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COUSINS PROPERTIES INC - Quarter Report: 2010 June (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-11312
COUSINS PROPERTIES INCORPORATED
(Exact name of registrant as specified in its charter)
     
GEORGIA   58-0869052
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     
191 Peachtree Street, Suite 3600, Atlanta, Georgia   30303-1740
(Address of principal executive offices)   (Zip Code)
(404) 407-1000
(Registrant’s telephone number, including area code)
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ     No o
     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o     No o
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer þ  Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o     No þ
     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
     
Class   Outstanding at August 4, 2010
Common Stock, $1 par value per share   101,767,204 shares
 
 

 


 

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 EX-10.1
 EX-31.1
 EX-31.2
 EX-32. 1
 EX-32.2

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FORWARD-LOOKING STATEMENTS
     Certain matters contained in this report are “forward-looking statements” within the meaning of the federal securities laws and are subject to uncertainties and risks, as itemized in Item 1A included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. These forward-looking statements include information about possible or assumed future results of the Company’s business and the Company’s financial condition, liquidity, results of operations, plans and objectives. They also include, among other things, statements regarding subjects that are forward-looking by their nature, such as:
  the Company’s business and financial strategy;
 
  the Company’s ability to obtain future financing arrangements;
 
  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.
     The forward-looking statements are based upon management’s beliefs, assumptions and expectations of the Company’s future performance, taking into account information currently available. These beliefs, assumptions and expectations may change as a result of many possible events or factors, not all of which are known. If a change occurs, the Company’s business, financial condition, liquidity and results of operations may vary materially from those expressed in forward-looking statements. Actual results may vary from forward-looking statements, due to, but not limited to, the following:
  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.
     The words “believes,” “expects,” “anticipates,” “estimates,” “plans,” “may,” “intend,” “will” or similar expressions are intended to identify forward-looking statements. Although the Company believes its plans, intentions and expectations reflected in any forward-looking statements are reasonable, the Company can give no assurance that such plans, intentions or expectations will be achieved. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise, except as required under U.S. federal securities laws.

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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)
                 
    June 30, 2010     December 31, 2009  
    (Unaudited)          
ASSETS
               
PROPERTIES:
               
Operating properties, net of accumulated depreciation of $251,250 and $233,091 in 2010 and 2009, respectively
  $ 911,954     $ 1,006,760  
Land held for investment or future development
    126,149       137,233  
Residential lots
    63,496       62,825  
Multi-family units held for sale
    15,050       28,504  
 
           
Total properties
    1,116,649       1,235,322  
 
               
OPERATING PROPERTY AND RELATED ASSETS HELD FOR SALE, net of accumulated depreciation of $8,201
    78,475        
 
               
CASH AND CASH EQUIVALENTS
    17,137       9,464  
RESTRICTED CASH
    4,944       3,585  
NOTES AND OTHER RECEIVABLES, net of allowance for doubtful accounts of $6,172 and $5,734 in 2010 and 2009, respectively
    45,345       49,678  
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
    158,955       146,150  
OTHER ASSETS
    47,517       47,353  
 
           
 
               
TOTAL ASSETS
  $ 1,469,022     $ 1,491,552  
 
           
LIABILITIES AND EQUITY
               
NOTES PAYABLE
  $ 580,378     $ 590,208  
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
    46,237       56,577  
DEFERRED GAIN
    4,334       4,452  
DEPOSITS AND DEFERRED INCOME
    16,702       7,465  
LIABILITIES OF OPERATING PROPERTY HELD FOR SALE
    1,984        
 
           
TOTAL LIABILITIES
    649,635       658,702  
 
               
COMMITMENTS AND CONTINGENT LIABILITIES
               
 
               
REDEEMABLE NONCONTROLLING INTERESTS
    12,686       12,591  
 
               
STOCKHOLDERS’ 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       74,827  
7.50% Series B cumulative redeemable preferred stock, $25 liquidation preference; 3,791,000 shares issued and outstanding in 2010 and 2009
    94,775       94,775  
Common stock, $1 par value, 150,000,000 shares authorized, 105,337,286 and 103,352,382 shares issued in 2010 and 2009, respectively
    105,337       103,352  
Additional paid-in capital
    673,663       662,216  
Treasury stock at cost, 3,570,082 shares in 2010 and 2009
    (86,840 )     (86,840 )
Accumulated other comprehensive loss on derivative instruments
    (9,376 )     (9,517 )
Distributions in excess of net income
    (78,487 )     (51,402 )
 
           
TOTAL STOCKHOLDERS’ INVESTMENT
    773,899       787,411  
Nonredeemable noncontrolling interests
    32,802       32,848  
 
           
TOTAL EQUITY
    806,701       820,259  
 
           
 
               
TOTAL LIABILITIES AND EQUITY
  $ 1,469,022     $ 1,491,552  
 
           
See notes to condensed consolidated financial statements.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except per share amounts)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
REVENUES:
                               
Rental property revenues
  $ 35,992     $ 34,573     $ 70,799     $ 69,554  
Fee income
    8,213       8,172       16,551       16,216  
Multi-family residential unit sales
    7,943       1,185       18,089       1,185  
Residential lot and outparcel sales
    316       3,328       14,135       5,876  
Other
    171       1,239       295       2,218  
 
                       
 
    52,635       48,497       119,869       95,049  
 
                       
COSTS AND EXPENSES:
                               
Rental property operating expenses
    15,393       14,358       30,054       30,836  
Multi-family residential unit cost of sales
    6,108       1,185       14,078       1,185  
Residential lot and outparcel cost of sales
    275       2,023       9,371       3,753  
General and administrative expenses
    8,589       9,948       18,539       19,366  
Separation expenses
    33       2,026       101       2,370  
Reimbursed general and administrative expenses
    3,591       4,030       8,009       8,258  
Depreciation and amortization
    14,372       14,804       27,693       27,290  
Interest expense
    10,286       10,281       20,067       19,485  
Impairment loss
    586       36,500       586       36,500  
Other
    3,197       4,432       4,525       5,978  
 
                       
 
    62,430       99,587       133,023       155,021  
 
                       
LOSS ON EXTINGUISHMENT OF DEBT
                (592 )      
 
                       
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES, UNCONSOLIDATED JOINT VENTURES AND SALE OF INVESTMENT PROPERTIES
    (9,795 )     (51,090 )     (13,746 )     (59,972 )
 
                               
BENEFIT (PROVISION) FOR INCOME TAXES FROM OPERATIONS
    (14 )     (11,293 )     1,132       (7,352 )
 
                               
INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES:
                               
Equity in net income (loss) from unconsolidated joint ventures
    2,394       (1,231 )     5,314       589  
Impairment loss on investment in unconsolidated joint ventures
          (28,130 )           (28,130 )
 
                       
 
    2,394       (29,361 )     5,314       (27,541 )
 
                       
 
                               
LOSS FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES
    (7,415 )     (91,744 )     (7,300 )     (94,865 )
 
                               
GAIN ON SALE OF INVESTMENT PROPERTIES
    1,061       801       1,817       168,235  
 
                       
 
                               
INCOME (LOSS) FROM CONTINUING OPERATIONS
    (6,354 )     (90,943 )     (5,483 )     73,370  
 
                               
INCOME FROM DISCONTINUED OPERATIONS:
                               
Income from discontinued operations
    1,570       911       2,879       808  
Gain on extinguishment of debt
          12,498             12,498  
Gain on sale of investment properties
          146             146  
 
                       
 
    1,570       13,555       2,879       13,452  
 
                       
 
                               
NET INCOME (LOSS)
    (4,784 )     (77,388 )     (2,604 )     86,822  
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
    (584 )     (698 )     (1,110 )     (1,110 )
 
                       
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST
    (5,368 )     (78,086 )     (3,714 )     85,712  
DIVIDENDS TO PREFERRED STOCKHOLDERS
    (3,227 )     (3,227 )     (6,454 )     (6,454 )
 
                       
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
  $ (8,595 )   $ (81,313 )   $ (10,168 )   $ 79,258  
 
                       
 
                               
PER COMMON SHARE INFORMATION — BASIC AND DILUTED:
                               
Income (loss) from continuing operations
  $ (0.10 )   $ (1.84 )   $ (0.13 )   $ 1.28  
Income from discontinued operations
    0.02       0.26       0.03       0.26  
 
                       
Net income (loss) available to common shareholders — basic and diluted
  $ (0.09 )   $ (1.58 )   $ (0.10 )   $ 1.54  
 
                       
DIVIDENDS DECLARED PER COMMON SHARE
  $ 0.09     $ 0.25     $ 0.18     $ 0.50  
 
                       
WEIGHTED AVERAGE SHARES — BASIC AND DILUTED
    101,001       51,615       100,538       51,483  
 
                       
See notes to condensed consolidated financial statements.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Six Months Ended June 30, 2010 and 2009
(Unaudited, in thousands)
                                                                         
                                    Accumulated   Cumulative            
                                    Other   Undistributed            
                                    Comprehensive   Net Income            
                    Additional           Income (Loss)   (Distributions in   Total   Nonredeemable    
    Preferred   Common   Paid-In   Treasury   on Derivative   Excess of   Stockholders’   Noncontrolling   Total
    Stock   Stock   Capital   Stock   Instruments   Net Income)   Investment   Interests   Equity
     
 
                                                                       
Balance December 31, 2009
  $ 169,602     $ 103,352     $ 662,216     $ (86,840 )   $ (9,517 )   $ (51,402 )   $ 787,411     $ 32,848     $ 820,259  
 
                                                                       
Net income (loss)
                                  (3,714 )     (3,714 )     1,140       (2,574 )
Change in fair value of derivative instruments
                            141             141             141  
     
Total comprehensive income
                            141       (3,714 )     (3,573 )     1,140       (2,433 )
Common stock issued pursuant to:
                                                                       
Stock dividend, net of issuance costs
          1,686       10,284                   (12,030 )     (60 )           (60 )
Grants under director stock plan
          35       215                         250             250  
Restricted stock and director option grants
          264       (124 )                       140             140  
Amortization of stock options and restricted stock, net of forfeitures
                1,072                         1,072             1,072  
Distributions to noncontrolling interests
                                              (1,186 )     (1,186 )
Change in fair value of redeemable noncontrolling interests
                                  1,144       1,144             1,144  
Cash preferred dividends paid
                                  (6,454 )     (6,454 )           (6,454 )
Cash common dividends paid
                                  (6,031 )     (6,031 )           (6,031 )
     
Balance June 30, 2010
  $ 169,602     $ 105,337     $ 673,663     $ (86,840 )   $ (9,376 )   $ (78,487 )   $ 773,899     $ 32,802     $ 806,701  
     
 
                                                                       
Balance December 31, 2008
  $ 169,602     $ 54,922     $ 368,829     $ (86,840 )   $ (16,601 )   $ (23,189 )   $ 466,723     $ 37,539     $ 504,262  
 
                                                                       
Net income
                                  85,712       85,712       1,229       86,941  
Change in fair value of derivative instruments
                            3,512             3,512             3,512  
     
Total comprehensive income
                            3,512       85,712       89,224       1,229       90,453  
Common stock issued pursuant to:
                                                                       
