What changed in this filing

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Item 1. Financial Statements

2020-07-30 compared with 2020-04-30 · 347 added, 105 removed, 368 unchanged (55% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Real estate assets:

Operating properties, net of accumulated depreciation of $ 692,126 and $ 577,139 in 2020 and 2019, respectively

$ 6,011,375 $ 5,669,324

Projects under development 205,376 410,097

Land 97,196 116,860

6,313,947 6,196,281

Real estate assets and other assets held for sale, net of accumulated depreciation and amortization of $ 61,093 in 2019

5 unchanged sentences

Intangible assets, net 224,066 257,649

Other assets 55,316 59,449

Total assets $ 6,908,448 $ 7,151,447

Notes payable $ 1,939,517 $ 2,222,975

2 unchanged sentences

Intangible liabilities, net of accumulated amortization of $ 66,343 and $ 55,798 in 2020 and 2019, respectively

72,560 83,105

Other liabilities 115,493 134,128

4 unchanged sentences

Preferred stock, $ 1 par value, 20,000,000 shares authorized, 1,716,837 shares issued and outstanding in 2019

Common stock, $1 par value, 300,000,000 shares authorized, 151,124,621 and 149,347,382 shares issued in 2020 and 2019, respectively

Common stock, $ 1 par value, 300,000,000 shares authorized, 151,153,042 and 149,347,382 shares issued, and 148,568,109 and 146,762,449 shares outstanding in 2020 and 2019, respectively

151,153 149,347

Additional paid-in capital 5,540,945 5,493,883

Treasury stock at cost, 2,584,933 shares in 2020 and 2019

( 148,473 ) ( 148,473 )

Distributions in excess of cumulative net income ( 1,028,289 ) ( 1,137,200 )

1 unchanged sentence

Nonredeemable noncontrolling interests 24,993 68,561

Total equity 4,540,329 4,427,835

Total liabilities and equity $ 6,908,448 $ 7,151,447

3 unchanged sentences

in thousands, except per share amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Rental property revenues $ 175,099 $ 134,933 $ 364,228 $ 258,798

Fee income 4,690 7,076 9,422 15,804

Other 126 11 163 151

179,915 142,020 373,813 274,753

Rental property operating expenses 61,621 46,705 126,159 90,192

4 unchanged sentences

Transaction costs 63 49,827 428 49,830

Other 552 624 1,118 804

157,962 169,540 317,122 282,283

Income from unconsolidated joint ventures 1,715 3,634 5,140 6,538

Gain on sales of investments in unconsolidated joint ventures

Gain on investment property transactions

Net income attributable to noncontrolling interests

Net income available to common stockholders

Net income per common share — basic

Net income per common share — diluted

Gain (loss) on sales of investments in unconsolidated joint ventures ( 231 ) — 45,999 —

Gain (loss) on investment property transactions ( 201 ) 1,304 90,715 14,415

Net income (loss) 23,236 ( 22,582 ) 198,545 13,423

Net (income) loss attributable to noncontrolling interests ( 135 ) 173 ( 501 ) ( 491 )

Net income (loss) available to common stockholders $ 23,101 $ ( 22,409 ) $ 198,044 $ 12,932

Net income (loss) per common share — basic and diluted

$ 0.16 $ ( 0.20 ) $ 1.34 $ 0.12

Weighted average shares — basic 148,548 112,926 147,986 109,049

4 unchanged sentences

in thousands except per share amounts)

Three Months Ended March 31, 2020

Distributions in

Stockholders’

Nonredeemable

Three Months Ended June 30, 2020

Stock Additional

Capital Treasury

Stock Distributions in

Net Income Stockholders’

Investment Nonredeemable

Noncontrolling

Interests Total

Balance March 31, 2020 $ — $ 151,125 $ 5,538,875 $ ( 148,473 ) $ ( 1,006,820 ) $ 4,534,707 $ 24,291 $ 4,558,998

Net income — — — — 23,101 23,101 135 23,236

Common stock issued pursuant to stock based compensation

— 30 928 — — 958 — 958

Amortization of stock options, restricted stock, and restricted stock units, net of forfeitures

— ( 2 ) 1,142 — — 1,140 — 1,140

Contributions from nonredeemable noncontrolling interests

— — — — — — 780 780

Distributions to nonredeemable noncontrolling interests

— — — — — — ( 213 ) ( 213 )

Common dividends ($ 0.30 per share)

— — — — ( 44,570 ) ( 44,570 ) — ( 44,570 )

Balance June 30, 2020 $ — $ 151,153 $ 5,540,945 $ ( 148,473 ) $ ( 1,028,289 ) $ 4,515,336 $ 24,993 $ 4,540,329

Three Months Ended June 30, 2019

Stock Additional

Capital Treasury

Stock Distributions in

Net Income Stockholders’

Investment Nonredeemable

Noncontrolling

Interests Total

Balance March 31, 2019 $ 1,717 $ 107,731 $ 3,934,038 $ ( 148,473 ) $ ( 1,124,596 ) $ 2,770,417 $ 57,812 $ 2,828,229

Net loss — — — — ( 22,409 ) ( 22,409 ) ( 173 ) ( 22,582 )

Common stock issued in merger — 41,576 1,556,613 — — 1,598,189 — 1,598,189

Common stock issued pursuant to stock based compensation

— 41 1,373 — — 1,414 — 1,414

Amortization of stock options and restricted stock, net of forfeitures

— — 624 — — 624 — 624

Nonredeemable noncontrolling

interests acquired in merger — — — — — — 5,187 5,187

Contributions from nonredeemable noncontrolling interests

— — — — — — 1,660 1,660

Distributions to nonredeemable noncontrolling interests

— — — — — — ( 541 ) ( 541 )

