




Cousins Properties Incorporated and Consolidated Entities

CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                               ------------
                                                                                           1994             1995
                                                                                           ----             ----

<S>                                                                                     <C>              <C>
ASSETS

PROPERTIES (Notes 4 and 8):
   Operating properties, net of accumulated depreciation of
     $12,112 in 1994 and $15,483 in 1995                                                $   92,464       $   93,871
   Land held for investment or future development                                           27,353           27,035
   Projects under construction                                                               8,711           87,503
   Residential lots under development                                                        8,602           11,452
                                                                                         ---------        ---------
     Total properties                                                                      137,130          219,861

CASH AND CASH EQUIVALENTS, at cost, which approximates market                                3,407            1,552

NOTES AND OTHER RECEIVABLES (Note 3)                                                        52,571           53,868

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Notes 4 and 5)                                130,838          137,260

OTHER ASSETS                                                                                 6,871            5,465
                                                                                        ----------       ----------
       TOTAL ASSETS                                                                     $  330,817       $  418,006
                                                                                        ==========       ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT

NOTES PAYABLE  (Note 4)                                                                 $   41,799       $  113,434

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                                                    11,144           22,681

MINORITY INTERESTS IN CONSOLIDATED ENTITIES                                                  3,631            3,837

DEPOSITS AND DEFERRED INCOME                                                                 1,345              376
                                                                                        ----------       ----------
       TOTAL LIABILITIES                                                                    57,919          140,328
                                                                                        ----------       ----------
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4)

STOCKHOLDERS' INVESTMENT (Note 6):
   Common stock, $1 par value, authorized 50,000,000 shares;
     issued 27,863,741 in 1994 and 28,222,639 in 1995                                       27,864           28,223
   Additional paid-in capital                                                              147,495          153,265
   Cumulative undistributed net income                                                      97,539           96,190
                                                                                        ----------       ----------
       TOTAL STOCKHOLDERS' INVESTMENT                                                      272,898          277,678
                                                                                        ----------       ----------
       TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT                                   $  330,817       $  418,006
                                                                                        ==========       ==========
</TABLE>


The  accompanying  notes  are an  integral  part of these  consolidated  balance
sheets.


<PAGE>


Cousins Properties Incorporated and Consolidated Entities

CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>

                                                                                      Years Ended December 31,
                                                                                      ------------------------
 
                                                                                  1993          1994          1995
                                                                                  ----          ----          ----

REVENUES:
<S>                                                                               <C>           <C>           <C>      
   Rental property revenues (Note 10)                                           $  6,687      $  13,150     $  19,348
   Development and construction fees                                                 898          1,020         3,515
   Management fees                                                                 1,999          2,061         2,213
   Leasing and other fees                                                          3,006          1,942         2,156
   Residential lot and outparcel sales                                                --          6,132         9,040
   Interest and other                                                              6,456          6,801         4,764
                                                                                --------      ---------     ---------
                                                                                  19,046         31,106        41,036
                                                                                --------      ---------     ---------

INCOME FROM UNCONSOLIDATED JOINT VENTURES (Note 5)                                 5,516         12,580        14,113
                                                -                               --------      ---------     ---------

COSTS AND EXPENSES:
   Rental property operating expenses                                              2,310          3,338         4,681
   General and administrative expenses                                             7,336          7,538         7,648
   Depreciation and amortization                                                   3,164          3,742         4,516
   Leasing and other commissions                                                     193             82            20
   Stock appreciation right expense (Note 6)                                         721            433         1,298
   Residential lot and outparcel cost of sales                                        --          5,762         8,407
   Interest expense (Note 4)                                                          --            411           687
   Property taxes on undeveloped land                                                537          1,085           977
   Other                                                                           1,058            922         1,688
                                                                                --------      ---------     ---------
                                                                                  15,319         23,313        29,922
                                                                                --------      ---------     ---------


INCOME FROM OPERATIONS BEFORE INCOME TAXES
   AND GAIN ON SALE OF INVESTMENT PROPERTIES                                       9,243         20,373        25,227
PROVISION (BENEFIT) FOR INCOME TAXES FROM
   OPERATIONS (Note 7)                                                              (795)          (166)          747
                    -                                                           --------      ---------     ---------

INCOME BEFORE GAIN ON SALE OF INVESTMENT
   PROPERTIES                                                                     10,038         20,539        24,480
                                                                                --------      ---------     ---------

GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
   APPLICABLE INCOME TAX PROVISION (Note 7)                                        1,927          6,356         1,862
                                         -                                      --------      ---------     ---------

NET INCOME                                                                      $ 11,965      $  26,895     $  26,342
                                                                                ========      =========     =========

INCOME PER SHARE (Note 6)
   From operations before gain on sale of investment properties                 $    .44      $     .74     $     .87
   From gain on sale of investment properties, net of
     applicable income tax provision                                                 .09            .23           .07
                                                                                --------      ---------     ---------

NET INCOME PER SHARE                                                            $    .53      $     .97     $     .94
                                                                                ========      =========     =========

CASH DIVIDENDS DECLARED PER SHARE (Note 6)                                      $    .73      $     .90     $     .99
                                                                                ========      =========     =========


</TABLE>


The accompanying notes are an integral part of these consolidated statements.


<PAGE>


Cousins Properties Incorporated and Consolidated Entities

- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
- --------------------------------------------------------------------------------
Years Ended December 31, 1993, 1994 and 1995
($ in thousands)
<TABLE>
<CAPTION>
                                                                        Additional        Cumulative
                                                           Common         Paid-In        Undistributed
                                                            Stock         Capital         Net Income         Total
                                                            -----         -------         ----------         -----
<S>                                                       <C>           <C>               <C>              <C> 

BALANCE, December 31, 1992                                $ 21,717      $   53,427        $  100,947       $  176,091
                  --- ----                                --------      ----------        ----------       ----------

   Net income, 1993                                             --              --            11,965           11,965
   Common stock issued pursuant to:
     6,100,000 share stock offering,
       net of expenses                                       6,100          93,401                --           99,501
     Exercise of options and
       Director stock plan                                      14             190                --              204
   Dividends declared                                           --              --           (17,204)         (17,204)
                                                          --------      ----------        ----------       ---------- 

BALANCE, December 31, 1993                                  27,831         147,018            95,708          270,557

   Net income, 1994                                             --              --            26,895           26,895
   Common stock issued pursuant to:
     Exercise of options and
       Director stock plan                                      12             169                --              181
     Compensation paid in stock in lieu of cash                 21             308                --              329
   Dividends declared                                           --              --           (25,064)         (25,064)
                                                          --------      ----------        ----------       ---------- 

BALANCE, December 31, 1994                                  27,864         147,495            97,539          272,898

   Net income, 1995                                             --              --            26,342           26,342
   Common stock issued pursuant to:
     Exercise of options and
       Director stock plan                                      42             638                --              680
     Dividend reinvestment plan                                307           4,956                --            5,263
     Compensation paid in stock in lieu of cash                 10             176                --              186
   Dividends declared                                           --              --           (27,691)         (27,691)
                                                          --------      ----------        ----------       ---------- 

BALANCE, December 31, 1995                                $ 28,223      $  153,265        $   96,190       $  277,678
                                                          ========      ==========        ==========       ==========



</TABLE>


The accompanying notes are an integral part of these consolidated statements.

<PAGE>


- --------------------------------------------------------------------------------
Cousins Properties Incorporated and Consolidated Entities
- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 9)
- --------------------------------------------------------------------------------
($ in thousands)
<TABLE>
<CAPTION>
                                                                                              Years Ended December 31,
                                                                                              ------------------------
                                                                                           1993        1994        1995
                                                                                           ----        ----        ----
<S>                                                                                     <C>         <C>         <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:
   Income before gain on sale of investment properties                                  $  10,038   $  20,539   $  24,480
   Adjustments to reconcile net income to net cash provided by operating activities:
       Depreciation and amortization, net of minority interests' share                      3,164       3,662       4,340
       Stock appreciation right expense                                                       721         433       1,298
       Cash charges to expense accrual for stock appreciation rights                         (147)        (49)       (132)
       Other non-cash charges (credits)                                                       310        (623)         --
       Rental revenue recognized on straight-line basis in excess
         of rental revenue specified in lease agreements                                     (391)       (209)       (107)
       Deferred income received                                                               297       1,131       1,673
       Deferred income recognized                                                            (252)       (301)     (2,800)
       Income from unconsolidated joint ventures                                           (5,516)    (12,580)    (14,113)
       Operating distributions from unconsolidated joint ventures                           7,507      15,665      15,786
       Compensation paid in stock in lieu of cash                                              --         329         186
       Residential lot and outparcel cost of sales                                             --       5,667       8,065
       Changes in other operating assets and liabilities:
         Change in other receivables                                                          440        (606)     (1,018)
         Change in accounts payable and accrued liabilities                                (1,068)      2,549          62
                                                                                        ---------   ---------   ---------
Net cash provided by operating activities                                                  15,103      35,607      37,720
                                                                                        ---------   ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Gain on sale of investment properties, net of applicable income tax provision            1,927       6,356       1,862
   Adjustments to reconcile gain on sale of investment properties
     to net cash provided by sales activities:
       Cost of sales                                                                        1,444       6,923       2,869
       Note received as sales consideration                                                    --          --        (500)
       Deposits and deferred income recognized                                             (3,370)         --          --
   Property acquisition and development expenditures                                      (31,358)    (53,573)    (87,234)
   Investment in unconsolidated joint ventures, including interest
     capitalized to equity investments                                                    (87,180)    (20,844)     (9,318)
   Non-operating distributions from unconsolidated joint ventures                              --         586       1,226
Collection of notes receivable                                                                386      45,011         841
   Change in other assets, net                                                               (458)     (2,601)        802
   Principal payments received on government agency securities                                585         636         103
   Investment in notes receivable                                                          (5,524)    (28,039)        (18)
                                                                                        ---------   ---------   ---------
Net cash used in investing activities                                                    (123,548)    (45,545)    (89,367)
                                                                                        ---------   ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of lines of credit                                                                --     (50,138)    (86,336)
   Proceeds from lines of credit                                                            3,499      73,287      78,575
   Proceeds from other notes payable                                                       22,306         475      80,116
   Repayment of other notes payable                                                           (43)    (16,976)       (720)
   Dividends paid                                                                         (17,204)    (25,064)    (27,691)
   Common stock sold, net of expenses                                                      99,564          77       5,848
   Investment in joint venture by minority interest                                           974          --          --
                                                                                        ---------   ---------   ---------
Net cash (used in) provided by financing activities                                       109,096     (18,339)     49,792
                                                                                        ---------   ---------   ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                          651     (28,277)     (1,855)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                             31,033      31,684       3,407
                                                                                        ---------   ---------   ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                                $  31,684   $   3,407   $   1,552
                                                                                        =========   =========   =========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.