Stock dividend, net of issuance costs
          927       7,551                   (8,551 )     (73 )           (73 )
Grants under director stock plan
          24       97                         121             121  
Amortization of stock options and restricted stock, net of forfeitures
          (10 )     2,912                         2,902             2,902  
Distributions to noncontrolling interests
                                              (5,905 )     (5,905 )
Change in fair value of redeemable noncontrolling interests
                                  (180 )     (180 )           (180 )
Cash preferred dividends paid
                                  (6,454 )     (6,454 )           (6,454 )
Cash common dividends paid
                                  (17,121 )     (17,121 )           (17,121 )
     
Balance June 30, 2009
  $ 169,602     $ 54,936     $ 371,838     $ (86,840 )   $ (13,089 )   $ 38,768     $ 535,215     $ 32,863     $ 568,078  
     
See notes to condensed consolidated financial statements.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)
                 
    Six Months Ended June 30,  
    2010     2009  
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net income (loss)
  $ (2,604 )   $ 86,822  
Adjustments to reconcile net income to net cash flows provided by operating activities:
               
Gain on sale of investment properties
    (1,817 )     (168,381 )
Loss (gain) on extinguishment of debt
    592       (12,498 )
Impairment loss
    586       36,500  
Impairment loss on investment in unconsolidated joint ventures
          28,130  
Losses on abandoned predevelopment projects
    1,949       4,072  
Depreciation and amortization
    28,459       28,437  
Amortization of deferred financing costs
    911       776  
Stock-based compensation
    1,462       3,023  
Change in deferred income taxes, net of valuation allowance
          8,897  
Effect of recognizing rental revenues on a straight-line or market basis
    (2,225 )     (2,203 )
Income from unconsolidated joint ventures
    (5,314 )     (589 )
Operating distributions from unconsolidated joint ventures
    4,838       3,938  
Residential lot, outparcel and multi-family cost of sales, net of closing costs paid
    21,581       4,809  
Residential lot, outparcel and multi-family acquisition and development expenditures
    (894 )     (3,005 )
Changes in other operating assets and liabilities:
               
Change in other receivables and other assets, net
    (1,647 )     (2,032 )
Change in accounts payable and accrued liabilities
    3,297       (1,180 )
 
           
Net cash provided by operating activities
    49,174       15,516  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Proceeds from investment property sales
    14,788       2,220  
Property acquisition, development and other capital expenditures
    (12,185 )     (28,643 )
Investment in unconsolidated joint ventures
    (3,624 )     (3,007 )
Distributions from unconsolidated joint ventures
    3,685       2,500  
Payment of debt guarantee for unconsolidated joint venture
    (17,250 )      
Investment in notes receivable, net of collections
    88       (640 )
Change in other assets
    (1,629 )     (2,012 )
Change in restricted cash
    (1,359 )     (644 )
 
           
Net cash used in investing activities
    (17,486 )     (30,226 )
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from credit facility
          158,200  
Repayment of credit facility
          (71,200 )
Payment of loan issuance costs
    (1,723 )      
Repayment of notes payable
    (9,830 )     (71,561 )
Common stock issuance costs
    (60 )     (73 )
Cash common dividends paid
    (6,031 )     (17,121 )
Cash preferred dividends paid
    (6,454 )     (6,454 )
Contributions from noncontrolling interests
    1,269       6  
Distributions to noncontrolling interests
    (1,186 )     (5,929 )
 
           
Net cash used in financing activities
    (24,015 )     (14,132 )
 
           
 
               
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    7,673       (28,842 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    9,464       82,963  
 
           
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 17,137     $ 54,121  
 
           
See notes to condensed consolidated financial statements.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2010
(UNAUDITED)
1. BASIS OF PRESENTATION AND NEW ACCOUNTING PRONOUNCEMENTS
Basis of Presentation
     The condensed consolidated financial statements included herein include the accounts of Cousins Properties Incorporated (“Cousins”) and its consolidated subsidiaries, including Cousins Real Estate Corporation and its subsidiaries (“CREC”). All of the entities included in the condensed consolidated financial statements are hereinafter referred to collectively as the “Company.”
     Cousins has elected to be taxed as a real estate investment trust (“REIT”) and intends to, among other things, distribute 100% of its federal taxable income to stockholders, thereby eliminating any liability for federal income taxes under current law. Therefore, the results included herein do not include a federal income tax provision for Cousins. CREC operates as a taxable REIT subsidiary and is taxed separately from Cousins as a C-Corporation. Accordingly, the condensed consolidated statements of income include a provision for, or benefit from, CREC’s income taxes.
     The condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, these financial statements reflect all adjustments necessary (which adjustments are of a normal and recurring nature) for the fair presentation of the Company’s financial position as of June 30, 2010 and results of operations for the three and six months ended June 30, 2010 and 2009. Results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of results expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. The accounting policies employed are materially the same as those shown in Note 2 to the consolidated financial statements included in such Form 10-K, with the addition of the following new accounting pronouncement.
New Accounting Pronouncement
     The Company follows the guidelines in Accounting Standards Codification (“ASC”) 810, (as amended by Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation No. 46(R)), for determining the appropriate consolidation treatment of non-wholly owned entities. The Company adopted new guidelines effective January 1, 2010, which modify how a company determines that an entity is a variable interest entity (“VIE”) and when that entity is consolidated. Variable interest holders who have the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and have the obligation to absorb the majority of losses of the entity or the right to receive significant benefits of the entity are considered to be the primary beneficiary. The primary beneficiary of a VIE must consolidate the VIE. When the Company is the primary beneficiary of a VIE, the new guidance also requires ongoing reassessments of this conclusion, not just upon the occurrence of certain events. Additional disclosures about the Company’s involvement in VIEs, including any significant changes in risk exposure due to that involvement, are required under the new guidelines. The impact of the adoption of these new guidelines did not result in any entities which were previously determined not to be VIEs to be VIEs

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and had no effect on the Company’s financial condition, results of operations or cash flows. Additional disclosures as required upon adoption of the new guidelines regarding the Company’s VIEs are as follows:
     Cousins/Callaway, LLC (“Cousins/Callaway”), a 50-50 joint venture between the Company and Callaway Gardens Resort, Inc. (“Callaway”), develops residential lots within The Callaway Gardens Resort outside of Atlanta, Georgia. The project is anticipated to be funded fully through Company contributions, and Callaway has no obligation to fund any costs. Although the Company is contributing all of the equity to the venture, Callaway has the right to receive returns from the project, but absorbs no losses. The Company has determined that Cousins/Callaway is a VIE. The Company is the sole decision maker for the venture and is also the development manager. Since the Company has the power to direct the activities that could be significant to the VIE, the Company is the primary beneficiary and consolidates the venture. At June 30, 2010 and December 31, 2009, the assets of Cousins/Callaway equaled approximately $16.2 million and $16.3 million, respectively, and there were no significant liabilities.
     Handy Road Associates, LLC (“Handy Road”) is a 50-50 joint venture which owns 1,187 acres of land in suburban Atlanta, Georgia, intended for future development and/or sale. In 2009, the Company’s partner in Handy Road indicated it will not make further capital contributions to the venture. In addition, the Company determined the partner would not receive any of the economic benefits of the entity. Therefore, Handy Road has been determined to be a VIE, with the Company as the primary beneficiary. As a result of this determination, the Company consolidates the entity. The creditors of Handy Road have recourse only against the assets of Handy Road and do not have recourse against the Company. As of June 30, 2010 and December 31, 2009, Handy Road had approximately $5.6 million in assets and $3.4 million in notes payable.
2. NOTES PAYABLE, INTEREST EXPENSE AND COMMITMENTS AND CONTINGENCIES
     The following table summarizes the terms and amounts of the notes payable outstanding at June 30, 2010 and December 31, 2009 (in thousands):
                             
        Term/                
        Amortization       Outstanding at  
Description   Interest Rate   Period (Years)   Maturity   June 30, 2010     December 31, 2009  
Credit Facility, unsecured (see note)
  LIBOR + 1.75% to 2.25%   4/N/A   8/29/11   $ 40,000     $ 40,000  
Term Facility, unsecured (see note)
  Swapped rate of 5.01%
+ 1.75% to 2.25%
  5/N/A   8/29/12     100,000       100,000  
Terminus 100 mortgage note (interest only)
  6.13%   5/N/A   10/1/12     180,000       180,000  
The American Cancer Society Center mortgage note (interest only until October 1, 2011)
  6.4515%   5/30   9/1/17     136,000       136,000  
333/555 North Point Center East mortgage note
  7.00%   10/25   11/1/11     26,857       27,287  
100/200 North Point Center East mortgage note (interest only until July 1, 2010)
  5.39%   5/30   6/1/12     25,000       25,000  
Meridian Mark Plaza mortgage note (see note)
  8.27%   10/28   9/1/10     22,025       22,279  
Lakeshore Park Plaza mortgage note
  5.89%   4/25   8/1/12     17,726       17,903  
The Points at Waterview mortgage note
  5.66%   10/25   1/1/16     16,811       17,024  
600 University Park Place mortgage note
  7.38%   10/30   8/10/11     12,416       12,536  
Handy Road Associates, LLC (see note)
  Prime + 1%, but not < 6%   5/N/A   3/30/11     3,374       3,340  
Glenmore Garden Villas, LLC (see note)
  LIBOR + 2.25%   3/N/A   10/3/10           8,674  
Other miscellaneous notes
  Various   Various   Various     169       165  
 
                       
 
              $ 580,378     $ 590,208  
 
                       
     In the first quarter of 2010, the Company sold its interest in Glenmore Garden Villas, LLC (“Glenmore”), a townhome development in Charlotte, North Carolina. In connection with this sale, Glenmore repaid the $8.7 million outstanding construction loan on the project. Also in the first quarter of 2010, the Handy Road note payable was extended for one year, to March 30, 2011, at an interest rate of Prime plus 1%, with a minimum interest rate of 6%. In July 2010, the Company paid

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the Meridian Mark Plaza mortgage note in full and entered into a new mortgage note payable secured by Meridian Mark Plaza. This note has a maturity of August 1, 2020, a principal amount of $27.0 million and an interest rate of 6%.
     Credit Facility Amendment
     In February 2010, the Company entered into a First Amendment (the “Amendment”) of its Credit and Term Facilities with Bank of America and the other participating banks. The Amendment reduced the amount available under the Credit Facility from $500 million to $250 million. The amount available under the Term Facility remained at $100 million. The Amendment provided that if the Term Facility was repaid prior to the maturity of the Credit Facility, the availability under the Credit Facility would increase correspondingly, allowing a total availability under the combined Facilities of $350 million. The maturity dates for both Facilities remain the same under the Amendment.
     Amounts outstanding under the Credit and Term Facilities accrue interest at LIBOR plus a spread. The Amendment changed the spread for the Credit and Term Facilities, as detailed below:
                         
