##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto
 Commission file number: 001-11312
 COUSINS PROPERTIES INCORPORATED
  GEORGIA
(State or other jurisdiction of 
incorporation or organization)
    
    58-0869052
(I.R.S. Employer Identification No.)191 Peachtree Street, Suite 3600, Atlanta, Georgia
(Address of principal executive offices)
    
    30303-1740
(Zip Code)
 (404) 407-1000
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
  Class
    
    Outstanding at November 4, 2010Common Stock, $1 par value per share
    
    102,632,451 shares




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of
OperationsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults upon Senior SecuritiesItem 4. (Removed and Reserved)Item 5. Other InformationItem 6. ExhibitsSIGNATURESEXHIBIT 31.1 - SECTION 302 CERTIFICATION OF CEOEXHIBIT 31.2 - SECTION 302 CERTIFICATION OF CFOEXHIBIT 32.1 - SECTION 906 CERTIFICATION OF CEOEXHIBIT 32.2 - SECTION 906 CERTIFICATION OF CFOEX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
  
    
    the Companys business and financial strategy;
    
    the Companys ability to obtain future financing arrangements;
    
    the Companys understanding of its competition and its ability to compete
effectively;
    
    projected operating results;
    
    market and industry trends;
    
    estimates relating to future distributions;
    
    projected capital expenditures; and
    
    interest rates.
  
    
    availability and terms of capital and financing, both to fund operations and to
refinance indebtedness as it matures;
    
    risks and uncertainties related to the national and local economic conditions, the
real estate industry in general and in specific markets, and the commercial, residential and
condominium markets in particular;
    
    the potential for recognition of additional impairments due to continued adverse
market and economic conditions;
    
    leasing risks, including an inability to obtain new tenants or renew tenants on
favorable terms, or at all, upon the expiration of existing leases and the ability to lease newly
developed or currently unleased space;
    
    financial condition of existing tenants;
    
    rising interest and insurance rates;
    
    the availability of sufficient development or investment opportunities;
    
    competition from other developers or investors;
    
    the risks associated with development projects (such as construction delays, cost
overruns and leasing/ sales risk of new properties);
    
    potential liability for uninsured losses, condemnation or environmental liability;
    
    potential liability for a failure to meet regulatory requirements;
    
    the financial condition and liquidity of, or disputes with, joint venture partners;
    
    any failure to comply with debt covenants under credit agreements; and
    
    any failure to continue to qualify for taxation as a real estate investment trust.
  3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30, 2010
    
    
    December 31, 2009(Unaudited)ASSETSPROPERTIES:Operating properties, net of accumulated depreciation
of $258,897 and $233,091 in 2010 and 2009, respectively
    
    $
    907,932
    
    
    $
    1,006,760Land held for investment or future development
    
    
    126,210
    
    
    
    137,233Residential lots
    
    
    63,586
    
    
    
    62,825Multi-family units held for sale
    
    
    10,193
    
    
    
    28,504Total properties
    
    
    1,107,921
    
    
    
    1,235,322OPERATING PROPERTY HELD FOR SALE,
net of accumulated depreciation of $5,461
    
    
    2,318
    
    
    
    CASH AND CASH EQUIVALENTS
    
    
    9,211
    
    
    
    9,464RESTRICTED CASH
    
    
    17,632
    
    
    
    3,585NOTES AND OTHER RECEIVABLES,net of allowance for
doubtful accounts of $5,143 and $5,734 in 2010 and 2009, respectively
    
    
    45,306
    
    
    
    49,678INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
    
    
    163,231
    
    
    
    146,150OTHER ASSETS
    
    
    45,433
    
    
    
    47,353TOTAL ASSETS
    
    $
    1,391,052
    
    
    $
    1,491,552LIABILITIES AND EQUITYNOTES PAYABLE
    
    $
    514,363
    
    
    $
    590,208ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
    
    
    36,531
    
    
    
    56,577DEFERRED GAIN
    
    
    4,275
    
    
    
    4,452DEPOSITS AND DEFERRED INCOME
    
    
    17,287
    
    
    
    7,465TOTAL LIABILITIES
    
    
    572,456
    
    
    
    658,702COMMITMENTS AND CONTINGENT LIABILITIESREDEEMABLE NONCONTROLLING INTERESTS
    
    
    13,482
    
    
    
    12,591STOCKHOLDERS INVESTMENT:Preferred stock, 20,000,000 shares authorized, $1 par value:7.75% Series A cumulative redeemable preferred stock, $25 liquidation
preference; 2,993,090 shares issued and outstanding in 2010 and 2009
    
    
    74,827
    
    
    
    74,8277.50% Series B cumulative redeemable preferred stock, $25 liquidation
preference; 3,791,000 shares issued and outstanding in 2010 and 2009
    
    
    94,775
    
    
    
    94,775Common stock, $1 par value, 150,000,000 shares authorized, 106,205,120 and
103,352,382 shares issued in 2010 and 2009, respectively
    
    
    106,205
    
    
    
    103,352Additional paid-in capital
    
    
    679,437
    
    
    
    662,216Treasury stock at cost, 3,570,082 shares in 2010 and 2009
    
    
    (86,840
    )
    
    
    (86,840
    )Accumulated other comprehensive loss on derivative instruments
    
    
    (94
    )
    
    
    (9,517
    )Distributions in excess of net income (loss)
    
    
    (96,029
    )
    
    
    (51,402
    )TOTAL STOCKHOLDERS INVESTMENT
    
    
    772,281
    
    
    
    787,411Nonredeemable noncontrolling interests
    
    
    32,833
    
    
    
    32,848TOTAL EQUITY
    
    
    805,114
    
    
    
    820,259TOTAL LIABILITIES AND EQUITY
    
    $
    1,391,052
    
    
    $
    1,491,552
 See notes to condensed consolidated financial statements.
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##### Table of Contents



COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009REVENUES:Rental property revenues
    
    $
    36,255
    
    
    $
    36,205
    
    
    $
    106,997
    
    
    $
    105,392Fee income
    
    
    8,690
    
    
    
    9,510
    
    
    
    25,241
    
    
    
    25,726Multi-family residential unit sales
    
    
    6,637
    
    
    
    9,228
    
    
    
    24,726
    
    
    
    10,413Residential lot and outparcel sales
    
    
    630
    
    
    
    1,150
    
    
    
    14,765
    
    
    
    7,026Other
    
    
    245
    
    
    
    675
    
    
    
    540
    
    
    
    2,89352,457
    
    
    
    56,768
    
    
    
    172,269
    
    
    
    151,450COSTS AND EXPENSES:Rental property operating expenses
    
    
    15,276
    
    
    
    16,617
    
    
    
    45,172
    
    
    
    47,260Multi-family residential unit cost of sales
    
    
    5,190
    
    
    
    7,372
    
    
    
    19,268
    
    
    
    8,557Residential lot and outparcel cost of sales
    
    
    549
    
    
    
    979
    
    
    
    9,920
    
    
    
    4,732General and administrative expenses
    
    
    8,109
    
    
    
    9,180
    
    
    
    26,648
    
    
    
    28,546Separation expenses
    
    
    202
    
    
    
    724
    
    
    
    303
    
    
    
    3,094Reimbursed general and administrative expenses
    
    
    3,522
    
    
    
    3,979
    
    
    
    11,531
    
    
    
    12,237Depreciation and amortization
    
    
    13,977
    
    
    
    13,264
    
    
    
    41,610
    
    
    
    40,428Interest expense
    
    
    8,702
    
    
    
    10,793
    
    
    
    28,769
    
    
    
    30,278Impairment loss
    
    
    
    
    
    
    4,012
    
    
    
    586
    
    
    
    40,512Other
    
    
    964
    
    
    
    1,723
    
    
    
    5,489
    
    
    
    7,70156,491
    
    
    
    68,643
    
    
    
    189,296
    
    
    
    223,345LOSS ON EXTINGUISHMENT OF DEBT AND INTEREST RATE SWAPS
    
    
    (9,235
    )
    
    
    
    
    
    
    (9,827
    )
    
    
    LOSS FROM CONTINUING OPERATIONS BEFORE TAXES,
UNCONSOLIDATED JOINT VENTURES AND SALE OF
INVESTMENT PROPERTIES
    
    
    (13,269
    )
    
    
    (11,875
    )
    
    
    (26,854
    )
    
    
    (71,895
    )BENEFIT (PROVISION) FOR INCOME TAXES FROM OPERATIONS
    
    
    (25
    )
    
    
    (54
    )
    
    
    1,107
    
    
    
    (7,406
    )INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES:Equity in net income (loss) from unconsolidated joint ventures
    
    
    2,179
    
    
    
    (19,926
    )
    
    
    7,493
    
    
    
    (19,337
    )Impairment loss on investment in unconsolidated joint ventures
    
    
    
    
    
    
    (22,928
    )
    
    
    
    
    
    
    (51,058
    )2,179
    
    
    
    (42,854
    )
    
    
    7,493
    
    
    
    (70,395
    )LOSS FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE
OF INVESTMENT PROPERTIES
    
    
    (11,115
    )
    
    
    (54,783
    )
    
    
    (18,254
    )
    