<PAGE>


- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------


Cousins Properties Incorporated and Consolidated Entities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1993, 1994 and 1995
1.   SIGNIFICANT ACCOUNTING POLICIES

     Consolidation and Presentation:
     The  Consolidated  Financial  Statements  include  the  accounts of Cousins
Properties Incorporated ("Cousins") and its majority owned partnerships, as well
as Cousins Real Estate  Corporation  ("CREC") and its  subsidiaries.  All of the
entities  included in the  Consolidated  Financial  Statements  are  hereinafter
referred to  collectively  as the  "Company."  The Company's  investments in its
non-majority  owned  joint  ventures  are  recorded  using the equity  method of
accounting.  However,  the  recognition  of losses is  limited  to the amount of
direct or implied  financial  support.  Information  regarding the  non-majority
owned joint ventures is included in Note 5.
     Certain 1993 and 1994 amounts have been reclassified to conform with the 
1995 presentation.
     Income Taxes:
     Since 1987,  Cousins  has  elected to be taxed as a real estate  investment
trust ("REIT").  As a REIT,  Cousins is not subject to corporate  federal income
taxes to the extent that it distributes  100% of its taxable  income  (excluding
CREC's  and its  wholly  owned  subsidiaries'  consolidated  taxable  income) to
stockholders,  which is Cousins' current intention. The Company computes taxable
income on a basis different from that used for financial reporting purposes (see
Note 7). CREC and its wholly  owned  subsidiaries  file a  consolidated  federal
income tax return.
     Depreciation and Amortization:
     Buildings  are  depreciated  over 30 to 40 years.  Furniture,  fixtures and
equipment are depreciated over 5 to 15 years.  Leasehold improvements and tenant
improvements  are  amortized  over  the  life of the  applicable  leases  or the
estimated useful life of the assets, whichever is shorter. Deferred expenses are
amortized over the period of estimated benefit. The straight-line method is used
for all depreciation and amortization.
     Fee Income and Cost Capitalization:
     Development,  construction,  management,  and leasing  fees  received  from
unconsolidated  joint ventures are recognized as earned. A portion of these fees
may be capitalized by the joint ventures; however, the Company expenses salaries
and other direct costs related to this income.  The Company classifies its share
of fee income earned by unconsolidated  joint ventures as fee income rather than
joint  venture  income for those  ventures  where the  related  expense is borne
primarily by the Company rather than the venture.
     Development,  construction,  and leasing fees between consolidated entities
are eliminated in consolidation. Costs related to planning, development, leasing
and  construction of properties  (including  related general and  administrative
expenses)  are  capitalized.  The table  below  shows the fees  eliminated,  the
internal costs  capitalized  related to these fees, and the additional  internal
costs capitalized by CREC to its own residential developments ($ in thousands):
<TABLE>
<CAPTION>

                                                                       1993        1994          1995
                                                                       ----        ----          ----
                 <S>                                                 <C>          <C>          <C>

                  Fees eliminated in consolidation                   $   918      $ 3,019      $ 5,479
                  Internal costs capitalized in consolidation to
                     projects on which fees were eliminated          $ 1,107      $ 1,508      $ 2,552
                  Internal costs capitalized to CREC
                     residential developments                        $    39      $   292      $   498
</TABLE>



     Interest, real estate taxes, and rental revenues and expenses of properties
prior to the date they become  operational  are also  capitalized  for financial
reporting purposes. Interest is also capitalized to investments accounted for by
the equity  method when the  investee  has  property  under  development  with a
carrying  value in excess of the  investee's  borrowings.  Deferred  leasing and
other  capitalized  costs  associated with a particular  property are classified
with Properties in the Consolidated Balance Sheets.
     Management  fees  received  from  consolidated  entities  are  shown  as  a
reduction in rental property operating expenses.


<PAGE>


     Cash and Cash Equivalents:
     Cash and cash  equivalents  includes  cash and highly  liquid  money market
instruments.  Highly  liquid money market  instruments  include  securities  and
repurchase  agreements with original  maturities of three months or less,  money
market  mutual funds,  and  securities on which the interest or dividend rate is
adjusted to market rate at least every three months.  At December 31, 1995, cash
and cash  equivalents  included  $550,000  from a  property  sale held in escrow
pending reinvestment in a tax free exchange.
     Rental Property Revenues:
     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
13, income on leases which include scheduled  increases in rental rates over the
lease term is recognized on a straight-line basis.

     Use of Estimates:
     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

     Stock Based Compensation:
     The  Company  will  adopt  SFAS  No.  123,   "Accounting   for  Stock-Based
Compensation"  during 1996. The Company  anticipates it will continue to measure
compensation  costs using APB Opinion No. 25,  "Accounting  for Stock  Issued to
Employees,"  and  therefore  the  adoption of this  statement  will not have any
effect on the financial results of the Company.

     Impairment of Long-Lived Assets:
     The Company has adopted SFAS No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of" which requires
impairment  losses to be recorded on long-lived  assets used in operations  when
indicators of impairment are present and the  undiscounted  cash flows estimated
to be generated by those assets are less than the assets' carrying amount.  SFAS
No. 121 also addresses the accounting for long-lived assets that are expected to
be  disposed  of. The  adoption  of SFAS No. 121 had no effect on the  financial
results of the Company.

2.   RELATIONSHIP WITH DEVELOPMENT AND LEASING ENTITY

     CREC conducts  certain  development and leasing  activities for real estate
projects. A wholly owned subsidiary of CREC, Cousins MarketCenters, Inc. ("CMC")
(formerly  known as Cousins/New  Market  Development  Company,  Inc.),  develops
retail power centers for the Company. CREC also manages a joint venture property
in which it has an  ownership  interest.  At December  31,  1993,  1994 and 1995
Cousins owned 100% of CREC's $5,025,000 par value 8% cumulative  preferred stock
and 100% of CREC's nonvoting common stock, which common stock is entitled to 95%
of any  dividends  of CREC  after  preferred  dividend  requirements.  Thomas G.
Cousins,  Chairman of the Board of Cousins, owns 100% of the voting common stock
of CREC,  which voting  common stock is entitled to 5% of any  dividends of CREC
after  preferred  dividend  requirements.  CREC  is  included  in the  Company's
Consolidated Financial Statements,  but is taxed as a regular corporation.  CREC
has paid no common dividends to date, and for financial reporting purposes, none
of CREC's income is attributable to Mr. Cousins'  minority  interest because the
face  amount  of CREC's  preferred  stock  plus  accumulated  dividends  thereon
($8,241,000 in aggregate) exceed CREC's $4,279,508 of equity.


<PAGE>


3.   NOTES AND OTHER RECEIVABLES

     At December 31, 1994 and 1995, notes and other receivables include the 
following ($ in thousands):
<TABLE>
<CAPTION>
                                                                           1994             1995
                                                                           ----             ----
                  <S>                                                   <C>              <C>
                  650 Massachusetts Avenue Mortgage Notes               $  28,039        $ 27,574
                  Wildwood Training Facility Mortgage Note                 17,791          17,416
                  Miscellaneous Notes                                         669           1,082
                  Cumulative rental revenue recognized on a straight-
                    line basis in excess of revenue which accrued in
                    accordance with lease terms (see Note 1)                3,945           4,052
                  Other Receivables                                         2,127           3,744
                                                                        ---------        --------
                  Total Notes and Other Receivables                     $  52,571        $ 53,868
                                                                        =========        ========
</TABLE>

     650  Massachusetts  Avenue  Mortgage Notes - On March 10, 1994, the Company
purchased from the Resolution Trust  Corporation  ("RTC") two notes  aggregating
$37 million at a total cost of approximately $28 million.  The two notes,  which
resulted  from the RTC's  restructuring  in December 1993 of a $53 million note,
are  secured  by a  first  deed  of  trust  on  an  office  building  containing
approximately  250,000 square feet located at 650 Massachusetts  Avenue,  NW, in
Washington,  D.C.  The notes  mature  December  31,  2003,  at which  time their
unamortized balance will be a maximum of approximately $32.1 million.  The notes
require minimum monthly payments totaling $2,818,000 annually, which through the
year  2000 are  supported  by a U.S.  government  agency  lease.  For  financial
reporting purposes,  the discounted notes are treated as non-amortizing notes to
the extent of the minimum required payments,  with the minimum required payments
treated as interest income at a rate of approximately  10%. Amounts in excess of
the minimum required payments ($0 in 1994 and $465,000 in 1995) are treated as a
reduction of principal.
     Wildwood  Training  Facility  Mortgage  Note - This note,  which has a face
amount of $25.9 million and matures  November 30, 2013, is  collateralized  by a
building  located  on  land  owned  by  the  Company  and  leased  to a  limited
partnership  through November 30, 2013, with no renewal option.  The building is
100% leased to  International  Business  Machines  Corporation  ("IBM")  through
November 30, 1998. The IBM lease generates net cash flow of  approximately  $2.4
million annually to the limited partnership, of which approximately $2.3 million
is paid to the  Company as note and lease  payments.  Of these  amounts,  ground
lease  payments of $304,000 per year have been  treated as rental  income in the
accompanying  financial  statements and the remaining $2.0 million is treated as
principal  amortization  over the  remaining  ground  lease term and interest at
9.235% on the  carrying  value of the note.  The leased land is carried at $0 in
the accompanying financial statements.
     IBM has an option to extend its Training  Facility  lease from  December 1,
1998 through November 30, 2003 on terms that would generate net cash flow to the
limited   partnership  of  approximately   $3.1  million   annually,   of  which
approximately $3.0 million would be paid to the Company as note and ground lease
payments.
     Fair Value - The estimated  fair value of the  Company's  $46.5 million and
$46.1 million of notes  receivable at December 31, 1994 and 1995,  respectively,
is $49.3 million and $52.1  million,  respectively,  calculated  by  discounting
future  cash flows from the notes  receivable  at the  estimated  rates at which
similar loans would be made currently.



<PAGE>


4.   NOTES PAYABLE, COMMITMENTS, AND CONTINGENT LIABILITIES
<TABLE>
<CAPTION>

     At December 31, 1994 and 1995, the composition of notes payable was as follows ($ in thousands):
                                                  December 31, 1994                        December 31, 1995
                                                      Share of                                 Share of
                                                   Unconsolidated                           Unconsolidated
                                         Company   Joint Ventures    Total        Company   Joint Ventures    Total
                                         -------   --------------    -----        -------   --------------    -----
<S>                                     <C>           <C>          <C>          <C>            <C> 

   Floating Rate Lines of Credit        $ 40,631      $  6,905     $  47,536    $  32,870      $ 23,153     $  56,023

   Fixed Rate Mortgages (primarily
     non-recourse)                         1,168        72,650        73,818       80,564        64,759       145,323
                                        --------      --------     ---------    ---------      --------     ---------

                                        $ 41,799      $ 79,555     $ 121,354    $ 113,434      $ 87,912     $ 201,346
                                        ========      ========     =========    =========      ========     =========
</TABLE>
<TABLE>
<CAPTION>

     The following table briefly summarizes the terms of the debt outstanding at December 31, 1995 ($ in thousands):
                                                                                 Term/
                                                                             Amortization                  Balance at
                                                                                Period          Final     December 31,
             Description                                      Rate              (Years)       Maturity        1995
             -----------                                      ----              -------       --------        ----
<S>                                                      <C>                     <C>            <C>         <C>   

Company Debt:
   Line of credit ($100 million maximum) secured
     by partnership interest in CSC Associates, L.P.     Fed Funds + .85%        2/ N/A         9/30/96     $  32,870
   North Point MarketCenter mortgage note                      8.50%             10/25          7/15/05        29,853
   Perimeter Expo mortgage note                                8.04%             10/30          8/15/05        21,442
   Note secured by Company's interest in 650
     Massachusetts Avenue mortgage notes (see Note 3)          6.53%             5/ N/A        10/01/00        28,000
   Other miscellaneous notes                                0% to 8.5%           Various        Various         1,269
                                                                                                            ---------
                                                                                                              113,434
                                                                                                            ---------

Share of Unconsolidated Joint Venture Debt:
   Wildwood:
     Line of credit ($25 million maximum)                Fed Funds + .75%        2/ N/A          9/1/97        13,154
     2300 Windy Ridge mortgage note                            7.56%             10/25         12/01/05        36,000
     2500 Windy Ridge mortgage note                            7.45%             10/20         12/15/05        13,000
     Summit Green mortgage note                               9.875%             10/30           4/1/98         5,274
   Ten Peachtree Place mortgage note                           8.00%             10/18         11/30/01        10,485
   CC-JM II Associates ($12.2 million
     construction loan)                                     LIBOR + .9%          5/ N/A         6/26/00         7,759
   Norfolk Hotel Associates ($2.4 million line of credit)Fed Funds + .85%        1/ N/A        10/31/96         2,240
                                                                                                            ---------
                                                                                                               87,912
                                                                                                            ---------
                                                                                                            $ 201,346
                                                                                                            =========
</TABLE>

     The Company  completed  three new  financings and two  refinancings  during
1995. The North Point MarketCenter,  Perimeter Expo and 650 Massachusetts Avenue
financings  were  completed  in July,  August and December  1995,  respectively.
Wildwood Associates refinanced two mortgage notes in December 1995. One of those
mortgage notes,  which had an $81 million balance at a 9.09% rate and matured in
August 1999, was  refinanced  with a $72 million 7.56% mortgage note. The second
mortgage note,  which had a $31 million  balance at a 9.125% rate and matured in
June 1996, was refinanced with a $26 million 7.45% mortgage note.
     The note secured by the Company's interest in the 650 Massachusetts  Avenue
mortgage  notes  actually  floats at LIBOR + 1%, but as of January  10, 1996 was
effectively  fixed at the 6.53% rate shown above  through an interest  rate swap
agreement with a financial institution.




