Good day and welcome to the Cousins Properties Incorporated Second Quarter 2008 Earnings Conference Call. (Operator Instructions). At this time, I would like to turn the conference over for opening remarks and introduction to Tom Bell, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning, everyone. I am Tom Bell, Chairman and CEO of Cousins. And with me today are Dan DuPree, our President and Chief Operating Officer, Jim Fleming, our CFO and Craig Jones, our Chief Investment Officer. I would like to welcome to you our second quarter conference call. At this time I will ask Jim to review the financial results for the quarter, Jim.

Thank you, Tom. Good morning, everyone. Thanks for your interest in Cousins. Certain matters we'll be discussing today are forward-looking statements within the meaning of federal securities laws. Actual results may differ materially from these statements. Please refer to our filings with the SEC including our Annual Report on Form 10-K for the year ended December 31, 2007 for a discussion of the factors that may cause such material differences. Also certain items we may refer to today are considered non-GAAP financial measures within the meaning of Regulation G as propagated by the SEC. For these items, the comparable GAAP measures and the related reconciliations may be found through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website at www.cousinsproperties.com. This quarter we reported FFO of $0.31 per share compared with $0.27 per share last quarter. I’d like to highlight the factors that contributed to this increase in FFO. You can follow by looking at our supplemental package beginning on page eight. Revenues from our operating properties are increasing as development projects become operational and recently signed leases commence. Rental property revenues less rental property operating expenses for consolidate properties increased $1.3 million between the first and second quarters. $678,000 of this increase came from One Georgia Center as a result of the commencement of the Georgia Department of Transportation lease. $473,000 of the increase was a result the grand opening of The Avenue Forsyth. Also income from the Avenue Carriage Crossing increased $173,000 from the first quarter to the second quarter because our first quarter results were reduced for pre-petition accounts receivable on our Linens ‘N Things lease. FFO from track sales was $5.7 million, which resulted from the sale of 28 acres at our Avenue Forsyth project, the sale of 75…

Thanks, Jim. Well, since Jim covered the key events of the quarter, I will focus on how we see our markets, our projects, and our future prospects. Most real estate markets are weak across the board, and at this time, we are not seeing any improvement. In most cases, the bid-ask spread on asset sales is still significant and market psychology remains quite negative. Credit markets are also very difficult and are really a barrier to new development and acquisitions. Retailers are suffering and most have cut back on new store openings, and investors are generally seeking a higher return than presently available, leaving a great deal of money on the sidelines. Other than that, everything is just dandy. Looking to our current assets, our office properties are doing relatively well despite the current economic downturn. A Terminus 100 as we said before is essentially full. The buildings are 95% leased and we have prospects for the remaining space. At One Georgia Center, the Georgia Department of Transportation has moved into the building and as of August 1, they are paying rent on the full 282,000 square feet under their lease bringing this building to 100% rent paying. In July, we entered into a 22,000-square-foot lease expansion with one of our tenants at 200 North Point, and that brings the building to 100% leased and brings the 400 -- or the 540,000-square-foot, four-building complex over 98% leased. As Jim mentioned, we also closed a new loan on the 96%-leased Lakeshore Park Plaza in Birmingham. In our existing portfolio, this just leaves 3100 Wildwood as the only operating building with significant vacancy and we are continuing to pursue deals on this special purpose building. Excluding 3100, our office portfolio is 97% leased, up from 89% this time last year. On the…

Thank you, sir. (Operator Instructions). And our first question is from the line of Sloan Bohlen with Goldman Sachs. Please go ahead.

Good morning, guys. I am here with Jay as well. A question for Tom, just with regard to the sale of Jefferson Mill and Forsyth, can you give us a sense as to what your strategy is, and given you guys are fairly well capitalized on the balance sheet? Why sell the higher cost basis land at this point?

Well, Sloan, after doing our best to crack the industrial market for a couple of years, we just determined that particularly in this market when we expect to see as the markets recover some really good and well-priced development opportunities, we decide we are going to exit the industrial business. And so we made arrangement with our partners, with Weeks, to exit this business. And we are going to exit the business in pieces. So this first transaction we did with Weeks we felt was the appropriate way to approach this exit. It provided a decent return for our shareholders on what has been not a great experience for us in the industrial business. If you want specific details as to the financial transaction, I will turn it over to Craig Jones.

