• Sold a ground-leased outparcel at The Avenue Webb Gin for approximately $1.8 million, generating pre-tax gain on sale of approximately $582,000.

• Executed or renewed leases covering approximately 80,000 square feet of office space and 72,000 square feet of retail space.

Other highlights subsequent to quarter end included the following:

• In April 2009, repaid in full an $83.3 million mortgage note payable secured by the San Jose MarketCenter for approximately $70 million. The Company expects to record a gain on extinguishment of this debt of approximately $12.7 million in the second quarter of 2009.

• Executed a 50,000 square foot lease with Firethorn Holdings, LLC at Terminus 200, a 25-story office building under construction at the Company's Terminus development in Atlanta, Georgia.

Results of Operations:
Rental Property Revenues. Rental property revenues increased approximately $3.2 million (9%) in the three month 2009 period compared to the same 2008 period. These increases are discussed in detail below.
Rental property revenues from the office portfolio increased approximately $296,000 (1%) in the three month 2009 period as a result of the following:
• Increase of $411,000 due to an increase in average economic occupancy at Terminus 100;

• Increase of $257,000 from the American Cancer Society Center (the "ACS Center"), where average economic occupancy increased;

• Increase of $1.3 million from One Georgia Center, due to an increase in average economic occupancy; and

• Decrease of $1.4 million related to 191 Peachtree Tower, where average economic occupancy decreased, mainly due to the December 2008 expiration of the Wachovia lease.

Rental property revenues from the retail portfolio increased approximately $2.9 million (39%) in the three month 2009 period as a result of the following:
• Increase of $1.6 million related to increased average economic occupancy at The Avenue Forsyth, which opened in April 2008;

• Increase of $1.2 million related to increased average economic occupancy at Tiffany Springs MarketCenter, which opened in July 2008.

Rental Property Operating Expenses. Rental property operating expenses increased approximately $3.9 million (29%) in the three month 2009 period compared to the same 2008 period as a result of the following:
• Increase of $1.3 million related to the increased occupancy at Terminus 100 and One Georgia Center;

• Increase of $465,000 related to 191 Peachtree Tower, due mainly to increases in real estate taxes, marketing costs and bad debt expense;

• Increase of $1.0 million related to the 2008 openings of The Avenue Forsyth and Tiffany Springs MarketCenter; and

• Increase of $651,000 related to San Jose MarketCenter and The Avenue Carriage Crossing, due to increases in bad debt expense.

Fee Income. Fee income increased $486,000 (6%) between the three month 2009 and 2008 periods. Fee income is comprised of management fees, development fees and leasing fees, which the Company performs for third party property owners and joint ventures in which it has an ownership interest. These amounts vary between quarters, due to the number of contracts with ventures and

third party owners and the development and leasing needs at the underlying properties. Amounts could vary in future periods based on volume and composition of activities at the underlying properties. Between the 2009 and 2008 periods, management fee income, including salary and expense reimbursements, increased approximately $814,000, due to higher average projects under management between the periods. This amount was partially offset by a decrease in leasing fee income of approximately $261,000, mainly due to timing of lease rollovers at the properties.
Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and outparcel sales increased $804,000 (46%) between the three month 2009 period and the same 2008 period, and residential lot and outparcel cost of sales increased $784,000 (83%) between the periods.
Residential Lot Sales and Cost of Sales - The Company's residential lot business consists of projects that are consolidated, for which income is recorded in the residential lot and outparcel sales and cost of sales line items, and projects that are owned through joint ventures in which the Company is a 50% partner with Temco Associates LLC ("Temco") and CL Realty, L.L.C., for which income is recorded in income from unconsolidated joint ventures. Residential lot sales increased $604,000 between the three month 2009 period and the same 2008 period. Lot sales were as follows:

                                                 2009     2008
                        Consolidated projects      4        2
                        Temco                      -        2
                        CL Realty, L.L.C.         21       31

