10-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 Commission file number 2-20111 COUSINS PROPERTIES INCORPORATED A GEORGIA CORPORATION I.R.S. EMPLOYER IDENTIFICATION NO. 58-0869052 2500 WINDY RIDGE PARKWAY ATLANTA, GEORGIA 30339 TELEPHONE: 770-955-2200 Securities registered pursuant to Section 12(b) of the Act: Common Stock ($1 Par Value) Name of exchange on which registered: New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. As of March 9, 2001, 49,500,617 shares of common stock were outstanding; and the aggregate market value of the common stock of Cousins Properties Incorporated held by nonaffiliates was $919,520,223. DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents have been incorporated by reference into the designated Part of this Form 10-K: Registrant's Proxy Statement Part III, Items 10, 11, 12 and 13 dated March 30, 2001 Registrant's Annual Report to Part II, Items 5, 6, 7 and 8 Stockholders for the year ended December 31, 2000 PART I ------ Item 1. Business -------------------- Corporate Profile Cousins Properties Incorporated (the "Registrant" or "Cousins") is a Georgia corporation, which since 1987 has elected to be taxed as a real estate investment trust ("REIT"). Cousins Real Estate Corporation and its subsidiaries ("CREC") is a taxable entity consolidated with the Registrant, which owns, develops, and manages a portion of the Registrant's real estate portfolio. CREC II Inc. and its subsidiaries ("CREC II") is another taxable entity which owns a 75% interest (100% as of February 28, 2001) in Cousins Stone LP, an unconsolidated joint venture which is a full-service real estate company headquartered in Dallas, Texas that specializes in third party property management, development and leasing of Class A office buildings. The Registrant, together with CREC and CREC II, is hereafter referred to as the "Company." Cousins is an Atlanta-based, fully integrated, self administered equity REIT. The Company has extensive experience in the real estate industry, including the acquisition, financing, development, management and leasing of properties. Cousins has been a public company since 1962, and its common stock trades on the New York Stock Exchange. The Company owns a portfolio of well-located, high-quality retail, office, medical office and land development projects and holds several tracts of strategically located undeveloped land. The strategies employed to achieve the Company's investment goals include the development of properties which are substantially precommitted to quality tenants; maintaining high levels of occupancy within owned properties; the selective sale of assets; the creation of joint venture arrangements and the acquisition of quality income-producing properties at attractive prices. The Company also seeks to be opportunistic and take advantage of normal real estate business cycles. Unless otherwise indicated, the notes referenced in the discussion below are the "Notes to Consolidated Financial Statements" included in the financial section of the Registrant's 2000 Annual Report to Stockholders. Brief Description of Company Investments Office. As of March 15, 2001, the Company's office portfolio ------- included the following thirty-seven commercial office buildings:
Company's Percent Economic Leased Metropolitan Rentable Ownership (Fully Property Description Area Square Feet Interest Executed) ------------------------ ----------------- ----------- --------- --------- Inforum Atlanta, GA 988,000 100% 99% 101 Independence Center Charlotte, NC 526,000 100% 99% 101 Second Street San Francisco, CA 387,000 100% (b) 92% 55 Second Street San Francisco, CA 375,000 100% (b) 87% (a) AT&T Wireless Services Headquarters Los Angeles, CA 222,000 100% 100% The Points at Waterview Dallas, TX 200,000 100% 100% Lakeshore Park Plaza Birmingham, AL 190,000 100% (b) 89% 3100 Windy Hill Road Atlanta, GA 188,000 100% 100% 333 John Carlyle Washington, D.C. 153,000 100% 93% 555 North Point Center East Atlanta, GA 152,000 100% 95% 615 Peachtree Street Atlanta, GA 149,000 100% 95% 333 North Point Center East Atlanta, GA 129,000 100% 100% 600 University Park Place Birmingham, AL 123,000 100% (b) 91% 3301 Windy Ridge Parkway Atlanta, GA 107,000 100% 100% Cerritos Corporate Center - Phase II Los Angeles, CA 104,000 100% 100% (a) 1900 Duke Street Washington, D.C. 97,000 100% 97% (a) One Georgia Center Atlanta, GA 363,000 88.50% 98% Bank of America Plaza Atlanta, GA 1,261,000 50% 100% Gateway Village Charlotte, NC 1,065,000 50% 100% (a) 3200 Windy Hill Road Atlanta, GA 687,000 50% 100% 2300 Windy Ridge Parkway Atlanta, GA 635,000 50% 100% The Pinnacle Atlanta, GA 423,000 50% 98% 1155 Perimeter Center West Atlanta, GA 362,000 50% 100% (a) 2500 Windy Ridge Parkway Atlanta, GA 314,000 50% 100% Two Live Oak Center Atlanta, GA 278,000 50% 100% 4200 Wildwood Parkway Atlanta, GA 260,000 50% 100% Ten Peachtree Place Atlanta, GA 259,000 50% 100% John Marshall - II Washington, D.C. 224,000 50% 100% Austin Research Park - Building IV Austin, TX 184,000 50% 100% (a) Austin Research Park - Building III Austin, TX 174,000 50% 100% (a) 4300 Wildwood Parkway Atlanta, GA 150,000 50% 100% 4100 Wildwood Parkway Atlanta, GA 100,000 50% 100% First Union Tower Greensboro, NC 322,000 11.50% 90% Grandview II Birmingham, AL 149,000 11.50% 100% 200 North Point Center East Atlanta, GA 130,000 11.50% 95% 100 North Point Center East Atlanta, GA 128,000 11.50% 95% One Ninety One Peachtree Tower Atlanta, GA 1,215,000 9.80% 97% ---------- 12,773,000 ==========
(a) Under construction and/or in lease-up. (b) These projects are actually owned in ventures in which a portion of the upside is shared with the other venturer. See "Major Properties" - "101 Second Street," "55 Second Street" and "Cousins/Daniel LLC" where discussed. The weighted average leased percentage of these office buildings (excluding all properties currently under construction and/or in lease-up and One Ninety One Peachtree Tower, as it is less than 10% owned by the Company) was approximately 98% as of March 15, 2001 and the leases expire as follows:
2010 & 2001 2002 2003 2004 2005 2006 2007 2008 2009 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- OFFICE ------ Consolidated: ------------- Square Feet Expiring (d) 181,596 43,284 252,578 239,738 373,412 323,515 139,217 291,121 814,349 738,887 3,397,697(b) % of Leased Space 5% 1% 7% 7% 11% 10% 4% 9% 24% 22% 100% Annual Base Rent (a) 2,992,480 622,175 3,168,316 3,936,756 7,353,306 4,938,730 2,968,888 6,292,968 15,897,726 19,167,139 67,338,484 Annual Base Rent/Sq. Ft. (a) 16.48 14.37 12.54 16.42 19.69 15.27 21.33 21.62 19.52 25.94 19.82 Joint Venture: -------------- Square Feet Expiring (d) 551,464 530,284 408,423 434,237 674,426 540,391 684,114 45,005 353,175 1,392,411 5,613,930(c) % of Leased Space 10% 9% 7% 8% 12% 10% 12% 1% 6% 25% 100% Annual Base Rent (a) 7,986,474 9,762,968 7,171,870 8,068,152 12,369,978 9,722,610 16,791,309 888,817 8,050,731 33,532,817 114,345,726 Annual Base Rent/Sq. Ft. (a) 14.48 18.41 17.56 18.58 18.34 17.99 24.54 19.75 22.80 24.08 20.37 Total (including only Company's % share of Joint Venture Properties): --------------------------------------------------------------------- Square Feet Expiring (d) 411,278 292,658 469,176 514,014 675,016 581,929 465,614 298,771 961,680 1,407,675 6,077,811 % of Leased Space 7% 5% 8% 8% 11% 9% 8% 5% 16% 23% 100% Annual Base Rent (a) 6,087,272 5,171,282 6,953,603 8,919,341 12,973,745 9,613,705 11,100,869 6,448,431 19,411,828 35,387,371 122,067,447 Annual Base Rent/Sq. Ft. (a) 14.80 17.67 14.82 17.35 19.22 16.52 23.84 21.58 20.19 25.14 20.08
(a) Annual base rent excludes the operating expense reimbursement portion of the rent payable. If the lease does not provide for pass through of such operating expense reimbursements, an estimate of operating expenses is deducted from the rental rate shown. The base rental rate shown is the estimated rate in the year of expiration. Amounts disclosed are in dollars. (b) Rentable square feet leased as of March 15, 2001 out of approximately 3,514,000 total rentable square feet. (c) Rentable square feet leased as of March 15, 2001 out of approximately 5,683,000 total rentable square feet. (d) Where a tenant has the option to cancel its lease without penalty, the lease expiration date used in the table above reflects the cancellation option date rather than the lease expiration date. The weighted average remaining lease term of these twenty-nine office buildings was approximately 7 years as of March 15, 2001. Most of the Company's leases in these buildings provide for pass through of operating expenses and base rents which escalate over time. Medical Office. As of March 15, 2001, the Company's medical office --------------- portfolio included the following six medical office properties:
Company's Percent Economic Leased Metropolitan Rentable Ownership (Fully Property Description Area Square Feet Interest Executed) -------------------- ------------- ----------- --------- --------- Northside/Alpharetta II Atlanta, GA 198,000 100% 74% Meridian Mark Plaza Atlanta, GA 159,000 100% 99% Northside/Alpharetta I Atlanta, GA 103,000 100% 100% AtheroGenics Atlanta, GA 50,000 100% 100% Crawford Long Medical Office Building Atlanta, GA 366,000 50% 51% (a) Presbyterian Medical Plaza at University Charlotte, NC 69,000 11.50% 100% ------- 945,000 =======
(a) Under construction and in lease-up. The weighted average leased percentage of these medical office buildings (excluding the property currently under construction and in lease-up) was 90% as of March 15, 2001 and the leases expire as follows:
2010 & 2001 2002 2003 2004 2005 2006 2007 2008 2009 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- MEDICAL OFFICE -------------- Consolidated: ------------- Square Feet Expiring 4,970 4,290 35,388 48,066 23,723 4,884 20,012 40,652 124,823 147,088 453,896(b) % of Leased Space 1% 1% 8% 11% 5% 1% 4% 9% 28% 32% 100% Annual Base Rent (a) 86,230 72,415 676,258 893,333 409,956 90,102 417,130 915,237 2,547,438 3,606,703 9,714,802 Annual Base Rent/Sq. Ft. (a) 17.35 16.88 19.11 18.59 17.28 18.45 20.84 22.51 20.41 24.52 21.40 Joint Venture: -------------- Square Feet Expiring 0 1,397 0 0 3,445 0 23,359 0 0 40,503 68,704(c) % of Leased Space 0% 2% 0% 0% 5% 0% 34% 0% 0% 59% 100% Annual Base Rent (a) 0 21,109 0 0 56,498 0 390,329 0 0 772,392 1,240,328 Annual Base Rent/Sq. Ft. (a) 0 15.11 0 0 16.40 0 16.71 0 0 19.07 18.05 Total (including only Company's % share of Joint Venture Properties): --------------------------------------------------------------------- Square Feet Expiring 4,970 4,451 35,388 48,066 24,119 4,884 22,698 40,652 124,823 151,780 461,831 % of Leased Space 1% 1% 8% 10% 5% 1% 5% 9% 27% 33% 100% Annual Base Rent (a) 86,230 74,843 676,258 893,333 416,453 90,102 462,018 915,237 2,547,438 3,695,528 9,857,440 Annual Base Rent/Sq. Ft. (a) 17.35 16.81 19.11 18.59 17.27 18.45 20.36 22.51 20.41 24.35 21.34
(a) Annual base rent excludes the operating expense reimbursement portion of the rent payable. If the lease does not provide for pass through of such operating expense reimbursements, an estimate of operating expenses is deducted from the rental rate shown. The base rental rate shown is the estimated rate in the year of expiration. Amounts disclosed are in dollars. (b) Rentable square feet leased as of March 15, 2001 out of approximately 510,000 total rentable square feet. (c) Rentable square feet leased as of March 15, 2001 out of approximately 69,000 total rentable square feet. The weighted average remaining lease term of these five medical office buildings was approximately 9 years as of March 15, 2001. The Company's leases in these medical office buildings provide for pass through of operating expenses and base rents which escalate over time. Retail. As of March 15, 2001, the Company's retail portfolio included ------- the following twelve properties:
Company's Percent Rentable Economic Leased Metropolitan Square Feet Ownership (Fully Property Description Area (Company Owned) Interest Executed) -------------------------- ------------------------ --------------- -------- --------- Presidential MarketCenter Atlanta, GA 374,000 100% 97% The Avenue of the Peninsula Rolling Hills Estates, CA 369,000 100% 83% The Avenue East Cobb Atlanta, GA 225,000 100% 100% Perimeter Expo Atlanta, GA 176,000 100% 100% Salem Road Station Atlanta, GA 67,000 100% 81% (a) Mira Mesa MarketCenter San Diego, CA 447,000 88.50% 100% The Avenue Peachtree City Atlanta, GA 167,000 88.50% 56% (a) The Shops at World Golf Village St. Augustine, FL 80,000 50% 78% Greenbrier MarketCenter Chesapeake, VA 493,000 11.50% 99% North Point MarketCenter Atlanta, GA 401,000 11.50% 100% Los Altos MarketCenter Long Beach, CA 157,000 11.50% 100% Mansell Crossing Phase II Atlanta, GA 103,000 11.50% 91% --------- 3,059,000 =========
(a) Under construction and/or in lease-up. The weighted average leased percentage of these retail properties (excluding all properties currently under construction and/or in lease-up) was approximately 95% as of March 15, 2001, and the leases expire as follows:
2010 & 2001 2002 2003 2004 2005 2006 2007 2008 2009 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- RETAIL ------ Consolidated: ------------- Square Feet Expiring 19,678 24,367 4,749 90,084 116,815 79,369 10,414 40,327 28,259 644,462 1,058,524(b) % of Leased Space 2% 2% 0% 9% 11% 7% 1% 4% 3% 61% 100% Annual Base Rent (a) 148,916 435,734 118,766 1,673,370 2,918,856 2,069,214 289,075 501,518 710,634 12,663,004 21,529,087 Annual Base Rent/Sq. Ft. (a) 7.57 17.88 25.01 18.58 24.99 26.07 27.76 12.44 25.15 19.65 20.34 Joint Venture: -------------- Square Feet Expiring 44,243 52,398 10,411 26,840 86,176 98,000 25,023 4,719 59,033 1,242,080 1,648,923(c) % of Leased Space 3% 3% 1% 2% 5% 6% 2% 0% 3% 75% 100% Annual Base Rent (a) 618,218 816,070 192,745 582,098 1,558,165 1,103,770 675,322 75,504 642,363 17,125,005 23,389,260 Annual Base Rent/Sq. Ft. (a) 13.97 15.57 18.51 21.69 18.08 11.26 26.99 16.00 10.88 13.79 14.18 Total (including only Company's % share of Joint Venture Properties): --------------------------------------------------------------------- Square Feet Expiring 24,766 30,393 5,946 94,354 159,663 92,949 18,274 40,870 35,596 1,112,733 1,615,544 % of Leased Space 1% 2% 0% 6% 10% 6% 1% 3% 2% 69% 100% Annual Base Rent (a) 220,011 529,582 140,932 1,769,899 3,864,027 2,297,533 509,219 510,201 800,096 19,843,335 30,484,835 Annual Base Rent /Sq. Ft.(a) 8.88 17.42 23.70 18.76 24.20 24.72 27.87 12.48 22.48 17.83 18.87