    Credit and Term Facilities   Credit Facility   Term Facility Applicable
    Applicable Spread — As   Applicable Spread —   Spread — Before
Leverage 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 %
     At June 30, 2010, based on the Company’s leverage ratio, the spread over LIBOR on the Credit and Term Facilities was 2.0%. Certain covenants changed under the Amendment, specifically, the minimum Consolidated Fixed Charge Coverage Ratio, as defined, decreased from 1.50 to 1.30. The Company incurred an administrative fee of approximately $1.6 million related to the Amendment, and expensed unamortized deferred loan costs related to the previous facility of $592,000.
     In July 2010, the Company paid the outstanding balance of the Term Facility in full, and accordingly, the amount available under the Credit Facility increased to $350 million. In conjunction with the payoff of the Term Facility, the Company terminated the interest rate swap hedging this variable rate facility, and the Company paid the counterparty to the swap agreement $9.2 million which will be recognized as an expense in the third quarter of 2010.
     Derivative Instruments and Hedging Activities
     The Company follows the requirements of ASC 815 for derivative instruments. Entities that use derivative instruments are required to provide qualitative disclosures about their objectives and strategies for using such instruments, as well as any details of credit-risk-related contingent features contained within derivatives. Entities are also required to disclose certain information about the amounts and location of derivatives located within the financial statements, how the provisions of derivative accounting rules have been applied, and the impact that hedges have on an entity’s financial position, financial performance and cash flows.
     The Company utilizes interest rate swap agreements to manage its exposure to interest rate changes under variable-rate obligations. The Company had an interest rate swap agreement with a notional amount of $100 million in order to manage its interest rate risk under the Term Facility. The Company designated this swap as a cash flow hedge, and this swap effectively fixed the underlying

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LIBOR rate of the Term Facility at 5.01%. This swap was terminated in July 2010 as discussed above. The Company also has an interest swap with a notional amount of $40 million in order to manage interest rate risk associated with floating-rate, LIBOR-based borrowings. This swap was also designated as a cash flow hedge and effectively fixes a portion of the underlying LIBOR rate on Company borrowings at 2.995% through October 2010. During both the six month periods ended June 30, 2010 and 2009, there was no ineffectiveness under any of the Company’s interest rate swaps. The Company calculates the fair value of its interest rate swaps as of the end of each reporting period. The fair value calculation for the swaps is deemed to be a Level 2 calculation under the guidelines as set forth in ASC 820. The fair values of the interest rate swap agreements were recorded in accounts payable and accrued liabilities and other comprehensive loss on the Condensed Consolidated Balance Sheets, detailed as follows (in thousands):
                         
            Floating Rate,    
            LIBOR-based    
    Term Loan   Borrowings   Total
     
 
                       
Balance, December 31, 2009
  $ 8,662     $ 855     $ 9,517  
Change in fair value
    358       (499 )     (141 )
     
Balance, June 30, 2010
  $ 9,020     $ 356     $ 9,376  
     
     Other Debt Information
     The real estate and other assets of The American Cancer Society Center (the “ACS Center”) are restricted under the ACS Center loan agreement in that they are not available to settle debts of the Company. However, provided that the ACS Center loan has not incurred any uncured event of default, as defined in the loan agreement, the cash flows from the ACS Center, after payments of debt service, operating expenses and reserves, are available for distribution to the Company.
     For the three and six months ended June 30, 2010 and 2009, interest expense was as follows (in thousands):
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2010     2009     2010     2009  
Total interest expensed
  $ 10,286     $ 11,815     $ 20,067     $ 24,071  
Interest expensed-discontinued operations
          (279 )           (1,505 )
Interest capitalized
          (1,255 )           (3,081 )
 
                       
Total interest incurred
  $ 10,286     $ 10,281     $ 20,067     $ 19,485  
 
                       
     At June 30, 2010, the Company had outstanding letters of credit and performance bonds of $6.6 million. As a lessor, the Company has $13.3 million of obligations as of June 30, 2010, mainly to fund tenant improvement allowances as stated in lease agreements. As a lessee, the Company has future obligations under ground and office leases of approximately $17.1 million at June 30, 2010.
     Fair Value
     At June 30, 2010 and December 31, 2009, the estimated fair value of the Company’s notes payable was approximately $596.0 million and $586.2 million, respectively, calculated by discounting future cash flows at estimated rates at which similar loans would have been obtained at those dates. This fair value calculation is considered to be a Level 2 calculation under the guidelines as set forth in ASC 820, as the Company utilizes market rates for similar type loans from third party brokers.
3. EARNINGS PER SHARE
     Net income per share-basic is calculated as net income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Net income per share-diluted is calculated as net income available to common stockholders divided by the diluted

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weighted average number of common shares outstanding during the period, including nonvested restricted stock which has nonforfeitable dividends. Diluted weighted average number of common shares is calculated to reflect the potential dilution under the treasury stock method that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding. As of June 30, 2010 and 2009, none of the Company’s outstanding stock options were dilutive. The numerator used in the Company’s per share calculations is reduced for the effect of preferred dividends and is the same for both basic and diluted net income per share.
     In 2009, the Company paid certain common dividends using a combination of cash and stock. During 2009, the Company reflected the issuance of stock related to these dividends on a retroactive basis. Beginning with the fourth quarter 2009, upon issuance of new accounting guidance, the Company began calculating the effect of the dividends on a prospective basis. Amounts presented below reflect prospective treatment, but review of prior year reports may show a different per share number.
     Weighted average shares-basic and weighted average shares-diluted are as follows (in thousands — there are no dilutive potential common shares in any periods presented):
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
 
                               
Weighted average shares — basic and diluted
    101,001       51,615       100,538       51,483  
Weighted average anti-dilutive options not included
    7,174       6,295       7,185       6,287  
4. STOCK-BASED COMPENSATION
     The Company has several types of stock-based compensation — stock options, restricted stock, restricted stock units and compensation plans based on stock price growth — which are described in Note 7 of “Notes to Consolidated Financial Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. The Company recorded compensation expense of approximately $776,000 and $821,000 for the three months ended June 30, 2010 and 2009, respectively, and $1.8 million and $1.7 million for the six months ended June 30, 2010 and 2009, respectively, for stock-based compensation, after the effect of capitalization and income tax benefit, and before adjustment for any valuation allowance.
     On February 15, 2010, the Company granted 301,993 options and 264,401 shares of stock to key employees. The stock grants cliff vest three years from the date of grant, receive dividends and have voting rights during the vesting period. Previous stock grants vested ratably over four years. Compensation expense will be recorded ratably over the new vesting period. Also in February 2010, the Company granted 2,416 options and 1,074 Restricted Stock Units (“RSUs”) to one of its directors. On June 1, 2010, the Company made annual grants to its directors, which included 48,000 options, vesting immediately, and 20,368 RSUs, which cliff vest in three years.
     RSUs are accounted for as liability awards under ASC 718, and employees are paid cash upon vesting based upon the value of the Company’s stock. On February 15, 2010, the Company awarded two new types of performance-based RSUs to key employees, based on two performance metrics: (1) Total Stockholder Return (“TSR”) of the Company, as defined, as compared to the MSCI US REIT index, and (2) Ratio of total debt, as defined, to the trailing 12-month earnings before interest, taxes, depreciation and amortization, as defined (“EBITDA”). The performance period is January 1, 2010 to December 31, 2012, and the targeted number of TSR RSUs and EBITDA RSUs awarded is 91,815 and 132,207, respectively. The ultimate payout of these awards can range from 0% to 200% of the targeted number of units depending on the achievement of the performance metrics described above. Both of these types of RSUs cliff vest on February 15, 2013 and are dependent upon the attainment of

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required service and performance criteria. The number of each type of RSU to be issued will be determined at that date, and the payout per unit will be equal to the 30-day average closing price of the Company’s stock ending on December 31, 2012. The Company is expensing an estimate of the fair value of the TSR RSUs over the vesting period using a quarterly Monte Carlo valuation. The EBITDA RSUs are also expensed over the vesting period using the fair market value of the Company’s stock at the reporting period multiplied by the anticipated number of units to be paid based on the current estimate of the expected ratio upon vesting. Dividend equivalents on the RSUs will also be paid based upon the percentage vested. The dividend equivalent payments will equal the total dividends that would have been paid during the performance period, and as if the dividends had been reinvested in Company stock.
5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
     The Company describes its investments in unconsolidated joint ventures in Note 5 of “Notes to Consolidated Financial Statements” in its Annual Report on Form 10-K for the year ended December 31, 2009. The following table summarizes balance sheet data of the Company’s unconsolidated joint ventures as of June 30, 2010 and December 31, 2009 (in thousands):
                                                                 
                                                    Company’s  
    Total Assets     Total Debt     Total Equity     Investment  
    2010     2009     2010     2009     2010     2009     2010     2009  
SUMMARY OF FINANCIAL POSITION:
                                                               
CP Venture IV LLC entities
  $ 318,588     $ 324,402     $ 34,727     $ 35,451     $ 271,135     $ 277,063     $ 15,531     $ 15,933  
Charlotte Gateway Village, LLC
    157,646       160,266       103,670       110,101       51,414       48,214       10,384       10,401  
CF Murfreesboro Associates
    131,226       139,782       105,059       113,476       24,232       23,231       14,328       13,817  
Palisades West LLC
    123,107       125,537                   74,732       74,237       39,272       39,104  
CL Realty, L.L.C.
    109,092       114,598       3,057       3,568       104,633       109,184       48,064       49,825  
CPV and CPV Two
    105,336       101,209                   103,431       99,133       3,716       3,270  
Terminus 200 LLC
          27,537             76,762             (47,921 )            
MSREF/Terminus 200 LLC
    55,093             39,483             13,140             2,628        
Temco Associates, LLC
    60,498       60,752       2,996       3,061       56,948       57,484       22,449       22,716  
Crawford Long — CPI, LLC
    35,320       35,277       49,213       49,710       (15,447 )     (15,280 )     (6,482 )     (6,396 )
Ten Peachtree Place Associates
    22,218       22,971       27,065       27,341       (5,561 )     (4,846 )     (4,240 )     (3,887 )
Wildwood Associates
    21,236       21,263                   21,164       21,205       (1,668 )     (1,647 )
TRG Columbus Dev Venture, Ltd.
    5,368       6,802                   2,724       2,464       146       383  
Pine Mountain Builders, LLC
    8,561       6,807       1,733       1,834       2,931       3,119       2,437       2,631  
 
                                               
 
  $ 1,153,289     $ 1,147,203     $ 367,003     $ 421,304     $ 705,476     $ 647,287     $ 146,565     $ 146,150  
 
                                               
     Negative investment balances are included in the Deposits and Deferred Income line item on the accompanying June 30, 2010 Condensed Consolidated Balance Sheet.
     The following table summarizes income statement data of the Company’s unconsolidated joint ventures for the six months ended June 30, 2010 and 2009 (in thousands):
                                                 
                                    Company’s Share of  
    Total Revenues     Net Income (Loss)     Net Income (Loss)  
    2010     2009     2010     2009     2010     2009  
SUMMARY OF OPERATIONS:
                                               
CP Venture IV LLC entities
  $ 15,579     $ 15,448     $ 1,826     $ 1,699     $ 491     $ 588  
Charlotte Gateway Village, LLC
    15,933       15,656       3,808       3,390       588       588  
CF Murfreesboro Associates
    7,182       6,431       1,001       557       401       179  
Palisades West LLC
    6,730       6,238       2,282       2,714       1,107       1,330  
CL Realty, L.L.C.
    4,212       1,757       1,219       (4,974 )     1,125       (2,573 )
CP and CPV Two
    9,254       9,242       4,301       5,016       445       515  
Terminus 200 LLC
    533       144       55       (45 )           (22 )
MSREF/Terminus 200 LLC
    245             (480 )           (96 )      
Temco Associates, LLC
    1,877       1,198       813       (943 )     406       (472 )
Crawford Long — CPI, LLC
    5,688       5,621       834       934       416       466  
Ten Peachtree Place Associates
    3,847       3,646       481       307       248       161  
Wildwood Associates
                (41 )     (65 )     (20 )     (32 )
TRG Columbus Dev. Venture, Ltd.
    1,071       29       392       23       162       1  
Pine Mountain Builders, LLC
    1,185       1,130       91       85       46       27  
Other
                      (226 )     (5 )     (167 )
 