<PAGE>


     Concurrent with an $80 million  financing  completed  February 6, 1996 (see
Note 11), the  Company's  line of credit was paid down to $1,000,  and the terms
were modified to provide for an unsecured  $10 million line  maturing  April 30,
1996. Prior to April 30, 1996, the Company plans to increase the line amount and
extend the maturity date.
     The CC-JM II Associates venture has a commitment for a $24,675,000, 17 year
fully  amortizing  loan at a 7%  interest  rate which  should  fund in the first
quarter of 1996.
     The Company has guaranteed its share of the Wildwood  Associates,  CC-JM II
Associates,  and  Norfolk  Hotel  Associates  short term credit  facilities.  At
December  31,  1995,  the Company  had  outstanding  letters of credit  totaling
$495,000,  and assets with carrying values of $182,958,000 and $131,185,000 were
pledged as security on the  Company's  and its  unconsolidated  joint  ventures'
debt,  respectively.  The fixed rate long-term  mortgage debt of the Company and
its unconsolidated joint ventures is non-recourse to the Company.
     As of year-end 1995, after giving effect to the $80 million financing which
occurred subsequent to year-end,  the weighted average maturity of the Company's
debt,  including its share of  unconsolidated  joint ventures,  was 9 years. The
aggregate  maturities of the  indebtedness at December 31, 1995 summarized above
are as follows ($ in thousands):
<TABLE>
<CAPTION>

                                                                                Share of
                                                                             Unconsolidated
                                                             Company         Joint Ventures           Total
                                                             -------         --------------           -----
                           <S>                              <C>                 <C>                <C>   
                           1996                             $  34,439           $ 16,592           $  51,031
                           1997                                 1,023              1,338               2,361
                           1998                                 1,060              7,009               8,069
                           1999                                 1,151              1,998               3,149
                           2000                                27,295              9,913              37,208
                           Thereafter                          48,466             51,062              99,528
                                                           ----------           --------           ---------
                                                            $ 113,434           $ 87,912           $ 201,346
                                                            =========           ========           =========
</TABLE>

     For each of the years ended December 31, 1993, 1994 and 1995, interest 
expense was recorded as follows  ($ in thousands):
<TABLE>
<CAPTION>

                             Share of Unconsolidated
                           Company                       Joint Ventures                           Total
Year          Expensed   Capitalized   Total     Expensed   Capitalized   Total     Expensed   Capitalized   Total
- ----          --------   -----------   -----     --------   -----------   -----     --------   -----------   -----
<S>             <C>        <C>        <C>        <C>           <C>      <C>         <C>          <C>         <C>

1993            $          $  346     $  346     $  13,990     $  108   $ 14,098    $ 13,990     $   454     $14,444
1994             411        1,118      1,529         7,262                 7,262       7,673       1,118       8,791
1995             687        5,073      5,760         6,760        302      7,062       7,447       5,375      12,822
</TABLE>

     The Company had future  lease  commitments  under a land lease  aggregating
$7.4 million over its remaining term of 73 years.  Current annual lease payments
are approximately  $63,000. The Company has entered into construction and design
contracts for real estate projects, of which approximately $19.6 million remains
committed  at December 31,  1995.  At December  31, 1994 and 1995,  the carrying
value of the Company's notes payable approximates fair value.


<PAGE>


5.   INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

     The  following   information   summarizes   financial  data  and  principal
activities of  unconsolidated  joint ventures in which the Company had ownership
interests  ($  in  thousands).   Audited   financial   statements  for  Wildwood
Associates,  CSC  Associates,  L.P., and Haywood Mall Associates are included in
the Company's Form 10-K.
<TABLE>
<CAPTION>
                                                                                                        Company's
                                      Total Assets           Total Debt           Total Equity         Investment
                                      ------------           ----------           ------------         ----------
                                    1994       1995       1994       1995       1994      1995       1994       1995
                                    ----       ----       ----       ----       ----      ----       ----       ----

<S>                              <C>        <C>        <C>       <C>        <C>        <C>        <C>        <C>    

SUMMARY OF FINANCIAL POSITION:
Wildwood Associates              $ 227,875  $ 232,866  $ 132,608 $  134,855 $  92,284  $  90,168  $   3,289  $   2,231
CSC Associates, L.P.               208,057    206,889         --         --   204,712    203,938    105,239    104,776
Ten Peachtree Place Associates      21,814     21,173     21,692     20,971      (140)       (17)       (75)       (39)
Haywood Mall Associates             32,826     44,531         --         --    31,869     43,293     15,985     21,961
Spring/Haynes Associates            16,344     16,527         --         --    16,331     16,502      1,603      1,688
Norfolk Hotel Associates             8,011      8,169      4,810      4,480     3,144      3,631      1,572      1,815
CC-JM II Associates                  7,498     27,253         --     15,518     5,281      8,034      2,711      4,393
Other                                2,781      1,183         --         --     1,095        882        514        435
                                 ---------  ---------  --------- ---------- ---------  ---------  ---------  ---------
                                 $ 525,206  $ 558,591  $ 159,110 $  175,824 $ 354,576  $ 366,431  $ 130,838  $ 137,260
                                 =========  =========  ========= ========== =========  =========  =========  =========
</TABLE>
<TABLE>
<CAPTION>

                                                                                                  Company's Share
                                      Total Revenues               Net Income (Loss)           of Net Income (Loss)
                                      --------------               -----------------           --------------------
                                 1993      1994      1995      1993      1994      1995      1993     1994      1995
                                 ----      ----      ----      ----      ----      ----      ----     ----      ----
<S>                            <C>      <C>        <C>       <C>      <C>       <C>        <C>      <C>       <C>

SUMMARY OF OPERATIONS:
Wildwood Associates            $36,224  $ 36,305   $ 37,767  $ 4,322  $  4,844  $  5,884   $ 2,161  $  2,422  $  2,942
CSC Associates, L.P.            27,810    28,931     31,195   (1,194)   13,009    14,697       201     6,880     7,308
Ten Peachtree Place Associates          4,263      4,228     4,276    411       461        523      240       192
236
Haywood Mall Associates          9,979    10,371     11,269    4,014     4,949     5,926     2,007     2,474     2,963
Spring/Haynes Associates            57        63        289     (214)      (66)      171      (107)      (33)       86
Norfolk Hotel Associates        12,680     1,029        804    1,445       664       486       723       332       243
CC-JM II Associates                 --        --         --       --        --        --        --        (1)       --
Other                            1,784       999      1,215      582       627       675       291       314       335
                               -------  --------   --------  -------  --------  --------   -------  --------       ---
                               $92,797  $ 81,926   $ 86,815  $ 9,366  $ 24,488  $ 28,362   $ 5,516  $ 12,580  $ 14,113
                               =======  ========   ========  =======  ========  ========   =======  ========  ========
</TABLE>
<TABLE>
<CAPTION>
             
                                                                                Company's Share Of
                                      Cash Flows From               Cash Flows From                  Operating
                                   Operating Activities          Operating Activities           Cash Distributions
                                   --------------------          --------------------           ------------------
                                  1993     1994      1995      1993      1994      1995      1993      1994      1995
                                  ----     ----      ----      ----      ----      ----      ----      ----      ----
<S>                            <C>       <C>       <C>       <C>       <C>       <C>       <C>      <C>       <C>

SUMMARY OF OPERATING CASH FLOWS:
Wildwood Associates            $ 12,006  $ 12,999  $ 12,812  $  6,003  $  6,500  $  6,406  $ 4,000  $  4,000  $  4,000
CSC Associates, L.P.              2,393    16,777    22,366     2,070     8,840    11,219      950     8,400     7,771
Ten Peachtree Place Associates      935     1,165     1,100       280       315       305      200       200       200
Haywood Mall Associates           4,628     5,856     3,502     2,314     2,928     1,751    2,053     2,879     3,349
Spring/Haynes Associates            (98)      (83)      122       (49)      (42)       61       --        --        --
Norfolk Hotel Associates             33       470       338        17       235       169       --        --        --
CC-JM II Associates                  --        --        --        --        --        --       --        --        --
Other                               843       619       721       422       310       361      304       186       466
                               --------  --------  --------  --------  --------  --------  -------  --------  --------
                               $ 20,740  $ 37,803  $ 40,961  $ 11,057  $ 19,086  $ 20,272  $ 7,507  $ 15,665  $ 15,786
                               ========  ========  ========  ========  ========  ========  =======  ========  ========
</TABLE>



<PAGE>


     Wildwood  Associates - Wildwood  Associates  was formed in 1985 between the
Company  and IBM,  each as 50%  partners.  The  partnership  owns  three  office
buildings  totaling 1.6 million rentable square feet, two office buildings under
construction  totaling  250,000  rentable square feet (see Note 8), other income
producing  commercial  properties,  and additional  developable land in Wildwood
Office  Park  ("Wildwood")  in  Atlanta,  Georgia.  Wildwood  is an office  park
containing a total of approximately  289 acres, of which  approximately 85 acres
are owned by Wildwood  Associates  and an estimated 22 acres are committed to be
contributed to Wildwood Associates by the Company;  the Company owns the balance
of the developable acreage in the office park.
     Wildwood Associates and a related partnership  (included in the amounts for
Wildwood  Associates  above) also own one office  building at Summit  Green,  an
office  project  situated  on 21  acres  of  leased  land in  Greensboro,  North
Carolina.
The Summit Green project includes sites for two additional buildings.
     Through  December 31, 1995, IBM had contributed  $46.6 million in cash plus
properties  having an agreed value of $16.3 million for its one-half interest in
Wildwood Associates. The Company has contributed $84,000 in cash plus properties
having  an  agreed  value of $49.3  million  for its  one-half  interest  in the
partnership,  and is obligated to contribute the aforesaid estimated 22 acres of
additional land with an agreed value of $13.5 million.  The Company and IBM each
lease office space from the partnership at rates  comparable to those charged to
third parties.
     The Company's  investment as recorded in the  Consolidated  Balance  Sheets
($2.2 million at December 31, 1995) is based upon the Company's  historical cost
of the  properties  at  the  time  they  were  contributed  or  committed  to be
contributed to the  partnership,  whereas its investment as recorded on Wildwood
Associates'  books ($45.1 million at December 31, 1995) is based upon the agreed
values at the time the partnership was formed.
     CSC Associates,  L.P.  ("CSC") - CSC was formed in 1989 between the Company
and a wholly owned subsidiary of NationsBank Corporation,  each as 50% partners.
CSC owns the 1.3  million  rentable  square foot  NationsBank  Plaza in Atlanta,
Georgia.
     CSC's  net  income  or loss and cash  distributions  are  allocated  to the
partners based on their percentage interests (50% each), subject to a preference
to Cousins. The Cousins preference is $2.5 million (giving Cousins an additional
$1.25  million over what it would  otherwise  receive),  and accrued to Cousins,
with  interest  at 9% to the extent  unpaid,  over the period  February  1, 1992
through January 31, 1995. In October 1993, the  partnership  fully repaid all of
its debt  with  equity  contributions  of $86.7  million  made by each  partner.
Following  repayment of the  partnership's  debt,  Cousins began recognizing its
accrued preference  currently in income,  which resulted in Cousins  recognizing
$874,000,  $451,000  and  $36,000 in income  over what it would  have  otherwise
recognized in the years ended  December 31, 1993,  1994 and 1995,  respectively.
During  the  years  ended   December  31,  1994  and  1995,   Cousins   received
distributions  of the preference  and accrued  interest of  approximately  $2.65
million and  $71,000,  respectively.  Amounts  above the  preference  amount are
allocated based on the partners' percentage interests.
     Ten Peachtree  Place  Associates  ("TPPA") - TPPA is a general  partnership
between the Company (50%) and a wholly owned subsidiary of The Coca-Cola Company
("Coca-Cola")  (50%).  The venture owns Ten Peachtree  Place, a 259,000 rentable
square foot building located in midtown Atlanta,  Georgia.  The building is 100%
leased to Coca-Cola through November 30, 2001.
     The TPPA partnership agreement generally provides that each of the partners
is entitled to receive 50% of cash flows from  operating  activities net of note
principal  amortization through the term of the Coca-Cola lease, after which the
Company and its  partner  are  entitled to receive 15% and 85% of the cash flows
(including  any  sales  proceeds),  respectively,  until the two  partners  have
received a combined distribution of $15.3 million.  Thereafter,  each partner is
entitled to receive 50% of cash flows.
     Haywood Mall  Associates - Haywood Mall Associates is a venture between the
Company and an  affiliate  of  Corporate  Property  Investors.  The venture owns
Haywood  Mall,  a  regional  shopping  center on 86 acres 5 miles  southeast  of
downtown  Greenville,  South Carolina.  Expansion of the mall from 956,000 gross
leaseable square feet ("GLA") (of which the venture's ownership is approximately
272,000  GLA) to  1,256,000  GLA  (of  which  the  venture's  ownership  will be
approximately  330,000 GLA) was substantially  completed in 1995. The balance of
the mall is owned by the mall's five major  department  stores.  During the year
ended December 31, 1995, the Company  contributed $5.8 million to fund its share
of the completion of the expansion.