That's all right. And just my next question is on -- could you give us an idea as to the breakout of the second-generation bump in TI and those costs going forward. And maybe could you give us an idea of what is driving it, you know, now that the department of Transportation is in their building. Are you seeing it more on the office side or the retail side?

Sloan, this is Jim, yeah, we talked last quarter about the Department of Transportation and the TI that was required there. If you look at the total for the second generation, costs this quarter was $8.4 million and $7.5 of that was Georgia DOT. There is about $2.6 million left to go after the second quarter to complete the work on the Georgia DOT space.

Okay. Alright, thank you very much Jim.

Thank you. Our next question is from the line of Chris Haley with Wachovia Securities. Please go ahead.

Good morning guys, this is Young Coo here with Chris. I was wondering if you guys could give us some details in terms of the margins on those tract sales, looked a bit slim?

Young, again, this is Jim. If you look at them all together, we've got the Jefferson Mills sales that we announced we have already closed the Jefferson Mills sales that we got in a contract with Forsyth land sale and Long Meadows Farm sale. If you combine them all together, it was about a 25% margin.

Okay. Thank you for that. And can you give us some more color on future prop recognition for the Q3 condo sales?

We anticipate about $800,000 of gain. That is an approximate number subject to final accounting, but that's our best guess right now from the bulk sale. Not a huge number but a slight gain in the third quarter from that bulk sale.

Gotcha. And how is the leasing velocity in the Terminus 200? We saw some news from that end but none were actually office tenants?

Well, we have got some good prospects for T.200 but it's very tough. The Buckhead market is difficult. We‘ve got lot of supply coming on line. The success of Terminus as a project is helping us in that very competitive market. I think we are seeing all the deals in the market, we're getting short listed for pretty much everything. So far all the buildings are being fairly reasonable with regard to pricing and inducements. I suppose it will get more competitive over time. Our leasing guys feel pretty good about these four prospects. I think we will have some things to announce in the not-too-distant futures about that. Having these restaurant leases tied up is a good thing for us because it shows, you know, that the place is going to continue to build momentum, but we will be the last people to say that and it isn't going to be tough. I think we will win, Cousins in Atlanta is hard to beat and sort of head-to-head competition like this, as we demonstrated over and over again but it is going to be tough.

Really, thank you for that. And lastly, we saw that rental square feet at Cosmopolitan changed a bit. Can you give us some background on that?

Well we sold a chunk of that land to GDOT so that they could improve, God bless them, the exit, the interchange on the interstate and in the process of doing that, they clipped a couple of buildings. We had to take them down. And they paid us a nice price for themselves.

Yeah, we had about a $600,000 gain in our numbers from that land sale.

Gotcha, great. Thank you.

Thank you. (Operator Instructions). And our next question is from the line of Cedrik Lachance with Green Street Advisors. Please go ahead.

Thanks. In regards to the retail same-store results, if you had not taken provisions on Linens ‘N Things and CompUSA, where would have been your same-store?

Cedrik, I think they would have been pretty flat from quarter-to-quarter. Most of the difference was from that CompUSA adjustment at Los Altos and we do the best we can to report same-store sales. We have got a pretty small retail portfolio so we reported across number properties, some of which like Los Altos, we have a minority interest in. But the answer is it would have been pretty flat but for those adjustments.

Okay. When I compare your same-store versus what we see being reported by strip centers, by malls, it seems to come in at the low end. Is there something with the lifestyle center concept that we need to be concerned about in this downturn?

At the low end. I am not sure I understand that. What -- you mean in terms of leasing?

No, if you look at same-store results, generally malls and strip centers are in positive territory if you are about flat. I'm trying to understand –

Yeah, actually -- again, Cedrik, the answer is -- I think you will do better -- this is harder, but I think you will do better by looking at the property-by-property NOI which we've got in our supplemental. The issue is, we've got a fairly small sample size and fluctuations like tax reimbursements or various other things -- or these reserves can sometimes come into play. We did -- if you look at it from the six months it is pretty flat and would have been up except for the all of these reserves. But I don't know if you can tell a lot from a trend, from a fairly small sample size like that.