    
    (149,696
    )GAIN ON SALE OF INVESTMENT PROPERTIES
    
    
    58
    
    
    
    406
    
    
    
    1,875
    
    
    
    168,641INCOME (LOSS) FROM CONTINUING OPERATIONS
    
    
    (11,057
    )
    
    
    (54,377
    )
    
    
    (16,379
    )
    
    
    18,945INCOME FROM DISCONTINUED OPERATIONS:Income from discontinued operations
    
    
    25
    
    
    
    1,041
    
    
    
    2,743
    
    
    
    1,897Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,498Gain on sale of investment properties
    
    
    6,572
    
    
    
    7
    
    
    
    6,572
    
    
    
    1536,597
    
    
    
    1,048
    
    
    
    9,315
    
    
    
    14,548NET INCOME (LOSS)
    
    
    (4,460
    )
    
    
    (53,329
    )
    
    
    (7,064
    )
    
    
    33,493NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
    
    
    (696
    )
    
    
    (531
    )
    
    
    (1,806
    )
    
    
    (1,641
    )NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST
    
    
    (5,156
    )
    
    
    (53,860
    )
    
    
    (8,870
    )
    
    
    31,852DIVIDENDS TO PREFERRED STOCKHOLDERS
    
    
    (3,226
    )
    
    
    (3,228
    )
    
    
    (9,680
    )
    
    
    (9,682
    )NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
    
    $
    (8,382
    )
    
    $
    (57,088
    )
    
    $
    (18,550
    )
    
    $
    22,170PER COMMON SHARE INFORMATION  BASIC AND DILUTED:Income (loss) from continuing operations
    
    $
    (0.15
    )
    
    $
    (0.98
    )
    
    $
    (0.28
    )
    
    $
    0.14Income from discontinued operations
    
    
    0.06
    
    
    
    0.02
    
    
    
    0.09
    
    
    
    0.27Net income (loss) available to common stockholders  basic and diluted
    
    $
    (0.08
    )
    
    $
    (0.96
    )
    
    $
    (0.18
    )
    
    $
    0.41DIVIDENDS DECLARED PER COMMON SHARE
    
    $
    0.09
    
    
    $
    0.15
    
    
    $
    0.27
    
    
    $
    0.65WEIGHTED AVERAGE SHARES  BASIC AND DILUTED
    
    
    101,893
    
    
    
    59,403
    
    
    
    100,995
    
    
    
    54,152
 See notes to condensed consolidated financial statements.
 5




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##### Table of Contents



COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Nine Months Ended September 30, 2010 and 2009
(Unaudited, in thousands)
 Accumulated
    
    
    CumulativeOther
    
    
    UndistributedComprehensive
    
    
    Net IncomeAdditional
    
    
    
    
    
    
    Income (Loss)
    
    
    (Distributions in
    
    
    
    
    
    
    NonredeemablePreferred
    
    
    Common
    
    
    Paid-In
    
    
    Treasury
    
    
    on Derivative
    
    
    Excess of
    
    
    Total Stockholders
    
    
    NoncontrollingStock
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Instruments
    
    
    Net Income)
    
    
    Investment
    
    
    Interests
    
    
    Total EquityBalance December 31, 2009
    
    $
    169,602
    
    
    $
    103,352
    
    
    $
    662,216
    
    
    $
    (86,840
    )
    
    $
    (9,517
    )
    
    $
    (51,402
    )
    
    $
    787,411
    
    
    $
    32,848
    
    
    $
    820,259Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,870
    )
    
    
    (8,870
    )
    
    
    1,759
    
    
    
    (7,111
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,423
    
    
    
    
    
    
    
    9,423
    
    
    
    
    
    
    
    9,423Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,423
    
    
    
    (8,870
    )
    
    
    553
    
    
    
    1,759
    
    
    
    2,312Common stock issued pursuant to:Stock dividend, net of issuance costs
    
    
    
    
    
    
    2,564
    
    
    
    15,489
    
    
    
    
    
    
    
    
    
    
    
    (18,130
    )
    
    
    (77
    )
    
    
    
    
    
    
    (77
    )Grants under director stock plan
    
    
    
    
    
    
    35
    
    
    
    215
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250
    
    
    
    
    
    
    
    250Restricted stock and director option grants
    
    
    
    
    
    
    264
    
    
    
    (124
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    140Amortization of stock options and restricted stock,
net of forfeitures
    
    
    
    
    
    
    (10
    )
    
    
    1,641
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,631
    
    
    
    
    
    
    
    1,631Distributions to nonredeemable noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,774
    )
    
    
    (1,774
    )Change in fair value of redeemable
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,144
    
    
    
    1,144
    
    
    
    
    
    
    
    1,144Cash preferred dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,680
    )
    
    
    (9,680
    )
    
    
    
    
    
    
    (9,680
    )Cash common dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,091
    )
    
    
    (9,091
    )
    
    
    
    
    
    
    (9,091
    )Balance September 30, 2010
    
    $
    169,602
    
    
    $
    106,205
    
    
    $
    679,437
    
    
    $
    (86,840
    )
    
    $
    (94
    )
    
    $
    (96,029
    )
    
    $
    772,281
    
    
    $
    32,833
    
    
    $
    805,114Balance December 31, 2008
    
    $
    169,602
    
    
    $
    54,922
    
    
    $
    368,829
    
    
    $
    (86,840
    )
    
    $
    (16,601
    )
    
    $
    (23,189
    )
    
    $
    466,723
    
    
    $
    37,539
    
    
    $
    504,262Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,852
    
    
    
    31,852
    
    
    
    1,792
    
    
    
    33,644Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,368
    
    
    
    
    
    
    
    3,368
    
    
    
    
    
    
    
    3,368Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,368
    
    
    
    31,852
    
    
    
    35,220
    
    
    
    1,792
    
    
    
    37,012Common stock issued pursuant to:Stock offering, net of issuance costs
    
    
    
    
    
    
    46,000
    
    
    
    272,573
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    318,573
    
    
    
    
    
    
    
    318,573Stock dividend, net of issuance costs
    
    
    
    
    
    
    1,604
    
    
    
    12,172
    
    
    
    
    
    
    
    
    
    
    
    (13,776
    )
    
    
    
    
    
    
    
    
    
    
    Grants under director stock plan
    
    
    
    
    
    
    29
    
    
    
    142
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    171Amortization of stock options and
restricted stock, net of forfeitures
    
    
    
    
    
    
    (15
    )
    
    
    3,247
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,232
    
    
    
    
    
    
    
    3,232Distributions to nonredeemable noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,508
    )
    
    
    (6,508
    )Change in fair value of redeemable
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (180
    )
    
    
    (180
    )
    
    
    
    
    
    
    (180
    )Cash preferred dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,682
    )
    
    
    (9,682
    )
    
    
    
    
    
    
    (9,682
    )Cash common dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,738
    )
    
    
    (19,738
    )
    
    
    
    
    
    
    (19,738
    )Balance September 30, 2009
    
    $
    169,602
    
    
    $
    102,540
    
    
    $
    656,963
    
    
    $
    (86,840
    )
    
    $
    (13,233
    )
    
    $
    (34,713
    )
    
    $
    794,319
    
    
    $
    32,823
    
    
    $
    827,142
 See notes to condensed consolidated financial statements.
 6




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##### Table of Contents



COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months Ended September 30,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (7,064
    )
    
    $
    33,493Adjustments to reconcile net income to net cash flows provided by operating activities:Gain on sale of investment properties, including discontinued operations
    
    
    (8,447
    )
    
    
    (168,794
    )Loss (gain) on extinguishment of debt
    
    
    592
    
    
    
    (12,498
    )Impairment loss
    
    
    586
    
    
    
    40,512Impairment loss on investment in unconsolidated joint ventures
    
    
    
    
    
    
    51,058Losses on abandoned predevelopment projects
    
    
    1,949
    
    
    
    4,072Depreciation and amortization
    
    
    42,455
    
    
    
    42,305Amortization of deferred financing costs
    
    
    1,495
    
    
    
    1,124Stock-based compensation
    
    
    1,771
    
    
    
    3,403Change in deferred income taxes, net of valuation allowance
    
    
    
    
    
    
    8,897Effect of recognizing rental revenues on a straight-line or market basis
    
    
    (3,635
    )
    
    
    (3,396
    )(Income) loss from unconsolidated joint ventures
    
    
    (7,493
    )
    
    
    19,337Operating distributions from unconsolidated joint ventures
    
    
    7,814
    
    
    
    5,420Residential lot, outparcel and multi-family cost of sales, net of closing costs paid
    
    
    26,817
    
    
    
    11,848Residential lot, outparcel and multi-family acquisition and development expenditures
    
    
    (1,663
    )
    
    
    (6,167
    )Changes in other operating assets and liabilities:Change in other receivables and other assets, net
    
    
    1,536
    
    
    
    (2,558
    )Change in accounts payable and accrued liabilities
    
    
    4,628
    
    
    
    3,309Net cash provided by operating activities
    
    
    61,341
    
    
    
    31,365CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from investment property sales
    
    
    98,694
    
    
    
    2,531Property acquisition and development expenditures
    
    
    (26,355
    )
    