<PAGE>


     Spring/Haynes  Associates  - This  general  partnership  was formed in 1985
between the Company and a wholly  owned  subsidiary  of  Coca-Cola,  each as 50%
general  partners,   to  jointly  own  and  develop  real  estate.  The  Company
contributed  40 acres of  undeveloped  land at  Georgia  Highway  400 and Haynes
Bridge Road in north central suburban Atlanta, Georgia. Coca-Cola contributed 11
acres of property in midtown Atlanta. In September 1993, the undeveloped land at
Georgia   Highway  400  was   distributed  to  the  partners  who   concurrently
recontributed  certain  acres of the land into North  Point  Market  Associates,
L.P., a consolidated  partnership formed between the partners to own North Point
MarketCenter and Mansell Crossing Phase II. The Company's  remaining  investment
in Spring/Haynes Associates as recorded in the Consolidated Balance Sheets ($1.7
million at  December  31,  1995) is based upon the  Company's  historical  cost,
whereas its investment as recorded on the  partnership's  books ($8.3 million at
December 31, 1995) is based upon the agreed values of the properties at the time
they were contributed to the partnership.  (See Note 11 for a description of the
Company's  exchange of its  interest  in these two  partnerships  subsequent  to
year-end.)
     Norfolk Hotel Associates ("NHA") - NHA is a partnership between the Company
and an affiliate of Odyssey Partners,  L.P., each as 50% partners,  which held a
mortgage  note on and  owned  the land  under  the Omni  International  Hotel in
Norfolk, Virginia. In January 1992, NHA terminated the land lease and became the
owner of the hotel and a long-term  parking  agreement with an adjacent building
owner. In April 1993, the partnership  sold the hotel, but retained its interest
in the parking  agreement.  The Company's share of the gain on this  transaction
was  approximately  $.5 million  and is  included in Income From  Unconsolidated
Joint  Ventures  in the  accompanying  Consolidated  Statements  of Income.  The
partnership  received a mortgage  note for a portion of the sales  proceeds.  In
July  1994,  NHA  distributed  to each  partner a 50%  interest  in the  parking
agreement held by NHA. The Company currently  receives payments of approximately
$228,000 per year for its 50% interest in the agreement, and has entered into an
option  agreement to sell its interest for $2 million in July 1996,  which would
result in a profit to the Company of approximately $411,000.
     CC-JM II  Associates  - This joint  venture was formed in 1994  between the
Company  and an  affiliate  of Carr  Realty  Corporation,  each  as 50%  general
partners,  to develop and own a 224,000  rentable square foot office building in
suburban Washington, D.C. The building is 100% leased for 15 years to Booz-Allen
&  Hamilton,  an  international  consulting  firm,  as a part  of its  corporate
headquarters  campus.  Rent  commenced  on January  21,  1996.  The  building is
expected to be  completed  at a total cost of  approximately  $32  million  with
contributions to the venture of $4 million by each partner.
     Other - This category consists of several other joint ventures including:
     Cousins-Hines Partnerships - Through the Cousins-Hines  partnerships,  CREC
effectively owns 9.8% of the One Ninety One Peachtree Tower in Atlanta, Georgia.
This 1.2 million rentable square foot office building,  which opened in December
1990, was developed in partnership with the Hines Interests Limited  Partnership
and the Dutch Institutional Holding Company.  Because CREC's effective ownership
of this building is less than 20%, the Company accounts for its investment using
the cost method of accounting, and therefore the above tables do not include the
Company's share of One Ninety One Peachtree Tower.
     Temco  Associates - Temco  Associates  was formed in 1991 as a  partnership
between the Company (50%) and a subsidiary of  Temple-Inland  Inc. (50%).  Temco
Associates has an option through March 2006,  with no carrying costs, to acquire
approximately  35,000 acres in Paulding County,  Georgia  (northwest of Atlanta,
Georgia), of which approximately 13,000 acres would be a fee simple interest and
approximately  22,000 acres would be a timber rights  interest  only. The option
may be  exercised  in whole or in part over the  option  period,  and the option
price of the fee simple land was $694 per acre at December 31, 1995,  escalating
at  6%  per  year  during  the  term  of  the  option.  During  1993  and  1994,
approximately 1,100 and 72 acres, respectively, of the option related to the fee
simple  interest was  exercised  and  simultaneously  sold for gross  profits of
$305,000 and $243,000, respectively. None of the option was exercised in 1995.
     Dusseldorf  Joint  Venture  - In 1992,  the  Company  entered  into a joint
venture  agreement for the development of a 133,000  rentable square foot office
building in  Dusseldorf,  Germany which is 34% leased to IBM.  Cousins'  venture
partners are IBM and Multi Development Corporation International B.V. ("Multi"),
a Dutch real estate  development  company.  In December  1993,  the building was
presold to an affiliate of Deutsche Bank.  CREC and Multi jointly  developed the
building.  Due to the release of certain  completion  guarantees  related to the
building,  approximately  $2.6 million of  development  income was recognized in
September 1995 ($931,000 of which had been deferred as of December 31, 1994).
     Additional Information - The Company recognized $3,106,000,  $2,539,000 and
$5,780,000 of  development,  construction,  leasing,  and  management  fees from
unconsolidated joint ventures in 1993, 1994 and 1995, respectively.

6.   STOCKHOLDERS' INVESTMENT, STOCK APPRECIATION RIGHT EXPENSE AND
     PER SHARE DATA

     Options and Stock Appreciation Rights:
     The Company has a stock incentive plan for key employees which provides for
the granting of stock  options.  Subject to  stockholder  approval,  the Company
amended this plan  effective as of September  1995 so as to allow for both stock
and stock option awards under the plan (see "Stock Grants"  below).  At December
31, 1995, the Company had granted options to key employees to purchase 1,412,578
shares  of  the  Company's  common  stock  (including  258,228  shares  under  a
predecessor plan), and subject to stockholder approval of the 1995 amendment, is
authorized  to award an additional  1,202,850  stock options or shares of stock.
The Company may incorporate a provision in each stock option  agreement to allow
the option  holder to  surrender  options  and  request a cash  payment  for the
difference  between the fair market value of the shares at the date of surrender
and the option price.  Separately from the stock incentive plan, the Company has
issued stock appreciation rights ("SARs") to certain employees.
     In order to  compensate  the  holders  of  unexercised  stock  options  for
decreases in the  underlying  value of shares  subject to the options  resulting
from certain  capital gain  distributions  to  stockholders,  the Company issued
Deferred  Payment  Agreements  from 1988 through 1991 to holders of  unexercised
stock  options  at the  time  of  such  distributions.  These  Deferred  Payment
Agreements  provided  for a fixed cash  payment  to stock  option  holders  upon
exercise  of the options in an amount  approximately  equal to the amount of the
capital gain  distribution that would have been payable on the shares subject to
the options if the options had been  exercised  prior to the record date for the
distributions.  Holders  of  SARs  were  similarly  compensated  by  a  downward
adjustment in the price of SARs held by them.
     Financial Accounting Standards Board pronouncements  require that all stock
options  which have a cash payment  election  option be  accounted  for as SARs.
Accordingly, included in the Consolidated Statements of Income under the heading
"stock  appreciation  right  expense"  are  increases or  reductions  in accrued
compensation  expense to reflect the issuance of new SARs or stock  options with
cash  payment  provisions,  vesting,  changes in the market  value of the common
stock from the dates of grant, and expirations of non-vested  options or SARs of
terminated  employees.  In the first quarter of 1993, the cash payment provision
associated  with  374,341  stock  options  was given up by certain of the option
holders,   thereby  reducing  stock  appreciation  right  expense  for  1993  by
approximately $502,000.
     The following is a summary of stock option  activity under the stock option
plan ($ in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                         Number of       Total Option
                                          Shares             Price                    Option Price Per Share
                                          ------             -----                    ----------------------
                                        1994   1995      1994      1995             1994                 1995
                                        ----   ----      ----      ----             ----                 ----
     <S>                                 <C>  <C>     <C>       <C>          <C>                   <C>

     Outstanding, beginning of year      911  1,184   $ 13,503  $ 17,919     $  4.82 to $17.75     $  8.11 to $17.75
     Terminated                           --    (29)        --      (493)    $   --                $ 15.75 to $17.75
     Exercised                           (11)   (42)       (57)     (579)    $  4.82               $  8.11 to $17.75
     Granted                             284    300      4,473     5,396     $ 15.75               $ 18.00
                                       -----  -----   --------  --------                   
     Outstanding, end of year          1,184  1,413   $ 17,919  $ 22,243     $  8.11 to $17.75     $  9.00 to $18.00
                                       =====  =====   ========  ========     
     Shares exercisable
     at end of year                      567    805
                                         ===    ===
</TABLE>

