Ladies and gentlemen, thank you for standing by and welcome to the Cousins Properties Incorporated third quarter 2009 conference call. (Operator Instructions) As a remainder, this conference is being recorded Thursday, November 5, 2009. Certain matters the company will be discussing today are forward-looking statements within the meaning of the federal securities laws. Actual results may differ materially from these statements. Please refer to the company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2008 and the current report on Form 8-K filed on September 14, 2009 for a discussion of the factors that may cause such material differences. Also, certain items the company may refer to today are considered non-GAAP financial measures within the meaning of Regulation G as promulgated by the SEC. For these items, the comparable GAAP measures and 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. I would now like to turn the conference over to Mr. Larry Gellerstedt, President and Chief Executive Officer. Please go ahead.

Good afternoon. I’m Larry Gellerstedt, President and Chief Executive Officer of Cousins Properties. On the phone with me today are Jim Fleming, our Chief Financial Officer; Craig Jones, our Chief Investment officer; and Steve Yenser, our Chief Leasing and Asset Management Officer. Welcome to our third quarter conference call. As you all probably noticed, we had an exceptionally active third quarter, so before diving into the details, I would like to highlight the key takeaways and what it means to Cousins moving forward. First, by raising $319 million in the secondary equity offering, we significantly delevered the company. Our strong balance sheet and access to capital will be a distinct advantage over our competition in the months and years ahead. Private developers, which make up the vast majority of the competition in our key markets simply do not have this kind of access to capital. Secondly, we have significantly cut costs across the board. Third, our operating portfolio continues to perform well in the face of very tough market conditions. Leasing our vacant space, both in the existing portfolio and in our development projects, remains our highest priority. Fourth, sales have significantly picked up in our two remaining condominium projects. Fifth, we have more land than we would like to have and plan to reduce this inventory moving forward. The good news is our land is located in the highest growth markets in the nation and our cost basis for the most part is low. Our carrying cost is also low, so we can afford to be somewhat selective as we work to decrease these holdings over the coming quarters. Finally, it’s hard to predict when we will be able to deploy opportunistic capital but we are proactively tracking the market at a very detailed level and continue to seek investment opportunities. What I can say on this front is that we will focus on return rather than size and as always, we will have a sharpshooter approach. We will also likely remain focused on our key markets where we have significant relationships and expertise. I will provide more detail on all these points in a few minutes but at this time, I will call on Jim to review the financial results for the quarter. Jim.

Thank you, Larry and thanks to everyone on this call for your interest in Cousins. This quarter we reported FFO before special charges of $0.12 per share, compared with $0.45 last quarter. As you may recall, a good bit of our FFO in the second quarter came from our repurchase of the San Jose mortgage debt, which resulted in a gain of $12.5 million, or $0.24 per share. In a few minutes, I’ll discuss the items that make up the remainder of the difference but first I want to highlight some of the more significant events from the quarter. As most of you know, in September we issued 46 million shares of common stock in a secondary stock offering. The decision to issue this stock resulted from a thorough analysis of our company in which we looked at all of our assets and operations. We came to the conclusion that an equity offering was important in order to improve our liquidity, to decrease our overall leverage, and to provide more cushion under our bank loan covenants. While we didn’t like our stock price and still don’t, we were very pleased with the results of the stock offering. Because the offering was two times over-subscribed we chose to increase the offering size a bit, which resulted in net proceeds of $318.6 million. By the end of the third quarter, we had used $248 million to pay down bank debt and since the end of the quarter, we have paid an additional $105 million. Paying down our bank debt won't result in much boost to our FFO but it has dramatically reduced our leverage and increased our liquidity. As of today, our line of credit balance has been reduced from $398 million to $45 million, which along with our $100 million bank…

Thanks, Jim. Well, we are starting to see reports every day that the economy may have bottomed out and at least technically, the recession has ended. And it is certainly good after this long period of time to have some upbeat economic news but the real estate sector as we all know has always lagged the overall economy and we certainly don’t expect this cycle will be any different. We do see things that appear to be stabilizing in our key markets but we anticipate the 2010 will be another challenging year. However, long-term we continue to believe in the long-term prospects of our key markets throughout the sun belt. Now, continuing with the key points I touched on at the beginning of my call, I want to stress three themes that are very important to our company right now. Our balance sheet, our cost structure, and our operations. Regarding our balance sheet, Jim mentioned how much our equity raise has helped our leverage level and we are going to push to sell some assets over the next couple of years in order to drop our leverage even further. The most obvious place to start is our condos and we are now working through a much more aggressive approach to selling that appears to be working. More on that in a couple of minutes. Over the next year, you should also expect us to focus on our land positions and our industrial assets and possibly a few selected operating properties. Our approach will be to sell non-strategic assets if we can get decent pricing. While I am talking about sales, I want to discuss our San Jose retail project, which we have been marketing for possible sale or refinancing. The project was 96% leased at the end of last quarter…

(Operator Instructions) Our first question comes from the line of John Stewart from Green Street Advisors.

