Good day, and welcome to the Cousins Properties Incorporated Third Quarter 2012 Earnings Conference Call. Today’s call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Tripp Sullivan of Corporate Communications.

Good morning. Certain matters that Company will be discussing today are forward-looking statements within the meaning of Federal Securities Laws. For example, the company may provide estimates about expected operating income from properties, as well as certain categories of expenses along with expectations regarding development, acquisition and disposition opportunities. Such forward-looking statements are subject to uncertainties and risks and 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, 2011, for additional information regarding certain risk and uncertainties. Also certain items that 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 maybe found through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of its website at www.cousinsproperties.com. And now, I will turn the call over to Larry Gellerstedt.

Good morning, everyone. First I'd like to let all of our friends up the eastern seaboard know that you’ve been very much in our thoughts this week. We hope that you and your families weather the storm without any catastrophic damage and that the pending recovery process goes as smoothly as possible. Times like these certainly put things into perspective for all of us. With that said, let me give a few thoughts on our business. Our third quarter results with the sale of a non-core business unit agreement to sell 2 of our largest retail assets, the acquisition of a strategic office tower in Texas and another solid performance for the operating portfolio demonstrate continued progress across the board. The operating performance is best exemplified by a 4.1% increase in same property NOI through the first 9 months of the 2012. This uptick is even more impressive on a cash basis at 10.2%. Moving forward as we said often, our portfolio will be increasingly comprised of Class-A office assets that are well placed within high growth Sun Belt markets, where our expertise and long-term relationships are competitive advantage. Further, playing to our strengths, we are using this stable platform to seek additional returns through opportunistic investments. Operationally, as we work to execute this strategy, we remain tightly focused on simplifying the platform, capturing NOI embedded within our portfolio and executing on investment opportunities. The first of these simplification should serve to further remove the NAV discount from our shares. The latter 2 embedded NOI and investments should drop future NAV growth both organically and externally. First let’s discuss simplification, aside from its positive impact on valuation the ongoing simplification of the platform provides 2 important benefits, first it enables us to operate more efficiently and to focus where we…

Thanks, Larry. Good morning, everyone. The third quarter continued a string of solid quarters we’ve had throughout 2012. However, before I jump into the numbers, I thought it might be helpful to quickly review the handful of special items that were in our third quarter results. First, as Larry just discussed, we sold Cousins Properties Services, often referred to as CPS during the quarter. The total potential sales price is $15.4 million, of which we received about 64% upfront. The earn out of the balance is dependent on driving fees at the properties included in the sale, as well as adding additional properties to the deal. With a few exceptions the earn out will be settled up a year from closing. We recorded a gain of $7.4 million during the quarter and any additional proceeds we do receive will be recorded as additional gains as we receive them. The second special item has to do with the participation interest we purchased in an acquisition we completed in 1999. In this purchase, we assumed the development contract that entitled us to 50% of the proceeds after debt from the sale of Motorola’s 1 million square foot campus in Austin, Texas. This project was eventually sold in 2008 generating cash of $27 million of which we received $13.5 million and an $18 million seller’s note that had a ladder debt maturity between 2014 and 2016. The buyer chose to pay half the note $9 million early this past quarter. This generated $4.5 million to us during the quarter which runs through fee income on the earnings statement. There was also a $1.1 million commission associated with this transaction. With that expense running through other expenses, for net proceeds of $3.4 million, this is the number reflected in the special table on the…

[Operator Instructions] And our first question comes from the line of Jamie Feldman with Bank of America Merrill Lynch.

I was hoping you can talk a little bit more about 191 Peachtree and American Cancer Society. Just kind of leasing prospects and what you guys are seeing in the data center space versus the office space.

I will tell you on American Cancer Society, we're seeing -- we began our remarketing effort to the data users earlier this year and we’re seeing a lot of interest from those users. And what we’re not in a position to do is try to handicap exactly when those might convert to leases. And what I’d say that the users are finding that the building is extraordinarily compelling, in terms of its location and infrastructure. And that is generating a lot of interest. The timing issue is some of these users, particularly the ones that are public in nature are more used to owning their space than leasing space, and so it has taken a while to sort of work through those economics for them. But in the meantime, the building remains very attractive from an office user standpoint as well. It’s just, it’s different than your normal office building lease up because of those 130,000 square foot floor plates, is your leases just tend to come in big chunks and therefore the progress is a little bit more difficult to predict. [Indiscernible] as 191 Peachtree, I think you can see that we had great leasing momentum over the summer and just to dial back when we bought this building, it was 20% occupied. And so we’re now, we’ll move up to 87% occupied and where we’ve got existing tenants that are talking expansion. So we feel good about 191 Peachtree, I would tell you that downtown Atlanta, the office market remains slow, it’s not bad but it’s just slow relative to a midtown or a Buckhead. And we’re going to do some efforts to make sure that we work to keep the downtown market in front of the tenant rep brokers and others because there is so much positive going on with downtown.

