Annual base rent excludes the operating expense reimbursement portion of the
rent payable and any percentage rents due. If the lease does not provide for
pass through of such operating expense reimbursements, an estimate of
operating expenses is deducted from the rental rate shown. The base rental
rate shown is the estimated rate in the year of expiration. Amounts
disclosed are in dollars.
(c) Gross leasable area leased as of December 31, 2002 out of approximately
1,883,000 total gross leasable area.
The weighted average remaining lease term of these 11 retail properties
was approximately ten years as of December 31, 2002. Most of the major tenant
leases in these retail properties provide for pass through of operating expenses
and base rents which escalate over time.
Other. The Company's other real estate holdings include equity
-----
interests in approximately 360 acres of strategically located land held for
investment or future development at North Point and Wildwood Office Park, the
option to acquire the fee simple interest in approximately 7,500 acres of land
through its Temco Associates joint venture, and a mortgage note of approximately
$26 million which is secured by a 250,000 rentable square foot office building
in Washington, D.C. The terms of this note have some of the characteristics of
an equity investment and management believes it should provide a comparable
return on investment (see Note 3).
The Company's joint venture partners include, but are not limited to,
either the following companies or their affiliates: IBM, The Coca-Cola Company
("Coca-Cola"), Bank of America Corporation ("Bank of America"), The Prudential
Insurance Company of America ("Prudential"), Temple-Inland Inc., Equity Office
Properties Trust, CommonWealth Pacific, LLC ("CommonWealth") and CarrAmerica
Realty Corporation.
A more detailed description of the Company's real estate properties is
included in Item 2 of this Report.
Significant Changes in 2002
Significant changes in the Company's business and properties during the
year ended December 31, 2002 were as follows:
Office Division. In February 2002, 55 Second Street, an approximately
---------------
379,000 rentable square foot office building in San Francisco, California,
became partially operational for financial reporting purposes. Also in February
2002, Emory Crawford Long Medical Office Tower, an approximately 358,000
rentable square foot medical office facility in Atlanta, Georgia, owned by
Crawford Long - CPI, LLC (see Note 5), became partially operational for
financial reporting purposes.
Retail Division. In August 2002, the Company purchased 22.17 acres of
---------------
land for approximately $4,945,000 for the development of The Avenue West Cobb,
an approximately 206,000 square foot specialty retail center in suburban
Atlanta, Georgia. Construction commenced on this center in September 2002.
In October 2002, the Company sold Salem Road Station, an approximately
67,000 square foot retail center in suburban Atlanta, Georgia for $7,379,000,
which was approximately $940,000 over the cost of the center. Including
depreciation recapture of approximately $380,000 and net of an income tax
provision of approximately $146,000, the net gain on this sale was approximately
$1,174,000. Also in October 2002, the Company sold two outparcels at Salem Road
Station for $548,000, which was approximately $195,000 over the cost of the
outparcels. The gain on this sale, net of an income tax provision of
approximately $74,000, was approximately $121,000.
In December 2002, the Company purchased 11.91 acres of land for
approximately $1,911,000 for the development of The Shops of Lake Tuscaloosa, an
approximately 70,000 square foot retail center in Tuscaloosa, Alabama.
Construction of this center commenced in February 2003.
Land Division. The Company is currently developing or has developed
-------------
nine residential communities, eight in suburban Atlanta, Georgia and one in Pine
Mountain, Georgia. These nine communities include land on which approximately
2,957 lots are being or were developed, of which 166, 121 and 217 lots were sold
in 2002, 2001 and 2000, respectively.
Of the nine communities, four containing 1,076 lots were completely
sold as of December 31, 2000. Two communities containing 704 lots were
completely sold as of December 31, 2002. The three residential communities
remaining under development at December 31, 2002 contain approximately 1,177
lots, 146 of which have been sold.
In November 1998, Temco Associates began development of the Bentwater
residential community, which will consist of approximately 1,669 lots on
approximately 1,290 acres (see Note 5). Temco Associates sold 289, 233 and 219
lots in 2002, 2001 and 2000, respectively.
In December 2002, the Company sold approximately 5.5 acres of Wildwood
land for $2,500,000. The net gain on this sale was approximately $2,143,000.
Financings. On February 22, 2002, CSC Associates, L.P. ("CSC"), an
----------
entity in which the Company owns a 50% equity interest, completed a $150 million
non-recourse mortgage note payable (the "New Loan") with an interest rate of
6.958% and a maturity of March 1, 2012. The New Loan is secured by CSC's
interest in the Bank of America Plaza building and related leases and
agreements. CSC loaned the $150 million proceeds of the New Loan to the Company
under a non-recourse loan (the "New Cousins Loan") secured by the Company's
interest in CSC under the same payment terms as those of the New Loan. The
Company paid all costs of issuing the New Loan and the New Cousins Loan,
including a $750,000 fee to an affiliate of Bank of America Corporation.
On March 15, 2002, $65,873,925 of the proceeds from the New Loan was
used to pay off in full the existing collateralized non-recourse mortgage notes
(the "Prior Notes"). The $65,873,925 included $65,525,710 for the payoff of the
principal balance as of February 15, 2002 (the last payment date of the Prior
Notes) and $348,215 for accrued interest from February 15, 2002 through March
14, 2002. The existing non-recourse loan to CSC, which was secured by the
Company's interest in CSC under the same payment terms as those of the Prior
Notes, was also repaid in full.
In connection with the prepayment in full of the Prior Notes, the
Company paid a prepayment premium in the amount of $2,871,925. This prepayment
premium, along with the unamortized balance of closing costs paid by the Company
related to the Prior Notes in the amount of $629,278, were expensed as an
extraordinary item in the Company's Consolidated Statements of Income in 2002.
Stock Repurchase Plan
In November 2001, the Board of Directors of the Company adopted a stock
repurchase plan authorizing the repurchase of up to 5 million shares of common
stock prior to January 1, 2004 (see Note 6). During January 2003, the Company
purchased an additional 234,100 shares at an average price of $23.657. As of
March 18, 2003, the Company had repurchased a total of 2,691,582 shares for an
aggregate price of $64,893,935.
Subsequent Event
The Company and Cable & Wireless Internet Services, Inc. ("Cable") have
executed an agreement under which Cable's lease on 158,000 rentable square feet
at 55 Second Street was terminated effective January 31, 2003, conditioned upon
the payment to the Company of a termination fee of $20 million. The Company
received $10 million of the termination fee in February 2003, with the remaining
$10 million due April 1, 2003 from an irrevocable letter of credit held by the
Company.
Environmental Matters
Under various federal, state and local laws, ordinances and
regulations, an owner or operator of real estate is generally liable for the
costs of removal or remediation of certain hazardous or toxic substances on or
in such property. Such laws often impose liability without regard to whether the
owner knew of, or was responsible for, the presence of such hazardous or toxic
substances. The presence of such substances, or the failure to remediate such
substances properly, may subject the owner to substantial liability and may
adversely affect the owner's ability to develop the property or to borrow using
such real estate as collateral. The Company is not aware of any environmental
liability that the Company's management believes would have a material adverse
effect on the Company's business, assets or results of operations.
Certain environmental laws impose liability on a previous owner of
property to the extent that hazardous or toxic substances were present during
the prior ownership period. A transfer of the property does not relieve an owner
of such liability. Thus, although the Company is not aware of any such
situation, the Company may be liable in respect of properties previously sold.
In connection with the development or acquisition of certain
properties, the Company has obtained Phase One environmental audits (which
generally involve inspection without soil sampling or ground water analysis)
from independent environmental consultants. The remaining properties (including
most of the Company's land held for investment or future development) have not
been so examined. No assurance can be given that no environmental liabilities
exist, that the reports revealed all environmental liabilities, or that no prior
owner created any material environmental condition not known to the Company.
The Company believes that it and its properties are in compliance in
all material respects with all federal, state and local laws, ordinances and
regulations regarding hazardous or toxic substances.
Competition
The Company's properties compete for tenants with similar properties
located in our markets primarily on the basis of location, rent charged,
services provided and the design and condition of the facilities. 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.
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. These include, but are not limited to, general and
local economic conditions, local real estate conditions, the activity of others
developing competitive projects, the cyclical nature of the real estate
industry, the financial condition of existing tenants, interest rates, the
Company's ability to obtain favorable financing or zoning, the environmental
impact, the effects of terrorism and other risks detailed from time to time in
the Company's filings with the Securities and Exchange Commission, including the
Form 8-K filed on March 9, 2001. The words "believes," "expects," "estimates"
and similar expressions are intended to identify forward-looking statements.
Although the Company believes that its plans, intentions and expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such plans, intentions or expectations will be achieved. Such
forward-looking statements are based on current expectations and speak only as
of the date of such statements. 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.
Executive Offices; Employees
The Registrant's executive offices are located at 2500 Windy Ridge
Parkway, Suite 1600, Atlanta, Georgia 30339-5683. At December 31, 2002, the
Company employed 403 people.
Website Access to 1934 Act Reports
The Company makes available free of charge on its website,
www.CousinsProperties.com, its filed 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
information contained in the Company's website is not incorporated herein by
reference. Copies of these documents are also available without exhibits free of
charge upon request to the Company at 2500 Windy Ridge Parkway, Suite 1600,
Atlanta, Georgia 30339-5683, Attention: Mark A. Russell, Vice President - Chief
Financial Analyst and Director of Investor Relations. Mr. Russell, the Company's
investor relations contact, may also be reached by telephone at (770) 857-2449,
by facsimile at (770) 857-2360 or by email at markrussell@cousinsproperties.com.
Item 2. Properties
- ----------------------
Table of Major Properties
The following tables set forth certain information relating to major
office, medical office and retail properties, stand alone retail lease sites,
and land held for investment and future development in which the Company has a
10% or greater ownership interest. All information presented is as of December
31, 2002. Dollars are stated in thousands.
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Office
- ------
Inforum
Atlanta, GA
30303-1032 1999 N/A 100% 990,000 96% 97% BellSouth Corporation
4 Acres (2) Georgia Lottery Corp. (2013)
Lockwood Greene Engineers, Inc.
(2007/2012)(4)
Co Space Services, LLC
(2020/2025)
Turner Broadcasting (2006/2016)
Sapient Corporation (2009/2019)
101 Independence Center
Charlotte, NC
28246-1000 1996 N/A 100% 526,000 98% 97% Bank of America (3)
2 Acres (5) (2008/2028)(6)
Robinson Bradshaw & Hinson,
P.A.(2014)(7)
Ernst & Young LLP(2004)
Congress at Fourth
Austin, TX
78701-3619 (8) N/A 100% 525,000 33%(8) (8) Jenkins & Gilchrist (2013)(8)
2 Acres Winstead, Sechrest & Minick P.C.
(2014/2024)(8)
101 Second Street
San Francisco, CA
94105-3601 2000 Myers Second 100%(9) 387,000 83% 86% Thelen, Reid & Priest
Street Company 1 Acre (2012/2022)
LLC
55 Second Street
San Francisco, CA
94105-3601 2002 Myers Bay 100%(9) 379,000 92%(10) 89%(11) Cable & Wireless (3)
Area Company LLC 1 Acre (2014/2019)(10)
Paul Hastings (2017/2027)
Fritz Companies (2012/2017)
Preston Gates (2010/2015)
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Office
- ------
Inforum
Atlanta, GA
30303-1032 277,744 $ 91,476 $ 0 N/A
127,827 $ 64,862
125,916
110,797
57,827
57,689
101 Independence Center
Charlotte, NC
28246-1000 359,327 $ 79,559(5) $ 44,928 12/1/07
$ 60,357(5) 8.22%
89,584
24,125
Congress at Fourth
Austin, TX
78701-3619 45,552(8) $ 53,632 $ 0 N/A
37,000 (8)
101 Second Street
San Francisco, CA
94105-3601 135,919 $ 99,272 $ 88,055 4/19/10
$ 84,282 8.33%
55 Second Street
San Francisco, CA
94105-3601 158,550 $109,960 $ 0 N/A
$107,014
73,708
57,380
43,968
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Office (Continued)
- ------------------
AT&T Wireless Services
Headquarters
Suburban Los Angeles, CA
90703-8573 1999 N/A 100% 222,000 100% 100% AT&T Wireless Services
6 Acres (12) (2014/2029)
Cerritos Corporate Center -
Phase II
Suburban Los Angeles, CA
90703-8573 2001 N/A 100% 105,000 100% 100% AT&T Wireless Services
3 Acres (12) (2011/2021)
The Points at Waterview
Suburban Dallas, Texas
75080-1472 2000 N/A 100% 201,000 82% 45% Bombadier Aerospace Corp.
15 Acres (5) (2013/2023)
Cisco Systems, Inc. (2005/2010)
Lakeshore Park Plaza
Birmingham, AL
35209-6719 1998 Daniel Realty 100%(9) 190,000 82% 78% Infinity Insurance (2005/2015)
Company 12 Acres
600 University Park Place
Birmingham, AL
35209-6774 2000 Daniel Realty 100%(9) 123,000 95% 95% Southern Company, Inc. (3)
Company 10 Acres (2005/2011)
Southern Progress (2006)
333 John Carlyle
Suburban Washington, D.C.
22314-5745 1999 N/A 100% 153,000 96% 94% A.T. Kearney (2009/2019)
1 Acre
1900 Duke Street
Suburban Washington, D.C.
22314-5745 2000 N/A 100% 97,000 100% 99% Municipal Securities Rulemaking
1 Acre Board (2016/2026)
American Society of Clinical
Oncology (2010/2015)
333 North Point Center East
Suburban Atlanta, GA
30022-8274 1998 N/A 100% 129,000 93% 96% Alltel Telecom Information
9 Acres Services, Inc. (2003)
J.C. Bradford (2005/2010)
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Office (Continued)
- -----------------
AT&T Wireless Services
Headquarters
Suburban Los Angeles, CA
90703-8573 222,000 $ 56,214 $ 0 N/A
$ 48,295
Cerritos Corporate Center -
Phase II
Suburban Los Angeles, CA
90703-8573 105,000 $ 19,344 $ 0 N/A
$ 18,082
The Points at Waterview
Suburban Dallas, Texas
75080-1472 97,740 $ 27,535(5) $ 0 N/A
$ 24,846(5)
48,303
Lakeshore Park Plaza
Birmingham, AL
35209-6719 107,293 $ 16,022 $ 10,088 11/1/08
$ 13,856 6.78%
600 University Park Place
Birmingham, AL
35209-6774 41,961 $ 20,229 $ 13,822 8/10/11
$ 17,115 7.38%
25,465
333 John Carlyle
Suburban Washington, D.C.
22314-5745 94,115 $ 29,161 $ 48,459(13) 11/1/11
$ 24,877 7.00%
(13)
1900 Duke Street
Suburban Washington, D.C.