(a)Annual base rent excludes the operating expense reimbursement portion of the rent payable and any percentage rents due. If the lease does not provide for pass through of such operating expense reimbursements, an estimate of operating expenses is deducted from the rental rate shown. The base rental rate shown is the estimated rate in the year of expiration. Amounts disclosed are in dollars. (b)Gross leasable area leased as of March 15, 2001 out of approximately 1,144,000 total gross leasable area. (c)Gross leasable area leased as of March 15, 2001 out of approximately 1,681,000 total gross leasable area. The weighted average remaining lease term of these ten retail properties was approximately 11 years as of March 15, 2001. Most of the major tenant leases in these retail properties provide for pass through of operating expenses and base rents which escalate over time. Other. The Company's other real estate holdings include equity interests in approximately 377 acres of strategically located land held for investment and future development at North Point and Wildwood Office Park, the option to acquire the fee simple interest in approximately 9,600 acres of land through its Temco Associates joint venture, and two mortgage notes for an aggregate of approximately $24 million which are secured by a 250,000 square foot office building in Washington, D.C. The terms of these two notes have some of the characteristics of an equity investment and should provide a comparable return on investment (see Note 3). The Company's joint venture partners include either the company as named or an affiliate of the company named and are as follows: IBM, The Coca-Cola Company ("Coca-Cola"), Bank of America Corporation ("Bank of America"), The Prudential Insurance Company of America ("Prudential"), Temple-Inland Inc., Equity Office Properties Trust, CommonWealth Pacific, LLC ("CommonWealth") and CarrAmerica Realty Corporation. Refer to Item 2 hereof for a more detailed description of the Company's real estate properties. Significant Changes in 2000 Significant changes in the Company's business and properties during the year ended December 31, 2000 were as follows: Office Division. In January 2000, 1155 Perimeter Center West, an approximately 362,000 rentable square foot office building in Atlanta, Georgia, owned by 285 Venture, LLC (see Note 5), became partially operational for financial reporting purposes. Also in January 2000, Crawford Long - CPI, LLC (see Note 5) commenced construction of the Crawford Long medical office building, an approximately 366,000 rentable square foot medical office building in Atlanta, Georgia. In February 2000, 555 North Point Center East, an approximately 152,000 rentable square foot office building in suburban Atlanta, Georgia, became partially operational for financial reporting purposes. In April 2000, 101 Second Street, an approximately 387,000 rentable square foot office building in San Francisco, California, became partially operational for financial reporting purposes. In June 2000, 600 University Park Place, an approximately 123,000 rentable square foot office building in Birmingham, Alabama, became partially operational for financial reporting purposes. Also in June 2000, CPI/FSP I, L.P. (see Note 5) commenced construction of Austin Research Park - Buildings III and IV, two approximately 174,000 and 184,000 rentable square foot office buildings, respectively, in Austin, Texas. CPI/FSP I, L.P. also owns an additional parcel of land upon which a third building of approximately 184,000 rentable square feet could be developed. In October 2000, 1900 Duke Street, an approximately 97,000 rentable square foot office building in suburban Washington, D.C., became partially operational for financial reporting purposes. In November 2000, Gateway Village, an approximately 1.1 million rentable square foot office building complex in Charlotte, North Carolina (see Note 5), became partially operational for financial reporting purposes. In December 2000, CP Venture Three LLC acquired One Georgia Center, an approximately 363,000 rentable square foot office building in midtown Atlanta, Georgia. The purchase price of the building was approximately $35.8 million, which includes an additional parcel of land upon which a second building of approximately 288,000 rentable square feet could be developed. Also in December 2000, the Company purchased The Points at Waterview, an approximately 200,000 rentable square foot office building in suburban Dallas, Texas. The purchase price was approximately $25.4 million which includes an adjacent parcel of land upon which a second building of approximately 60,000 rentable square feet could be developed. Retail Division. In March 2000, the Company sold Laguna Niguel Promenade, an approximately 154,000 square foot retail center in Laguna Niguel, California, for $26.7 million which was approximately $6.4 million over the cost of the center. Including depreciation recapture of approximately $.8 million, the net gain on the sale was approximately $7.2 million. In April 2000, Mira Mesa MarketCenter, an approximately 447,000 square foot retail center in suburban San Diego, California, became partially operational for financial reporting purposes. In May 2000, The Avenue of the Peninsula, a 369,000 square foot retail center in Rolling Hills Estates, California, became partially operational for financial reporting purposes. In October 2000, Salem Road Station, an approximately 67,000 square foot neighborhood retail center in suburban Atlanta, Georgia, became partially operational for financial reporting purposes. Land Division. The Company is currently developing or has developed seven residential communities in suburban Atlanta, Georgia, including four in which development commenced in 1994, one in 1995, one in 1996 and one in 2000. These developments currently include land on which approximately 1,879 lots are being or were developed, of which 217, 292 and 344 lots were sold in 2000, 1999 and 1998, respectively. As of December 31, 2000, all of the lots in four of the seven residential communities had been sold. In November 1998, Temco Associates began development of the Bentwater residential community in suburban Atlanta, Georgia, which will consist of approximately 1,735 lots on approximately 1,290 acres (see Note 5). Temco Associates sold 219 and 106 lots within Bentwater in 2000 and 1999, respectively. Financings. In April 2000, the Company completed the $90 million financing of 101 Second Street. This non-recourse mortgage note payable has an interest rate of 8.33% and a maturity of April 27, 2010. In July 2000, the Company completed the $39 million financing of The Avenue East Cobb. This non-recourse mortgage note payable has an interest rate of 8.39% and a maturity of August 1, 2010. In August 2000, the Company completed the $25.5 million financing of Meridian Mark Plaza. This non-recourse mortgage note payable has an interest rate of 8.27% and a maturity of October 1, 2010. In October 2000, the Company repaid in full upon its maturity the note payable to First Union National Bank that was secured by the Company's interest in the 650 Massachusetts Avenue mortgage notes (see Note 3). In December 2000, the Company's credit facility was temporarily increased from $150 million to $225 million, which temporary increase expires June 30, 2001 (see Note 4). Environmental Matters Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate is generally liable for the costs of removal or remediation of certain hazardous or toxic substances on or in such property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to remediate such substances properly, may subject the owner to substantial liability and may adversely affect the owner's ability to develop the property or to borrow using such real estate as collateral. The Company is not aware of any environmental liability that the Company's management believes would have a material adverse effect on the Company's business, assets or results of operations. Certain environmental laws impose liability on a previous owner of property to the extent that hazardous or toxic substances were present during the prior ownership period. A transfer of the property does not relieve an owner of such liability. Thus, although the Company is not aware of any such situation, the Company may be liable in respect of properties previously sold. In connection with the development or acquisition of certain properties, the Company obtained Phase One environmental audits (which generally involve inspection without soil sampling or ground water analysis) from independent environmental consultants. The remaining properties (including most of the Company's land held for investment) have not been so examined. No assurance can be given that no environmental liabilities exist, that the reports reviewed all environmental liabilities, or that no prior owner created any material environmental condition not known to the Company. The Company believes that it and its properties are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances. Competition Our properties compete for tenants with similar properties located in our markets primarily on the basis of location, rent charged, services provided and the design and condition of the facilities. We also compete with other REITs, financial institutions, pension funds, partnerships, individual investors and others when attempting to acquire and develop properties. Forward-Looking Statements This Annual Report on Form 10-K includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to uncertainties and risks. Although the Company believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved. Important factors that could cause actual results to differ materially from the Company's forward-looking statements include, but are not limited to, general and local economic conditions, local real estate conditions, the activity of others developing competitive projects, the cyclical nature of the real estate industry, interest rates, the Company's ability to obtain favorable financing or zoning, the environmental impact and other governmental regulations. The risk factors are described in more detail in the Company's Current Report on Form 8-K, dated March 9, 2001, filed with the Securities and Exchange Commission. Subsequent Events On February 21, 2001, the Company sold Colonial Plaza MarketCenter, an approximately 480,000 square foot retail center in Orlando, Florida for $54 million, which was approximately $10.8 million over the cost of the center. Including depreciation recapture of approximately $6.2 million, the net gain on the sale was approximately $17 million. Executive Offices; Employees The Registrant's executive offices are located at 2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339-5683. At December 31, 2000, the Company employed 396 people. Item 2. Properties ---------------------- Table of Major Properties The following tables set forth certain information relating to major office, medical office and retail properties, stand alone retail lease sites, and land held for investment and future development in which the Company has a 10% or greater ownership interest. All information presented is as of December 31, 2000, except leasing information which is as of March 15, 2001. Dollars are stated in thousands.
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Office ------ Inforum Atlanta, GA 30303-1032 1999 N/A 100% 988,000 99% 87% 4 Acres (2) 101 Independence Center Charlotte, NC 28246-1000 1996 N/A 100% 526,000 99% 98% 2 Acres 101 Second Street San Francisco, CA 94105-3601 2000 Myers Second 100%(6) 387,000 92% 80%(7) Street Company 1 Acre LLC 55 Second Street San Francisco, CA 94105-3601 (8) Myers Bay 100%(6) 375,00 87%(8) (8) Area Company LLC 1 Acre AT&T Wireless Services Headquarters Suburban Los Angeles, CA 90703-8573 1999 N/A(6) 100%(6) 222,000 100% 100% 6 Acres (9)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Office ------ Inforum Atlanta, GA 30303-1032 BellSouth Corporation (3)(2009) 277,744 $ 86,083 $ 0 N/A Georgia Lottery Corp. (2003/2013) 127,827 $ 75,834 Lockwood Greene Engineers, Inc. 125,916 (2007/2012) Co Space Services, LLC 110,797 (2020/2025) Turner Broadcasting (2006/2016)(4) 57,827 Sapient Corporation (2009/2019) 57,689 101 Independence Center Charlotte, NC 28246-1000 Bank of America (3) 359,327 $ 76,964 $ 46,727 12/1/07 (2008/2028)(5) $ 64,709 8.22% Robinson Bradshaw & Hinson, 82,218 P.A. (2004/2009) Ernst & Young LLP (2004) 24,125 101 Second Street San Francisco, CA 94105-3601 Arthur Andersen LLP 147,986 $ 97,577 $ 89,597 4/27/10 (2009/2014) $ 93,753 8.33% Thelen, Reid & Priest 128,299 (2012/2022) 55 Second Street San Francisco, CA 94105-3601 Digital Island, Inc. (2014/2019)(8) 158,025(8) $ 44,980 $ 0 N/A Paul Hastings (2017/2027)(8) 68,100(8) (8) Fritz Companies (2012/2017)(8) 57,117(8) Preston Gates (2010/2015)(8) 43,469(8) AT&T Wireless Services Headquarters Suburban Los Angeles, CA AT&T Wireless Services 222,000 $ 52,645 $ 0 N/A (2014/2029) $ 49,639
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Office (Continued) ------------------ Cerritos Corporate Center - Phase II Suburban Los Angeles, CA 90703-8573 (8) N/A 100% 104,000 100% (8) 3 Acres (9) The Points at Waterview Suburban Dallas, Texas 75080-1472 2000 N/A 100% 200,000 100% (10) 15 Acres (10) Lakeshore Park Plaza Birmingham, AL 35209-6719 1998 Daniel Realty 100%(6) 190,000 89% 91% Company 12 Acres 600 University Park Place Birmingham, AL 35209-6774 2000 Daniel Realty 100%(6) 123,000 91% 49%(11) Company 10 Acres 333 John Carlyle Suburban Washington, D.C. 22314-5745 1999 N/A 100% 153,000 93% 89% 1 Acre 1900 Duke Street Suburban Washington, D.C. 22314-5745 2000 N/A 100% 97,000 97% 22%(12) 1 Acre 333 North Point Center East Suburban Atlanta, GA 30022-8274 1998 N/A 100% 129,000 100% 98% 9 Acres 555 North Point Center East Suburban Atlanta, GA 30022-8274 2000 N/A 100% 152,000 95% 72%(13) 10 Acres 615 Peachtree Street Atlanta, GA 30308-2312 1996 N/A 100% 149,000 95% 82% 2 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Office (Continued) ------------------ Cerritos Corporate Center - Phase II Suburban Los Angeles, CA 90703-8573 AT&T Wireless Services 104,000 $ 7,439 $ 0 N/A (2011/2021)(8) (8) The Points at Waterview Suburban Dallas, Texas 75080-1472 STB Systems, Inc. (2001) 89,050 $ 25,468 $ 0 N/A Cisco Systems, Inc. (2005/2010) 64,897 (10) Lakeshore Park Plaza Birmingham, AL 35209-6719 Infinity Insurance (2005/2015) 95,530 $ 16,530 $ 10,498 11/1/08 TCI Southeast (2001) 20,625 $ 15,405 6.78% 600 University Park Place Birmingham, AL 35209-6774 Southern Company, Inc. (3) 41,961 $ 19,456 $ 0 N/A (2005/2011) $ 18,739 333 John Carlyle Suburban Washington, D.C. 22314-5745 A.T. Kearney (2009/2019) 94,115 $ 29,072 $ 0 N/A $ 27,269 1900 Duke Street Suburban Washington, D.C. 22314-5745 American Society of Clinical 36,247 $ 26,247 $ 0 N/A Oncology (2010/2015) $ 20,163 Municipal Securities Rulemaking 47,556 Board (2016/2026) 333 North Point Center East Suburban Atlanta, GA 30022-8274 Alltel Telecom Information 48,559 $ 13,309 $ 0 N/A Services, Inc. (2003) $ 11,066 J.C. Bradford (2005/2010) 22,222 555 North Point Center East Suburban Atlanta, GA 30022-8274 Regus Business Centre 89,688 $ 16,574 $ 0 N/A (2011/2016)(14) $ 15,712 615 Peachtree Street Atlanta, GA 30308-2312 Wachovia (3)(2004/2007) 50,073 $ 13,243 $ 0 N/A $ 10,718
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Office (Continued) ------------------ One Georgia Center Atlanta, GA 30308-3619 2000 Prudential 88.50%(6) 363,000 98% (15) 3 Acres (15) Wildwood Office Park: Atlanta, GA 2300 Windy Ridge Parkway 30339-5671 1987 IBM 50% 635,000 100% 99% 12 Acres 2500 Windy Ridge Parkway 30339-5683 1985 IBM 50% 314,000 100% 98% 8 Acres 3200 Windy Hill Road 30339-5609 1991 IBM 50% 687,000 100% 100% 15 Acres 4100 and 4300 Wildwood Parkway 30339-8400 1996 IBM 50% 250,000 100% 100% 13 Acres 4200 Wildwood Parkway 30339-8402 1997 IBM 50% 260,000 100% 100% 8 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Office (Continued) ------------------ One Georgia Center Atlanta, GA 30308-3619 Norfolk & Southern (2004/2014) 89,041 $ 36,346 $ 0 N/A SouthTrust Bank (2004/2019) 80,895 $ 36,197 Wildwood Office Park: Atlanta, GA 2300 Windy Ridge Parkway 30339-5671 IBM (2002/2012) 99,233 $ 77,645 $ 63,158 12/1/05 Profit Recovery Group 72,191 $ 48,692 7.56% (2005/2010)(16) Manhattan Associates, LLC 63,296 (2002/2007) Financial Services Corporation 62,928 (2006/2011)(16) Computer Associates 62,445 (2005/2010) Life Office Management Associates 56,652 (2005/2010) Docucomp (2002/2007) 55,396 Chevron USA (2005) 51,415 2500 Windy Ridge Parkway 30339-5683 Coca-Cola Enterprises Inc. 171,037 $ 29,876 $ 22,578 12/15/05 (2003/2008) $ 17,508 7.45% Cousins Properties Incorporated 43,888 (2003) 3200 Windy Hill Road 30339-5609 IBM (2006/2011) 418,333 $ 85,615 $ 67,034 1/1/07 PriceWaterhouseCoopers 69,108 $ 58,906 8.23% (2009/2014) W.H. Smith Inc. 41,858 (2002/2007) 4100 and 4300 Wildwood Parkway 30339-8400 Georgia-Pacific 250,000 $ 29,914 $ 28,272 4/1/12 Corporation (2012/2017) $ 25,532 7.65% (17)(18) 4200 Wildwood Parkway 30339-8402 General Electric (3)(2014/2024) 260,000 $ 36,989 $ 42,787 3/31/14 $ 34,203 6.78%
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Office (Continued) ------------------ 3301 Windy Ridge Parkway 30339-5685 1984 N/A 100% 107,000 100% 100% 10 Acres 3100 Windy Hill Road 30339-5605 1983 N/A 100%(19) 188,000 100% 100% 13 Acres Bank of America Plaza Atlanta, GA 30308-2214 1992 Bank of America (3) 50% 1,261,000 100% 100% 4 Acres Gateway Village Charlotte, NC 28202-1125 (8) Bank of America (3) 50% 1,065,000 100% 13%(22) 8 Acres The Pinnacle Atlanta, GA 30326-1234 1999 LORET 50% 423,000 98% 92% Holdings, L.L.L.P. 4 Acres Two Live Oak Center Atlanta, GA 30326-1234 1997 LORET 50% 278,000 100% 99% Holdings, L.L.L.P. 2 Acres 1155 Perimeter Center West Atlanta, GA 30338-5416 (8) J. P. Morgan (3) 50% 362,000 100% 34%(23) 6 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Office (Continued) ------------------ 3301 Windy Ridge Parkway 30339-5685 Indus International, Inc. 107,000 $ 10,954 $ 0 N/A (2012/2017) $ 5,853 3100 Windy Hill Road 30339-5605 IBM (2006) 188,000 $ 17,005 (19) $ 0 N/A $ 14,284 (19) Bank of America Plaza Atlanta, GA 30308-2214 Bank of America (3) 572,742 $223,686 $ 0 (21) N/A(21) (2012/2042) $164,157 Troutman Sanders 224,181 (2007/2017) Ernst & Young LLP 211,211 (2007/2017)(20) Paul Hastings (2012/2017)(20) 92,224 Hunton & Williams 91,103 (2004/2009) Gateway Village Charlotte, NC 28202-1125 Bank of America (2015/2035) 1,065,000 $173,281 $140,618 1/2/02 $172,705 LIBOR (as defined) +.50% The Pinnacle Atlanta, GA 30326-1234 Merrill Lynch (2010/2011) 72,866 $ 91,759 $ 69,304 12/31/09 A.T. Kearney (2009/2019) 47,866 $ 83,907 7.11% PaineWebber (2013/2018)(17) 47,631 Two Live Oak Center Atlanta, GA 30326-1234 SYNAVANT Inc. 75,484 $ 48,844 $ 29,194 12/31/09 (2007/2017) $ 40,480 7.90% Chubb & Son, Inc. (3) 48,520 (2007/2017) 1155 Perimeter Center West Atlanta, GA 30338-5416 Mirant Corporation (2015) 360,395 $ 57,498 $ 0 N/A $ 56,772