Okay. And then I guess a similar question on 2100 Ross. What’s the typical tenant that wants to be in the Arts District right now or do you feel like you have to kind of bring people to that market or that submarket?

No, the market is very full. There is an article in one of the leading Dallas business magazines I think it’s called Big D, which will be appropriate for Dallas. But that features this park, this 5-acre park that’s fancy interstate and connects the Arts District where all the symphony halls, the museums and all those components and Dallas have been put in on location over the last couple of decades. It really connects Uptown and Arts District market into one and the occupancy rate in that market is very low and contiguous space is very hard to find. What’s happening in Dallas is, is that some of the traditional downtown tenants of the CBD of Dallas. If you look at the last 5 to 10 years have generally been migrating out of the CBD to the Uptown Arts District model. And so the 2100 Ross deal actually is a main and main location. It's just an older building that has sponsorship or capital improvements done to it in awhile, but the largest tenant in that building is CBRE, and you’ve got a really a very strong tenant roster and we just feel really confident that the combination of the momentum in that submarket as well as our sponsorship and some capital that that will be a very, very compelling investment.

Okay. And then finally Greg, in the press release you talked about further severance charges, is that still related to the Third-Party Management business or is there more going on?

The costs related with the Third-Party Management sale were wrapped into the Third-Party Management transaction. These costs are incremental to that; these are corporate reorganization costs excluding the third party sale.

Okay.

So what you have got going on there, Jamie, is that we’ve -- when the Third-Party business was sold, there were some further corporate restructuring we were able to do, and those costs are -- some of them flowed through in the third quarter which is what you saw and the balance are some folks that will be here through the end of the year, and so their severance costs will flow through in the fourth quarter. The good news is, is that it really after a couple of years of really working on the cost structures we got out of these non-core businesses, is that we’ve really got the platform of where we want from a cost and size standpoint on a go-forward basis.

Okay, and then my last question is, I mean, Austin, I think you said you had the best site in town, I mean we're hearing there are several potential developments there. Like how do we get comfortable that there is not going to be too much supply come online in that market?

Well, the -- if you look at who has gone through the entitlement process is the best way to track Austin, because it’s a very difficult city in terms of getting through the entitlement process and if you look at who is at the tail-end of getting their final check-offs, it's us and then there is one other building that’s about 180,000 feet. That's about exactly where we are. The other buildings that you hear talking about in Dallas are much further behind us in terms of their process and I would say are at least 9 to 12 months, if they would decide to start going today, would be my guess. So I would expect that probably in this cycle, because so much of the downtown Austin market rolls in a 2, 2.5 year time period. I would think that you probably would see at most 2 buildings go, which would add a little over a 0.5 million square feet, which that market has certainly shown an ability to absorb.

Okay, so you’d be comfortable even if that other building got started.

Yes, I mean, but we also are really watching closely the preleasing activity we can get and I want to give just a little bit more color on that, your tenants, most of your tenants in the downtown Austin market because of the state capital and some other components of Texas are -- there are 10,000, 15,000 foot tenants, I think the average size deal in downtown, Austin is 10,000 square feet or something roughly like that. So when you talk to tenants of that size about preleasing, but it’s a decision that their leases are out for 2 or 2.5 years is not a question of interest, it’s just a question of getting prioritization of why is this something I need to jump on right now. And I was out in Austin for over a day last week meeting with tenants myself. I just couldn’t feel more positive about where we sit, where our building is, the response from tenants. But we also are going to be very disciplined in making sure that we’ve got enough preleasing and enough in the pipeline that we feel on a risk-adjusted basis that it’s a compelling investment to make and if it’s not, then we won’t do it. But I feel very positive about it right now.

And our next question comes from the line of Brendan Maiorana with Wells Fargo.

Larry, so what’s the level of preleasing that you think you’d want to get before you make the go decision at Third in Colorado?