22314-5745 47,556 $ 24,169 (13) (13)
$ 22,050
36,247
333 North Point Center East
Suburban Atlanta, GA
30022-8274 48,559 $ 13,277 $ 31,960(14) 11/1/11
$ 9,377 7.00%
(14)
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Office (Continued)
- ------------------
555 North Point Center East
Suburban Atlanta, GA
30022-8274 2000 N/A 100% 152,000 91% 91% Regus Business Centre
10 Acres (2011/2016)(15)
615 Peachtree Street
Atlanta, GA
30308-2312 1996 N/A 100% 148,000 91% 91% Wachovia (3)(2004/2007)
2 Acres
One Georgia Center
Atlanta, GA
30308-3619 2000 Prudential (3) 88.50%(9) 363,000 78% 84% Norfolk & Southern (2004/2014)
3 Acres (5) SouthTrust Bank (2004/2019)
Wildwood Office Park,
Atlanta, GA:
2300 Windy
Ridge Parkway
30339-5671 1987 IBM 50% 635,000 88% 99% Manhattan Associates, LLC
12 Acres (2008/2013)(16)
Computer Associates
(2005/2010)
Profit Recovery Group
(2005/2010)
Financial Services Corporation
(2006/2011)
Life Office Management Associates
(2005/2010)(16)
Chevron USA (2005)
2500 Windy
Ridge Parkway
30339-5683 1985 IBM 50% 315,000 89% 93% Coca-Cola Enterprises Inc.
8 Acres (2018/2023)
Cousins Properties Incorporated
(2003)
3200 Windy
Hill Road
30339-5609 1991 IBM 50% 687,000 95% 100% IBM (2006/2011)
15 Acres IBM (2009/2014)(17)
General Electric (2003)
W.H. Smith Inc. (2012/2017)
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Office (Continued)
- -----------------
555 North Point Center East
Suburban Atlanta, GA
30022-8274 89,688 $ 16,818 (14) (14)
$ 14,124
615 Peachtree Street
Atlanta, GA
30308-2312 50,073 $ 13,489 $ 0 N/A
$ 9,421
One Georgia Center
Atlanta, GA
30308-3619 91,425 $ 40,327(5) $ 0 N/A
80,895 $ 36,321(5)
Wildwood Office Park,
Atlanta, GA:
2300 Windy
Ridge Parkway
30339-5671 135,398 $ 79,829 $ 57,662 12/1/05
$ 41,539 7.56%
74,255
62,576
61,928
57,692
(2005/2010)(16)
45,967
2500 Windy
Ridge Parkway
30339-5683 187,251 $ 30,659 $ 20,812 12/15/05
$ 14,723 7.45%
44,030
3200 Windy
Hill Road
30339-5609 421,489 $ 85,452 $ 63,938 1/1/07
69,108 $ 50,527 8.23%
65,947
41,858
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Office (Continued)
- ------------------
4100 and 4300
Wildwood Parkway
30339-8400 1996 IBM 50% 250,000 100% 100% Georgia-Pacific
13 Acres Corporation (2012/2017)(18)
4200 Wildwood Parkway
30339-8402 1997 IBM 50% 260,000 100% 100% General Electric (3)(2014/2024)
8 Acres
3301 Windy Ridge
Parkway
30339-5685 1984 N/A 100% 107,000 100% 100% Indus International, Inc.
10 Acres (2012/2017)
3100 Windy Hill
Road
30339-5605 1983 N/A 100%(19) 188,000 100% 100% IBM (2006)
13 Acres
Bank of America Plaza
Atlanta, GA
30308-2214 1992 Bank of America (3) 50% 1,261,000 100% 100% Bank of America (3)(2012/2042)
4 Acres Troutman Sanders (2007/2017)
Ernst & Young LLP (2007/2017)
Paul Hastings (2012/2017)(21)
Hunton & Williams (2009/2014)
Gateway Village
Charlotte, NC
28202-1125 2001 Bank of America (3) 50%(9) 1,065,000 100% 100%(9) Bank of America (3)(2015/2035)
8 Acres
The Pinnacle
Atlanta, GA
30326-1234 1999 LORET 50% 424,000 98% 98% Merrill Lynch (2010/2011)
Holdings, L.L.L.P. 4 Acres A.T. Kearney (2009/2019)
UBS PaineWebber
(2013/2018)(22)
Two Live Oak Center
Atlanta, GA
30326-1234 1997 LORET 50% 279,000 80% 89% SYNAVANT Inc. (2007/2017)
Holdings, L.L.L.P. 2 Acres Chubb & Son, Inc. (3)
(2007/2017)
1155 Perimeter Center West
Atlanta, GA
30338-5416 2001 J. P. Morgan (3) 50% 362,000 99% 100% Mirant Corporation (2015)
6 Acres
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Office (Continued)
- -----------------
4100 and 4300
Wildwood Parkway
30339-8400 250,000 $ 26,596 $ 26,888 4/1/12
$ 19,773 7.65%
4200 Wildwood Parkway
30339-8402 260,000 $ 36,973 $ 40,806 3/31/14
$ 30,717 6.78%
3301 Windy Ridge
Parkway
30339-5685 107,000 $ 12,600 $ 0 N/A
$ 6,559
3100 Windy Hill
Road
30339-5605 188,000 $ 17,005(19) $ 0 N/A
$ 12,924(19)
Bank of America Plaza
Atlanta, GA
30308-2214 572,742 $225,468 (20) (20)
224,181 $151,916
211,211
92,224
91,103
Gateway Village
Charlotte, NC
28202-1125 1,065,000 $202,269 $181,532 12/1/16
$191,048 6.41%
The Pinnacle
Atlanta, GA
30326-1234 72,866 $ 92,830 $ 67,754 12/31/09
47,866 $ 75,200 7.11%
47,738
Two Live Oak Center
Atlanta, GA
30326-1234 65,451 $ 47,127 $ 28,526 10/1/07
48,520 $ 34,604 7.90%
1155 Perimeter Center West
Atlanta, GA
30338-5416 360,395 $ 58,566 $ 0 N/A
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Office (Continued)
- ------------------
Ten Peachtree Place
Atlanta, GA
30309-3814 1991 Coca-Cola (3) 50%(9) 260,000 100% 14% AGL Services Co. (2013/2028)
5 Acres (5) Domtar (2006)(23)
John Marshall-II
Suburban Washington, D.C.
22102-3802 1996 CarrAmerica Realty 50% 224,000 100% 100% Booz-Allen & Hamilton
Corporation (3) 3 Acres (2011/2016)
Austin Research Park -
Building III
Austin, TX
78759-2314 2001 CommonWealth 50% 174,000 100% 100% Charles Schwab & Co., Inc.
Pacific, LLC 4 Acres (5) (2012/2032)(24)
and CalPERS
Austin Research Park -
Building IV
Austin, TX
78759-2314 2001 CommonWealth 50% 184,000 100% 100% Charles Schwab & Co., Inc.
Pacific, LLC 7 Acres (5) (2012/2032)(24)
and CalPERS
First Union Tower
Greensboro, NC
27401-2167 1990 Prudential (3) 11.50%(9) 323,000 66% 77% Smith Helms Mullis &
1 Acre Moore (2010/2015)
Wachovia Bank (3)
(2009/2019)
Grandview II
Birmingham, AL
35243-1930 1998 Prudential (3) 11.50%(9) 149,000 100% 100% Fortis Benefits Insurance
8 Acres Company (2005/2011)
Daniel Realty Company (2008)
100 North Point Center East
Suburban Atlanta, GA
30022-4885 1995 Prudential (3) 11.50%(9) 128,000 70% 76% Schweitzer-Mauduit
7 Acres International, Inc. (2007/2012)
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Office (Continued)
- -----------------
Ten Peachtree Place
Atlanta, GA
30309-3814 226,779 $ 33,997(5) $ 13,212 12/31/08
32,720 $ 27,479(5) LIBOR
+ 0.75%
John Marshall-II
Suburban Washington, D.C.
22102-3802 224,000 $ 27,768 $ 19,244 4/1/13
$ 20,660 7.00%
Austin Research Park -
Building III
Austin, TX
78759-2314 174,000 $ 24,627(5) $ 0 N/A
$ 23,202(5)
Austin Research Park -
Building IV
Austin, TX
78759-2314 184,000 $ 26,557(5) $ 0 N/A
$ 25,301(5)
First Union Tower
Greensboro, NC
27401-2167 70,360 $ 54,264 $ 0 N/A
$ 38,120
62,622
Grandview II
Birmingham, AL
35243-1930 69,652 $ 23,115 $ 0 N/A
$ 16,963
23,440
100 North Point Center East
Suburban Atlanta, GA
30022-4885 32,696 $ 25,337 $ 22,870(25) 8/1/07
$ 16,737 7.86%
(25)
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Office (Continued)
- ------------------
200 North Point Center East
Suburban Atlanta, GA
30022-4885 1996 Prudential (3) 11.50%(9) 130,000 47% 53% APAC Teleservices, Inc.
9 Acres (2004/2009)
Motorola, Inc. (2003)
Dean Witter (2007)
Medical Office
Northside/Alpharetta I
Suburban Atlanta, GA
30005-3707 1998 N/A 100% 103,000 93% 95% Northside Hospital (3)(2013)(27)
1 Acre (26)
Northside/Alpharetta II
Suburban Atlanta, GA
30005-3707 1999 N/A 100% 198,000 79% 76% Northside Hospital (3)(2019)(28)
2 Acres (26)
$ 15,715
Meridian Mark Plaza
Atlanta, GA
30342-1613 1999 N/A 100% 161,000 100% 99% Northside Hospital (3)
3 Acres (2013/2023)(29)
Scottish Rite Hospital for
Crippled Children, Inc.
(2013/2018)(29)
AtheroGenics
Suburban Atlanta, GA
30004-2148 1999 N/A 100% 50,000 100% 100% AtheroGenics (2019/2029)
4 Acres
Emory Crawford Long Medical
Office Tower
Atlanta, GA
30308-9999 2002 Emory University 50% 358,000 85% 65%(11) Emory University (2017/2047)
(30)
Presbyterian Medical Plaza
at University
Charlotte, NC
28233-3549 1997 Prudential (3) 11.50%(9) 69,000 100% 100% Novant Health, Inc.
1 Acre (31) (2012/2027)(32)
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Office (Continued)
- -----------------
200 North Point Center East
Suburban Atlanta, GA
30022-4885 22,409 $ 21,836 (25) (25)
$ 15,135
22,492
15,709
Medical Office
Northside/Alpharetta I
Suburban Atlanta, GA
30005-3707 49,908 $ 15,922 $ 9,903 1/1/06
$ 13,021 7.70%
Northside/Alpharetta II
Suburban Atlanta, GA
30005-3707 75,342 $ 18,175 $ 0 N/A
$ 15,715
Meridian Mark Plaza
Atlanta, GA
30342-1613 51,054 $ 26,751 $ 24,926 10/1/10
$ 22,264 8.27%
29,556
AtheroGenics
Suburban Atlanta, GA
30004-2148 50,000 $ 7,655 $ 0 N/A
$ 5,697
Emory Crawford Long Medical
Office Tower
Atlanta, GA
30308-9999 136,053 $ 48,931 $ 0 N/A
$ 47,442
Presbyterian Medical Plaza
at University
Charlotte, NC
28233-3549 63,862 $ 8,615 $ 0 N/A
$ 6,907
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Retail Centers
- --------------
Presidential MarketCenter
Suburban
Atlanta, GA
30278-2149 1994, 1996 N/A 100% 490,000 100% 99% Target (33)
and 2000 66 acres overall of Publix Super Market
(374,000 100% Company (2019/2044)
square feet of Company owned Carmike Cinemas (3)(2023/2033)
and 49 acres owned Bed, Bath & Beyond (2008/2023)
are owned T.J. Maxx (2004/2014)
by the Office Depot, Inc. (2011/2026)
Company) Ross (2012/2032)
Marshalls (2010/2025)
Gap (2006/2016)
The Avenue of the Peninsula
Rolling Hills Estates, CA
90274-3664 2000 N/A 100% 375,000 91% 80% Regal Cinema (2015/2030)
14 Acres Saks & Company (2019/2049)
Borders (2018/2038)
Restoration Hardware (2010/2020)
Pottery Barn (2013)
Banana Republic (3)(2006/2016)
Gap (2006/2016)
Perimeter Expo
Atlanta, GA
30338-1519 1993 N/A 100% 291,000 92% 92% The Home Depot Expo (33)
19 acres overall of Marshalls (2014/2029)
(176,000 92% of Company Best Buy (2014/2029)
square feet Company owned Linens `N Things (2014/2024)
and 10 acres owned Office Max (2013/2033)
are owned by Gap's Old Navy Store
the Company) (2007/2012)
The Avenue East Cobb
Suburban Atlanta, GA
30062-8197 1999 N/A 100% 225,000 100% 97% Borders, Inc. (2015/2030)
30 Acres Bed, Bath & Beyond (2010/2025)
Gap (2005/2015)
Talbot's (2010/2020)
Pottery Barn (3)(2006/2012)
Banana Republic (3)(2005/2015)
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Retail Centers
- --------------
Presidential MarketCenter
Suburban
Atlanta, GA
30278-2149 N/A $ 29,672 $ 27,667 5/2/11
56,146 $ 23,955 7.65%
44,565
35,127
32,000
31,628
30,464
30,000
12,000
The Avenue of the Peninsula
Rolling Hills Estates, CA
90274-3664 55,673 $ 91,858 $ 0 N/A
42,404 $ 81,751
14,286
13,521
12,089
9,705
9,000
Perimeter Expo
Atlanta, GA
30338-1519 N/A $ 19,853 $ 19,792 8/15/05
36,598 $ 16,038 8.04%
36,000
30,351
23,500
13,939
The Avenue East Cobb
Suburban Atlanta, GA
30062-8197 24,882 $ 41,145 $ 38,255 8/1/10
21,000 $ 33,318 8.39%
19,434
12,905
10,000
8,009
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Retail Centers (Continued)
- --------------------------
The Avenue West Cobb
Suburban Atlanta, GA
30064-1615 (8) N/A 100% 206,000 28%(8) (8) Linens N Things (2013/2028)(8)
22 Acres Barnes & Noble (2013/2023)(8)
Talbots (2013/2023)(8)
The Shops of Lake Tuscaloosa
Tuscaloosa, AL
35406-2649 (8) N/A 100% 70,000 63%(8) (8) Publix Super Markets (3)
12 Acres (2024/2054)(8)
Mira Mesa MarketCenter
Suburban San Diego, CA
92126-2960 2000 Prudential (3) 88.50%(9) 480,000 100% 100% Home Depot (2020/2045)
40 Acres Edwards Theaters (2020/2035)
Albertsons (2020/2060)
Ross (2011/2026)
Barnes & Noble Superstores, Inc.
