Cousins Properties Incorporated 2006 Annual Report - SNL Financial

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
12. RENTAL PROPERTY REVENUES
The Company’s leases typically contain escalation provisions and provisions requiring tenants to pay a pro rata
share of operating expenses. The leases typically include renewal options and are classified and accounted for as
operating leases.
At December 31, 2006, future minimum rentals to be received by consolidated entities under existing noncancelable
leases, excluding tenants’ current pro rata share of operating expenses, are as follows ($ in thousands):
Office Retail Industrial Total
2007 ................................... $ 52,527 $ 19,953 $1,073 $ 73,553
2008 ................................... 58,680 20,682 1,146 80,508
2009 ................................... 46,467 20,773 1,169 68,409
2010 ................................... 41,686 20,871 1,192 63,749
2011 ................................... 37,308 20,104 1,216 58,628
Subsequent to 2011 ........................ 184,107 98,183 203 282,493
$420,775 $200,566 $5,999 $627,340
13. REPORTABLE SEGMENTS
The Company has four reportable segments: Office/Multi-Family, Retail, Land and Industrial. The Office
division entered the multi-family development business in the fourth quarter of 2004 and changed its name to the
Office/Multi-Family Division in the second quarter of 2005. The Office/Multi-Family Division develops leases and
manages owned and third-party owned office buildings and invests in and/or develops for-sale multi-family real
estate products. The Retail and Industrial Divisions develop, lease and manage retail and industrial centers,
respectively. The Land Division owns various tracts of land that are held for investment or future development. The
Land Division also develops single-family residential communities that are parceled into lots and sold to various
home builders or sold as undeveloped tracts of land. A majority of the Company’s properties are located within the
Southeastern United States. The Company’s reportable segments are categorized based on the type of product the
division provides and the expertise of the division’s management and personnel. The divisions are managed
separately because each product they provide has separate and distinct development issues, leasing and/or sales
strategies and management issues. The divisions also match the manner in which the chief operating decision maker
reviews results and information and allocates resources. The unallocated and other category in the following table
includes general corporate overhead costs not specific to any segment and also includes interest expense, as
financing decisions are not generally made at the reportable segment level.
In periods prior to 2006, the Company recorded reimbursements of salary and benefits of on-site employees
pursuant to management agreements with third parties and unconsolidated joint ventures as reductions of general
and administrative expenses. In 2006, the Company began recording these reimbursements in Fee Income on the
Consolidated Statements of Income and reclassified prior period amounts to conform to the 2006 presentation. As a
result, Fee Income and General and Administrative Expenses in total have increased by $15.1 million in 2005 and
$13.2 million in 2004 when compared to amounts previously reported. Fee Income and General and Administrative
Expenses from the Office/Multi-Family Division have increased by $15.0 million in 2005 and $13.2 million in 2004
when compared to amounts previously reported. Fee Income and General and Administrative Expenses from the
Retail Division have increased by approximately $100,000 in 2005 and approximately $24,000 in 2004 when
compared to amounts previously reported.
Company management evaluates the operating performance of its reportable segments based on funds from
operations available to common stockholders (“FFO”). FFO is a supplemental operating performance measure used
in the real estate industry. Prior to 2006, the Company calculated FFO in accordance with the National Association
of Real Estate Investment Trusts’ (“NAREIT”) definition of FFO, which is net income available to common
F-38