                                   
 
  $ 73,336     $ 66,540     $ 16,582     $ 8,472     $ 5,314     $ 589  
 
                                   
     Terminus 200 LLC (“T200”) developed and operated an office building in the Terminus project in Atlanta, Georgia. The partners of T200 guaranteed the construction loan up to an amount of

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$17.25 million each, plus any unpaid interest. During 2009, the Company accrued this guarantee amount and recorded impairment charges equal to its full investment in T200. In the second quarter of 2010, the Company paid this guarantee. Concurrently, the Company entered into a transaction where the partner in T200 withdrew, and the Company and Morgan Stanley formed a new venture, MSREF/Terminus 200 LLC. The Company and Morgan Stanley contributed equity to the MSREF/Terminus 200 LLC venture, T200 conveyed the building to MSREF/Terminus 200 LLC and the new venture assumed the construction loan. Also in connection with this transaction, the term of the loan was extended to December 31, 2013, the interest rate was adjusted to LIBOR + 2.5%, and the availability under the loan was reduced to $92 million. The Company’s ownership interest in MSREF/Terminus 200 LLC is 20%.
     In June 2010, the CF Murfreesboro Associates construction loan was modified. The maturity date was extended to July 20, 2013, the interest rate was adjusted to LIBOR + 3.0% and the capacity under the loan decreased to $113.2 million. The venture made principal payments of approximately $8.2 million and paid $1 million in fees as a part of this modification.
6. OTHER ASSETS
     Other Assets on the Condensed Consolidated Balance Sheets included the following (in thousands):
                 
    June 30, 2010     December 31, 2009  
Investment in Verde
  $ 9,376     $ 9,376  
FF&E and leasehold improvements, net of accumulated depreciation of $15,229 and $14,195 in 2010 and 2009, respectively
    5,018       5,306  
Predevelopment costs and earnest money
    6,517       7,673  
Lease inducements, net of accumulated amortization of $2,420 and $1,860 in 2010 and 2009, respectively
    12,327       12,545  
Loan closing costs, net of accumulated amortization of $2,723 and $4,177 in 2010 and 2009, respectively
    3,593       3,385  
Prepaid expenses and other assets
    4,324       2,631  
Intangible Assets:
               
Goodwill
    5,450       5,450  
Above market leases, net of accumulated amortization of $8,723 and $8,704 in 2010 and 2009, respectively
    545       564  
In-place leases, net of accumulated amortization of $2,446 and $2,391 in 2010 and 2009, respectively
    367       423  
 
           
 
  $ 47,517     $ 47,353  
 
           
     Investment in Verde relates to a cost method investment in a non-public real estate owner and developer. Goodwill relates entirely to the Office reportable segment. Above and below market leases are amortized into rental revenues over the remaining lease terms. In-place leases are amortized into depreciation and amortization expense also over remaining lease terms.
7. CONSOLIDATED STATEMENTS OF CASH FLOWS — SUPPLEMENTAL INFORMATION
     The following table summarizes supplemental information related to the Consolidated Statements of Cash Flows (in thousands):

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    Six Months Ended June 30,
    2010   2009
Interest paid, net of amounts capitalized
  $ 18,971     $ 21,986  
Income taxes paid (refunded)
    121       (498 )
 
               
Non-Cash Transactions
               
Transfer of assets to held for sale
  $ 78,475     $  
Issuance of common stock for payment of common dividends
    12,030       8,551  
Land received on note receivable default
    5,030        
Change in accruals excluded from property development and acquisition expenditures
    4,051       3,700  
Transfer 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
    141       3,512  
Change in fair value of redeemable noncontrolling interests
    (1,144 )     180  
Transfer from note payable to redeemable noncontrolling interests
          7,410  
Transfer from accrued interest payable to redeemable noncontrolling interests
          1,357  
Transfer from investment in joint ventures to land held for investment or future development
          5,342  
Transfer from projects under development to operating properties
          114,509  
Transfer from projects under development to land held for investment or future development
          5,159  
Transfer from other assets to land held for investment or future development
          2,327  
Issuance of note payable for purchase of townhomes
          3,150  
8. NONCONTROLLING INTERESTS
     Under the guidance in ASC 810, the Company consolidates various ventures that it controls. These ventures are involved in the ownership and/or development of real estate. The noncontrolling interest’s share of income or loss is presented separately below net income on the Condensed Consolidated Statements of Income. The Company has several consolidated ventures with agreements that contain provisions requiring the Company to purchase the noncontrolling interest at the then fair value upon demand on or after a future date. The estimate of the obligation to the noncontrolling partner is recognized as Redeemable Noncontrolling Interests and is presented between liabilities and equity on the Condensed Consolidated Balance Sheets. The redemption values related to these redeemable interests are adjusted to the higher of fair value or cost basis in a separate line item within Equity. The Company recognizes changes in the redemption value in the period in which they occur. Nonredeemable noncontrolling interests are recorded in a separate line item within Equity.
     The following table details the activity within Redeemable Noncontrolling Interests for the six months ended June 30, 2010 and 2009 (in thousands):
                 
    Six Months Ended June 30,  
    2010     2009  
Beginning Balance
  $ 12,591     $ 3,945  
Net loss attributable to redeemable noncontrolling interests
    (30 )     (119 )
Contributions from (distributions to) noncontrolling interests
    1,269       (18 )
Conversion of note payable and accrued interest to noncontrolling interest
          8,767  
Change in fair value of noncontrolling interests
    (1,144 )     180  
 
           
Ending Balance
  $ 12,686     $ 12,755  
 
           
      For the six months ended June 30, 2010 and 2009, net income (loss) on the Condensed Consolidated Statements of Equity is reconciled to the Condensed Consolidated Income Statements as follows (in thousands):

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    Six Months Ended June 30,  
    2010     2009  
 
               
Net income (loss) attributable to controlling interest
  $ (3,714 )   $ 85,712  
Net income attributable to nonredeemable noncontrolling interests
    1,140       1,229  
Net loss attributable to redeemable noncontrolling interests
    (30 )     (119 )
 
           
Net income (loss)
  $ (2,604 )   $ 86,822  
 
           
9. REPORTABLE SEGMENTS
     The Company follows the rules as outlined in ASC 280 for segment reporting. The Company has five reportable segments: Office, Retail, Land, Third-Party Management and Multi-Family. These reportable segments represent an aggregation of operating segments reported to the Chief Operating Decision Maker based on similar economic characteristics that include the type of product and nature of service. Each segment includes both consolidated operations and joint ventures. The Office segment includes results of operations for office properties. The Retail segment includes results of operations for retail centers. The Land segment includes results of operations for various tracts of land that are held for investment or future development, and single-family residential communities that are parceled into lots and sold to various homebuilders or sold as undeveloped tracts of land. The Third-Party Management segment includes fee income where the Company manages, leases and/or develops properties for other owners. The Multi-Family segment includes results of operations for the development and sale of multi-family real estate. The Other segment includes:
    fee income, salary reimbursements and expenses for joint venture properties 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.
     Company management evaluates the performance of its reportable segments in part based on funds from operations available to common stockholders (“FFO”). FFO is a supplemental operating performance measure used in the real estate industry. The Company calculated FFO using the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition of FFO, which is net income (loss) available to common stockholders (computed in accordance with GAAP), excluding extraordinary items, cumulative effect of change in accounting principle and gains or losses from sales of depreciable property plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
     FFO is used by industry analysts, investors and the Company as a supplemental measure of an equity REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure

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of a REIT’s operating performance that excludes historical cost depreciation, among other items, from GAAP net income. Management believes that the use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates operating performance in part based on FFO. Additionally, the Company uses FFO and FFO per share, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and other key employees.
     Segment net income, investment in joint ventures and capital expenditures are not presented in the following tables. Management does not utilize these measures when analyzing its segments or when making resource allocation decisions, and therefore this information is not provided. FFO is reconciled to net income (loss) on a total Company basis. Dollars are stated in thousands.
                                                         
                            Third Party                    
Three Months Ended June 30, 2010   Office     Retail     Land     Management     Multi-Family     Other     Total  
 
                                                       
Net rental property revenues less rental property operating expenses
  $ 14,992     $ 6,735     $     $     $     $ 615     $ 22,342  
Fee income, net of reimbursed expenses
                126       1,971             2,525       4,622  
Residential lot, multi-family unit, tract and outparcel sales, net of cost of sales, including gain on sale of undepreciated investment properties
          (8 )     175             1,835       876       2,878  
Other income
          33                         157       190  
General and administrative expenses
                      (1,795 )           (6,827 )     (8,622 )
Interest expense
                                  (10,286 )     (10,286 )
Depreciation and amortization of non-real estate assets
                                  (463 )     (463 )
Other expenses
                                  (3,197 )     (3,197 )
Impairment loss
                            (586 )           (586 )
Funds from operations from unconsolidated joint ventures
    2,426       1,644       727             45             4,842  
Income attributable to noncontrolling interests
                                  (584 )     (584 )
Provision for income taxes from operations
                                  (14 )     (14 )
Preferred stock dividends
                                  (3,227 )     (3,227 )
     
 
                                                       
Funds from operations available to common stockholders
  $ 17,418     $ 8,404     $ 1,028     $ 176     $ 1,294     $ (20,425 )     7,895  
             
 
                                                       
Real estate depreciation and amortization, including Company’s share of joint ventures
                                                    (16,549 )
Gain on sale of depreciated investment properties
                                                    59  
 
                                                     
 
                                                       
Net loss available to common stockholders
                                                  $ (8,595 )
 
                                                     

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                            Third Party                    
Three Months Ended June 30, 2009   Office     Retail     Land     Management     Multi-Family     Other     Total  
 
                                                       
Net rental property revenues less rental property operating expenses
  $ 15,233     $ 6,334     $     $     $     $ 369     $ 21,936  
Fee income, net of reimbursed expenses
                285       2,265             1,592       4,142  
Residential lot, multi-family unit, tract and outparcel sales, net of cost of sales, including gain on sale of undepreciated investment properties
          1,126       925                         2,051  
Other income
    188       909                         188       1,285  
General and administrative expenses
                      (1,835 )           (10,139 )     (11,974 )
Interest expense
                                  (10,560 )     (10,560 )
Depreciation and amortization of non-real estate assets
                                  (938 )     (938 )
Other expenses
                                  (4,432 )     (4,432 )
Impairment loss
                            (36,500 )           (36,500 )
Gain on extinguishment of debt
                                  12,498       12,498  
Funds from operations from unconsolidated joint ventures
    2,508       1,598       (3,064 )           (82 )     (15 )     945  
Impairment loss on investment in unconsolidated joint ventures
                (27,000 )           (1,130 )           (28,130 )
Income attributable to noncontrolling interests
                                  (698 )     (698 )
Provision for income taxes from operations
                                  (11,293 )     (11,293 )
Preferred stock dividends
                                  (3,227 )     (3,227 )
     
 
                                                       
Funds from operations available to common stockholders
  $ 17,929     $ 9,967     $ (28,854 )   $ 430     $ (37,712 )   $ (26,655 )     (64,895 )
             