(2015/2030)
Gap's Old Navy Store (2006/2016)
Long's Drugs (2021/2041)
The Avenue Peachtree City
Suburban Atlanta, GA
30269-3120 2001 Prudential (3) 88.50%(9) 169,000 98% 78% Books a Million (2008/2013)
18 Acres Gap (2012/2022)
Homebanc Mortgage Corporation
(2007/2012)
Banana Republic (3)(2012/2022)
Rack Room Shoes (2008/2015)
The Shops at World Golf Village
St. Augustine, FL
32092-2724 1999 W.C. Bradley Co. 50% 80,000 74% 70% Bradley Specialty Retailing,
3 Acres Inc. (2013/2023)
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Retail Centers
- --------------
The Avenue West Cobb
Suburban Atlanta, GA
30064-1615 24,025(8) $ 8,380 $ 0 N/A
28,030(8) (8)
6,502(8)
The Shops of Lake Tuscaloosa
Tuscaloosa, AL
35406-2649 44,271(8) $ 2,109 $ 0 N/A
(8) (8)
Mira Mesa MarketCenter
Suburban San Diego, CA
92126-2960 129,833 $ 51,683 $ 0 N/A
94,041 $ 47,965
55,489
30,187
26,566
22,448
21,018
The Avenue Peachtree City
Suburban Atlanta, GA
30269-3120 13,750 $ 29,351 $ 0 N/A
10,800 $ 26,730
8,851
8,015
6,720
The Shops at World Golf Village
St. Augustine, FL
32092-2724 31,044 $ 13,454 $ 0 N/A
$ 11,339
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Retail Centers (Continued)
- --------------------------
North Point MarketCenter
Suburban Atlanta, GA
30202-4889 1994/1995 Prudential (3) 11.50%(9) 517,000 100% 100% Target (33)
60 Acres (34) Babies "R" Us (2012/2032)
(401,000 Media Play (2010/2025)
square feet Marshalls (2010/2025)
and 49 acres Rhodes (2011/2021)
are owned by Linens `N Things (2005/2025)
CP Venture United Artists (2014/2034)
Two LLC) Circuit City (2015/2030)
PETsMART (2009/2029)
Gap's Old Navy Store
(2006/2011)
Greenbrier MarketCenter
Chesapeake, VA
23327-2840 1996 Prudential (3) 11.50%(9) 493,000 100% 100% Target (2016/2046)(35)
44 Acres Harris Teeter, Inc. (2016/2036)
Best Buy (2015/2030)
Bed, Bath & Beyond (2012/2027)
Babies "R" Us (2006/2021)
Stein Mart, Inc. (2006/2026)
Barnes & Noble Superstores,
Inc. (2012/2022)
PETsMART(2011/2031)
Office Max (2011/2026)
Gap's Old Navy Store
(2007/2012)
Los Altos MarketCenter
Long Beach, CA
90815-3126 1996 Prudential (3) 11.50%(9) 258,000 100% 100% Sears (33)
19 Acres Circuit City (3)(2017/2037)
(157,000 square Borders, Inc. (2017/2037)
feet and 17 Acres Bristol Farms (3)(2012/2032)
are owned by CompUSA, Inc. (2011/2021)
CP Venture Sav-on Drugs (3)(2016/2036)
Two LLC)
Mansell Crossing Phase II
Suburban Atlanta, GA
30202-4822 1996 Prudential (3) 11.50%(9) 103,000 100% 92% Bed, Bath & Beyond (2012/2027)
13 Acres Ross Stores Inc. (2013/2033)
Rooms To Go (2016/2036)
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Retail Centers
- --------------
North Point MarketCenter
Suburban Atlanta, GA
30202-4889 N/A $ 56,919 $ 26,409 7/15/05
$ 48,113 8.50%
48,884
40,000
40,000
35,000
34,733
33,420
25,465
20,000
Greenbrier MarketCenter
Chesapeake, VA
23327-2840 117,220 $ 51,355 $ 0 N/A
51,806 $ 43,848
45,106
40,484
40,000
36,000
29,974
26,040
23,484
14,000
Los Altos MarketCenter
Long Beach, CA
90815-3126 N/A $ 32,812 $ 0 N/A
38,541 $ 28,524
30,000
28,200
25,620
16,914
Mansell Crossing Phase II
Suburban Atlanta, GA
30202-4822 40,787 $ 12,574 $ 0 N/A
32,144 $ 10,757
21,000
Percentage
Description, Year Rentable Leased Average
Location Development Company's Square Feet as of 2002 Major Tenants (lease
and Completed Venture Ownership and Acres December Economic expiration/options
Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration)
- ------------ ----------- ------- ---------- ---------- ---------- --------- --------------------
Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects
- -------------------------------------------------------------------------
Wildwood Office Park
Suburban Atlanta, GA
30339-5671 1985-1993 IBM 50% 14 Acres 100% 88% N/A
North Point
Suburban Atlanta, GA
30202-4885 1993 N/A 100% 24 Acres 100% 95% N/A
Adjusted
Cost and
Adjusted
Cost Less Debt
Description, Major Depreciation Maturity
Location Tenants' and and
and Rentable Amortization Debt Interest
Zip Code Sq. Feet (1) Balance Rate
- ----------- -------- ------------ ------- --------
Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects
- -------------------------------------------------------------------------
Wildwood Office Park
Suburban Atlanta, GA
30339-5671 N/A $ 8,717 $ 0 N/A
$ 6,594
North Point
Suburban Atlanta, GA
30202-4885 N/A $ 3,697 $ 0 N/A
$ 3,501
(1) Cost as shown in the accompanying table includes deferred leasing costs
and other related assets. For each of the following projects; 2300 and
2500 Windy Ridge Parkway, 3200 Windy Hill Road, 4100 and 4300 Wildwood
Parkway, 4200 Wildwood Parkway and Wildwood Stand Alone Retail Lease
Sites, the cost shown is what the cost would be if Wildwood Associates'
land cost were adjusted downward to the Company's lower basis in the land
it contributed to Wildwood Associates.
(2) Approximately .18 acres of the total 4 acres of land at Inforum is under a
ground lease expiring 2068. (3) Actual tenant or venture partner is
affiliate of entity shown. (4) Lockwood Green Engineers, Inc. reduced its
space under lease from 125,916 square feet to 97,918 square feet effective
February 1,
2003.
(5) Includes acreage and cost of land available for future development. See
"Land Held for Investment or Future Development."
(6) 103,656 square feet of this lease of 101 Independence Center expires in
2010. Additionally, the tenant has the right to terminate
increments of space each year beginning in 2005 with 18 months notice.
(7) 3,060 square feet of this lease of 101 Independence Center expires in
2004.
(8) Project was under construction and in lease-up as of December 31, 2002. In
certain situations, lease expiration dates are based upon estimated
commencement dates and square footage is estimated.
(9) See "Major Properties" - "101 Second Street," " 55 Second Street,"
"Cousins/Daniel, LLC," "One Georgia Center," "Charlotte Gateway Village,
LLC," "Ten Peachtree Place," "CP Venture Two LLC," and "CP Venture Two LLC
and CP Venture Three LLC" where these ventures' preferences and/or terms
are discussed.
(10) See "Item 1, Subsequent Event" for information concerning the termination
of the Cable and Wireless lease effective January 31, 2003.
(11) 55 Second Street and Emory Crawford Long Medical Office Tower became
partially operational for financial reporting purposes in February 2002.
Thus, economic occupancy does not include a full year of operations.
(12) AT&T Wireless Services Headquarters and Cerritos Corporate Center - Phase
II are located on a total of 9 acres which are subject to a ground lease
expiring in 2034, with an option to renew through 2087.
(13) 333 John Carlyle and 1900 Duke Street were financed together as one
non-recourse mortgage note payable. Until certain events occur, this
mortgage note is cross-defaulted with the note referred to in Note 14.
(14) 333 North Point Center East and 555 North Point Center East were financed
together as one non-recourse mortgage note payable. Until certain events
occur, this mortgage note is cross-defaulted with the note referred to in
Note 13.
(15) On January 14, 2003, Regus Business Centre filed Chapter 11 bankruptcy. To
date this lease has not been assumed or rejected. (16) 5,448 square feet
of the Manhattan Associates lease expires in 2005; 7,208 square feet of
the Life Office Management Associates
lease expires in 2008.
(17) IBM has the right to terminate its lease on 69,108 square feet at 3200
Windy Hill Road in 2004 upon the payment of a termination fee.
(18) Georgia-Pacific Corporation has the right to terminate its lease in 2007,
upon payment of a cancellation penalty. Additionally, Georgia-Pacific
Corporation has the option to purchase the building on its lease
expiration date for a price of $33,750,000.
(19) See "Major Properties" - "Wildwood Office Park" where the accounting for
the 3100 Windy Hill Road Building is discussed.
(20) See "Item 1, Significant Changes in 2002, Financings" where debt on Bank
of America Plaza is discussed.
(21) Paul Hastings has a cancellation right on 12,812 square feet and 20,574
square feet of this lease of Bank of America Plaza in 2005 and 2006,
respectively.
(22) UBS PaineWebber has the right to terminate its lease in 2008, upon payment
of a cancellation penalty. (
23) Domtar has the right to terminate its lease in 2004 with six months
notice.
24) Charles Schwab & Co., Inc. has the right to terminate its lease with
respect to either 50% or all of the space in either or both of Buildings
III and IV in 2009, upon 14 months notice and payment of a termination
fee.
(25) 100 North Point Center East and 200 North Point Center East were financed
together as one non-recourse mortgage note payable.
(26) Northside/Alpharetta I and II are located on 1 acre and 2 acres subject to
ground leases, which expire in 2058 and 2060, respectively.
(27) 4,716 square feet, 12,532 square feet and 4,716 square feet of this lease
of Northside/Alpharetta I expire in 2005, 2009 and 2011, respectively.
(28) 17,444 square feet and 10,754 square feet of this lease of
Northside/Alpharetta II expire in 2009 and 2011, respectively. (29) 8,718
square feet of the Northside Hospital lease expires in 2008; 7,521 square
feet of the Scottish Rite Hospital lease expires
in 2004.
(30) Emory Crawford Long Medical Office Tower was developed on top of a
building within the Crawford Long Hospital campus. The Company received a
fee simple interest in the air rights above this building in order to
develop the medical office tower.
(31) Presbyterian Medical Plaza at University is located on 1 acre which is
subject to a ground lease expiring in 2057. (32) Novant Health, Inc. has
the option to renew 23,359 square feet of this lease of Presbyterian
Medical Plaza at University through
2027, with the option to renew the balance through 2022.
(33) This anchor tenant owns its own space.
(34) North Point MarketCenter includes approximately 4 outparcels which are
ground leased to freestanding users. (35) Tenant has exercised an option
to acquire the land on which tenant's store resides.
Major Properties
- ----------------
General
- -------
This section describes the major operating properties in which the
Company has an interest either directly or indirectly through joint venture
arrangements. A "negative investment" in a joint venture results from
distributions of capital to the Company, if any, exceeding the sum of (i) the
Company's contributions of capital and (ii) reported earnings (losses) of the
joint venture allocated to the Company. "Investment" in a joint venture means
the book value of the Company's investment in the joint venture.
Wildwood Office Park
- --------------------
Wildwood Office Park is a 285 acre commercial development in Atlanta,
Georgia, master planned by I.M. Pei, which includes eight office buildings
containing 2,442,000 rentable square feet. The property is zoned for office,
institutional, commercial and residential use. Approximately 104 acres in the
park are owned by, or committed to be contributed to, Wildwood Associates (see
below), including approximately 34 acres of land held for future development.
The Company owns 100% of the 96 acre balance of the land available for future
development. (See "Land Held for Investment or Future Development.")
Located in Atlanta's northwest commercial district, just north of the
Interstate 285/Interstate 75 intersection, Wildwood features convenient access
to all of Atlanta's major office, commercial and residential districts. The
Wildwood complex overlooks the Chattahoochee River and borders 1,200 acres of
national forest, thus providing an urban office facility in a forest setting.
Wildwood Associates. Wildwood Associates is a joint venture formed in
1985 between the Company and IBM. The Company and IBM each have a 50% interest
in Wildwood Associates. At December 31, 2002, the Company's investment in
Wildwood Associates and a related partnership, which included the cost of the
land the Company is committed to contribute to Wildwood Associates, was a
negative investment of approximately $37,565,000.
Wildwood Associates owns the 3200 Windy Hill Road building (687,000
rentable square feet), the 2300 Windy Ridge Parkway building (635,000 rentable
square feet), the 2500 Windy Ridge Parkway building (315,000 rentable square
feet), the 4100 and 4300 Wildwood Parkway buildings (250,000 rentable square
feet in total) and the 4200 Wildwood Parkway building (260,000 rentable square
feet). As of December 31, 2002, 3200 Windy Hill Road was 95% leased, 2300 Windy
Ridge Parkway was 88% leased, 2500 Windy Ridge Parkway was 89% leased and the
remaining buildings were all 100% leased. Wildwood Associates also owns 14 acres
leased to two banking facilities and five restaurants.
Other Buildings in Wildwood Office Park. Wildwood Office Park also
contains the 3301 Windy Ridge Parkway building, a 107,000 rentable square foot
office building located on approximately ten acres which is wholly owned by the
Company. The 3301 Windy Ridge Parkway Building was 100% leased as of December
31, 2002.
In addition, the 3100 Windy Hill Road building, a 188,000 rentable
square foot corporate training facility, occupies a 13-acre parcel of land which
is wholly owned by the Company. The training facility improvements were sold in
1983 to a limited partnership of private investors, at which time the Company
received a leasehold mortgage note. The training facility land was
simultaneously leased to the partnership for thirty years, along with certain
equipment for varying periods. The training facility had been leased by the
partnership to IBM through November 30, 1998.
Effective January 1, 1997, the IBM lease was extended eight years
beyond its previous expiration, to November 30, 2006. Based on the economics of
the lease, the Company will receive substantially all of the economic risks and
rewards from the property through the term of the IBM lease. In addition, the
Company will receive substantially all of the future economic risks and rewards
from the property beyond the IBM lease because of the short term remaining on
the land lease (seven years as of January 1, 1997) and the large mortgage note
balance ($25.9 million as of January 1, 1997) that would have to be paid off,
with interest, in that seven year period before the limited partnership would
receive any significant benefit. Therefore, effective January 1, 1997, the
$17,005,000 balance of the mortgage note and land was reclassified to Operating
Properties, and revenues and expenses (including depreciation) from that point
forward have been recorded as if the building were owned by the Company.
North Point
- -----------
North Point is a mixed-use commercial development located in north
central suburban Atlanta, Georgia, off of Georgia Highway 400, a six-lane state
highway that runs from downtown Atlanta to the northern Atlanta suburbs. The
Company owns either directly or through a venture arrangement approximately 134
and 221 acres located on the east and west sides, respectively, of Georgia
Highway 400. Development had been mainly concentrated on the land located east
of Georgia Highway 400 until July 1998 when the Company commenced construction
of the first building, AtheroGenics, on the west side. Planning and
infrastructure work has also begun for additional development on the west side
property. The east side land surrounds North Point Mall, a 1.3 million square
foot regional mall on a 100-acre site which the Company sold in 1988. The
following describes the various components of North Point.
North Point MarketCenter and Mansell Crossing Phase II. North Point
MarketCenter, which was 100% leased as of December 31, 2002, is a 517,000 square
foot retail power center (of which 401,000 square feet are owned in a venture)
located adjacent to North Point Mall. Mansell Crossing Phase II, which was 100%
leased as of December 31, 2002, is an approximately 103,000 square foot
expansion of an existing retail power center, previously developed by the
Company for a third party. These two centers are located on 49 and 13 acres of
land, respectively, at North Point. Both of these properties were contributed to
the Prudential venture in November 1998 (see Note 5).
North Point Center East. The Company owns either directly or indirectly
through a venture arrangement four office buildings located adjacent to North
Point Mall and the retail properties discussed above. 100 North Point Center
East and 200 North Point Center East, which were completed in 1995 and 1996,
respectively, and contain 128,000 and 130,000 rentable square feet,
respectively, were contributed to the Prudential venture in November 1998 (see
Note 5). 333 North Point Center and 555 North Point Center East, which were
completed in 1998 and 2000, respectively, and contain 129,000 and 152,000
rentable square feet, respectively, are wholly owned by the Company. These four
office buildings are located on 35 acres of land at North Point. 555 North Point
Center East became partially operational for financial reporting purposes in
February 2000. 100, 200, 333 and 555 North Point Center East were 70%, 47%, 93%
and 91% leased, respectively, as of December 31, 2002.
