Cousins sees more pain ahead in real estate

By Gertha Coffee

The Atlanta Journal-Constitution

Atlanta-based Cousins Properties expects 2010 to be another tough year for commercial real estate, CEO Larry Gellerstedt said Thursday, despite the end of the recession as measured by general economic growth.

"It's hard to see momentum picking up in general," he said in a conference call to analysts following the company's third quarter earnings release.

"On the office side, lots of tenants are looking because it's a great time to look," but few are making commitments.  The retail side, he said, will be determined by the strength of holiday sales this year.

He said Cousins made significant strides in improving its balance sheet and cost structure to make the company more competitive, including raising more than $300 million from an offering of common stock,  reducing staff and finding a buyer for its corporate jet.

In third-quarter results, Cousins reported a decrease in funds from operations, an earnings yardstick used by real estate investment trusts.

For the third quarter ended  Sept. 30, FFO was $7.3 million, or 12 cents a share before special charges, compared with $20.9 million, or 39 cents a share, for the third quarter of 2008.

The company recorded $48.5 million of non-cash impairment charges during the third quarter, including $4 million related to the sale of its corporate jet and $38.9 million in write-downs on the value of Terminus 200, its new Buckhead office tower.