     At December 31, 1994,  the Company had 369,215 SARs  outstanding  (of which
225,360 were exercisable) at prices ranging from $10.78 per share to $16.875 per
share. At December 31, 1995, the Company had 344,050 SARs  outstanding (of which
271,780 were exercisable) at prices ranging from $10.78 per share to $16.875 per
share.
     At December 31, 1994 and 1995,  the total amount accrued for stock options,
SARs,  and  Deferred   Payment   Agreements   was  $2,296,000  and   $3,367,000,
respectively.
     Stock Grants:
     As indicated  above,  the September 1995  amendment to the stock  incentive
plan  provides  for stock awards in addition to stock  option  awards,  with the
amended  plan being  subject to  stockholder  approval.  The stock awards may be
subject  to  specified   performance  and  vesting   requirements.   Subject  to
stockholder  approval of the September 1995 amendment,  110,400 shares of common
stock have been awarded to date,  of which 10,400 shares were awarded in lieu of
1995 cash  bonuses,  and  100,000  shares  were  awarded  subject  to  specified
performance and vesting requirements.  The estimated cost of the 100,000 shares,
which will not be issued until all requirements  have been met, is being accrued
over the five year performance and vesting period, and $44,000 was accrued as of
December 31, 1995.
     Per Share Data:
     Primary  income per share is computed by  dividing  income by the  weighted
average number of shares of common stock and dilutive  common stock  equivalents
outstanding  (22,781,485,  27,844,341  and  27,983,180  in 1993,  1994 and 1995,
respectively).  Fully diluted income per share does not differ  materially  from
primary income per share in 1993, 1994 and 1995.
     Ownership Limitations:
     In order to maintain Cousins' qualification as a REIT, Cousins' Articles of
Incorporation include certain restrictions on the ownership of more than 3.9% of
the Company's common stock.
     Distribution of REIT Taxable Income:
     The following is a reconciliation  between dividends declared and dividends
applied  in 1993 and 1994  and  estimated  to be  applied  in 1995 to meet  REIT
distribution requirements ($ in thousands):
<TABLE>
<CAPTION>
                                                                                          1993       1994       1995
                                                                                          ----       ----       ----
         <S>                                                                           <C>        <C>        <C>    
         Dividends declared                                                            $ 17,204   $ 25,064   $ 27,691
         That portion of dividends declared in current year, and paid in current
           year, which was applied to the prior year distribution requirements             (665)      (161)    (3,048)
         That portion of dividends declared in subsequent year, and paid in
           subsequent year, which will apply to current year                                161      3,048      3,118
                                                                                       --------   --------   --------
         Dividends applied to meet current year REIT distribution requirements         $ 16,700   $ 27,951   $ 27,761
                                                                                       ========   ========   ========
</TABLE>

     Dividends  applied  to meet REIT  distribution  requirements  were equal to
Cousins'  taxable  income (see Note 7).  Since  electing to qualify as a REIT in
1987, Cousins has had no accumulated undistributed taxable income.
7.   INCOME TAXES

     In 1993, 1994 and 1995, because Cousins qualified as a REIT and distributed
all of its  taxable  income  (see Note 6), it  incurred  no  federal  income tax
liability.  The  differences  between taxable income as reported on Cousins' tax
return (actual 1993 and 1994 and estimated 1995) and  Consolidated Net Income as
reported herein are as follows ($ in thousands):
<TABLE>
<CAPTION>
                                                                                          1993       1994       1995
                                                                                          ----       ----       ----
         <S>                                                                           <C>        <C>        <C>    
         Consolidated net income                                                       $ 11,965   $ 26,895   $ 26,342
         Consolidating adjustments                                                          515     (1,875)       348
         Less CREC net loss (income)                                                      1,413        394     (1,652)
                                                                                       --------   --------   --------
         Cousins net income for financial reporting purposes                             13,893     25,414     25,038
         Adjustments arising from:
           Sales of investment properties                                                17,563      3,909     (2,014)
           Income from unconsolidated joint ventures (principally depreciation,
              revenue recognition, and operational timing differences)                   (7,529)    (2,361)    (1,557)
           Rental income recognition                                                       (403)      (111)      (192)
           Interest income recognition                                                       --        198        123
           Wildwood Training Facility differences                                        (7,664)       342        375
           Interest expense                                                                 194        297      3,520
           Compensation expense under stock option and SAR plans                            138         92        290
           Depreciation                                                                      59        336        324
           Net operating loss generated (utilized)                                          295       (295)        --
           Other                                                                            154        130      1,854
                                                                                       --------   --------   --------
              Cousins taxable income                                                   $ 16,700   $ 27,951   $ 27,761
                                                                                       ========   ========   ========
</TABLE>




<PAGE>
<TABLE>
<CAPTION>


     The  consolidated  provision  (benefit) for income taxes is composed of the
following ($ in thousands):
                                                                                          1993       1994       1995
                                                                                          ----       ----       ----
         <S>                                                                           <C>        <C>        <C>    
         CREC and its wholly owned subsidiaries:
           Currently payable (refundable):
              Federal                                                                  $   (577)  $     --   $    574
              State                                                                        (157)        --         17
                                                                                           (734)        --        591
         Adjustments arising from:
           Income from unconsolidated joint ventures                                        687        411        171
           Operating loss carryforward                                                     (628)       (94)       323
           Stock appreciation right expense                                                (166)      (111)      (324)
           Fee income                                                                        --       (361)       354
           Other                                                                             16        (33)       (49)
                                                                                            (91)      (188)       475
         CREC provision (benefit) for income taxes                                         (825)      (188)     1,066
         Cousins provision (benefit) for state income taxes                                  30         22       (228)
         Less provision applicable to gain on sale of investment properties                  --         --        (91)
                                                                                       --------   --------   -------- 
         Consolidated provision (benefit) applicable to income from operations         $   (795)  $   (166)  $    747
                                                                                       ========   ========   ========
</TABLE>


     The Cousins  provision  (benefit)  for state income taxes in 1995 is net of
$252,000 of state income tax refunds related to a successful  judicial appeal by
Cousins of an assessment paid in 1992.
     The net income tax provision  (benefit) differs from the amount computed by
applying the  statutory  federal  income tax rate to CREC's income (loss) before
taxes as follows ($ in thousands):
<TABLE>
<CAPTION>

                                                                      1993                1994               1995
                                                                      ----                ----               ----
                                                                Amount     Rate     Amount     Rate     Amount     Rate
                                                                ------     ----     ------     ----     ------     ----
     <S>                                                        <C>         <C>      <C>        <C>     <C>        <C>

     Federal income tax provision (benefit)                     $ (761)     34%      $(198)     34%     $ 924      34%
     State income tax provision (benefit), net of
       federal income tax effect                                   (90)      4         (23)      4        109       4
     Other                                                          26      (1)         33      (5)        33       1
                                                                ------      ---      -----      ---     -----      ---
     CREC provision (benefit) for income taxes                    (825)     37%       (188)     33%     1,066      39%
                                                                            ---                 ---                ---
     Cousins provision (benefit) for income taxes                   30                  22               (228)
     Less provision applicable to gain on sale of
       investment properties                                        --                  --                (91)
                                                                ------               -----              ----- 
     Consolidated provision (benefit) applicable to income
       from operations                                          $ (795)              $(166)             $ 747
                                                                ======               =====              =====
</TABLE>
<TABLE>
<CAPTION>

     The  components  of CREC's net deferred tax  liability are as follows ($ in
thousands):

                                                                               1994              1995
                                                                               ----              ----
                  <S>                                                       <C>                <C>    

                  Deferred tax assets                                       $  1,711           $  1,405
                  Deferred tax liabilities                                    (3,017)            (3,221)
                                                                            --------           -------- 
                  Net deferred tax liability                                $ (1,306)          $ (1,816)
                                                                            ========           ======== 
</TABLE>


     The tax effect of significant  temporary  differences  representing  CREC's
deferred tax assets and liabilities are as follows ($ in thousands):
<TABLE>
<CAPTION>


                                                                               1994              1995
                                                                               ----              ----
                   <S>                                                      <C>                <C>   
                  Operating loss carryforward                               $    721           $    310
                  Income from unconsolidated joint ventures                   (2,775)            (2,946)
                  Stock appreciation right expense                               430                755
                  Fee income                                                     361                  7
                  Other                                                          (43)                58
                                                                            --------           --------
                                                                            $ (1,306)          $ (1,816)
                                                                            ========           ======== 
</TABLE>



8.   PROPERTY TRANSACTIONS

     Retail Properties
     In September 1995, North Point MarketCenter Phase II, a 176,000 square foot
(60,000 of which is owned by the Company) retail power center expansion in north
central  suburban  Atlanta,  became fully  operational  for financial  reporting
purposes.  In October 1995,  Lawrenceville  MarketCenter,  a 499,000 square foot
retail power center in northeast suburban Atlanta,  became partially operational
for financial  reporting  purposes.  In December 1995, Lovejoy Station, a 77,000
square  foot retail  strip  center in south  central  suburban  Atlanta,  became
partially operational for financial reporting purposes.
     Construction  which commenced during 1995 included:  Mansell Crossing Phase
II, a  100,000  square  foot  retail  power  center  expansion  adjacent  to the
Company's  other  North  Point  properties,  in February  1995;  Colonial  Plaza
MarketCenter,  a 533,000  square foot  retail  power  center in  suburban  north
central Orlando,  Florida, in February 1995; Greenbrier MarketCenter,  a 474,000
square  foot  retail  power  center  in  Chesapeake,   Virginia,  in  May  1995;
Presidential  MarketCenter  Phase II, a 130,000  square foot retail power center
expansion  in  northeast  suburban  Atlanta,  in November  1995;  and  Rivermont
Station,  a 92,000  square foot retail  strip center in north  central  suburban
Atlanta, in December 1995.
     Office Properties
     In August  1995,  Wildwood  Associates  commenced  construction  on two new
office buildings on approximately  12.6 acres of land it owns in Wildwood Office
Park. The two buildings will be a total of 250,000 rentable square feet of which
227,000 rentable square feet are pre-leased to Georgia-Pacific Corporation.
     In November 1995,  construction commenced on 200 North Point Center East, a
125,000  rentable  square foot office  building at North Point,  adjacent to 100
North Point  Center East (a  building of similar  size which  opened in December
1995),  North Point Mall and the  Company's  retail  properties in north central
suburban Atlanta.
     Residential Lots
     The  Company  is  currently  developing  five  residential  communities  in
suburban Atlanta,  including four in which development commenced in 1994 and one
in 1995. These  developments  currently include land on which  approximately 827
lots are being  developed  (with  additional  lots  developable on adjacent land
under  option),  of  which  116 and  180  lots  were  sold  in  1994  and  1995,
respectively.   9.   CONSOLIDATED   STATEMENTS  OF  CASH  FLOWS  -  SUPPLEMENTAL
INFORMATION
<TABLE>
<CAPTION>
     Interest (net of amounts capitalized) (see Note 4) and income taxes paid (net of refunds) were as follows      ($ in
thousands):
                                                                               1993     1994       1995
                                                                               ----     ----       ----
                  <S>                                                        <C>        <C>       <C>  

                  Interest paid                                              $    --    $  336    $   846
                  Income taxes paid (refunded), net of $577 and
                    $252 refunded in 1994 and 1995, respectively             $    68    $ (549)   $   376
</TABLE>

     Significant non-cash financing and investing included the following:
     a.  In  1994  and   1995,   approximately   $27,602,000   and   $2,860,000,
respectively,  was  transferred  from Projects Under  Construction  to Operating
Properties.
     b. In 1994 and 1995,  approximately $941,000 and $2,970,000,  respectively,
was transferred from Land Held for Investment or Future  Development to Projects
Under Construction.  In 1993, approximately $4,709,000 was transferred from Land
Held for Investment or Future Development to Operating Properties.
     c. In July  1994,  Norfolk  Hotel  Associates  distributed  a 50%  interest
(approximately  $1,589,000)  in a long-term  parking  agreement with an adjacent
building owner (see Note 5).
     d. In  September  1993,  the  carrying  value  of the  Company's  land  and
infrastructure costs for North Point MarketCenter (approximately $7,933,000) was
transferred  from Land Held for  Investment  or Future  Development  to Projects
Under Construction.  Included in the $7,933,000 of costs transferred to Projects
Under Construction was the Company's carrying value (approximately  $495,000) of
a concurrent land distribution from Spring/Haynes Associates. Also concurrently,
an  affiliate  of  Coca-Cola   contributed   the  land  it  previously  held  in
Spring/Haynes  Associates  for a 17.7%  minority  interest  in the  North  Point
MarketCenter project, which was recorded at a value of $2,658,000 (see Note 5).


<PAGE>


10.  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 all are classified and accounted for as
operating leases.
<TABLE>
<CAPTION>
     At December 31, 1995, future minimum rentals to be received by consolidated
entities under existing  non-cancelable  leases,  excluding tenants' current pro
rata share of operating expenses, are as follows ($ in thousands):
                                                                  Retail        Office         Total
                                                                  ------        ------         -----
                  <S>                                           <C>           <C>           <C>    

                  1996                                          $  13,949     $  6,536      $  20,485
                  1997                                             13,964        6,601         20,565
                  1998                                             13,959        6,394         20,353
                  1999                                             13,768        6,358         20,126
                  2000                                             13,306        5,047         18,353
                  Subsequent to 2000                              148,920       16,882        165,802
                                                                ---------     --------      ---------
                                                                $ 217,866     $ 47,818      $ 265,684
                                                                =========     ========      =========
</TABLE>

For the years ended  December 31, 1993,  1994 and 1995,  income  recognized on a
straight-line  basis for  financial  reporting  purposes  exceeded  income which
accrued in accordance  with the lease terms by $391,000,  $209,000 and $107,000,
respectively (see Notes 1 and 3). Of the future minimum office rentals,  75% are
attributable  to the three  major  tenants of the  Company's  First  Union Tower
project in Greensboro, North Carolina. 11. SUBSEQUENT EVENTS

     CSC Associates, L.P. Financing
     On February 6, 1996,  CSC  Associates,  L.P.  ("CSC") issued $80 million of
6.377%  collateralized notes (the "Notes").  The Notes amortize in equal monthly
installments of $590,680 based on a 20 year  amortization  schedule,  and mature
February 15, 2011. The Notes are non-recourse obligations of CSC and are secured
by a Deed to Secure Debt, an Assignment of Rents and Security Agreement covering
CSC's  interest  in the  NationsBank  Plaza  building  and  related  leases  and
agreements.
     CSC has loaned the $80 million proceeds of the Notes to the Company under a
non-recourse loan (the "Cousins Loan") secured by the Company's  interest in CSC
under the same payment  terms as those of the Notes.  The Company paid all costs
of issuing  the Notes and the  Cousins  Loan,  including  a  $400,000  fee to an
affiliate of NationsBank Corporation. In addition, the Company will pay a fee to
an  affiliate of  NationsBank  Corporation  of .3% per annum of the  outstanding
principal balance of the Notes. The Company used the proceeds to temporarily pay
down  short  term  debt,  and  will  ultimately  use the  funds  for  continuing
development opportunities.
     Exchange of Interests in North Point Market Associates, L.P. and 
Spring/Haynes Associates
     At December 31, 1995,  the Company had interests in two  partnerships  with
Coca-Cola which were exchanged subsequent to year-end:  Spring/Haynes Associates
(50% interest) and North Point Market  Associates,  L.P.  (82.3%  interest) (see
Note 5).  Effective  January 1, 1996, the Company and Coca-Cola  entered into an
exchange  transaction which effectively  resulted in Coca-Cola receiving 100% of
the Spring/Haynes  Associates'  property and the Company receiving $1,092,000 in
cash and 100% of North Point Market  Associates,  L.P.'s properties (North Point
MarketCenter and Mansell Crossing Phase II).
     Los Altos MarketCenter
     In February 1996, the Company  purchased the Los Altos Shopping  Center,  a
retail  center  located in Long Beach,  California.  The Company  commenced  the
demolition   of  the  retail  center  and  began   construction   of  Los  Altos
MarketCenter,  a 280,000  square  foot (of which the  Company  will own  152,000
square  feet)  retail  power center which is expected to be completed at a total
cost of approximately $23 million.



<PAGE>


Cousins Properties Incorporated and Consolidated Entities
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                  1991           1992           1993           1994           1995
                                                  ----           ----           ----           ----           ----
<S>                                            <C>            <C>            <C>            <C>             <C>    
   
Rental property revenues                       $    6,728     $    6,933     $    6,687      $  13,150      $  19,348
Fees                                                4,855          4,953          5,903          5,023          7,884
Residential lot and outparcel sales                    --             --             --          6,132          9,040
Interest and other                                  7,127          6,989          6,456          6,801          4,764
                                               ----------     ----------     ----------      ---------      ---------
Total revenues                                     18,710         18,875         19,046         31,106         41,036
                                               ----------     ----------     ----------      ---------      ---------
Income from unconsolidated joint ventures           2,434          2,573          5,516         12,580         14,113
                                               ----------     ----------     ----------      ---------      ---------
Rental property operating expenses                  2,456          2,354          2,310          3,338          4,681
Depreciation and amortization                       2,236          2,345          3,164          3,742          4,516
Stock appreciation right expense                      378            860            721            433          1,298
Residential lot and outparcel cost of sales            --             --             --          5,762          8,407
Interest expense                                    1,149            820             --            411            687
General, administrative, and other expenses         5,573          5,640          9,124          9,627         10,333
                                               ----------     ----------     ----------      ---------      ---------
Total expenses                                     11,792         12,019         15,319         23,313         29,922
                                               ----------     ----------     ----------      ---------      ---------
Provision (benefit) for income taxes
   from operations                                    244            360           (795)          (166)           747
Gain on sale of investment properties,
   net of applicable income tax provision              --          6,644          1,927          6,356          1,862
                                               ----------     ----------     ----------      ---------      ---------
Net income                                     $    9,108     $   15,713     $   11,965      $  26,895      $  26,342
                                               ==========     ==========     ==========      =========      =========
Income per share:
   From operations before gain on
     sale of investment properties            $      .53      $     .50      $      .44     $     .74       $     .87
   From gain on sale of investment proper-
     ties, net of applicable tax provision            --            .36             .09           .23             .07
                                               ----------     ----------     ----------      ---------      ---------
   Net income per share                       $      .53      $     .86      $      .53     $     .97       $     .94
                                              ==========      =========      ==========     =========       =========
Cash dividends declared per share             $      .60      $     .62      $      .73     $     .90       $     .99
                                              ==========      =========      ==========     =========       =========
Total assets                                  $  169,406      $  195,791     $  319,702     $ 330,817      $ 418,006
Notes payable                                     34,680           9,079         35,151        41,799        113,434
Stockholders' investment                         114,100         176,091        270,557       272,898        277,678
</TABLE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Stockholders of Cousins Properties Incorporated:
     We have audited the  accompanying  consolidated  balance  sheets of Cousins
Properties  Incorporated (a Georgia corporation) and consolidated entities as of
December 31, 1994 and 1995, and the related  consolidated  statements of income,
stockholders'  investment  and cash  flows  for each of the  three  years in the
period  ended   December  31,  1995.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial  statements based on our audits. We did not audit the
financial  statements of CSC Associates,  L.P. and Haywood Mall Associates which
statements  combined  reflect assets of 46% and 45% of the joint ventures totals
as of December  31, 1994 and 1995 and  revenues of 41%, 48% and 49% of the 1993,
1994 and 1995 joint ventures totals, respectively. Those statements were audited
by other  auditors  whose  reports  have been  furnished  to us and our opinion,
insofar as it relates to the amounts  included for those entities as of December
31, 1994 and 1995 and for each of the three years in the period  ended  December
31, 1995, is based solely on the reports of the other auditors.
     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that our  audits  and the  reports  of  other  auditors  provide  a
reasonable basis for our opinion.
     In our opinion,  based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the  financial  position of Cousins  Properties  Incorporated  and  consolidated
entities as of December 31, 1994 and 1995,  and the results of their  operations
and their cash flows for each of the three  years in the period  ended  December
31, 1995 in conformity with generally accepted accounting principles.

                                                         ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 20, 1996

<PAGE>


Cousins Properties Incorporated and Consolidated Entities

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------

Results of Operations For The Three Years Ended December 31, 1995
     General.   Historically,   the  Company's   financial   results  have  been
significantly  affected  by sale  transactions  and the fees  generated  by, and
start-up operations of, major real estate  developments,  which transactions and
developments do not necessarily  recur.  Accordingly,  the Company's  historical
financial  statements  may not be indicative of future  operating  results.  For
information as to certain  factors which may affect future income and cash flow,
see "Additional Prospective Information." The notes referenced in the discussion
below are the "Notes to  Consolidated  Financial  Statements"  included  in this
annual report.
     Rental Property Revenues and Operating  Expenses.  Rental property revenues
increased  from  $6,687,000 in 1993 to $13,150,000  and  $19,348,000 in 1994 and
1995,  respectively.  The increases in 1994 and 1995 are primarily due to rental
property revenues from the Company's retail power centers.  Perimeter Expo which
became  operational in December 1993  increased  $3,022,000 and $418,000 in 1994
and 1995, respectively. North Point MarketCenter which became operational in May
1994 (Phase I) and July 1995 (Phase II) increased  $1,958,000  and $2,437,000 in
1994 and 1995, respectively.  Presidential MarketCenter which became operational
in  December  1994   increased   $117,000  and  $1,762,000  in  1994  and  1995,
respectively.  Lawrenceville  MarketCenter  which became operational in December
1995 contributed to the increased results in 1995 by $312,000.
     Rental  property  revenues  from 20 acres of the  Georgia  Highway 400 land
being ground  leased to  freestanding  users also  increased in 1994 and 1995 by
$400,000  and  $429,000,  respectively.  Approximately  6 acres of leases  began
generating  income  during  the fourth  quarter of 1993,  with 7 acres of leases
beginning  throughout  1994  and an  additional  7  acres  of  leases  beginning
throughout 1995.
     Rental  property  revenues were also affected by changes which  occurred in
the 3301 Windy Ridge  Parkway  Building,  a 107,000  square foot Company  wholly
owned building in Wildwood Office Park,  which had rental  property  revenues of
$0, $876,000 and $1,001,000 in 1993, 1994 and 1995, respectively.  This building
was  unoccupied  during  1993.  Subsequently,  commencing  January 1994 a single
tenant leased the building for a term of ten years.  The lease was initially for
60% of the building,  with options permitting the tenant to expand its occupancy
to the  remainder of the building  over the next several  years;  the first such
option for an additional 10% of the space was exercised in the fourth quarter of
1994. Rental property revenues were also favorably  impacted over the three year
period by First Union Tower,  which had rental property  revenues of $5,421,000,
$5,522,000 and $5,961,000 in 1993, 1994 and 1995, respectively.
     Rental  property  operating  expenses  increased from $2,310,000 in 1993 to
$3,338,000 and $4,681,000 in 1994 and 1995, respectively.  The increases in 1994
and 1995 were primarily related to the occupancy of the retail power centers and
the two office buildings discussed above.
     Development and Construction Fees.  Development and construction fee income
increased  from $898,000 in 1993 to $1,020,000  and $3,515,000 in 1994 and 1995,
respectively.  The  increase  in 1995 is due  primarily  to the  recognition  of
development income from the Dusseldorf project  ($2,604,000) (see Note 5) and an
increase of $244,000 in development  fees recognized  from Wildwood  Associates.
This increase was partially offset by a decrease in development fees of $313,000
recognized  by CMC  from  third  party  retail  developments.  Development  fees
received  from the Emory  Conference  Center,  a third party  development,  also
decreased in 1995 by $117,000.
     The increase in 1994 was  primarily  related to  development  fees received
from the  Emory  Conference  Center,  ($235,000  increase).  This  increase  was
partially  offset  by a  decrease  of  $112,000  in office  tenant  construction
activity.
     Management  Fees.  Management  fees  increased  from  $1,999,000 in 1993 to
$2,061,000  and  $2,213,000  in 1994 and  1995,  respectively.  Management  fees
increased in 1994 and 1995  primarily due to lease-up of the projects from which
management fees are received.
     Leasing and Other Fees and Leasing and Other Commissions  Expense.  Leasing
and other fees decreased from $3,006,000 in 1993 to $1,942,000 in 1994, and then
increased to  $2,156,000  in 1995.  The increase in 1995 was due  primarily to a
$374,000  third  party   incentive  fee  and  a  $276,000  cash  flow  and  sale
participation received from third party retail projects. Leasing fee income from
NationsBank Plaza also increased  $141,000 in 1995.  Partially  offsetting these
increases  was a decrease  in leasing  fees  received  from third  party  retail
projects  as such  third  party work was  phased  out and  in-house  development
increased.
     The  decrease in 1994 was also due to a decrease in leasing  fees  received
from third party retail projects of $802,000. Office leasing fees also decreased
in 1994 by $262,000.
     Changes in leasing  commission  expense were associated  primarily with the
changes in leasing fee income recognized from One Ninety One Peachtree Tower and
retail leasing and other fees received from third parties.
     Residential Lot and Outparcel Sales and Cost of Sales.  Residential lot and
outparcel  sales  increased from $0 in 1993 to $6,132,000 and $9,040,000 in 1994
and  1995,  respectively.  Both  the  increases  in 1994  and  1995  were due to
increases in  residential  lot sales by CREC from none in 1993 to 116 and 180 in
1994 and 1995,  respectively.  CMC also  recognized  $1,300,000  and $525,000 in
outparcel sales in 1994 and 1995, respectively.
     Residential  lot and outparcel  cost of sales  increased from $0 in 1993 to
$5,762,000 and $8,407,000 in 1994 and 1995, respectively.  The increases in both
years were due to the increases in sales discussed above.
     Interest  and Other  Income.  Interest  and  other  income  increased  from
$6,456,000  in 1993 to  $6,801,000  in 1994 and then  decreased to $4,764,000 in
1995. The decrease in 1995 is due to decreases in interest  income received from
the  9.1%  Mortgage  Notes  ($1,813,000   decrease)  and  temporary  investments
($163,000 decrease).  The 9.1% Mortgage Notes which had a balance of $39,927,000
at  December  31,  1993 were repaid in full on June 30,  1994.  The  decrease in
temporary investment income was primarily due to the Company's investment of its
excess cash in real estate assets in 1995.  Partially offsetting these decreases
was an increase of $533,000  due to the  recognition  of a full year of interest
income from the 650  Massachusetts  Avenue  Notes which were  purchased in March
1994 (see Note 3).
     The  increase in 1994 is  primarily  due to interest  income of  $2,285,000
being  recognized  from the  purchase  of the 650  Massachusetts  Avenue  Notes.
Additionally,  the  Company  recognized  a gain  of  $623,000  on the  sale of a
non-real estate asset in November 1994.  Offsetting these increases in 1994 were
decreases in interest income  received from the 9.1% Mortgage Notes  ($1,820,000
decrease) and temporary investments ($511,000 decrease).
     Income  From  Unconsolidated  Joint  Ventures.  (All  amounts  reflect  the
Company's  share of joint  venture  income.)  Income from  unconsolidated  joint
ventures  increased from  $5,516,000 in 1993 to $12,580,000  and  $14,113,000 in
1994 and 1995, respectively.
     Income  from  CSC  Associates,  L.P.  increased  from  $201,000  in 1993 to
$6,880,000 and $7,308,000 in 1994 and 1995,  respectively.  The increase in 1995
is due to the continued  lease-up of NationsBank  Plaza as the leases which were
executed in 1994 began to favorably  impact the operating  results in 1995.  The
Company's  share of both the 1994 and 1995  results  benefited  by $451,000  and
$36,000 in 1994 and 1995,  respectively,  due to recognition by the Company of a
partnership income preference after the partnership's debt was repaid in October
1993 and net  income  became  positive  (see  Note 5).  In  addition,  the total
interest expense of the partnership was reduced by  approximately  $12.3 million
in 1994 because of the partnership's debt prepayment (see Note 5).
     Income  from  Wildwood  Associates  increased  from  $2,161,000  in 1993 to
$2,422,000 and $2,942,000 in 1994 and 1995,  respectively.  The increase in 1995
is the result of the lease-up of the 2500 Windy Ridge Parkway Building ($144,000
increase in net operating income) and the 3200 Windy Hill Road Building ($67,000
increase in net operating  income).  Results in 1995 were favorably  impacted by
lower  interest  expense  (approximately  $155,000)  which was due to  increased
interest  capitalization  and  refinancings  of two  mortgage  notes  payable in
December 1995.  Depreciation  and  amortization  expense which was lower in 1995
(approximately  $147,000) and increased  rental income from certain ground lease
sites (approximately $57,000) also favorably impacted 1995 results. The increase
in 1994 was  primarily  because of leaseup of the 3200 Windy Hill Road  Building
($287,000 increase in net operating income). Results in 1994 were also favorably
impacted by increased rental income (approximately $139,000) from certain ground
lease sites which began generating revenue during the fourth quarter of 1993 and
second quarter of 1994.
     Income from Haywood Mall  Associates  increased from  $2,007,000 in 1993 to
$2,474,000 and $2,963,000,  in 1994 and 1995, respectively.  The Company's share
of the 1995 results was favorably  impacted by the  venture's  prepayment of its
outstanding  debt through equity  contributions of $10 million from each partner
on April 29, 1994.  Results in 1995  reflect no interest  expense as compared to
four  months of interest  expense in 1994 (a  decrease  in  interest  expense of
$299,000). Results in 1995 also reflect increases in operating income due to the
completion  and  lease-up  of the  expansion  of Haywood  Mall (see Note 5). The
Company's  share of the 1994 results also  benefited  from the prepayment of the
debt as discussed above. Results in 1994 reflect four months of interest expense
as compared to twelve months of interest  expense in 1993  ($613,000  decrease).
Partially  offsetting this favorable  impact of reduced interest expense in 1994
was a $340,000  charge  incurred  related  to the  prepayment  of the  venture's
mortgage debt.
     Income from Norfolk  Hotel  Associates  decreased  from $723,000 in 1993 to
$332,000 and $243,000 in 1994 and 1995, respectively. The decrease in 1995 was a
result of the July 1994  distribution  to each  partner of a 50% interest in the
parking  agreement (see Note 5). The 1994 results include seven months of income
from the parking  agreement versus none in 1995, a decrease of $121,000.  Income
in 1993 was favorably  impacted by a $460,000 gain  recognized  upon the sale of
the  Omni  International  Hotel in  April  1993.  Subsequent  to the  sale,  the
partnership  recognized  more net income from the sales  proceeds  (including  a
purchase money first mortgage note) than it was receiving from hotel  operations
prior to the sale.
     General and Administrative  Expenses.  General and administrative  expenses
increased from $7,336,000 in 1993 to $7,538,000 and $7,648,000 in 1994 and 1995,
respectively. The increases in 1994 and 1995 were primarily because of personnel
increases  related to the  Company's  expansion,  offset by an increase in costs
capitalized to projects under development  ($3,049,000 in 1995 versus $1,800,000
in 1994).
     Depreciation and Amortization. Depreciation and amortization increased from
$3,164,000 in 1993 to $3,742,000 and $4,516,000 in 1994 and 1995,  respectively.
Both the 1994 and 1995  increases  are due primarily to the retail power centers
becoming operational as discussed above (increases of $824,000 and $1,061,000 in
1994 and 1995, respectively). These increases were partially offset by decreases
of $439,000  and $211,000 in 1994 and 1995,  respectively,  in  amortization  of
intangible  assets  acquired when the Company  purchased the retail  development
business  of New Market  Companies,  Inc.  These  intangible  assets  were being
written off as the related income was recognized.
     Stock  Appreciation   Right  Expense.   Stock  appreciation  right  expense
decreased  from  $721,000  in 1993 to  $433,000  in 1994 and then  increased  to
$1,298,000 in 1995.  This  non-cash  item is primarily  related to the price per
share of the common stock,  which  increased  over the three year period and was
$16.50,  $17.375  and  $20.25 per share at  December  31,  1993,  1994 and 1995,
respectively.  The cash payment provision  associated with 374,341 stock options
was given up by certain of the option  holders in 1993,  thereby  reducing stock
appreciation right expense by approximately $502,000 (see Note 6).
     Interest  Expense.  Interest expense  increased from $0 in 1993 to $411,000
and $687,000 in 1994 and 1995,  respectively.  All interest was  capitalized  in
1993. In 1995,  interest expense before  capitalization  increased to $5,760,000
from  $1,529,000 in 1994 due to higher debt levels.  This increase was partially
offset by increased  capitalization  because of a higher level of projects under
development. The amount of interest capitalized to projects under development (a
reduction of interest  expense)  increased to $5,073,000 in 1995 from $1,118,000
in 1994.
     Property Taxes on  Undeveloped  Land.  Property  taxes on undeveloped  land
increased  from $537,000 to $1,085,000 in 1994 and then decreased to $977,000 in
1995.  The increase in 1994 is due primarily to an increase in property taxes of
the Company's  Georgia  Highway 400 land  ($579,000  increase of which  $150,000
related to a 1993 property tax reassessment).
     Other  Expenses.  Other  expenses  decreased  from  $1,058,000  in  1993 to
$922,000 in 1994 and then  increased to $1,688,000 in 1995. The increase in 1995
is due primarily to an increase of $631,000 in  predevelopment  expenses.  Other
expenses were negatively  impacted in 1993 because of a $310,000 charge made for
the present value of an  indemnification  an insurance company in rehabilitation
had made to the Company in 1974,  but defaulted on in the third quarter of 1993.
This  obligation  is due in monthly  installments  of principal  and interest of
$3,208 through December 2009.  Partially offsetting the favorable variance of no
similar expense in 1994 was an increase in  predevelopment  expenses of $244,000
from 1993 to 1994.
     Provision  (Benefit)  For Income  Taxes From  Operations.  The  benefit for
income taxes from  operations  decreased from a benefit of $795,000 in 1993 to a
benefit of $166,000 in 1994,  which benefit  decreased in 1995 to a provision of
$747,000.  The provision  (benefit) for income taxes from  operations  increased
from 1994 to 1995 due primarily to an increase in CREC and its subsidiaries' net
income  before  income taxes from a net loss before  income taxes of $582,000 to
net income  before  income  taxes of  $2,626,000.  The  increase in CREC and its
subsidiaries'  net income  before  income  taxes was due to the  recognition  of
certain of the development  income from the Dusseldorf project by CREC (see Note
5). Also  contributing  to the increase in net income before income taxes was an
increase in intercompany development and leasing fees recognized from $3,019,000
in 1994 to  $5,479,000  in  1995.  Intercompany  fee  income  is  eliminated  in
consolidation  (see Note 1),  but the tax  effect is not.  The  increase  in the
provision for income taxes from  operations was partially  offset by $252,000 of
state income tax refunds  received  related to a successful  judicial  appeal by
Cousins  of an  assessment  paid in 1992.  The  benefit  for  income  taxes from
operations  decreased  from 1993 to 1994 due primarily to a decrease in CREC and
its  subsidiaries'  net loss  before  income  taxes from  $2,238,000  in 1993 to
$582,000 in 1994.  The  decrease in CREC and its  subsidiaries'  net loss before
income taxes was due to an increase in intercompany development and leasing fees
recognized, and decreased intangible amortization.

<PAGE>
     Gain  on  Sale  of  Investment  Properties.  Gain  on  sale  of  investment
properties,  net of applicable  income tax provision was $1,927,000,  $6,356,000
and $1,862,000 in 1993, 1994 and 1995, respectively.  The 1995 gain included the
following:  the August 1995 sale of an  approximately 1 acre parcel proximate to
the CNN Center in downtown  Atlanta ($1.6  million gain) and the September  1995
sale of a 6.2 acre parcel in West Cobb County,  Georgia ($.5 million gain).  The
1994 gain  included the  following:  the June 1994 sale of the  Company's 9 acre
Peachtree Road property  ($3.3 million  gain),  the August 1994 sale of the 10.8
acre site in North Point  MarketCenter  Phase II ($1.8  million  gain),  and the
November  1994  sale of a 21 acre  parcel  in West Cobb  County,  Georgia  ($1.3
million  gain).  The 1993 gain was from  profits  recognized  on the sale of 100
acres in 1988 at North Point; the Company  recognized profits on this sale based
on percentage of completion  accounting as certain  infrastructure work required
by the sales contract was completed in 1992 and 1993. Net proceeds received from
land  sales  were  $0,  $13,279,000  and  $4,731,000  in 1993,  1994  and  1995,
respectively.