AtheroGenics. The Company owns directly the AtheroGenics building, an
approximately 50,000 rentable square foot office and laboratory building located
on a four-acre site on the west side of Georgia Highway 400. The AtheroGenics
building was 100% leased as of December 31, 2002.
Other North Point Property. Approximately 24 acres of the North Point
land are ground leased in one to five acre sites to freestanding users. These 24
acres were 100% leased as of December 31, 2002.
The remaining approximately 230 developable acres at North Point are
wholly owned by the Company. Approximately 13 acres of this land are located on
the east side of Georgia Highway 400 and are zoned for office use. Approximately
217 acres of the land are located on the west side of Georgia Highway 400 and
are zoned for office, institutional and light industrial use. The Company has
submitted a zoning request for a mixed use development, including residential,
office and commercial as well as facilities for a performing arts center,
assisted living, education and a community center. (See "Land Held for
Investment or Future Development.")
Other Operational Office Properties
- -----------------------------------
Inforum. In June 1999, the Company acquired Inforum, a 990,000 rentable
square foot office building in downtown Atlanta, Georgia, for $71 million by
completing a tax-deferred exchange with the proceeds ($69 million) from the sale
of the Company's 50% interest in Haywood Mall. Inforum was 96% leased as of
December 31, 2002.
101 Independence Center. In December 1996, the Company acquired 101
Independence Center, a 526,000 rentable square foot office building (including
an underground parking garage and an adjacent parking deck) located at the
intersection of Trade and Tryon Streets in the central business district of
Charlotte, North Carolina. The acquisition included land upon which an
approximately 535,000 rentable square foot building can be developed. 101
Independence Center was 98% leased as of December 31, 2002.
101 Second Street. Cousins/Myers Second Street Partners, L.L.C., a
venture formed in 1997 between the Company and Myers Second Street Company LLC
("Myers"), purchased approximately one acre of undeveloped land in downtown San
Francisco, California upon which 101 Second Street, an approximately 387,000
rentable square foot office building was developed. 101 Second Street became
partially operational for financial reporting purposes in April 2000. In August
2002, the 148,000 square foot lease with Arthur Andersen was terminated, and in
September 2002, 88,000 square feet of this space was re-leased. This property
was 83% leased as of December 31, 2002. Myers' economic rights are limited to
development fees and certain incentive interests, which include a residual
interest in the cash flow and capital proceeds. This venture is treated as a
consolidated entity in the Company's financial statements.
55 Second Street. In November 1999, the Company formed Cousins/Myers
II, LLC, a venture with Myers Bay Area Company LLC ("Myers Bay"). The venture
purchased approximately one acre of fully entitled undeveloped land in downtown
San Francisco, California and began development of 55 Second Street, an
approximately 379,000 rentable square foot office building. 55 Second Street
became partially operational for financial reporting purposes in February 2002
and was 92% leased as of December 31, 2002. Effective January 31, 2003, a major
tenant's lease on 158,000 square feet was terminated (see "Item 1, Business,
Subsequent Event" and Note 10). Myers Bay's economic rights are limited to
development fees and certain incentive interests, which include a residual
interest in the cash flow and capital proceeds. The venture is treated as a
consolidated entity in the Company's financial statements.
AT&T Wireless Services Headquarters. On November 18, 1998, the Company
entered into Commonwealth/Cousins I, LLC (the "Venture") with CommonWealth for
the purpose of developing AT&T Wireless Services Headquarters, a 222,000
rentable square foot office building in suburban Los Angeles, California, which
became partially operational for financial reporting purposes in September 1999
and was 100% leased as of December 31, 2002.
CommonWealth transferred all rights in the project and in exchange
received an initial credit to its capital account of $4,980,039, which was equal
to a 49.9% interest in the Venture. The Company contributed $5,000,000 as its
capital contribution for a 50.1% interest in the Venture. The Venture entered
into a put and call agreement which CommonWealth exercised in January 2001 to
sell its entire interest for approximately $7.5 million. Upon completion of the
buyout, the Venture's name was changed to Cousins/Cerritos I, LLC, which is 100%
owned by the Company.
Cerritos Corporate Center - Phase II. In June 2000, the Company
commenced construction of Cerritos Corporate Center - Phase II, an approximately
105,000 rentable square foot office building in suburban Los Angeles,
California, adjacent to the Company's AT&T Wireless Services Headquarters office
building. Cerritos Corporate Center - Phase II became fully operational for
financial reporting purposes in June 2001 and was 100% leased to AT&T Wireless
Services as of December 31, 2002
The Points at Waterview. In December 2000, the Company purchased The
Points at Waterview, an approximately 201,000 rentable square foot office
building in suburban Dallas, Texas. The purchase price was approximately $25.4
million which included an adjacent parcel of land on which a second building of
approximately 60,000 rentable square feet can be developed. The Points at
Waterview was 82% leased as of December 31, 2002.
Cousins/Daniel, LLC. Cousins/Daniel, LLC ("Cousins/Daniel") was formed
in 1997 between Cousins, Inc. (a wholly-owned subsidiary of Cousins) and Daniel
Realty Company ("Daniel"). The purpose of this venture is to develop certain
projects proposed by Daniel and selected by the Company. Daniel's economic
rights are limited to development fees, leasing fees, management fees and
certain incentive interests. These incentive interests include a residual
interest in the cash flow and capital proceeds. All projects undertaken within
the venture are pooled for purposes of calculating the aforementioned residuals.
This venture is treated as a consolidated entity in the Company's financial
statements.
In June 1998, Cousins/Daniel acquired Lakeshore Park Plaza, an
approximately 190,000 rentable square foot office building and also purchased
the land for and commenced construction of 600 University Park Place, an
approximately 123,000 rentable square foot office building which became
partially operational for financial reporting purposes in June 2000. Both of
these office buildings are located in Birmingham, Alabama, and were 82% and 95%
leased, respectively, as of December 31, 2002.
333 John Carlyle. In January 1998, the Company purchased the land for
and commenced construction of 333 John Carlyle, an approximately 153,000
rentable square foot office building in suburban Washington, D.C. 333 John
Carlyle became partially operational for financial reporting purposes in May
1999 and was 96% leased as of December 31, 2002.
1900 Duke Street. In January 1999, the Company purchased the land for
and commenced construction of 1900 Duke Street, an approximately 97,000 rentable
square foot office building in suburban Washington, D.C., which became partially
operational for financial reporting purposes in October 2000 and was 100% leased
as of December 31, 2002.
615 Peachtree Street. In August 1996, the Company acquired 615
Peachtree Street, a 148,000 rentable square foot 12-story downtown Atlanta
office building, located across from Bank of America Plaza. 615 Peachtree Street
was 91% leased as of December 31, 2002.
One Georgia Center. In December 2000, CP Venture Three LLC (see Note 5)
acquired One Georgia Center, an approximately 363,000 rentable square foot
office building in midtown Atlanta, Georgia. The purchase price of the building
was approximately $35.8 million, which included an adjacent parcel of land upon
which an approximately 350,000 rentable square foot building can be developed.
One Georgia Center was 78% leased as of December 31, 2002.
Bank of America Plaza. Bank of America Plaza is a 55-story,
approximately 1.3 million rentable square foot office tower designed by Kevin
Roche and is located on approximately 4 acres of land between the midtown and
downtown districts of Atlanta, Georgia. The building, which was completed in
1992, was 100% leased as of December 31, 2002. An affiliate of Bank of America
leases approximately 46% of the rentable square feet. Bank of America Plaza was
developed by CSC Associates, L.P. ("CSC"), a joint venture formed by the Company
and a wholly-owned subsidiary of Bank of America, each as 50% partners.
CSC's net income or loss and cash distributions are allocated to the
partners based on their percentage interests (50% each). At December 31, 2002,
the Company's investment in CSC was approximately $84,133,000.
Charlotte Gateway Village, LLC ("Gateway"). On December 14, 1998, the
Company and a wholly-owned subsidiary of Bank of America Corporation formed
Gateway for the purpose of developing and owning Gateway Village, an
approximately 1.1 million rentable square foot office building complex in
downtown Charlotte, North Carolina. Construction of Gateway Village commenced in
July 1998. The project, which is 100% leased to Bank of America Corporation with
a term of 15 years, became partially operational for financial reporting
purposes in November 2000. Gateway's net income or loss and cash distributions
are allocated to the members as follows: first to the Company so that it
receives a cumulative compounded return equal to 11.46% on its capital
contributions, second to a wholly-owned subsidiary of Bank of America
Corporation until it has received an amount equal to the aggregate amount
distributed to the Company, and then 50% to each member. At December 31, 2002,
the Company had an investment in Gateway of approximately $10,655,000.
Cousins LORET Venture, L.L.C.("Cousins LORET"). Effective July 31,
1997, Cousins LORET was formed between the Company and LORET Holdings, L.L.L.P.
("LORET"), each as 50% members. LORET contributed Two Live Oak Center, a 279,000
rentable square foot office building located in Atlanta, Georgia, which was
renovated in 1997, and was 80% leased as of December 31, 2002. LORET also
contributed an adjacent four-acre site on which construction of The Pinnacle, a
424,000 rentable square foot office building, commenced in August 1997 and was
completed in November 1998. The Pinnacle was 98% leased as of December 31, 2002.
The Company contributed $25 million of cash to Cousins LORET to match the value
of LORET's agreed-upon equity. At December 31, 2002, the Company had an
investment in Cousins LORET of approximately $6,599,000.
285 Venture, LLC. In March 1999, the Company and a commingled trust
fund advised by J.P. Morgan Investment Management Inc. (the "J.P. Morgan Fund")
formed 285 Venture, LLC, each as 50% partners, for the purpose of developing
1155 Perimeter Center West, an approximately 362,000 rentable square foot office
building complex in Atlanta, Georgia. 1155 Perimeter Center West became
partially operational for financial reporting purposes in January 2000 and was
99% leased as of December 31, 2002. The J.P. Morgan Fund contributed the
approximately six-acre site upon which 1155 Perimeter Center West was developed.
The land had an agreed-upon value of approximately $5.4 million which the
Company matched with a cash contribution. At December 31, 2002, the Company's
investment in 285 Venture, LLC was approximately $31,031,000.
Ten Peachtree Place. Ten Peachtree Place is a 20-story, 260,000
rentable square foot office building located in midtown Atlanta, Georgia.
Completed in 1991, this structure was designed by Michael Graves and was 100%
leased to Coca-Cola through November 30, 2001. Ten Peachtree Place was 100%
leased as of December 31, 2002. Approximately four acres of adjacent land,
currently used for surface parking, are available for future development of an
approximately 400,000 square foot office building or a 350-unit apartment
complex.
Ten Peachtree Place is owned by Ten Peachtree Place Associates
("TPPA"), a general partnership between the Company (50%) and a wholly-owned
subsidiary of Coca-Cola (50%). The partnership acquired the property in 1991 for
a nominal cash investment, subject to a ten-year purchase money note. The TPPA
partnership agreement generally provides that each partner is entitled to
receive 50% of cash flows from operating activities, net of note principal
amortization, through the ten-year term of the Coca-Cola lease. After the
expiration of the Coca-Cola lease, in accordance with the partnership agreement,
each partner must contribute on a 50% basis capital contributions needed for
tenant improvements and leasing commissions related to the releasing of the
building, as well as to fund any operating deficits. The cash flows from
operating activities, net of note principal amortization, will be used first to
repay these capital contributions plus 8% interest to each partner on a 50%
basis. After these capital contributions plus 8% interest are repaid in full,
the Company and its partner are entitled to receive 15% and 85% of the cash
flows (including any sales proceeds), respectively, until the two partners have
received a combined distribution of $15.3 million. Thereafter, each partner is
entitled to receive 50% of cash flows. At December 31, 2002, the Company had an
investment in Ten Peachtree Place Associates of approximately $4,262,000.
CC-JM II Associates. This joint venture was formed in 1994 between the
Company and an affiliate of CarrAmerica Realty Corporation, each as 50% general
partners, to develop and own John Marshall-II, a 224,000 square foot office
building in suburban Washington, D.C. The building is 100% leased until 2011 to
Booz-Allen & Hamilton, an international consulting firm, as a part of its
corporate headquarters campus. At December 31, 2002, the Company had an
investment in CC-JM II Associates of approximately $2,204,000.
CPI/FSP I, L.P. In May 2000, CPI/FSP I, L.P., a 50% limited
partnership, was formed. 50% of the venture is owned by the Company through a
general partnership, Cousins Austin GP, Inc. (1%), and a limited partnership,
Cousins Austin, Inc. (49%). The remaining 50% is owned by a general partnership,
Fifth Street Properties - Austin, LLC (1%), and a limited partnership, Fifth
Street Properties - Austin Investor, LLC (49%), which are both owned by
CommonWealth Pacific LLC and CalPERS. CPI/FSP I, L.P. developed Austin Research
Park - Buildings III and IV, two approximately 174,000 and 184,000 rentable
square foot office buildings, respectively, in Austin, Texas, which became
partially operational for financial reporting purposes in June 2001 and
September 2001, respectively. Both buildings were 100% leased as of December 31,
2002. Additionally, the venture owns an adjacent six-acre parcel of land for
future development of an approximately 175,000 rentable square foot office
building. At December 31, 2002, the Company had an investment in CPI/FSP I, L.P.
of approximately $25,277,000.
CP Venture Two LLC. On November 12, 1998, the Company entered into a
venture agreement with Prudential. On such date the Company contributed its
interest in nine properties to the venture and Prudential contributed cash (see
Note 5). The nine properties contributed included four office properties, 100
and 200 North Point Center East as discussed above, First Union Tower and
Grandview II, and one medical office property, Presbyterian Medical Plaza at
University. First Union Tower is an office building containing approximately
323,000 rentable square feet, located on one acre of land in downtown
Greensboro, North Carolina. First Union Tower was 66% leased as of December 31,
2002. Grandview II is an approximately 149,000 rentable square foot office
building in Birmingham, Alabama, which was owned by Cousins/Daniel, LLC prior to
being contributed. Grandview II was 100% leased as of December 31, 2002.
Presbyterian Medical Plaza at University, an approximately 69,000 rentable
square foot medical office building in Charlotte, North Carolina, was 100%
leased as of December 31, 2002. See "Other Retail Properties" where retail
properties contributed to the Prudential venture are discussed.
One Ninety One Peachtree Tower. One Ninety One Peachtree Tower is a
50-story, office tower located in downtown Atlanta, Georgia that was completed
in December 1990. One Ninety One Peachtree Tower, which contains 1.2 million
rentable square feet, was designed by John Burgee Architects, with Phillip
Johnson as design consultant.
One Ninety One Peachtree Tower was developed on approximately 2 acres
of land, of which approximately 1.5 acres is owned and approximately one-half
acre under the parking facility is leased for a 99-year term expiring in 2087
with a 99-year renewal option. One Ninety One Peachtree Tower was 97% leased as
of December 31, 2002.
C-H Associates, Ltd. ("C-H Associates"), a partnership formed in 1988
between CREC (49%), Hines Peachtree Associates Limited Partnership (49%) and
Peachtree Palace Hotel, Ltd. (2%), owns a 20% interest in the partnership that
owns One Ninety One Peachtree Tower. C-H Associates' 20% ownership of One Ninety
One Peachtree Tower results in an effective 9.8% ownership interest by CREC,
subject to a preference in favor of the majority partner, in the One Ninety One
Peachtree Tower project. Therefore, C-H Associates is not treated as a
consolidated entity in the Company's financial statements. The balance of the
One Ninety One Peachtree Tower project was owned by DIHC Peachtree Associates,
which was an affiliate of Dutch Institutional Holding Company, but was acquired
by Cornerstone Properties, Inc. in October 1997. In June 2000, Equity Office
Properties Trust acquired Cornerstone Properties, Inc.