Common dividends ($ 0.29 per share)

— — — — ( 42,562 ) ( 42,562 ) — ( 42,562 )

Balance June 30, 2019

$ 1,717 $ 149,348 $ 5,492,648 $ ( 148,473 ) $ ( 1,189,567 ) $ 4,305,673 $ 63,945 $ 4,369,618

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

in thousands except per share amounts)

Six Months Ended June 30, 2020

Stock Additional

Capital Treasury

Stock Distributions in

Net Income Stockholders’

Investment Nonredeemable

Noncontrolling

Interests Total

Balance December 31, 2019 $ 1,717 $ 149,347 $ 5,493,883 $ ( 148,473 ) $ ( 1,137,200 ) $ 4,359,274 $ 68,561 $ 4,427,835

Net income (loss)

Net income — — — — 198,044 198,044 501 198,545

Common stock issued pursuant to stock based compensation

— 90 ( 397 ) — — ( 307 ) — ( 307 )

Common stock issued pursuant to unitholder redemption

Amortization of stock options and restricted stock, net of forfeitures

( 1,717 ) 1,719 45,032 — — 45,034 ( 45,034 ) —

Amortization of stock options, restricted stock, and restricted stock units, net of forfeitures

— ( 3 ) 2,427 — — 2,424 — 2,424

Contributions from nonredeemable noncontrolling interests

— — — — — — 1,816 1,816

Distributions to nonredeemable noncontrolling interests

— — — — — — ( 851 ) ( 851 )

Common dividends ($ 0.60 per share)

Balance March 31, 2020

Three Months Ended March 31, 2019

Distributions in

Stockholders’

Nonredeemable

— — — — ( 89,133 ) ( 89,133 ) — ( 89,133 )

Balance June 30, 2020 $ — $ 151,153 $ 5,540,945 $ ( 148,473 ) $ ( 1,028,289 ) $ 4,515,336 $ 24,993 $ 4,540,329

Six Months Ended June 30, 2019

Stock Additional

Capital Treasury

Stock Distributions in

Net Income Stockholders’

Investment Nonredeemable

Noncontrolling

Interests Total

Balance December 31, 2018 $ 1,717 $ 107,681 $ 3,934,385 $ ( 148,473 ) $ ( 1,129,445 ) $ 2,765,865 $ 55,291 $ 2,821,156

Net income — — — — 12,932 12,932 491 13,423

Common stock issued in merger — 41,576 1,556,613 — — 1,598,189 — 1,598,189

Common stock issued pursuant to stock based compensation

— 91 418 — — 509 — 509

Amortization of stock options and restricted stock, net of forfeitures

— — 1,232 — — 1,232 — 1,232

Nonredeemable noncontrolling

interests acquired in merger — — — — — — 5,187 5,187

Contributions from nonredeemable noncontrolling interests

— — — — — — 4,241 4,241

Distributions to nonredeemable noncontrolling interests

— — — — — — ( 1,265 ) ( 1,265 )

Common dividends ($ 0.58 per share)

Balance March 31, 2019

— — — — ( 73,054 ) ( 73,054 ) — ( 73,054 )

Balance June 30, 2019

$ 1,717 $ 149,348 $ 5,492,648 $ ( 148,473 ) $ ( 1,189,567 ) $ 4,305,673 $ 63,945 $ 4,369,618

See accompanying notes.

2 unchanged sentences

in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 198,545 $ 13,423

Adjustments to reconcile net income to net cash provided by operating activities:

17 unchanged sentences

Change in notes receivable and other assets 52 85,978

Other — ( 47 )

Net cash provided by (used in) investing activities 248,792 ( 37,246 )

3 unchanged sentences

Repayment of notes payable ( 30,760 ) ( 684,445 )

Issuance of unsecured senior notes — 650,000

Payment of deferred financing costs — ( 2,861 )

Contributions from nonredeemable noncontrolling interests 1,816 4,241

1 unchanged sentence

Common dividends paid ( 87,123 ) ( 57,817 )

Net cash provided by (used in) financing activities

Other ( 1,368 ) ( 1,026 )

Net cash used in financing activities ( 369,786 ) ( 29,173 )

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

12,594 11,372

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

June 30, 2020

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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Therefore, the results included herein do not include a federal income tax provision for Cousins.

As of March 31, 2020 , the Company's portfolio of real estate assets consisted of interests in 19.0 million square feet of office space and 310,000 square feet of mixed-use space.

As of June 30, 2020, the Company's portfolio of real estate assets consisted of interests in 19.0 million square feet of office space and 310,000 square feet of mixed-use space.

Basis of Presentation :

The condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”).

In the opinion of management, these financial statements reflect all adjustments necessary (which adjustments are of a normal and recurring nature) for the fair presentation of the Company's financial position as of March 31, 2020 and the results of operations for the three months ended March 31, 2020 and 2019 .

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of results expected for the full year.

In the opinion of management, these financial statements reflect all adjustments necessary (which adjustments are of a normal and recurring nature) for the fair presentation of the Company's financial position as of June 30, 2020 and the results of operations for the three and six months ended June 30, 2020 and 2019.

The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of results expected for the full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC.

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All shares of common stock, preferred stock, stock options, restricted stock units, and per share information presented in the condensed consolidated financial statements have been adjusted to reflect the reverse stock split on a retroactive basis for all periods presented.

For the three months ended March 31, 2020 and 2019 , there were no items of other comprehensive income.

For the three and six months ended June 30, 2020 and 2019, there were no items of other comprehensive income.