 
                                                       
Real estate depreciation and amortization, including Company’s share of joint ventures
                                                    (16,603 )
Gain on sale of depreciated investment properties
                                                    185  
 
                                                     
 
                                                       
Net loss available to common stockholders
                                                  $ (81,313 )
 
                                                     
                                                         
                            Third Party                    
Six Months Ended June 30, 2010   Office     Retail     Land     Management     Multi-Family     Other     Total  
 
                                                       
Net rental property revenues less rental property operating expenses
  $ 29,710     $ 13,513     $     $     $     $ 1,148     $ 44,371  
Fee income, net of reimbursed expenses
                294       4,066             4,182       8,542  
Residential lot, multi-family unit, tract and outparcel sales, net of cost of sales, including gain on sale of undepreciated investment propertie
          4,585       674             4,011       1,204       10,474  
Other income
          41                         273       314  
General and administrative expenses
                      (3,696 )           (14,944 )     (18,640 )
Interest expense
                                  (20,067 )     (20,067 )
Depreciation and amortization of non-real estate assets
                                  (1,034 )     (1,034 )
Other expenses
                      (466 )           (4,059 )     (4,525 )
Impairment loss
                            (586 )           (586 )
Loss on extinguishment of debt
                                  (592 )     (592 )
Funds from operations from unconsolidated joint ventures
    4,842       3,447       1,599             162             10,050  
Income attributable to noncontrolling interests
                                  (1,110 )     (1,110 )
Benefit for income taxes from operations
                                  1,132       1,132  
Preferred stock dividends
                                  (6,454 )     (6,454 )
     
Funds from operations available to common stockholders
  $ 34,552     $ 21,586     $ 2,567     $ (96 )   $ 3,587     $ (40,321 )     21,875  
             
Real estate depreciation and amortization, including Company’s share of joint ventures
                                                    (32,161 )
Gain on sale of depreciated investment properties
                                                    118  
 
                                                     
 
                                                       
Net loss available to common stockholders
                                                  $ (10,168 )
 
                                                     

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                            Third Party                    
Six Months Ended June 30, 2009   Office     Retail     Land     Management     Multi-Family     Other     Total  
 
                                                       
Net rental property revenues less rental property operating expenses
  $ 28,937     $ 12,464     $     $     $     $ 724     $ 42,125  
Fee income, net of reimbursed expenses
                285       4,425             3,248       7,958  
Residential lot, multi-family unit, tract and outparcel sales, net of cost of sales, including gain on sale of undepreciated investment properties
          1,804       1,161                   113       3,078  
Other income
    190       1,266                         815       2,271  
General and administrative expenses
                      (3,614 )           (18,122 )     (21,736 )
Interest expense
                                  (20,990 )     (20,990 )
Depreciation and amortization of non-real estate assets
                                  (1,906 )     (1,906 )
Other expenses
                                  (5,978 )     (5,978 )
Impairment loss
                            (36,500 )           (36,500 )
Gain on extinguishment of debt
                                  12,498       12,498  
Funds from operations from unconsolidated joint ventures
    4,861       3,202       (3,022 )           (118 )     (38 )     4,885  
Impairment loss on investment in unconsolidated joint ventures
                (27,000 )           (1,130 )           (28,130 )
Income attributable to noncontrolling interests
                                  (1,110 )     (1,110 )
Provision for income taxes from operations
                                  (7,352 )     (7,352 )
Preferred stock dividends
                                  (6,454 )     (6,454 )
     
Funds from operations available to common stockholders
  $ 33,988     $ 18,736     $ (28,576 )   $ 811     $ (37,748 )   $ (44,552 )     (57,341 )
             
Real estate depreciation and amortization, including Company’s share of joint ventures
                                                    (30,839 )
Gain on sale of depreciated investment properties
                                                    167,438  
 
                                                     
 
                                                       
Net income available to common stockholders
                                                  $ 79,258  
 
                                                     
     In 2010, the Company began analyzing the Third-Party Management segment after an allocation of certain corporate overhead costs, whereas previously, amounts were generally viewed without such allocation. The 2009 tables above have been adjusted to reclassify this general and administrative expense allocation from the “Other” column to the “Third-Party Management” column to be consistent with the current year presentation.
     When reviewing the results of operations for the Company, management analyzes the following revenue and income items net of their related costs:
    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.
     These amounts are shown in the segment tables above in the same “net” manner as shown to management. Certain adjustments are required to reconcile the above segment information to the Company’s consolidated revenues, including removing gains on sales of investment properties from revenues, as they are not presented within revenues on the Condensed Consolidated Statements of Income. The following table reconciles information presented in the tables above to the Company’s total consolidated revenues:
                                 
Reconciliation to Revenues on Condensed Consolidated Income Statements   Three Months Ended June 30,     Six Months Ended June 30,  
(in thousands)   2010     2009     2010     2009  
Net rental property revenues less rental property operating expenses
  $ 22,342     $ 21,936     $ 44,371     $ 42,125  
Plus rental property operating expenses
    15,393       14,358       30,054       30,836  
Fee income, net of reimbursed expenses
    4,622       4,142       8,542       7,958  
Reimbursements of third-party and joint venture personnel included in fee income
    3,591       4,030       8,009       8,258  
Residential lot, multi-family unit, tract, and outparcel sales, net of cost of sales, including gain on sale of undepreciated investment properties
    2,878       2,051       10,474       3,078  
Less gain on sale of undepreciated investment properties
    (1,002 )     (746 )     (1,699 )     (955 )
Plus residential lot, multi-family unit, tract, and outparcel cost of sales
    6,383       3,208       23,449       4,938  
Net rental property revenues less rental property operating expenses from discontinued operations
    (1,743 )     (1,721 )     (3,626 )     (3,407 )
Other income
    190       1,285       314       2,271  
Other income from discontinued operations
    (19 )     (46 )     (19 )     (53 )
 
                       
Total consolidated revenues
  $ 52,635     $ 48,497     $ 119,869     $ 95,049  
 
                       

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10. PROPERTY TRANSACTION AND PRESENTATION
     In July 2010, the Company sold San Jose MarketCenter, a 213,000 square foot retail center in San Jose, California. The sales price was $85.0 million and a gain of approximately $6.5 million is anticipated to be recognized in the third quarter of 2010. The results of the property’s operations for all periods presented are included in Discontinued Operations on the Condensed Consolidated Statements of Income. The Company had no other projects that qualified as held for sale or as a discontinued operation in 2009.
     The components of Discontinued Operations for the three and six months ended June 30, 2010 and 2009 are as follows ($ in thousands):
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2010     2009     2010     2009  
Rental property revenues
  $ 2,269     $ 2,522     $ 4,675     $ 5,045  
Other income
    19       46       19       53  
Rental property operating expenses
    (526 )     (801 )     (1,049 )     (1,638 )
Depreciation and amortization
    (192 )     (577 )     (766 )     (1,147 )
Interest expense
          (279 )           (1,505 )
Gain on sale of investment properties
          146             146  
Gain on extinguishment of debt
          12,498             12,498  
 
                       
 
  $ 1,570     $ 13,555     $ 2,879     $ 13,452  
 
                       
     The assets and liabilities of San Jose MarketCenter are categorized as Held for Sale on the June 30, 2010 Condensed Consolidated Balance Sheet. The principal components of these assets and liabilities are as follows ($ in thousands):
         
Operating property, net of accumulated depreciation of $8,201
  $ 76,970  
Notes and other receivables
    1,440  
Other assets
    65  
 
     
Total assets
  $ 78,475  
 
     
 
       
Accounts payable and accrued liabilties
  $ 684  
Deposits and deferred income
    1,300  
 
     
Total liabilities
  $ 1,984  
 
     

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview:
     Cousins Properties Incorporated (“Cousins”), a Georgia corporation, is a self-administered and self-managed real estate investment trust (“REIT”). Cousins Real Estate Corporation (“CREC”) is a taxable entity wholly-owned by and consolidated with Cousins. CREC owns, develops, and manages its own real estate portfolio and performs certain real estate related services for other parties.
     Cousins, CREC and their subsidiaries (collectively, the “Company”) develop, manage and own office, multi-family, retail, industrial and residential real estate projects. As of June 30, 2010, the Company’s portfolio of real estate assets consisted of interests in 7.5 million square feet of office space, 4.6 million square feet of retail space, 2.0 million square feet of industrial space, 44 for-sale units in two completed multi-family projects, interests in 24 residential communities in various stages of development, approximately 9,300 acres of strategically located land tracts held for investment or future development, and significant land holdings for development of single-family residential communities. The Company also provides leasing and/or management services for approximately 12.7 million square feet of office and retail space owned by third parties.
     The Company’s strategy is to produce stockholder returns by creating value through the development, redevelopment, leasing and management, and sale of high quality, well-located office, retail, multi-family and residential properties. The Company has developed a substantial portion of the operating properties it owns. A key element in the Company’s strategy is to actively manage its portfolio of investment properties and, at the appropriate times, to engage in timely and strategic recycling of its capital, by strategic sales of assets, obtaining non-recourse mortgage notes on selected assets, or through contributions to ventures in which the Company retains an ownership interest. These transactions seek to maximize the value of the assets the Company has created, generate capital for additional development properties and return a portion of the value created to the Company’s stockholders.
     Management continues to assess its opportunities in the current economic environment and has seen the number of traditional development opportunities across its product types decrease. Management does not expect this trend to change significantly in the next nine to 12 months, but is optimistic that other, more non-traditional, opportunities may present themselves to the Company. These opportunities could include acquisition of single-family residential, office or retail developments whose developers or lenders are experiencing problems and acquisition of retail or office projects with financing problems. However, there can be no assurance that these non-traditional opportunities will materialize.
     Highlights for the quarter ended June 30, 2010 included the following:
    Restructured the Terminus 200 venture, resulting in the full payment of the Company’s loan guarantee, a reduction of the Company’s ownership from 50% to 20%, a change in the Company’s venture partner in the venture and an extension of the venture’s construction loan.
 
    Closed the sale of 22 units at 10 Terminus Place, generating gain of approximately $1.8 million.
 
    Sold 44 acres of land at King Mill Distribution Park generating gain of approximately $876,000.
 
    Sold 5.8 acres of land at North Point/Westside generating gain of approximately $134,000.
 
    Extended the loan on The Avenue Murfreesboro, a 751,000-square-foot power center in suburban Nashville, to July 2013.

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    Executed a 459,000-square-foot lease at Jefferson Mill Business Park, bringing this building to 100% leased.
 
    Executed leases for 150,000 square feet at Terminus 200.
 
    Executed or renewed leases covering an additional 171,000 square feet of office space and 143,000 square feet of retail space.
Other highlights subsequent to quarter end included the following:
    Sold San Jose MarketCenter, a 213,000-square-foot power center, for $85 million, generating an estimated net gain of $6.5 million.
 
    Obtained a new $27 million loan on Meridian Mark Plaza, a 160,000-square-foot medical office building in Atlanta, maturing in 2020 at an interest rate of 6%, and repaid the prior $22 million loan, which had an interest rate of 8.27% and was scheduled to mature in September 2010.
 
    Repaid the Company’s $100 million Term Loan under its Credit 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.
Results of Operations:
     Rental Property Revenues. Rental property revenues increased approximately $1.4 million (4%) and $1.2 million (2%) in the three and six month 2010 periods, respectively, compared to the same 2009 periods, due to the following:
    Increase of $1.4 million and $3.4 million in the three and six month 2010 periods, respectively, related to 191 Peachtree Tower, where average economic occupancy for the six month periods increased from 51% in 2009 to 72% in 2010;
 
    Increase of $521,000 and $915,000 in the three and six month 2010 periods, respectively, from The Avenue Forsyth, where average economic occupancy for the six month periods increased from 56% in 2009 to 67% in 2010;
 
    Decrease of $515,000 and $1.8 million in the three and six month 2010 periods, respectively, from the American Cancer Society Center (the “ACS Center”), where average economic occupancy for the six month periods decreased from 97% in 2009 to 84% in 2010. This decrease is the result of the expiration of the Bell South lease in the third quarter of 2009;
 
    Decrease of $473,000 in the six month 2010 period from Terminus 100 where average economic occupancy for the six month periods decreased from 95% in 2009 to 92% in 2010. The results for the three month 2010 period were fairly consistent with the three month 2009 period;
 
    Decrease of $112,000 and $548,000 in the three and six month 2010 periods, respectively, related to The Avenue Carriage Crossing due to a decrease in revenues associated with an anticipated reduction in real estate tax expense (and consequently recoveries) for 2010 and a decrease in recoveries of tenant bill back expenses; and
 
    Decrease of $81,000 and $310,000 in the three and six month 2010 periods, respectively, related to 8995 Westside Parkway where average economic occupancy for the six month periods decreased from 53% in 2009 to 23% in 2010. As of June 30, 2010, the building is vacant.
     Rental Property Operating Expenses. Rental property operating expenses increased approximately $1.0 million (7%) in the three month 2010 period compared to the same 2009 period and

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decreased $782,000 (3%) in the six month 2010 period compared to the same 2009 period, due to the following:
    Increase of $1.1 million and $95,000 in the three and six month 2010 periods, respectively, at Terminus 100 due to an increase in bad debt expense between the periods, partially offset by the receipt of a refund of prior year property taxes in the 2010 period and a decrease in occupancy in the 2010 period compared to 2009;
 
    Increase of $199,000 and $139,000 in the three and six month 2010 periods, respectively, at 191 Peachtree, due to an increase in occupancy and an increase in real estate taxes; and
 
    Decrease of $360,000 and $741,000 in the three and six 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.
     Fee Income. Fee income remained relatively constant between the 2010 and 2009 periods. Fee income is comprised of management fees, development fees and leasing fees, which the Company performs for third party property owners and joint ventures in which it has an ownership interest. These amounts vary between quarters due to the number of contracts with ventures and third party owners and the development and leasing needs at the underlying properties. Amounts could vary in future periods based on volume and composition of activities at the underlying properties.
     Multi-family Residential Sales and Cost of Sales. Multi-family residential sales and cost of sales increased approximately $6.8 million and $4.9 million, respectively, between the three month 2010 and 2009 periods. Multi-family residential sales and cost of sales increased approximately $16.9 million and $12.9 million, respectively, between the six month 2010 and 2009 periods. These increases are a result of the fact that there were 43 closings of condominium units in the six month 2010 period, mainly at 10 Terminus Place, compared to two unit closings in the six month 2009 period.
     Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and outparcel sales and cost of sales decreased $3.0 million and $1.7 million between the three month 2010 and 2009 periods, respectively. Residential lot and outparcel sales and cost of sales increased $8.3 million and $5.6 million between the six month 2010 and 2009 periods, respectively.
     Residential Lot Sales and Cost of Sales — The Company’s residential lot business consists of projects that are consolidated, for which income is recorded in the residential lot and outparcel sales and cost of sales line items, and projects that are owned through joint ventures where the Company is a 50% partner in Temco Associates LLC (“Temco”) and CL Realty, L.L.C. (“CL Realty”), for which income is recorded in income from unconsolidated joint ventures. Lot sales for the six month periods were as follows:
                 
    2010   2009
Consolidated projects
    7       7  
Temco
    1        
CL Realty
    164       66  
 
               
Total
    172       73  
 
               
     Residential lot sales and cost of sales decreased $237,000 and $98,000, respectively, between the three month 2010 and 2009 periods for consolidated projects. Residential lot sales and cost of sales decreased $595,000 and $351,000, respectively, between the six month periods for consolidated projects. The changes are due to different price points and profit margins between the various residential projects.

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     Outparcel Sales and Cost of Sales — Outparcel sales and cost of sales decreased $2.8 million and $1.6 million between the three month 2010 and 2009 periods, respectively. Outparcel sales and costs of sales increased $8.9 million and $6.0 million between the six month 2010 and 2009 periods, respectively. There were eight outparcel sales in the six month 2010 period, compared to two outparcel sales in the same 2009 period.
     Interest and Other Income. Interest and other income decreased $1.1 million and $1.9 million between the three month and six month 2010 and 2009 periods, respectively. The primary reason for the decrease is that termination fees decreased by $1.0 million and $1.4 million between the three and six month 2010 and 2009 periods, respectively, due to several termination fees recognized in 2009 mainly due to retail tenants ending their leases early at several centers. In addition, interest income declined $614,000 in the six month 2010 period compared to the same 2009 period, mainly due to a reduction in notes receivable outstanding between the periods.
     General and Administrative Expense, Separation Expense and Reimbursements (“G&A”). G&A expense decreased $3.8 million (24%) and $3.3 million (11%) between the three and six month 2010 and 2009 periods, respectively, primarily as a result of the following:
    Decrease in salaries and benefits of employees, excluding stock-based compensation, of $739,000 and $1.2 million in the three and six month 2010 periods, respectively, due to a decrease in the number of employees at the Company between the periods;
 
    Decrease of $531,000 and $542,000 in the three and six month 2010 periods, respectively, in stock-based compensation expense, due in part to a decrease in the stock price between June 30, 2009 and June 30, 2010, as several types of stock-based compensation are expensed using the closing market price of stock as an estimate of the value or as an input in the calculation of the value;
 
    Decrease of $173,000 and $256,000 in the three and six month 2010 periods, respectively, related to corporate airplane costs, as the Company’s airplane was sold in 2009;
 
    Decrease in separation expenses of $2.0 million and $2.3 million for the three and six month 2010 periods, respectively, from expense that was recognized in 2009 for the lump sum payment and for modifications of stock compensation awards related to the retirement of the Company’s former chief executive officer;
 
    Decrease of $439,000 and $249,000 in reimbursed salaries and expenses, as the square footage of third party managed properties has decreased slightly between the 2010 and 2009 periods; and
 
    Capitalization of personnel costs to projects under development, which reduces G&A expense, declined $644,000 and $2.0 million, as the level of development and predevelopment projects has dropped between the periods, partially offsetting the decreases noted above.
     Depreciation and Amortization. Depreciation and amortization decreased approximately $432,000 (3%) in the three month 2010 period compared to the same 2009 period and increased $403,000 (1%) in the six month 2010 period compared to the same 2009 period, primarily as a result of the following:
    Decrease of $1.2 million for both the three and six month 2010 periods 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 $239,000 and $495,000 in the three and six month 2010 periods, respectively, due to the sale of the Company’s airplane in 2009;

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    Decrease of $228,000 and $365,000 in the three and six month 2010 periods, respectively, due to reduction in depreciation of furniture, fixtures and equipment for the corporate offices from lower staff and less office space, as well as fully amortized equipment;
 
    Increase of $543,000 and $1.4 million in the three and six month 2010 periods, respectively, related to higher tenant improvement amortization from increased occupancy at 191 Peachtree Tower;
 
    Increase of $668,000 and $681,000 in the three and six month 2010 periods, respectively, at The Avenue Webb Gin due to accelerated amortization in 2010 of tenant assets for tenants who terminated their leases prior to the originally scheduled end date; and
 
    Increase of $241,000 and $548,000 in the three and six month 2010 periods, respectively, at The Avenue Forsyth as the property became fully operational in May 2009, and the first quarter of 2009 reflects partial occupancy.
     Interest Expense. Interest expense did not change significantly between the three month 2010 and 2009 periods and increased $582,000 (3%) between the six month 2010 and 2009 periods. Interest expense before capitalization decreased during both periods due to lower average borrowings on the Credit Facility in 2010 compared to 2009. Capitalized interest, which lowers interest expense, decreased $1.3 million and $3.1 million for the three and six month 2010 periods, respectively, when compared to the same 2009 periods, due to a decrease in projects under development.
     Impairment Loss. The impairment loss of $586,000 recorded in the three month 2010 period relates to a charge taken on the Company’s 60 North Market condominium project. Based on current economic conditions, the Company revised its estimates of timing and selling prices of its remaining retail units resulting in the impairment loss. In the second quarter of 2009, the Company recorded an impairment loss of $34.9 million on its 10 Terminus Place condominium project and a $1.6 million impairment loss on a mezzanine note receivable related to the 60 North Market project. In the third quarter of 2009, the Company foreclosed on the 60 North Market project.
     Other Expense. Other expense decreased $1.2 million (28%) and $1.5 million (24%) between the three and six month 2010 periods, respectively, compared to the same 2009 periods. Two predevelopment projects totaling $4.1 million were written off in 2009, and one predevelopment project of $1.9 million was written off in 2010, causing the decreases.
     Loss on Extinguishment of Debt. In 2010, the Company modified its Credit and Term Facilities and decreased the capacity available. In conjunction with this modification, the Company charged a portion of the unamortized loan closing costs, which were paid when entering into the Facilities, to expense.
     Benefit (Provision) for Income Taxes from Operations. Income tax expense decreased $11.3 million and $8.5 million in the three and six month 2010 periods, respectively, when compared to the same 2009 periods. In the first quarter of 2009, the Company recorded a deferred tax benefit due to losses at the Company’s taxable entity, CREC. In the second quarter of 2009, the Company recorded a valuation allowance against the current year’s income tax benefit and also against the full balance of the deferred tax asset that was generated in earlier periods. The Company was unable to predict with certainty whether the deferred tax asset and current year benefits would ultimately be realized. The Company is currently continuing to recognize no current benefit due to the ongoing uncertainty of realization. Therefore, no benefit was recognized during the first and second quarters of 2010 for current period CREC operating losses. In the fourth quarter of 2009, Congress changed tax laws which allowed the Company to carry back operating losses to profitable years. As a result, the Company recognized a benefit of $3.1 million in the fourth quarter of 2009, and recognized an additional benefit of $1.1 million in the first quarter of 2010.

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     Income from Unconsolidated Joint Ventures. Income from unconsolidated joint ventures increased $31.8 million and $32.9 million in the three and six month 2010 periods compared to the 2009 periods due to the following (all amounts discussed are at the Company level):
    Income from the CL Realty joint venture increased $24.0 million for both the three and six month 2010 periods, compared to the same 2009 periods. 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 determined that it had an “other-than-temporary” decline, in accordance with the definition in accounting guidance, in its investment in CL Realty. Accordingly, the Company impaired its investment in the joint venture asset by $20.3 million, also in the second quarter of 2009. No impairments have been recognized in 2010. The increases are also due to CL Realty recognizing income from mineral deposits and oil and gas reserves on its land, in addition to an increase in lot sales between 2010 and 2009;
 
    Increase in income from Temco Associates of $6.8 million and $7.6 million in the three and six month 2010 periods, respectively, compared to the same 2009 periods. The Company impaired its investment in Temco by $6.7 million in the second quarter of 2009 as it determined that it had an “other-than-temporary” decline, in accordance with the definition in accounting guidance, in its investment. No impairment was 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 $1.2 million for both the three and six month 2010 periods compared to 2009 from the Glenmore Garden Villas (“Glenmore”) joint venture. The Company determined that it had an “other-than-temporary” decline, in accordance with the definition in accounting guidance, in its investment in Glenmore and impaired its investment by $1.1 million in the second quarter of 2009. The assets of Glenmore were sold in early 2010.
     Gain on Sale of Investment Properties. Gain on sale of investment properties decreased $166.4 million between the six month 2010 and 2009 periods (there was no significant fluctuation for the three month periods). The decrease is attributable to the recognition in the first quarter 2009 of $167.2 million in deferred gain related to the 2006 venture formation with Prudential. When the Company and Prudential formed the venture, the Company contributed properties and Prudential contributed cash. The Company deferred the related gain because the consideration received was a partnership interest as opposed to cash. In the 2009 period, the Company and Prudential made a pro rata distribution of cash from the venture that caused the Company to recognize all of the gain that was deferred in 2006.
     Discontinued Operations. In the second quarter of 2010, San Jose MarketCenter, a 213,000-square-foot retail center in San Jose, California, met the requirements under accounting rules of a held-for-sale property. Consequently, the results of operations for all periods presented were reflected in Discontinued Operations on the accompanying Condensed Consolidated Statements of Income. Included in the results was a gain on extinguishment of debt, which was recognized in the second quarter of 2009. The Company satisfied the San Jose MarketCenter mortgage note payable at a discount from the carrying amount in 2009, and the difference in the payment and the carrying amount of the note was recognized as a gain. San Jose MarketCenter was sold in July 2010.
     Funds from Operations. The table below shows Funds from Operations Available to Common Stockholders (“FFO”) and the related reconciliation to net income (loss) available to common stockholders. The Company calculated FFO in accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, which is net income (loss) available to common stockholders (computed in accordance with GAAP), excluding extraordinary items, cumulative effect of change in accounting principle and gains or losses from sales of depreciable property, plus

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depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
     FFO is used by industry analysts and investors as a supplemental measure of an equity REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates operating performance in part based on FFO. Additionally, the Company uses FFO and FFO per share, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and other key employees. The reconciliation of net income (loss) available to common stockholders to FFO is as follows for the three and six months ended June 30, 2010 and 2009 (in thousands):
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Net Income (Loss) Available to Common Stockholders
  $ (8,595 )   $ (81,313 )   $ (10,168 )   $ 79,258  
Depreciation and amortization:
                               
Consolidated properties
    14,372       14,804       27,693       27,290  
Discontinued properties
    192       577       766       1,147  
Share of unconsolidated joint ventures
    2,453       2,174       4,747       4,332  
Depreciation of furniture, fixtures and equipment:
                               
Consolidated properties
    (462 )     (934 )     (1,029 )     (1,898 )
Discontinued properties
    (1 )     (4 )     (5 )     (8 )
Share of unconsolidated joint ventures
    (5 )     (14 )     (11 )     (24 )
(Gain) loss on sale of investment properties:
                               
Consolidated
    (1,061 )     (801 )     (1,817 )     (168,235 )
Discontinued properties
          (146 )           (146 )
Share of unconsolidated joint ventures
          16             (12 )
Gain on sale of undepreciated investment properties
    1,002       746       1,699       955  
 
                       
Funds From Operations Available to Common Stockholders
  $ 7,895     $ (64,895 )   $ 21,875     $ (57,341 )
 
                       
 
                               
Per Common Share — Basic and Diluted:
                               
Net Income (Loss) Available
  $ (.09 )   $ (1.58 )   $ (.10 )   $ 1.54  
 
                       
Funds From Operations
  $ .08     $ (1.26 )   $ .22     $ (1.11 )
 
                       
Weighted Average Shares — Basic and Diluted
    101,001       51,615       100,538       51,483  
 
                       
Liquidity and Capital Resources:
Our primary liquidity sources are:
    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.
Our primary liquidity uses are:
    Property operations and corporate expenses;
 
    Expenditures on predevelopment and development projects;

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    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.
     The Company has taken steps in the last twelve months to improve its financial position by reducing its leverage, extending maturities and modifying credit agreements to reduce overall financial exposure. In the second quarter of 2010, the Company restructured its interest in the Terminus 200 building by bringing in a new partner who contributed capital and by modifying and extending the loan to allow more time and capacity to lease the building. The Company also modified the CF Murfreesboro Associates loan, scheduled to mature in July 2010, to, among other things, extend the maturity date to July 2013. Subsequent to the end of the quarter, the Company replaced the $22 million Meridian Mark Plaza loan, scheduled to mature in September 2010, with a $27 million loan that matures in 2020 and carries an interest rate of 6%, which is 227 basis points below the old loan. Also after quarter end, the Company sold San Jose MarketCenter and repaid its Term Facility as a result.
     The Company expects to fund its commitments over the next twelve months with one or more of the liquidity sources described above. The tightening of the credit markets, combined with the overall economic downturn in the last several years, has made obtaining some forms of these sources of capital more difficult. However, the conditions that have led to the tightening credit markets have also led to a decline in new development opportunities for the Company. Therefore, while the sources of funds have become more limited than they were in recent years, the Company’s capital needs, particularly related to new development, have also decreased. The Company did not commence any new development or predevelopment projects in the six months ended June 30, 2010, and currently anticipates that there will be limited development activity for the remainder of 2010 and early 2011.
     At June 30, 2010, the Company was subject to the following contractual obligations and commitments (in thousands):
                                         
            Less than                     After  
    Total     1 Year     1-3 Years     4-5 Years     5 years  
Contractual Obligations:
                                       
Company long-term debt:
                                       
Unsecured notes payable
  $ 140,169     $ 169     $ 140,000     $     $  
Mortgage notes payable
    440,209       27,715       263,617       4,347       144,530  
Interest commitments under notes payable (1)
    116,945       34,762       44,619       18,947       18,617  
Ground leases
    15,018       98       203       213       14,504  
Other operating leases
    2,103       670       989       348       96  
     
Total contractual obligations
  $ 714,444     $ 63,414     $ 449,428     $ 23,855     $ 177,747  
     
 
                                       
Commitments:
                                       
Letters of credit
  $ 3,129     $ 3,105     $ 24     $     $  
Performance bonds
    3,433       3,361       72              
Unfunded tenant improvements and other
    13,329       13,329                    
     
Total commitments
  $ 19,891     $ 19,795     $ 96     $     $  
     
 
(1)   Interest on variable rate obligations is based on rates effective as of June 30, 2010, including the effect of interest rate swaps.
Credit Facility Amendment
     In February 2010, the Company entered into a First Amendment (the “Amendment”) of its Credit and Term Facilities with Bank of America and the other participating banks. The Amendment

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reduced the amount available under the Credit Facility from $500 million to $250 million. The amount available under the Term Facility remained at $100 million. The Amendment provided that if the Term Facility was repaid prior to the maturity of the Credit Facility, the availability under the Credit Facility would increase correspondingly, allowing a total availability under the combined Facilities of $350 million. The maturity dates for both Facilities remain the same under the Amendment.
     Amounts outstanding under the Facilities accrue interest at LIBOR plus a spread. The Amendment changed the spread for the Credit and Term Facilities, as detailed below:
                         
    Credit and Term        
    Facilities   Credit Facility   Term Facility
    Applicable 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 %
     Certain covenants changed under the Amendment. Specifically, the minimum Consolidated Fixed Charge Coverage Ratio, as defined, decreased from 1.50 to 1.30. Other covenants and fees were also amended. The Company incurred an administrative fee of approximately $1.6 million related to the Amendment. The Company is currently in compliance with its financial covenants.
     As of June 30, 2010, the Company had $40 million drawn on its $250 million Credit Facility. The amount available under the Credit Facility is reduced by outstanding letters of credit, which were $3.1 million at June 30, 2010. As of June 30, 2010, the spread over LIBOR for the Credit Facility was 2.0%.
     The Company expects its Credit Facility and cash on hand to be the primary funding source for its contractual obligations and commitments in the near term. The Company may obtain long-term mortgage debt on some of its recently developed, unencumbered assets, to the extent available and with acceptable terms, to help fund its commitments.
     In July 2010, the Company paid the outstanding balance of the Term Facility in full. Therefore, the amount available under the Credit Facility increased $100 million to $350 million. In conjunction with the payoff, the interest rate swap against the Term Facility was terminated, and the Company paid the counterparty to the swap agreement $9.2 million as a result. The fee related to this payment will be recognized as an expense in the third quarter of 2010.
     Derivative Instruments and Hedging Activities
     The Company follows the requirements of ASC 815 for derivative instruments. Entities that use derivative instruments are required to provide qualitative disclosures about their objectives and strategies for using such instruments, as well as any details of credit-risk-related contingent features contained within derivatives. Entities are also required to disclose certain information about the amounts and location of derivatives located within the financial statements, how the provisions of derivative accounting rules have been applied, and the impact that hedges have on an entity’s financial position, financial performance and cash flows.
     The Company utilizes interest rate swap agreements to manage its exposure to interest rate changes under variable-rate obligations. The Company had an interest rate swap agreement with a

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notional amount of $100 million in order to manage its interest rate risk under the Term Facility. The Company designated this swap as a cash flow hedge, and this swap effectively fixes the underlying LIBOR rate of the Term Facility at 5.01%. The Company also has an interest swap with a notional amount of $40 million in order to manage interest rate risk associated with floating-rate, LIBOR-based borrowings. This swap was also designated as a cash flow hedge and effectively fixes a portion of the underlying LIBOR rate on Company borrowings at 2.995% through October 2010. During both the six month periods ended June 30, 2010 and 2009, there was no ineffectiveness under any of the Company’s interest rate swaps. The Company calculates the fair value of its interest rate swaps as of the end of each reporting period by obtaining a third party valuation utilizing estimated future LIBOR rates. The fair value calculation for the swaps is deemed to be a Level 2 calculation under the guidelines as set forth in ASC 820. The fair values of the interest rate swap agreements were recorded in accounts payable and accrued liabilities and other comprehensive loss on the Condensed Consolidated Balance Sheets, detailed as follows (in thousands):
                         
            Floating Rate,    
            LIBOR-based    
    Term Loan   Borrowings   Total
 
Balance, December 31, 2009
  $ 8,662     $ 855     $ 9,517  
Change in fair value
    358       (499 )     (141 )
     
Balance, June 30, 2010
  $ 9,020     $ 356     $ 9,376  
     
     Additional Financial Condition Information
     The real estate and other assets of the ACS Center are restricted under the ACS Center loan agreement in that they are not available to settle debts of the Company. However, provided that the ACS Center loan has not incurred any uncured event of default, as defined in the loan agreement, the cash flows from the ACS Center, after payments of debt service, operating expenses and reserves, are available for distribution to the Company.
     In July 2010, the Company paid the Meridian Mark Plaza mortgage note in full and entered into a new mortgage note payable secured by Meridian Mark Plaza. This note has a maturity of August 1, 2020, a principal amount of $27.0 million and an interest rate of 6%.
     The Company’s mortgage debt is primarily non-recourse fixed-rate mortgage notes secured by various real estate assets. Many of the Company’s non-recourse mortgages contain covenants which, if not satisfied, could result in acceleration of the maturity of the debt. The Company expects that it will either refinance the non-recourse mortgages at maturity or repay the mortgages with proceeds from other financings.
     As of June 30, 2010, the weighted average interest rate on the Company’s consolidated debt was 6.36%.
     The Company may also generate capital through the issuance of securities that includes common or preferred stock, warrants, debt securities or depositary shares. In March 2010, the Company filed a shelf registration statement to allow for the issuance of up to $500 million of such securities, of which $494 million remains to be drawn as of June 30, 2010.
     Over the long term, management expects the economy and credit markets to recover to the point that the Company will be able to actively manage its portfolio of income-producing properties and strategically sell assets or form joint ventures to capture value for stockholders and to recycle capital for future development activities. The Company expects to continue to utilize indebtedness to fund future commitments and expects to place long-term permanent mortgages on selected assets as well as utilize construction facilities for any development assets. The Company may enter into additional joint venture arrangements to help fund future developments and may enter into additional structured

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transactions with third parties. Management will continue to evaluate all public equity sources, including the issuance of common and preferred stock, and select the most appropriate options as capital is required.
     The Company’s business model is dependent upon raising or recycling capital to meet obligations. If one or more sources of capital are not available when required, the Company may be forced to reduce the number of projects it acquires or develops and/or raise capital on potentially unfavorable terms, or may be unable to raise capital, which could have an adverse effect on the Company’s financial position or results of operations.
Cash Flows.
     Cash Flows from Operating Activities. Cash flows from operating activities increased approximately $33.7 million between the six month 2010 period and the corresponding 2009 period due to the following:
    Increase of $15.7 million in net proceeds from multi-family sales, due to an increase in condominium sales at the Company’s 10 Terminus Place condominium project in Atlanta, Georgia;
 
    Increase of $7.3 million in net proceeds from residential lot and outparcel sales, due to an increase in the number of outparcels sold in the 2010 period;
 
    Decrease of $2.1 million in residential lot, outparcel and multi-family acquisition and development expenditures due to a decrease in development activities;
 
    Decrease in cash paid for interest expense of $3.0 million, due to a decrease in average borrowings between the 2010 and 2009 periods;
 
    Decrease of payments for general and administrative expenses, primarily due to a decrease in salaries and benefits from a reduced number of employees and from reduced bonus and profit sharing payments between the periods.
     Cash Flows from Investing Activities. Net cash used in investing activities decreased approximately $12.7 million between the six month 2010 period and the corresponding 2009 period, due to the following:
    Proceeds from property sales, which were mainly land tract sales, increased $12.6 million;
 
    Property acquisition and development expenditures decreased $16.5 million, as the Company currently does not have any significant projects under development; and
 
    Cash used in investing activities increased $17.3 million due to the payment of the debt guarantee as a result of the restructuring of the Company’s Terminus 200 LLC joint venture.
     Cash Flows from Financing Activities. Net cash used in financing activities increased approximately $9.9 million between the six month 2010 period and the corresponding 2009 period, due to the following:
    Net borrowings under the Credit Facility were $87.0 million in 2009, and there were no borrowings or repayments on the Credit Facility in the first six months of 2010;
 
    Payments of loan issuance costs increased $1.7 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;
 
    Repayments of notes payable decreased $61.7 million in 2010. The Company satisfied the San Jose MarketCenter note in the 2009 period for approximately $70.3 million. In the 2010 period, the Company repaid the $8.7 million Glenmore Garden Villas note in conjunction with the sale of that property;

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    Cash common dividends paid decreased $11.1 million due to a reduction in the dividend per share amount from $0.25 per share in the first and second quarters of 2009 to $0.09 per share in the first and second quarters of 2010. Additionally, the Company paid its dividends in the first and second quarters of 2010 in a combination of cash and stock. In the first quarter 2009, the Company paid its dividends in cash and began paying them in a combination of cash and stock in the second quarter of 2009; and
 
    Distributions to noncontrolling interests decreased $4.7 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. During the six months ended June 30, 2010, the Company paid cash common and preferred dividends of $12.5 million, which it funded with cash provided by operating activities. During the 2009 period, the Company paid cash common and preferred dividends of $23.6 million which it funded with cash provided by operating activities, proceeds from investment property sales, distributions from unconsolidated joint ventures and indebtedness. The Company intends to fund the cash portion of its quarterly distributions to common and preferred stockholders with cash provided by operating activities, as well as proceeds from investment property sales, distributions from unconsolidated joint ventures, and indebtedness, if necessary. The Company began paying its quarterly common stock dividends in a combination of cash and stock in the second quarter 2009, and has continued to pay the quarterly dividends in this manner in all subsequent quarters. The Company’s Board of Directors declared the third quarter dividend of $0.09 per share payable in September 2010, which will be paid in a combination of cash and stock, and will reduce the amount available under the shelf registration discussed above. Future dividends may continue to be paid with a combination of cash and stock.
Off Balance Sheet Arrangements
     The Company has a number of off balance sheet joint ventures with varying structures. At June 30, 2010, the Company’s unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of approximately $367.0 million, of which the Company’s share was $158.3 million. The unconsolidated joint ventures also had performance bonds, which the Company guarantees, totaling approximately $1.4 million, as of June 30, 2010. The loans are generally mortgage or construction loans, most of which are non-recourse to the Company, although in certain instances, the Company provides “non-recourse carve-out guarantees” on these non-recourse loans. The Company has a guarantee on $26.2 million of the CF Murfreesboro Associates’ construction loan. This loan was extended in June 2010, but the guarantee amount under the loan did not change.
     Several of these ventures are involved in the acquisition and development of real estate. As capital is required to fund the acquisition and development of this real estate, the Company must fund its share of the costs not funded by operations or outside financing. The Company does not currently have any other active development projects, although there are potential projects in predevelopment. The Company also estimates there will be further acquisition and development expenditures at certain of its residential joint ventures. Based on the nature and timing of activities conducted in these ventures, management cannot estimate with any degree of accuracy amounts that the Company may be required to fund in the short or long-term. However, management does not believe that additional funding of these ventures will have a material adverse effect on its financial condition or results of operations.
Critical Accounting Policies
     There have been no material changes in the Company’s critical accounting policies from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
     There have been no material changes in the market risk associated with the Company’s notes payable at June 30, 2010 compared to that as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
Item 4. Controls and Procedures
     We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives. We also have investments in certain unconsolidated entities. As we do not always control or manage these entities, our disclosure controls and procedures with respect to such entities are necessarily more limited than those we maintain with respect to our consolidated subsidiaries.
     As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer along with the Chief Financial Officer, of the effectiveness, design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon the foregoing, the Chief Executive Officer along with the Chief Financial Officer concluded that our disclosure controls and procedures were effective. In addition, based on such evaluation we have identified no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
     The Company is subject to routine actions for negligence and other claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance and all of which collectively are not expected to have a material impact on the financial condition or results of operations of the Company.
Item 1A. Risk Factors
     There has been no material change in the Company’s risk factors from those outlined in Item 1A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
     The following table contains information about the Company’s purchases of its equity securities during the second quarter of 2010:

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    COMMON STOCK  
    TOTAL PURCHASES (1)       PURCHASES INSIDE PLAN  
                      Total Number of     Maximum Number of  
                      Shares Purchased as     Shares That May Yet  
    Total Number of     Average Price Paid       Part of Publicly     Be Purchased Under  
    Shares Purchased     per Share       Announced Plan (2)     Plan (2)  
April 1 - 30
        $               4,121,500  
May 1 - 31
                        4,121,500  
June 1 - 30
                        4,121,500  
 
                         
 
        $               4,121,500  
 
                         
                                   
    PREFERRED STOCK  
    TOTAL PURCHASES       PURCHASES INSIDE PLAN  
                      Total Number of     Maximum Number of  
                      Shares Purchased as     Shares That May Yet  
    Total Number of     Average Price Paid       Part of Publicly     Be Purchased Under  
    Shares Purchased     per Share       Announced Plan (3)     Plan (3)  
April 1 - 30
        $               6,784,090  
May 1 - 31
                        6,784,090  
June 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 second 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 second 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 second quarter of 2010.
Item 3. Defaults Upon Senior Securities
     None.
Item 4. (Removed and Reserved)
Item 5. Other Information
     Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
     As described in the Company’s definitive proxy statement filed on April 1, 2010, each of our named executive officers (each an “NEO” and collectively “NEOs”) has an opportunity to earn an annual incentive cash award designed to reward annual corporate performance, as well as to encourage and reward individual achievement during the year. At a meeting of the Compensation, Succession, Nominating and Governance Committee of the Board of Directors (the “Compensation Committee”) on August 9, 2010, the Compensation Committee approved the payment to each of our named executive officers (each an “NEO” and collectively the “NEOs”) of 40% of each such NEO’s target 2010 annual incentive cash award based upon the Company’s performance for the first six months of 2010. The Compensation Committee considered the Company’s performance over the first half of 2010 as compared to the performance goals set by the Compensation Committee for 2010 and exercised its discretion to make the mid-year payment. In particular, the Compensation Committee considered the Company to have already achieved over 50% of its annual goals as of June 30, 2010. The Compensation Committee had previously emphasized with management the importance of executing against goals during the first six months of 2010 so as to create momentum for the year and into 2011. The Compensation Committee will evaluate the Company’s full year’s performance in early 2011 to determine whether the NEOs will earn all or any part of the remaining portion of their 2010 target annual cash incentive award.

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As previously disclosed on a Current Report on Form 8-K filed on June 30, 2010, James A. Fleming, the Company’s executive vice president and chief financial officer, notified the Company on June 30, 2010 that he is retiring effective December 31, 2010, and that he has agreed to serve as a consultant to the Company after his retirement.
The Company entered into a Retirement and Consulting Agreement and General Release with Mr. Fleming dated August 9, 2010, with respect to his retirement, which is effective as of December 31, 2010. Pursuant to the agreement, Mr. Fleming will be eligible to receive his 2010 annual incentive cash award in an amount equal to his target bonus times a percentage that is not less than the average percentage of target paid to the other named executive officers, as determined by the Compensation Committee, paid consistent with the time that such bonuses are paid to the other executive officers. Also pursuant to the agreement, all of Mr. Fleming’s shares of restricted stock and shares of restricted stock units that are not vested will vest. The stock options granted to him in 2009 and 2010 that are not vested will vest and will be modified to permit him the right to exercise the options through the original stated term of the options. Restricted stock units that have performance requirements will only be paid if the underlying requirements are met. The Company will reimburse Mr. Fleming for the cost of COBRA health insurance benefits for up to one year after his retirement.
Pursuant to the agreement, Mr. Fleming will provide consulting services to the Company upon the Company’s request not to exceed a prescribed number of hours per month during the first six months of 2011. He will receive $320,000 in consulting fees for this commitment. Mr. Fleming has agreed to certain non-disclosure, non-solicitation and standstill provisions. The agreement also contains a general release and other customary terms and conditions. The agreement also provides Mr. Fleming a revocation right that if exercised by him would eliminate the Company’s requirement to provide any of the consideration described above.

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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.
 
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 6, 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.
 
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.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  COUSINS PROPERTIES INCORPORATED
 
 
  /s/ James A. Fleming    
  James A. Fleming   
  Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)   
 
August 9, 2010

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