Through C-H Associates, CREC received 50% of the development fees from
the One Ninety One Peachtree Tower project. In addition, CREC owns a 50%
interest in two general partnerships which received fees from leasing and
managing the One Ninety One Peachtree Tower project. In December 2002, CREC
contributed its interest in C-H Associates to Cousins Texas LLC.
The One Ninety One Peachtree Tower project was funded substantially by
debt until March 1993, at which time the predecessor owner contributed equity in
the amount of $145,000,000 which repaid approximately one-half of the debt.
Subsequent to the equity contribution, C-H Associates received a priority
distribution of $250,000 per year (of which CREC was entitled to receive
$112,500) for seven years beginning in 1993 and ending in 2000. The equity
contributed is entitled to a preferred return at a rate increasing over the
first 14 years from 5.5% to 11.5% (payable after CREC's priority return); at
December 31, 2002, the cumulative undistributed preferred return was
$18,162,399. After Equity Office Properties Trust recovers its preferred return,
the partners share in any operating cash flow distributions in accordance with
their percentage interests. The project is subject to long-term debt of
approximately $140,433,713 at December 31, 2002. At December 31, 2002, the
Company had a negative investment of approximately $91,000 in the One Ninety One
Peachtree Tower project.
Operational Medical Office Properties
- -------------------------------------
Medical Office Properties. In June 1998, the Company acquired
Northside/Alpharetta I, an approximately 103,000 rentable square foot medical
office building in suburban Atlanta, Georgia. Northside/Alpharetta I was 93%
leased as of December 31, 2002. Northside/Alpharetta II, an approximately
198,000 rentable square foot medical office building in suburban Atlanta,
Georgia, was 79% leased as of December 31, 2002. Additionally, Meridian Mark
Plaza, an approximately 161,000 rentable square foot medical office building in
Atlanta, Georgia, was 100% leased as of December 31, 2002.
Crawford Long - CPI, LLC. In October 1999, the Company formed Crawford
Long - CPI, LLC with Emory University, each as 50% partners, for the purpose of
developing and owning the Emory Crawford Long Medical Office Tower, an
approximately 358,000 rentable square foot medical office building located in
midtown Atlanta, Georgia. This property became partially operational for
financial reporting purposes in February 2002 and was 85% leased as of December
31, 2002. At December 31, 2002, the Company had an investment in Crawford Long -
CPI, LLC of approximately $25,434,000.
Office Properties Under Development
- -----------------------------------
Congress at Fourth. In January 2001, the Company acquired approximately
two acres of land for approximately $12,500,000 in Austin, Texas and began
development of Congress at Fourth, an approximately 525,000 rentable square foot
office building which was 33% leased as of December 31, 2002.
Other Retail Properties
- -----------------------
Operational Retail Properties. The Company owns four retail centers
which were fully operational for financial reporting purposes as of December 31,
2002. Perimeter Expo is an approximately 291,000 square foot retail power center
(of which the Company owns approximately 176,000 square feet) in Atlanta,
Georgia which was 92% leased (Company owned) as of December 31, 2002.
Presidential MarketCenter is an approximately 490,000 square foot retail power
center (of which the Company owns approximately 374,000 square feet) in suburban
Atlanta, Georgia, which was 100% leased (Company owned) as of December 31, 2002.
The Avenue East Cobb is an approximately 225,000 square foot open-air retail
specialty center in suburban Atlanta, Georgia. The Avenue East Cobb was 100%
leased as of December 31, 2002. The Avenue of the Peninsula is an approximately
375,000 square foot open-air retail specialty center in Rolling Hills Estates,
California, in the greater Los Angeles metropolitan area. The Avenue of the
Peninsula became partially operational for financial reporting purposes in May
2000 and was 91% leased as of December 31, 2002.
CP Venture Two LLC and CP Venture Three LLC. In November 1998, the
Company contributed both Greenbrier MarketCenter and Los Altos MarketCenter, in
addition to North Point MarketCenter and Mansell Crossing II (see "North Point"
discussion), to the aforementioned Prudential venture (see Note 5). Greenbrier
MarketCenter is an approximately 493,000 square foot retail power center located
in Chesapeake, Virginia, which was 100% leased as of December 31, 2002. Los
Altos MarketCenter is an approximately 258,000 square foot retail power center
(of which the Prudential venture owns 157,000 square feet) located in Long
Beach, California, which was 100% leased as of December 31, 2002.
Mira Mesa MarketCenter, an approximately 480,000 square foot retail
power center in suburban San Diego, California, became partially operational for
financial reporting purposes in April 2000. Mira Mesa MarketCenter is owned by
CP Venture Three LLC (see Note 5) and was 100% leased as of December 31, 2002.
The Avenue Peachtree City, an approximately 169,000 square foot open-air retail
specialty center in suburban Atlanta, Georgia, became partially operational for
financial reporting purposes in April 2001. The Avenue Peachtree City is also
owned by CP Venture Three LLC (see Note 5) and was 98% leased as of December 31,
2002.
Brad Cous Golf Venture, Ltd. Effective January 31, 1998, the Company
formed the Brad Cous Golf Venture, Ltd. with W.C. Bradley Co., each as 50%
partners, for the purpose of developing and owning The Shops at World Golf
Village, an approximately 80,000 square foot retail center located adjacent to
the PGA Hall of Fame in St. Augustine, Florida. The Shops at World Golf Village
was 74% leased as of December 31, 2002. At December 31, 2002, the Company had an
investment in Brad Cous Golf Venture, Ltd. of approximately $5,767,000.
Retail Properties Sold. In October 2002, the Company sold Salem Road
Station, an approximately 67,000 square foot retail center in suburban
Atlanta, Georgia. See "Item 1, Business, Significant Changes in 2002, Retail
Division" and Note 8.
Retail Properties Under Development
- -----------------------------------
The Avenue West Cobb. In August 2002, the Company purchased
approximately 22 acres of land for approximately $4,945,000 and began
development of The Avenue West Cobb, an approximately 206,000 square foot
specialty retail center in suburban Atlanta, Georgia. This center was 28% leased
as of December 31, 2002.
The Shops of Lake Tuscaloosa. In December 2002, the Company purchased
approximately 12 acres of land for approximately $1,911,000 and began developing
The Shops of Lake Tuscaloosa, an approximately 70,000 square foot center in
Tuscaloosa, Alabama. This center will be anchored by a Publix supermarket and
was 63% leased as of December 31, 2002. Residential Lots Under Development
As of December 31, 2002, CREC and Temco Associates owned the following
parcels of land which are being developed into residential communities ($ in
thousands):
Estimated
Total Lots Purchase
Initial on Land Money
Year Currently Lots Remaining Carrying Debt
Description Acquired Owned (1) Sold to Date Lots Value Balance
----------- -------- --------- ------------ --------- -------- ---------
CREC
----
Callaway Gardens
Harris County
Pine Mountain, GA 2002 141 - 141 $ 2,358 $1,760
Echo Mill
West Cobb County
Suburban Atlanta, GA 1994 541 541 - (192) -
River's Call
East Cobb County
Suburban Atlanta, GA 1971-1989 108 10 98 5,237 43
The Lakes at Cedar Grove
Fulton County
Suburban Atlanta, GA 2001 928 136 792 12,697 1,450
----- --- ----- ------- ------
Total 1,718 687 1,031 $20,100 $3,253
===== === ===== ======= ======
Temco Associates
----------------
Bentwater
Paulding County
Suburban Atlanta, GA 1998 1,669(2) 847 822 $17,861 $ -
======== === ===== ======= ======
(1) Includes lots sold to date.
(2) See discussion of Temco Associates below.
Land Held for Investment or Future Development
- ----------------------------------------------
As of December 31, 2002, the Company owned or controlled the following
significant land holdings either directly or indirectly through venture
arrangements, and this land was not subject to any debt. The Company intends to
convert these land holdings to income-producing assets but may sell portions of
land holdings if opportunities arise at favorable prices before development is
feasible.
Developable Company's Adjusted
Land Area Joint Venture Ownership Cost
Description, Location and Zoned Use Year Acquired (Acres)(1) Partner Interest ($ in thousands)
- ----------------------------------- ------------- ----------- ------------- --------- ----------------
Wildwood Land
Suburban Atlanta, Georgia
Office and Commercial 1971-1989 96 N/A 100% $ 4,802
Office and Commercial 1971-1982 34 IBM 50% $ 9,008(2)
North Point Land
(Georgia Highway 400 & Haynes Bridge Road) (3)
Suburban Atlanta, Georgia
Office and Commercial - East 1970-1985 13 N/A 100% $ 956
Office and Commercial - West (4) 1970-1985 217 N/A 100% $ 8,055
Ridenour Land
Suburban Atlanta, Georgia 2002 8 N/A 100% $ 2,533
Salem Road Station
Suburban Atlanta, Georgia
Retail Outparcel 2000 2 N/A 100% $ 286
Temco Associates
(Paulding County)
Suburban Atlanta, Georgia 1991 (5) Temple-Inland 50% $17,861
Inc. (6)
(1) Based upon management's current estimates.
(2) For the portion of the Wildwood Office Park land owned by a joint venture,
the cost shown is what the cost would be if the venture's land cost were
adjusted downward to the Company's lower basis in the land it contributed
to the venture. The adjusted cost excludes building predevelopment costs,
net, of $1,042,000.
(3) The North Point property is located both east and west of Georgia Highway
400. See "Major Properties, North Point" for a description of the
development in this area.
(4) The Company has submitted a zoning request for a mixed-use development,
including residential, office and commercial, as well as facilities for a
performing arts center, assisted living, education and a community center.
(5) See "Temco Associates" discussion below. (6) Joint venture partner is an
affiliate of the entity shown.
In addition, the Company owned, directly or indirectly, the following
land parcels located adjacent to operating properties discussed above. The basis
of each of these building pads is included in the basis of the operating
properties in the Company's consolidated financial statements or the applicable
joint venture's financial statements.
Potential Office Building
Square Footage
-------------------------
101 Independence Center 535,000
Ten Peachtree Place 400,000 (1)
One Georgia Center 350,000
Austin Research Park (2) 175,000
The Points at Waterview 60,000
(1) This building pad will accommodate the above noted office
building or a 350-unit apartment complex.
(2) Owned by CPI/FSP I, L.P.
Temco Associates. Temco Associates was formed in March 1991 as a
partnership between CREC (50%) and a subsidiary of Temple-Inland Inc. (50%).
Temco Associates has an option through March 2006, with no carrying costs, to
acquire the fee simple interest in approximately 7,500 acres in Paulding County,
Georgia (northwest of Atlanta, Georgia). The partnership also has an option to
acquire interests in a timber rights only lease covering approximately 22,000
acres. This option also expires in March 2006, with the underlying lease
expiring in 2025. The options may be exercised in whole or in part over the
option period, and the option price of the fee simple land was $1,107 per acre
at January 1, 2002, escalating at 6% on January 1 of each succeeding year during
the term of the option.
During 2002, 2001 and 2000, approximately 1,595, 487 and 734 acres,
respectively, of the option related to the fee simple interest were exercised.
In 2002, approximately 607 acres were simultaneously sold for gross profits of
$1,005,000 and approximately 78 acres were held for sale under three-year
options to two third parties. Approximately three acres were sold in 2002 for
gross profits of $336,000, which were a component of the 13 acres purchased in
2000 that were being held for sale or future development. Also, in 2002,
approximately 281 acres were acquired for additional phases of the Bentwater
residential community and approximately 629 acres were acquired and are being
held for a future development in Paulding County. In 2001, approximately 359
acres were simultaneously sold for gross profits of $1,902,000 and approximately
128 acres were held for sale under a three-year option to a third party.
Approximately two acres were sold in 2001 for gross profits of $291,000, which
were a component of the 13 acres purchased in 2000 that were being held for sale
or future development. In 2000, approximately 461 acres were simultaneously sold
for gross profits of $1,546,000, 13 acres are being held for sale or future
development (of which approximately 3 and 2 acres were sold in 2002 and 2001,
respectively, as noted above) and approximately 260 acres were acquired for the
development of the Bentwater residential community. Approximately 1,669 lots
will be developed within Bentwater on an approximate total of 1,290 acres. Temco
Associates sold 289, 233 and 219 lots within Bentwater in 2002, 2001 and 2000,
respectively.
Other Investments
- -----------------
Air Rights Near the CNN Center. The Company owns a leasehold interest
in the air rights over the approximately 365,000 square foot CNN Center parking
facility in Atlanta, Georgia, adjoining the headquarters of Turner Broadcasting
System, Inc. and Cable News Network. The air rights are developable for
additional parking or office use. The Company's net carrying value of this
interest is $0.
Supplemental Financial and Leasing Information
- ----------------------------------------------
Depreciation and amortization, net of minority interest's share,
include the following components for the years ended December 31, 2002 and 2001
($ in thousands):
2002 2001
------------------------------------- --------------------------------------
Share of Share of
Unconsolidated Unconsolidated
Consolidated Joint Ventures Total Consolidated Joint Ventures Total
------------ -------------- ----- ------------ -------------- -----
Furniture, fixtures and
equipment $ 2,122 $ 9 $ 2,131 $ 1,485 $ 52 $ 1,537
Goodwill and specifically
identifiable intangible
assets 26 -- 26 681 -- 681
Building (including tenant
first generation) 50,370 17,305 67,675 38,727 15,357 54,084
Tenant second generation 2,327 777 3,104 3,964 744 4,708
------- ------- ------- ------- ------- -------
$54,845 $18,091 $72,936 $44,857 $16,153 $61,010
======= ======= ======= ======= ======= =======
Exclusive of new developments and purchases of furniture, fixtures and
equipment, the Company had the following capital expenditures for the years
ended December 31, 2002 and 2001, including its share of unconsolidated joint
ventures ($ in thousands):
2002 2001
------------------------ ------------------------
Office Retail Total Office Retail Total
------- ------ ------- ------ ------ ------
Second generation
related costs $11,348 $456 $11,804 $3,292 $290 $3,582
Building improvements 888 296 1,184 2,484 7 2,491
------- ---- ------- ------ ---- ------
Total $12,236 $752 $12,988 $5,776 $297 $6,073
======= ==== ======= ====== ==== ======
Item 3. Legal Proceedings
- -----------------------------------
No material legal proceedings are presently pending by or against the
Company.
Item 4. Submission of Matters to a Vote of Security Holders
- ---------------------------------------------------------------
No matter was submitted for a vote of the security holders during the
fourth quarter of the Registrar's fiscal year ended
December 31, 2002.
Item X. Executive Officers of the Registrant
- ------------------------------------------------
The Executive Officers of the Registrant as of the date hereof are as
follows:
Name Age Office Held
---- --- -----------
Thomas G. Cousins 71 Chairman of the Board of
Directors
Thomas D. Bell, Jr. 53 President, Chief Executive
Officer and Vice Chairman
of the Board of Directors
Daniel M. DuPree 56 Vice Chairman of the Company
R. Dary Stone 49 Vice Chairman of the Company
Tom G. Charlesworth 53 Executive Vice President, Chief
Financial Officer and Chief
Investment Officer
James A. Fleming 44 Senior Vice President, General
Counsel and Secretary
Craig B. Jones 52 Senior Vice President and
President of the Office
Division
John S. McColl 40 Senior Vice President - Office
Division
Joel T. Murphy 44 Senior Vice President and
President of the Retail
Division
Family Relationships:
- ---------------------
Lillian C. Giornelli, Mr. Cousins' daughter, is a director of the
Company. Hugh L. McColl, Jr., John S. McColl's father, is a director of the
Company. There are no other family relationships among the current Executive
Officers or Directors.