Therefore, no presentation of comprehensive income is required.

1 unchanged sentence

If the entity or arrangement qualifies as a VIE and the Company is determined to be the primary beneficiary, the Company is required to consolidate the assets, liabilities, and results of operations of the VIE.

At March 31, 2020 , the Company had no investments or interests in any VIEs.

At June 30, 2020, the Company had no investments or interests in any VIEs.

MERGER WITH TIER REIT, INC.

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The Merger has been accounted for as a business combination with the Company as the accounting acquirer, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair value.

The total value of the

transaction is based on the closing stock price of the Company's common stock on June 13, 2019, the day immediately prior to the closing of the Merger.

The total value of the transaction is based on the closing stock price of the Company's common stock on June 13, 2019, the day immediately prior to the closing of the Merger.

Based on the shares issued in the transaction, the total fair value of the assets acquired and liabilities assumed in the Merger was $ 1.6 billion.

During the three months ended March 31, 2020 and 2019 , the Company incurred expenses related to the Merger of $ 365,000 and $ 3,000 , respectively.

For the three and six months ended June 30, 2020, the Company incurred expenses related to the Merger of $ 63,000 and $ 428,000 , respectively.

For the three and six months ended June 30, 2019, the Company incurred expenses related to the Merger of $ 49.8 million.

Management engaged a third party valuation specialist to assist with valuing the real estate assets acquired and liabilities assumed in the Merger.

The third party used cash flow analyses as well as an income approach and a cost approach to determine the fair value of real estate assets acquired.

Based on additional information that may become available, subsequent adjustments may be made to the purchase price allocation within the allocation period, which typically does not exceed one year.

The purchase price was allocated as follows (in thousands):

6 unchanged sentences

Intangible assets 141,184

Other assets 9,954

Notes payable 747,549

5 unchanged sentences

Total purchase price $ 1,598,362

During the three months ended March 31, 2020 , the Company recorded revenues of $ 51.0 million related to assets acquired in the Merger.

During the three and six months ended June 30, 2020, the Company recorded revenues related to assets acquired in the Merger of $ 51.7 million and $ 102.7 million, respectively.

During the three and six months ended June 30, 2019, the Company recorded revenues related to assets acquired in the Merger of $ 9.7 million.

The following unaudited supplemental pro forma information is based upon the Company's historical condensed consolidated statements of operations, adjusted as if the Merger had occurred on January 1, 2018.

The supplemental pro forma information is not necessarily indicative of future results, or of actual results, that would have been achieved had the Merger been consummated on January 1, 2018.

Three Months Ended March 31, 2019

Three Months Ended

June 30, 2019 Six Months Ended

June 30, 2019

Revenues $ 182,288 $ 367,319

Net income 62,092 87,744

Net income available to common stockholders 61,211 86,576

Supplemental pro forma earnings were adjusted to exclude $ 3,000 of transaction costs incurred in the three months ended March 31, 2019 .

Supplemental pro forma earnings were adjusted to exclude $ 49.8 million of transaction costs incurred in the three and six months ended June 30, 2019.

TRANSACTIONS WITH NORFOLK SOUTHERN RAILWAY COMPANY

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The Company determined that the inputs method of measuring progress of satisfying the performance obligation was the most appropriate method of recognizing revenue for the services component.

Therefore, the Company began recognizing revenue in the quarter ended March 31, 2019 , and will recognize future revenue based upon the time spent by the Company’s employees in providing these services as compared to the total estimated time required to satisfy the performance obligation.

During the three months ended March 31, 2020 and 2019, the Company recognized $ 3.7 million and $ 6.6 million , respectively, in fee income in its condensed consolidated statements of operations related to the services provided to NS.

As of March 31, 2020 and December 31, 2019 , the Company had deferred income included in the consolidated balance sheet of $ 9.9 million and $ 11.3 million , respectively, related to NS.

Therefore, the Company began recognizing revenue in the quarter ended March 31, 2019, and will continue to recognize revenue based upon the time spent by the Company’s employees in providing these services as compared to the total estimated time required to satisfy the performance obligation.

During the three months ended June 30, 2020 and 2019, the Company recognized $ 3.7 million and $ 5.0 million, respectively, in fee income in its condensed consolidated statements of operations related to the services provided to NS.

During the six months ended June 30, 2020 and 2019, the Company recognized $ 7.5 million and $ 11.6 million, respectively, in fee income in its condensed consolidated statements of operations related to the services provided to NS.

As of June 30, 2020 and December 31, 2019, the Company had deferred income included in the consolidated balance sheet of $ 8.5 million and $ 11.3 million, respectively, related to NS.

REAL ESTATE TRANSACTIONS

During March 2020, the Company sold Hearst Tower, a 966,000 square foot office building in Charlotte, North Carolina that was included in the Company's Charlotte/Office operating segment, for a gross purchase price of $ 455.5 million .

During May 2020, the Company purchased a 1,550 space parking garage in Charlotte, North Carolina for a gross purchase price of $ 85.0 million.

This property is included in real estate assets on the condensed consolidated balance sheet and in the Company's Charlotte/Office operating segment.

During March 2020, the Company sold Hearst Tower, a 966,000 square foot office building in Charlotte, North Carolina, for a gross purchase price of $ 455.5 million.

This property was included in the Company's Charlotte/Office operating segment.

This transaction was triggered by the exercise of a purchase option by the building's primary lessee.

The Company recognized a gain of $ 90.9 million on the sale of Hearst Tower.

During February 2020, as part of the Company's strategy in regards to disposal of non-core assets, the Company sold Woodcrest, a 386,000 square foot office property in Cherry Hill, New Jersey that was included in the Company's Other/Office operating segment, for a gross purchase price of $ 25.3 million .