Good question, Brendan. I’d sort of give you the range. We set an internal thing, you certainly would pull the trigger and go with the high 40s, 50% level there, you can get construction financing and just the market is so compelling in that level. That’s a pretty easy decision, and the other range, we’re not going to start at zero. So then the question gets to be, if you were to start at less than 50 and above zero, what’s that magic number? And to me, that magic number is really a combination of 2 things; one is how many firm commitments we can get, actual leases in our pocket that we know are good. And then how may LOIs we can get that are leases that we have a strong feeling in terms of being able to convert those in the first half of next year. And then we’re going to have to make a gut call, and the thing that I’ll remind people about Austin market is the -- I’ve certainly never seen in developments that I’ve been involved with where you got a new building coming on at a great location in the CBD area, and the tenants that you’re talking to that are existing tenants, that you’re talking about rents and the new buildings that are either flat or lower than rents they are paying in buildings that are much older. Great buildings, we built some of them. But it’s a pretty compelling thing, but in that range we’re definitely a no at zero, we’re definitely a yes at 50, the judgment call comes in between and that’s and we’re probably going to end up in between.

Okay. And when you’re saying 50 preleasing, you’re talking about actually having leases in hand as opposed to leases plus LOIs. is that right?

Yes. I mean that would be a very easy decision. But I don’t think we’re going to end up with that decision, I think we’re going to end up with something that we’ve got some leases, some really strong LOIs, and then we’ll look at the pipeline. It is a very compelling market to be -- and I think putting 350,000 square foot in that downtown market, there is a real need for it and a demand for it.

Sure. Larry, another question just in the terms of with all the capital that you have coming in and the new investment opportunities and development is one of them and you talked about acquisitions too. If we look at your home market in Atlanta, there has been a couple of deals that have happened there over the past few months where maybe buyer reception wasn’t as significant as what sellers thought. Initially there has been, I think at least 1 or 2 deals that maybe got pulled. We know the Texas markets are strong in terms of new investment opportunity, pricing. Are you seeing that in the other markets where you are looking at maybe pricing is backing off a little bit and that gives you a little more confidence that you'll be able to gets some deals done?

That’s a great question Brendan. I think what we clearly have seen in Atlanta is you saw some assets trade at pretty aggressive numbers over the summer to Alliance. We thought was a pretty strong number particularly as we look at Terminus. You saw the Concourse deal which I mentioned in my speech get done and then you have seen a couple of assets get pulled, I think the reason that the assets got pulled from the sellers, at least the ones that I’ve talked to is, as Atlanta has gotten better, their pricing expectations have gone up, and their comfort level with holding has also gone up. So whereas someone might have been willing 2 years ago to sell at 90% of expectation, we got at least in one case I was happy to be talking to the guy 2 nights ago, and they came in about 96% of the expectation, and decided 96% wasn’t good enough, but I do think that we are very cognizant of some of the aggressive pricing that’s going on in Texas and we're being very disciplined about that, we do have some opportunities out there on the acquisition side as well that are consistent with our strategy but we will remain very disciplined. We also certainly have not turned off looking at opportunities in Atlanta even though we want a geographically less in our amount of our portfolio in Atlanta. And I’d point out that when we sell these 2 retail centers both of which are in Atlanta, that will be a significant amount of capital that we’re freeing up that is currently invested in Atlanta assets. And so we keep our eye certainly close on the Atlanta market and we pull the trigger on something in Atlanta if we thought it was compelling and consistent with our strategy.

Sure and that’s helpful. Did you guys provide the pricing on the 2 retail -- the 4 sites in Webb Gin?

We have not provided that yet. We just got them under contract, and we would expect, both those contracts are now hard with the buyers with significant earnest money down, and so we feel very confident that both of those will close by the end of the year. And buyer interest on both those assets was very strong.

Okay, and then just for Gregg, you kind of alluded to this in your prepared remarks, but with all the capital that’s coming in, how should we think about what’s likely for the use of proceeds you got, the preferreds which I guess potentially in one or both of the tranches can be repaid there’s from debt that’s maturing next year but there’s not a lot of, they wouldn’t appear to be a lot of near-term uses of that capital coming in.

That’s right, Brendan, we feel confident in our investment opportunities, but none of them are close enough to the finish line where we can disclose them. But we’re going to have -- the timings not going to be perfect on this capital recycling. We're going to be sitting; we’re likely going to be sitting on some cash for a period of time. We had $90 million outstanding on our line at quarter-end. And as I said, we’ll have $250 million in cash coming in. So there is a high probability that for a short period of time, we’ll have a large cash balance on the balance sheet. And so that’s what I’m referring to when I say, please take that into consideration, as you guys generate your fresh earnings forecast for ‘13.

I’m not sure about the numbers.

Well, I don't think we’ll have it for a long period of time. I know we won’t have it for a long period of time. If our investment opportunities don’t pan out, we do have the option of buying in either our preferred or common stock, mostly likely our preferred stock, it’s in the Series A is 7 ¾% coupon, we’d immediately receive 7 ¾% return on purchase, not the worst investment we can make in the world. But in the near-term while we let these investment opportunities flesh out to see if they come to pass or not, there will be a period of time where we’ll likely sit on [indiscernible] cash.

Brendan, I might just add one thing, just as a sort of a side note, when I became CEO in July of ‘09, I made a little marker and I dreamed of the day that I would get the question of what we’re going to do with cash. So, thank you for making that come true. It's been a long haul.

It's a tough problem to have, right?

Exactly.

And our next question comes from the line of John Guinee with Stifel, Nicolaus.

So Larry and Gregg and Cameron, you guys are a little bit of an oxymoron. You're a small cap REIT that doesn’t need capital. So congratulations. How are you guys thinking about joint ventures these days? Is that an arrow in your quiver in terms of the things you’ll do? And when you do it, will you do it as a capital source versus a value add partner. And then refresh our memory on a couple of the bigger ones such as Murfreesboro and Charlotte Gateway, the big sale leaseback to BofA.

Well let us start with the assets John, let me -- let Gregg walk through Murfreesboro and Gateway. I’m really glad you asked the question on Gateway because I think as we have simplified the company. Gateway may be the one that needs the most clarification.

The Murfreesboro is a large lifestyle property that we owned in Tennessee and a 50-50 joint venture with Faison. It has floating rate debt associated with it, mid $90s million in terms of the debt that matures in July 13, obviously, no prepayment penalty with floating rate debt. And we were in the process right now with Faison of deciding what to do. We have an option of selling it, obviously we have an option of refinancing it. And we’re in the midst of working through that right now. I would tell you that we’re both leaning entirely towards selling it before the debt matures in the summertime, but no firm decision has been made. And then in terms of Gateway Village that’s a property that we owned in a joint venture with BofA. So 1.1 million square foot property in downtown Charlotte, it's where they have all their back office operations. It’s 100% leased through 2016. That lease corresponds to the debt. The debt is a fully amortizing piece of debt. So come 2016 when the lease expires there will be no debt on the property. We’ve received about 11.5% deferred return that we recognized in our income statement every quarter. And it gets a little squirrely on the backside, but really the likely outcome is that they can either when their lease matures and the debt matures, we can either retain 50% ownership interest in the ongoing building or they can buy us out, providing us with the 17% look-back IRR in our initial investment, which was $10.5 million. And they have not indicated what they’re going to do and it’s still 4 years away. So in the meantime we are running in the building as it was originally intended to be run, and we’ll wait for an indication from BofA.

And then, John, in terms of your question on joint ventures, I do think that our creativity in terms of being able to structure ventures appropriately and with partners as a competitive strength. I think if we look at the public’s deals of where and the first 4 of them we were a capital provider and then the fifth one we stepped in and did the development as well, but even when we were a capital provider we had the knowledge and skill-sets to come in and add value and if the deals have gotten in trouble, we certainly could have taken them over. I think the same of Emory, I was just out looking at Emory yesterday, they’ve just opened the -- when we talk about the over 100 apartments rented, this is under project that's still under construction and has been leasing out of a trailer. So I went out yesterday to see they’ve just opened the leasing office out there. And I would say venturing with Gables on that deal, they have added a tremendous amount of value and the 25% of the deal that we gave to them we feel very good about it. I think the same thing in downtown Austin if you sort of took the glass that’s half empty approach if that deal does not happen then we are not left with a huge landholding in downtown Austin. We partnered with the land holder there, so our exposure today is probably a little bit over $1 million in pre-development costs versus -- plus being in the $15 million because we bought aside and had that. So I think it’s certainly a strength. Our preference obviously is if we can find deals to do that are 100% Cousins is cleaner. If we do ventures we would like to -- our next preference would be obviously to be the operator because we once again think that's very much a part of our prior skill set, but we -- on the opportunistic side you’ve got to be creative to get the value and keep the risk in check and I do think it’s competitive strength.

[Operator Instructions] And our next question comes from the line of Michael Knott, with Green Street Advisors.

This is [indiscernible] here with Michael. A question as far as just sort of with the deals getting pulled in Atlanta and pricing getting pretty full in Texas as you mentioned, does it make you want to cast a wider net geographically in order to search kind of compelling opportunities? Could we see you guys doing a big deal in Florida let’s say?

I think first of all, I feel really good about our pipeline and so we have not felt compelled for a lack of what we think are good prospects to cast a net further, having said that we certainly consider anything in the Southeast to be within the net. It's just not the primary part, so could you see us potentially doing something in the national Tennessee or a market like that -- Tampa, Orlando you could, and we look at those deals that come through. But so much of our strength is on the ground management and leasing, it’s a real differentiator for us. And so we’re not ones that unless there was something very unique about it, where we found a local partner that brought some value, one-offs are not exactly our strategy on our long-term hold deals. And we constantly study other markets. I mean we’ve got a group that’s dedicated to do that, we look at the South Florida market periodically. But I really would stress right now we don’t feel opportunity constrained in terms of when I look at our pipeline.

Okay. And just kind of a related question, and obviously it’s more long-term, but any updates on the 2 large mixed-use Atlanta development, Fort McPherson and the big Multi-Model project?

We continue on the Multi-Model project to be actively working. We got a team working full-time on it with 4 city, that’s a long entitlement process to go through, getting all the federal permits and various things there. I’d say the project is tracking ahead of schedule on the whole design and permitting standpoint. The funding component of it, with everything going on at the federal level is still, I wouldn’t say it’s less clear than it was, it’s just -- it’s 2 to 3 years out, I would say and I would put Fort McPherson in the same category.

Okay. A question for Gregg. Can you talk about the solid expense performance, you guys had in the quarter, just maybe a little bit about kind of what the key drivers of the expense reductions were?

Yes. There’s obviously on the expense side, there could be a lot of moving parts, but I would compliment 2 primary things, Jeff. First, I think that our team is doing a great job in just keeping a lid on operating expenses, it’s a focus and they’re doing a terrific job in executing it. Secondarily though, and what’s also driving the numbers a good bit, is that we’ve been very successful at tax appeals. and so we’ve seen some reductions in tax bills that are flowing now through the income statement.

Okay, great. And just a last one from me, do you guys have an estimate on mark-to-market rents for your portfolio today?

Yes. I don’t have that at the top of my list, Jeff. I don’t have that number.

And our next question is a follow-up question from the line of Jamie Feldman with Bank of America Merrill Lynch.

Great. Just a quick question on your discussion of having excess cash, given your FADPR, I think in the quarter was like 50%, how are you guys thinking about the dividend, and then maybe even a special dividend with the portfolio restructuring in the current NOI stream?

I’ll start out with the special dividend, Jamie. We’ve managed our tax exposure very carefully. So there’s no need for a special dividend in the foreseeable future unless something were to change. So we’ve done a good job with that, and then in terms of just the raw dividend that’s recurring common dividend, you’re right, our FAD during the quarter was $0.09, our dividend is $0.045, so we’re only paying out about 15% of our FAD. The board will make the ultimate decision what the dividend policy is, but as Larry and I talked about, the last a little bit, this capital recycling effort comes with some dilution exposure from an earnings perspective, as stuff works through. And so we want to make sure that we’re always in a position that we adequately cover our core quarterly dividend, no matter what the capital recycling program generates, and when the time comes that we get kind of through the highest velocity period for our capital recycling, which is this kind of ‘12, ‘13 period. I think it will be easier for us to take a look at that, and maybe not leave quite as much buffer in between our FAD and our dividend.

Okay. So basically, you kind of feel like at the current level makes sense, and you’ll see where you can put capital to work?

Yes. Let’s play out the end of ’12 and ‘13 in terms of capital recycling, and then I think we’ll be able to really start to -- I guess to reduce that contingency in ‘14 going forward.

There are no further questions at this time. I would now like to turn the conference back to Mr. Larry Gellerstedt.

We just appreciate people being on the line, and once again, those up the eastern seaboard, I hope you know that we’re very sincere, and our hopes and thoughts being with you all, that that area recovers quickly, and that things return to normal as soon as possible. Thanks for joining the call today.

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