Term of Office:
- ---------------
The term of office for all officers expires at the annual stockholders'
meeting, but the Board has the power to remove any officer at any time.
Business Experience:
- --------------------
Mr. Cousins has served as Chairman of the Board of the Company since
inception. He was also the Chief Executive Officer of the Company from inception
until January 2002. Mr. Cousins is also Director Emeritus of Total System
Services, Inc.; Trustee Emeritus of Emory University; Trustee of the High Museum
of Art; Member of the Board of Georgia Research Alliance and Chairman and
Trustee of the CF Foundation.
Mr. Bell has served as the President and Chief Executive Officer of the
Company since January 2002. He is also Vice Chairman of the Board and Chairman
of the Executive Committee, having served in these capacities since June 2000.
He was a Special Limited Partner with Forstmann Little & Co. from January 2001
until January 2002. He was Worldwide Chairman and Chief Executive Officer of
Young & Rubicam, Inc. from January 2000 to November 2000; President and Chief
Operating Officer of Young & Rubicam, Inc. from August 1999 to December 1999;
and Chairman and Chief Executive Officer of Young & Rubicam Advertising from
September 1998 to August 1999. He was President and Chief Executive Officer of
Burson-Marsteller from May 1995 to September 1998. Mr. Bell is also a director
of Lincoln Financial Group, McLeod USA, Credit Suisse Group, Regal Entertainment
and the United States Chamber of Commerce.
Mr. DuPree rejoined the Company in March 2003 as Vice Chairman of the
Company. During his previous tenure with the Company from October 1992 until
April 2001, he became Senior Vice President in April 1993, Senior Executive Vice
President in April 1995 and President and Chief Operating Officer in November
1995. From September 2002 until February 2003, Mr. DuPree was Chief Executive
Officer of Barry Real Estate Companies, a privately held development firm. From
1984 to 1992, he was President and Chief Executive Officer of New Market
Companies, Inc. and affiliates.
Mr. Stone joined the Company in June 1999 as President of Cousins Stone
LP, a venture in which the Company purchased a 50% interest in June 1999. In
July 2000, the Company purchased an additional 25% interest in Cousins Stone LP
and in February 2001, the Company purchased the remaining 25% interest. The name
Cousins Stone LP was changed to Cousins Properties Services LP in August 2001.
Mr. Stone was President and Chief Operating Officer of the Company from February
2001 to January 2002 and has been a Director of the Company since 2001.
Effective January 2002, he relinquished the positions of President and Chief
Operating Officer and assumed the position of President - Texas. In February
2003 he became Vice Chairman of the Company. Prior to June 1999, and since at
least January 1998, he was founder and President of the predecessor to Cousins
Stone LP, Faison-Stone.
Mr. Charlesworth joined the Company in October 1992 and became Senior
Vice President, Secretary and General Counsel in November 1992 and Executive
Vice President and Chief Investment Officer in January 2001. He became Chief
Financial Officer in February 2003. Prior to 1992 he worked for certain
affiliates of Thomas G. Cousins as Chief Financial Officer and Legal Counsel.
Mr. Fleming joined the Company in July 2001 as Senior Vice President,
General Counsel and Secretary. He was a partner in the Atlanta law firm of
Fleming & Ray from October 1994 until July 2001. Prior to that he was a partner
at Long, Aldridge & Norman, where he served as Managing Partner from 1991
through 1993.
Mr. Jones joined the Company in October 1992 and became Senior Vice
President in November 1995 and President of the Office Division in September
1998. From 1987 until joining the Company, he was Executive Vice President of
New Market Companies, Inc. and affiliates.
Mr. McColl joined the Company in April 1996 as Vice President of the
Office Division. He was promoted in May 1997 to Senior Vice President. Prior to
that he was President of Hutchinson Capital Group, Inc. and an officer of Quest
Capital Corp.
Mr. Murphy joined the Company in October 1992 and became Senior Vice
President of the Company and President of the Retail Division in November 1995.
From 1988 until joining the Company, he was Senior Vice President of New Market
Companies, Inc. and affiliates.
PART II
-------
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
- --------------------------------------------------------------------------------
The information concerning the market prices for the Registrant's
common stock and related stockholder matters appearing under the caption "Market
and Dividend Information" and "About Your Dividends" in the Registrant's 2002
Annual Report to Stockholders is incorporated herein by reference.
Item 6. Selected Financial Data
- -----------------------------------
The information appearing under the caption "Five Year Summary of
Selected Financial Data" in the Registrant's 2002 Annual Report to
Stockholders is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
- ---------------------------------------------------------------------------
Results of Operations
---------------------
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," which appears in the Registrant's 2002 Annual Report
to Stockholders, is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
- ---------------------------------------------------------------------
"Quantitative and Qualitative Disclosures about Market Risk,"
which appears in the Registrant's 2002 Annual Report to Stockholders, is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
- -------------------------------------------------------
The Consolidated Financial Statements and Notes to Consolidated
Financial Statements of the Registrant and Independent Auditors' Report which
appear in the Registrant's 2002 Annual Report to Stockholders are incorporated
herein by reference.
The information appearing under the caption "Selected Quarterly
Financial Information (Unaudited)" in the Registrant's 2002 Annual Report to
Stockholders is incorporated herein by reference.
Other financial statements and financial statement schedules required
under Regulation S-X are filed pursuant to Item 15 of Part IV of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
Financial Disclosure
--------------------
In June 2002 the Board of Directors of the Registrant, upon
recommendation of its Audit Committee, ended the engagement of Arthur Andersen
LLP ("Arthur Andersen") as the Company's independent public accountants and
engaged Deloitte & Touche LLP ("Deloitte") to serve as the Registrant's
independent public accountants for the fiscal year ended December 31, 2002. As
discussed in the Registrant's Form 8-K dated June 7, 2002, there were no
disagreements with or reportable events concerning Arthur Andersen, and the
Registrant had not engaged Deloitte in any consultation.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
- --------------------------------------------------------------
The information concerning the Directors and Executive Officers of the
Registrant that is required by this Item 10, except that which is presented in
Item X in Part I above, is included under the captions "Directors and Executive
Officers of the Company" and "Section 16(A) Beneficial Ownership Reporting
Compliance" in the Proxy Statement dated March 25, 2003 relating to the 2003
Annual Meeting of the Registrant's Stockholders, and is incorporated herein by
reference.
Item 11. Executive Compensation
- ----------------------------------
The information concerning executive compensation required by this Item
11 is included under the captions "Executive Compensation" (other than the
Committee Report on Compensation) and "Compensation of Directors" in the Proxy
Statement dated March 25, 2003 relating to the 2003 Annual Meeting of the
Registrant's Stockholders, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
- ------------------------------------------------------------------------------
Related Stockholder Matters
---------------------------
The information concerning security ownership of certain beneficial
owners and management required by this Item 12 is included under the captions
"Directors and Executive Officers of the Company," "Principal Stockholders" and
"Equity Compensation Plan Information" in the Proxy Statement dated March 25,
2003 relating to the 2003 Annual Meeting of the Registrant's Stockholders, and
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- ----------------------------------------------------------
The information concerning certain relationships and related
transactions required by this Item 13 is included under the caption "Certain
Transactions" in the Proxy Statement dated March 25, 2003 relating to the 2003
Annual Meeting of the Registrant's Stockholders, and is incorporated herein by
reference.
Item 14. Controls and Procedures
- -----------------------------------
Within the 90 days prior to the date of this annual report, the
Company, under the supervision of the Chief Executive Officer and Chief
Financial Officer and with the participation of the Company's management,
carried out an evaluation of the effectiveness of the design and operation of
the Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company required to be included in the Company's periodic
Securities and Exchange Commission filings. No significant changes were made in
the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
PART IV
-------
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- ----------------------------------------------------------------------------
(a) 1. Financial Statements
--------------------
A. The following Consolidated Financial Statements of the
Registrant, together with the applicable Independent
Auditors' Report, are contained in the Registrant's 2002
Annual Report to Stockholders and are incorporated herein by
reference:
Page Number
in Annual Report
----------------
Consolidated Balance Sheets -
December 31, 2002 and 2001 19
Consolidated Statements of Income
for the Years Ended
December 31, 2002, 2001 and 2000 20
Consolidated Statements of Stockholders'
Investment for the Years Ended
December 31, 2002, 2001 and 2000 21
Consolidated Statements of Cash Flows
for the Years Ended December 31,
2002, 2001 and 2000 22
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000 23 through 44
Independent Auditors' Report 45
B. The following Financial Statements, together with the
applicable Report of Independent Auditors, of CSC
Associates, L.P., a joint venture of the Registrant meeting
the criteria for a significant subsidiary under the rules
and regulations of the Securities and Exchange Commission,
are filed as a part of this report.
Page Number
in Form l0-K
------------
Report of Independent Auditors F-1
Balance Sheets - December 31, 2002
and 2001 F-2
Statements of Operations for the
Years Ended December 31, 2002,
2001 and 2000 F-3
Statements of Partners' Capital for
the Years Ended December 31, 2002,
2001 and 2000 F-4
Statements of Cash Flows for the Years Ended
December 31, 2002, 2001 and 2000 F-5
Notes to Financial Statements
December 31, 2002, 2001 and 2000 F-6 through F-10
Item 15. Continued
- ---------------------
2. Financial Statement Schedules
-----------------------------------
The following financial statement schedules, together with the
applicable report of independent public accountants are filed as a
part of this report.
Page Number
in Form l0-K
------------
A. Cousins Properties Incorporated and
Consolidated Entities:
Independent Auditors' Report on
Supplemental Schedule S-9
Schedule III- Real Estate and
Accumulated Depreciation -
December 31, 2002 S-10 through S-15
B. CSC Associates, L.P.
Schedule III- Real Estate and
Accumulated Depreciation -
December 31, 2002 F-11
NOTE: Other schedules are omitted because of the absence of conditions
under which they are required or because the required information
is given in the financial statements or notes thereto.
Item 15. Continued
- ---------------------
3. Exhibits
--------------
3(a)(i) Restated and Amended Articles of Incorporation of
Registrant, as amended August 9, 1999, filed as
Exhibit 3.1 in the Registrant's Form 10-Q for the
quarter ended June 30, 2002, and incorporated
herein by reference.
3(b) By-laws of Registrant, as amended April 29, 1993,
filed as Exhibit 3.2 in the Registrant's Form 10-Q
for the quarter ended June 30, 2002, and
incorporated herein by reference.
4(a) Dividend Reinvestment Plan as restated as of March
27, 1995, filed in the Registrant's Form S-3 dated
March 27, 1995, and incorporated herein by
reference.
10(a)(i) Cousins Properties Incorporated 1989 Stock Option
Plan, as renamed the 1995 Stock Incentive Plan and
approved by the Stockholders on May 6, 1996, filed
as Exhibit A to the Registrant's Proxy Statement
dated May 6, 1996, and as amended by the
Stockholders on April 21, 1998, filed in the
Registrant's Proxy Statement dated March 27, 1998,
and incorporated herein by reference.
10(a)(ii) Cousins Properties Incorporated 1999 Incentive
Stock Plan, approved by the Stockholders on May 4,
1999, filed as Exhibit A to the Registrant's Proxy
Statement dated March 29, 1999; as amended and
restated, approved by the Stockholders on December
28, 2000, filed as Exhibit A to the Registrant's
Proxy Statement dated December 1, 2000; as amended
and restated, approved by the Stockholders on May
1, 2001, filed as Annex B in the Registrant's Proxy
Statement dated March 30, 2001; and as amended and
restated, approved by the Stockholders on May 7,
2002, filed as Annex A in the Registrant's Proxy
Statement dated March 29, 2002, and incorporated
herein by reference.
10(b)(i) Cousins Properties Incorporated Profit Sharing
Plan, as amended and restated effective as of
January 1, 2002.
10(b)(ii) Cousins Properties Incorporated Profit Sharing
Trust Agreement as effective as of January 1, 1991.
10(d) Cousins Properties Incorporated Stock Plan for
Outside Directors, as approved by the Stockholders
on April 29, 1997.
10(e) Cousins Properties Incorporated Credit Agreement as
of August 31, 2001 among Cousins Properties
Incorporated, Banks (as defined), Bank of America,
N.A., as Administrative Agent, Wachovia Bank, N.A.,
as Syndication Agent and each of Bank of America
Securities LLC and Wachovia Securities, Inc., as
Joint Lead Arrangers and Joint Book Managers, filed
as Exhibit 10(e) to the Registrant's Form 10-K for
the year ended December 31, 2001, and incorporated
herein by reference.
Item 15. Continued
- ---------------------
11 Computation of Per Share Earnings. Data required
by SFAS No. 128, "Earnings Per Share," is provided
in Note 1 of the Consolidated Financial Statements
of Registrant included in the Registrant's 2002
Annual Report to Stockholders, and incorporated
herein by reference.
13 Portions of the Annual Report to Stockholders for
the year ended December 31, 2002 expressly
incorporated by reference herein: Pages 19 through
58, and the information under the caption "Selected
Quarterly Financial Information: on Page 59.
21 Subsidiaries of the Registrant.
23(a) Consent of Independent Auditors (Deloitte & Touche
LLP).
23(b) Independent Auditor's Consent (Ernst & Young LLP).
99.1 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
--------------------------
There were no reports filed on Form 8-K in the quarter ended
December 31, 2002.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Cousins Properties Incorporated
(Registrant)
Dated: March 25, 2003
BY: /s/ Tom G. Charlesworth
----------------------------------------
Tom G. Charlesworth
Executive Vice President, Chief Financial
Officer and Chief Investment Officer
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Capacity Date
- --------- -------- ----
Principal Executive Officer:
President, Chief Executive March 25, 2003
/s/ Thomas D. Bell, Jr. Officer and Vice Chairman
- ---------------------------------- of the Board
Thomas D. Bell, Jr.
Principal Financial and Accounting
Officer:
Executive Vice President, March 25, 2003
/s/ Tom G. Charlesworth Chief Financial Officer
- ---------------------------------- and Chief Investment Officer
Tom G. Charlesworth
Additional Directors:
/s/ T. G. Cousins Chairman of the Board March 25, 2003
- ----------------------------------
T. G. Cousins
/s/ Richard W. Courts, II Director March 25, 2003
- ----------------------------------
Richard W. Courts, II
/s/ Lillian C. Giornelli Director March 25, 2003
- ----------------------------------
Lillian C. Giornelli
/s/ Terence C. Golden Director March 25, 2003
- ----------------------------------
Terence C. Golden
/s/ Boone A. Knox Director March 25, 2003
- ----------------------------------
Boone A. Knox
/s/ John J. Mack Director March 25, 2003
- ----------------------------------
John J. Mack
/s/ Hugh L. McColl, Jr. Director March 25, 2003
- ----------------------------------
Hugh L. McColl, Jr.