The Company recognized a net gain of $ 90.7 million on the sale of Hearst Tower.

This property was included in the Company's Other/Office operating segment.

The Company acquired Woodcrest in the Merger with TIER and did not record any gain or loss on the sale of Woodcrest.

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The following information summarizes financial data and principal activities of the Company's unconsolidated joint ventures.

The information included in the following table entitled summary of financial position is as of March 31, 2020 and December 31, 2019 (in thousands).

The information included in the summary of operations table is for the three months ended March 31, 2020 and 2019 (in thousands):

Company’s Investment

The information included in the following table entitled summary of financial position is as of June 30, 2020 and December 31, 2019 (in thousands).

The information included in the summary of operations table is for the six months ended June 30, 2020 and 2019 (in thousands):

Total Assets Total Debt Total Equity Company’s Investment

SUMMARY OF FINANCIAL POSITION:

2020 2019 2020 2019 2020 2019 2020 2019

DC Charlotte Plaza LLLP $ 177,003 $ 179,694 $ — $ — $ 91,115 $ 90,373 $ 48,249 $ 48,058

6 unchanged sentences

Crawford Long - CPI, LLC 30,130 28,459 67,136 67,947 ( 38,463 ) ( 40,250 ) ( 18,353 ) (1) ( 19,205 ) (1)

Total Revenues

Net Income (Loss)

Company's Share of Income (Loss)

Other 7,666 8,879 — — 7,472 7,318 4,558 4,113

$ 573,607 $ 658,303 $ 197,508 $ 165,039 $ 245,989 $ 354,404 $ 111,504 $ 114,158

Total Revenues Net Income (Loss) Company's Share of Income (Loss)

SUMMARY OF OPERATIONS:

2020 2019 2020 2019 2020 2019

Charlotte Gateway Village, LLC $ 6,684 $ 13,611 $ 3,400 $ 5,049 $ 1,699 $ 2,524

6 unchanged sentences

AMCO 120 WT Holdings, LLC 584 — ( 1,310 ) ( 32 ) ( 272 ) —

Other 244 64 198 ( 93 ) 485 ( 52 )

$ 31,995 $ 56,338 $ 9,276 $ 13,256 $ 5,140 $ 6,538

(1) Negative bases are included in deferred income on the condensed consolidated balance sheets.

In April 2020, the Carolina Square Holdings LP joint venture executed an amendment for its associated construction loan, extending the maturity date from May 2020 to May 2021 and reducing the spread over the London Interbank Offering Rate ("LIBOR") from 1.90 % to 1.25 %.

This amendment also eliminated the Company's repayment guaranty.

In March 2020, the Company sold its interest in Charlotte Gateway Village, LLC ("Gateway"), which owned a 1.1 million square foot office building in Charlotte, North Carolina, to its partner for a gross purchase price of $ 52.2 million.

3 unchanged sentences

The Company recognized a gain of $ 1.3 million on the sale of its interest in Wildwood Associates, which included elimination of the remaining negative basis in the joint venture of $ 520,000 .

INTANGIBLE ASSETS

Intangible assets on the balance sheets as of March 31, 2020 and December 31, 2019 included the following (in thousands):

Intangible assets on the balance sheets as of June 30, 2020 and December 31, 2019 included the following (in thousands):

In-place leases, net of accumulated amortization of $ 192,808 and $ 163,867 in 2020 and 2019, respectively

$ 173,818 $ 202,760

Above-market tenant leases, net of accumulated amortization of $ 30,991 and $ 26,487 in 2020 and 2019, respectively

31,196 35,699

Below-market ground lease, net of accumulated amortization of $ 1,035 and $ 897 in 2020 and 2019, respectively

The carrying amount of goodwill did not change during the three months ended March 31, 2020 and 2019 .

Other assets on the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 included the following (in thousands):

17,378 17,516

$ 224,066 $ 257,649

The carrying amount of goodwill did not change during the six months ended June 30, 2020 and 2019.

Aggregate net amortization expense related to intangible assets and liabilities for the three and six months ended June 30, 2020 was $ 11.4 million and $ 23.5 million, respectively.

Aggregate net amortization expense related to intangible assets and liabilities for the three and six months ended June 30, 2019 was $ 7.3 million and $ 13.1 million, respectively.

Over the next five years and thereafter aggregate amortization of these intangible assets and liabilities is anticipated to be as follows (in thousands):

Rents Above Market

Ground Lease Below Market Ground Lease Above Market

Rents In Place Leases

2020 (six months) $ ( 8,865 ) $ ( 23 ) $ 138 $ 3,673 $ 24,997

2021 ( 14,139 ) ( 46 ) 276 6,600 39,932

2022 ( 11,047 ) ( 46 ) 276 5,230 27,979

2023 ( 9,360 ) ( 46 ) 276 4,182 22,820

2024 ( 8,143 ) ( 46 ) 276 3,294 17,920

Thereafter ( 19,356 ) ( 1,443 ) 16,136 8,217 40,170

$ ( 70,910 ) $ ( 1,650 ) $ 17,378 $ 31,196 $ 173,818

Other assets on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019 included the following (in thousands):

Predevelopment costs and earnest money

$ 17,403 $ 25,586

Furniture, fixtures and equipment, leasehold improvements, and other deferred costs, net of accumulated depreciation of $ 30,879 and $ 29,131 in 2020 and 2019, respectively

18,647 17,791

Prepaid expenses and other assets

1 unchanged sentence

Line of credit deferred financing costs, net of accumulated amortization of $ 3,705 and $ 2,952 in 2020 and 2019, respectively

