Investment in Unconsolidated Ventures

6 Months Ended

Jun. 30, 2011

Investment in Unconsolidated Ventures [Abstract]

Note 7 — Investment in Unconsolidated Ventures

At second quarter-end 2011, we had ownership interests ranging from 25 to 50 percent in 10 ventures that we account for using the equity method. We have no real estate ventures that are accounted for using the cost method. Our three largest ventures at second quarter-end 2011 are CL Realty, Temco and Palisades West. We own a 50 percent interest in both CL Realty and Temco, and Cousins Real Estate Corporation owns the other 50 percent interest. We own a 25 percent interest in Palisades West, Cousins Properties Incorporated owns a 50 percent interest and Dimensional Fund Advisors LP owns the remaining 25 percent interest. Information regarding these ventures follows:

	•		CL Realty, L.L.C. was formed in 2002 for the purpose of developing residential and mixed-use communities in Texas and across the southeastern United States. At second quarter-end 2011, the venture has 14 residential and mixed-use communities, of which 10 are in Texas, 3 are in Florida and 1 is in Georgia, representing approximately 5,200 planned residential lots and 290 commercial acres.

	•		Temco Associates, LLC was formed in 1991 for the purpose of acquiring and developing residential real estate sites in Georgia. At second quarter-end 2011, the venture has 4 residential and mixed-use communities, representing approximately 1,550 planned residential lots, all of which are located in Paulding County, Georgia. The venture also owns 5,712 acres of undeveloped land in Paulding County, Georgia.

	•		Palisades West LLC was formed in 2006 for the purpose of constructing a commercial office park in Austin, Texas. The project includes two office buildings totaling approximately 375,000 square feet and an accompanying parking garage. At second quarter-end 2011, the buildings are approximately 97 percent leased. Our remaining commitment for investment in this venture as of second quarter-end 2011 is $1,532,000. Effective fourth quarter 2008, we entered into a 10-year operating lease for approximately 32,000 square feet that we occupy as our corporate headquarters. In second quarter and first six months 2011, rents paid under this operating lease were $256,000 and $560,000 and are included in general and administrative and other operating expenses.

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:


	Second Quarter-End 2011														Year-End 2010
	CL					Palisades			Other						CL					Palisades			Other
	Realty			Temco		West			Ventures			Total			Realty			Temco		West			Ventures			Total
												(In thousands)
Real estate	$	81,898		$	59,567	$	121,754		$	66,942		$	330,161		$	85,436		$	60,454	$	124,696		$	69,612		$	340,198
Total assets		82,838			60,232		125,907			76,782			345,759			86,657			60,609		129,378			78,060			354,704
Borrowings ^(a)		1,727			2,859		—			74,080			78,666			2,664			2,929		—			74,605			80,198
Total liabilities		3,478			3,270		45,227	^(b)		88,150			140,125			4,124			3,133		48,612	^(b)		87,145			143,014
Equity		79,360			56,962		80,680			(11,368	)		205,634			82,533			57,476		80,766			(9,085	)		211,690
Our investment in real estate ventures:
Our share of their equity ^(c)		39,680			28,481		20,170			13,726			102,057			41,267			28,738		20,191			14,075			104,271
Unrecognized deferred gain ^(d)		(2,190	)		—		—			(958	)		(3,148	)		(2,190	)		—		—			(915	)		(3,105	)

Investment in real estate ventures	$	37,490		$	28,481	$	20,170		$	12,768		$	98,909		$	39,077		$	28,738	$	20,191		$	13,160		$	101,166

Combined summarized income statement information for our ventures accounted for using the equity method follows:


	Second Quarter						First Six Months
	2011			2010			2011			2010
				(In thousands)
Revenues:
CL Realty	$	1,649		$	2,485		$	3,518		$	4,212
Temco		288			89			346			1,877
Palisades West		4,084			3,416			8,114			6,731
Other ventures		4,116			6,355			5,665			8,220

Total	$	10,137		$	12,345		$	17,643		$	21,040


Earnings (Loss):
CL Realty	$	734		$	1,364		$	1,390		$	1,220
Temco		(212	)		(388	)		(416	)		812
Palisades West		1,455			1,158			2,911			2,282
Other ventures		(1,262	)		(15,190	)		(2,132	)		(16,283	)

Total	$	715		$	(13,056	)	$	1,753		$	(11,969	)


Our equity in their earnings (loss):
CL Realty	$	367		$	682		$	695		$	610
Temco		(106	)		(194	)		(208	)		406
Palisades West		364			290			728			569
Other ventures ^(c)		(223	)		(491	)		(231	)		(927	)

Total	$	402		$	287		$	984		$	658


^(a)		Total includes current maturities of $72,118,000 at second quarter-end 2011, of which $43,262,000 is non-recourse to us, and $75,121,000 at year-end 2010, of which $43,166,000 is non-recourse to us.

^(b)		Includes $43,678,000 of deferred income from leasehold improvements funded by tenants in excess of leasehold improvement allowances. These amounts are recognized as rental income over the lease term and are offset by depreciation expense related to these tenant improvements. There is no effect on venture net income.

^(c)		Our share of the equity in other ventures reflects our ownership interests ranging from 25 to 50 percent, excluding venture losses that exceed our investment where we are not obligated to fund those losses.

^(d)		Represents deferred gains on real estate contributed by us to ventures. We are recognizing income as real estate is sold to third parties. The deferred gains are reflected as a reduction to our investment in unconsolidated ventures.

In first six months 2011, we invested $1,135,000 in these ventures and received $4,354,000 in distributions; in first six months 2010, we invested $1,039,000 in these ventures and received $4,883,000 in distributions. Distributions include both return of investments and distributions of earnings.

At second quarter-end 2011, other ventures include three partnerships we participate in that have total assets of $51,504,000 and total liabilities of $82,740,000, which includes $67,532,000 of borrowings classified as current maturities. These partnerships are managed by third parties who intend to extend or refinance these borrowings; however, there is no assurance that this can be done. Although these borrowings may be guaranteed by third parties, we may under certain circumstances elect or be required to provide additional equity to these partnerships. We do not believe that the ultimate resolution of these matters will have a significant effect on our earnings or financial position. Our investment in these partnerships is $2,751,000 at second quarter-end 2011. These three partnerships are variable interest entities. Please read Note 17 for additional information.

In second quarter and first six months 2011, CL Realty’s earnings include an impairment charge of $500,000 related to a residential real estate project located in Tampa, Florida.

In second quarter and first six months 2010, other ventures loss includes a $13,061,000 loss on sale of a golf course and country club property in Denton, Texas. This loss did not impact our equity in the earnings (loss) of this venture as we exclude losses that exceed our investment where we are not obligated to provide additional funding.

We have provided performance bonds and letters of credit on behalf of certain ventures totaling $1,447,000 at second quarter-end 2011. Generally these performance bonds and letters of credit would be drawn on due to lack of performance by us or the ventures, such as failure to timely deliver streets and utilities in accordance with local codes and ordinances.