    
    (39,667
    )Investment in unconsolidated joint ventures
    
    
    (8,344
    )
    
    
    (3,895
    )Distributions from unconsolidated joint ventures
    
    
    3,654
    
    
    
    3,925Payment of debt guarantee for unconsolidated joint venture
    
    
    (17,250
    )
    
    
    Collection of notes receivable, net of investment
    
    
    132
    
    
    
    (71
    )Change in other assets
    
    
    (1,852
    )
    
    
    (2,490
    )Change in restricted cash
    
    
    (14,047
    )
    
    
    (1,225
    )Net cash provided by (used in) investing activities
    
    
    34,632
    
    
    
    (40,892
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from credit facility
    
    
    43,400
    
    
    
    158,200Repayment of credit and term facilities
    
    
    (113,800
    )
    
    
    (319,200
    )Proceeds from other notes payable
    
    
    27,034
    
    
    
    Payment of loan issuance costs
    
    
    (1,997
    )
    
    
    Repayment of notes payable
    
    
    (32,479
    )
    
    
    (75,327
    )Common stock issued, net of expenses
    
    
    173
    
    
    
    318,573Cash common dividends paid
    
    
    (9,091
    )
    
    
    (19,738
    )Cash preferred dividends paid
    
    
    (9,680
    )
    
    
    (9,682
    )Contributions from noncontrolling interests
    
    
    2,113
    
    
    
    Distributions to noncontrolling interests
    
    
    (1,899
    )
    
    
    (6,666
    )Net cash provided by (used in) financing activities
    
    
    (96,226
    )
    
    
    46,160NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (253
    )
    
    
    36,633CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    9,464
    
    
    
    82,963CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    9,211
    
    
    $
    119,596
 See notes to condensed consolidated financial statements.
 7




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##### Table of Contents



COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
(UNAUDITED)
 1. BASIS OF PRESENTATION AND NEW ACCOUNTING PRONOUNCEMENTS
 Basis of Presentation
    New Accounting Pronouncement
 Consolidation
 8




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##### Table of Contents



2. NOTES PAYABLE, INTEREST EXPENSE AND COMMITMENTS AND CONTINGENCIES
  Term/Amortization
    
    
    
    Outstanding atDescription
    
    Interest Rate
    
    Period (Years)
    
    Maturity
    
    September 30, 2010
    
    
    December 31, 2009Credit Facility, unsecured (see note)
    
    LIBOR + 1.75% to 2.25%
    
    4/N/A
    
    8/29/11
    
    $
    69,600
    
    
    $
    40,000Term Facility, unsecured (see note)
    
    See note
    
    5/N/A
    
    8/29/12
    
    
    
    
    
    
    100,000Terminus 100 mortgage note (interest only)
    
    6.13%
    
    5/N/A
    
    10/1/12
    
    
    180,000
    
    
    
    180,000The American Cancer Society Center mortgage
note (interest only until October 1, 2011)
    
    6.45%
    
    5/30
    
    9/1/17
    
    
    136,000
    
    
    
    136,000333/555 North Point Center East mortgage note
    
    7.00%
    
    10/25
    
    11/1/11
    
    
    26,637
    
    
    
    27,287100/200 North Point Center East mortgage note
(interest only until July 1, 2010)
    
    5.39%
    
    5/30
    
    6/1/12
    
    
    24,916
    
    
    
    25,000Meridian Mark Plaza mortgage note (see note)
    
    8.27%
    
    10/28
    
    9/1/10
    
    
    
    
    
    
    22,279Meridian Mark Plaza mortgage note (see note)
    
    6.00%
    
    10/30
    
    8/1/20
    
    
    26,973
    
    
    
    Lakeshore Park Plaza mortgage note
    
    5.89%
    
    4/25
    
    8/1/12
    
    
    17,636
    
    
    
    17,903The Points at Waterview mortgage note
    
    5.66%
    
    10/25
    
    1/1/16
    
    
    16,702
    
    
    
    17,024600 University Park Place mortgage note
    
    7.38%
    
    10/30
    
    8/10/11
    
    
    12,354
    
    
    
    12,536Handy Road Associates, LLC (see note)
    
    Prime + 1%, but not < 6%
    
    5/N/A
    
    3/30/11
    
    
    3,374
    
    
    
    3,340Glenmore Garden Villas, LLC (see note)
    
    LIBOR + 2.25%
    
    3/N/A
    
    10/3/10
    
    
    
    
    
    
    8,674Other
    
    4.13%
    
    2/N/A
    
    11/18/10
    
    
    171
    
    
    
    165$
    514,363
    
    
    $
    590,208
  9




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##### Table of Contents



Credit Facility Amendment
   Credit and Term Facilities
    
    Credit Facility
    
    Term Facility ApplicableApplicable Spread - As
    
    Applicable Spread -
    
    Spread - BeforeLeverage Ratio
    
    Amended
    
    Before Amendment
    
    Amendment≤ 35%
    
    1.75%
    
    0.75%
    
    0.70%>35% but ≤ 45%
    
    2.00%
    
    0.85%
    
    0.80%>45% but ≤ 50%
    
    2.25%
    
    0.95%
    
    0.90%>50% but ≤ 55%
    
    2.25%
    
    1.10%
    
    1.05%>55%
    
    N/A
    
    1.25%
    
    1.20%
   Derivative Instruments and Hedging Activities
   10




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##### Table of Contents



Floating Rate,LIBOR-basedTerm Loan
    
    
    Borrowings
    
    
    TotalBalance, December 31, 2009
    
    $
    8,662
    
    
    $
    855
    
    
    $
    9,517Termination of swap
    
    
    (9,235
    )
    
    $
    
    
    
    
    (9,235
    )Change in fair value
    
    
    573
    
    
    
    (761
    )
    
    
    (188
    )Balance, September 30, 2010
    
    $
    
    
    
    $
    94
    
    
    $
    94
 Other Debt Information
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Total interest incurred
    
    $
    8,702
    
    
    $
    11,392
    
    
    $
    28,769
    
    
    $
    35,462Interest expensed-discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,505
    )Interest capitalized
    
    
    
    
    
    
    (599
    )
    
    
    
    
    
    
    (3,679
    )Total interest expense
    
    $
    8,702
    
    
    $
    10,793
    
    
    $
    28,769
    
    
    $
    30,278
   Fair Value
  11




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##### Table of Contents



3. EARNINGS PER SHARE
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Weighted average shares  basic and diluted
    
    
    101,893
    
    
    
    59,403
    
    
    
    100,995
    
    
    
    54,152Weighted average anti-dilutive options not included
    
    
    7,061
    
    
    
    6,937
    
    
    
    7,086
    
    
    
    7,062
 4. STOCK-BASED COMPENSATION
    12




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##### Table of Contents



5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
  CompanysTotal Assets
    
    
    Total Debt
    
    
    Total Equity
    
    
    Investment2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009SUMMARY OF FINANCIAL POSITION:CP Venture IV LLC entities
    
    $
    315,917
    
    
    $
    324,402
    
    
    $
    
    
    
    $
    35,451
    
    
    $
    303,596
    
    
    $
    277,063
    
    
    $
    19,484
    
    
    $
    15,933Charlotte Gateway Village, LLC
    
    
    155,273
    
    
    
    160,266
    
    
    
    100,377
    
    
    
    110,101
    
    
    
    53,092
    
    
    
    48,214
    
    
    
    10,375
    
    
    
    10,401CF Murfreesboro Associates
    
    
    130,329
    
    
    
    139,782
    
    
    
    104,041
    
    
    
    113,476
    
    
    
    24,189
    
    
    
    23,231
    
    
    
    14,279
    
    
    
    13,817Palisades West LLC
    
    
    125,277
    
    
    
    125,537
    
    
    
    
    
    
    
    
    
    
    
    74,572
    
    
    
    74,237
    
    
    
    39,175
    
    
    
    39,104CL Realty, L.L.C.
    
    
    109,382
    
    
    
    114,598
    
    
    
    2,911
    
    
    
    3,568
    
    
    
    104,482
    
    
    
    109,184
    
    
    
    48,041
    
    
    
    49,825CPV and CPV Two
    
    
    108,904
    
    
    
    101,209
    
    
    
    
    
    
    
    
    
    
    
    105,588
    
    
    
    99,133
    
    
    
    3,939
    
    
    
    3,270Terminus 200 LLC
    
    
    
    
    
    
    27,537
    
    
    
    
    
    
    
    76,762
    
    
    
    
    
    
    
    (47,921
    )
    
    
    
    
    
    
    MSREF/Terminus 200 LLC
    
    
    61,621
    
    
    
    
    
    
    
    42,254
    
    
    
    
    
    
    
    13,723
    
    
    
    
    
    
    
    2,757
    
    
    
    Temco Associates, LLC
    
    
    60,540
    
    
    
    60,752
    
    
    
    2,963
    
    
    
    3,061
    
    
    
    56,890
    
    
    
    57,484
    
    
    
    22,420
    
    
    
    22,716Crawford Long  CPI, LLC
    
    
    35,077
    
    
    
    35,277
    
    
    
    48,959
    
    
    
    49,710
    
    
    
    (15,849
    )
    
    
    (15,280
    )
    
    
    (6,683
    )
    
    
    (6,396
    )Ten Peachtree Place Associates
    
    
    21,892
    
    
    
    22,971
    
    
    
    26,924
    
    
    
    27,341
    
    
    
    (5,908
    )
    
    
    (4,846
    )
    
    
    (4,410
    )
    
    
    (3,887
    )Wildwood Associates
    
    
    21,350
    
    
    
    21,263
    
    
    
    
    
    
    
    
    
    
    
    21,260
    
    
    
    21,205
    
    
    
    (1,620
    )
    
    
    (1,647
    )TRG Columbus Dev Venture, Ltd.
    