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Office (Continued) ------------------ Ten Peachtree Place Atlanta, GA 30309-3814 1991 Coca-Cola (3) 50%(6) 259,000 100% 100% 5 Acres John Marshall-II Suburban Washington, D.C. 22102-3802 1996 CarrAmerica Realty 50% 224,000 100% 100% Corporation (3) 3 Acres Austin Research Park - Building III Austin, TX 78759-2314 (8) CommonWealth 50% 174,000 100% (8) Pacific, LLC 4 Acres and CalPERS Austin Research Park - Building IV Austin, TX 78759-2314 (8) CommonWealth 50% 184,000 100% (8) Pacific, LLC 7 Acres and CalPERS First Union Tower Greensboro, NC 27401-2167 1990 Prudential 11.50%(6) 322,000 90% 89% 1 Acre Grandview II Birmingham, AL 35243-1930 1998 Prudential 11.50%(6) 149,000 100% 100% 8 Acres 100 North Point Center East Suburban Atlanta, GA 30022-4885 1995 Prudential 11.50%(6) 128,000 95% 100% 7 Acres 200 North Point Center East Suburban Atlanta, GA 30022-4885 1996 Prudential 11.50%(6) 130,000 95% 99% 9 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Office (Continued) ------------------ Ten Peachtree Place Atlanta, GA 30309-3814 Coca-Cola (3) (2001) 259,000 $ 22,902 $ 16,393 11/30/01 (24) $ 18,058 8.00% John Marshall-II Suburban Washington, D.C. 22102-3802 Booz-Allen & Hamilton 224,000 $ 29,781 $ 21,426 4/1/13 (2011/2016) $ 24,071 7.00% Austin Research Park - Building III Austin, TX 78759-2314 Charles Schwab & Co., Inc. 174,000 $ 12,328 $ 0 N/A (2011/2031) (8) (8) Austin Research Park - Building IV Austin, TX 78759-2314 Charles Schwab & Co., Inc. 184,000 $ 11,118 $ 0 N/A (2012/2032) (8) (8) First Union Tower Greensboro, NC 27401-2167 Smith Helms Mullis & 70,360 $ 53,663 $ 0 N/A Moore (2010/2015) $ 41,945 Fist Union Bank (3) 62,622 (2009/2019) Grandview II Birmingham, AL 35243-1930 Protective Life (2005/2011) (25) 65,164 $ 23,094 $ 0 N/A Daniel Realty Company (2008) 23,440 $ 19,956 100 North Point Center East Suburban Atlanta, GA 30022-4885 Schweitzer-Mauduit 32,696 $ 24,327 $ 11,888 (26) 8/1/07 International, Inc. (2007/2012) $ 18,572 7.86% Conseco Finance Inc. 21,914 (2006/2011)(17) 200 North Point Center East Suburban Atlanta, GA 30022-4885 Alltel Telecom Information 48,168 $ 21,735 $ 11,888 (26) 8/1/07 Services, Inc. (2001) $ 16,947 7.86% Motorola, Inc. (2001/2011) 22,897 APAC Teleservices, Inc. 22,409 (2004/2009)
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Medical Office -------------- Northside/Alpharetta I Suburban Atlanta, GA 30005-3707 1998 N/A 100% 103,000 100% 100% 1 Acre (27) Suburban Atlanta, GA 30005-3707 1999 N/A 100% 198,000 74% 60% 2 Acres (27) Meridian Mark Plaza Atlanta, GA 30342-1613 1999 N/A 100% 159,000 99% 90% 3 Acres AtheroGenics Suburban Atlanta, GA 30004-2148 1999 N/A 100% 50,000 100% 100% 4 Acres Crawford Long Medical Office Building Atlanta, GA 30308-9999 (8) Emory University 50% 366,000 51%(8) (8) (29) Presbyterian Medical Plaza at University Charlotte, NC 28233-3549 1997 Prudential 11.50%(6) 69,000 100% 100% 1 Acre (30) Retail Centers -------------- Presidential MarketCenter Suburban Atlanta, GA 30278-2149 1994, N/A 100% 490,000 98% 87% 1996 66 acres overall of and 2000 of which 97% Company 374,000 of Company owned and 49 acres owned are owned by the Company
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Medical Office -------------- Northside/Alpharetta I Suburban Atlanta, GA 30005-3707 Northside Hospital (3)(2013) 37,387 $ 15,677 $ 10,247 1/1/06 $ 14,082 7.70% Northside/Alpharetta II Suburban Atlanta, GA 30005-3707 Northside Hospital (3)(2019)(28) 64,588 $ 17,809 $ 0 N/A $ 17,061 Meridian Mark Plaza Atlanta, GA 30342-1613 Northside Hospital (3) 39,071 $ 24,804 $ 25,441 10/01/10 (2013/2023) $ 24,119 8.27% Scottish Rite Hospital for 22,035 Crippled Children, Inc. (2003/2008) AtheroGenics Suburban Atlanta, GA 30004-2148 AtheroGenics (2019/2029) 50,000 $ 7,355 $ 0 N/A $ 6,544 Crawford Long Medical Office Building Atlanta, GA 30308-9999 Emory University 118,005(8) $ 7,594 $ 0 N/A (2017/2047)(8) (8) Presbyterian Medical Plaza at University Charlotte, NC 28233-3549 Novant Health, Inc. 63,862 $ 8,600 $ 0 N/A (2012/2027)(31) $ 7,752 Retail Centers -------------- Presidential MarketCenter Suburban Atlanta, GA 30278-2149 Target (32) N/A $ 28,309 $ 0 N/A Publix Super Market 56,146 $ 24,435 (2019/2044) Carmike Cinemas (3)(2023/2033) 44,565 Bed, Bath & Beyond (2008/2024) 35,127 T.J. Maxx (2004/2014) 32,000 Office Depot, Inc. (2011/2026) 31,628 Ross (2012/2032) 30,464 Marshalls (2010/2025) 30,000 Gap (2006/2016) 12,000
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Retail Centers (Continued) -------------------------- The Avenue of the Peninsula Rolling Hills Estates, CA 90274-3664 2000 N/A 100% 369,000 83% 59%(33) 14 Acres Perimeter Expo Atlanta, GA 30338-1519 1993 N/A 100% 291,000 100% 100% 19 acres overall of of which 100% of Company 176,000 and Company owned 10 acres are owned owned by the Company The Avenue East Cobb Suburban Atlanta, GA 30062-8197 1999 N/A 100% 225,000 100% 91% 30 Acres Salem Road Station Suburban Atlanta, GA 30016-1863 2000 N/A 100% 67,000 81%(8) 21%(34) 13 Acres Mira Mesa MarketCenter Suburban San Diego, CA 92126-2960 2000 Prudential 88.50%(6) 447,000 100% 56%(35) 40 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Retail Centers (Continued) -------------------------- The Avenue of the Peninsula Rolling Hills Estates, CA 90274-3664 Regal Cinema (2015/2030) 55,673 $ 84,017 $ 0 N/A Saks & Company (2019/2055) 42,404 $ 82,069 Ice Chalet (2001) 14,068 Restoration Hardware (2010/2020) 11,000 Banana Republic (3)(2005/2015) 9,705 Gap (2005/2015) 9,000 Perimeter Expo Atlanta, GA 30338-1519 The Home Depot Expo (32) N/A $ 19,816 $ 20,361 8/15/05 Marshalls (2014/2029) 36,598 $ 16,907 8.04% Best Buy (2014/2029) 36,000 Linens `N Things (2014/2024) 30,351 Office Max (2013/2033) 23,500 The Sport Shoe (2004/2014) 14,348 Gap's Old Navy Store 13,939 (2002/2012) The Avenue East Cobb Suburban Atlanta, GA 30062-8197 Borders, Inc. (2015/2030) 24,882 $ 39,675 $ 38,902 8/1/10 Bed, Bath & Beyond (2010/2025) 21,007 $ 36,827 8.39% Gap (2005/2015) 19,434 Talbot's (2010/2020) 12,905 Pottery Barn (3)(2006/2012) 10,000 Banana Republic (3)(2005/2015) 8,009 Salem Road Station Suburban Atlanta, GA 30016-1863 Publix Super Market 44,270 $ 6,327 $ 0 N/A (2020/2040) $ 6,285 Mira Mesa MarketCenter Suburban San Diego, CA 92126-2960 Home Depot (2020/2045) 105,764 $ 46,821 $ 0 N/A Edwards Theaters (2020/2035) 94,041 $ 46,116 Albertsons (2020/2060) 55,489 Ross (2010/2025) 30,187 Barnes & Noble Superstores, Inc. 26,566 (2015/2030) Gap's Old Navy Store (2005/2015) 22,529 Long's Drugs (2021/2041) 21,018
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Retail Centers (Continued) -------------------------- The Avenue Peachtree City Suburban Atlanta, GA 30269-3120 (8) Prudential 88.50%(6) 167,000 56%(8) (8) 18 Acres The Shops at World Golf Village St. Augustine, FL 32092-2724 1999 W.C. Bradley Co. 50% 80,000 78% 52% 3 Acres North Point MarketCenter Suburban Atlanta, GA 30202-4889 1994/1995 Prudential 11.50%(6) 517,000 100% 99% 60 Acres (36) of which 401,000 and 49 acres are owned by CP Venture Two LLC Greenbrier MarketCenter Chesapeake, VA 23327-2840 1996 Prudential 11.50%(6) 493,000 99% 100% 44 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Retail Centers (Continued) -------------------------- The Avenue Peachtree City Suburban Atlanta, GA 30269-3120 Harry's in a Hurry (2016/2031)(8) 13,656(8) $ 15,002 $ 0 N/A Gap (2012/2022)(8) 10,800(8) (8) The Shops at World Golf Village St. Augustine, FL 32092-2724 Bradley Specialty Retailing, 31,044 $ 22,529 $ 0 N/A Inc. (2013/2023) $ 21,018 North Point MarketCenter Suburban Atlanta, GA 30202-4889 Target (32) N/A $ 56,850 $ 27,611 7/15/05 Babies "R" Us (2011/2031) 50,275 $ 51,793 8.50% Media Play (2010/2025) 48,884 Marshalls (2010/2025) 40,000 Rhodes (2011/2021) 40,000 Linens `N Things (2005/2025) 35,000 United Artists (2014/2034) 34,733 Circuit City (2015/2030) 33,420 PETsMART (2009/2029) 25,465 Gap's Old Navy Store 20,000 (2006/2011) Greenbrier MarketCenter Chesapeake, VA 23327-2840 Target (2016/2046) 117,220 $ 51,210 $ 0 N/A Harris Teeter, Inc. (2016/2036) 51,806 $ 47,157 Best Buy (2015/2030) 45,106 Bed, Bath & Beyond 40,484 (2012/2027) Babies "R" Us (2006/2021) 40,000 Stein Mart, Inc. (2006/2026) 36,000 Barnes & Noble Superstores, 29,974 Inc. (2011/2026) PETsMART (2011/2031) 26,040 Office Max (2011/2026) 23,484 Gap's Old Navy Store 14,000 (2002/2012)
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy ----------- ----------- ------- --------- ----------- ---------- --------- Retail Centers (Continued) -------------------------- Los Altos MarketCenter Long Beach, CA 90815-3126 1996 Prudential 11.50%(6) 258,000 100% 100% 19 Acres of which 157,000 and 17 Acres are owned by CP Venture Two LLC Mansell Crossing Phase II Suburban Atlanta, GA 30202-4822 1996 Prudential 11.50%(6) 103,000 91% 100% 13 Acres Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects ------------------------------------------------------------------------- Wildwood Office Park Suburban Atlanta, GA 30339-5671 1985-1993 IBM 50% 14 Acres 100% 100% North Point Suburban Atlanta, GA 30202-4885 1993 N/A 100% 24 Acres 100% 100%
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate ------------ -------------------- -------- ------------- ------- -------- Retail Centers (Continued) -------------------------- Los Altos MarketCenter Long Beach, CA 90815-3126 Sears (32) N/A $ 32,807 $ 0 N/A Circuit City (3)(2017/2037) 38,541 $ 30,492 Borders, Inc. (2017/2037) 30,000 Bristol Farms (3)(2012/2032) 28,200 CompUSA, Inc. (2011/2021) 25,620 Sav-on Drugs (3)(2016/2026) 16,914 Mansell Crossing Phase II Suburban Atlanta, GA 30202-4822 Bed Bath & Beyond 40,787 $ 12,450 $ 0 N/A (2012/2027) $ 11,597 Goody's Family Clothing, 32,144 Inc. (2009/2027) Rooms To Go (2016/2036) 21,000 Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects ------------------------------------------------------------------------- Wildwood Office Park Suburban Atlanta, GA 30339-5671 N/A N/A $ 8,629 $ 0 N/A $ 6,894 North Point Suburban Atlanta, GA 30202-4885 N/A N/A $ 3,692 $ 0 N/A $ 3,550
(1) Cost as shown in the accompanying table includes deferred leasing and financing costs and other related assets. For each of the following projects: 2300 and 2500 Windy Ridge Parkway, 3200 Windy Hill Road, 4100 and 4300 Wildwood Parkway, 4200 Wildwood Parkway and Wildwood Stand Alone Retail Lease Sites, the cost shown is what the cost would be if Wildwood Associates' land cost were adjusted downward to the Company's lower basis in the land it contributed to Wildwood Associates. (2) Approximately .18 acres of the total 4 acres of land at Inforum is under a ground lease expiring 2068. (3) Actual tenant or venture partner is affiliate of entity shown. (4) Turner Broadcasting has the right to terminate their lease in 2002 upon payment of significant cancellation penalties. (5) 103,656 square feet of this lease of 101 Independence Center expires in 2010. Additionally, the tenant has the right to terminate increments of space each year beginning in 2005 with 18 months' notice. (6) See "Major Properties" - "101 Second Street," " 55 Second Street," "Cousins/Cerritos I, LLC" (AT&T Wireless Services Headquarters), "Cousins/Daniel, LLC," "CP Venture Two LLC and CP Venture Three LLC," "Ten Peachtree Place" and "CP Venture Two LLC" where these ventures' preferences and/or terms are discussed. (7) 101 Second Street became partially operational in April 2000. Thus, economic occupancy does not include a full year of operations. (8) Project was under construction and/or lease-up as of December 31, 2000. In certain situations, lease expiration dates are based upon estimated commencement dates and square footage is estimated. (9) AT&T Wireless Services Headquarters and Cerritos Corporate Center - Phase II are located on a total of 9 acres which are subject to a ground lease expiring in 2034, with an option to renew through 2087. (10) The Points at Waterview was purchased on December 28, 2000. Therefore, economic occupancy was not calculated and no depreciation and amortization was recorded in 2000. Additionally, acreage includes a pad of land upon which an approximately 60,000 rentable square foot building could be developed. (11) 600 University Park Place became partially operational in June 2000. Thus, economic occupancy does not include a full year of operations. (12) 1900 Duke Street became partially operational in October 2000. Thus, economic occupancy does not include a full year of operations. (13) 555 North Point Center East became partially operational in February 2000. Thus, economic occupancy does not include a full year of operations. (14) 44,844 square feet of this lease of 555 North Point Center East expires in 2009, with an option to extend the lease to 2014. (15) One Georgia Center was purchased on December 1, 2000. Therefore, economic occupancy was not calculated for 2000. Additionally, acreage includes a pad of land upon which an approximately 288,000 rentable square foot building could be developed. (16) 9,615 square feet of the Profit Recovery Group lease of 2300 Windy Ridge Parkway expires in 2002 and 1,556 square feet of the Financial Services Corporation lease of 2300 Windy Ridge Parkway expires in 2001. (17) Georgia-Pacific Corporation, PaineWebber and Conseco Finance Inc. have the right to terminate their leases in 2007, 2008 and 2002, respectively, upon payment of significant cancellation penalties. (18) Georgia-Pacific Corporation has the option to purchase the building on its lease expiration date for a price of $33,750,000. (19) See "Major Properties" - "Wildwood Office Park" where the accounting for the 3100 Windy Hill Road Building is discussed. (20) Ernst & Young LLP has a cancellation right on 23,036 square feet of this lease of Bank of America Plaza in 2003, if notice is received in 2002, and Paul Hastings has a cancellation right on 12,812 square feet and 20,574 square feet in 2005 and 2006, respectively. (21) See "Major Properties" - "Bank of America Plaza" where debt on Bank of America Plaza is discussed. (22) Gateway Village became partially operational in November 2000. Thus, economic occupancy does not include a full year of operations. (23) 1155 Perimeter Center West became partially operational in January 2000. Thus, economic occupancy does not include a full year of a fully operational property. (24) Maturity of the Ten Peachtree Place mortgage debt is extendible to December 31, 2008. Rate becomes floating after November 30, 2001. (25) Protective Life has the right to cancel 13,052 square feet of this lease of Grandview II in 2003. (26) 100 North Point Center East and 200 North Point Center East were financed together with one non-recourse mortgage note payable. For purposes of this schedule the total debt has been allocated 50% to each building. (27) Northside/Alpharetta I and II are located on 1 acre and 2 acres subject to ground leases, which expire in 2058 and 2060, respectively. (28) 17,444 square feet of this lease of Northside/Alpharetta II expires in 2009. (29) The Crawford Long Medical Office Building is being developed on top of a building within the Crawford Long Hospital campus. The Company has received a fee simple interest in the air rights above this building in order to develop the medical office building. (30) Presbyterian Medical Plaza at University is located on 1 acre which is subject to a ground lease expiring in 2057. (31) Novant Health, Inc. has the option to renew 23,359 rentable square feet through 2027 of this lease of Presbyterian Medical Plaza at University, with the option to renew the balance through 2022. (32) This anchor tenant owns its own space. (33) The Avenue of the Peninsula became partially operational in May 2000. Thus, economic occupancy does not include a full year of operations. (34) Salem Road Station became partially operational in October 2000. Thus, economic occupancy does not include a full year of operations. (35) Mira Misa MarketCenter became partially operational in May 2000. Thus, economic occupancy does not include a full year of operations. (36) North Point MarketCenter includes approximately 4 outparcels which are ground leased to freestanding users.
Land Held for Investment and Future Development (excluding Retail Outparcels) Developable Company's Adjusted Land Area Joint Venture Ownership Cost Debt Description, Location and Zoned Use Year Acquired (Acres)(1) Partner Interest ($ in thousands) Balances ----------------------------------- ------------- ----------- ------------- --------- ---------------- -------- Wildwood Office Park Suburban Atlanta, Georgia Office and Commercial 1971-1989 130 N/A 100% $ 6,327 $ 0 Office and Commercial 1971-1982 34 IBM 50% $10,061(2) $ 0 North Point Land (Georgia Highway 400 & Haynes Bridge Road) (3) Suburban Atlanta, Georgia Office and Commercial - East 1970-1985 13 N/A 100% $ 917 $ 0 Office and Commercial - West 1970-1985 217 N/A 100% $ 7,678 $ 0 Temco Associates (Paulding County) Suburban Atlanta, Georgia 1991 (5) Temple-Inland 50% $13,001(5) $ 0 Inc. (4)
