POST APARTMENT HOMES, L.P.

December 22, 2004

Wachovia Bank, National Association,
     as Agent, and each of the Lenders
     that are parties to the Credit Agreement
     described below

  Re:    Credit Agreement dated as of January 16, 2004, among Post Apartment
Homes, L.P., Wachovia Bank, National Association, as Administrative Agent, and
the financial institutions that are parties thereto, as amended through the date
hereof (the “Credit Agreement”)

     We refer to the above-referenced Credit Agreement. Capitalized terms used
in this letter that are defined in the Credit Agreement are used in this letter
with the respective meanings provided for such capitalized terms in the Credit
Agreement. By this letter, we are requesting your agreement as to the treatment
of certain charges and related calculation of certain financial covenants in the
Credit Agreement as more particularly described below.

     On March 16, 1998, the Borrower issued its $100,000,000 6.85% Mandatory Par
Put Remarketed Securities (“MOPPRS”) due March 16, 2015. Under the terms of the
MOPPRS, Merrill Lynch, as remarketing dealer, has the option to repurchase these
senior promissory notes from investors at par on March 16, 2005, and remarket
them at a price equal to 5.715% plus the Borrower’s then-applicable credit
spread above the 10-year treasury rate (which price would represent an
above-market rate that, based on current interest rates, would be expected to
result in a premium to Merrill Lynch of approximately $12,000,000). Under the
remarketing agreement, the Borrower has the right to redeem the MOPPRS from
Merrill Lynch on March 16, 2005, by repaying the principal debt outstanding,
plus an additional amount based on the difference between the 5.715% rate and
the spot 10-year treasury rate for the remaining payments due over the 10-year
term of the remarketed senior promissory notes. Today, this additional amount
payable to Merrill Lynch for effective termination of its remarketing option
would be approximately $12,000,000.

     In accordance with GAAP, if the Borrower were to exercise its option to
redeem the MOPPRS from Merrill Lynch on March 16, 2005, the Borrower would incur
a “loss on early extinguishment of indebtedness” for the amount of the
additional payment and for the write off of unamortized deferred financing
costs. Assuming no change in interest rates between now and March 16, 2005, this
additional amount would be approximately $13,000,000 (including approximately
$700,000 of unamortized deferred financing costs). For purposes of calculating
financial covenants under the Credit Agreement, losses on early extinguishment
of indebtedness would be excluded from interest and fixed charge coverage ratios
and, as a result, would have no impact on the financial covenants or the
measurement of the Borrower’s ability to meet debt service requirements.

 

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     The Borrower has determined that it would be in its best interests to
terminate Merrill Lynch’s remarketing option in the fourth quarter of 2004
rather than in March 2005. However, this earlier termination, according to GAAP,
would result in the characterization and treatment of this additional amount as
approximately $12,000,000 of additional interest expense and approximately
$700,000 of additional amortization of deferred financing costs—rather than as
“loss on early extinguishment of debt” as described above. Assuming that the
forward yield curve accurately reflects the market’s expectation of future
interest rates, however, the economic impact of this earlier termination is
essentially the same as if the Borrower exercised its redemption option on
March 16, 2005. Rather than the Borrower paying Merrill Lynch $112,000,000 to
redeem the MOPPRS on March 16, 2005, the Borrower would pay approximately
$12,000,000 to terminate the remarketing option now, and would pay investors
$100,000,000 to redeem the principal amount of the MOPPRS at par on March 16,
2005. Although no different economically (again, assuming that future interest
rates are accounted for in the yield curve), the GAAP characterization of the
approximately $12,000,000 payment as interest expense and the additional
$700,000 as amortization of deferred financing costs would presumably be
required to be included in the Borrower’s computation of interest and fixed
charge coverage ratios and could result in non-compliance with such financial
covenants.

     The Borrower does not believe that the 3-month difference in timing of this
transaction should alter the calculation of the financial covenants.
Furthermore, the Borrower does not believe that this non-recurring charge
materially impacts its leverage or affects its ability to meet its ongoing debt
service obligations. Accordingly, the Borrower is requesting that the Lenders
acknowledge and agree that, notwithstanding the Borrower’s termination of
Merrill Lynch’s remarketing option prior to March 16, 2005 and the
classification under GAAP of the related charges as described above, the
Borrower shall treat all such charges as a “loss on early extinguishment of
debt” rather than “interest expense” for purposes of computing its financial
covenants under the Credit Agreement as of December 31, 2004 and in future
periods as applicable. Please sign and return a copy of this letter to evidence
your acknowledgment and agreement, which shall be effective as of the date of
this letter.

 

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                                                      Thank you for your
response to this request.

                 
 
  Yours very truly,
 
               
 
  POST APARTMENT HOMES, L.P.
 
               
 
  By:   Post GP Holdings, Inc.,
 
      its Sole General Partner
 
               

      By:  /s/  Sherry W. Cohen    

         

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          Name:  Sherry W. Cohen    

          Title:  EVP    

Acknowledged and Agreed to:

                     
WACHOVIA BANK NATIONAL
ASSOCIATION, as Agent and as a Lender
  WELLS FARGO BANK, NATIONAL
     ASSOCIATION

 
 
                   
By:
/s/  Cathy A. Casey   By: /s/  John S. Misiura
 

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  Name:  Cathy A. Casey       Name:  John S. Misiura  

   

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  Title:  Director       Title:  Vice President

   

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SUNTRUST BANK
  AMSOUTH BANK
 
                   
By:
          By:        
 
 

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PNC BANK, NATIONAL ASSOCIATION
  JP MORGAN CHASE BANK, N.A.
 
               (formerly JP Morgan Chase Bank,
 
               for itself and as successor by
 
               merger to Bank One, NA)
 
                   
By: 
/s/ Wayne Robertson   By:  /s/ Susan M. Tate  
 

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  Name:  Wayne Robertson       Name:  Susan M. Tate

   

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  Title:  Senior Vice President       Title:  Vice President

   

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SOUTHTRUST BANK
 
                   
By: 
/s/ Cathy A. Casey            
 

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  Name:  Cathy A. Casey              

   

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  Title:  Director            

   

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FIRST COMMERCIAL BANK
 
                   
By:
                   
 

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