    
    5,132
    
    
    
    6,802
    
    
    
    
    
    
    
    
    
    
    
    2,734
    
    
    
    2,464
    
    
    
    311
    
    
    
    383Pine Mountain Builders, LLC
    
    
    9,359
    
    
    
    6,807
    
    
    
    1,704
    
    
    
    1,834
    
    
    
    2,948
    
    
    
    3,119
    
    
    
    2,450
    
    
    
    2,631$
    1,160,053
    
    
    $
    1,147,203
    
    
    $
    330,133
    
    
    $
    421,304
    
    
    $
    741,317
    
    
    $
    647,287
    
    
    $
    150,518
    
    
    $
    146,150
   13




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##### Table of Contents



Companys Share ofTotal Revenues
    
    
    Net Income (Loss)
    
    
    Net Income (Loss)2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009SUMMARY OF OPERATIONS:CP Venture IV LLC entities
    
    $
    23,368
    
    
    $
    23,152
    
    
    $
    2,950
    
    
    $
    2,429
    
    
    $
    839
    
    
    $
    865Charlotte Gateway Village, LLC
    
    
    23,892
    
    
    
    23,491
    
    
    
    5,788
    
    
    
    5,169
    
    
    
    882
    
    
    
    882CF Murfreesboro Associates
    
    
    10,457
    
    
    
    9,235
    
    
    
    956
    
    
    
    956
    
    
    
    312
    
    
    
    327Palisades West LLC
    
    
    10,145
    
    
    
    9,417
    
    
    
    3,406
    
    
    
    4,101
    
    
    
    1,651
    
    
    
    2,008CL Realty, L.L.C.
    
    
    5,332
    
    
    
    2,045
    
    
    
    2,185
    
    
    
    (8,453
    )
    
    
    1,661
    
    
    
    (2,610
    )CP and CPV Two
    
    
    13,921
    
    
    
    13,620
    
    
    
    6,458
    
    
    
    6,803
    
    
    
    669
    
    
    
    703Terminus 200 LLC
    
    
    533
    
    
    
    300
    
    
    
    55
    
    
    
    (82,441
    )
    
    
    
    
    
    
    (20,954
    )MSREF/Terminus 200 LLC
    
    
    928
    
    
    
    
    
    
    
    (835
    )
    
    
    
    
    
    
    (167
    )
    
    
    Temco Associates, LLC
    
    
    2,110
    
    
    
    1,349
    
    
    
    429
    
    
    
    (2,400
    )
    
    
    214
    
    
    
    (1,200
    )Crawford Long  CPI, LLC
    
    
    8,614
    
    
    
    8,472
    
    
    
    1,432
    
    
    
    1,386
    
    
    
    715
    
    
    
    692Ten Peachtree Place Associates
    
    
    5,875
    
    
    
    5,543
    
    
    
    734
    
    
    
    517
    
    
    
    378
    
    
    
    270Wildwood Associates
    
    
    
    
    
    
    
    
    
    
    (85
    )
    
    
    (111
    )
    
    
    (42
    )
    
    
    (55
    )TRG Columbus Dev. Venture, Ltd.
    
    
    1,097
    
    
    
    63
    
    
    
    403
    
    
    
    (97
    )
    
    
    327
    
    
    
    1Pine Mountain Builders, LLC
    
    
    2,202
    
    
    
    1,529
    
    
    
    129
    
    
    
    51
    
    
    
    59
    
    
    
    11Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,503
    )
    
    
    (5
    )
    
    
    (277
    )$
    108,474
    
    
    $
    98,216
    
    
    $
    24,005
    
    
    $
    (78,593
    )
    
    $
    7,493
    
    
    $
    (19,337
    )
    6. OTHER ASSETS
  14




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September 30,
    
    
    December 31,2010
    
    
    2009Investment in Verde
    
    $
    9,376
    
    
    $
    9,376FF&E and leasehold improvements, net of accumulated depreciation
of $15,681 and $14,195 in 2010 and 2009, respectively
    
    
    4,783
    
    
    
    5,306Predevelopment costs and earnest money
    
    
    6,676
    
    
    
    7,673Lease inducements, net of accumulated amortization
of $2,706 and $1,860 in 2010 and 2009, respectively
    
    
    12,124
    
    
    
    12,545Loan closing costs, net of accumulated amortization
of $2,530 and $4,177 in 2010 and 2009, respectively
    
    
    3,283
    
    
    
    3,385Prepaid expenses and other assets
    
    
    2,860
    
    
    
    2,631Intangible Assets:Goodwill
    
    
    5,450
    
    
    
    5,450Above market leases, net of accumulated amortization
of $8,732 and $8,704 in 2010 and 2009, respectively
    
    
    536
    
    
    
    564In-place leases, net of accumulated amortization
of $2,469 and $2,391 in 2010 and 2009, respectively
    
    
    345
    
    
    
    423$
    45,433
    
    
    $
    47,353
  7. CONSOLIDATED STATEMENTS OF CASH FLOWS  SUPPLEMENTAL INFORMATION
  15




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##### Table of Contents



Nine Months Ended September 30,2010
    
    
    2009Interest paid, net of amounts capitalized
    
    $
    27,063
    
    
    $
    32,546Income taxes refunded
    
    
    3,288
    
    
    
    635Non-Cash TransactionsIssuance of common stock for payment of common dividends
    
    $
    18,130
    
    
    $
    13,776Transfer from investment in joint venture to deposits and deferred income
    
    
    12,713
    
    
    
    Land received on note receivable default
    
    
    5,030
    
    
    
    Transfer of assets to operating property held for sale
    
    
    2,318
    
    
    
    Change in accruals excluded from property development and acquisition expenditures
and investment in unconsolidated joint ventures
    
    
    1,804
    
    
    
    14,483Transfer from land held for investment or future development to operating properties
    
    
    1,410
    
    
    
    Issuance of note receivable for residential lot sale
    
    
    150
    
    
    
    Change in accumulated other comprehensive income
    
    
    188
    
    
    
    3,368Change in fair value of redeemable noncontrolling interests
    
    
    (1,144
    )
    
    
    180Consolidation of land from investment in joint ventures to land held for investment
or future development
    
    
    
    
    
    
    9,116Transfer from notes receivable to multi-family residential projects
    
    
    
    
    
    
    8,167Transfer from note payable and accrued interest to redeemable noncontrolling interests
    
    
    
    
    
    
    8,767Transfer from investment in joint ventures to land held for investment or future development
    
    
    
    
    
    
    5,342Transfer from projects under development to operating properties
    
    
    
    
    
    
    171,009Transfer from projects under development to land held for investment or future development
    
    
    
    
    
    
    5,159Transfer from other assets to land held for investment or future development
    
    
    
    
    
    
    2,440Transfer from operating properties to land held for investment or future development
    
    
    
    
    
    
    901Transfer from other receivables and other assets to notes receivable
    
    
    
    
    
    
    223Issuance of note payable for purchase of townhomes
    
    
    
    
    
    
    3,150
 8. NONCONTROLLING INTERESTS
   Nine Months Ended September 30,2010
    
    
    2009Beginning Balance
    
    $
    12,591
    
    
    $
    3,945Net income (loss) attributable to redeemable noncontrolling interests
    
    
    47
    
    
    
    (151
    )Contributions from (distributions to) noncontrolling interests
    
    
    1,988
    
    
    
    (158
    )Conversion of note payable and accrued interest to redeemable noncontrolling interest
    
    
    
    
    
    
    8,767Change in fair value of redeemable noncontrolling interests
    
    
    (1,144
    )
    
    
    180Ending Balance
    
    $
    13,482
    
    
    $
    12,583
 16




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##### Table of Contents



2010
    
    
    2009Net income (loss) attributable to controlling interest
    
    $
    (8,870
    )
    
    $
    31,852Net income attributable to nonredeemable noncontrolling interests
    
    
    1,759
    
    
    
    1,792Net income (loss) attributable to redeemable noncontrolling interests
    
    
    47
    
    
    
    (151
    )Net income (loss)
    
    $
    (7,064
    )
    
    $
    33,493
 9. REPORTABLE SEGMENTS
  
    
    fee income, salary reimbursements and expenses for joint venture properties, other
than the Land segment, that the Company manages, develops and/or leases;
    
    compensation for corporate employees, other than those in the Third-Party Management
segment;
    
    general corporate overhead costs, interest expense for consolidated entities (as
financing decisions are made at the corporate level, with the exception of joint
venture interest expense, which is included in joint venture results in the respective
segment);
    
    income attributable to noncontrolling interests;
    
    income taxes;
    
    depreciation;
    
    preferred dividends; and
    
    operations of the Industrial properties, which are not material for separate
presentation.
  17




