Business Context and Reporting Period
Cousins Properties Incorporated (the "Company") filed this Form 8-K on September 9, 2013, to report the completion of a major asset acquisition. The Company is a real estate investment trust incorporated in Georgia. The report details the closing of the "Texas Acquisition," a transaction initially announced on July 29, 2013.
Key Financial Metrics and Transaction Details
The Company acquired two major office properties in Texas for a gross aggregate purchase price of approximately $1.1 billion. After adjustments for tenant improvements, leasing commissions, and prorations totaling approximately $45.5 million, the net purchase price was approximately $1.0545 billion.
- Assets Acquired:
- Greenway Plaza: A 10-building, approximately 4.4 million square foot office complex in Houston, Texas.
- 777 Main Street: An approximately 980,000 square foot Class A office building in downtown Fort Worth, Texas.
- Funding Sources:
- Approximately $907.1 million in net proceeds from a common stock offering (completed August 5, 2013), the disposition of The Avenue Murfreesboro retail center (closed August 12, 2013), and property-level debt financings on Post Oak Central and Promenade (closed September 6, 2013).
- $30 million in earnest money deposits previously paid.
- Approximately $129.1 million drawn from an existing $350 million Credit Facility.
Material Changes and Financing Structure
The Company elected not to utilize a new $950 million term loan facility (with an accordion feature up to $1.1 billion) arranged with JPMorgan Chase Bank, N.A. and Bank of America, N.A. Consequently, the unused commitments for this Term Loan were automatically terminated upon the closing of the acquisition. The transaction was funded primarily through equity issuance, asset disposition, and existing credit facilities rather than the new term loan.
Outlook, Risks, and Forward-Looking Statements
The filing includes a cautionary statement regarding forward-looking statements, noting that expectations regarding the effects and financing of the Texas Acquisition are subject to uncertainties. The Company directs investors to review risk factors in its Annual Report on Form 10-K for the year ended December 31, 2012, and the July 29, 2013 Form 8-K. Unaudited pro forma financial information regarding the acquisition is incorporated by reference from a previous filing but is not detailed within the text of this specific report.
Key Facts for Investor Verification
- Verify the final net purchase price after all closing adjustments ($1.1 billion gross less ~$45.5 million credits).
- Confirm the impact of the $907.1 million in proceeds from the August 2013 stock offering and asset sales on the Company's capital structure.
- Review the pro forma financial information (Exhibit 99.4 in the July 29, 2013 filing) to understand the accretive or dilutive effect of the acquisition.
- Note that the planned $950 million term loan was not drawn and the facility was terminated.
- Check the occupancy and lease-up status of the newly acquired Greenway Plaza and 777 Main Street properties.