/s/ William Porter Payne Director March 25, 2003
- ----------------------------------
William Porter Payne
/s/ R. Dary Stone Director and Vice Chairman March 25, 2003
- ---------------------------------- of the Company
R. Dary Stone
CERTIFICATION
I, Thomas D. Bell, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of Cousins Properties
Incorporated;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;
Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and
Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent function):
All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 25, 2003
/s/ Thomas D. Bell, Jr.
- ----------------------------------
Thomas D. Bell, Jr.
President, Chief Executive Officer
and Vice Chairman of the Board
CERTIFICATION
I, Tom G. Charlesworth, certify that:
1. I have reviewed this annual report on Form 10-K of Cousins Properties
Incorporated;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent function):
All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
Any fraud, whether or not material, that involves management or
other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 25, 2003
/s/ Tom G. Charlesworth
- -----------------------------------
Tom G. Charlesworth
Executive Vice President, Chief Financial Officer
and Chief Investment Officer
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL SCHEDULE
To Cousins Properties Incorporated:
We have audited the consolidated financial statements of Cousins
Properties Incorporated and consolidated entities as of December 31, 2002 and
2001, and for each of the three years in the period ended December 31, 2002, and
have issued our report thereon dated February 14, 2003 (which report expresses
an unqualified opinion and includes an explanatory paragraph relating to the
impact of the adoption of Statements of Financial Accounting Standards No. 133
and No. 144); such consolidated financial statements and report are included in
your 2002 Annual Report to Stockholders and are incorporated herein by
reference. Our audit also included the consolidated financial statement schedule
of Cousins Properties Incorporated and consolidated entities, listed in Item 15.
This consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
February 14, 2003
SCHEDULE III
(Page 1 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 2002
------------------- -------------------- ----------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
- ----------------------------------------------
North Point Land -
Fulton Co., GA $ -- $ 10,294 $ -- $ 15,767 $(17,050) $ 9,011 $ -- $ 9,011
Salem Road Station
Outparcels -
Newton Co., GA -- 611 -- -- (325) 286 -- 286
Wildwood Land -
Atlanta, GA -- 10,214 -- 4,873 (10,285) 4,802 -- 4,802
Ridenour Land -
Cobb County, GA -- 1,696 -- 837 -- 2,533 -- 2,533
----------------------------------------------------------------------------------------------
-- 22,815 -- 21,477 (27,660) 16,632 -- 16,632
----------------------------------------------------------------------------------------------
SCHEDULE III
(Page 1 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column F Column G Column H Column I
-------- -------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 2002
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (a) tion Acquired Is Computed
- ----------- -------- -------- -------- -----------
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
- ----------------------------------------------
North Point Land -
Fulton Co., GA $ -- -- 1970-1985 --
Salem Road Station
Outparcels -
Newton Co., GA -- -- 1999 --
Wildwood Land -
Atlanta, GA -- -- 1971-1989 --
Ridenour Land -
Cobb County, GA -- -- 2002 --
--------
--
--------
SCHEDULE III
(Page 2 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 2002
------------------- -------------------- ----------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
OPERATING PROPERTIES
- --------------------
Inforum -
Atlanta, GA $ -- $ 5,226 $ 67,370 $ 18,880 $ -- $ 5,226 $ 86,250 $ 91,476
101 Independence Center -
Charlotte, NC 44,928 11,096 62,824 5,639 -- 11,155 68,404 79,559
101 Second Street -
San Francisco, CA 88,055 11,698 -- 80,070 7,504 11,698 87,574 99,272
333 John Carlyle -
Washington, D.C. 48,459 (b) 5,371 -- 22,307 1,483 5,371 23,790 29,161
333 North Point Center East -
Fulton Co., GA 31,960 (c) 551 -- 11,917 809 551 12,726 13,277
555 North Point Center East -
Fulton Co., GA -- (c) 368 -- 15,278 1,172 368 16,450 16,818
600 University Park Place -
Birmingham, AL 13,822 1,899 -- 16,562 1,768 1,899 18,330 20,229
615 Peachtree Street -
Atlanta, GA -- 4,740 7,229 1,520 -- 4,740 8,749 13,489
AT&T Wireless Services
Headquarters -
Los Angeles, CA -- -- -- 54,871 1,343 -- 56,214 56,214
Cerritos Corporate
Center - Phase II -
Los Angeles, CA -- -- -- 18,992 352 -- 19,344 19,344
1900 Duke Street -
Washington, D.C. -- (b) -- -- 22,969 1,200 3,469 20,700 24,169
Lakeshore Park Plaza -
Birmingham, AL 10,088 3,362 12,261 399 -- 3,362 12,660 16,022
SCHEDULE III
(Page 2 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column F Column G Column H Column I
-------- -------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 2002
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (a) tion Acquired Is Computed
- ----------- -------- -------- -------- -----------
OPERATING PROPERTIES
- --------------------
Inforum -
Atlanta, GA $ 26,614 -- 1999 25 Years
101 Independence Center -
Charlotte, NC 19,202 -- 1996 25 Years
101 Second Street -
San Francisco, CA 14,990 1998 1984 30 Years
333 John Carlyle -
Washington, D.C. 4,284 1998 1998 30 Years
333 North Point Center East -
Fulton Co., GA 3,900 1996 1996 30 Years
555 North Point Center East -
Fulton Co., GA 2,694 1998 1998 30 Years
600 University Park Place -
Birmingham, AL 3,114 1998 1998 30 Years
615 Peachtree Street -
Atlanta, GA 4,068 -- 1996 15 Years
AT&T Wireless Services
Headquarters -
Los Angeles, CA 7,919 1998 1998 30 Years
Cerritos Corporate
Center - Phase II -
Los Angeles, CA 1,262 1999 1999 30 Years
1900 Duke Street -
Washington, D.C. 2,119 2000 2000 30 Years
Lakeshore Park Plaza -
Birmingham, AL 2,166 -- 1998 30 Years
SCHEDULE III
(Page 3 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 2002
------------------- -------------------- ----------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
OPERATING PROPERTIES (Continued)
- --------------------------------
One Georgia Center -
Atlanta, GA -- 9,267 27,079 3,979 2 9,267 31,060 40,327
The Points at Waterview -
Collin Co., TX -- 2,558 22,910 2,067 -- 2,558 24,977 27,535
Wildwood - 3100 Windy Hill
Road - Atlanta, GA -- -- 17,005 -- -- -- 17,005 17,005
Wildwood - 3301 Windy
Ridge Parkway -
Atlanta, GA -- 20 -- 11,064 1,516 1,439 11,161 12,600
AtheroGenics -
Fulton Co., GA -- 200 -- 7,375 80 200 7,455 7,655
Meridian Mark Plaza -
Atlanta, GA 24,926 2,200 -- 22,816 1,735 2,219 24,532 26,751
Northside/Alpharetta I -
Fulton Co., GA 9,903 -- 15,577 345 -- -- 15,922 15,922
Northside/Alpharetta II -
Fulton Co., GA -- -- -- 17,163 1,012 -- 18,175 18,175
The Avenue East Cobb -
Cobb Co., GA 38,255 7,205 -- 32,058 1,882 7,205 33,940 41,145
The Avenue of the Peninsula -
Rolling Hills Estates, CA -- 4,338 17,152 63,248 7,120 4,338 87,520 91,858
The Avenue Peachtree City -
Fayette Co., GA -- 3,510 -- 24,156 1,685 3,643 25,708 29,351
Mira Mesa MarketCenter -
San Diego, CA -- 14,465 -- 34,803 2,415 14,465 37,218 51,683
North Point Stand Alone
Retail Sites -
Fulton Co., GA -- 4,559 -- 431 (1,293) 3,697 -- 3,697
SCHEDULE III
(Page 3 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column F Column G Column H Column I
-------- -------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 2002
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (a) tion Acquired Is Computed
- ----------- -------- -------- -------- -----------
OPERATING PROPERTIES (Continued)
- --------------------------------
One Georgia Center -
Atlanta, GA 4,006 -- 2000 30 Years
The Points at Waterview -
Collin Co., TX 2,689 -- 2000 25 Years
Wildwood - 3100 Windy Hill
Road - Atlanta, GA 4,081 1997 1997 25 Years
Wildwood - 3301 Windy
Ridge Parkway -
Atlanta, GA 6,041 1984 1984 30 Years
AtheroGenics -
Fulton Co., GA 1,958 1998 1998 30 Years
Meridian Mark Plaza -
Atlanta, GA 4,487 1997 1997 30 Years
Northside/Alpharetta I -
Fulton Co., GA 2,901 -- 1998 25 Years
Northside/Alpharetta II -
Fulton Co., GA 2,460 1998 1998 30 Years
The Avenue East Cobb -
Cobb Co., GA 7,827 1998 1998 30 Years
The Avenue of the Peninsula -
Rolling Hills Estates, CA 10,107 1998 1998 30 Years
The Avenue Peachtree City -
Fayette Co., GA 2,621 2002 2002 30 Years
Mira Mesa MarketCenter -
San Diego, CA 3,718 1999 1999 30 Years
North Point Stand Alone
Retail Sites -
Fulton Co., GA 196 -- 1970-1985 Various
SCHEDULE III
(Page 4 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 2002
------------------- -------------------- ----------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
OPERATING PROPERTIES (Continued)
- --------------------------------
Perimeter Expo -
Atlanta, GA 19,792 8,550 -- 11,232 71 8,550 11,303 19,853
Presidential MarketCenter -
Gwinnett Co., GA 27,667 3,956 -- 24,816 900 3,956 25,716 29,672
Miscellaneous -- 398 145 101 (474) -- 170 170
-----------------------------------------------------------------------------------------------
357,855 105,537 249,552 525,058 32,282 109,376 803,053 912,429
-----------------------------------------------------------------------------------------------
PROJECTS UNDER CONSTRUCTION
- ---------------------------
55 Second Street -
San Francisco, CA $ -- $ 22,141 $ -- $ 78,346 $ 9,473 $ 24,296 $ 85,664 $ 109,960
Congress at Fourth -
Austin, TX -- 12,270 -- 38,186 3,176 12,964 40,668 53,632
The Avenue West Cobb -
Cobb Co., GA -- 4,945 -- 3,266 169 4,945 3,435 8,380
The Shops of Lake Tuscaloosa -
Tuscaloosa, AL -- 1,911 -- 192 6 1,911 198 2,109
-----------------------------------------------------------------------------------------------
-- 41,267 -- 119,990 12,824 44,116 129,965 174,081
-----------------------------------------------------------------------------------------------
SCHEDULE III
(Page 4 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column F Column G Column H Column I
-------- -------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 2002
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (a) tion Acquired Is Computed
- ----------- -------- -------- -------- -----------
OPERATING PROPERTIES (Continued)
- --------------------------------
Perimeter Expo - 3,815 1993 1993 30 Years
Presidential MarketCenter -
Gwinnett Co., GA 5,717 1993-2000 1993 30 Years
Miscellaneous 144 -- 1977-1984 Various
--------
155,100
--------
PROJECTS UNDER CONSTRUCTION
55 Second Street -
San Francisco, CA $ 2,946 1999 1999 30 Years
Congress at Fourth -
Austin, TX -- 2001 2001 --
The Avenue West Cobb -
Cobb Co., GA -- 2002 2002 --
The Shops of Lake Tuscaloosa -
Tuscaloosa, AL -- 2002 2002 --
--------
2,946
--------
SCHEDULE III
(Page 5 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 2002
------------------- -------------------- ----------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ -----
RESIDENTIAL LOTS UNDER DEVELOPMENT
- ----------------------------------
Echo Mill -
Cobb Co., GA $ -- $ 5,298 $ -- $ 11,211 $(16,701) $ (192) $ -- $ (192)
River's Call -
Cobb Co., GA 43 2,001 -- 6,167 (2,931) 5,237 -- 5,237
The Lakes at Cedar Grove -
Fulton Co., GA 1,450 4,720 -- 12,256 (4,279) 12,697 -- 12,697
Callaway Gardens -
Harris Co., GA 1,760 2,098 -- 244 16 2,358 -- 2,358
-----------------------------------------------------------------------------------------------
3,253 14,117 -- 29,878 (23,895) 20,100 -- 20,100
-----------------------------------------------------------------------------------------------
$361,108 $ 183,736 $249,552 $696,403 $ (6,449) $190,224 $933,018 $1,123,242
===============================================================================================
SCHEDULE III
(Page 5 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column F Column G Column H Column I
-------- -------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 2002
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (a) tion Acquired Is Computed
- ----------- -------- -------- -------- -----------
RESIDENTIAL LOTS UNDER DEVELOPMENT
- ----------------------------------
Echo Mill -
Cobb Co., GA $ -- 1994 1994 --
River's Call -
Cobb Co., GA -- 2000 1971-1989 --
The Lakes at Cedar Grove -
Fulton Co., GA -- 2001 2001 --
Callaway Gardens -
Harris Co., GA -- 2002 2002 --
--------
--
--------
$158,046
========
SCHEDULE III
(Page 6 of 6)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
NOTES:
(a) Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended December 31, 2002 are as
follows:
Real Estate Accumulated Depreciation
--------------------------------- -----------------------------
2002 2001 2000 2002 2001 2000
---- ---- ---- ---- ---- ----
Balance at beginning of period $1,045,805 $ 954,480 $768,783 $106,039 $ 70,032 $35,929
---------------------------------- -----------------------------
Additions during the period:
Improvements and other
capitalized costs 89,650 132,023 213,783 -- -- --
Provision for depreciation -- -- -- 52,387 36,007 34,103
---------------------------------- -----------------------------
89,650 132,023 213,783 52,387 36,007 34,103
---------------------------------- -----------------------------
Deductions during the period:
Cost of real estate sold (12,213) (40,698) (28,086) (380) -- --
---------------------------------- -----------------------------
(12,213) (40,698) (28,086) (380) -- --
---------------------------------- -----------------------------
Balance at close of period $1,123,242 $1,045,805 $954,480 $158,046 $106,039 $70,032
================================= =============================
(b) 333 John Carlyle and 1900 Duke Street were financed together as one
non-recourse mortgage note payable.
(c) 333 North Point Center East and 555 North Point Center East were financed
together as one non-recourse mortgage note payable.
REPORT OF INDEPENDENT AUDITORS
To the Partners of
CSC Associates, L.P. (A Limited Partnership)
We have audited the accompanying balance sheets of CSC Associates, L.P. (the
Partnership) as of December 31, 2002 and 2001, and the related statements of
operations, partners' capital, and cash flows for each of the three years in the
period ended December 31, 2002. Our audits also include the financial statement
schedule of CSC Associates, L.P. listed in the Index at Item 15(a). These
financial statements and schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CSC Associates, L.P. as of
December 31, 2002 and 2001, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2002, in conformity
with accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ERNST & YOUNG LLP
Atlanta, Georgia
February 7, 2003
CSC ASSOCIATES, L.P.