$ 55,316 $ 59,449

NOTES PAYABLE

The following table summarizes the terms of notes payable outstanding at March 31, 2020 and December 31, 2019 ($ in thousands):

Interest Rate

The following table summarizes the terms of notes payable outstanding at June 30, 2020 and December 31, 2019 ($ in thousands):

Description Interest Rate Maturity (1) 2020 2019

Unsecured Notes:

6 unchanged sentences

2017 Senior Notes, Unsecured 4.09 % 2027 100,000 100,000

1,250,000 1,501,500

Secured Mortgage Notes:

Fifth Third Center 3.37 % 2026 138,709 140,332

Terminus 100 5.25 % 2023 116,593 118,146

Colorado Tower 3.45 % 2026 115,883 117,085

Promenade 4.27 % 2022 94,308 95,986

816 Congress 3.75 % 2024 79,118 79,987

Terminus 200 3.79 % 2023 75,224 76,079

Legacy Union One 4.24 % 2023 66,000 66,000

Meridian Mark Plaza 6.00 % 2020 — 22,978

685,835 716,593

$ 1,935,835 $ 2,218,093

Unamortized premium 9,406 11,239

1 unchanged sentence

Total Notes Payable $ 1,939,517 $ 2,222,975

(1) Weighted average maturity of notes payable outstanding at March 31, 2020 was 5.7 years .

(1) Weighted average maturity of notes payable outstanding at June 30, 2020 was 5.4 years.

Credit Facility

6 unchanged sentences

The amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.

The Company is in compliance with all covenants of the Credit Facility.

The interest rate applicable to the Credit Facility varies according to the Company's leverage ratio, and may, at the election of the Company, be determined based on either (1) the current London Interbank Offering Rate ("LIBOR") plus a spread of between 1.05 % and 1.45 %, or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50 %, or the one-month LIBOR plus 1.0 % (the "Base Rate"), plus a spread of between 0.10 % or 0.45 %, based on leverage.

At March 31, 2020 , the Credit Facility's spread over LIBOR was 1.05 % .

At June 30, 2020, the Credit Facility's spread over LIBOR was 1.05 %.

The amount that the Company may draw under the Credit Facility is a defined calculation based on the Company's unencumbered assets and other factors.

The total available borrowing capacity under the Credit Facility was $ 1.0 billion at March 31, 2020 .

The total available borrowing capacity under the Credit Facility was $ 1.0 billion at June 30, 2020.

The Company has a $ 250 million unsecured term loan (the "Term Loan") that matures on December 2, 2021.

The Term Loan has financial covenants consistent with those of the Credit Facility.

The interest rate applicable to the Term Loan varies according to the Company’s leverage ratio and may, at the election of the Company, be determined based on either (1) the current LIBOR plus a spread of between 1.20 % and 1.70 % , based on leverage or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50 % , or the one-month LIBOR plus 1.00 % (the “Base Rate”), plus a spread of between 0.00 % and 0.75 % , based on leverage.

At March 31, 2020 , the Term Loan's spread over LIBOR was 1.20 % .

The interest rate applicable to the Term Loan varies according to the Company’s leverage ratio and may, at the election of the Company, be determined based on either (1) the current LIBOR plus a spread of between 1.20 % and 1.70 %, based on leverage or (2) the greater of Bank of America's prime rate, the federal funds rate plus

0.50 %, or the one-month LIBOR plus 1.00 % (the “Base Rate”), plus a spread of between 0.00 % and 0.75 %, based on leverage.

At June 30, 2020, the Term Loan's spread over LIBOR was 1.20 %.

The Company is in compliance with all covenants of the Term Loan.

Unsecured Senior Notes

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The senior notes also contain customary representations and warranties and affirmative and negative covenants, as well as customary events of default.

The Company is in compliance with all covenants of the unsecured senior notes.

Mortgage Notes

1 unchanged sentence

Other Debt Information

At March 31, 2020 and December 31, 2019 , the estimated fair value of the Company’s notes payable were $ 2.0 billion and $ 2.3 billion , respectively, calculated by discounting the debt's remaining contractual cash flows at estimated rates at which similar loans could have been obtained at March 31, 2020 and December 31, 2019 .

At June 30, 2020 and December 31, 2019, the estimated fair value of the Company’s notes payable was $ 2.0 billion and $ 2.3 billion, respectively, calculated by discounting the debt's remaining contractual cash flows at estimated rates at which similar loans could have been obtained at June 30, 2020 and December 31, 2019.

The estimate of the current market rate, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship.

These fair value calculations are considered to be Level 2 under the guidelines as set forth in ASC 820 as the Company utilizes market rates for similar type loans from third party brokers.

For the three months ended March 31, 2020 and 2019 , interest expense was recorded as follows (in thousands):

For the three and six months ended June 30, 2020 and 2019, interest expense was recorded as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Total interest incurred $ 17,952 $ 13,175 $ 39,165 $ 25,010

2 unchanged sentences

OTHER LIABILITIES

Other liabilities on the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 included the following (in thousands):

Other liabilities on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019 included the following (in thousands):

Ground lease liability $ 59,123 $ 59,379

Prepaid rent 29,364 33,428

Security deposits 13,405 13,545

1 unchanged sentence

Other liabilities 5,745 11,184

$ 115,493 $ 134,128

COMMITMENTS AND CONTINGENCIES

At March 31, 2020 , the Company had outstanding performance bonds totaling $ 1.1 million .

As a lessor, the Company had $ 237.1 million in future obligations under leases to fund tenant improvements and other future construction obligations at March 31, 2020 .