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##### Table of Contents



Third PartyThree Months Ended September 30, 2010
    
    Office
    
    
    Retail
    
    
    Land
    
    
    Management
    
    
    Multi-Family
    
    
    Other
    
    
    TotalNet rental property revenues less rental property operating expenses
    
    $
    14,658
    
    
    $
    5,262
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,092
    
    
    $
    21,012Fee income, net of reimbursed expenses
    
    
    
    
    
    
    
    
    
    
    117
    
    
    
    2,416
    
    
    
    
    
    
    
    2,635
    
    
    
    5,168Residential lot, multi-family unit, tract and outparcel sales, net of cost
of sales, including gain on sale of undepreciated investment properties
    
    
    
    
    
    
    (1
    )
    
    
    81
    
    
    
    
    
    
    
    1,447
    
    
    
    
    
    
    
    1,527Other income
    
    
    8
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230
    
    
    
    256General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,906
    )
    
    
    
    
    
    
    (6,405
    )
    
    
    (8,311
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,702
    )
    
    
    (8,702
    )Depreciation and amortization of non-real estate assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (441
    )
    
    
    (441
    )Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (964
    )
    
    
    (964
    )Loss on extinguishment of debt and interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,235
    )
    
    
    (9,235
    )Funds from operations from unconsolidated joint ventures
    
    
    2,532
    
    
    
    1,458
    
    
    
    368
    
    
    
    
    
    
    
    165
    
    
    
    
    
    
    
    4,523Income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (696
    )
    
    
    (696
    )Provision for income taxes from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    (25
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,226
    )
    
    
    (3,226
    )Funds from operations available to common stockholders
    
    $
    17,198
    
    
    $
    6,737
    
    
    $
    566
    
    
    $
    510
    
    
    $
    1,612
    
    
    $
    (25,737
    )
    
    
    886Real estate depreciation and amortization, including Companys
share of joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,899
    )Gain on sale of depreciated investment properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,631Net loss available to common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,382
    )
 18




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##### Table of Contents



Third PartyThree Months Ended September 30, 2009
    
    Office
    
    
    Retail
    
    
    Land
    
    
    Management
    
    
    Multi-Family
    
    
    Other
    
    
    TotalNet rental property revenues less rental property operating expenses
    
    $
    15,146
    
    
    $
    5,702
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    385
    
    
    $
    21,233Fee income, net of reimbursed expenses
    
    
    
    
    
    
    
    
    
    
    112
    
    
    
    3,842
    
    
    
    
    
    
    
    1,577
    
    
    
    5,531Residential, multi-family and outparcel
sales, net of cost of sales,
including gain on sale of undepreciated investment properties
    
    
    281
    
    
    
    171
    
    
    
    68
    
    
    
    
    
    
    
    1,856
    
    
    
    
    
    
    
    2,376Other income
    
    
    86
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    414
    
    
    
    675General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,593
    )
    
    
    
    
    
    
    (7,311
    )
    
    
    (9,904
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,793
    )
    
    
    (10,793
    )Depreciation and amortization of non-real estate assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (833
    )
    
    
    (833
    )Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,723
    )
    
    
    (1,723
    )Impairment loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,012
    )
    
    
    (4,012
    )Funds from operations from unconsolidated joint ventures
    
    
    (18,403
    )
    
    
    1,576
    
    
    
    (788
    )
    
    
    
    
    
    
    
    
    
    
    (129
    )
    
    
    (17,744
    )Impairment loss on investment in unconsolidated joint ventures
    
    
    (17,993
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,935
    )
    
    
    
    
    
    
    (22,928
    )Income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (531
    )
    
    
    (531
    )Provision for income taxes from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    (54
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,228
    )
    
    
    (3,228
    )Funds from operations available to common stockholders
    
    $
    (20,883
    )
    
    $
    7,624
    
    
    $
    (608
    )
    
    $
    1,249
    
    
    $
    (3,079
    )
    
    $
    (26,238
    )
    
    
    (41,935
    )Real estate depreciation and
amortization, including Companys
share of joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,217
    )Gain on sale of depreciated investment properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64Net loss available to common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (57,088
    )
 Third PartyNine Months Ended September 30, 2010
    
    Office
    
    
    Retail
    
    
    Land
    
    
    Management
    
    
    Multi-Family
    
    
    Other
    
    
    TotalNet rental property revenues less rental property operating expenses
    
    $
    44,368
    
    
    $
    18,775
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,240
    
    
    $
    65,383Fee income, net of reimbursed expenses
    
    
    
    
    
    
    
    
    
    
    411
    
    
    
    6,482
    
    
    
    
    
    
    
    6,817
    
    
    
    13,710Residential lot, multi-family unit, tract and
outparcel sales, net of cost
of sales, including gain on sale of undepreciated investment properties
    
    
    
    
    
    
    4,584
    
    
    
    755
    
    
    
    
    
    
    
    5,458
    
    
    
    1,204
    
    
    
    12,001Other income
    
    
    18
    
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    473
    
    
    
    570General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,602
    )
    
    
    
    
    
    
    (21,349
    )
    
    
    (26,951
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,769
    )
    
    
    (28,769
    )Depreciation and amortization of non-real estate assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,475
    )
    
    
    (1,475
    )Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (466
    )
    
    
    
    
    
    
    (5,023
    )
    
    
    (5,489
    )Impairment loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (586
    )
    
    
    
    
    
    
    (586
    )Loss on extinguishment of debt and interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,827
    )
    
    
    (9,827
    )Funds from operations from unconsolidated joint ventures
    
    
    7,374
    
    
    
    4,823
    
    
    
    2,049
    
    
    
    
    
    
    
    327
    
    
    
    
    
    
    
    14,573Income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,806
    )
    
    
    (1,806
    )Benefit for income taxes from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,107
    
    
    
    1,107Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,680
    )
    
    
    (9,680
    )Funds from operations available to common stockholders
    
    $
    51,760
    
    
    $
    28,261
    
    
    $
    3,215
    
    
    $
    414
    
    
    $
    5,199
    
    
    $
    (66,088
    )
    
    
    22,761Real estate depreciation and amortization, including Companys
share of joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,060
    )Gain on sale of depreciated investment properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,749Net loss available to common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (18,550
    )
 19




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##### Table of Contents



Third PartyNine Months Ended September 30, 2009
    
    Office
    
    
    Retail
    
    
    Land
    
    
    Management
    
    
    Multi-Family
    
    
    Other
    
    
    TotalNet rental property revenues less rental property operating expenses
    
    $
    44,083
    
    
    $
    18,166
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,109
    
    
    $
    63,358Fee income, net of reimbursed expenses
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    8,267
    
    
    
    
    
    
    
    4,825
    
    
    
    13,489Residential, multi-family, outparcel and
other sales, net of cost of sales,
including gain on sale of undepreciated investment properties
    
    
    281
    
    
    
    1,975
    
    
    
    1,229
    
    
    
    
    
    
    
    1,856
    
    
    
    113
    
    
    
    5,454Other income
    
    
    276
    
    
    
    1,441
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,229
    
    
    
    2,946Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,498
    
    
    
    12,498General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,207
    )
    
    
    
    
    
    
    (25,433
    )
    
    
    (31,640
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,783
    )
    
    
    (31,783
    )Depreciation and amortization of non-real estate assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,739
    )
    
    
    (2,739
    )Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,701
    )
    
    
    (7,701
    )Impairment loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,500
    )
    
    
    (4,012
    )
    
    
    (40,512
    )Funds from operations from unconsolidated joint ventures
    
    
    (13,542
    )
    
    
    4,778
    
    
    
    (3,810
    )
    
    
    
    
    
    
    (118
    )
    
    
    (167
    )
    
    
    (12,859
    )Impairment loss on investment in unconsolidated joint ventures
    
    
    (17,993
    )
    
    
    
    
    
    
    (27,000
    )
    
    
    
    
    
    
    (6,065
    )
    
    
    
    
    
    
    (51,058
    )Income attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,641
    )
    
    
    (1,641
    )Provision for income taxes from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,406
    )
    
    
    (7,406
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,682
    )
    
    
    (9,682
    )Funds from operations available to common stockholders
    
    $
    13,105
    
    
    $
    26,360
    
    
    $
    (29,184
    )
    
    $
    2,060
    
    
    $
    (40,827
    )
    
    $
    (70,790
    )
    
    
    (99,276
    )Real estate depreciation and
amortization, including Companys
share of joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46,056
    )Gain on sale of depreciated investment properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,502Net income available to common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    22,170
   
    
    Rental property operations, including discontinued;
    
    Reimbursements of third-party and joint venture personnel costs;
    
    Residential, tract and outparcel sales;
    
    Multi-family sales; and
    
    Gains on sales of investment properties.
  20




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##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Reconciliation to Revenues on Condensed Consolidated Statements of Operations (in thousands):Net rental property revenues less rental property operating expenses
    
    $
    21,012
    
    
    $
    21,233
    
    
    $
    65,383
    
    
    $
    63,358Plus rental property operating expenses
    
    
    15,276
    
    
    