--------------------
BALANCE SHEETS
--------------
DECEMBER 31, 2002 AND 2001
--------------------------
($ in thousands)
ASSETS
------
2002 2001
-------- --------
REAL ESTATE ASSETS:
Building and improvements, including land and
land improvements of $22,818 in 2002 and 2001 $224,445 $223,187
Accumulated depreciation (73,289) (65,710)
--------------------
151,156 157,477
--------------------
CASH AND CASH EQUIVALENTS 5,323 1,662
--------------------
RESTRICTED CASH (Note 2) 690 -
--------------------
NOTE RECEIVABLE (Note 4) 148,283 66,007
--------------------
OTHER ASSETS:
Straight-line rent, interest and other
receivables (Note 3) 10,941 11,282
Deferred expenses, net of accumulated amortization
of $1,063 and $843 in 2002 and 2001, respectively 412 617
Furniture, fixtures and equipment, net of accumulated
depreciation of $134 and $99 in 2002 and 2001,
respectively 70 73
Other, net of accumulated amortization of $263
and $217 in 2002 and 2001, respectively (Note 6) 760 801
--------------------
Total other assets 12,183 12,773
--------------------
$317,635 $237,919
====================
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
NOTE PAYABLE (Note 4) $148,283 $ 66,007
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 5,482 2,975
--------------------
Total liabilities 153,765 68,982
--------------------
PARTNERS' CAPITAL (Note 1) 163,870 168,937
--------------------
$317,635 $237,919
====================
The accompanying notes are an integral part of these balance sheets.
CSC ASSOCIATES, L.P.
--------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
----------------------------------------------------
($ in thousands)
2002 2001 2000
------- ------- -------
REVENUES:
Rental income (Note 2) and recovery
of expenses charged directly to
specific tenants $42,489 $39,948 $39,339
Interest income (Note 4) 9,673 4,306 4,478
---------------------------
Total revenues 52,162 44,254 43,817
---------------------------
EXPENSES:
Real estate taxes 4,471 4,222 4,133
Management and personnel costs 2,064 1,958 1,867
Cleaning 1,485 1,473 1,475
Utilities 825 826 813
Contract security 813 627 517
Repairs and maintenance 418 486 456
Elevator 363 355 337
Parking 296 279 276
General and administrative expenses 169 173 75
Grounds maintenance 133 135 129
Insurance 653 115 110
Marketing and other expenses 60 63 63
Interest expense (Note 4) 9,673 4,306 4,478
Depreciation and amortization 7,656 7,662 7,710
---------------------------
Total expenses 29,079 22,680 22,439
---------------------------
NET INCOME $23,083 $21,574 $21,378
===========================
The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P.
--------------------
STATEMENTS OF PARTNERS' CAPITAL (NOTE 1)
----------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
----------------------------------------------------
($ in thousands)
BALANCE, December 31, 1999 $183,685
Net income 21,378
Distributions (27,980)
--------
BALANCE, December 31, 2000 177,083
Net income 21,574
Distributions (29,720)
--------
BALANCE, December 31, 2001 168,937
Net income 23,083
Distributions (28,150)
--------
BALANCE, December 31, 2002 $163,870
========
The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P.
--------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
----------------------------------------------------
($ in thousands)
2002 2001 2000
-------- ------- ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23,083 $21,574 $21,378
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,656 7,662 7,710
Rental revenue recognized on straight-line
basis different from rental revenue
specified in the lease agreements 1,261 362 207
Change in other receivables and
other assets (747) 109 130
Change in accounts payable and
accrued liabilities related to operations 2,506 775 (1,015)
------------------------------
Net cash provided by operating activities 33,759 30,482 28,410
------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to building and improvements (1,258) (54) (1,604)
Issuance of note receivable (Note 4) (150,000) - -
Payoff of note receivable (Note 4) 65,526 - -
Collection of note receivable (Note 4) 2,198 2,782 2,610
Reserve Funds deposits (Note 4) (690) - -
Payments for furniture, fixtures and equipment - (28) (113)
------------------------------
Net cash (used in) provided by investing activities (84,224) 2,700 893
------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of long-term debt (Note 4) 150,000 - -
Payoff of long-term note (Note 4) (65,526) - -
Repayments of long-term debt (Note 4) (2,198) (2,782) (2,610)
Partnership distributions (28,150) (29,720) (27,980)
------------------------------
Net cash provided by (used in) financing activities 54,126 (32,502) (30,590)
------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,661 680 (1,287)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 1,662 982 2,269
------------------------------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 5,323 $ 1,662 $ 982
==============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for interest $ 10,181 $ 4,314 $ 4,485
==============================
The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P.
--------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002, 2001 AND 2000
--------------------------------
1. FORMATION OF THE PARTNERSHIP AND TERMS OF THE PARTNERSHIP AGREEMENT
-------------------------------------------------------------------
CSC Associates, L.P. ("CSC" or the "Partnership") was formed under the
terms of a Limited Partnership Agreement dated September 29, 1989 and by the
filing of its Certificate of Limited Partnership on October 27, 1989. C&S
Premises, Inc. ("Premises") and Cousins Properties Incorporated ("CPI") each own
a 1% general partnership and a 49% limited partnership interest in the
Partnership. Premises is a wholly-owned subsidiary of NB Holdings Corporation,
which is a wholly-owned subsidiary of Bank of America. In 1996 Premises
transferred its 1% general partnership interest in the partnership to C&S
Premises-SPE, Inc., a wholly-owned subsidiary of Premises. The Partnership was
formed for the purpose of developing and owning a 1.3 million gross square foot
office tower in midtown Atlanta, Georgia (the "Building"), which is the Atlanta
headquarters of Bank of America Corporation.
The Partnership Agreement and related documents (the "Agreements")
contain among other provisions, the following:
a. CPI is the Managing Partner.
b. CPI contributed $18.2 million cash to the Partnership and
Premises contributed land parcels to the Partnership having an
aggregate agreed upon value of $18.2 million. The property
value, in the opinion of the partners, was equal to the
estimated fair market value of the land at the time of
formation of the Partnership. The value of the property
contributed by Premises was recorded on the Partnership's
books at an amount equal to the cash contributed by CPI for an
equal (50%) partnership interest. In October 1993, the
partners each contributed an additional $86.7 million.
c. No interest is earned on partnership capital.
d. Net income or loss and cash distributions are allocated to
the partners based on their percentage interests (50%
each).
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Capitalization Policies
- -----------------------
All costs related to planning, developing and constructing the Building
plus expenditures for the Building prior to the date it became operational for
financial reporting purposes have been capitalized. Interest expense,
amortization of financing costs, and real estate taxes were also capitalized
while the Building was under development.
Depreciation and Amortization
- -----------------------------
Real estate assets are carried at cost. Depreciation of the building
commenced on the date the building became operational for financial reporting
purposes, and the building is being depreciated over 40 years. Leasehold and
tenant improvements are amortized over the life of the related lease or the
useful life of the asset, whichever is shorter. Furniture, fixtures, and
equipment are depreciated over 5 years. Deferred expenses, which include certain
marketing and leasing costs and deferred operating expenses which are being
passed through to the tenants, are amortized over the period of estimated
benefit. The straight-line method is used for all depreciation and amortization.
Income Taxes
- ------------
No provision has been made for federal or state income taxes because
each partner's proportionate share of income or loss from the Partnership will
be passed through to be included on each partner's separate tax return.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents include all cash and highly liquid money
market instruments. Highly liquid money market instruments include securities
and repurchase agreements with original maturities of three months or less or
money market mutual funds.
Restricted Cash
- ---------------
Restricted Cash includes reserve funds established under the debt
agreement (Note 4).
Long-Lived Assets
- -----------------
Long-lived assets include property, equipment and other assets which
are held and used by an entity. These assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The carrying value of long-lived assets is
periodically reviewed by management, and impairment losses, if any, are
recognized when the expected undiscounted future operating cash flows derived
from such assets are less than their carrying value. Management believes no such
impairments have occurred during any of the periods presented.
In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses
financial accounting and reporting for the impairment of long-lived assets and
discontinued operations. The Partnership adopted the standard effective January
1, 2002, and the adoption had no impact on its financial statements.
Rental Income
- -------------
In accordance with SFAS No. 13, "Accounting for Leases," income on
leases which include increases in rental rates over the lease term (other than
scheduled increases based on the Consumer Price Index) and/or free rent periods
is recognized on a straight-line basis.
Allowance for Doubtful Accounts
- -------------------------------
The Partnership makes valuation adjustments to all tenant-related
revenue based upon the tenant's credit and business risk. The Partnership
generally suspends the accrual of income on specific tenants where rental
payments or reimbursements are delinquent 90 days or more. As of December 31,
2002 and 2001, there is no allowance for doubtful accounts included in the
accompanying Balance Sheets.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates.
3. LEASES
------
The Partnership has leased office space to NB Holdings Corporation, as
well as to unrelated third parties. The leases contain escalation provisions and
provisions requiring tenants to pay a pro rata share of operating expenses. The
leases typically include renewal options and all are classified and accounted
for as operating leases.
At December 31, 2002, future minimum rentals to be received under
existing non-cancelable leases, excluding tenants' current pro rata share of
operating expenses, are as follows ($ in thousands):
Lease Leases
With With
NB Holdings Third
Corporation Parties Total
----------- ------- --------
2003 $ 14,117 $17,200 $ 31,317
2004 14,117 13,128 27,245
2005 14,117 16,292 30,409
2006 14,118 16,476 30,594
2007 14,118 9,374 23,492
Subsequent to 2007 64,693 13,503 78,196
--------------------------------------
$135,280 $85,973 $221,253
======================================
In the years ended December 31, 2002 and 2001, income which would have
accrued in accordance with the lease terms exceeded income recognized on a
straight-line basis by $1,261,000 and $362,000, respectively. At December 31,
2002 and 2001, receivables which related to the cumulative excess of revenues
recognized in accordance with SFAS No. 13 over revenues which accrued in
accordance with the actual lease agreements totaled approximately $8,989,000 and
$10,250,000, respectively. Of that amount, 14% was related to leases with NB
Holdings Corporation and approximately 40% and 34% was related to each of two
professional services firms. At December 31, 2002, NB Holdings Corporation
leased approximately 46% and two professional services firms leased
approximately 18% and 17% of the net rentable space of the Building.
4. NOTE PAYABLE AND NOTE RECEIVABLE
--------------------------------
On February 6, 1996, the Partnership issued $80 million of 6.377%
collateralized notes (the "Prior Notes"). The Prior Notes amortized in equal
monthly installments of $590,680 based on a 20-year amortization schedule and
were to mature February 15, 2011. The Prior Notes were non-recourse obligations
of the Partnership and were secured by a Deed to Secure Debt, Assignment of
Rents and Security Agreement covering the Partnership's interest in the
Building.
The Partnership then loaned the $80 million proceeds of the Prior Notes
to CPI under a non-recourse loan (the "Prior Cousins Loan") secured by CPI's
interest in CSC under the same payment terms as those of the Prior Notes. CPI
paid all costs of issuing the Prior Notes and the Prior Cousins Loan, including
a $400,000 fee to an affiliate of Bank of America. In addition, CPI paid a
monthly fee to an affiliate of Bank of America of .025% of the outstanding
principal balance of the Prior Notes. These fees totaled approximately $203,000
and $211,000 in 2001 and 2000, respectively.
On February 22, 2002, CSC refinanced the Prior Notes, completing a $150
million non-recourse mortgage note payable (the "New Loan") with an interest
rate of 6.958% and a maturity of March 1, 2012. The New Loan is secured by CSC's
interest in the Bank of America Plaza building and related leases and
agreements. CSC loaned the $150 million proceeds of the New Loan to CPI under a
non-recourse loan (the "New Cousins' Loan") secured by CPI's interest in CSC
under the same payment terms as those of the New Loan. CPI paid all costs of
issuing the New Loan and the New Cousins Loan, including a $750,000 fee to an
affiliate of Bank of America Corporation.
The New Loan requires establishment of Reserve Funds for capital
replacements and repairs for the Building and costs and expenses incurred with
respect to leases. These funds are increased by $76,677 per month throughout the
life of the loan. At December 31, 2002, these Reserve Funds totaled $690,093.
On March 15, 2002, $65,873,925 of the proceeds from the New Loan was
used to pay off in full the Prior Notes. The $65,873,925 included $65,525,710
for the payoff of the principal balance as of February 15, 2002 (the last
payment date of the Prior Notes) and $348,215 for accrued interest from February
15, 2002 through March 14, 2002. The Prior Cousins Loan to CSC was also repaid
in full.
In connection with the prepayment in full of the Prior Notes, CPI paid
a prepayment premium in the amount of $2,871,925.
The estimated fair value of both the note payable and related note
receivable at December 31, 2002 was $148 million, which was calculated by
discounting future cash flows under the notes at estimated rates at which
similar notes would be made currently.
The maturities of the New Cousins Loan and the New Loan at December 31,
2002 are as follows (in thousands):
2003 $ 2,433
2004 2,608
2005 2,795
2006 2,996
2007 3,212
Subsequent to 2007 134,239
--------
$148,283
========
5. RELATED PARTIES
---------------
The Partnership engaged CPI and an affiliate of CPI to manage, develop
and lease the Building. During 2002, 2001 and 2000, fees to CPI and its
affiliate incurred by the Partnership were as follows ($ in thousands):
2002 2001 2000
------ ------ ------
Leasing and procurement fees $ 131 $ 303 $ 109
Management fees 1,085 1,007 990
------------------------------
$1,216 $1,310 $1,099
==============================
6. PARKING AGREEMENT
-----------------
On February 7, 1996, CSC entered into a 25-year Cross Parking License
Agreement ("Parking Agreement") with the North Avenue Presbyterian Church
("NAPC") which allows CSC the use of 200 parking spaces in NAPC's parking deck
which is located adjacent to NAPC. The agreement commenced on October 1, 1996.
CSC paid a $1,000,000 contribution toward the construction cost of the parking
deck as consideration for the Parking Agreement. The $1,000,000 contribution
plus additional costs of approximately $23,000 are included in Other Assets and
are being amortized over the 25-year life of the Parking Agreement. NAPC may
reduce the number of parking spaces available to the Partnership or may
terminate the Parking Agreement under certain conditions after the sixth year,
at which time a partial refund of the $1,000,000 would be due to CSC. In
addition, CSC is responsible for the maintenance of the parking deck and the
payment of the related operating expenses.
SCHEDULE III
CSC ASSOCIATES, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisitions December 31, 2002
------------------- -------------------- ----------------------------------
Carrying
Costs
Buildings Less Cost Land Buildings
Encumbrances and Improve- of Sales and Land and Total
Description (b) Land Improvements ments and Other Improvements Improvements (a)
- ----------- ------------ ---- ------------ -------- --------- ------------ ------------ ---
Bank of America Plaza
Atlanta, Georgia $148,283 $ 18,200 $ -- $195,796 $ 10,449 $ 22,818 $201,627 $224,445
=============================================================================================
SCHEDULE III
CSC ASSOCIATES, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
($ in thousands)
Column A Column F Column G Column H Column I
-------- -------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 2002
lated Date of Income
Deprecia- Construc- Date Statement
Description tion (a) tion Acquired Is Computed
- ----------- ---------- --------- -------- -----------
Bank of America Plaza
Atlanta, Georgia $73,289 1990-1992 1990 5-40
=======
NOTE: (a) Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended December 31, 2002 are as
follows:
Real Estate Accumulated Depreciation
---------------------------------- -------------------------------
2002 2001 2000 2002 2001 2000
-------- -------- -------- ------- ------- -------
Balance at beginning of period $223,187 $223,687 $222,436 $65,710 $58,678 $51,208
Improvements and other capitalized costs 1,258 54 1,604 -- -- --
Write-offs of improvements and other capitalized costs -- (554) (353) -- (554) (378)
Provision for depreciation -- -- -- 7,579 7,586 7,848
---------------------------------- -------------------------------
Balance at end of period $224,445 $223,187 $223,687 $73,289 $65,710 $58,678
================================== ===============================
(b)CSC's interest in Bank of America Plaza and related leases and agreements secure a note.