Okay. In terms of Biscayne, you had written down all your profits in the past. So if you have an $18 million gain in there, why aren't we going to see $18 million being recognized in the FFO stream? Can you help me understand the accounting behind it?

Yeah, Cedrik, we had 529 residential units, and we -- we reversed the profit on about 120 of those units and we wound up selling those units at a very slight gain which will be reflected in the $800,000 or so gain that we expect in the third quarter.

But explain --

But, in prior periods when we closed the units, we closed over 400 -- we closed about 400 of the units at substantial gains and we did recognize the profit and income as we went along with those actual closings, and so the $18 million gain is really on the books that this point.

And what is the minority interest in there since you are already a majority partner in that JV?

There is a majority partner on our side that after a certain return to us, we’ll get about 11% and had about 11% of the capital in it. But if you look at the numbers that we are reporting, it is the gross number and then you will see sub-traction in the minority interest and we have been doing accounting for that way all along.

Okay, and can you give some details on the loan-to-value and the spreads on the Birmingham loan?

The interest rate was 5.89%. It is a four-year loan. Today if you look at the -- the four-year rate -- I don't remember exactly what the spread is. I would say probably 250 to 300 basis points above treasury. That is basically reflective of what is happening in the market which is spreads have increased, the base rates have gone down. You wind up with a pretty good effective rate. In terms of the loan to value, they haven't disclosed that. I would say it was probably closer to 60% and 70% given today's market.

Tom, you talked about single-family distressed investment. Can you comment a little more on that? Where those projects might be, what could be your participation, is it in JV, is it straight up on balance sheet? What size also are you targeting?

We don't have -- we are not talking of a particular size. But what we are seeing our developments, many of which are 50%, 60% complete where the developer having completed all the infrastructure has lots remaining and the lots are going back to the banks and the banks are just now saying, “okay, I think with a little more pressure from the OCC, we have got to unload these non-performing assets and are looking for buyers at significant discounts, discounts of 40% to 50%. And, so if we can find good projects which have been successful which have lots where you basically get all the infrastructure for free, then we would be willing to move in and take those banks -- those lots from the banks and hold them and wait for the market to return.

Are you likely to proceed alone or on JV?

It depends on the size of the transaction. We can do it either way. In a couple of cases, the banks would like to participate in some way, and, they can’t participate if you create a structure where -- let's say you create a joint venture structure, they can own up to 49% of that structure and still have the assets off of their balance sheet. So, each deal is a little bit different. As to markets, North Carolina, Tennessee, of course, Georgia, perhaps Florida though we haven't seen anything there yet.

Okay.

Texas, yeah. Craig reminds me, Texas.

Okay, so basically all the markets in which you are here at present.

Yes.

Okay. Maybe a final question, in regards to profit margins on -- when I look at page 33 of your supplemental and your share of consolidated JV residential, it seems that on your tract sales there is no associated cost of sales. I am just trying to understand if it’s a function of JV accounting in which you would have already received all of your equity back or was there anything else special there?

Cedrik, the JV reporting it all rolls up on to our income statement as a net number, so this breakdown is a net number. You can look at -- I think there are other places where you can get the breakdown of cost of sales and I'd be glad to help you with that.

In the past you have put your cost of sales, but in this particular quarter you did not. I was just wondering if this was an accounting treatment that was slightly different?

I don't think we have it differently in this phase but I will be glad to get on the phone with you if you want to go through that.

Okay, sounds good. Thank you.

Thanks.

Thank you. And at this time, there are no additional questions. I would like to turn it back to Mr. Bell for any closing remarks.

Well, we appreciate everybody's participation this morning. Yeah, it is a tough market out there. We don't see any near-term improvement frankly, but we do hope to see additional opportunities towards the end of the year, and we will be back to you next quarter. As always don't hesitate to call us if you have any additional questions. Thank you.

Thank you, sir. Ladies and gentlemen, this does conclude our conference for today. If you’d like to listen to replay of today’s conference, please dial 1800-405-2236 or 303-590-3000 using the access code of 11116487 followed by the pound key. ACT would like to thank you for your participation. You may now disconnect.