(1) Based upon management's estimates. (2) For the portion of the Wildwood Office Park land owned by a joint venture, the cost shown is what the cost would be if the venture's land cost were adjusted downward to the Company's lower basis in the land it contributed to the venture. The adjusted cost excludes building predevelopment costs, net, of $1,079,000. (3) The North Point property is located both east and west of Georgia Highway 400. Development had been mainly concentrated on the land located east of Georgia Highway 400, until July 1998 when the Company commenced construction of the first building, AtheroGenics, on the west side. The land located east of Georgia Highway 400 surrounds North Point Mall, a 1.3 million square foot regional mall on a 100 acre site which the Company sold in 1988. (4) Joint venture partner is an affiliate of the entity shown. (5) Temco Associates has an option through March 2006, with no carrying costs, to acquire the fee simple interest in approximately 9,600 acres in Paulding County, Georgia (northwest of Atlanta, Georgia). The partnership also has an option to acquire interests in a timber rights only lease covering approximately 22,000 acres. This option also expires in March 2006, with the underlying lease expiring in 2025. The options may be exercised in whole or in part over the option period and the option price on the fee simple land is $985 per acre on January 1, 2001, escalating at 6% on January 1 of each succeeding year during the term of the option. During 2000, 1999 and 1998, approximately 734, 640 and 328 acres, respectively, of the option related to the fee simple interest was exercised. In 2000, approximately 461 acres were simultaneously sold for gross profits of $1,546,000 and approximately 264 acres were acquired for the development of the Bentwater residential community. Approximately 1,735 lots will be developed within Bentwater on an approximate total of 1,290 acres, the remainder of which will be acquired as needed through exercises of the option related to the fee simple interest. The remaining 9 acres were being held for sale or future development. In 1999, approximately 466 acres were simultaneously sold for gross profits of $2,458,000 and approximately 174 acres were acquired for development of Bentwater. In 1998, approximately 83 acres were simultaneously sold for gross profits of approximately $192,000. The Cobb County YMCA had a three year option to purchase approximately 38 acres out of the total acres of the options exercised in 1998, which they exercised in December 1999. The remaining 207 acres were deeded in early 1999 to a golf course developer who developed the golf course within Bentwater. Temco Associates sold 219 and 106 lots within Bentwater in 2000 and 1999, respectively. Major Properties ---------------- General ------- This section describes the major operating properties in which the Company has an interest either directly or indirectly through joint venture arrangements. A "negative investment" in a joint venture results from distributions of capital to the Company, if any, exceeding the sum of (i) the Company's contributions of capital and (ii) reported earnings (losses) of the joint venture allocated to the Company. "Investment" in a joint venture means the book value of the Company's investment in the joint venture. Wildwood Office Park -------------------- Wildwood Office Park is a 285 acre Class A commercial development in Atlanta, Georgia, master planned by I.M. Pei, which includes 8 office buildings containing 2,441,000 rentable square feet. The property is zoned for office, institutional, commercial and residential use. Approximately 105 acres in the park are owned by, or committed to be contributed to, Wildwood Associates (see below), including approximately 34 acres of land held for future development. The Company owns 100% of the 130 acre balance of the land available for future development. Located in Atlanta's northwest commercial district, just north of the Interstate 285/Interstate 75 intersection, Wildwood features convenient access to all of Atlanta's major office, commercial and residential districts. The Wildwood complex overlooks the Chattahoochee River and borders 1,200 acres of national forest, thus providing an urban office facility in a forest setting. Wildwood Associates. Wildwood Associates is a joint venture formed in 1985 between the Company and IBM. The Company and IBM each have a 50% interest in Wildwood Associates. At December 31, 2000, the Company's investment in Wildwood Associates and a related partnership, which included the cost of the land the Company is committed to contribute to Wildwood Associates, was a negative investment of approximately $39,081,000. Wildwood Associates owns the 3200 Windy Hill Road Building (687,000 rentable square feet), the 2300 Windy Ridge Parkway Building (635,000 rentable square feet), the 2500 Windy Ridge Parkway Building (314,000 rentable square feet), the 4100 and 4300 Wildwood Parkway Buildings (250,000 rentable square feet in total) and the 4200 Wildwood Parkway Building (260,000 rentable square feet). As of March 15, 2001, these buildings were all 100% leased. Wildwood Associates also owns 14 acres leased to two banking facilities and five restaurants. Other Buildings in Wildwood Office Park. Wildwood Office Park also contains the 3301 Windy Ridge Parkway Building, a 107,000 rentable square foot office building located on approximately 10 acres which is wholly owned by the Company. The 3301 Windy Ridge Parkway Building was 100% leased as of March 15, 2001. In addition, the 3100 Windy Hill Road Building, a 188,000 rentable square foot corporate training facility occupies a 13-acre parcel of land which is wholly owned by the Company. The training facility improvements were sold in 1983 to a limited partnership of private investors, at which time the Company received a leasehold mortgage note. The training facility land was simultaneously leased to the partnership for thirty years, along with certain equipment for varying periods. The training facility had been leased by the partnership to IBM through November 30, 1998. Effective January 1, 1997, the IBM lease was extended eight years beyond its previous expiration, to November 30, 2006. Based on the economics of the lease, the Company will receive substantially all of the economic risks and rewards from the property through the term of the IBM lease. In addition, the Company will receive substantially all of the future economic risks and rewards from the property beyond the IBM lease because of the short term remaining on the land lease (7 years) and the large mortgage note balance ($25.9 million) that would have to be paid off, with interest, in that 7 year period before the limited partnership would receive any significant benefit. Therefore, effective January 1, 1997, the $17,005,000 balance of the mortgage note and land was reclassified to Operating Properties, and revenues and expenses (including depreciation) from that point forward have been recorded as if the building were owned by the Company. North Point ----------- North Point is a mixed-use commercial development located in north central suburban Atlanta, Georgia, off of Georgia Highway 400, a six lane state highway that runs from downtown Atlanta to the northern Atlanta suburbs. The Company owns either directly or through a venture arrangement approximately 134 and 221 acres located on the east and west sides of Georgia Highway 400, respectively. Development had been mainly concentrated on the land located east of Georgia Highway 400 until July 1998 when the Company commenced construction of the first building, AtheroGenics, on the west side. Planning and infrastructure work has also begun for additional development on the west side property. The east side land surrounds North Point Mall, a 1.3 million square foot regional mall on a 100-acre site which the Company sold in 1988. The following describes the various components of North Point. North Point MarketCenter and Mansell Crossing Phase II. North Point MarketCenter, which is 100% leased as of March 15, 2001, is a 517,000 square foot retail power center (of which 401,000 square feet are owned in a venture) located adjacent to North Point Mall. Mansell Crossing Phase II, which was 91% leased as of March 15, 2001, is an approximately 103,000 square foot expansion of an existing retail power center, previously developed by the Company for a third party. These two centers are located on 49 and 13 acres of land, respectively, at North Point. Both of these properties were contributed to the Prudential venture in November 1998 (see Note 5). North Point Center East. The Company owns either directly or indirectly through a venture arrangement four Class A office buildings located adjacent to North Point Mall and the retail properties discussed above. 100 North Point Center East, 200 North Point Center East, 333 North Point Center East and 555 North Point Center East which were completed in 1995, 1996, 1998 and 2000, respectively, are 128,000, 130,000, 129,000 and 152,000 rentable square feet, respectively. 555 North Point Center East became partially operational for financial reporting purposes in February 2000. These four office buildings are located on 35 acres of land at North Point. 100 and 200 North Point Center East were contributed to the Prudential venture in November 1998 (see Note 5). 100, 200 and 555 North Point Center East were all 95% leased as of March 15, 2001 and 333 North Point Center East was 100% leased as of March 15, 2001. AtheroGenics. The Company owns directly AtheroGenics, an approximately 50,000 rentable square foot office and laboratory building located on a 4-acre site on the west side of Georgia Highway 400. AtheroGenics is 100% leased as of March 15, 2001. Other North Point Property. Approximately 24 acres of the North Point land are ground leased in 1 to 5 acre sites to freestanding users. These 24 acres were 100% leased as of March 15, 2001. The remaining approximately 230 developable acres at North Point are 100% owned by the Company. Approximately 13 acres of this land are located on the east side of Georgia Highway 400 and are zoned for office use. Approximately 217 acres of the land are located on the west side of Georgia Highway 400 and are zoned for office, institutional and light industrial use. Other Operational Office Properties ----------------------------------- Bank of America Plaza. Bank of America Plaza is a Class A, 55-story, approximately 1.3 million rentable square foot office tower designed by Kevin Roche and is located on approximately 4 acres of land between the midtown and downtown districts of Atlanta, Georgia. The building, which was completed in 1992, was 100% leased as of March 15, 2001. An affiliate of Bank of America leases approximately 46% of the rentable square feet. Bank of America Plaza was developed by CSC Associates, L.P. ("CSC"), a joint venture formed by the Company and a wholly owned subsidiary of Bank of America, each as 50% partners. CSC's net income or loss and cash distributions are allocated to the partners based on their percentage interests (50% each). At December 31, 2000, the Company's investment in CSC was approximately $90,959,000. Cousins LORET Venture, L.L.C.("Cousins LORET"). Effective July 31, 1997, Cousins LORET was formed between the Company and LORET Holdings, L.L.L.P. ("LORET"), each as 50% members. LORET contributed Two Live Oak Center, a 278,000 rentable square foot office building located in Atlanta, Georgia, which was renovated in 1997, and was 100% leased as of March 15, 2001. Two Live Oak Center was contributed subject to a 7.90% $30 million non-recourse ten year mortgage note payable. LORET also contributed an adjacent 4-acre site on which construction of The Pinnacle, a 423,000 rentable square foot Class A office building, commenced in August 1997 and was completed in November 1998. The Pinnacle became partially operational for financial reporting purposes in March 1999 and as of March 15, 2001 was 98% leased. In May 1998, Cousins LORET completed the $70 million non-recourse financing of The Pinnacle at an interest rate of 7.11% and a term of twelve years. This financing was completely funded on December 30, 1998. The Company contributed $25 million of cash to Cousins LORET to match the value of LORET's agreed-upon equity. At December 31, 2000, the Company had an investment in Cousins LORET of approximately $12,932,000. Ten Peachtree Place. Ten Peachtree Place is a 20-story, 259,000 rentable square foot Class A office building located in midtown Atlanta, Georgia. Completed in 1991, this structure was designed by Michael Graves and is currently 100% leased to Coca-Cola. Approximately four acres of adjacent land, currently used for surface parking, are available for future development. Ten Peachtree Place is owned by Ten Peachtree Place Associates, a general partnership between the Company (50%) and a wholly owned subsidiary of Coca-Cola (50%). The partnership acquired the property in 1991 for a nominal cash investment, subject to a ten-year purchase money note. This 8% purchase money note had an outstanding balance of $16,393,000 at December 31, 2000. If the purchase money note is paid in accordance with its terms, it will amortize to approximately $15.3 million ($59 per rentable square foot) over the ten-year term of the Coca-Cola lease, at which time Coca-Cola is entitled to receive the preferred return described below, and the property may be sold, released, or returned to the lender under the purchase money note for $1.00 without penalty or any further liability to the Company for the indebtedness. At December 31, 2000, the Company had an investment in Ten Peachtree Place Associates of approximately $255,000. The Company anticipates that Ten Peachtree Place Associates will generate approximately $400,000 per year of cash flows from operating activities net of note principal amortization during the ten-year lease. The partnership agreement generally provides that each of the partners is entitled to receive 50% of cash flows from operating activities net of note principal amortization (excluding any sale proceeds) for ten years, after which time the Company is entitled to 15% of cash flows (including any sale proceeds) and its partner is entitled to receive 85% of cash flows (including any sale proceeds), until the two partners have received a combined distribution of $15.3 million, after which time each partner is entitled to receive 50% of cash flows (including any sale proceeds). CC-JM II Associates. This joint venture was formed in 1994 between the Company and an affiliate of CarrAmerica Realty Corporation, each as 50% general partners, to develop and own John Marshall-II, a 224,000 square foot Class A office building in suburban Washington, D.C. The building is 100% leased until 2011 to Booz-Allen & Hamilton, an international consulting firm, as a part of its corporate headquarters campus. At December 31, 2000, the Company had an investment in CC-JM II Associates of approximately $2,129,000. Cousins/Daniel, LLC. Cousins/Daniel, LLC ("Cousins/Daniel") was formed in 1997 between Cousins, Inc. (a wholly owned subsidiary of Cousins) and Daniel Realty Company ("Daniel"). The purpose of this venture is to develop certain projects proposed by Daniel and selected by the Company. Daniel's economic rights are limited to development fees, leasing fees, management fees and certain incentive interests. These incentive interests include a residual interest in the cash flow and a residual interest in capital proceeds. All projects undertaken within the venture are pooled for purposes of calculating the aforementioned residuals. This venture is treated as a consolidated entity in the Company's financial statements. In June 1998, Cousins/Daniel acquired Lakeshore Park Plaza, an approximately 190,000 rentable square foot office building and also purchased the land for and commenced construction of, 600 University Park Place, an approximately 123,000 rentable square foot Class A office building which became partially operational for financial reporting purposes in June 2000. Both of these office buildings are located in Birmingham, Alabama, and are 89% and 91% leased, respectively, as of March 15, 2001. Cousins/Cerritos I, LLC. On November 18, 1998, the Company entered into Commonwealth/Cousins I, LLC (the "Venture") with CommonWealth for the purposes of developing AT&T Wireless Services Headquarters, a 222,000 rentable square foot Class A office building in suburban Los Angeles, California, which was 100% leased as of March 15, 2001. CommonWealth transferred all rights in the project and in exchange received an initial credit to its capital account of $4,980,039, which is equal to a 49.9% interest in the Venture. The Company contributed $5,000,000 as its capital contribution for a 50.1% interest in the Venture. The Venture is treated as a consolidated entity in the Company's financial statements. The Venture entered into a put and call agreement which CommonWealth exercised in January 2001 to sell its entire interest for approximately $7.5 million. Upon completion of the buyout, the Venture's name was changed to Cousins/Cerritos I, LLC, which is 100% owned by the Company. CP Venture Two LLC. On November 12, 1998, the Company entered into a venture agreement with Prudential. On such date the Company contributed its interest in nine properties to the venture and Prudential contributed cash (see Note 5). The nine properties contributed included four office properties, 100 and 200 North Point Center East as discussed above, First Union Tower and Grandview II and one medical office property, Presbyterian Medical Plaza at University. First Union Tower is a Class A office building containing approximately 322,000 rentable square feet, located on one acre of land in downtown Greensboro, North Carolina. First Union Tower was 90% leased as of March 15, 2001. Grandview II is an approximately 149,000 rentable square foot Class A office building in Birmingham, Alabama, which was owned by Cousins/Daniel, LLC prior to being contributed. Grandview II was approximately 100% leased as of March 15, 2001. Presbytrian Medical Plaza at University, an approximately 69,000 rentable square foot medical office building in Charlotte, North Carolina, was approximately 100% leased as of March 15, 2001. See the Other Retail Properties section where retail properties contributed to the Prudential venture are discussed. In December 2000, CP Venture Three LLC acquired One Georgia Center, an approximately 363,000 rentable square foot office building in midtown Atlanta, Georgia. The purchase price of the building was approximately $35.8 million. 101 Second Street. Cousins/Myers Second Street Partners, L.L.C., a venture formed in 1997 between the Company and Myers Second Street Company LLC ("Myers"), purchased approximately 1 acre of undeveloped land in downtown San Francisco, California upon which 101 Second Street, an approximately 387,000 rentable square foot Class A office building was developed. 101 Second Street was 92% leased as of March 15, 2001. Myers' economic rights are limited to development fees and certain incentive interests, which include a residual interest in the cash flow and capital proceeds. This venture is treated as a consolidated entity in the Company's financial statements. 333 John Carlyle. In January 1998, the Company purchased the land for and commenced construction of 333 John Carlyle, an approximately 153,000 rentable square foot Class A office building in suburban Washington, D.C. 333 John Carlyle became partially operational for financial reporting purposes in May 1999 and was 93% leased as of March 15, 2001. 1900 Duke Street. In January 1999, the Company purchased the land for and commenced construction of 1900 Duke Street, an approximately 97,000 rentable square foot Class A office building in suburban Washington, D.C. which is 97% leased as of March 15, 2001. Inforum. In June 1999, the Company acquired Inforum, a 988,000 rentable square foot office building in downtown Atlanta, Georgia, for $71 million by completing a tax-deferred exchange with the proceeds ($69 million) from the sale of the Company's 50% interest in Haywood Mall. Inforum was 99% leased as of March 15, 2001. 101 Independence Center. In December 1996, the Company acquired 101 Independence Center, a 526,000 rentable square foot Class A office building (including an underground parking garage and an adjacent parking deck) located at the intersection of Trade and Tryon Streets in the central business district of Charlotte, North Carolina. 101 Independence Center was 99% leased as of March 15, 2001. 615 Peachtree Street. In August 1996, the Company acquired 615 Peachtree Street, a 149,000 rentable square foot 12-story downtown Atlanta office building, located across from Bank of America Plaza. 615 Peachtree Street was 95% leased as of March 15, 2001. The Points at Waterview. In December 2000, the Company purchased The Points at Waterview, an approximately 200,000 rentable square foot office building in suburban Dallas, Texas. The purchase price was approximately $25.4 million which includes an adjacent parcel of land on which a second building of approximately 60,000 rentable square feet can be developed. One Ninety One Peachtree Tower. One Ninety One Peachtree Tower is a 50-story, Class A office tower located in downtown Atlanta, Georgia that was completed in December 1990. One Ninety One Peachtree Tower, which contains 1.2 million rentable square feet, was designed by John Burgee Architects, with Phillip Johnson as design consultant. One Ninety One Peachtree Tower was developed on approximately 2 acres of land, of which approximately 1.5 acres is owned and approximately one-half acre under the parking facility is leased for a 99-year term expiring in 2087 with a 99-year renewal option. One Ninety One Peachtree Tower was approximately 97% leased at March 15, 2001. C-H Associates, Ltd. ("C-H Associates"), a partnership formed in 1988 between CREC (49%), Hines Peachtree Associates Limited Partnership (49%) and Peachtree Palace Hotel, Ltd. (2%), owns a 20% interest in the partnership that owns One Ninety One Peachtree Tower. C-H Associates' 20% ownership of One Ninety One Peachtree Tower results in an effective 9.8% ownership interest by CREC, subject to a preference in favor of the majority partner, in the One Ninety One Peachtree Tower project. The balance of the One Ninety One Peachtree Tower project was owned by DIHC Peachtree Associates, which was an affiliate of Dutch Institutional Holding Company, but was acquired by Cornerstone Properties, Inc. in October 1997. In June 2000, Equity Office Properties Trust acquired Cornerstone Properties, Inc. Through C-H Associates, CREC received 50% of the development fees from the One Ninety One Peachtree Tower project. In addition, CREC owns a 50% interest in two general partnerships which receive fees from leasing and managing the One Ninety One Peachtree Tower project. The One Ninety One Peachtree Tower project was funded substantially by debt until March 1993, at which time the predecessor owner contributed equity in the amount of $145,000,000 which repaid approximately one-half of the debt. Subsequent to the equity contribution, C-H Associates had been entitled to a priority distribution of $250,000 per year (of which CREC was entitled to receive $112,500) for seven years beginning in 1993 and ending in 2000. The equity contributed is entitled to a preferred return at a rate increasing over the first 14 years from 5.5% to 11.5% (payable after CREC's priority return); at December 31, 2000, the cumulative undistributed preferred return was $13,485,701. After the owner, currently Equity Office Properties Trust, recovers its preferred return, the partners share in any operating cash flow distributions in accordance with their percentage interests. The project is subject to long-term debt of approximately $142,350,000 at December 31, 2000. At December 31, 2000, the Company had a negative investment of approximately $91,000 in the One Ninety One Peachtree Tower project. Operational Medical Office Properties ------------------------------------- Medical Office Properties. In June 1998, the Company acquired Northside/Alpharetta I, an approximately 106,000 rentable square foot medical office building in suburban Atlanta, Georgia. Northside/Alpharetta I was 100% leased as of March 15, 2001. Northside/Alpharetta II, an approximately 198,000 rentable square foot medical office building in suburban Atlanta, Georgia was 73% leased as of March 15, 2001. Additionally, Meridian Mark Plaza, an approximately 159,000 rentable square foot medical office building in Atlanta, Georgia, was 100% leased at March 15, 2001. Office Properties Under Development ----------------------------------- 55 Second Street. In November 1999, the Company formed Cousins/Myers II, LLC, a venture with Myers Bay Area Company LLC ("Myers Bay"), which purchased approximately 1 acre of fully entitled undeveloped land in downtown San Francisco, California and began development of 55 Second Street, an approximately 375,000 rentable square foot Class A office building which was 87% leased as of March 15, 2001. Myers Bay's economic rights are limited to development fees and certain incentive interests, which include a residual interest in the cash flow and capital proceeds. The venture is treated as a consolidated entity in the Company's financial statements. Charlotte Gateway Village, LLC ("Gateway"). On December 14, 1998, the Company and a wholly owned subsidiary of Bank of America Corporation formed Gateway for the purpose of developing and owning Gateway Village, a 1.1 million rentable square foot Class A office building complex in downtown Charlotte, North Carolina. Construction of Gateway Village commenced in July 1998. The project, which is 100% leased to Bank of America Corporation with a term of 15 years, became partially operational for financial reporting purposes in November 2000. In December 1998, Gateway completed construction financing of up to $190 million for Gateway Village. The note bears an interest rate of LIBOR (adjusted for certain reserve requirements) plus .50% and matures January 2, 2002. No amounts were drawn on the note until 1999. This note is fully exculpated and is supported by a lease to Bank of America Corporation with a term of 15 years. Pursuant to the Gateway operating agreement, this construction financing will be replaced with permanent long-term financing which will be fully amortized at the end of the Bank of America Corporation lease. At December 31, 2000, the Company had an investment in Gateway of approximately $21,489,000. Gateway's net income or loss and cash distributions are allocated to the members as follows: first to the Company so that it receives a cumulative compounded return equal to 11.46% on its capital contributions, second to a wholly owned subsidiary of Bank of America Corporation until it has received an amount equal to the aggregate amount distributed to the Company and then 50% to each member. 285 Venture, LLC. In March 1999, the Company and a commingled trust fund advised by J.P. Morgan Investment Management Inc. (the "J.P. Morgan Fund") formed 285 Venture, LLC, each as 50% partners, for the purpose of developing 1155 Perimeter Center West, an approximately 362,000 rentable square foot Class A office building complex in Atlanta, Georgia. 1155 Perimeter Center West became partially operational for financial reporting purposes in January 2000 and was 100% leased as of March 15, 2001. The J.P. Morgan Fund contributed the approximately 6-acre site upon which 1155 Perimeter Center West was developed. The land had an agreed-upon value of approximately $5.4 million which the Company matched with a cash contribution. At December 31, 2000, the Company's investment in 285 Venture, LLC was approximately $30,693,000. CPI/FSP I, L.P. In May 2000, CPI/FSP I, L.P., a 50% limited partnership, was formed. 50% of the venture is owned by the Company through a general partnership, Cousins Austin GP, Inc. (1%), and a limited partnership, Cousins Austin, Inc. (49%). The remaining 50% is owned by a general partnership, Fifth Street Properties - Austin, LLC (1%), and a limited partnership, Fifth Street Properties - Austin Investor, LLC (49%), which are both owned by CommonWealth Pacific LLC and CalPERS. CPI/FSP I, L.P. is currently developing Austin Research Park - Buildings III and IV, two approximately 174,000 and 184,000 rentable square foot office buildings, respectively, in Austin, Texas, which are both 100% leased as of March 15, 2001. Additionally, the venture owns an adjacent pad for future development of an approximately 184,000 rentable square foot office building. Cerritos Corporate Center - Phase II. In June 2000, the Company commenced construction of Cerritos Corporate Center - Phase II, an approximately 104,000 rentable square foot office building in suburban Los Angeles, California, adjacent to the Company's AT&T Wireless Services Headquarters office building, which was 100% leased to AT&T Wireless Services as of March 15, 2001. Medical Office Properties Under Development ------------------------------------------- Crawford Long - CPI, LLC. In October 1999, the Company formed Crawford Long - CPI, LLC with Emory University, each as 50% partners, for the purpose of developing and owning the Crawford Long Medical Office Building, an approximately 366,000 rentable square foot medical office building located in midtown Atlanta, Georgia. The building is currently under development and was 49% leased as of March 15, 2001. Other Retail Properties ----------------------- Operational Retail Properties. The Company owns six retail centers which were fully operational for financial reporting purposes as of December 31, 2000. Perimeter Expo is a 291,000 square foot retail power center (of which the Company owns 176,000 square feet) in Atlanta, Georgia which was 100% leased (Company owned) as of March 15, 2001. Presidential MarketCenter is a 490,000 square foot retail power center (of which the Company owns 374,000 square feet) in suburban Atlanta, Georgia which was 97% leased (Company owned) as of March 15, 2001. The Avenue East Cobb is a 225,000 square foot open-air retail specialty center in suburban Atlanta, Georgia which was 100% leased as of March 15, 2001. The Avenue of the Peninsula is a 369,000 square foot open-air retail specialty center in Rolling Hills Estates, California, in the greater Los Angeles metropolitan area which was 83% leased as of March 15, 2001. The Avenue of the Peninsula became partially operational for financial reporting purposes in May 2000. Salem Road Station, an approximately 67,000 square foot neighborhood retail center in suburban Atlanta, Georgia, became partially operational for financial reporting purposes in October 2000 and was 81% leased as of March 15, 2001. The Company also owned Colonial Plaza MarketCenter, which was fully operational as of December 31, 2000, but was subsequently sold (see "Retail Properties Sold" below). CP Venture Two LLC and CP Venture Three LLC. In November 1998, the Company contributed both Greenbrier MarketCenter and Los Altos MarketCenter in addition to North Point MarketCenter and Mansell Crossing II (see North Point discussion) to the aforementioned Prudential venture (see Note 5). Greenbrier MarketCenter is a 493,000 square foot retail power center which is located in Chesapeake, Virginia and was 99% leased as of March 15, 2001. Los Altos MarketCenter is a 258,000 square foot retail power center (of which the Prudential venture owns 157,000 square feet) which is located in Long Beach, California and was 100% leased as of March 15, 2001. Mira Mesa MarketCenter, an approximately 447,000 square foot retail power center in suburban San Diego, California, became partially operational for financial reporting purposes in April 2000 and was 100% leased as of March 15, 2001. Mira Mesa MarketCenter is owned by CP Venture Three LLC (see Note 5). The Avenue Peachtree City, a 167,000 square foot open-air retail specialty center in suburban Atlanta, Georgia owned by CP Venture Three LLC (see Note 5), is currently under development and was 56% leased as of March 15, 2001. Brad Cous Golf Venture, Ltd. Effective January 31, 1998, the Company formed the Brad Cous Golf Venture, Ltd. with the W.C. Bradley Co., each as 50% partners, for the purpose of developing and owning The Shops at World Golf Village, an approximately 80,000 square foot retail center located adjacent to the PGA Hall of Fame in St. Augustine, Florida. The Shops at World Golf Village became partially operational for financial reporting purposes in April 1999 and was 78% leased as of March 15, 2001. At December 31, 2000, the Company had an investment in Brad Cous Golf Venture, Ltd. of approximately $5,608,000. Retail Properties Sold. On March 28, 2000, the Company sold Laguna Niguel Promenade, an approximately 154,000 square foot retail center in Laguna Niguel, California for $26.7 million, which was approximately $6.4 million over the cost of the center. Including depreciation recapture of approximately $.8 million, the net gain on the sale was approximately $7.2 million. The net proceeds from the sale were placed in escrow pending a tax-deferred exchange to be identified by the Company. On February 21, 2001, the Company sold Colonial Plaza MarketCenter, an approximately 480,000 square foot retail center in Orlando, Florida for $54 million, which was approximately $10.8 million over the cost of the center. Including depreciation recapture of approximately $6.2 million, the net gain on the sale was approximately $17 million. Residential Lots Under Development ---------------------------------- As of December 31, 2000, CREC and Temco Associates owned the following parcels of land which are being developed into residential communities ($ in thousands):
Estimated Total Lots Initial on Land Year Currently Lots Remaining Carrying Description Acquired Owned (1) Sold to Date Lots Value ----------- -------- --------- ------------ --------- -------- CREC ---- Brown's Farm West Cobb County Suburban Atlanta, GA 1993 213 213 0 $ 0 Apalachee River Club Gwinnett County Suburban Atlanta, GA 1994 186 186 0 0 Echo Mill West Cobb County Suburban Atlanta, GA 1994 541 441 100 784 Barrett Downs Forsyth County Suburban Atlanta, GA 1994 144 144 0 0 Bradshaw Farm Cherokee County Suburban Atlanta, GA 1994 533 533 0 0 Alcovy Woods Gwinnett County Suburban Atlanta, GA 1996 162 115 47 1,305 River's Call East Cobb County Suburban Atlanta, GA 1971-1989 100 8 92 912 ----- ----- ----- ------- Total 1,879 1,640 239 $ 3,001 ===== ===== ===== ======= Temco Associates ---------------- Bentwater Paulding County Suburban Atlanta, GA 1998 1,735(2) 325 1,410 $13,001 ======== ===== ===== =======
(1) Includes lots sold to date. (2) See discussion of Temco Associates below. Land Held for Investment and Future Development ----------------------------------------------- In addition to the various land parcels located adjacent to operating properties or projects under construction discussed above, the Company owns or controls the following significant land holdings either directly or indirectly through venture arrangements. The Company intends to convert these land holdings to income-producing usage or to sell portions of land holdings as opportunities arise over time. Temco Associates. Temco Associates was formed in March 1991 as a partnership between CREC (50%) and a subsidiary of Temple-Inland Inc. (50%). Temco Associates has an option through March 2006, with no carrying costs, to acquire the fee simple interest in approximately 9,600 acres in Paulding County, Georgia (northwest of Atlanta, Georgia). The partnership also has an option to acquire interests in a timber rights only lease covering approximately 22,000 acres. This option also expires in March 2006, with the underlying lease expiring in 2025. The options may be exercised in whole or in part over the option period and the option price on the fee simple land is $985 per acre on January 1, 2001, escalating at 6% on January 1 of each succeeding year during the term of the option. During 2000, 1999 and 1998, approximately 734, 640 and 328 acres, respectively, of the option related to the fee simple interest was exercised. In 2000, approximately 461 acres were simultaneously sold for gross profits of $1,546,000 and approximately 264 acres were acquired for the development of the Bentwater residential community. Approximately 1,735 lots will be developed within Bentwater on an approximate total of 1,290 acres, the remainder of which will be acquired as needed through exercises of the option related to the fee simple interest. The remaining 9 acres were being held for sale or future development. In 1999, approximately 466 acres were simultaneously sold for gross profits of $2,458,000 and approximately 174 acres were acquired for development of Bentwater. In 1998, approximately 83 acres were simultaneously sold for gross profits of approximately $192,000. The Cobb County YMCA had a three year option to purchase approximately 38 acres out of the total acres of the options exercised in 1998, which they exercised in December 1999. The remaining 207 acres were deeded in early 1999 to a golf course developer who developed the golf course within Bentwater. Temco Associates sold 219 and 106 lots within Bentwater in 2000 and 1999, respectively. Other Investments ----------------- Air Rights Near the CNN Center. The Company owns a leasehold interest in the air rights over the approximately 365,000 square foot CNN Center parking facility in Atlanta, Georgia, adjoining the headquarters of Turner Broadcasting System, Inc. and Cable News Network. The air rights are developable for additional parking or office use. The Company's net carrying value of this interest is $0. Cousins Stone LP. Cousins Stone LP was formed on June 1, 1999 when CREC II's subsidiaries acquired Faison's 50% interest in Faison-Stone. CREC II's subsidiaries acquired an additional 25% interest in July 2000. Cousins Stone LP is a full-service real estate company headquartered in Dallas, Texas that specializes in third party property management, development and leasing of Class A office properties. At December 31, 2000, the Company had an investment in Cousins Stone LP of approximately $11,093,000. Effective February 28, 2001, CREC II's subsidiaries acquired the remaining 25% interest in Cousins Stone LP. Warrants to Purchase Stock in Other Companies --------------------------------------------- Cypress Communications, Inc. In December 1999, the Company executed an Amended and Restated Master Communications License Transaction Agreement (the "Master Agreement") with Cypress Communications, Inc. ("Cypress") that provides for Cypress and the owner of each building subject to the Master Agreement to enter into a Communications License Agreement (an "Agreement") pursuant to which Cypress will have the non-exclusive right to access the risers and certain areas of certain of the Company's and its joint ventures' office and medical office buildings. Each Agreement allows Cypress to install equipment and wiring, at Cypress' sole cost and expense, and to offer a variety of telecommunication services to tenants of each of the applicable buildings. Each Agreement has a term of 5 years with an automatic renewal for another 5 years unless Cypress elects not to renew or Cypress fails to equip the applicable building with a server within 18 months of the execution of the Agreement. Pursuant to each Agreement, the Company receives a percentage of the revenue earned by Cypress from tenants and third parties who use the telecommunication services. In addition, the Company entered into a Stock Warrant Agreement with Cypress under which Cypress issued 248,441 warrants to the Company, each warrant entitling the owner to purchase one share of Cypress' common stock at an exercise price of $4.22 per share. On February 10, 2000, Cypress completed its initial public offering of 10 million shares of common stock. The warrants have not been exercised, and the underlying common stock has not been registered under the Securities Act of 1933 and is not required to be registered until 18 months after completion of the initial public offering. Effective February 10, 2000 (the date Cypress completed its initial public offering), the value of the warrants were recorded in both Other Assets and Deferred Income in the Company's Consolidated Balance Sheets. The value of the warrants of $566,000 was determined based on the difference between management's estimate of the fair market value of the warrants less the exercise price times the number of warrants granted. The Company early adopted SFAS No. 133 effective October 1, 2000 (see Note 1). Warrants are considered derivatives under this statement and, therefore, the warrants were marked-to-market which resulted in a reduction of net income of approximately $566,000 which was recorded as a cumulative effect of change in accounting principle in the Company's Consolidated Statements of Income. AtheroGenics, Inc. In July 1998, the Company received 50,000 warrants at an exercise price of $5.00 per share for the purchase of Series C Convertible Preferred Stock of AtheroGenics, Inc, the tenant which leases 100% of AtheroGenics and who completed an initial public offering on August 8, 2000. As the share price at December 31, 2000 equaled the warrant price, no adjustment was necessary pursuant to SFAS No. 133. Supplemental Financial and Leasing Information ---------------------------------------------- Depreciation and amortization expense, net of minority interest's share, include the following components for the years ended December 31, 2000 and 1999 ($ in thousands):
2000 1999 Share of Share of Unconsolidated Unconsolidated Consolidated Joint Ventures Total Consolidated Joint Ventures Total ------------ -------------- ----- ------------ -------------- ----- Furniture, fixtures and equipment $ 799 $ 230 $ 1,029 $ 640 $ 101 $ 741 Deferred financing costs -- 1 1 -- 17 17 Goodwill and related business acquisition costs 300 -- 300 300 19 319 Building (including tenant first generation) 29,135 14,829 43,964 6,476 11,229 17,705 Tenant second generation 1,284 717 2,001 9,108 8,847 17,955 ------- ------- ------- ------- ------- ------- $31,518 $15,777 $47,295 $16,524 $20,213 $36,737 ======= ======= ======= ======= ======= =======
Exclusive of new developments and purchases of furniture, fixtures and equipment, the Company had the following capital expenditures for the years ended December 31, 2000 and 1999, including its share of unconsolidated joint ventures ($ in thousands):
2000 1999 Office Retail Total Office Retail Total ------ ------ ----- ------ ------ ----- Second generation related costs $3,239 $637 $3,876 $1,224 $208 $1,432 Building improvements 907 27 934 220 -- 220 ------ ---- ------ ------ ---- ------ Total $4,146 $664 $4,810 $1,444 $208 $1,652 ====== ==== ====== ====== ==== ======
Item 3. Legal Proceedings --------------------------- No material legal proceedings are presently pending by or against the Company. Item 4. Submission of Matters to a Vote of Security Holders ------------------------------------------------------------- (a) The Company held a Special Meeting of Shareholders on December 28, 2000. (b) Not applicable. (c) The following proposal was adopted by the Shareholders of the Company. A total of 31,329,373 votes were cast for the proposal, 5,549,230 votes were cast against the proposal and 117,766 votes were abstained: (i) The 1999 Incentive Stock Plan (the "Plan") was amended so as to increase the number of shares of common stock available under the Plan by 1.2 million shares. Item X. Executive Officers of the Registrant ---------------------------------------------- The Executive Officers of the Registrant as of the date hereof are as follows: Name Age Office Held ---- --- ----------- Thomas G. Cousins 69 Chairman of the Board of Directors and Chief Executive Officer R. Dary Stone 47 President and Chief Operating Officer Tom G. Charlesworth 51 Executive Vice President and Chief Investment Officer Kelly H. Barrett 36 Senior Vice President and Chief Financial Officer George J. Berry 63 Senior Vice President Craig B. Jones 50 Senior Vice President and President of the Office Division John S. McColl 38 Senior Vice President - Office Division Joel T. Murphy 42 Senior Vice President and President of the Retail Division John L. Murphy 55 Senior Vice President - Office Division W. James Overton 54 Senior Vice President - Office Division Family Relationships: --------------------- Lillian C. Giornelli, Mr. Cousins' daughter, is a director of the Company. There are no other family relationships among the current Executive Officers or Directors. Hugh L. McColl, Jr., John S. McColl's father, is a nominee for director at the Company's Annual Meeting of Stockholders on May 1, 2001. Term of Office: --------------- The term of office for all officers expires at the annual directors' meeting, but the Board has the power to remove any officer at any time. Business Experience: -------------------- Mr. Cousins has been the Chief Executive Officer of the Company since its inception. Mr. Stone joined the Company in June 1999 as President of Cousins Stone LP, a venture in which the Company had owned a 75% interest until February 28, 2001, when the Company purchased the remaining 25% interest. Prior to that he was founder and President of the predecessor to Cousins Stone LP, Faison-Stone. Mr. Stone was named President and Chief Operating Officer of the Company in February 2001. Mr. Charlesworth joined the Company in October 1992 and became Senior Vice President, Secretary and General Counsel in November 1992 and Executive Vice President and Chief Investment Officer in January 2001. Prior to that he worked for certain affiliates of Thomas G. Cousins as Chief Financial Officer and Legal Counsel. Ms. Barrett joined the Company in October 1992 as Vice President and Controller and became Senior Vice President - Finance of the Company in August 1997 and Chief Financial Officer in January 2001. Prior to that she was employed by Arthur Andersen LLP as an Audit Manager. Mr. Berry has been Senior Vice President since joining the Company in September 1990. Prior to that he was Commissioner of the State of Georgia's Department of Industry, Trade and Tourism from 1983 to 1990. Mr. Jones joined the Company in October 1992 and became Senior Vice President in November 1995 and President of the Office Division in September 1998. From 1987 until joining the Company, he was Executive Vice President of New Market Companies, Inc. and affiliates. Mr. McColl joined the Company in April 1996 as Vice President of the Office Division. He was promoted in May 1997 to Senior Vice President. Prior to that he was President of Hutchinson Capital Group, Inc. and an officer of Quest Capital Corp. Mr. Joel Murphy joined the Company in October 1992 and became Senior Vice President of the Company and President of the Retail Division in November 1995. From 1988 until joining the Company, he was Senior Vice President of New Market Companies, Inc. and affiliates. Mr. John Murphy has been Senior Vice President since joining the Company in December 1987. Mr. Overton has been Senior Vice President since joining the Company in September 1989. Prior to that he was employed by Hardin Construction Group, Inc. from 1972 to 1989, where he served as President from 1985 to 1989. PART II ------- Item 5. Market for Registrant's Common Stock and Related Security Holder Matters -------------------------------------------------------------------------------- The information concerning the market prices for the Registrant's common stock and related stockholder matters appearing under the caption "Market and Dividend Information" on page 54 of the Registrant's 2000 Annual Report to Stockholders is incorporated herein by reference. Item 6. Selected Financial Data ------------------------------- The information appearing under the caption "Five Year Summary of Selected Financial Data" on page 46 of the Registrant's 2000 Annual Report to Stockholders is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results -------------------------------------------------------------------------------- of Operations ------------- Management's Discussion and Analysis of Financial Condition and Results of Operations which appears on pages 47 through 53 of the Registrant' s 2000 Annual Report to Stockholders is incorporated herein by reference. Item 7a. Quantitative and Qualitative Disclosure about Market Risk ------------------------------------------------------------------ Quantitative and Qualitative Disclosures about Market Risk, which appears on page 53 of the Registrant's 2000 Annual Report to Stockholders, is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data ---------------------------------------------------- The Consolidated Financial Statements and Notes to Consolidated Financial Statements of the Registrant and Report of Independent Public Accountants which appear on pages 25 through 46 of the Registrant's 2000 Annual Report to Stockholders are incorporated herein by reference. The information appearing under the caption "Selected Quarterly Financial Information (Unaudited)" on page 55 of the Registrant's 2000 Annual Report to Stockholders is incorporated herein by reference. Other financial statements and financial statement schedules required under Regulation S-X are filed pursuant to Item 14 of Part IV of this report. Item 9. Changes in and Disagreements with Accountants on Accounting and -------------------------------------------------------------------------------- Financial Disclosure -------------------- Not applicable. PART III -------- Item 10. Directors and Executive Officers of the Registrant -------------------------------------------------------------- The information concerning the Directors and Executive Officers of the Registrant that is required by this Item 10, except that which is presented in Item X in Part I above, is included under the captions "Directors and Executive Officers of the Company" on pages 2 through 9 and "Section 16(A) Beneficial Ownership Reporting Compliance" on page 27 of the Proxy Statement dated March 30, 2001 relating to the 2000 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 11. Executive Compensation ---------------------------------- The information appearing under the caption "Executive Compensation" on pages 9 through 12 (other than the Committee Report on Compensation) and "Compensation of Directors" on page 16 of the Proxy Statement dated March 30, 2001 relating to the 2000 Annual Meeting of the Registrant's Stockholders is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management -------------------------------------------------------------------------- The information concerning security ownership of certain beneficial owners and management required by this Item 12 is included under the captions "Directors and Executive Officers of the Company" on pages 2 through 9 and "Principal Stockholders" on page 24 of the Proxy Statement dated March 30, 2001 relating to the 2000 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions ---------------------------------------------------------- The information concerning certain transactions required by this Item 13 is included under the caption "Certain Transactions" on pages 24 through 26 of the Proxy Statement dated March 30, 2001 relating to the 2000 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. PART IV ------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ---------------------------------------------------------------------------- (a) 1. Financial Statements -------------------------- A. The following Consolidated Financial Statements of the Registrant, together with the applicable Report of Independent Public Accountants, are contained on pages 25 through 46 of the Registrant's 2000 Annual Report to Stockholders and are incorporated herein by reference: Page Number in Annual Report ---------------- Consolidated Balance Sheets - December 31, 2000 and 1999 25 Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 and 1998 26 Consolidated Statements of Stockholders' Investment for the Years Ended December 31, 2000, 1999 and 1998 27 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 28 Notes to Consolidated Financial Statements December 31, 2000, 1999 and 1998 29 through 45 Report of Independent Public Accountants 46 B. The following Financial Statements, together with the applicable Report of Independent Auditors, of CSC Associates, L.P., a joint venture of the Registrant meeting the criteria for a significant subsidiary under the rules and regulations of the Securities and Exchange Commission, are filed as a part of this report. Page Number in Form l0-K ------------ Report of Independent Auditors F-1 Balance Sheets - December 31, 2000 and 1999 F-2 Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998 F-3 Statements of Partners' Capital for the Years Ended December 31, 2000, 1999 and 1998 F-4 Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 F-5 Notes to Financial Statements F-6 through December 31, 2000, 1999 and 1998 F-9 2. Financial Statement Schedules ----------------------------------- The following financial statement schedules, together with the applicable report of independent public accountants are filed as a part of this report. Page Number in Form l0-K ------------ A. Cousins Properties Incorporated and Consolidated Entities: Report of Independent Public Accountants on Schedule S-7 Schedule III- Real Estate and Accumulated Depreciation - December 31, 2000 S-8 through S-12 B. CSC Associates, L.P. Schedule III- Real Estate and Accumulated Depreciation - December 31, 2000 F-10 NOTE: Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto. Item 14. Continued --------------------- 3. Exhibits -------------- 3(a)(i) Articles of Incorporation of Registrant, as approved by the Stockholders on April 29, 1997, filed as Exhibit B to the Registrant's Proxy Statement dated April 29, 1997, and as amended by the Stockholders on April 21, 1998 as filed in the Registrant's Proxy Statement dated March 27, 1998, and incorporated herein by reference. 3(b) By-laws of Registrant, as approved by the Stockholders on April 30, 1990, and as further amended by the Stockholders on April 29, 1993, filed as Exhibit 4(b) to the Registrant's Form S-3 dated September 28, 1993, and incorporated herein by reference. 4(a) Dividend Reinvestment Plan as restated as of March 27, 1995, filed in the Registrant's Form S-3 dated March 27, 1995, and incorporated herein by reference. 10(a)(i) Cousins Properties Incorporated 1989 Stock Option Plan, as renamed the 1995 Stock Incentive Plan and approved by the Stockholders on May 6, 1996, filed as Exhibit A to the Registrant's Proxy Statement dated May 6, 1996, and as amended by the Stockholders on April 21, 1998, as filed in the Registrant's Proxy Statement dated March 27, 1998, and incorporated herein by reference. 10(a)(ii) Cousins Real Estate Corporation Stock Appreciation Right Plan, amended and restated as of March 15, 1993, filed as Exhibit 10(a)(ii) to the Registrant's Form 10-K for the year ended December 31, 1992, and incorporated herein by reference. 10(a)(iii) Cousins Properties Incorporated Stock Appreciation Right Plan, dated as of March 15, 1993, filed as Exhibit 10(a)(iii) to the Registrant's Form 10-K for the year ended December 31, 1992, and incorporated herein by reference. 10(a)(iv) Cousins Properties Incorporated 1999 Incentive Stock Plan, as amended and restated, approved by the Stockholders on December 28, 2000, filed as Annex A to the Registrant's Proxy Statement dated December 1, 2000, and incorporated herein by reference. 10(b)(i) Cousins Properties Incorporated Profit Sharing Plan as amended and restated effective as of January 1, 1996, filed as Exhibit 10(b)(i) to the Registrant's Form 10-K for the year ended December 31, 1995, and incorporated herein by reference. 10(b)(ii) Cousins Properties Incorporated Profit Sharing Trust Agreement as effective as of January 1, 1991, filed as Exhibit 10(b)(ii) to the Registrant's Form 10-K for the year ended December 31, 1991, and incorporated herein by reference. Item 14. Continued --------------------- 10(d) Cousins Properties Incorporated Stock Plan for Outside Directors, as approved by the Stockholders on April 29, 1997, filed as Exhibit B to the Registrant's Proxy Statement dated April 29, 1997, and incorporated herein by reference. 13 Annual Report to Stockholders for the year ended December 31, 2000. 21 Subsidiaries of the Registrant. 23(a) Consent of Independent Public Accountants (Arthur Andersen LLP). 23(b) Consent of Independent Auditors (Ernst & Young LLP). (b) Reports on Form 8-K. -------------------------- There were no reports filed on Form 8-K in the quarter ended December 31, 2000. On March 9, 2001, the Company filed a Form 8-K specifying certain risk factors relating to the Company and its business. SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Cousins Properties Incorporated ------------------------------- (Registrant) Dated: March 23, 2001 BY: /s/ Kelly H. Barrett ----------------------------------------- Kelly H. Barrett Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Signature Capacity Date --------- -------- ---- Principal Executive Officer: Chairman of the Board, March 23, 2001 Chief Executive Officer /s/ T.G. Cousins and Director --------------------------- T. G. Cousins Principal Financial and Accounting Officer: Senior Vice President and March 23, 2001 /s/ Kelly H. Barrett Chief Financial Officer -------------------------- Kelly H. Barrett Additional Directors: /s/ Richard W. Courts Director March 23, 2001 ------------------------- Richard W. Courts, II /s/ Boone A. Knox Director March 23, 2001 ------------------------- Boone A. Knox /s/ William Porter Payne Director March 23, 2001 ------------------------- William Porter Payne /s/ R. Dary Stone Director March 23, 2001 ------------------------- R. Dary Stone REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE ---------------------------------------------------- To Cousins Properties Incorporated: We have audited in accordance with auditing standards generally accepted in the United States, the financial statements included in the Cousins Properties Incorporated annual report to stockholders incorporated by reference in this Form l0-K, and have issued our report thereon dated February 6, 2001. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in Item 14, Part (a) 2.A. is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Atlanta, Georgia February 6, 2001
SCHEDULE III (Page 1 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ------------------------------ Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT ---------------------------------------------- North Point Property - Fulton Co., GA $ -- $ 10,294 $ -- $ 15,338 $(17,037) $ 8,595 $ -- $ 8,595 Salem Road Station Outparcels - Newton Co., GA -- 611 -- -- (315) 296 -- 296 Wildwood - Atlanta, GA -- 11,156 -- 4,847 (9,676) 6,327 -- 6,327 ---------------------------------------------------------------------------------------------- -- 22,061 -- 20,185 (27,028) 15,218 -- 15,218 ----------------------------------------------------------------------------------------------
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- --------- -------- ----------- LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT ---------------------------------------------- North Point Property - Fulton Co., GA $ -- -- 1970-1985 -- Salem Road Station Outparcels - Newton Co., GA -- -- 1999 -- Wildwood - Atlanta, GA -- -- 1971-1989 -- ------- -- -------
SCHEDULE III (Page 2 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- OPERATING PROPERTIES -------------------- 101 Independence Center - Charlotte, NC $ 46,727 $ 11,096 $ 62,824 $ 3,043 $ -- $ 11,155 $ 65,808 $ 76,963 101 Second Street - San Francisco, CA 89,597 11,698 -- 78,375 7,504 11,698 85,879 97,577 333 John Carlyle - Washington, D.C. -- 5,371 -- 22,218 1,483 5,371 23,701 29,072 333 North Point Center East - Fulton Co., GA -- 551 -- 11,949 809 551 12,758 13,309 555 North Point Center East - Fulton Co., GA -- 368 -- 15,035 1,171 368 16,206 16,574 600 University Park Place - Birmingham, AL -- 1,899 -- 15,789 1,768 1,899 17,557 19,456 615 Peachtree Street - Atlanta, GA -- 4,740 7,229 1,274 -- 4,740 8,503 13,243 AT&T Wireless Services Headquarters - Los Angeles, CA -- -- -- 51,302 1,343 -- 52,645 52,645 Inforum - Atlanta, GA -- 5,226 67,370 13,487 -- 5,226 80,857 86,083 Lakeshore Park Plaza - Birmingham, AL 10,498 3,362 12,261 907 -- 3,362 13,168 16,530 One Georgia Center - Atlanta, GA -- 9,267 27,079 -- -- 9,267 27,079 36,346 The Points at Waterview - Collin Co., TX -- 2,558 22,910 -- -- 2,558 22,910 25,468 Wildwood - 3100 Windy Hill Road - Atlanta, GA -- -- 17,005 -- -- -- 17,005 17,005
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- --------- -------- ----------- OPERATING PROPERTIES -------------------- 101 Independence Center - Charlotte, NC $ 12,254 -- 1996 25 Years 101 Second Street - San Francisco, CA 3,824 1998 1997 30 Years 333 John Carlyle - Washington, D.C. 1,803 1998 1998 30 Years 333 North Point Center East - Fulton Co., GA 2,242 1996 1996 30 Years 555 North Point Center East - Fulton Co., GA 862 1998 1998 30 Years 600 University Park Place - Birmingham, AL 717 1998 1998 30 Years 615 Peachtree Street - Atlanta, GA 2,525 -- 1996 15 Years AT&T Wireless Services Headquarters - Los Angeles, CA 3,005 1998 1998 30 Years Inforum - Atlanta, GA 10,249 -- 1999 25 Years Lakeshore Park Plaza - Birmingham, AL 1,125 -- 1998 30 Years One Georgia Center - Atlanta, GA 149 -- 2000 30 Years The Points at Waterview - Collin Co., TX -- -- 2000 25 Years Wildwood - 3100 Windy Hill Road - Atlanta, GA 2,721 1997 1997 25 Years
SCHEDULE III (Page 3 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- OPERATING PROPERTIES (Continued) -------------------------------- Wildwood - 3301 Windy Ridge Parkway - Atlanta, GA -- 20 -- 9,418 1,516 1,439 9,515 10,954 AtheroGenics - Fulton Co., GA -- 200 -- 7,075 80 200 7,155 7,355 Meridian Mark Plaza - Atlanta, GA 25,441 2,200 -- 21,869 1,735 2,200 23,604 25,804 Northside/Alpharetta I - Fulton Co., GA 10,247 -- 15,577 100 -- -- 15,677 15,677 Northside/Alpharetta II - Fulton Co., GA -- -- -- 16,797 1,012 -- 17,809 17,809 The Avenue East Cobb - Cobb Co., GA 38,902 7,205 -- 30,588 1,882 7,205 32,470 39,675 The Avenue of the Peninsula - Rolling Hills Estates, CA -- 4,338 17,152 55,407 7,120 4,338 79,679 84,017 Colonial Plaza MarketCenter - Orlando, FL -- 8,500 -- 31,641 1,905 8,500 33,546 42,046 Mira Mesa MarketCenter - San Diego, CA -- 14,465 -- 29,941 2,415 14,465 32,356 46,821 North Point Stand Alone Retail Sites - Fulton Co., GA -- 4,559 -- 426 (1,293) 3,692 -- 3,692 Perimeter Expo - Atlanta, GA 20,361 8,564 -- 11,181 71 8,564 11,252 19,816 Presidential MarketCenter - Gwinnett Co., GA -- 3,956 -- 23,453 900 3,956 24,353 28,309
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- --------- -------- ----------- OPERATING PROPERTIES (Continued) -------------------------------- Wildwood - 3301 Windy Ridge Parkway - Atlanta, GA 5,101 1984 1984 30 Years AtheroGenics - Fulton Co., GA 811 1998 1998 30 Years Meridian Mark Plaza - Atlanta, GA 1,686 1997 1997 30 Years Northside/Alpharetta I - Fulton Co., GA 1,595 -- 1998 25 Years Northside/Alpharetta II - Fulton Co., GA 747 1998 1998 30 Years The Avenue East Cobb - Cobb Co., GA 2,848 1998 1998 30 Years The Avenue of the Peninsula - Rolling Hills Estates, CA 1,949 1998 1998 30 Years Colonial Plaza MarketCenter - Orlando, FL 6,059 1995 1995 30 Years Mira Mesa MarketCenter - San Diego, CA 705 1999 1999 25 Years North Point Stand Alone Retail Sites - Fulton Co., GA 142 -- 1970-1985 Various Perimeter Expo - Atlanta, GA 2,909 1993 1993 30 Years Presidential MarketCenter - Gwinnett Co., GA 3,874 1993-2000 1993 30 Years
SCHEDULE III (Page 4 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- OPERATING PROPERTIES (Continued) -------------------------------- Miscellaneous -- 398 145 76 (474) -- 145 145 ---------------------------------------------------------------------------------------------- 241,773 110,541 249,552 451,351 30,947 110,754 731,637 842,391 ---------------------------------------------------------------------------------------------- PROJECTS UNDER CONSTRUCTION --------------------------- 55 Second Street - San Francisco, CA $ -- $ 22,141 $ -- $ 20,039 $ 2,800 $ 24,318 $ 20,662 $ 44,980 1900 Duke Street - Washington, D.C. -- 3,469 -- 15,578 1,116 3,469 16,694 20,163 Cerritos Corporate Center - Phase II - Los Angeles, CA -- -- -- 7,303 136 -- 7,439 7,439 The Avenue Peachtree City - Fayette Co., GA -- 3,510 -- 10,749 743 3,643 11,359 15,002 Salem Road Station - Newton Co., GA -- 396 -- 5,519 371 411 5,875 6,286 ---------------------------------------------------------------------------------------------- -- 29,516 -- 59,188 5,166 31,841 62,029 93,870 ---------------------------------------------------------------------------------------------- RESIDENTIAL LOTS UNDER DEVELOPMENT ---------------------------------- Echo Mill - Cobb Co., GA $ -- $ 5,298 $ -- $ 9,485 $(13,999) $ 784 $ -- $ 784 Alcovy Woods - Gwinnett Co., GA -- 1,142 -- 2,978 (2,815) 1,305 -- 1,305 River's Call Land - Cobb Co., GA -- 1,059 -- 2,612 (2,759) 912 -- 912 ---------------------------------------------------------------------------------------------- -- 7,499 -- 15,075 (19,573) 3,001 -- 3,001 ---------------------------------------------------------------------------------------------- $241,773 $169,617 $249,552 $545,799 $(10,488) $160,814 $793,666 $954,480 =============================================================================================
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- --------- -------- ----------- OPERATING PROPERTIES (Continued) -------------------------------- OPERATING PROPERTIES (Continued) Miscellaneous 130 -- 1974-1984 Various ------- 70,032 ------- PROJECTS UNDER CONSTRUCTION --------------------------- 55 Second Street - San Francisco, CA $ -- 1999 1999 -- 1900 Duke Street - Washington, D.C. -- 1998 1998 -- Cerritos Corporate Center - Phase II - Los Angeles, CA -- 2000 2000 -- The Avenue Peachtree City - Fayette Co., GA -- 1999 1999 -- Salem Road Station - Newton Co., GA -- 1999 1999 -- ------- -- ------- RESIDENTIAL LOTS UNDER DEVELOPMENT ---------------------------------- Echo Mill - Cobb Co., GA $ -- 1994 1994 -- Alcovy Woods - Gwinnett Co., GA -- 1996 1996 -- River's Call Land - Cobb Co., GA -- 2000 1971-1989 -- ------- -- ------- $70,032 =======
SCHEDULE III (Page 5 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) NOTES: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 2000 are as follows: Real Estate Accumulated Depreciation ------------------------------ --------------------------- 2000 1999 1998 2000 1999 1998 ---- ---- ---- ---- ---- ---- Balance at beginning of period $768,783 $462,047 $449,619 $35,929 $23,422 $33,617 Additions during the period: Improvements and other capitalized costs 213,783 350,114 213,495 -- -- -- Provision for depreciation -- -- -- 34,103 12,507 13,648 ------------------------------ --------------------------- 213,783 350,114 213,495 34,103 12,507 13,648 ------------------------------ --------------------------- Deductions during the period: Cost of real estate contributed -- -- (185,044) -- -- (23,843) Cost of real estate sold (28,086) (43,378) (16,023) -- -- -- (28,086) (43,378) (201,067) -- -- (23,843) ------------------------------ --------------------------- Balance at close of period $954,480 $768,783 $462,047 $70,032 $35,929 $23,422 ============================== ===========================
REPORT OF INDEPENDENT AUDITORS ------------------------------ To the Partners of CSC Associates, L.P. (A Limited Partnership) We have audited the accompanying balance sheets of CSC Associates, L.P. (the Partnership) as of December 31, 2000 and 1999, and the related statements of operations, partners' capital, and cash flows for each of the three years in the period ended December 31, 2000. Our audits also include the financial statement schedule of CSC Associates, L.P. listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CSC Associates, L.P. as of December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Atlanta, Georgia February 2, 2001
CSC ASSOCIATES, L.P. -------------------- BALANCE SHEETS -------------- DECEMBER 31, 2000 AND 1999 -------------------------- ($ in thousands) ASSETS ------ 2000 1999 -------- -------- REAL ESTATE ASSETS: Building and improvements, including land and land improvements of $22,818 in 2000 and 1999 $213,317 $212,308 Accumulated depreciation (53,367) (46,795) -------------------- 159,950 165,513 -------------------- CASH AND CASH EQUIVALENTS 982 2,269 -------------------- NOTE RECEIVABLE (Note 4) 68,789 71,399 -------------------- OTHER ASSETS: Deferred expenses, net of accumulated amortization of $6,082 and $5,156 in 2000 and 1999, respectively 5,881 6,418 Straight-line rent, interest and other receivables (Note 3) 11,558 11,674 Furniture, fixtures and equipment, net of accumulated depreciation of $80 and $63 in 2000 and 1999, respectively 69 76 Other, net of accumulated amortization of $181 and $139 in 2000 and 1999 (Note 6) 842 884 -------------------- Total other assets 18,350 19,052 -------------------- $248,071 $258,233 ==================== LIABILITIES AND PARTNERS' CAPITAL --------------------------------- NOTE PAYABLE (Note 4) $ 68,789 $ 71,399 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 2,199 3,149 -------------------- Total liabilities 70,988 74,548 -------------------- PARTNERS' CAPITAL (Note 1) 177,083 183,685 -------------------- $248,071 $258,233 ==================== The accompanying notes are an integral part of these balance sheets.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF OPERATIONS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 ----------------------------------------------------- ($ in thousands) 2000 1999 1998 ------- ------- ------- REVENUES: Rental income and recovery of expenses charged directly to specific tenants $39,339 $38,585 $36,956 Interest income (Note 4) 4,478 4,639 4,790 ----------------------------- Total revenues 43,817 43,224 41,746 ----------------------------- EXPENSES: Real estate taxes 4,133 3,856 3,407 Management and personnel costs 1,867 1,762 1,686 Cleaning 1,475 1,453 1,352 Utilities 813 874 811 Contract security 517 536 485 Repairs and maintenance 456 465 512 Elevator 337 340 309 Parking 276 286 299 Grounds maintenance 129 138 164 Insurance 110 103 106 General and administrative expenses 75 80 73 Marketing and other expenses 63 43 114 Interest expense (Note 4) 4,478 4,639 4,790 Depreciation and amortization 7,710 7,694 7,444 ----------------------------- Total expenses 22,439 22,269 21,552 ----------------------------- NET INCOME $21,378 $20,955 $20,194 ============================= The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF PARTNERS' CAPITAL ------------------------------- FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 ---------------------------------------------------- ($ in thousands) BALANCE, December 31, 1997 $193,716 Net income 20,194 Distributions (23,700) -------- BALANCE, December 31, 1998 190,210 Net income 20,955 Distributions (27,480) -------- BALANCE, December 31, 1999 183,685 Net income 21,378 Distributions (27,980) -------- BALANCE, December 31, 2000 $177,083 ======== The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF CASH FLOWS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 ---------------------------------------------------- ($ in thousands) 2000 1999 1998 ------- ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $21,378 $20,955 $20,194 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,710 7,694 7,444 Rental revenue recognized on straight-line basis different from rental revenue specified in the lease agreements 207 15 (164) Change in other receivables and other assets 130 (170) (207) Change in accounts payable and accrued liabilities related to operations (1,015) 27 1,640 ------------------------- Net cash provided by operating activities 28,410 28,521 28,907 ------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to building and improvements (1,322) (99) (3,480) Payments for deferred expenses (374) (371) (458) Collection of note receivable 2,610 2,450 2,298 Payments for furniture, fixtures and equipment (21) (43) (15) ------------------------- Net cash provided by (used in) investing activities 893 1,937 (1,655) ------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of note payable (2,610) (2,450) (2,298) Partnership distributions (27,980) (27,480) (23,700) ------------------------- Net cash used in financing activities (30,590) (29,930) (25,998) ------------------------- NET (DECREASE) INCREASE IN CASH (1,287) 528 1,254 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,269 1,741 487 ------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 982 $ 2,269 $ 1,741 ========================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ 4,485 $ 4,646 $ 4,802 ========================= The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 2000, 1999 AND 1998 -------------------------------- 1. FORMATION OF THE PARTNERSHIP AND TERMS OF THE PARTNERSHIP AGREEMENT ------------------------------------------------------------------- CSC Associates, L.P. ("CSC" or the "Partnership") was formed under the terms of a Limited Partnership Agreement dated September 29, 1989 and by the filing of its Certificate of Limited Partnership on October 27, 1989. C&S Premises, Inc. ("Premises") and Cousins Properties Incorporated ("CPI") each own a 1% general partnership and a 49% limited partnership interest in the Partnership. Premises is a wholly owned subsidiary of NB Holdings Corporation, which is a wholly owned subsidiary of Bank of America. In 1996 Premises transferred its 1% general partnership interest in the partnership to C&S Premises-SPE, Inc., a wholly owned subsidiary of Premises. The Partnership was formed for the purpose of developing and owning a 1.4 million gross square foot office tower in downtown Atlanta, Georgia (the "Building"), which is the Atlanta headquarters of Bank of America Corporation. The Partnership Agreement and related documents (the "Agreements") contain among other provisions, the following: a. CPI is the Managing Partner. b. CPI is obligated to contribute a total of $18.2 million cash to the Partnership, all of which has been contributed. Premises is obligated to contribute land parcels to the Partnership having an aggregate agreed upon value of $18.2 million, all of which has been contributed, which property value, in the opinion of the partners, was equal to the estimated fair market value of the land at the time of formation of the Partnership. The value of the property contributed by Premises was recorded on the Partnership's books at an amount equal to the cash contributed by CPI for an equal (50%) partnership interest. In October 1993, the partners each contributed an additional $86.7 million. c. No interest is earned on partnership capital. d. Net income or loss and cash distributions are allocated to the partners based on their percentage interests (50% each). 2. SIGNIFICANT ACCOUNTING POLICIES ------------------------------- Capitalization Policies ----------------------- All costs related to planning, developing and constructing the Building plus expenditures for the Building prior to the date it became operational for financial statement purposes have been capitalized. Interest expense, amortization of financing costs, and real estate taxes were also capitalized while the Building was under development. Depreciation and Amortization ----------------------------- Real estate assets are carried at cost. Depreciation of the Building commenced on the date the Building became operational for financial reporting purposes and the Building is being depreciated over 40 years. Leasehold and tenant improvements are amortized over the life of the related lease or the useful life of the asset, whichever is shorter. Furniture, fixtures, and equipment are depreciated over 5 years. Deferred expenses, which include certain marketing and leasing costs and deferred operating expenses which are being passed through to the tenants, are amortized over the period of estimated benefit. The straight-line method is used for all depreciation and amortization. Income Taxes ------------ No provision has been made for federal or state income taxes because each partner's proportionate share of income or loss from the Partnership will be passed through to be included on each partner's separate tax return. Cash and Cash Equivalents ------------------------- Cash and cash equivalents include all cash and highly liquid money market instruments. Highly liquid money market instruments include securities and repurchase agreements with original maturities of three months or less or money market mutual funds. Rental Income ------------- In accordance with Statement of Financial Accounting Standards ("SFAS") No. 13, income on leases which include increases in rental rates over the lease term (other than scheduled increases based on the Consumer Price Index) is recognized on a straight-line basis. Allowance for Doubtful Accounts ------------------------------- From time to time, the Partnership evaluates the need to establish an allowance for doubtful accounts based on a review of specific receivables. As of December 31, 2000 and 1999, there is no allowance for doubtful accounts included in the accompanying Balance Sheets. Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. 3. LEASES ------ The Partnership has leased office space to NB Holdings Corporation, as well as to unrelated third parties. The lease with NB Holdings Corporation was negotiated at rates comparable to those quoted to third parties. The leases contain escalation provisions and provisions requiring tenants to pay a pro rata share of operating expenses. The leases typically include renewal options and all are classified and accounted for as operating leases. At December 31, 2000, future minimum rentals to be received under existing non-cancelable leases, excluding tenants' current pro rata share of operating expenses, are as follows ($ in thousands):
Lease Leases With With NB Holdings Third Corporation Parties Total ----------- -------- -------- 2001 $ 12,231 $ 17,652 $ 29,883 2002 12,231 18,988 31,219 2003 12,231 19,699 31,930 2004 12,231 18,322 30,553 2005 12,231 18,264 30,495 Subsequent to 2005 78,487 38,279 116,766 ----------------------------------- $139,642 $131,204 $270,846 ===================================
In the year ended December 31, 2000 and 1999, income which would have accrued in accordance with the lease terms exceeded income recognized on a straight-line basis by $207,000 and $15,000, respectively. At December 31, 2000 and 1999, receivables which related to the cumulative excess of revenues recognized in accordance with SFAS No. 13 over revenues which accrued in accordance with the actual lease agreements totaled approximately $10,612,000 and $10,819,000, respectively. Of that amount, 15% was related to leases with NB Holdings Corporation and approximately 37% and 34% was related to each of two professional services firms, respectively. At December 31, 2000 NB Holdings Corporation leased approximately 46% and two professional services firms leased approximately 18% and 17%, respectively, of the net rentable space of the Building. 4. NOTE PAYABLE AND NOTE RECEIVABLE -------------------------------- On February 6, 1996, the Partnership issued $80 million of 6.377% collateralized notes (the "Notes"). The Notes amortize in equal monthly installments of $590,680 based on a 20 year amortization schedule, and mature February 15, 2011. The Notes are non-recourse obligations of the Partnership and are secured by a Deed to Secure Debt, Assignment of Rents and Security Agreement covering the Partnership's interest in the Building. The Partnership has loaned the $80 million proceeds of the Notes to CPI under a non-recourse loan (the "CPI Loan") secured by CPI's Partnership interests under the same payment terms as those of the Notes. CPI paid all costs of issuing the Notes and the CPI Loan, including a $400,000 fee to an affiliate of Bank of America. In addition, CPI pays a monthly fee to an affiliate of Bank of America of .025% of the outstanding principal balance of the Notes. These fees totaled approximately $211,000 and $218,000 in 2000 and 1999, respectively. The estimated fair value of both the note payable and related note receivable at December 31, 2000 and 1999 was $66 million and $64 million, respectively, which was calculated by discounting future cash flows under the notes at estimated rates at which similar notes would be made currently. The maturities of the Notes at December 31, 2000 are as follows (in thousands): 2001 $ 2,782 2002 2,965 2003 3,159 2004 3,367 2005 3,588 Subsequent to 2005 52,928 ------- $68,789 ======= 5. RELATED PARTIES --------------- The Partnership engaged CPI and an affiliate of CPI to manage, develop and lease the Building. During 2000, 1999 and 1998, fees to CPI and its affiliate incurred by the Partnership were as follows ($ in thousands): 2000 1999 1998 ------ ------ ------ Development and tenant construction fees $ -- $ 27 $ 38 Leasing and procurement fees 109 63 399 Management fees 990 959 917 ---------------------------- $1,099 $1,049 $1,354 ============================ 6. PARKING AGREEMENT ----------------- On February 7, 1996, CSC entered into a 25 year Cross Parking License Agreement ("Parking Agreement") with the North Avenue Presbyterian Church ("NAPC") which allows CSC the use of 200 parking spaces in NAPC's parking deck which is located adjacent to NAPC. The agreement commenced on October 1, 1996. CSC paid a $1,000,000 contribution toward the construction cost of the parking deck as consideration for the Parking Agreement. The $1,000,000 contribution plus additional costs of approximately $23,000 are included in Other Assets and are being amortized over the 25 year life of the Parking Agreement. NAPC may reduce the number of parking spaces available to the Partnership or may terminate the Parking Agreement under certain conditions after the sixth year, at which time a partial refund of the $1,000,000 would be due to CSC. In addition, CSC is responsible for the maintenance of the parking deck and the payment of the related operating expenses.
SCHEDULE III CSC ASSOCIATES, L.P. REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- Bank of America Plaza Atlanta, Georgia $ -- $18,200 $ -- $184,668 $10,449 $22,818 $190,499 $213,317 ===============================================================================================
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- --------- -------- ----------- Bank of America Plaza Atlanta, Georgia $53,367 1990-1992 1990 5-40 =======
NOTE: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 2000 are as follows:
Real Estate Accumulated Depreciation ------------------------------ --------------------------- 2000 1999 1998 2000 1999 1998 ---- ---- ---- ---- ---- ---- Balance at beginning of period $212,308 $212,334 $209,120 $46,795 $40,033 $33,621 Improvements and other capitalized costs 1,324 99 3,480 -- -- -- Write-offs of improvements and other capitalized costs (315) (125) (266) (315) (125) (266) Provision for depreciation -- -- -- 6,887 6,887 6,678 ------------------------------ --------------------------- Balance at end of period $213,317 $212,308 $212,334 $53,367 $46,795 $40,033 ============================== ===========================