At June 30, 2020, the Company had outstanding performance bonds totaling $ 1.2 million.

As a lessor, the Company had $ 193.8 million in future obligations under leases to fund tenant improvements and other future construction obligations at June 30, 2020.

The Company is subject to various legal proceedings, claims, and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance.

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Recent events related to the COVID-19 pandemic and the actions taken to contain it have created substantial uncertainty for all businesses, including the Company.

The Company’s financial statements as of and for the three months ended March 31, 2020 have been prepared in light of these circumstances.

The Company’s financial statements as of and for the three and six months ended June 30, 2020 have been prepared in light of these circumstances.

We have continued to follow the policies described in our footnotes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, including those related to impairment and estimates of the likelihood of collectibility of amounts due from tenants.

While the results of our current analysis did not result in any impairments or material valuation adjustments to amounts due from tenants as of March 31, 2020, circumstances related to the COVID-19 pandemic may result in recording impairments or material valuation adjustments to amounts due from tenants in future periods.

While the Company has not been obligated contractually or by law to provide its tenants with rent relief related to COVID-19, it will recognize any associated rent reductions in the period during which those obligations occur.

Otherwise any COVID-19 related changes in negotiated rents or leasing terms will be accounted for as lease modifications and the Company will recognize the effects over time.

While our current analysis did not result in any impairments or material valuation adjustments to amounts due from tenants as of June 30, 2020, circumstances related to the COVID-19 pandemic may result in recording impairments or material valuation adjustments to amounts due from tenants in future periods.

In limited circumstances to date, we have entered into lease amendments with certain tenants, a majority of which are small retail operators who have experienced disruptions in their business as a result of the pandemic.

Some of these agreements forgive rents in 2020 and extend the lease term for the equivalent number of months at the end of the original lease.

These rent forgiveness and extension agreements will be accounted for as lease modifications, and the Company will recognize the effects over time through straight-line rent.

Other agreements provide for payment deferrals without extensions.

The Company will also account for these deferral agreements as lease modifications and has included these deferred payments in deferred rents receivable on the accompanying condensed consolidated balance sheet.

STOCKHOLDERS' EQUITY

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Holders of limited voting preferred stock are not entitled to any dividends or distributions and the limited voting preferred stock is not convertible into or exchangeable for any other property or securities of the Company.

As of March 31, 2020, the Company had no preferred stock outstanding.

As of June 30, 2020, the Company had no preferred stock outstanding.

STOCK-BASED COMPENSATION

The Company has several types of stock-based compensation — stock options, restricted stock, and restricted stock units (“RSUs”).

The Company's compensation expense for the three months ended March 31, 2020 relates to restricted stock and RSUs awarded in 2017, 2018, 2019, and 2020.

The Company's compensation expense for the three and six months ended June 30, 2020 relates to restricted stock and RSUs awarded in 2018, 2019, and 2020.

Compensation expense for the six months ended June 30, 2020 also includes expenses related to restricted stock and RSUs awarded in 2017.

Restricted stock and the 2020 RSUs are equity-classified awards for which the compensation expense per share is fixed.

The 2018 and 2019 RSUs are liability-classified awards for which the expense fluctuates from period to period dependent, in part, on both the Company's stock price and on the Company's stock performance relative to its peers.

For the three months ended March 31, 2020 and 2019 , stock-based compensation expense, net of forfeitures, was recorded as follows (in thousands):

For the three and six months ended June 30, 2020 and 2019, stock-based compensation expense, net of forfeitures, was recorded as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Equity-classified awards $ 1,141 $ 624 $ 2,425 $ 1,232

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Total stock-based compensation expense, net of forfeitures

$ 2,921 $ 1,121 $ 3,185 $ 6,649

On April 23, 2019, the Company's stockholders approved the Cousins Properties Incorporated 2019 Omnibus Incentive Stock Plan (the "2019 Plan").

The Company also maintains the Cousins Properties Incorporated 2009 Incentive Stock Plan (the "2009 Plan") and the Cousins Properties Incorporated 2005 Restricted Stock Unit Plan (the “RSU Plan”), although no further issuances are permitted under the 2009 plan or RSU Plan.

Under the 2019 Plan, during the three months ended March 31, 2020 , the Company made restricted stock grants of 71,421 shares to key employees, which vest ratably over a three-year period .

Also under the 2019 Plan, during the three months ended March 31, 2020 , the Company awarded two types of RSUs to key employees based on the following metrics:

The Company also maintains the Cousins Properties Incorporated 2009 Incentive Stock Plan (the "2009 Plan") and the Cousins Properties Incorporated 2005 Restricted Stock Unit Plan (the “RSU Plan”), although no further awards are permitted under the 2009 plan or RSU Plan.

Under the 2019 Plan, during the six months ended June 30, 2020, the Company made restricted stock grants of 71,421 shares to key employees, which vest ratably over a three-year period.

Also under the 2019 Plan, during the six months ended June 30, 2020, the Company awarded two types of RSUs to key employees based on the following metrics:

(1) Total Stockholder Return of the Company, as defined in the 2019 Plan, as compared to the companies in the SNL US REIT Office index (“Market-based RSUs”), and (2) the ratio of cumulative funds from operations (“FFO”) per share to targeted cumulative FFO per share (“Performance-based RSUs”), as defined in the 2019 Plan.

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Dividend equivalents on the Market-based RSUs and the Performance-based RSUs will also be settled in shares of the Company’s common stock based upon the number of units vested.