Additional Prospective Information
     The  Company  opened  three  retail   centers  during  1995:   North  Point
MarketCenter Phase II in July 1995,  Lawrenceville  MarketCenter in October 1995
and Lovejoy Station in December 1995.  Rental property  revenues,  net of rental
property  operating  expenses  from these three centers will increase in 1996 as
the Company recognizes a full year of operations.  Additionally,  several retail
power centers which were under  construction as of December 31, 1995 will become
operational  during  1996 and  will  also  increase  rental  property  operating
results, including Colonial Plaza MarketCenter, Greenbrier MarketCenter, Mansell
Crossing  Phase  II  and  Presidential  MarketCenter  Phase  II.  The  Company's
increased ownership of North Point MarketCenter (see Note 11) will also increase
rental property operating results.
     Development fees are expected to decrease in 1996 as the development income
recognized  in 1995  included  approximately  $2.6 million  from the  Dusseldorf
project (see Note 5).
     The  Company's  share of  Wildwood  Associates  cash flows  from  operating
activities will be favorably impacted in 1996 as the two new buildings discussed
in Note 8 become  operational.  Wildwood  Associates'  cash flows from operating
activities  will also be  favorably  impacted by lower  interest  expense on two
mortgage notes payable which were  refinanced in December 1995.  These increases
will be  partially  offset by a decrease in rental  rates at the  Wildwood  2500
Building.  The Company's share of CSC Associates' and CC-JM II Associates'  cash
flows from operating activities will also increase,  the former due to continued
leaseup  of the  NationsBank  Plaza,  and  the  latter  due  to  the  building's
completion and full occupancy in January 1996.
     The Company has entered  into an option  agreement  to sell its interest in
the Norfolk parking agreement for $2 million in July 1996, which would result in
a profit to the Company of approximately $411,000 (see Note 5).
     Interest  expense  will  increase in 1996 as projects  that have been under
construction  become  operational and associated  interest  expense is no longer
capitalized. In addition to being a 50% partner in Wildwood Associates, IBM is a
major tenant in Wildwood  Office Park and Summit  Green.  In 1993 and 1994,  IBM
underwent a downsizing  and made a portion of its leased space  available to new
tenants.  This provided Cousins with a marketing advantage by allowing cash flow
to be  maintained,  while making  space  available  to  prospective  tenants for
extended leases on very competitive lease terms.
<TABLE>
<CAPTION>
     The  following is a breakdown as of February 15, 1996,  of the office space
leased by IBM (square feet in thousands):
                                                                  Square Feet
                                                                   Re-leased       Square Feet
                               Square Feet       Primary       or Sub-leased to     Currently        Square Feet
                                Leased at         Lease          Others During      Available         Currently
                               January 1,      Expiration         1993, 1994     for Re-leasing       Retained
Building                          1993            Date             and 1995      or Sub-leasing        by IBM
- --------                          ----            ----             --------      --------------        ------
<S>                              <C>        <C>                       <C>              <C>               <C> 
Wildwood 2300                      315      December 2002              305              10                --   
Wildwood 2500                      186      December 1995              158              28                --
Wildwood 3100                      188      November 1998               --              --               188
Wildwood 3200                      446      December 2001               24              --               422
Summit Green                       104      November 1996               46              46                12
                                 -----                                 ---              --               ---
                                 1,239                                 533              84               622
                                 =====                                 ===              ==               ===
</TABLE>

     Major  tenants  in  the  re-leased  space  included  Coca-Cola  Enterprises
(140,000 square feet) and Georgia Pacific (63,000 square feet).


Liquidity and Capital Resources
     The Company's debt  (including its pro rata share of  unconsolidated  joint
venture  debt) was 26% of total  market  capitalization  at December  31,  1995,
giving the Company excellent financial flexibility.  As discussed in Notes 4 and
8, concurrent with an $80 million  financing  completed on February 6, 1996, the
Company's line of credit was paid down to $1,000, and the terms were modified to
provide for an unsecured  $10 million  line  maturing  April 30, 1996.  Prior to
April 30,  1996,  the Company  plans to increase  the line amount and extend the
maturity  date.  The Company  temporarily  used the remaining  proceeds from the
financing to pay down short term debt.
     The  Company  has  development  projects in various  planning  stages.  The
Company currently intends to finance these projects and projects currently under
construction  discussed in Notes 8 and 11, by using the excess proceeds from the
$80 million  financing  discussed  above,  existing lines of credit  (increasing
those lines of credit as required),  and long-term non-recourse financing on the
Company's  unleveraged  projects  as  market  conditions  warrant.   Effects  of
Inflation
     The Company  attempts to minimize  the effect of  inflation  on income from
operating  properties  by the use of  rents  tied to  tenants'  sales,  periodic
fixed-rent increases and increases based on cost-of-living  adjustments,  and/or
pass-through of operating cost increases to tenants.

<PAGE>


- --------------------------------------------------------------------------------


<PAGE>


Cousins Properties Incorporated and Consolidated Entities
- --------------------------------------------------------------------------------
MARKET AND DIVIDEND INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
     The high and low sales prices for the Company's common stock and cash dividends declared per share were as follows:
                                         1994 Quarters                                    1995 Quarters
                                         -------------                                    -------------
                             First    Second       Third     Fourth         First     Second      Third      Fourth
                             -----    ------       -----     ------         -----     ------      -----      ------
<S>                        <C>        <C>       <C>         <C>           <C>        <C>         <C>        <C>
High                       $ 17-5/8   $ 18      $ 17-3/4    $ 17-3/8      $ 17-3/4   $ 18-1/8    $ 18-3/8   $ 20-1/4
Low                          15-7/8     15-1/8    15-3/4      15-1/4        16-1/2     16-1/2      17-1/8     17
Dividends Declared             .22        .22        .22         .24           .24        .24         .24         .27
Payment Date               2/22/94    5/27/94    8/24/94    12/21/94       2/22/95    5/30/95     8/24/95    12/21/95
</TABLE>

     The Company's  stock trades on the New York Stock  Exchange  (ticker symbol
CUZ). At December 31, 1995, there were 1,241 stockholders of record.
     In 1994, the Company  designated as capital gain dividends  42.1818% of the
dividend paid  February 22, 1994 and all of the dividends  paid May 27, 1994. In
1995, the Company  designated as capital gain dividends  2.4815% of the dividend
paid December 21, 1995.  All other  dividends paid in 1994 and 1995 were taxable
as ordinary  dividends.  In addition,  in 1994 and 1995 an amount  calculated as
3.73% and 3.25% of total dividends,  respectively, was an "adjustment attributed
to  depreciation  of  tangible  property  placed  in  service  after  1986"  for
alternative minimum tax purposes. This amount was passed through to stockholders
and must be used as an item of  adjustment  in  determining  each  stockholder's
alternative minimum taxable income.
ABOUT YOUR DIVIDENDS
- --------------------------------------------------------------------------------
     Timing of Dividends - Cousins  normally pays regular  dividends  four times
each year in February, May, August and December.
     Differences  Between  Net  Income  and Cash  Dividends  Declared - Cousins'
current  intention is to distribute 100% of its taxable income and thus incur no
corporate income taxes. However, Consolidated Net Income for financial reporting
purposes  and Cash  Dividends  Declared  will  generally  not be  equal  for the
following reasons:
     a. There will continue to be considerable  differences between Consolidated
Net  Income  as  reported  to  stockholders  (which  includes  the  income  of a
consolidated  non-REIT  entity that pays  corporate  income  taxes) and Cousins'
taxable  income.  The  differences  are  enumerated  in  Note  7  of  "Notes  to
Consolidated Financial Statements."
     b. For purposes of meeting REIT distribution requirements, dividends may be
applied to the calendar year before or after the one in which they are declared.
The  differences  between  dividends  declared in the current year and dividends
applied to meet current year REIT  distribution  requirements  are enumerated in
Note 6 of "Notes to Consolidated Financial Statements."
     Capital Gains  Dividends - In some years, as it did in 1993, 1994 and 1995,
Cousins  will have  taxable  capital  gains,  and Cousins  currently  intends to
distribute 100% of such gains to stockholders. The Form 1099-DIV sent by Cousins
to stockholders of record each January shows total dividends paid (including the
capital  gains  dividends) as well as that which should be reported as a capital
gain. For  individuals,  the capital gain portion of the dividends is subtracted
from total dividends on Schedule B of IRS Form 1040 and reported separately as a
capital gain in accordance with the Schedule B instructions.
     Tax Preference  Items and  "Differently  Treated Items" - Internal  Revenue
Code Section 59(d)  requires that certain  corporate  tax  preference  items and
"differently  treated  items" be passed  through  to a REIT's  stockholders  and
treated as tax  preference  items and items of  adjustment  in  determining  the
stockholder's  alternative minimum taxable income. The amount of this adjustment
is included under "Market and Dividend Information" in this report.
     Tax preference  items and  adjustments  are  includable in a  stockholder's
income  only for  purposes of  computing  the  alternative  minimum  tax.  These
adjustments will not affect a stockholder's tax filing unless that stockholder's
alternative  minimum  tax  is  higher  than  that  stockholder's   regular  tax.
Stockholders  should  consult their tax advisors to determine if the  adjustment
reported by Cousins affects their tax filing.  Many  stockholders will find that
the  adjustment  reported  by  Cousins  will have no effect on their tax  filing
unless they have other large sources of alternative  minimum tax  adjustments or
tax preference items.

<PAGE>


Cousins Properties Incorporated and Consolidated Entities

- --------------------------------------------------------------------------------
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
Selected  quarterly  information for the two years ended December 31, 1995 ($ in
thousands, except per share amounts):
<TABLE>
<CAPTION>
                                                                                             Quarters
                                                                               First     Second      Third     Fourth
                                                                               -----     ------      -----     ------
<S>                                                                          <C>        <C>       <C>        <C>
1994:
Revenues                                                                     $ 5,507    $ 6,751   $  8,147   $ 10,701
Income from unconsolidated joint ventures                                      3,241      2,774      3,335      3,230
Gain on sale of investment properties, net of applicable income
 tax provision                                                                            3,242      1,677      1,437
Net income                                                                     4,798      8,056      6,134      7,907
Net income per share                                                             .17        .29        .22        .28

1995:
Revenues                                                                       8,000      8,409     15,330      9,297
Income from unconsolidated joint ventures                                      3,374      3,495      3,467      3,777
Gain on sale of investment properties, net of applicable income
  tax provision                                                                                      1,746        116
Net income                                                                     5,873      5,441      9,599      5,429
Net income per share                                                             .21        .20        .34        .19
</TABLE>






<PAGE>


- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
Arthur Andersen LLP



COUNSEL
King & Spalding
Troutman Sanders
Kilpatrick & Cody
Arrington & Hollowell, P.C.



TRANSFER AGENT AND REGISTRAR
First Union National Bank
Shareholder Services Group
Two First Union Center, M-12
Charlotte, North Carolina    28288-1154
Telephone Number:        1-800-829-8432
FAX Number:              1-704-374-6987


DIVIDEND REINVESTMENT PLAN
The Company  offers its  stockholders  the  opportunity  to purchase  additional
shares of common stock through the Dividend  Reinvestment Plan with purchases at
95% of current  market value.  A copy of the Plan  prospectus  and an enrollment
card may also be obtained by calling or writing to the Company.





FORM 10-K AVAILABLE
The Company's  annual  report on Form 10-K and interim  reports on Form 10-Q are
filed with the Securities and Exchange Commission.  Copies are available without
exhibits  free of charge to any  person who is a record or  beneficial  owner of
common  stock upon written  request to the Company at 2500 Windy Ridge  Parkway,
Suite 1600, Atlanta, Georgia 30339-5683.