    16,617
    
    
    
    45,172
    
    
    
    47,260Fee income, net of reimbursed expenses
    
    
    5,168
    
    
    
    5,531
    
    
    
    13,710
    
    
    
    13,489Reimbursements of third-party and joint venture personnel included in fee income
    
    
    3,522
    
    
    
    3,979
    
    
    
    11,531
    
    
    
    12,237Residential lot, multi-family unit, tract, and outparcel sales, net of cost of sales, including
gain on sale of undepreciated investment properties
    
    
    1,527
    
    
    
    2,376
    
    
    
    12,001
    
    
    
    5,454Loss (gain) on sale of undepreciated investment properties
    
    
    1
    
    
    
    (349
    )
    
    
    (1,698
    )
    
    
    (1,304
    )Plus residential lot, multi-family unit, tract and outparcel cost of sales
    
    
    5,739
    
    
    
    8,351
    
    
    
    29,188
    
    
    
    13,289Net rental property revenues less rental property operating expenses from discontinued operations
    
    
    (33
    )
    
    
    (1,645
    )
    
    
    (3,558
    )
    
    
    (5,226
    )Other income
    
    
    256
    
    
    
    675
    
    
    
    570
    
    
    
    2,946Other income from discontinued operations
    
    
    (11
    )
    
    
    
    
    
    
    (30
    )
    
    
    (53
    )Total consolidated revenues
    
    $
    52,457
    
    
    $
    56,768
    
    
    $
    172,269
    
    
    $
    151,450
 10. PROPERTY TRANSACTIONS AND PRESENTATION
    Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Rental property revenues
    
    $
    123
    
    
    $
    2,430
    
    
    $
    4,855
    
    
    $
    7,842Other income
    
    
    11
    
    
    
    
    
    
    
    30
    
    
    
    53Rental property operating expenses
    
    
    (90
    )
    
    
    (785
    )
    
    
    (1,297
    )
    
    
    (2,616
    )Depreciation and amortization
    
    
    (19
    )
    
    
    (604
    )
    
    
    (845
    )
    
    
    (1,877
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,505
    )Gain on sale of investment properties
    
    
    6,572
    
    
    
    7
    
    
    
    6,572
    
    
    
    153Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,498$
    6,597
    
    
    $
    1,048
    
    
    $
    9,315
    
    
    $
    14,548
 21




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview:
     Highlights for the quarter ended September 30, 2010 included the following :
 
    
    Sold San Jose MarketCenter, a 213,000-square-foot power center located in San Jose,
California, for $85 million, generating a net gain of $6.6 million.
    
    Obtained a new 10-year, $27 million mortgage loan with an interest rate of 6% secured
by Meridian Mark Plaza, a 160,000-square-foot medical office building in Atlanta, and
repaid a $22 million loan scheduled to mature in September 2010 with an interest rate of
8.27%.
    
    Repaid the Companys $100 million Term Facility and eliminated the interest rate swap
associated with the term loan for a cost of approximately $9.2 million. Repayment of this
loan correspondingly increased the Companys borrowing capacity under its Credit Facility.
    
    Executed or renewed leases covering 487,000 square feet of office space and 158,000
square feet of retail space.
 22




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##### Table of Contents



Highlights subsequent to quarter-end included the following :
 
    
    Sold 8995 Westside Parkway, a 51,000-square-foot office building in Atlanta, Georgia,
for $3.2 million, generating an estimated gain of approximately $700,000.
 
    
    Received a $1.1 million payment from the Companys partner in the Oklahoma City
predevelopment project representing a partial recovery of amounts previously written off.
 Results of Operations:
 Rental Property Revenues.
 
    
    Increase of $423,000 and $3.9 million in the three and nine month 2010 periods,
respectively, related to 191 Peachtree Tower, where average economic occupancy for the
nine month periods increased from 57% in 2009 to 73% in 2010;
 
    
    Increase of $458,000 and $1.4 million in the three and nine month 2010 periods,
respectively, from The Avenue Forsyth, where average economic occupancy for the nine
month periods increased from 58% in 2009 to 69% in 2010;
 
    
    Decrease of $653,000 and $2.4 million in the three and nine month 2010 periods,
respectively, from the American Cancer Society Center (the ACS Center), where average
economic occupancy for the nine month periods decreased from 97% in 2009 to 85% in 2010.
This decrease is mainly the result of the expiration of the AT&T lease in the third
quarter of 2009;
 
    
    Decrease of $395,000 and $911,000 in the three and nine month 2010 periods from
Terminus 100 due to a decrease in revenues from retail tenants at this property, a
decrease in parking revenues and an adjustment to tenant recovery revenues as certain
operating expenses decreased or were adjusted from the prior year and the resulting savings get
passed back to the tenants; and
 
    
    Decrease of $612,000 in the nine month 2010 period related to The Avenue Carriage
Crossing due to a decrease in revenues associated with an anticipated reduction in real
estate tax expense for 2010, which decreases the recovery of amounts billed back to
tenants. The results for the three month periods did not change significantly between
years.
 Rental Property Operating Expenses.
 
    
    Decrease of $552,000 in the three month 2010 period at Terminus 100 from the receipt
of a refund of prior year real estate taxes in the 2010 period and a decrease in bad debt
expense in the 2010 period compared to 2009. Decrease of $457,000 in the nine month 2010
period, due to the real estate tax refund along with prior year operating expense
adjustments made in the 2009 period. These decreases were partially offset by an
increase in bad debt expense in the nine month 2010 period;
 
    
    Decrease of $614,000 and $766,000 in the three and nine month 2010 periods,
respectively, at The Avenue Webb Gin and The Avenue Forsyth mainly due to decreases in
bad debt expense and real estate tax expense; and
    
    Decrease of $502,000 and $1.2 million in the three and nine month 2010 periods,
respectively, from The Avenue Carriage Crossing due to a lower accrual for 2010 taxes
based on an anticipated reduction in real estate tax expense mentioned above and a
reduction in insurance and other operating expenses.
 23




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##### Table of Contents



Fee Income.
 Multi-family Residential Sales and Cost of Sales
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    200910 Terminus Place
    
    
    18
    
    
    
    5
    
    
    
    59
    
    
    
    760 North Market
    
    
    
    
    
    
    1
    
    
    
    2
    
    
    
    1The Brownstones at Habersham
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    1418
    
    
    
    20
    
    
    
    61
    
    
    
    22
  Residential Lot and Outparcel Sales and Cost of Sales.
 Residential Lot Sales and Cost of Sales
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Consolidated projects
    
    
    4
    
    
    
    1
    
    
    
    11
    
    
    
    8Temco
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    CL Realty
    
    
    74
    
    
    
    29
    
    
    
    238
    
    
    
    9579
    
    
    
    30
    
    
    
    251
    
    
    
    103
  24




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##### Table of Contents



Outparcel Sales and Cost of Sales
 Other Income.
 General and Administrative Expense, Separation Expense and Reimbursements (G&A).
 
    
    Salaries and related benefits, excluding stock-based compensation, increased $568,000
between the three month 2010 and 2009 periods. The number of employees remained
relatively flat between the periods, but bonus expense increased. Salaries and benefits
decreased $932,000 during the nine month periods due to a reduction in force that
occurred during 2009;
 
    
    Decrease of $520,000 and $288,000 in employee leasing commissions in the three and
nine month 2010 periods, respectively, compared to the same 2009 periods due to a
decrease in leasing activity in the Companys third party management segment;
 
    
    Decrease of $48,000 and $590,000 in the three and nine month 2010 periods,
respectively, in stock-based compensation expense, due in part to a decrease in the stock
price between September 30, 2009 and September 30, 2010, as several types of stock-based
compensation are expensed using the Companys common stock price. This decrease was
partially offset by an increase in the number of grants outstanding;
 
    
    Decrease of $108,000 and $364,000 in the three and nine month 2010 periods,
respectively, related to corporate airplane costs, as the Companys airplane was sold in
2009;
 
    
    Decrease in professional fee expense of $155,000 and $264,000 in the three and nine
month 2010 periods, respectively, as the Company incurred lower legal costs in the first
nine months of 2010;
 
    
    Decrease in marketing and advertising expense of $127,000 and $284,000 in the three
and nine month 2010 periods, respectively, mainly due to decreased costs at certain of
the Companys residential developments;
    
    Increase of $398,000 in capitalization of personnel costs, which decreases general and
administrative expenses, in the three month 2010 period mainly due to internal costs
related to successful leases from higher leasing activity. For the nine month periods,
capitalized personnel costs decreased $1.6 million, as the level of development and
predevelopment projects declined between the periods;
 
    
    Decrease in separation expenses of $522,000 and $2.8 million for the three and nine
month 2010 periods, respectively, mainly due to the separation costs associated with the
retirement of the Companys former chief executive officer in July 2009; and
 
    
    Decrease of $457,000 and $706,000 in reimbursed salaries and expenses, as the average
square footage of third party managed properties has decreased between the 2010 and 2009
periods.
 25




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##### Table of Contents



Depreciation and Amortization.
 
    
    Increase of $374,000 and $1.8 million in the three and nine month 2010 periods,
respectively, related to higher tenant improvement amortization from increased occupancy at
191 Peachtree Tower;
 
    
    Increase of $675,000 and $1.2 million in the three and nine month 2010 periods,
respectively, at The Avenue Forsyth due to an increase in occupancy. Additionally,
depreciation expense for the three month 2010 period increased compared to the same 2009
period due to the write off of tenant assets for tenants who terminated their leases during
2010, which were prior to the originally scheduled end date;
 
    
    Increase of $672,000 in the nine month 2010 period at The Avenue Webb Gin due to
accelerated amortization in 2010 of assets for tenants who terminated their leases prior to
the originally scheduled end date;
 
    
    Decrease of $1.4 million for the nine month 2010 period related to Terminus 100. In
2009, the amortization of certain tenant assets was accelerated due to reductions in space
or early termination of leases, with no corresponding significant adjustments in the 2010
periods;
 
    
    Decrease of $159,000 and $655,000 in the three and nine month 2010 periods,
respectively, due to the sale of the Companys airplane in 2009; and
 
    
    Decrease of $232,000 and $597,000 in the three and nine month 2010 periods,
respectively, due to reduction in depreciation of furniture, fixtures and equipment for the
corporate offices from fewer staff and less office space, as well as fully amortized
equipment.
 Interest Expense.
 
    
    Lower average borrowings and a lower average interest rate on the Credit Facility in
2010 compared to 2009;
 
    
    Repayment of the Term Facility in July 2010;
 
    
    Repayment of the 8.39% Meridian Mark Plaza note payable in July 2010. The Company
entered into a new note payable secured by Meridian Mark Plaza at an interest rate of 6%;
and
 
    
    Decrease in capitalized interest of $599,000 and $3.7 million for the three and nine
month 2010 periods, respectively, when compared to the same 2009 periods due to a decrease
in projects under development in the 2010 period, which partially offset the decrease in
interest expense.
 Impairment Loss.
 26




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##### Table of Contents



Other Expense.
 Loss on Extinguishment of Debt.
 Benefit (Provision) for Income Taxes from Operations.
 Income from Unconsolidated Joint Ventures.
 
    
    Income related to the CL Realty joint venture increased $573,000 and $24.6 million in
the three and nine month 2010 periods, respectively, compared to the same 2009 periods.
Income increased in both the three and nine month periods due to an increase in lot sales
in 2010 and increase in income recognized from the sale of mineral deposits and oil and
gas reserves on its land. The income further increased in the nine month 2010 period as
CL Realty recognized an impairment on one of its residential projects in the second
quarter of 2009, the Companys share of which was $2.6 million. In addition, the Company
impaired its investment in the joint venture by $20.3 million in the second quarter of
2009;
    
    Increase of $38.9 million in both the three and nine month 2010 periods from Terminus
200, LLC (T200). T200 was a 50-50 joint venture which, in August 2009, substantially
completed the development of a 566,000-square-foot office building in Atlanta, Georgia.
The venture recorded an impairment loss in the third quarter of 2009, the Companys share
of which was $20.9 million. The Company guaranteed the T200 construction loan up to
$17.25 million, determined that it was probable that it would be required to fund this
guarantee in accordance with ASC 450-10, and accrued its obligation under this guarantee
in the third quarter of 2009. In the second quarter of 2010, the Company paid this
guarantee, and the Company and Morgan Stanley entered into a new venture, whereby T200
conveyed the building to the new venture.
 
    
    Increase in income from Temco Associates of $536,000 and $8.1 million in the three and
nine month 2010 periods, respectively, compared to the same 2009 periods. In the third
 27




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##### Table of Contents



quarter of 2009, Temco recorded an impairment charge on one of its assets, the Companys
share of which was $631,000. An additional impairment charge of $6.7 million on the
Companys investment in Temco was recognized in the second quarter of 2009. No
impairments were recognized in 2010. In addition, Temco received letter of credit
proceeds in 2010, which also increased income from the venture between the years; and
 
    
    Increase in income of $5.0 million and $6.2 million in the three and nine month 2010
periods, respectively, compared to 2009 from the Glenmore Garden Villas (Glenmore)
joint venture. This increase is a result of two impairment charges taken on the
Companys investment in Glenmore in 2009. The second charge of $4.9 million was recorded
in the third quarter of 2009. The assets of Glenmore were sold in early 2010.
 Gain on Sale of Investment Properties.
 Discontinued Operations.
  Funds from Operations.
  28




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net Income (Loss) Available to Common Stockholders
    
    $
    (8,382
    )
    
    $
    (57,088
    )
    
    $
    (18,550
    )
    
    $
    22,170Depreciation and amortization:Consolidated properties
    
    
    13,977
    
    
    
    13,264
    
    
    
    41,610
    
    
    
    40,428Discontinued properties
    
    
    19
    
    
    
    604
    
    
    
    845
    
    
    
    1,877Share of unconsolidated joint ventures
    
    
    2,350
    
    
    
    2,192
    
    
    
    7,097
    
    
    
    6,524Depreciation of furniture, fixtures and equipment:Consolidated properties
    
    
    (441
    )
    
    
    (829
    )
    
    
    (1,470
    )
    
    
    (2,727
    )Discontinued properties
    
    
    
    
    
    
    (4
    )
    
    
    (5
    )
    
    
    (12
    )Share of unconsolidated joint ventures
    
    
    (6
    )
    
    
    (10
    )
    
    
    (17
    )
    
    
    (34
    )Gain on sale of investment properties:Consolidated
    
    
    (58
    )
    
    
    (406
    )
    
    
    (1,875
    )
    
    
    (168,641
    )Discontinued properties
    
    
    (6,572
    )
    
    
    (7
    )
    
    
    (6,572
    )
    
    
    (153
    )Share of unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )Gain on sale of undepreciated investment properties
    
    
    (1
    )
    
    
    349
    
    
    
    1,698
    
    
    
    1,304Funds From Operations Available to Common
Stockholders
    
    $
    886
    
    
    $
    (41,935
    )
    
    $
    22,761
    
    
    $
    (99,276
    )Per Common Share  Basic and Diluted:Net Income (Loss) Available
    
    $
    (0.08
    )
    
    $
    (0.96
    )
    
    $
    (0.18
    )
    
    $
    0.41Funds From Operations
    
    $
    0.01
    
    
    $
    (0.71
    )
    
    $
    0.23
    
    
    $
    (1.83
    )Weighted Average Shares  Basic and Diluted
    
    
    101,893
    
    
    
    59,403
    
    
    
    100,995
    
    
    
    54,152
 Liquidity and Capital Resources:
  
    
    Cash from operations;
 
    
    Borrowings under our Credit Facility;
 
    
    Non-recourse mortgage notes payable on selected assets;
 
    
    Proceeds from equity offerings;
 
    
    Joint venture formations; and
 
    
    Strategic sales of assets.
  
    
    Property operations and corporate expenses;
 
    
    Expenditures on predevelopment and development projects;
 
    
    Payments of tenant improvements and other leasing costs;
 
    
    Principal and interest payments on debt obligations;
 
    
    Dividends to common and preferred stockholders; and
 
    
    Property acquisitions.
 Financial Condition.
  29




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##### Table of Contents



Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 yearsContractual Obligations:Company long-term debt:Unsecured notes payable
    
    $
    69,771
    
    
    $
    171
    
    
    $
    69,600
    
    
    $
    
    
    
    $
    Mortgage notes payable
    
    
    444,592
    
    
    
    18,157
    
    
    
    252,143
    
    
    
    5,239
    
    
    
    169,053Interest commitments under notes payable (1)
    
    
    110,579
    
    
    
    30,001
    
    
    
    35,457
    
    
    
    21,915
    
    
    
    23,206Ground leases
    
    
    14,993
    
    
    
    98
    
    
    
    204
    
    
    
    214
    
    
    
    14,477Other operating leases
    
    
    1,973
    
    
    
    637
    
    
    
    923
    
    
    
    318
    
    
    
    95Total contractual obligations
    
    $
    641,908
    
    
    $
    49,064
    
    
    $
    358,327
    
    
    $
    27,686
    
    
    $
    206,831Commitments:Letters of credit
    
    $
    3,129
    
    
    $
    3,105
    
    
    $
    24
    
    
    $
    
    
    
    $
    Performance bonds
    
    
    3,386
    
    
    
    3,345
    
    
    
    41
    
    
    
    
    
    
    
    Unfunded tenant improvements and other
    
    
    19,209
    
    
    
    19,209
    
    
    
    
    
    
    
    
    
    
    
    Total commitments
    
    $
    25,724
    
    
    $
    25,659
    
    
    $
    65
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Interest on variable rate obligations is based on rates effective as of September 30,
2010, including the effect of interest rate swaps.  Credit Facility Amendment
  30




---



##### Table of Contents



Credit and TermFacilities

    
    Credit Facility

    
    Term FacilityApplicable Spread -

    
    Applicable Spread -

    
    Applicable Spread -Leverage Ratio
    
    As Amended

    
    Before Amendment

    
    Before Amendment≤ 35%
    
    
    1.75
    %
    
    
    0.75
    %
    
    
    0.70
    %>35% but ≤ 45%
    
    
    2.00
    %
    
    
    0.85
    %
    
    
    0.80
    %>45% but ≤ 50%
    
    
    2.25
    %
    
    
    0.95
    %
    
    
    0.90
    %>50% but ≤ 55%
    
    
    2.25
    %
    
    
    1.10
    %
    
    
    1.05
    %>55%
    
    
    N/A
    
    
    
    1.25
    %
    
    
    1.20
    %
     Derivative Instruments and Hedging Activities
   31




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##### Table of Contents



Floating Rate,LIBOR-basedTerm Loan
    
    
    Borrowings
    
    
    TotalBalance, December 31, 2009
    
    $
    8,662
    
    
    $
    855
    
    
    $
    9,517Termination of swap
    
    
    (9,235
    )
    
    $
    
    
    
    
    (9,235
    )Change in fair value
    
    
    573
    
    
    
    (761
    )
    
    
    (188
    )Balance, September 30, 2010
    
    $
    
    
    
    $
    94
    
    
    $
    94
 Additional Financial Condition Information
       32




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##### Table of Contents



Cash Flows.
 Cash Flows from Operating Activities
 
    
    Increase of $14.5 million in net proceeds from multi-family residential unit sales due
to an increase in condominium sales at 10 Terminus Place;
 
    
    Increase of $7.0 million in net proceeds from residential lot and outparcel sales due to
an increase in the number of outparcels sold in the 2010 period;
 
    
    Increase of $2.7 million from the collection of an income tax receivable in the 2010
period;
 
    
    Decrease in cash paid for interest of $9.2 million due to a decrease in average
borrowings and average interest rates between the 2010 and 2009 periods;
    
    Decrease of $4.5 million in residential lot, outparcel and multi-family acquisition and
development expenditures due to a decrease in development activities; and
 
    
    Offsetting these inflows was the payment of a $9.2 million fee for the interest rate
swap termination.
 Cash Flows from Investing Activities
 
    
    Proceeds from property sales increased $96.2 million from the sale of San Jose
MarketCenter and an increase in tract sales from the 2009 period;
 
    
    Property acquisition and development expenditures decreased $13.3 million, as the
Company currently does not have any significant projects under development;
 
    
    Investment in joint ventures increased between the 2010 and 2009 periods. In 2010, the
Company contributed approximately $4.0 million to the CP Venture IV entities to pay its
share of the maturing mortgage note payable and contributed approximately $2.9 million to
form the MSREF/Terminus 200 LLC venture;
 
    
    Cash flows from investing activities decreased as a result of the payment of a debt
guarantee of $17.25 million in 2010, as a result of the restructuring of the Companys
Terminus 200 LLC joint venture; and
 
    
    Restricted cash increased $12.8 million, mainly related to required reserves for tenant
improvements that will be due for a lease signed at the ACS Center. Amounts are required
to be set aside for this under the ACS Center loan.
 Cash Flows from Financing Activities
 
    
    Common stock issued, net of expenses, decreased $318.4 million due to the issuance of 46
million shares in the third quarter of 2009;
 
    
    Repayment of notes payable decreased $42.8 million in the 2010 period due to repayment
of the mortgage note at Meridian Mark Plaza for $22.0 million and the payment of the $8.7
million Glenmore Garden Villas note in conjunction with the sale of that property compared
to the 2009 repayments of the San Jose MarketCenter note for $70.3 million and the
Brownstones at Habersham note for $3.2 million;
 33




---



##### Table of Contents




    
    Net borrowings under the Credit and Term Facilities decreased $90.6 million in the
2010 period from the nine month 2009 period.  During the first nine months of 2009,
the Company repaid $248 million under these facilities with proceeds from the September
2009 stock issuance.  During 2009, the Company had net borrowings of $87 million to fund
development and to repay the San Jose MarketCenter mortgage note.  During the nine month
2010 period, the Company repaid the $100 million Term Facility mainly using the proceeds
from the sale of San Jose MarketCenter, offset by additional borrowings to pay the fee on
 the interest rate swap termination and the payment of the Terminus 200 LLC debt guarantee;
 
    
    Proceeds from other notes payable increased $27.0 million due to the issuance of a new
mortgage note at Meridian Mark Plaza;
    
    Payments of loan issuance costs increased $2.0 million in the 2010 period due to the
payment of an administrative fee of approximately $1.6 million related to the amendment of
the Companys Credit Facility and loan issuance costs related to the new Meridian Mark
Plaza note;
 
    
    Cash common dividends paid decreased $10.6 million due partially to a reduction in the
quarterly dividend per share to $0.09 for 2010 compared to $0.25 per share for the first
and second quarters of 2009 and $0.15 per share for the third quarter of 2009.
Additionally, the Company paid its dividends in cash in the first quarter of 2009, while
each quarter since then through the third quarter of 2010 has been paid in a combination of
cash and stock; and
 
    
    Distributions to noncontrolling interests decreased $4.8 million from the 2009 to the
2010 period primarily due to a distribution of $4.6 million in the 2009 period to the
partner in the Companys CP Venture Six joint venture.
 Dividends.
 Off Balance Sheet Arrangements
  34




---



##### Table of Contents



Critical Accounting Policies
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4.
    
    Controls and Procedures
   
 PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
 35




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##### Table of Contents



Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  COMMON STOCKTOTAL PURCHASES (1)
    
    
    PURCHASES INSIDE PLANTotal Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares That May YetTotal Number of
    
    
    Average Price Paid
    
    
    Part of Publicly
    
    
    Be Purchased UnderShares Purchased
    
    
    per Share
    
    
    Announced Plan (2)
    
    
    Plan (2)July 1 - 31
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    4,121,500August 1 - 31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,121,500September 1 - 30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,121,500
    
    
    $
    
    
    
    
    
    
    
    
    4,121,500
 PREFERRED STOCKTOTAL PURCHASES
    
    
    PURCHASES INSIDE PLANTotal Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares That May YetTotal Number of
    
    
    Average Price Paid
    
    
    Part of Publicly
    
    
    Be Purchased UnderShares Purchased
    
    
    per Share
    
    
    Announced Plan (3)
    
    
    Plan (3)July 1 - 31
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    6,784,090August 1 - 31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,784,090September 1 - 30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,784,090
    
    
    $
    
    
    
    
    
    
    
    
    6,784,090
 
 (1)
    
    The purchases of equity securities generally relate to shares remitted by employees as
payment for option exercises or income taxes due. There was no activity for the third quarter
of 2010.(2)
    
    On May 9, 2006, the Board of Directors of the Company authorized a stock repurchase plan of
up to 5,000,000 shares of the Companys common stock. On November 18, 2008, the expiration of
this plan was extended to May 9, 2011. The Company has purchased 878,500 common shares under
this plan, and no purchases occurred during the third quarter of 2010.(3)
    
    On November 10, 2008, the stock repurchase plan was also expanded to include authorization to
repurchase up to $20 million of preferred shares. This program was expanded on November 18,
2008, to include all 4,000,000 shares of both the Companys Series A and B Preferred stock.
The Company has purchased 1,215,910 preferred shares under this plan, and no purchases
occurred in the third quarter of 2010. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. (Removed and Reserved)
 
 Item 5. Other Information
  
 Item 6. Exhibits
 3.1
    
    Restated and Amended Articles of Incorporation of the Registrant, as amended
August 9, 1999, filed as Exhibit 3.1 to the Registrants Form 10-Q for the quarter
ended June 30, 2002, and incorporated herein by reference.
 36




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##### Table of Contents



3.1.1
    
    Articles of Amendment to Restated and Amended Articles of Incorporation of
the Registrant, as amended July 22, 2003, filed as Exhibit 4.1 to the Registrants
Current Report on Form 8-K filed on July 23, 2003, and incorporated herein by
reference.3.1.2
    
    Articles of Amendment to Restated and Amended Articles of Incorporation of
the Registrant, as amended December 15, 2004, filed as Exhibit 3(a)(i) to the
Registrants Form 10-K for the year ended December 31, 2004, and incorporated herein
by reference.3.1.3
    
    Articles of Amendment to Restated and Amended Articles of Incorporation of
the Registrant, as amended May 4, 2010, filed as Exhibit 3.1 to the Registrants
Current Report on Form 8-K filed May 10, 2010, and incorporated herein by reference.3.2
    
    Bylaws of the Registrant, as amended and restated June 6, 2009, filed as
Exhibit 3.1 to the Registrants Current Report on Form 8-K filed on June 8, 2009, and
incorporated herein by reference.10.1^
    
    Retirement and Consulting Agreement and General Release with James A.
Fleming dated August 9, 2010 filed as Exhibit 10.1 to the Registrants Form 10-Q for
the quarter ended June 30, 2010, and incorporated herein by reference.11
    
    Computation of Per Share Earnings*31.1
    
    Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Data required by ASC 260, Earnings Per Share, is provided in Note 3 to the Condensed
Consolidated financial statements included in this report.^
    
    Indicates a management contract or compensatory plan or arrangement.
    
    Filed herewith. 37




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##### Table of Contents



SIGNATURES
  COUSINS PROPERTIES INCORPORATED/s/ James A. FlemingJames A. FlemingExecutive Vice President and Chief Financial Officer (Duly
Authorized Officer and Principal Financial Officer)  38