Under the 2019 Plan, during the three months ended June 30, 2020, the Company issued 34,059 shares of common stock to members of its board of directors, reflecting the regular equity component of the non-executive director annual compensation, along with the exercise by some directors to receive common stock in lieu of all or a portion of the cash component of their annual compensation.

The Company recorded $ 1.1 million in general and administrative expense related to these issuances.

The Company’s stock compensation for stock options, restricted stock, and RSUs granted in 2018 and 2019 is described in note 15 of the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

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Fee income is accounted for in accordance with the guidance set forth in ASC 606.

For the three months ended March 31, 2020 and 2019 , the Company recognized rental property revenues of $ 189.1 million and $ 123.9 million , respectively, of which $ 54.1 million and $ 32.6 million , respectively, represented variable rental revenue.

For the three months ended March 31, 2020 and 2019 , the Company recognized fee and other revenue of $ 4.8 million and $ 8.9 million , respectively.

For the three and six months ended June 30, 2020, the Company recognized rental property revenues of $ 175.1 million and $ 364.2 million, respectively, of which $ 44.2 million and $ 98.3 million, respectively, represented variable rental revenue.

For the three and six months ended June 30, 2019, the Company recognized rental property revenues of $ 134.9 million and $ 258.8 million, respectively, of which $ 35.8 million and $ 68.9 million, respectively, represented variable rental revenue.

For the three and six months ended June 30, 2020, the Company recognized fee and other revenue of $ 4.8 million and $ 9.6 million, respectively.

For the three and six months ended June 30, 2019, the Company recognized fee and other revenue of $ 7.1 million and $ 16.0 million, respectively.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019 (in thousands):

Three Months Ended March 31,

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2020 and 2019 (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Earnings per Common Share - basic:

Net income attributable to noncontrolling interests in

Net income (loss) $ 23,236 $ ( 22,582 ) $ 198,545 $ 13,423

Net (income) loss attributable to noncontrolling interests in

CPLP from continuing operations

( 5 ) 265 ( 307 ) ( 323 )

Net income attributable to other noncontrolling interests ( 130 ) ( 92 ) ( 194 ) ( 168 )

Net income available to common stockholders

Net income (loss) available to common stockholders $ 23,101 $ ( 22,409 ) $ 198,044 $ 12,932

Weighted average common shares - basic 148,548 112,926 147,986 109,049

Net income per common share - basic

Net income (loss) per common share - basic $ 0.16 $ ( 0.20 ) $ 1.34 $ 0.12

Earnings per common share - diluted:

Net income (loss) $ 23,236 $ ( 22,582 ) $ 198,545 $ 13,423

Net income attributable to other noncontrolling interests ( 130 ) ( 92 ) ( 194 ) ( 168 )

Net income available for common stockholders before allocation of net income attributable to noncontrolling interests in CPLP

Net income (loss) available for common stockholders before allocation of net income attributable to noncontrolling interests in CPLP

$ 23,106 $ ( 22,674 ) $ 198,351 $ 13,255

Weighted average common shares - basic 148,548 112,926 147,986 109,049

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common shares

25 1,744 572 1,744

Weighted average common shares - diluted 148,580 114,670 148,570 110,822

Net income per common share - diluted

Antidilutive restricted stock units, less share assumed purchased at market price

For the three months ended March 31, 2020 , 3,000 restricted stock units, less shares assumed purchased at market price, were not included in the diluted weighted average common shares because they would have been antidilutive for the period presented.

Net income (loss) per common share - diluted $ 0.16 $ ( 0.20 ) $ 1.34 $ 0.12

Antidilutive restricted stock units, less share assumed purchased at market price, and antidilutive stock options outstanding

For the three and six months ended June 30, 2020, 18,000 and 7,000 restricted stock units, less shares assumed purchased at market price, respectively, were not included in the diluted weighted average common shares because they would have been antidilutive for the period presented.

These restricted stock units could be dilutive in the future.

For the three months ended June 30, 2019, 27,000 stock options had an exercise price that did not exceed the average market value of the Company's stock.

They were not included in the diluted weighted average common shares due to the net loss during the period.

These antidilutive stock options could be dilutive in the future.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL INFORMATION

Supplemental information related to the cash flows, including significant non-cash activity affecting the condensed consolidated statement of cash flows, for the three months ended March 31, 2020 and 2019 is as follows (in thousands):

Supplemental information related to the cash flows, including significant non-cash activity affecting the condensed consolidated statement of cash flows, for the six months ended June 30, 2020 and 2019 is as follows (in thousands):

Interest paid $ 31,800 $ 22,130

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Common stock dividends declared and accrued

44,570 42,563

Transfer from land held and other assets to projects under development

Change in accrued property, acquisition, development, and tenant expenditures

Non-cash assets and liabilities assumed in TIER transaction

Ground lease right-of-use assets and associated liabilities

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The following table provides a reconciliation of cash, cash equivalents, and restricted cash recorded on the condensed consolidated balance sheets to cash, cash equivalents, and restricted cash in the condensed consolidated statements of cash flows (in thousands):

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Cash and cash equivalents $ 28,255 $ 15,603

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Segment net income, amount of capital expenditures, and total assets are not presented in the following tables because management does not utilize these measures when analyzing its segments or when making resource allocation decisions.