                        Total                     25       35

Demand for residential lots is down significantly as a result of general market conditions and as a result of limited demand in the Company's and its ventures' principal markets in Texas, Florida and metropolitan Atlanta. Builders, the primary customers for such residential lots, have a general oversupply of inventory in the Company's markets and are working to reduce inventory levels before they consider buying additional lots. Many builders are also in financial distress because of current market conditions. In addition, the recent changes in credit availability for home buyers and homebuilders have made it more difficult to obtain financing for purchasers. Management is closely monitoring market developments but is currently unable to predict when markets will improve. Management expects these market conditions to continue to negatively impact residential lot sales and have an adverse impact on the Company's results of operations until such time as the residential lot markets improve. Therefore, consistent with current market trends, the Company anticipates residential lot sales for 2009, like those in 2008, will be lower than those the Company experienced in recent years, both at consolidated projects and at Temco and CL Realty, L.L.C. The Company cannot currently quantify the effect of the current slowdown on its results of operations for 2009 and forward.
Residential lot cost of sales increased $411,000 between the three month 2009 and 2008 periods. The change in residential lot cost of sales was also partially due to the number of lots sold during the periods and partially to fluctuations in gross profit percentages used to calculate the cost of sales for residential lot sales in certain of the residential developments.
Outparcel Sales and Cost of Sales - Outparcel sales increased $200,000 between the three month 2009 and 2008 periods. There was one outparcel sale in each period, although the 2009 sale was at a higher price. Outparcel cost of sales increased $373,000 between the periods, as the basis in the 2009 land parcel was higher than the parcel sold in 2008.
General and Administrative Expense, including Reimbursements ("G&A"). G&A expense decreased approximately $395,000 (3%) between the three month 2009 and 2008 periods primarily as a result of the following:

• Decrease in salaries and benefits for employees and directors of approximately $3.9 million. This decrease is based in part on a decrease in the number of employees at the Company between the periods. The decrease is also due to a decrease in stock-based compensation expense, a portion of which fluctuates with the Company's stock price;

• Increase in salaries for reimbursed employees of approximately $442,000 due to higher average projects under management in 2009 compared to the same 2008 period;

• Decrease of approximately $2.7 million in the capitalization of personnel costs to projects under development, which have declined.

Depreciation and Amortization. Depreciation and amortization increased approximately $1.8 million (16%) between the three month 2009 and 2008 periods primarily as a result of the following:
• Increase of $773,000 related to the increases in tenant improvements associated with increases in occupancy at Terminus 100 and One Georgia Center;

• Increase of $1.2 million from the openings of The Avenue Forsyth and Tiffany Springs MarketCenter; and

• Decrease of $570,000 related to 191 Peachtree Tower, mainly due to a decrease in tenant asset amortization from the expiration of the Wachovia lease in December 2008.

Interest Expense. Interest expense increased approximately $4.2 million (66%) in the three month 2009 period compared to the same 2008 period as a result of higher average debt outstanding between periods, and a decrease in capitalized interest of $3.1 million due to lower weighted average expenditures on development projects.
Other Expense. Other expense decreased approximately $209,000 (12%) between the three month 2009 and 2008 periods. The expenses incurred by the Company when pursuing a potential development project are recorded in this category. In the 2008 period, approximately $1.1 million was expensed for a retail project no longer probable of development, and in the 2009 period, approximately $800,000 was expensed for a retail project no longer probable of being developed.
Benefit for Income Taxes from Operations. Benefit for income taxes from operations increased approximately $724,000 (23%) between the three month 2009 and 2008 periods as a result of higher losses from Cousins Real Estate Corporation ("CREC"), the Company's taxable REIT subsidiary. CREC losses were higher as a result of the following:
• Decrease in income from the TRG Columbus Development Venture, Ltd. ("TRG"), as TRG had no sales in the 2009 period, and decrease in income from CL Realty, L.L.C. as a result of fewer lot sales and other income (see further discussion in the income from unconsolidated joint ventures section below);

• Increase in interest expense on borrowings between the Company and CREC.

Income from Unconsolidated Joint Ventures. Income from unconsolidated joint ventures decreased approximately $997,000 (35%) in the three month 2009 period compared to the same 2008 period due to the following. (All amounts discussed reflect the Company's share of joint venture income based on its ownership interest in each joint venture.)
• Decrease in income from TRG of approximately $651,000 due to substantially all of the unit closings being completed by the third quarter of 2008, and therefore the entity had limited activity in the 2009 period.

• Decrease in income from CL Realty, L.L.C. of approximately $885,000 due to a mineral rights lease bonus recognized in the first quarter of 2008 and to the recognition of income from potential lot buyers forfeiting their deposits in 2008. This decrease was also attributable to a decrease in lots sold from 31 in the 2008 period to 21 in the 2009 period. See additional discussion in the Residential Lot and Outparcel Sales and Cost of Sales section above.

• Increase in income of approximately $613,000 from Palisades West LLC, which developed and owns two office buildings in Austin, Texas. Building 1 became partially operational in the fourth quarter of 2008.

Gain on Sale of Investment Properties. Gain on sale of investment properties increased $163.6 million between the three month 2009 and 2008 periods. The increase is attributable to the recognition of $167.2 million in deferred gain related to the 2006 venture formation with Prudential. When the Company and Prudential formed the venture, the Company contributed properties and Prudential contributed cash. The Company accounted for the transaction as a sale in accordance with SFAS No. 66, "Accounting for Sales of Real Estate," but deferred the related gain because the consideration received was a partnership interest as opposed to cash. In the 2009 period, the Company and Prudential made a pro rata distribution of cash from the venture that caused the Company to recognize all of the gain that was deferred in 2006.
Discussion of New Accounting Pronouncements. Derivative Instruments and Hedging Activities In March 2008, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133." SFAS No. 161 requires entities that use derivative instruments to provide qualitative disclosures about their objectives and strategies for using such instruments, as well as any details of credit-risk-related contingent features contained within derivatives. SFAS No. 161 also requires entities to disclose additional information about the amounts and location of derivatives located within the financial statements, how the provisions of SFAS No. 133 have been applied, and the impact that hedges have on an entity's financial position, financial performance, and cash flows. The Company adopted the provisions of SFAS No. 161 effective January 1, 2009, although no additional disclosures were required. See Note 2 for the Company's disclosures about its derivative instruments and hedging activities.
Fair Value of Financial Instruments Financial Staff Position ("FSP") FAS 107-1, "Interim Disclosures about Fair Value of Financial Instruments," requires disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. This statement is effective for interim periods ending after June 15, 2009. The Company plans to adopt FSP FAS 107-1 in the second quarter of 2009.
Accounting for Noncontrolling Interests The Company adopted SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements," and Emerging Issues Task Force ("EITF") D-98, "Classification and Measurement of Redeemable Securities," on January 1, 2009.
The Company consolidates various ventures that are involved in the ownership and/or development of real estate and has historically recorded the other partner's interest as a minority interest. In December 2007, the FASB issued SFAS No. 160 which requires that amounts formerly reflected as minority interests be classified as noncontrolling interests and reflected in stockholders' equity, if appropriate, in the Company's Condensed Consolidated Balance Sheets. Income or loss associated with noncontrolling interests is required to be presented separately, net of tax, below net income on the Company's Condensed Consolidated Income Statement. These amounts were previously included in net income as minority interest in income of consolidated subsidiaries. In addition, SFAS No. 160 also requires a reconciliation of equity of both the parent and its noncontrolling interests. During 2008, revisions were also made to EITF D-98, which clarified that certain noncontrolling interests with redemption provisions that are outside the Company's control, commonly referred to as redeemable minority

interests, were within the scope of EITF D-98. The Company has several venture agreements which contain provisions requiring the Company to purchase the noncontrolling interest at the then fair value upon demand on or after a future date. Upon adoption of SFAS No. 160, and in conjunction with the requirements of EITF D-98, the Company reflected the fair value of the redeemable noncontrolling interests in consolidated subsidiaries in a separate line item on the Condensed Consolidated Balance Sheets. The Company recorded the difference between cost and fair value of redeemable noncontrolling interests as an adjustment to Stockholders' Investment. Under EITF D-98, the Company has a choice of either
(1) accreting redeemable noncontrolling interests to their redemption value over the redemption period or (2) recognizing changes in the redemption value immediately as they occur. The Company is utilizing the second approach.
Accounting for Participating Securities The Company adopted EITF No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities," on January 1, 2009. This standard requires that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents be included in the computation of earnings per share for all periods presented. The Company's restricted stock falls within the scope of this standard. Therefore, both basic and diluted earnings per share for the three months ended March 31, 2008 have been retroactively adjusted to conform to this new standard. See Note 3 for further discussion.
Funds from Operations. The table below shows Funds from Operations Available to Common Stockholders ("FFO") and the related reconciliation to net income available to common stockholders for the Company. The Company calculated FFO in accordance with the National Association of Real Estate Investment Trusts' ("NAREIT") definition, which is net income available to common stockholders (computed in accordance with accounting principles generally accepted in the United States of America ("GAAP")), excluding extraordinary items, cumulative effect of change in accounting principle and gains or losses from sales of depreciable property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
FFO is used by industry analysts and investors as a supplemental measure of an equity REIT's operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates operating performance in part based on FFO. Additionally, the Company uses FFO and FFO per share, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and key employees. The reconciliation of net income available to common stockholders to FFO is as follows for the quarters ended March 31, 2009 and 2008 (in thousands):

                                                                      Three Months Ended
                                                                          March 31,
                                                                     2009             2008
Net Income Available to Common Stockholders                       $  160,571        $  1,839

Depreciation and amortization:
Consolidated properties                                               13,056          11,265
Discontinued properties                                                    -             174
Share of unconsolidated joint ventures                                 2,158           1,391

Depreciation of furniture, fixtures and equipment and
amortization of specifically identifiable intangible assets:
Consolidated properties                                                 (968 )          (770 )
Discontinued properties                                                    -              (7 )
Share of unconsolidated joint ventures                                   (10 )           (25 )

Gain on sale of investment properties, net of applicable
income tax provision:
Consolidated                                                        (167,434 )        (3,792 )
Share of unconsolidated joint ventures                                   (28 )             -

Gain on sale of undepreciated investment properties                      209           3,736


Funds From Operations Available to Common Stockholders            $    7,554        $ 13,811

Liquidity and Capital Resources:
Financial Condition.
The Company had four projects in its development pipeline at March 31, 2009. Management believes that the Company has the capacity to complete these projects with cash on hand plus availability under its credit facility and construction loans. The Company does not foresee the need to access the capital markets in order to complete its current projects. In addition, the Company is not exposed to any significant debt maturities in 2009. Management estimates that the Company has the ability to repay its near-term maturities with the availability noted above. The financial condition of the Company is discussed in further detail below.
At March 31, 2009, the Company was subject to the following contractual obligations and commitments (in thousands):

                                                            Less than                                                  After
                                           Total              1 Year           1-3 Years          4-5 Years           5 years
Contractual Obligations:
Company long-term debt
Unsecured notes payable and
construction loans                     $   422,226          $    226          $ 322,000          $ 100,000          $       -
Mortgage notes payable                     523,043             2,306            147,360            226,083            147,294
Interest commitments under notes
payable (1)                                172,904            45,798             72,063             28,038             27,005
Operating leases (ground leases)            15,137                92                192                202             14,651
Operating leases (all other)                 9,056             5,349              3,215                255                237

Total contractual obligations          $ 1,142,366          $ 53,771          $ 544,830          $ 354,578          $ 189,187


Commitments:
Letters of credit                      $     4,200          $  4,200          $       -          $       -          $       -
Performance bonds                            5,437             4,415              1,022                  -                  -
Estimated development
commitments (2)                             61,335            37,414             22,080              1,841                  -
Unfunded tenant improvements                 2,131             2,131                  -                  -                  -

Total commitments                      $    73,103          $ 48,160          $  23,102          $   1,841          $       -

(1) Interest on variable rate obligations is based on rates effective as of March 31, 2009.

(2) Development commitments include share of joint venture development commitments.

In April 2009, the Company repaid the San Jose MarketCenter note in full . . .