Larry, I wanted to first of all ask obviously we’ve seen a series of impairment charges and wanted to get your take in terms of where we stand as we work our through that process. Should we expect to see anything else in the fourth quarter or do you think you pretty well cleared the stage at this point?

That’s a fair question and we certainly at the end of every quarter take a very hard look at all our assets and looking for any impairments. And we certainly have attempted to be very, very diligent as always but particularly diligent these last couple of quarters as we have seen some impairments and have recognized those. And I am always positive and I hope we’ve been diligent and thorough but the other thing, as you know, that we can't predict is market conditions continue to change and that has an impact on the impairments. But we certainly think we’ve been diligent on that and I certainly look forward to a call that we don’t have any impairments to talk about, at least as much as you all on the phone do.

I wanted to touch quickly on the industrial assets -- you referenced those obviously in terms of potential dispositions and I know that at least under your predecessor, the strategy was to lease those up before you sold them but they have been just kind of languishing without much leasing. What is the thought process in terms of whether to move those along the same lines of what you are doing with the condos or are you going to hold out for more leasing there?

Well you know, I think the -- let me tell you what we are seeing on the industrial side. We actually have -- although we can't point to specific executed leases, we are seeing the number of prospects pick up, looking at our industrial properties. And although it’s a business, we want to get out of in the long-term, we have partners that are doing the day-to-day leasing of these assets that are very committed and they are long-term players in this space, so we think that we are seeing the deals out there. We think we are seeing an up-tick in the deals and quite frankly, we don’t think there is a market for these assets until they get significantly or predominantly leased. An empty industrial building in today’s market isn’t a whole lot different than a empty sub-division. You’ve got to get some NOI coming off those assets to generate anything. But we are always open to people that want to come and talk to us about a different approach to the portfolio if they think that makes sense.

Okay. A couple of housekeeping points -- on the AT&T lease at American Cancer Society, what was the annualized rent from that lease and what should we expect to see the drop off in the fourth quarter?

Give me a minute on that. I’ve got a schedule here, John, and I’ll look it up.

While you are looking that up, I had a couple points on the economic occupancy, which has certainly helpful, we appreciate seeing that but a couple that seem to beg a couple of questions, particularly at 191 Peach Tree and Avenue [Mar Frisboro] where there was a pick-up in economic occupancy but not so much in the percentage leased, and yet you didn’t really see that running through the P&L. Could you kind of walk us through --

I’m sorry, I wasn’t listening as closely as I should have because I am trying to flip through this lease, this schedule but the economic occupancy shows the status as of the end of the quarter. It’s a snapshot. It’s not an average on a daily basis for the quarter, so it’s not perfect, I suppose, if you are trying to match up NOI to come up with a run-rate but I think it will give you a better sense of where we are in the process and I think probably the right way to look at it is to look at the end of the quarter, look at it at the beginning of the quarter, and hopefully over time you will have a track record that you can look at from this to see how things kind of [slimmed] out.

I guess specifically on Avenue [Mar Frisboro], the bigger picture question is that the percentage leased was basically stagnant but economic occupancy picked up 600 basis points -- what should we expect to see in terms of the stabilized NOI run-rate from that asset and how do you [inaudible] on that property?

Give me another minute and let me see if I can look that up too and I will try to give you a better number but the --

John, I tell you what -- let us get those numbers together and come back to you on those two, if you don’t mind.

You bet. Let me just ask one more and I’ll jump off the queue -- the footnote on the Blue Valley land, could you kind of walk us through the story there?

Blue Valley is one where we wrote off our investment. We have no liability on the loan. We are in a partnership with a local residential developer. The loan is in default. The bank has actually been taken over and it is sort of in limbo. We had sort of expected that loan to get foreclosed and that hasn’t happened yet, so we are still showing on our debt schedule but essentially we don’t think we will have any further involvement at all and there won't be any financial impact on that, from that.

Why do you not have -- if you don’t have any liability, why are you showing $2.9 million as your share of the debt?

Well, we do that even for non-recourse debt, John. I mean, that’s just the way that we have done that schedule for years, so you will see that’s the case really for any project debt that is out there, whether it is recourse or non-recourse, where we have an ownership interest and technically we still have an ownership interest even though we don’t really expect to going forward.

Okay.

But that’s the reason for the footnote.

Thank you.

(Operator Instructions) Your next question comes from the line of John Guinee from Stifel Nicolaus.

Larry, Jim, excellent job. A couple of things -- what is your expected run-rate on G&A going forward in 2010?

John, that’s a great question. It’s a little hard to pin down because we are in the process of working on a budget right now for next year. To give you some perspective, our G&A in ’06 and ’07 was in the $57 million range to $58 million range before capitalization, but we had high levels of capitalization. We’ve cut that number, the top line number to what I think will be in the mid 30s, John. It could be in the high 30s. It depends on a number of non-cash things and whether those will affect us going into next year but worst case it would be high 30s. So Larry talked in his speech about a $17 million reduction -- I think that is conservative. We are expecting a very low level of capitalization of about $1 million next year, so that ought to bring us we think down into the mid 30s range, maybe even a little bit lower than that.

Okay. Second question is you guys have great supplementals but one sort of black box is the taxable resubsidiary, which I think you refer to sometimes as CREC. And that generated a sizable tax losses which used to be run through as tax loss carry forwards, essentially. That stopped in the second quarter. Is there any disclosure in your SEC documents about the taxable resub and how you expect that to -- when you expect that to turn profitable? Because a lot of your non-income producing land is sort of hard to value if the taxable resub continues to operate at a loss.

John, what we have said about that is that we can't predict when Crack or Cousins Real estate corporation, which is a tactical subsidiary, we can't predict when that business will become profitable. Really there are two factors that affected that decision -- one is we have -- although we’ve had a number of years in the past where it has generated profits in ’07, ’08, and ’09 -- and likely in ’09, we will have tax losses and under the accounting rules, if you have three years of tax losses in a row, it’s difficult to maintain a position that you are going to be able to use those tax losses going forward. The -- we do think -- I mean, I think that there is a good chance that we will be able to use those tax losses. It’s a significant sized asset for us and the NOLs have a 20-year life and some of the other disallowed interest items have an infinite life, so it is likely we will able to use them. It’s hard to say when. I think in valuing that business though, I wouldn’t look so much at that. You really need to look at the G&A for the company, which includes CREC, in terms of what our expenses are. But really what we have done with this is to say we are not going to get any tax advantages in the current period -- they will just add up and we will potentially get to use those in the future but in terms of the value of the land, the good news is that for once this business becomes profitable which could happen because of land sales at some point in the future, once this business becomes profitable we will have at least three years where we will be able to continue operating and have no effect on FFO from any tax burden.

Tying those two together, if you look at companies that have core portfolios about the size of yours, sort of 7, 10 million square feet, the ones we cover are Franklin Street Properties and Parkway, both of whom run G&As of sub $10 million a year. And then if you look at the same metrics no the basis of basis points to annual NOI, you sort of get that same $8 million to $10 million a year in G&A. Is it appropriate to bifurcate your G&A between your core operations and then your taxable resub and your merchant building business?

John, I don’t know that that would be that helpful. What I would say is we do have an amount in our G&A for our -- that’s part of the taxable subsidiary which is our third party management business, which is really a separate business. It’s very capital, very labor intensive, not capital intensive like most real estate and so it’s got -- we are making, generating profits from that business but it’s got a much lower profit margin than you would expect from a capital investment business like real estate. So that kind of business I think it’s more comparable to CBRE or [Jones Lang Lasalle], somebody like that that would have a much higher percentage of their revenues and their expenses. That’s a piece of it. I think another piece of it, and I don’t really know how to quantify this but I think that a number of other reats take an approach where they take their corporate office staff and allocate a lot of the cost to their properties, it’s a property level expenses. We do not do that -- unless somebody is working on a specific property, we report the G&A as G&A and I think we may show a higher number as a result of that than a lot of really the portfolio companies that really take a lot of that cost and allocate it out to the properties. And then third, we are more complicated. We do have a number of talent in different areas, multiple product types and so for a company our size, we do expect to run a somewhat higher G&A.

Thank you very much.

Your next question comes from the line of Jamie Feldman from Banc of America.

Hi, this is [inaudible] for Jamie. Can you please give some color around leasing velocity in fourth quarter thus far and maybe give some outlook on expectations for the office portfolio and the retail portfolio in 2010?

Well, the --

Just very generally.

Very generally -- let’s see, on the office side, it’s very, very hard to see that there is much momentum picking up in the office market in general in the markets that we are in. As I said in my talk, there is a lot of tenants looking that are looking primarily because it’s a great economic time to look. But that’s a balance of really two things -- one they are looking for good prices but two, they have to be confident where their businesses are, so that they can size their space right and their locations right. And so I can't say that we are seeing an increased momentum or velocity in office leasing yet, although we are seeing an increased number of prospects. Having said that, the positive impact on the improving economy that we talked about should be on -- we should see that with the confidence coming back and businesses start to make sure, make those decisions. But I do anticipate that 2010 from the office side will continue to be pretty sluggish and that’s why I think we are in a fairly good position because of the low amount of rollover we have. Steve, I’ll let you comment on the retail side.

I think on the retail side, I think it -- a lot of it is yet to be determined I think by how the holiday sales period will go for retailers. I think we would love to see a similar activity in ’10 that we have seen in 09 in the retail portfolio. We’ve had a very impressive ’09 given the market conditions that we have seen. So I think we are seeing an improving sales climate, albeit small. We are seeing that in our portfolio also and a lot of that, if that continues into the fourth quarter, I think will be a boost to the momentum of retailers looking at store openings for 2010.

Great. Thank you very much.

(Operator Instructions)

While we are waiting on a question, we had had two that we asked to have a moment on and I will let Jim provide those answers.

Let me start with Murphy’s Burrough -- on Murphy’s Burrough, if you look in our supplemental, and I don’t have my page numbers here but if you look at the joint venture information, you will see Cousins’ share of Avenue Murphy’s Burrough. We show the FFO Cousins going 708 in the first quarter, 727 in the second, and 786 in the third. In the third quarter, we did have four tenants totaling 28,000 square feet that took occupancy but there is a pretty significant FFO lag because most of those took occupancy late in the quarter. We do have one other University of Phoenix lease for 9,000 feet that is signed but not yet open, so that would give us a total of 37,000 square feet. Largely that -- those -- the rental numbers for those are not in the numbers you see historically. If you look, and I don’t want to pin us down too much in terms of a run-rate but we do expect significant increases in going forward -- somebody just passed me a note. I want to say we expect to see I would say in the range of $300,000 to $400,000 a quarter in increases over time as we get into next year. The AT&T lease, I’ve got a number here but let me make sure I’ve got this right. Why don’t we keep -- if there is anything else, let’s go to it. I just don’t want to quote an incorrect number.

Your next question comes from the line of John Stewart from Green Street Advisors.

To follow-up again on Murphy’s Burrough, when you look at the construction loans that you’ve got, obviously two of those three assets now, you’ve essentially written off entirely and here’s the third one and you know, Jim, I take your points about what you expect the pick-up from OI to be next year but with respect to that construction loan and the value of this asset or the expected pick-up in the income stream, how do you think about that maturity?

I feel pretty decent about that one, John. We’ve been in discussions with the lenders for a while. We are having some pretty productive discussions as we -- you know, we are in a partnership with [Faseon] on that, so we’ve got to work together with them. But we’ve made some progress lately and I think we are headed toward a loan extension on that. It’s not done yet but I feel decent about that.

Okay. And one more quick one, just on the pads at the brownstones at Haversham that you said are under contract -- what should we expect to see in the fourth quarter and will that be entirely gain or was there any basis allocated to the pads?

There will be a little bit of gain. We said we had $1.5 million in gains so far this quarter. There will probably be another couple of hundred thousand dollars of gain, we expect. It’s not a big number.

Okay. Thank you.

Mr. Gellerstedt, there are no further questions at this time. Please continue with your presentation or final remarks.

Well, we appreciate everyone’s interest in Cousins. I know that Jim and I and Cameron will be seeing most of you next week in Phoenix. We look forward to being able to talk about where we are and where we are going and spending time with you out in Phoenix next week. Thanks for your interest today and we are always available if you have questions to follow-up with. Thanks.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.