Veteran developer Tom Cousins, 75, retired as chairman of Cousins Properties Inc. in November, becoming chairman emeritus of the company he founded in 1958 with $2,500. The Atlanta native earned his start-up capital by selling manufactured homes, where he also learned the single-family home building business. Four short years later, Cousins Properties (NYSE: CUZ) went public and became Georgia's largest homebuilder.
Today, Cousins is a diversified real estate investment trust (REIT) with a total market capitalization of $2 billion. The Cousins portfolio includes interests in more than 14 million sq. ft. of office, retail and industrial space, as well as 9,200 acres of land for future development. Additionally, the company owns 23 single-family neighborhood developments. And while Cousins' holdings are heavily concentrated in the Sunbelt, they also reach as far as the West Coast. NREI recently spoke to Cousins about his years in the commercial real estate industry and lessons learned.
NREI: You've developed many high-profile signature buildings in the Southeast, and your company has enjoyed great stability over the decades. What is your legacy?
Cousins: I don't think of a project as a legacy. I would say to have left behind an organization that I am very proud of — and I don't take credit for it. We've been a public company for 44 years and it's an unusual group of gifted people of high skill, but also of high integrity. They are people that you're comfortable with, and when they tell you they're going to do something, they do it. It's the culture of that company that I consider a legacy.
NREI: How did you finance your first projects in the early 1960s?
Cousins: Back then, especially for someone who had so little capital, it was hard to even get a construction loan to build a house. So what we did is pre-sold the house, qualified the buyer and pre-closed the permanent loan. Then we had funds advanced for construction out of the permanent loan.
NREI: When did Cousins convert to REIT status and why?
Cousins: We became a REIT around '86 or '87 when there were major tax legislation changes. We were paying a lot of taxes because we were very profitable. One of our guys, in studying that, said we could elect to be taxed as a REIT and pay our earnings out to shareholders instead of to the federal government in taxes.
NREI: Cousins was a diversified REIT long before it was fashionable. Did you pay a price early on to be diversified?
Cousins: It was a hindrance in the public marketplace. But when I was running the company, I don't know that I ever made a decision because it would be popular with the analysts or the public market. I just didn't meet with analysts. I ran the company in a way that I thought was in the best interest of the shareholder long-term. Maybe it was selfish because I'm a long-term shareholder, but I would not do anything cosmetic, like try to get earnings in a particular quarter or particular year.
NREI: Over your career, what's the biggest lesson you learned as a commercial real estate developer?
Cousins: Neither a lender nor a borrower be. For me it's really understanding the basic economic law, the law of supply and demand. I think that is the biggest thing overall. We've tried to develop where there was a market need, a demand.