Information on the Company's segments along with a reconciliation of NOI to net income for the three months ended March 31, 2020 and 2019 are as follows (in thousands):

Three Months Ended March 31, 2020

Information on the Company's segments along with a reconciliation of NOI to net income for the three and six months ended June 30, 2020 and 2019 are as follows (in thousands):

Three Months Ended June 30, 2020 Office Mixed-Use Total

Atlanta $ 62,457 $ 129 $ 62,586

Austin 52,455 — 52,455

Charlotte 20,505 — 20,505

Dallas 4,487 — 4,487

Phoenix 12,084 — 12,084

Tampa 12,912 — 12,912

Other 15,043 1,176 16,219

Total segment revenues 179,943 1,305 181,248

Company's share of rental property revenues from unconsolidated joint ventures

( 4,844 ) ( 1,305 ) ( 6,149 )

Total rental property revenues $ 175,099 $ — $ 175,099

Three Months Ended June 30, 2019 Office Mixed-Use Total

Atlanta $ 59,499 $ — $ 59,499

Austin 31,815 — 31,815

Charlotte 27,110 — 27,110

Dallas 804 — 804

Phoenix 12,805 — 12,805

Tampa 13,471 — 13,471

Other 3,581 1,093 4,674

Total segment revenues 149,085 1,093 150,178

Company's share of rental property revenues from unconsolidated joint ventures

( 14,152 ) ( 1,093 ) ( 15,245 )

Total rental property revenues $ 134,933 $ — $ 134,933

Six Months Ended June 30, 2020 Office Mixed-Use Total

Atlanta $ 128,334 $ 165 $ 128,499

Austin 101,202 — 101,202

Charlotte 55,041 — 55,041

Dallas 8,958 — 8,958

Phoenix 25,243 — 25,243

Tampa 27,024 — 27,024

Other 31,538 2,438 33,976

Total segment revenues 377,340 2,603 379,943

Company's share of rental property revenues from unconsolidated joint ventures

( 13,112 ) ( 2,603 ) ( 15,715 )

Total rental property revenues $ 364,228 $ — $ 364,228

Six Months Ended June 30, 2019 Office Mixed-Use Total

Atlanta $ 116,969 $ — $ 116,969

Austin 59,907 — 59,907

Charlotte 50,496 — 50,496

Dallas 804 804

Phoenix 25,808 — 25,808

Tampa 26,441 — 26,441

Other 4,126 2,277 6,403

Total segment revenues 284,551 2,277 286,828

Company's share of rental property revenues from unconsolidated joint ventures

( 25,753 ) ( 2,277 ) ( 28,030 )

Total rental property revenues $ 258,798 $ — $ 258,798

NOI by reportable segment for the three and six months ended June 30, 2020 and 2019 are as follows (in thousands):

Three Months Ended June 30, 2020 Office Mixed-Use Total

Net Operating Income:

Atlanta $ 41,709 $ ( 13 ) $ 41,696

Austin 31,229 — 31,229

Charlotte 14,480 — 14,480

Dallas 3,580 — 3,580

Phoenix 8,922 — 8,922

Tampa 7,998 — 7,998

Other 8,397 830 9,227

Total Net Operating Income $ 116,315 $ 817 $ 117,132

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019 Office Mixed-Use Total

Net Operating Income:

Atlanta $ 39,368 $ — $ 39,368

Austin 18,577 — 18,577

Charlotte 18,050 — 18,050

Dallas 669 — 669

Phoenix 9,290 — 9,290

Tampa 8,573 — 8,573

Other 2,182 708 2,890

Total Net Operating Income $ 96,709 $ 708 $ 97,417

The following reconciles Net Operating Income to Net Income for each of the periods presented (in thousands):

Three Months Ended March 31,

Six Months Ended June 30, 2020 Office Mixed-Use Total

Net Operating Income:

Atlanta $ 86,564 $ ( 73 ) $ 86,491

Austin 60,523 — 60,523

Charlotte 36,593 — 36,593

Dallas 7,219 — 7,219

Phoenix 18,715 — 18,715

Tampa 16,142 — 16,142

Other $ 17,525 $ 1,706 $ 19,231

Total Net Operating Income $ 243,281 $ 1,633 $ 244,914

Six Months Ended June 30, 2019 Office Mixed-Use Total

Net Operating Income:

Atlanta $ 76,766 $ — $ 76,766

Austin 34,525 — 34,525

Charlotte 33,859 — 33,859

Dallas 670 — 670

Phoenix 18,781 — 18,781

Tampa 16,560 — 16,560

Other 2,411 1,576 3,987

Total Net Operating Income $ 183,572 $ 1,576 $ 185,148

The following reconciles Net Operating Income to net income (loss) for each of the periods presented (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Net Operating Income $ 117,132 $ 97,417 $ 244,914 $ 185,148

Net operating income from unconsolidated joint ventures ( 4,193 ) ( 9,379 ) ( 10,228 ) ( 17,252 )

Fee income 4,690 7,076 9,422 15,804

Termination fee income 539 190 3,383 710

Other income 126 11 163 151

Reimbursed expenses ( 322 ) ( 1,047 ) ( 843 ) ( 1,979 )

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Income from unconsolidated joint ventures 1,715 3,634 5,140 6,538

Gain on sales of investments in unconsolidated joint ventures

Gain on investment property transactions

Revenues by reportable segment, including a reconciliation to total rental property revenues on the condensed consolidated statements of operations, for three months ended March 31, 2020 and 2019 are as follows (in thousands):

Three Months Ended March 31, 2020

Total segment revenues

Less Company's share of rental property revenues from unconsolidated joint ventures

Total rental property revenues

Three Months Ended March 31, 2019

Total segment revenues

Less Company's share of rental property revenues from unconsolidated joint ventures

Total rental property revenues

Gain (loss) on sales of investments in unconsolidated joint ventures ( 231 ) — 45,999 —

Gain (loss) on investment property transactions ( 201 ) 1,304 90,715 14,415

Net income (loss) $ 23,236 $ ( 22,582 ) $ 198,545 $ 13,423

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements