SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KFOR ANNUAL AND TRANSITION REPORTS 
   PURSUANT TO SECTIONS 13 OR 15(d)  
  OF THE SECURITIES EXCHANGE ACT OF 1934

[ X]
      ANNUAL REPORT
        PURSUANT TO SECTION 13 OR 15(d) OF THE 
        SECURITIES EXCHANGE ACT OF 1934For
          the Fiscal Year Ended December 31, 2002[   
        ]
      TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE 
        SECURITIES EXCHANGE ACT OF 1934


Commission File Number: 1-12590GABLES RESIDENTIAL TRUST(Exact name of Registrant as specified in its charter)

---

|Maryland(State or other jurisdiction of incorporation
          or organization) |                 | 58-2077868(I.R.S. employer identification no.)
|-------------------------------------------------------------------------------- | --------------- | ----------------------------------------------
|                                                                                
|777
          Yamato Road, Suite 510
          Boca Raton,  FL                  
|                                                                                 | 33431(Zip Code)
|(Address
          of principal executive offices)                               |                

Registrant's telephone number, including area code:
  (561) 997-9700

---

Securities registered pursuant to Section 12(b)
  of the Act:

|Title
          of Each ClassCommon Shares of Beneficial Interest, par
          value $0.01 per share |  | Name
          of Each Exchange on which RegisteredNew York Stock Exchange
|------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------

Securities registered pursuant to Section 12(g)
  of the Act: None

Indicate by check
  mark whether the Registrant: (1) has filed all reports required to
  be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
  during the preceding 12 months (or for such shorter period that the Registrant
  was required to file such reports), and (2) has been subject to such filing
  requirements for the past 90 days.

(1) Yes [X]
        No [   ](2) Yes [X]
        No [   ]


As of June 28, 2002, the aggregate market
  value of the 24,359,993 common shares held by non-affiliates of the Registrant
  was $777,814,576 based upon the closing price of $31.93 on the New York Stock
  Exchange composite tape on such date. (For this computation, the Registrant
  has excluded the market value of all common shares reported as beneficially
  owned by executive officers and trustees of the Registrant; such exclusion shall
  not be deemed to constitute an admission that any such person is an affiliate
  of the Registrant.) As of March 14, 2003, there were 24,493,262 common
  shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCEInformation contained in Gables' Proxy Statement
relating to its Annual Meeting of Shareholders to be held May 13, 2003 is
incorporated by reference in Part III, Items 10, 11, 12 and 13.

FORM 10-K ANNUAL REPORT
  FISCAL YEAR ENDED DECEMBER 31, 2002
  TABLE OF CONTENTS

|ItemNo. |  |                                                                                                    | PageNo.                  
|------- |  | -------------------------------------------------------------------------------------------------- | -------------------------
|PART I  | 
|        | 
|1.      |  | Business                                                                                           | 3                        
|2.      |  | Properties                                                                                         | 15                       
|3.      |  | Legal
      Proceedings                                                                            | 19                       
|4.      |  | Submission
      of Matters to a Vote of Security Holders                                          | 19                       
|        | 
|        | 
|PARTII  | 
|        |  |                                                                                                    |                          
|        |  |                                                                                                    |                          
|5.      |  | Market
      for Registrant's Common Equity and Related Shareholder Matters                        | 20                       
|6.      |  | Selected
      Financial and Operating Information                                                 | 20                       
|7.      |  | Management's
      Discussion and Analysis of Financial Condition and Results of Operations        | 23                       
|7A.     |  | Quantitative
      and Qualitative Disclosures About Market Risk                                   | 40                       
|8.      |  | Financial
      Statements and Supplementary Data                                                  | 41                       
|9.      |  | Changes
      in and Disagreements with Accountants on Accounting and Financial Disclosure         | 41                       
|        |  |                                                                                                    |                          
|        | 
|PARTIII | 
|        |  |                                                                                                    |                          
|        |  |                                                                                                    |                          
|10.     |  | Directors
      and Executive Officers of the Registrant                                           | 42                       
|11.     |  | Executive
      Compensation                                                                       | 42                       
|12.     |  | Security
      Ownership of Certain Beneficial Owners and Management                               | 42                       
|13.     |  | Certain
      Relationships and Related Transactions                                               | 42                       
|14.     |  | Controls
      and Procedures                                                                      | 43                       
|        | 
|PARTIV  | 
|        |  |                                                                                                    |                          
|        |  |                                                                                                    |                          
|15.     |  | Exhibits,
      Financial Statements and Schedule and Reports on Form 8-KSignatures Certifications | 44
        47 
        48

PART I

Unless the context
  otherwise requires, all references to "we," "our" or "us" in this
  report refer collectively to Gables Residential Trust ("Gables"), a Maryland
  real estate investment trust ("REIT") and its subsidiaries, including Gables
  Realty Limited Partnership, a Delaware limited partnership, considered as a
  single enterprise. Gables GP, Inc., a wholly-owned subsidiary of Gables Residential
  Trust, is the sole general partner of Gables Realty Limited Partnership.

ITEM 1.  BUSINESS
  We are a fully integrated real estate company
  engaged in the multifamily apartment community management, development, construction,
  acquisition and disposition businesses. We are a REIT formed in 1993 under Maryland
  law to continue and expand the apartment community operations of our privately
  owned predecessor organization. We completed our initial public offering on
  January 26, 1994. Our executive offices are located at 777 Yamato Road, Suite
  510, Boca Raton, Florida 33431, and our common shares are listed on the NYSE
  under the symbol GBP. Substantially all of our business is conducted through
  and all of our interests in property are held by or through Gables Realty Limited
  Partnership (the "Operating Partnership"). We control the Operating Partnership
  through Gables GP, Inc. ("Gables GP"), a wholly-owned subsidiary and the sole
  general partner of the Operating Partnership. This structure is commonly referred
  to as an umbrella partnership REIT or UPREIT. At December 31, 2002, we were
  an 80.8% economic owner of the common equity of the Operating Partnership.Business Objective and Strategies

Our objective is to increase
  shareholder value by producing consistent high quality earnings to sustain dividends
  and annual total returns that exceed the multifamily sector average. We
  use the National Association of Real Estate Investment Trusts ("NAREIT")
  Equity Residential REIT Total Return Index (the "NAREIT Apartment Index")
  as the benchmark for the multifamily sector average.   To achieve
  our objective, we employ a number of business strategies which are outlined
  below:

Investment Strategy. Our
  investment strategy is research-driven. In order to outperform the sector index,
  we seek to (1) invest in markets that have growth potential that exceeds the
  national average and (2) select markets that have complementary economic drivers
  so that our portfolio has less volatility than the national average. We believe
  that the success of a real estate investment is predicated on three basic factors:
  (1) macro-market fundamentals, (2) specific sub-market dynamics and (3) product
  decisions.

Our objective is to own a portfolio
  of high-quality assets in strategically selected markets that are complementary
  through economic diversity and characterized by high job growth and resiliency
  to national economic downturns. We believe such a portfolio will provide predictable
  operating cash flow performance that exceeds the national average on a sustainable
  basis.

Real estate is a cyclical business
  and, as a long-term owner and operator of apartment communities, we believe
  it is important to evaluate performance potential throughout various economic
  cycles. We also believe that job creation and household formation are key components
  of demand for apartment communities. Research has shown that certain markets
  in the United States create more jobs and are more resilient to national economic
  downturns than others. In addition, we believe that the industrial job base
  of various markets can provide economic diversity through portfolio allocation
  that, in turn, can reduce volatility in performance. These factors, along with
  other macro-demographic characteristics, have led us to identify markets in
  which to make real estate investments.

We believe that within a macro-market
  environment, apartment communities located in different sub-markets can have
  different economic performance, and that specific sub-market locations are the
  primary factor in determining the potential for investment returns to exceed
  macro-market results. Factors that differentiate specific sub-markets within
  a macro-market include, among other items, proximity to employment centers,
  entertainment and shopping, quality of education systems, availability of land
  that could be used to introduce new apartment communities and the local entitlement
  process. It is our belief that apartment communities located in close proximity
  to these areas and areas with high barriers to entry through lack of available
  land and/or difficult entitlement processes should produce economic performance
  that exceeds that of apartment communities in locations without those characteristics.
  We refer to our desired locations as Established Premium NeighborhoodsTM,
  or EPNs, as compared to suburban locations that lack many of these differentiating
  characteristics. A key component used to identify EPNs is the average cost per
  square foot for single family housing. We believe that the single family housing
  market is very efficient in pricing the quality of housing and the proximity
  of neighborhoods to employment centers, entertainment, shopping, and quality
  education systems. By identifying these highly desirable neighborhoods where
  people are spending the most on a per square foot basis to live, and targeting
  them for investment, we believe we can achieve economic performance from our
  apartment communities that exceeds macro-market results.

The third component of
  our investment strategy is product specific. Our target resident is the affluent
  renter-by-choice who desires a high quality apartment community in which to
  live. We perform and commission extensive market research in an effort to design
  apartment communities that meet the current and future desires of our target
  customers. In addition, we invest for the long term by acquiring and developing
  apartment communities with high quality construction materials and amenities.
  We believe that long-term maintenance and capital expenditure requirements are
  reduced by investing additional capital up front in apartment communities built
  with quality construction materials. This strategy reduces the volatility associated
  with our cash flow streams relative to our competitors. The timeless design
  and high quality of the product targeted to the affluent renter-by-choice also
  gives us a competitive advantage over many other apartment owners through our
  ability to sell assets to condominium converters at prices in excess of apartment
  valuations. We have received numerous local and national awards and recognition
  for the quality of our apartment communities.

In order to execute our
  investment strategy, we believe it is important to maintain a strong local presence
  in each of our markets. Through our local expertise, we stay abreast of current
  market conditions and can proactively adjust tactics in anticipation of changes
  in market fundamentals. In addition, we believe we have a competitive advantage
  over many other apartment community owners through the vertical integration
  of our organization. We have expertise in all facets of apartment community
  investment, including the disciplines of development, construction, acquisition
  and disposition. Since 1982, we have been involved in the development and construction,
  acquisition and disposition of approximately 35,000, 20,000 and 29,000 apartment
  homes, respectively.

Operating Strategy. We
  adhere to a strategy of owning and operating high quality, class AA/A apartment
  communities under the Gables brand. We believe that such communities, when located
  in EPNs and supplemented with high quality service and amenities, attract the
  affluent renter-by-choice who is willing to pay a premium for location preference,
  superior service and high quality communities. The resulting portfolio should
  maintain high occupancy levels and rental rates relative to overall market conditions.
  This, coupled with more predictable operating expenses and reduced capital expenditure
  requirements associated with high quality construction materials, should lead
  to operating margins that exceed national averages for the apartment sector
  and sustainable growth in operating cash flow.

We are continuing to pursue
  a long-standing strategy of brand name development by linking the "Gables" name
  to our communities. This strategy is intended to reinforce our reputation for
  excellent service and build recognition of our multifamily communities as a
  high quality, recognizable brand. We believe that increased consumer recognition
  of the "Gables" brand name in each of our markets enhances our ability to attract
  new residents, increases the markets' perception of our communities as high
  quality residential developments and enhances our relationships with local authorities.

We operate our communities
  to maximize sustainable cash flow growth and create long-term real estate value.
  This strategy is achieved by proactive marketing and leasing of apartment homes,
  providing the best possible resident service, generating economies of scale
  to lower expenses and maintaining our communities to the highest standards.
  We believe that excellent service and branding thereof will distinguish us from
  our competitors, retain current residents and attract new prospects.

We employ a number of operating
  strategies based on market fundamentals and prediction models in order to generate
  sustainable operating cash flow that exceeds the macro-market and our competitors.
  Our innovative web-based property management system provides real-time financial
  and marketing information for all of our communities, and effectively summarizes
  operating and marketing data critical for making accurate daily decisions. The
  system also compiles demographic profile information on prospective and current
  residents, allowing us to effectively target our customer base through our branding
  efforts. We also utilize the Internet extensively as a marketing tool to attract
  new customers through our award-winning web site at www.gables.com. All of our
  communities have high-speed internet access. Capturing and analyzing macro-market
  and EPN sub-market data through our sophisticated operating systems allows us
  to perform analyses via our proprietary prediction models. As a result of these
  analyses, we may choose an operating tactic for a particular market aimed at
  maximizing rental rate growth while increasing short-term vacancy exposure.
  In other scenarios, a focus on maximizing occupancy at the expense of rental
  rate growth may deliver the best operating cash flow results. We may also utilize
  different operating tactics for assets that are targeted for disposition in
  order to maximize the sales price based on current market underwriting conditions.
  These and other operating tactics are employed to maximize sustainable cash
  flow growth and create long-term real estate value for shareholders relative
  to our competitors.

Human Resources Strategy.
  Our aim is to be the employer of choice within the industry, with a mission
  of Taking Care of the Way People Live® . A cornerstone of our strategy
  involves innovative human resource practices that we believe will attract and
  retain the highest caliber associates. Because of our long-established presence
  as a fully integrated multifamily apartment management, development, construction,
  acquisition and disposition company within our markets, we have the ability
  to offer multi-faceted career opportunities among the various disciplines within
  the industry. Approximately 10% of our associates have tenure in excess of 10
  years. Average tenure for executive officers, vice presidents and regional managers,
  and property managers is over 12 years, 10 years and 5 years, respectively.
  We believe the experience, expertise and depth of our bench strength is a competitive
  advantage.

We believe our success with
  human resource strategies is primarily due to our empowerment of associates
  and our career development and training. The results of our business operations
  are ultimately based on a series of local decisions. As a result, we believe
  the best way to run our business is to equip the most qualified people to make
  the best possible decisions. By empowering associates to make decisions at a
  local level, we increase customer and associate satisfaction. We operate each
  of our apartment communities as a business unit. Property managers and other
  on-site associates are responsible for achieving economic goals associated with
  revenues, occupancy and expenses relative to their macro-market, in addition
  to maintaining assets to a high standard in order to ensure long-term success
  potential. Empowering associates with responsibility and encouraging decision
  making requires hiring the highest caliber associate and allocating extensive
  resources to training and career development.

We are committed to training
  at all levels within our organization, from newly hired associates to senior
  management. This commitment is aimed at ensuring the competitive advantage inherent
  in the expertise of our associates and deep bench strength, which facilitates
  succession planning at all levels. Our service-oriented philosophy is branded
  and reinforced through our college of career development, Gables University.
  This comprehensive training system established for our employees is overseen
  by full-time training coordinators and offers classes in a variety of different
  schools, such as the School of Leasing, the School of People Resources and the
  School of Maintenance Development. Additionally, there are "degree" programs
  which are completed with graduation ceremonies. Service is also reinforced with
  quarterly "I Made a Difference" recognition ceremonies, where personal achievement
  by associates is acknowledged by senior management in each of our markets. We
  believe recognition programs reinforce our culture and branding philosophy.

A key component to achieving
  our objectives is the alignment of interests between associates and shareholders.
  Share ownership is prevalent throughout our organization and includes property
  and maintenance managers as well as members of the board of trustees. Approximately
  40% of our associates have equity ownership in Gables, and therefore have their
  interests aligned with all other shareholders.

Capital Strategy.Real
  estate investments are capital intensive. As a result, capital allocation decisions
  significantly impact total return to shareholders. Our objective is to produce
  unleveraged internal rates of return ("IRRs") during our investment
  hold period that exceed our long-term weighted average cost of capital. An integral
  part of our capital strategy involves maintaining financial flexibility via
  a conservative balance sheet that is investment grade. We have investment grade,
  senior unsecured debt ratings from Moody's Investors Service and Standard and
  Poor's of Baa2 and BBB, respectively. Our Series C Preferred Shares are also
  investment grade rated by those firms at baa3 and BBB-, respectively. We believe
  our conservative credit profile provides security for shareholders and is a
  competitive advantage over companies without the financial flexibility associated
  with investment grade balance sheets.

Our attention to return
  on invested capital manifests itself through a very focused approach to managing
  our capital structure. We are able to recycle existing capital through asset
  dispositions, which allows us to re-deploy capital into investments with higher
  return potential. In certain situations, we may also capitalize on the arbitrage
  that exists between the private market valuation of our assets and a discounted
  public market valuation of our common shares by selling assets and repurchasing
  stock. We have access to capital through a variety of sources, including debt
  financing and borrowing, common equity, preferred equity and private equity
  via direct investment, in addition to internally generated equity through asset
  dispositions and retained cash flow.

Ancillary Business Strategy.We
  are involved in ancillary business lines which include third-party property
  management, development and construction, corporate rental housing and asset
  disposition brokerage services. Our expertise in these areas stems from our
  core competencies. In addition, we are innovative in identifying and capitalizing
  on new services desired by our residents that provide for increases in earnings
  and high returns on invested capital. Regular feedback from residents and our
  clients provides avenues for enhanced service and earnings potential.

As of December 31, 2002,
  we managed 83 multifamily communities for third parties and unconsolidated joint
  ventures, comprising approximately 24,052 apartment homes. These fee management
  contracts are maintained with a total of approximately 50 owners. In addition
  to contributing to earnings, engaging in fee management allows us to create
  economies of scale by leveraging our management operations costs and providing
  access to development and acquisition opportunities, as well as providing additional
  market knowledge.
         2002 Significant Events. Apartment
  fundamentals on a national basis deteriorated during 2002 as a result of the
  economic recession and associated job losses, coupled with low mortgage rates
  which resulted in an increase in home purchases by apartment residents. Reduced
  interest rates also contributed to a decline in the capitalization rates ("cap
  rates") used by investors to acquire apartments. These reduced cap rates
  resulted in very attractive asset disposition prices for apartments. We sold
  approximately $196 million of assets in 2002 including gross sales prices of
  $104 million for assets owned by joint ventures. Our share of the proceeds from
  these sales exceeded $100 million and generated gains to us of approximately
  $31 million or $1.01 per diluted share.
         Due to deteriorating fundamentals and relatively
  high asset valuations we did not acquire any operating apartment communities
  in 2002. In addition, we significantly scaled back our development activities.
  We only commenced construction on one new development in 2002; the second phase
  of a joint venture community in Tampa, in which we own a 20% interest. Our capital
  commitment to this venture for such development is less than $3 million.
         During 2002, we refinanced approximately
  $308 million of indebtedness and preferred capital in a series of transactions
  that served to reduce our weighted average cost of this capital by approximately
  1.0%.
         Effective with the fourth quarter of 2002,
  we adopted a policy of a monthly dividend on our common shares instead of a
  quarterly payment. This was done in anticipation of the demographic shift associated
  with the aging of the Baby Boomer generation. This change improves our relative
  total return, as well as aligns the timing of cash flow from dividends with
  the cash flow needs of investors who have monthly, not quarterly, expense obligations.
    
        Apartment Portfolio.As of December 
  31, 2002, we owned 74 stabilized multifamily apartment communities comprising
  20,422 apartment homes, an indirect 25% interest in one stabilized apartment
  community comprising 345 apartment homes, an indirect 20% interest in two stabilized
  apartment communities comprising 621 apartment homes, and an indirect 8.3% interest
  in three stabilized apartment communities comprising 1,118 apartment homes.
  We also owned nine multifamily apartment communities under development or in
  lease-up at December 31, 2002 that are expected to comprise 2,410 apartment
  homes upon completion and an indirect 20% interest in four apartment communities
  under development or in lease-up at December 31, 2002 that are expected to comprise
  967 apartment homes upon completion. In addition, as of December 31, 2002, we
  owned a parcel of land on which we intend to develop an apartment community
  that we currently expect will comprise an estimated 450 apartment homes. We
  also have rights to acquire additional parcels of land on which we believe we
  could develop communities. Any future development is subject to permits and
  other governmental approvals, as well as our ongoing business review, and may
  not be undertaken or completed.

Our apartment communities
  generate rental revenue and other income through the leasing of apartment homes
  to a diverse base of residents. We evaluate the performance of each of our apartment
  communities on an individual basis. However, because each of our apartment communities
  has similar economic characteristics, residents, and products and services,
  they have been aggregated into one reportable segment which comprises 93% of
  our total revenues for each of the three years in the period ended December
  31, 2002.

Management Structure.We have been responsible for the development or acquisition of approximately
  55,000 apartment homes since 1982 and our senior management team has, on average,
  in excess of 12 years experience in the multifamily industry. We provide a full
  range of integrated real estate services through a team of approximately 1,315
  associates who have expertise in property operations, development, construction,
  acquisition and disposition. We maintain offices in Atlanta, Austin, Boca Raton,
  Dallas, Houston, Tampa and Washington, D.C., each with its own fully integrated
  organization, including experienced in-house management, development, construction,
  acquisition and disposition teams with specific knowledge of the particular
  markets served. We believe that our competitive strength and growth potential
  lie in our in-depth knowledge of the changing opportunities available in each
  local market and in our locally focused management structure, which empowers
  highly experienced development, acquisition, and disposition personnel to pursue
  opportunities in each market and highly experienced on-site managers to make
  the day-to-day decisions needed to maximize the performance of our existing
  properties. Our finance and accounting functions are controlled by a central
  staff located in Atlanta.

Competitive Advantages.We
  believe that we have several competitive advantages that will assist us in achieving
  our objective of producing total returns that exceed the NAREIT Apartment Index.
  These advantages include:

| |  | A fully integrated organization:a
      fully integrated organization with a track record of approximately 20 years
      in all phases of real estate property management, development, construction,
      rehabilitation, acquisition, disposition, financing and marketing.                                                                                                       
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Strategic portfolio diversification:a
      research-driven strategy that has identified major markets for investment
      that are geographically independent, rely on diverse economic foundations,
      have generated and are projected to continue to generate job growth substantially
      above national averages and have shown resiliency to national economic downturns.
| |  |                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Product focus:a portfolio concentration
      of class AA/A apartment communities that are located primarily in Established
      Premium NeighborhoodsTM and are targeted toward the affluent renter-by-choice,
      and include garden, townhome and higher density apartment communities.                                                                                          
|
| |  | Local presence in multiple markets:an
      established local presence in each of our markets, which we serve through
      an experienced team of associates with superior knowledge of local markets
      and a culture based on empowerment which provides incentives for outstanding
      performance at all levels.                                                            
| |  |                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Technologically savvy:a sophisticated
      information technology system that is web-based and provides real-time information
      that leads to better decision making through extensive use of proprietary
      prediction models.                                                                                                                                               
|
| |  | Brand recognition:a service-oriented
      philosophy which focuses on offering extensive resident amenities and services
      in high quality apartment homes to increase occupancy, rental rates and
      net operating income.                                                                                                                                                   

The Operating Partnership

Structured as an UPREIT,
  the Operating Partnership is the entity through which we conduct substantially
  all of our business and own, either directly or indirectly through subsidiaries,
  all of our assets. As of December 31, 2002, we held directly, or indirectly
  through Gables GP, 80.8% of the common equity of the Operating Partnership.
  Through Gables GP, our wholly-owned subsidiary and the sole general partner
  of the Operating Partnership, we control the Operating Partnership. The board
  of directors of Gables GP, the members of which are the same as the members
  of our board of trustees, manages the affairs of the Operating Partnership by
  directing the affairs of the general partner of the Operating Partnership. Our
  limited partner and indirect general partner interests in the Operating Partnership
  entitle us to share in cash distributions from, and in the profits and losses
  of, the Operating Partnership in proportion to our economic interest and entitle
  us to vote on all matters requiring a vote of the limited partners.

Generally, the other limited
  partners of the Operating Partnership are persons who contributed their direct
  or indirect interests in certain real estate assets to the Operating Partnership
  primarily in connection with the IPO and the acquisition of Trammell Crow Residential
  South Florida. The Operating Partnership is obligated to redeem each common
  unit of limited partnership interest ("Unit") held by a person other than us,
  at the request of the holder, for an amount equal to the fair market value of
  one of our common shares at the time of redemption, provided that we, at our
  option, may elect to acquire each Unit presented for redemption for one common
  share or cash. With each redemption, our percentage ownership interest in the
  Operating Partnership will increase. In addition, whenever we issue common shares
  or preferred shares, we are obligated to contribute any net proceeds to the
  Operating Partnership, and the Operating Partnership is obligated to issue an
  equivalent number of common or preferred units with substantially identical
  rights as the common or preferred shares, as applicable, to us.

We may cause the Operating
  Partnership to issue additional Units to acquire land parcels for the development
  of apartment communities or operating apartment communities in transactions
  that in certain circumstances defer some or all of the sellers tax consequences.
  We believe that many potential sellers of multifamily apartment communities
  have a low tax basis in their properties and would be more willing to sell the
  properties in transactions that defer federal income taxes. Offering Units instead
  of cash for properties may provide potential sellers partial federal income
  tax deferral.

The Management Company

Our fee management operations
  are conducted through Gables Residential Services, Inc., a wholly-owned subsidiary
  of the Operating Partnership. Gables Residential Services also provides other
  services to third parties, including construction, corporate rental housing
  and brokerage. A portion of these services are, or may also be, provided by
  the Operating Partnership directly, to the extent consistent with the gross
  income requirements for REITs under the Internal Revenue Code (the "Code").

Competition

All of our communities are
  located in developed areas that include other apartment communities. The number
  of competitive multifamily communities in a particular area could have a material
  effect on our ability to lease apartment homes at our present communities or
  any newly developed or acquired community, as well as on the rents charged.
  We may be competing for development and acquisition opportunities with others
  that have greater resources than we do, including other REITs. In addition,
  our communities must compete for residents against new and existing homes and
  condominiums. The home affordability index in all of our markets is above the
  national average. This competitive environment is partially offset by the propensity
  to rent for households in our markets which in all cases exceeds the national
  average.

The fee management business
  is highly competitive, and we face competition from a variety of local, regional
  and national firms. We compete against these firms by stressing the quality
  and experience of our employees, the services provided by us, and the market
  presence and experience we have developed over the past 20 years. We may nevertheless
  lose some of our third party management business, particularly when such properties
  are sold. Environmental and Related Matters

Under various federal, state
  and local environmental laws, ordinances and regulations, a current or previous
  owner or operator of real estate may be required, regardless of knowledge or
  responsibility, to investigate and remediate the effects of hazardous or toxic
  substances or petroleum product releases at such property, and may be held liable
  to a governmental entity or to third parties for property damage and for investigation
  and remediation costs incurred by such parties as a result of the contamination. 
  The cost of investigation, remediation or removal of such substances may be
  substantial, and the presence of such substances, or the failure to properly
  remediate the contamination on such property, may adversely affect the owner's
  ability to borrow against, sell or rent such property. In addition, some environmental
  laws create a lien on the contaminated site in favor of the government for damages
  and costs it incurs as a result of the contamination. Finally, the owner or
  operator of a site may be subject to common law claims by third parties based
  on damages and costs resulting from environmental contamination emanating from
  a site. In connection with the ownership, operation, management and development
  of our communities and other real estate assets, we may be potentially liable
  for such damages and costs.

Certain federal, state and
  local laws, ordinances and regulations govern the removal, encapsulation and
  disturbance of asbestos-containing materials ("ACMs") when such materials are
  in poor condition or in the event of reconstruction, remodeling, renovation
  or demolition of a building. Such laws, ordinances and regulations may impose
  liability for release of ACMs and may provide for third parties to seek recovery
  from owners or operators of real estate assets for personal injury associated
  with exposure to ACMs. In connection with the ownership, operation, management
  and development of our communities and other real estate assets, we may be potentially
  liable for such costs.

In addition, studies have
  linked radon, a naturally-occurring substance, to increased risks of lung cancer.
  While there are currently no state or federal requirements regarding the monitoring
  for, presence of, or exposure to radon in indoor air, the U.S. Environmental
  Protection Agency ("EPA") and the Surgeon General recommend testing
  residences for the presence of radon in indoor air, and the EPA further recommends
  that concentrations of radon in indoor air be limited to less than 4 picocuries
  per liter of air (the "Recommended Action Level").  The presence of radon
  in concentrations equal to or greater than the Recommended Action Level in a community
  may adversely affect our ability to rent apartment homes in that community and
  the market value of the community.Finally, federal legislation requires owners
  and landlords of residential housing constructed prior to 1978 to disclose to
  potential residents or purchasers any known lead-paint hazards and will impose
  treble damages for failure to so notify. In addition, lead-based paint in any
  of our communities may result in lead poisoning in children residing in that
  community if chips or particles of such lead-based paint are ingested, and we
  may be held liable under state laws for any such injuries caused by ingestion
  of lead-based paint by children living at our communities.
        Our assessments of our communities have
  not revealed, and we are not otherwise aware of, any environmental conditions
  that we believe would have a material adverse effect on our business, assets,
  financial condition or results of operations. Nevertheless, it is possible that
  our assessments do not reveal all environmental liabilities or that there are
  material environmental liabilities of which we are unaware. Moreover, there
  can be no assurance that (1) future laws, ordinances or regulations will
  not impose any material environmental liability, or (2) the current environmental
  condition of our communities will not be affected by residents, the condition
  of land or operations in the vicinity of the real estate assets, such as the
  presence of underground storage tanks, or the actions of third parties unrelated
  to us.

We believe that no ACMs
  were used in connection with the construction of our communities or will be
  used in connection with future construction. Our environmental assessments have
  revealed the presence of "potentially friable" ACMs at two of our communities.
  We have programs in place to maintain and monitor ACMs. We believe our communities
  are in compliance in all material respects with all federal, state and local
  laws, ordinances and regulations regarding hazardous or toxic substances or
  petroleum products. We have not been notified by any governmental authority
  and are not otherwise aware of any material non-compliance, liability or claim
  relating to hazardous or toxic substances or petroleum products in connection
  with any of our present properties that would involve substantial expenditure,
  and we do not believe that compliance with applicable environmental laws or
  regulations will have an adverse material effect on us, our financial condition
  or results of operations.
         Mold growth may occur when excessive moisture
  accumulates in buildings or on building materials, particularly if the moisture
  issue remains undiscovered or is not addressed over a period of time. 
  Although the occurrence of mold at multifamily and other structures, and the
  need to remediate such mold, is not uncommon, there has been increased awareness
  in recent years that certain molds may, in some instances, lead to adverse health
  effects, including allergic or other reactions.  To help limit mold growth,
  we educate residents about the importance of adequate ventilation and request
  or require that they notify us when they see mold or excessive moisture. 
  We have established procedures for promptly addressing and remediating mold
  or excessive moisture from apartment homes when we become aware of its presence
  regardless of whether we or the resident believe a health risk is presented. 
  However, we cannot assure that mold or excessive moisture will be detected and
  remediated in a timely manner.  If a significant mold problem arises at
  one of our communities, we could be required to undertake a costly remediation
  program to contain or remove the mold from the affected community and could
  be exposed to other liabilities. Costs of Compliance with Americans with Disabilities
  Act and Similar Laws

Under the Americans with
  Disabilities Act of 1990 (the "ADA"), all places of public accommodation are
  required to meet certain federal requirements related to access and use by disabled
  persons. These requirements became effective in 1992. We believe that our communities
  are substantially in compliance with present requirements of the ADA as they
  apply to multifamily dwellings. A number of additional federal, state and local
  laws exist which also may require modifications to our communities or regulate
  certain further renovations with respect to access by disabled persons. For
  example, the Fair Housing Amendments Act of 1988 (the "FHAA") requires apartment
  communities first occupied after March 13, 1990 to be accessible to the
  handicapped. Non-compliance with the FHAA could result in the imposition of
  fines or an award of damages to private litigants. We believe that our communities
  that are subject to the FHAA are substantially in compliance with this law.

Additional legislation may
  impose further burdens or restrictions on owners with respect to access by disabled
  persons. The ultimate amount of the cost of compliance with the ADA or related
  legislation is not currently ascertainable, and while these costs are not expected
  to have a material effect on us, they could be substantial. Limitations or restrictions
  on the completion of certain renovations may limit application of our investment
  strategy in certain instances or reduce overall returns on our investments.

Insurance

We carry comprehensive liability,
  fire, extended coverage and rental loss insurance with respect to all of our
  completed communities, with policy specifications, insured limits and deductibles
  customarily carried for similar properties. We carry similar insurance with
  respect to our development properties, but with certain appropriate exceptions
  given the undeveloped nature of these properties. There are, however, certain
  types of losses, such as losses arising from acts of war, that are not generally
  insured because they are either uninsurable or not economically insurable. Should
  an uninsured loss or a loss in excess of insured limits occur, we could lose
  our capital invested in a particular property as well as the anticipated future
  revenues from the property and would continue to be obligated on any mortgage
  indebtedness or other obligations related to the property. Any uninsured loss
  or loss in excess of insured limits would adversely affect us.

We cannot
  assure that we will have full coverage under our existing policies for property
  damage or liabilities to third parties arising as a result of exposure to mold
  or a claim of exposure to mold at a particular property.  See the discussion
  under "Environmental and Related Matters" above.Employees

We provide a full range
  of real estate services through a staff of approximately 1,315 employees, including
  an experienced management team. There are no collective bargaining agreements
  with any of our employees. We believe relations with our employees are excellent.

Tax Matters

We have elected to be taxed
  as a REIT under the Code. To qualify as a REIT, we must meet a number of organizational
  and operational requirements, including a requirement that we currently distribute
  at least 90% of the REIT's ordinary taxable income to shareholders. It is our
  current intention to adhere to these requirements and maintain our REIT status.
  As a REIT, we generally will not be subject to federal income tax on distributed
  taxable income. Even if we qualify as a REIT, we may be subject to certain state
  and local taxes on our income and real estate assets, and to federal income
  and excise taxes on our undistributed taxable income.
         We utilize Gables Residential Services,
  a taxable REIT subsidiary, to provide management and other services to third
  parties that a REIT may be prohibited from providing. Taxable REIT subsidiaries
  are subject to federal, state and local income taxes.

Policies with Respect to Significant Business
  Activities

The following is a discussion
  of our investment, financing and other significant policies. These policies
  have been established by our board of trustees and may be amended or revised
  from time to time by the board of trustees without a vote of the shareholders,
  except that (1) we cannot change our policy of holding assets and conducting
  business only through the Operating Partnership, Gables Residential Services
  and other permitted subsidiaries without the consent of the holders of Units
  as provided in the partnership agreement of the Operating Partnership, (2) changes
  in policies with respect to conflicts of interest must be consistent with legal
  requirements, and (3) we cannot take any action intended to terminate our qualification
  as a REIT without the approval of the holders of two-thirds of our common shares.
        Investment Policies.We conduct all
  of our investment activities through the Operating Partnership and its subsidiaries.
  Our investment objectives are to provide monthly cash distributions and achieve
  long-term capital appreciation through increases in our value. We may purchase
  income-producing multifamily apartments or other types of properties for long-term
  investment, expand and improve the communities presently owned or other properties
  purchased, or sell communities or other properties, in whole or in part, when
  circumstances warrant. We may also participate with third parties in apartment
  community ownership through joint ventures or other types of co-ownership. Equity
  investments may be subject to existing mortgage financing and other indebtedness
  or financing or indebtedness incurred in connection with acquiring or refinancing
  these investments. Debt service on such financing or indebtedness will have
  a priority over common shares and any distributions thereon.
        While we emphasize equity real estate investments
  in multifamily apartment communities, we may, at the discretion of the board
  of trustees, invest in other types of equity real estate investments and mortgages,
  including participating or convertible mortgages and other real estate interests.
  We currently intend to invest in apartment communities in specifically identified
  markets. However, future development or investment activities will not be limited
  to any geographic area or product type or to a specified percentage of our assets.
  We will not have any limit on the amount or percent of our assets invested in
  one property. Subject to certain customary covenants associated with our unsecured
  debt financing and the percentage of ownership limitations and gross income
  and asset tests necessary for REIT qualification, we may also invest in securities
  of other REITs, other entities engaged in real estate activities or which provide
  services to the real estate industry, or securities of other issuers, including
  for the purpose of exercising control over such entities. We may enter into
  joint ventures or partnerships for the purpose of obtaining an equity interest
  in a particular property in accordance with our investment policies. These investments
  may permit us to own interests in larger assets without unduly restricting diversification
  and, therefore, add flexibility in structuring our portfolio. We will not enter
  into a joint venture or partnership to make an investment that would not otherwise
  meet our investment policies. Investment in these securities is also subject
  to our policy not to be treated as an investment company under the Investment
  Company Act of 1940.

Financing Policies. Our
  debt to total market capitalization ratio, defined as our total consolidated
  debt as a percentage of the December 31, 2002 market value of our outstanding
  common shares and Units plus total consolidated debt and preferred shares and
  Units at liquidation value, was 53.0% at December 31, 2002. Excluding construction-related
  indebtedness, this ratio was 49.4% at December 31, 2002. This ratio will fluctuate
  with changes in the market price of our common shares and the number of outstanding
  common shares and Units or other forms of shares or Units of beneficial interest,
  and differs from the debt-to-book capitalization ratio, which is based upon
  book values. This percentage will increase as we use financing to continue construction
  of our development communities and acquire additional multifamily apartment
  communities. As the debt-to-book capitalization ratio may not reflect the current
  income potential of a company's assets and operations, we believe that, in most
  circumstances, the debt to fair market value ratio may provide an alternate
  indication of leverage for a company whose assets are primarily income-producing
  real estate and should be evaluated along with the debt service coverage and
  underlying components of indebtedness. Estimates of the fair market value of
  our assets are not always readily available through public channels due to the
  inherent complexity associated with valuing each of our assets. During time
  periods when the public valuation of equity securities is in-line with the private
  valuation of real estate assets, the debt to total market capitalization ratio
  may provide an alternative indication of leverage for a company whose assets
  are primarily income-producing real estate and could be evaluated along with
  the debt service coverage and underlying components of indebtedness.
           We currently have a policy
  of incurring debt only if the ratio of debt to total market capitalization (assuming
  total market capitalization and fair market value of our assets are in-line)
  would be 60% or less. Our declaration of trust and bylaws do not, however, limit
  the amount or percentage of indebtedness that we may incur. In addition, we
  may from time to time modify our debt policy in light of current economic conditions,
  relative costs of debt and equity capital, market values of our communities,
  general conditions in the market for debt and equity securities, fluctuations
  in the market price of common shares, growth opportunities and other factors.
  Accordingly, we may increase our debt to total market capitalization ratio beyond
  the limits described above. To the extent that the board of trustees decides
  to obtain additional capital, we may raise capital through asset dispositions,
  additional equity offerings, debt financings or retention of cash flow as allowable
  under the Code in order to maintain REIT tax status, or a combination of these
  methods. We presently anticipate that any additional borrowings would be made
  through the Operating Partnership, although we might incur indebtedness, the
  proceeds of which would be loaned to the Operating Partnership. Borrowings may
  be unsecured or may be secured by any or all of our assets, the Operating Partnership
  or any existing or new property owning partnership, and may have full or limited
  recourse to all or any portion of our assets, the Operating Partnership or any
  existing or new property owning partnership. Indebtedness incurred by us may
  be in the form of bank borrowings, tax-exempt bonds, purchase money obligations
  to sellers of apartment communities or other properties, publicly or privately
  placed debt instruments or financing from institutional investors or other lenders.
  The proceeds from any of our borrowings may be used for working capital to refinance
  existing indebtedness and to finance acquisitions, expansions or development
  of new communities and other properties, and for the payment of distributions.
  We have not established any limit on the number or amount of mortgages that
  may be placed on any single property or on our portfolio as a whole.
          We currently have a senior unsecured
  debt rating of BBB from Standard and Poor's and Baa2 from Moody's Investors
  Service. Our Series C Preferred Shares currently have a rating of BBB- from
  Standard and Poor's and baa3 from Moody's Investors Service.  We intend
  to adhere to financing policies that will allow us to maintain these investment
  grade credit ratings.

Conflict of Interest
  Policies.As part of their employment agreements, each of Chris Wheeler
  (Chairman, President and Chief Executive Officer), Marvin Banks (Senior Vice
  President and Chief Financial Officer), David Fitch (Senior Vice President and
  Chief Investment Officer) and Mike Hefley (Senior Vice President and Chief Operating
  Officer) is bound by a non-competition covenant. These non-competition covenants
  provide that, during the term of employment and for a period of one year following
  termination of employment, under certain circumstances, each individual is prohibited
  from directly or indirectly competing with us with respect to any multifamily
  apartment community management, development, construction, acquisition or disposition
  activities undertaken or being considered by us. These employment agreements
  also contain certain non-solicitation covenants wherein each individual subject
  to the agreement is prohibited, during the term of employment and for a period
  of one year following employment, from directly or indirectly (1) soliciting
  or inducing any of our present or future employees to accept employment with
  such individual or any person or entity associated with such individual, (2)
  employing, or causing any person or entity associated with such individual to
  employ, any of our present or future employees without providing us prior written
  notice of such proposed employment, or (3) either for himself or for any other
  person or entity, competing for or soliciting the third party owners with whom
  we have an existing property management agreement. The employment agreements
  for Mr. Wheeler, Mr. Banks and Mr. Hefley terminate on January 1, 2004, and
  the employment agreement for Mr. Fitch terminates in February 2004. These agreements
  are automatically extended for additional one-year periods unless notice is
  given by us or the employee three months prior to the agreement's expiration
  that the agreement will not be renewed.
        In addition, members of our board of trustees
  as well as officers ("Senior Management") are bound by a conflict of interest
  policy which narrowly focuses on business activities of Senior Management which
  may compete directly with our business in the multifamily sector. Under this
  policy, Senior Management must refrain from engaging in activities such as serving
  as a director, trustee, officer, employee, partner, consultant, agent, investor,
  lender, or a significant financial stakeholder in an enterprise that engages,
  or proposes to engage in the acquisition, development, management, ownership,
  operation or disposition of multifamily apartment communities in any market
  in which we are currently present or contemplating entering.

Senior Management may engage
  in certain permissible competitive activities, although potentially competitive
  with us. These activities which are similar to the activities described in the
  preceding paragraph, include any proposed activity that is fully disclosed to
  and approved by the chairman of the board, any proposed activity which involves
  either fewer than 30 residential units or a total value of less than $3.0 million,
  and relates to a property that is not located within a five mile radius of our
  existing or proposed properties, and any activity by a trustee, if such activity
  is an incidental or non-recurring part of the regular duties and responsibilities
  associated with his or her employment.

We have adopted a policy
  that, without the approval of a majority of our board of trustees who are neither
  officers nor affiliated with us, we will not (1) acquire from or sell to any
  trustee, officer or employee or any entity in which a trustee, officer or employee
  of our company beneficially owns more than a 1% interest, or acquire from or
  sell to any affiliate of any of the foregoing, any of our assets or other property,
  (2) make any loan to or borrow from any of the foregoing persons, or (3) engage
  in any other transaction with any of the foregoing persons.Other Information       Our annual reports on Form 10-K, quarterly
  reports on Form 10-Q, current reports on Form 8-K, including exhibits, and amendments
  to those reports filed or furnished pursuant to the Securities Exchange Act
  of 1934, are available free of charge in the "SEC Filings" section
  of our website located at http://www.gables.com, as soon as reasonably practicable
  after the reports are filed with or furnished to the Securities and Exchange
  Commission.

Risk Factors

Before you invest in
  our securities, you should be aware that there are various risks, including
  those described below. You should consider carefully these risk factors together
  with all of the information included or incorporated by reference in this document
  before you decide to purchase our securities. This section includes certain
  forward-looking statements.
      Development and construction risks could impact our
  profitability.We intend to continue to develop and construct multifamily
  apartment communities. Our development activities may be exposed to the following
  risks: We may be unable to obtain, or face delays
      in obtaining, necessary zoning, land-use, building, occupancy, and other
      required governmental permits and authorizations, which could result in
      increased costs and could require us to abandon our activities entirely
      with respect to the project for which we are unable to obtain permits or
      authorizations;
  We may abandon development opportunities that
      we have already begun to explore and as a result we may fail to recover
      expenses already incurred in connection with exploring such development
      opportunities;
  Occupancy rates and rents at a newly completed
      development community may fluctuate depending on a number of factors, including
      market and economic conditions, and may result in the community not being
      profitable;

We may not be able to obtain financing with
      favorable terms for the development of a community, which may make us unable
      to proceed with its development; and

We may be unable to complete construction and
      lease-up of a community on schedule, resulting in increased debt service
      expense and construction costs.

Acquisitions
  may not yield anticipated results.We intend to continue
  to acquire multifamily apartment communities on a select basis. Our acquisition
  activities and their success may be exposed to the following risks:

- The acquired community may fail to perform
      as we expected in analyzing our investment; and
- Our estimate of the costs of any necessary
      repositioning or redeveloping the acquired community may prove inaccurate.

Policy of limiting
  debt level may be changed.While our current policy is not to incur debt
  that would make our ratio of debt to total market capitalization (assuming total
  market capitalization and fair market value of our assets are in-line) greater
  than 60%, our declaration of trust and bylaws do not contain any such limitations.
  Our ratio of debt to total market capitalization as of December 31, 2002 was
  53%. Because we do not have any debt incurrence restrictions in our declaration
  of trust or bylaws, we could increase the amount of outstanding debt at any
  time. In the event that the price of our common shares increases, we could incur
  additional debt without increasing the ratio of debt to total market capitalization
  and without a concurrent increase in our ability to service such additional
  debt.

Incurrence of additional
  debt and related issuance of equity may be dilutive to shareholders.Future
  issuance of equity may dilute the interest of existing shareholders. To the
  extent that additional equity securities are issued to finance future developments
  and acquisitions instead of incurring additional debt, the interests of our
  existing shareholders could be diluted. Our ability to execute our business
  strategy depends on our access to an appropriate blend of debt financing, including
  unsecured lines of credit and other forms of secured and unsecured debt, and
  equity financing, including common and preferred equity.

Insufficient cash
  flow could affect our debt financing and create refinancing risk.We are
  subject to the risks normally associated with debt financing, including the
  risk that our cash flow will be insufficient to meet required payments of principal
  and interest. We anticipate that only a small portion of the principal of our
  debt will be repaid prior to maturity. Although we may be able to use cash flow
  to make future principal payments, we cannot assure you that sufficient cash
  flow will be available to make all required principal payments. Therefore, we
  are likely to need to refinance at least a portion of our outstanding debt as
  it matures. There is a risk that we may not be able to refinance existing debt
  or that the terms of any refinancing will not be as favorable as the terms of
  the existing debt.

Rising interest
  rates would increase interest costs and could affect the market price of our
  securities.We expect to incur variable-rate debt under credit facilities
  and other interim financing vehicles in connection with the acquisition, construction
  and renovation of multifamily apartment communities in the future, as well as
  for other purposes. In addition, we have tax-exempt bonds, as described more
  fully below, that bear interest at a variable rate.  Accordingly, if interest
  rates increase, so will our interest costs to the extent the variable rate increase
  is not hedged effectively. In addition, an increase in market interest rates
  may lead purchasers of our securities to demand a higher annual yield, which
  could adversely affect the market price of our outstanding securities.

Interest rate
  hedging contracts may involve material changes and may not provide adequate
  protection.From time to time, when we anticipate offerings of debt securities,
  we may seek to decrease our exposure to fluctuations in interest rates during
  the period prior to the pricing of the securities by entering into interest
  rate hedging contracts. We may do so to increase the predictability of our financing
  costs. Also, from time to time, we rely on interest rate hedging contracts to
  offset our exposure to moving interest rates with respect to debt financing
  arrangements at variable interest rates. The settlement of interest rate hedging
  contracts has in the past and may in the future involve charges to earnings
  that may be material in amount. Such charges are typically driven by the extent
  and timing of fluctuations in interest rates. Despite our efforts to minimize
  our exposure to interest rate fluctuations, there is no guarantee that we will
  be able to maintain our hedging contracts at their existing levels of coverage
  or that the amount of coverage maintained will cover all of our outstanding
  indebtedness at any such time. If our efforts are unsuccessful, we may not meet
  our objective of reducing the extent of our exposure to interest rate fluctuations.

Bond compliance requirements
  could limit income and restrict use of communities and cause favorable financing
  to become unavailable.Some of our multifamily apartment communities are
  financed with obligations issued by various local government agencies or instrumentalities,
  the interest on which is exempt from federal income taxation. These obligations
  are commonly referred to as "tax-exempt bonds." The bond compliance requirements
  for our current tax-exempt bonds, and the requirements of any future tax-exempt
  bond financing, may have the effect of limiting our income from communities
  subject to such financing. Under the terms of our tax-exempt bonds, we must
  comply with various restrictions on the use of the communities financed by such
  bonds, including a requirement that a percentage of apartments be made available
  to low and middle income households. In addition, some of our tax-exempt bond
  financing documents require that a financial institution guarantee payment of
  the principal of, and interest on, the bonds. The guarantee may take the form
  of a letter of credit, surety bond, guarantee agreement or other additional
  collateral. If the financial institution defaults in its guarantee obligations,
  or we are unable to renew the applicable guarantee or otherwise post satisfactory
  collateral, a default will occur under the applicable tax-exempt bonds and the
  community could be foreclosed upon.

Failure to generate
  sufficient revenue could limit cash flow available for distributions to shareholders.If
  our communities do not generate revenues sufficient to meet our operating expenses,
  including debt service and capital expenditures, our cash flow and ability to
  pay distributions to our shareholders will be adversely affected. The following
  factors, among others, may adversely affect the revenues generated by our apartment
  communities:

- the national and local economic climates;
- local real estate market conditions, such as oversupply of
    apartment homes;
- the perceptions by prospective residents of the safety, convenience
    and attractiveness of our communities and the neighborhoods where they are
    located;
- our ability to provide adequate management, maintenance and
    insurance; and
- increased operating costs including real estate taxes and
    insurance.

Significant expenditures
  associated with each investment such as debt service payments, if any, real
  estate taxes, insurance and maintenance costs are generally not reduced when
  circumstances cause a reduction in income from a community. For example, if
  we mortgage a community to secure payment of debt and are unable to meet the
  mortgage payments, we could sustain a loss as a result of foreclosure on the
  community or the exercise of other remedies by the mortgagee.

Unfavorable changes in
  market and economic conditions could hurt occupancy or rental rates.The
  market and economic conditions in metropolitan areas of our current markets
  in the United States may significantly affect apartment home occupancy or rental
  rates. Occupancy and rental rates in those markets, in turn, may significantly
  affect our profitability and our ability to satisfy our financial obligations.
  The risks that may affect conditions in those markets include the following:

- the economic climate which may be adversely
      impacted by plant closings, industry slowdowns and other factors;
- real estate conditions such as an oversupply
      of, or a reduced demand for, apartment homes;
- decline in household formation that adversely
      affects occupancy or rental rates;
- the inability or unwillingness of residents
      to pay rent increases;
- the potential effect of rent control or rent
      stabilization laws, or other laws regulating housing, on any of our communities,
      which could prevent us from raising rents to offset increases in operating
      costs; and
- the rental market which may limit the extent
      to which rents may be increased to meet increased expenses without decreasing
      occupancy rates.

Any of these risks could
  adversely affect our ability to achieve our desired yields on our communities
  and to make expected distributions to shareholders. Difficulty
  of selling apartment communities could limit flexibility.Real estate in
  metropolitan areas of the United States can be hard to sell, especially if market
  conditions are poor. This may limit our ability to change our portfolio promptly
  in response to changes in economic or other conditions. In addition, federal
  tax laws limit our ability to sell communities that we have owned for fewer
  than four years, and this may affect our ability to sell communities without
  adversely affecting returns to our shareholders.

Increased competition
  and low mortgage interest rates could limit our ability to lease apartment homes
  or increase or maintain rents.Our apartment communities in metropolitan
  areas compete with numerous housing alternatives in attracting residents, including
  other rental apartments and single-family homes that are available for rent,
  as well as new and existing single-family homes for sale. Competitive residential
  housing in a particular area or housing alternatives that are made competitive
  by a low mortgage interest rate environment could adversely affect our ability
  to lease apartment homes and to increase or maintain rents.
         Significant new operations and acquired
  communities under management require integration with the existing business
  and, if not properly integrated, could create inefficiencies.Our ability
  to manage growth effectively will require us, among other things, to successfully
  apply our experience in managing our existing portfolio of multifamily apartment
  communities to a larger number of assets. In addition, we must be able to successfully
  manage the integration of new management and operations personnel as our organization
  grows in size and complexity.
        Failure to succeed in new markets may
  limit growth.We may make selected acquisitions outside of our current market
  areas from time to time, if appropriate opportunities arise. Our historical
  experience in our current markets located in the United States does not ensure
  that we will be able to operate successfully in other market areas new to us.
  We may be exposed to a variety of risks if we choose to enter into new markets.
  These risks include, among others:

- a lack of market knowledge and understanding
      of the local economies;
- an inability to obtain land for development
      or to identify acquisition opportunities;
- an inability to obtain construction tradespeople;
      and
- an unfamiliarity with local governmental and
      permitting procedures.

Decrease of fee management
  business would result in decrease in revenues.We manage properties owned
  by third parties for a fee. Most of our management contracts are terminable
  upon 30-days notice. There is a risk that the management contracts will be terminated
  and/or that the rental revenues upon which management fees are based will decline
  and management fee income will decrease accordingly.
        Share ownership limit may prevent takeovers
  beneficial to shareholders.For us to maintain our qualification as a REIT
  for federal income tax purposes, not more than 50% in value of our outstanding
  shares of beneficial interest may be owned, directly or indirectly, by five
  or fewer individuals. As defined for federal income tax purposes, the term "individuals"
  includes a number of specified entities. Our declaration of trust includes restrictions
  regarding transfers of our shares of beneficial interest and ownership limits
  that are intended to assist us in satisfying such limitations. The ownership
  limit may have the effect of delaying, deferring or preventing someone from
  taking control of us, even though such a change of control could involve a premium
  price for our shareholders or otherwise could be in our shareholders' best interests.
        Limits on changes in control may discourage
  takeover attempts beneficial to shareholders.Our declaration of trust, our
  bylaws and Maryland law may have the effect of discouraging a third party from
  attempting to acquire us which makes a change in control more unlikely. The
  result may be a limitation on the opportunity for shareholders to receive a
  premium for their common shares over then-prevailing market prices.
        Compliance or failure to comply with
  Americans with Disabilities Act and other similar laws could result in substantial
  costs.The ADA generally requires that public accommodations, including
  office buildings and hotels be made accessible to disabled persons. Noncompliance
  could result in imposition of fines by the federal government or the award of
  damages to private litigants. If, pursuant to the ADA, we are required to make
  substantial alterations and capital expenditures in one or more of our properties,
  including the removal of access barriers, it could adversely affect our financial
  condition and results of operations, as well as the amount of cash available
  for distribution to our shareholders.
        A number of additional federal, state and
  local laws exist that impact our communities with respect to access thereto
  by disabled persons. For example, the FHAA requires that apartment communities
  first occupied after March 13, 1990 be accessible to the handicapped. Noncompliance
  with the FHAA could result in the imposition of fines or an award of damages
  to private litigants.
        We cannot predict the ultimate cost of compliance
  with the ADA or other similar legislation. The costs could be substantial.
        Failure to qualify as a REIT would cause
  us to be taxed as a corporation which would significantly lower cash available
  for distributions to shareholders.If we fail to qualify as a REIT
  for federal income tax purposes, we will be taxed as a corporation. We believe
  that we are organized and qualified as a REIT and intend to operate in a manner
  that will allow us to continue to qualify. However, we cannot assure you that
  we are qualified as such, or that we will remain qualified as such in the future.
  This is because qualification as a REIT involves the application of highly technical
  and complex provisions of the Code as to which there are only limited judicial
  and administrative interpretations, and involves the determination of various
  factual matters and circumstances not entirely within our control. In addition,
  future legislation, new regulations, administrative interpretations or court
  decisions may significantly change the tax laws or the application of the tax
  laws with respect to qualification as a REIT for federal income tax purposes
  or the federal income tax consequences of such qualification.
        If, in any taxable year, we fail to qualify
  as a REIT, we will be subject to federal income tax on our taxable income at
  regular corporate rates, plus any applicable alternative minimum tax. In addition,
  unless we are entitled to relief under applicable statutory provisions, we would
  be disqualified from treatment as a REIT for the four taxable years following
  the year in which we lose our qualification. The additional tax liability resulting
  from the failure to qualify as a REIT would significantly reduce or eliminate
  the amount of cash available for distributions to our shareholders. Furthermore,
  we would no longer be required to make distributions to our shareholders.
       Potential liability for environmental contamination
  and related matters could result in substantial costs.We are in the business
  of acquiring, owning, operating and developing real estate assets. From time
  to time we will sell to third parties some of our assets. Under various federal,
  state and local environmental laws, we may be required, often regardless of
  our knowledge or responsibility but solely because of our current or previous
  ownership or operation of real estate, to investigate and remediate the effects
  of hazardous or toxic substances or petroleum product releases at those properties.
  We may also be held liable to a governmental entity or to third parties for
  property damage and for investigation and clean-up costs incurred by us in connection
  with any contamination. These costs could be substantial. The presence of such
  substances or the failure to properly remediate the contamination may materially
  and adversely affect our ability to borrow against, sell or rent the affected
  asset. In addition, applicable environmental laws create liens on contaminated
  sites in favor of the government for damages and costs it incurs in connection
  with the contamination.
        Finally, when excessive moisture accumulates
  in buildings or on building materials, mold growth will often occur, particularly
  if the moisture problem remains undiscovered or is not addressed. Some molds
  are known to produce potent toxins or irritants. Concern about indoor exposure
  to mold has been increasing as exposure to mold can cause a variety of health
  effects and symptoms in certain individuals, including severe allergic or other
  reactions. As a result, the presence of mold at a community we own could require
  us to undertake a costly remediation program to contain or remove the mold from
  the affected community. Such a remediation program could necessitate the temporary
  relocation of some or all of the community's residents or the complete rehabilitation
  of the community.
       Potential liability for losses not covered by insurance
  could result in substantial costs.We may incur casualty losses that are
  not covered by insurance. We carry insurance coverage on our properties of types
  and in amounts that we believe are in line with coverage customarily obtained
  by owners of similar properties. We believe all of our properties are adequately
  insured. The property insurance that we maintain for our properties has historically
  been on an "all risk" basis, including losses covered by acts of terrorism.
  However, following the terrorist activity of September 11, 2001, and in light
  of the resulting uncertainty in the insurance market, our "all risk"
  insurance coverage in place for the current policy year contains specific exclusions
  for losses attributable to acts of terrorism. The cost and limited availability
  of specific third party insurance coverage for losses from acts of terrorism
  have made it commercially unreasonable for us to secure such coverage. Further,
  there are other types of losses, such as from wars or catastrophic acts of nature,
  for which we cannot obtain insurance at all or at a reasonable cost. In the
  event of an uninsured loss or a loss in excess of our insurance limits, we could
  lose both the revenues generated from the affected community and the capital
  we have invested in the affected community; depending on the specific circumstances
  of the affected community it is possible that we could be liable for any mortgage
  indebtedness or other obligations related to the community. Any such loss could
  materially and adversely affect our business and financial condition and results
  of operations.

ITEM
  2.  PROPERTIESAs of December 31,
  2002, we owned or had an interest in 80 stabilized communities consisting of
  22,506 apartment homes, and owned or had an interest in 13 development/lease-up
  communities consisting of 3,377 apartment homes. The communities, comprising
  a total of 25,883 apartment homes, are located in Texas, Georgia, Florida, Tennessee
  and Washington, D.C.   The following table shows the locations of
  the communities and the number of apartment homes in each metropolitan area:

Number of Communities
      Number of Apartment HomesMetropolitan Area
      Stabilized
      Development/Leaseup
      Total
      Stabilized
        Development/Leaseup
      TotalPercent
           of Total 
          ApartmentHomes


Atlanta, GA (a)
        19
        3
        22
        
        5,568
        587
        6,155
        23.8%Houston, TX (b)
        18
        1
        19
        
        5,416
        312
        5,728
        22.1%South FL
        17
        1
        18
        
        4,729
        311
        5,040
        19.5%Dallas, TX
        8
        2
        10
        
        1,600
        535
        2,135
        8.3%Austin, TX
        7
        1
        8
        
        1,677
        458
        2,135
        8.2%Memphis, TN (c)
        3
        -
        3
        
        1,309
        -
        1,309
        5.1%Orlando, FL
        3
        1
        4
        
        959
        315
        1,274
        4.9%Nashville,  TN (d)
        4
        -
        4
        
        1,166
        -
        1,166
        4.5%Tampa, FL (e)
        -
        4
        4
        
        -
        859
        859
        3.3%Washington, D.C.
        1
        -
        1
        
        82
        -
        82
        0.3%Totals
        80
        13
        93
        
        22,506
        3,377
        25,883
        100.0%


|(a) |  | Includes a stabilized community
        comprising 435 apartment homes and a development/lease-up community comprising
        274 apartment homes in which we have a 20% interest.                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Includes a stabilized community
        comprising 186 apartment homes in which we have a 20% interest.                                                                                                     
|(c) |  | Includes a stabilized community
        comprising 345 apartment homes in which we have a 25% interest and a stabilized
        community comprising 500 apartment homes in which we have an 8.26% interest.
|(d) |  | Includes two stabilized communities
        comprising 618 apartment homes in which we have an 8.26% interest.                                                                                              
|(e) |  | Includes three development/lease-up
        communities comprising 693 apartment homes in which we have a 20% interest.                                                                                     

Stabilized Communities.We
  developed 39 communities consisting of 11,128 apartment homes and acquired 41
  communities consisting of 11,378 apartment homes. We manage and operate all
  of the stabilized communities, which are typically two and three-story garden
  apartments, townhomes and higher-density apartments. As of December 31, 2002,
  the communities had an average scheduled monthly rental rate per apartment home
  of $976 or $0.96 per square foot and a physical occupancy rate of 94%. The average
  age of the communities is approximately twelve years.
         Most of our communities offer many attractive
  features designed to enhance their market appeal, such as vaulted ceilings,
  fireplaces, dishwashers, disposals, washer/dryer connections, ice-makers, patios
  and decks. Recreational facilities include swimming pools, fitness facilities,
  playgrounds, picnic areas and tennis and racquetball courts. In many communities,
  we make amenities and services such as aerobic classes, resident social events,
  dry cleaning pickup and delivery, and the use of fax, computer and copy equipment
  available to residents. All of our communities have high-speed internet access.
  In-depth market research, including periodic focus groups with residents and
  feedback from on-site management personnel, is used to refine and enhance management
  services and community design. Additional information regarding our stabilized
  communities at December 31, 2002 follows:

Stabilized Community Features as of December
  31,  2002

Community  
          (a)
      
      No.
        of 
        Apt.Homes
      Approx.
        RentableSq. Ft.(b)
      Total
        Acreage
      Year
        Constructed/Renovated
      Year
        Acquired
      Average 
        Unit Size(Sq. Ft.)
      Occupancy
        at12/31/02
      Scheduled
        Rentat 12/31/02 Per
        Unit         Sq. Ft.


Atlanta,
        GA
        Briarcliff Gables
        Buckhead Gables
        Gables Cityscape
        Gables Metropolitan I (d)
        Gables Mill
        Gables Montclair
        Gables Northcliff
        Gables Rock Springs I
        Gables Vinings (e)
        Gables Walk
        Gables Wood Arbor (e)
        Gables Wood Crossing (e)
        Gables Wood Glen 
        Gables Wood Knoll 
        Lakes at Indian Creek (e), (f)
        Roswell Gables I (e)
        Roswell Gables II (e)
        Spalding Gables (e)
        Wildwood Gables (e), (f) Totals/AveragesHouston,  TX
        Gables Austin Colony (e)
        Gables Bradford Place 
        Gables Bradford Pointe
        Gables Cityscape (e)
        Gables Citywalk/
          Waterford Sq. (e)
        Gables Edgewater
        Gables Lions Head (e)
        Gables Metropolitan Uptown
        Gables Meyer Park I
        Gables Meyer Park II 
        Gables of First Colony
        Gables Piney Point (e)
        Gables Pin Oak Green
        Gables Pin Oak Park
        Gables Rivercrest I 
        Gables Rivercrest II (e)
        Gables Windmill
           Landing (e)
        Gables White Oak (d) Totals/AveragesSouthFLCotton Bay (e)
        Gables Boca Place (e)
        Gables Boynton Beach I
        Gables Boynton Beach II
        Gables Kings Colony (e)
        Gables Mizner on the Green
        Gables Palma Vista 
        Gables San Michele I
        Gables San Michele II 
        Gables San Remo
        Gables Town Colony (e), (f)
        Gables Town Place (e)
        Gables Wellington
        Hampton Lakes (e)
        Hampton Place
        Mahogany Bay (e) 
        Vinings at Hampton
           Village (e) Totals/ Averages
      104
          162
          182
          435
          438
          183
          82
          188
          315
          310
          140
          268
          380
          312
          603
          384
          284
          2525465,568 237
          372
          360
          252
          317
          292
          277
          318
          345
          296
          324
          246
          581
          474
          140
          140 2591865,416444
          180
          252
          296
          480
          246
          189
          249
          343
          180
          172
          312
          222
          300
          368
          3281684,729
      128,976
        122,548
        150,610
        487,472
        406,676
        280,701
        127,990
        209,745
        336,735
        367,226
        127,540
        257,012
        377,340
        311,064
        552,384
        417,288
        334,268
        249,333619,7105,864,618 231,621
        320,322
        276,417
        214,824
        255,823
        257,339
        233,796
        290,141
        297,054
        294,908
        321,848
        227,880
        592,709
        483,740
        118,020
        118,020 224,689162,5524,921,703436,460
        175,812
        302,148
        357,653
        426,590
        311,176
        273,606
        332,683
        475,506
        329,978
        147,724
        260,192
        297,138
        317,004
        352,528
        330,459202,7525,329,409
      5.2
          3.5
          5.5
          15.0
          36.1
          9.9
          12.7
          28.7
          15.2
          19.7
          9.9
          22.3
          23.8
          19.6
          49.8
          28.3
          28.3
          11.237.9382.6 11.0
          13.3
          13.5
          6.8
          8.7
          12.2
          10.3
          8.9
          11.0
          7.7
          13.3
          7.5
          14.4
          11.9
          5.1
          5.0 9.86.1176.537.6
          9.4
          18.0
          15.9
          18.8
          8.9
          12.0
          32.4
          32.4
          11.8
          10.0
          13.0
          12.7
          11.0
          14.1
          25.48.6292.0
      1995
        1994
        1989
        2000
        1988
        2002
        1978
        1945-92
        1997
        1996-97
        1987
        1985-86
        1983
        1984
        1969-72
        1995
        1997
        1995
        1992-93
        1984
        1991
        1990
        1991
        1990/
        1985
        1990
        1983
        1995
        1993
        2002
        1996
        1994
        1990
        1992
        1982
        1983
        1984
            2002
        1986
        1984
        1996
        1997
        1986
        1996
        2000
        1998
        2000
        1995
        1985
        1987
        1998
        1986
        1985
        1986
        1988
      (c) 
        (c)
      --
          1994
          1994
          --
          1997
          --
          1997
          1997
          --
          1997
          --
          --
          --
          --
          1993
          --
          --
          --
          1991
          1998
          --
          --
          --
          --/
          1992
          --
          1998
          --
          --
          --
          1997
          --
          1996
          1996
          1987
          1998
          1998
          --
          1998
          1998
          1998
          1998
          1998
          1998
          --
          1998
          --
          1998
          1998
          1998
          1998
          1998
          1998
          1998
          1998
      1,240
        756
        827
        1,121
        928
        1,534
        1,561
        1,018
        1,069
        1,185
        911
        959
        993
        997
        916
        1,087
        1,177
        9891,135 1,053 977
        861
        768
        852
        807
        881
        844
        912
        861
        996
        993
        926
        1,020
        1,020
        843
        843 868874909983
        977
        1,199
        1,208
        889
        1,265
        1,448
        1,336
        1,386
        1,833
        859
        834
        1,338
        1,057
        958
        1,0071,2071,127
      96%
        93%
        95%
        90%
        93%
        93%
        96%
        94%
        93%
        94%
        89%
        91%
        96%
        91%
        90%
        95%
        95%
        94%92% 93% 95%
        97%
        95%
        96%
        97%
        94%
        97%
        95%
        91%
        91%
        98%
        97%
        95%
        95%
        94%
        97% 94%94%95%95%
        91%
        95%
        97%
        97%
        89%
        95%
        93%
        93%
        95%
        72%
        95%
        98%
        95%
        97%
        95%98% 94%
      $1,165
        869
        937
        1,217
        883
        1,489
        1,263
        995
        1,062
        1,140
        772
        754
        693
        753
        679
        920
        920
        960845 $ 922$ 993
        772
        682
        984
        967
        926
        779
        1,114
        899
        1,008
        1,021
        944
        1,140
        1,138
        799
        783 719967$ 946$763
         1,069
        940
        951
        899
        1,631
        1,628
        1,516
        1,491
        1,320
        987
        871
        1,053
        831
        795
        803877$1,045
      $0.94
        1.15
        1.13
        1.09
        0.95
        0.97
        0.81
        0.89
        0.99
        0.96
        0.85
        0.79
        0.70
        0.76
        0.74
        0.85
        0.78
        0.97
           0.74 $0.88 $1.02
        0.90
        0.89
        1.15
        1.20
        1.05
        0.92
        1.22
        1.04
        1.01
        1.03
        1.02
        1.12
        1.11
        0.95
        0.93 0.831.11$1.04$0.78
        1.09
        0.78
        0.79
        1.01
        1.29
        1.12
        1.13
        1.08
        0.72
        1.15
        1.04
        0.79
        0.79
        0.83
        0.800.73$0.93


Stabilized Community Features as of December 31,  2002

Community
          (a)
      
      No.
        of 
        Apt.Homes
      Approx.
        RentableSq. Ft.(b)
      Total
        Acreage
      Year
        Constructed/Renovated
      Year
        Acquired
      Average 
        Unit Size(Sq. Ft.)
      Occupancy
        at12/31/02
      Scheduled
        Rentat 12/31/02 Per
        Unit         Sq. Ft.


Austin,
          TXGables at the Terrace 
          Gables Barton Creek (e)
          Gables Bluffstone
          Gables Central Park
          Gables Great Hills
          Gables Park Mesa
          Gables Town LakeTotals/AveragesDallas, TX Gables at Pearl Street
          Gables CityPlace 
          Gables Green Oaks (g)
          Gables Mirabella
          Gables Spring Park
          Gables State Thomas
              Townshomes
          Gables Turtle Creek 
          Gables Valley Ranch (e)Totals/AveragesMemphis, TNArbors of Harbortown (h)
          Gables Cordova
          Gables Stonebridge (i)Totals/AveragesNashville, TNBrentwood Gables (i)
          Gables Hendersonville (i)
          Gables Hickory Hollow I (e)
          Gables Hickory Hollow II (e)Totals/AveragesOrlando, FLGables Celebration
          Gables Chatham Square (j)
          The Commons at Little Lake
              Bryan (j)Totals/AveragesWashington D.C.Gables Dupont CircleTotals/Averages
      308
          160
          256
          273
          276
          1482561,677108
          232
          300
          126
          188
          177
          1503191,600345
          4645001,309254
          364
          2722761,166231
          4482809598282
      292,292
        185,846
        251,909
        257,043
        228,930
        161,540239,2641,616,824117,688
        244,056
        286,740
        114,902
        198,178
        264,728
        150,930325,5341,702,756341,258
        434,461439,6461,215,365287,594
        342,982
        247,322259,7041,137,602267,417
        503,263289,4361,060,11679,89579,895
      18.6
        11.6
        32.7
        6.9
        23.7
        24.312.0129.83.6
        7.1
        12.8
        1.4
        12.3
        7.1 
        3.114.862.215.0
        32.234.081.214.5
        21.0
        19.018.072.58.8
        29.616.554.90.50.5
      1998
          1998
          1998
          1997
          1993
          1992
          1996
          1995
          1995
          1996
          1996
          1996
          20021995
          1994
          1991
          1986
          1993-96
          1996
          1991
          1988
          1987
          1999
          2001
          1998
          1998
      1998
          2000
          --
          --
          --
          1997
          --
          --
          1997
          --
          1997
          --
          --
          1996
          --
        --
          --
          1996
        --
          --
          --
          ----
          --
          --
          2001
      949
        1,162
        984
        942
        829
        1,0919359641,090
        1,052
        956
        912
        1,054
        1,496
        1,0061,0201,064989
        9368799281,132
        942
        9099419761,158
        1,1231,0341,105974974
      96%
        93%
        91%
        93%
        95%
        93%94%94%94%
        96%
        90%
        93%
        95%
        93%
        99%93%94%95%
        94%85%91%85%
        88%
        88%89%88%90%
        100%100%98%100%100%
      $1,083
        1,374
        1,012
        1,363
        839
        1,1711,328$1,151$1,344
        1,381
        827
        1,214
        950
        1,811
        1,176929$1,149$879
        691694$742$911
        688
        655649$719$1,116
        ----$1,116$2,665
        $2,665
      $1.14
        1.18
        1.03
        1.45
        1.01
        1.071.42$1.19$1.23
        1.31
        0.86
        1.33
        0.90
        1.21
        1.170.91$1.08$0.89
        0.740.79$0.80$0.80
        0.73
        0.730.69$0.74$0.96
        ----$0.96$2.74$2.74Grand
          Totals/Averages
      22,506
      22,928,288
      1,252.2
      
      
      983
      94%
      $976
      $0.96


|(a)
      (b)
      (c)
      (d)
      (e)
      (f)
      (g)
      (h)
      (i)
      (j) |  | Except as noted in notes (d),
      (h), and (i), we hold fee simple title to each of the communities. Except
      as noted in notes (d), (e), (h), and (i), the communities are unencumbered.
      In the Atlanta and Tennessee markets, rentable area is measured including
      any patio or balcony. In the Texas markets, rentable area is measured using
      only the heated area. In the Florida markets, rentable area is measured
      using only the air conditioned area.
      Year renovated; these communities were originally constructed as follows:
      Buckhead Gables: 1964 and Wildwood Gables: 1972. 
      We hold an indirect 20% interest in these communities. These communities
      secure indebtedness totaling $32.7 million at December 31, 2002.
      The denoted communities secure indebtedness totaling $329.1 million
      as of December 31, 2002.
      These communities are in renovation; therefore, occupancy is based on units
      available for lease.
      This community was sold in February 2003.
      We hold an indirect 25% interest in this community. This community secures
      indebtedness of $16.4 million at December 31, 2002.
      We hold an indirect 8.26% interest in these communities. These communities
      secure indebtedness totaling $52.1 million at December 31, 2002.
      These communities are leased to a single user group pursuant to a triple
      net master lease. Accordingly, scheduled rent data is not reflected.
|--------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Percent
          at December 31, 2002Actual or Estimated Quarter ofMarket
      Community
      No.
          of
          Apt.Homes
      Total
          BudgetedCost
      
      Cost
          to CompleteComplete
      Leased
      Occupied
      Constr-
          uctionStartInitialOccu-pancy.Constr-
          uctionEndStab-
          ilizedOccupancy(millions)
      (millions)
      
      
      
      
      
      
      (a)


Wholly-Owned
        Development/Lease-up Communities:Atlanta, GAGables 
        Rock  
             Springs II (b)
      233$
        25
      $ 18
      35%
      --
      --
      2
        Q 2002
      3
        Q 2003
      3
        Q 2004
      4
        Q 2004Austin, TX
      Gables Grandview
        (c)
      458
      55
      41
      --
      --
      --
      1 Q
        2003
      1 Q
        2004
      4 Q
        2004
      2 Q
        2005Dallas, TX
      Gables Ellis Street
      245
      46
      6
      87%
      34%
      26%
      3 Q
        2001
      3 Q
        2002
      3 Q
        2003
      1 Q
        2004Dallas, TX
      Gables State
        Thomas
            Ravello
      290
      48
      8
      86%
      --
      --
      4
        Q 2001
      1
        Q 2003
      3
        Q 2003
      3
        Q 2004Houston, TXGables 
        Augusta (c)
      312
      33
      26
      --
      --
      --
      1 Q
        2003
      1 Q
        2004
      4 Q
        2004
      2 Q
        2005South FL
      Gables Jupiter
      311
      38
      31
      --
      --
      --
      1 Q
        2003
      1 Q
        2004
      4 Q
        2004
      2 Q
        2005Tampa, FL
      Gables Beach Park
      166
      22
      17
      --
      --
      --
      1 Q
        2003
      4 Q
        2003
      2 Q
        2004
      3 Q
        2004Subtotals
      2,015
      $267
      $147Co-Investment
          Development/Lease-up Communities (d):Tampa,
        FLGables
        West Park Village II
      297
      $
        27
      $
        13
      48%
      --
      --
      2
        Q 2002
      1
        Q 2003
      4
        Q 2003
      2
        Q 2004Tampa,
        FLGables
        West Park Village III
      76
      10
      9
      --
      --
      --
      3
        Q 2003
      2
        Q 2004
      4
        Q 2004
      1
        Q 2005Subtotals
      373$37
      $ 22
      (e)Wholly-Owned
        Completed Communities in Lease-up:Atlanta, GA
      Gables Paces
      80
      $ 23
      
      100%
      74%
      69%
      3 Q
        2000
      1 Q
        2002
      2 Q
        2002
      2 Q
        2003Orlando, FL
      Gables North
        Village
      
      315
      44
      
      100%
      85%
      81%
      4 Q
        1999
      4
          Q 2000
      2 Q
        2002
      2 Q
        2003Subtotals
      395
      $67Co-Investment
        Completed Communities in Lease-up (d):Atlanta
      Gables
        Metropolitan II
      274
      $ 32
      
      
      100%
      69%
      63%
      1
          Q 2001
      2
        Q 2002
      4
        Q 2002
      3
        Q 2003Tampa,
        FL
      Gables
        West Park
        Village I (f)
      320
      35
      
      100%
      92%
      88%
      4
          Q 2000
      3
        Q 2001
      
      2 Q 2002
      1
        Q 2003Subtotals
      594
      $67Grand total
      3,377


(a)  Stabilized occupancy is defined as the earlier to
  occur of (i) 93% occupancy or (ii) one year after completion of construction.
  (b)  This community represents the reconstruction of 100 apartment homes
  previously owned and operated by us into 233 apartment homes.
  (c)  These communities secure indebtedness totaling $4.4 million as of
  December 31, 2002.
  (d)  These communities are owned by the GRAP JV Two, in which we hold an
  indirect 20% interest.  These communities secure indebtedness of $45.4
  million 
         as of December 31, 2002.
  (e)  Construction loan proceeds are expected to fund $13 million of these
  costs to complete at December 31, 2002. The remaining costs will be funded
  by 
         capital contributions to the venture
  from our venture partner and us in a funding ratio of 80% and 20%, respectively.
  (f)  This development community includes 40,000 square feet of commercial
  space which was 100% leased at December 31, 2002.Acquisition
  Right.In February 2003, we acquired an apartment community located in Austin
  comprising 239 apartment homes and 7,366 square feet of retail space.      Undeveloped Sites.As
  of December 31, 2002, we owned one undeveloped site in South Florida on which
  we intend to develop a multifamily community in the future consisting of an
  estimated 450 apartment homes. In addition, we owned an adjacent site in South
  Florida which we intend to develop in the future for sale to a single-family
  home builder once the related land development is complete. We also owned additional
  sites at December 31, 2002; however, we do not currently intend to develop apartment
  communities on these sites in the foreseeable future. Instead, we intend to
  sell these land parcels on an as-is basis. There can be no assurance of when
  or if our undeveloped sites will be developed or sold.

Development Rights.As
  of December 31, 2002, we had three development rights.

Development
          Rights
      Metropolitan
          AreaEstimated
        Number
        of ApartmentHomesGables City View
        Gables Stuart
        Gables Rothbury Square
             Total
      Washington, D.C.
        South Florida
        Washington, D.C.
      369
          318203890


There can be no assurance of when
  or if our development rights will be exercised.

The following is a "Safe
  Harbor" Statement under the Private Securities Litigation Reform Act of 1995
  and Section 21E of the Securities Exchange Act of 1934, as amended. The projections
  contained in the tables above under the captions "Development and Lease-up Communities,"
  "Undeveloped Sites" and "Development Rights" are forward-looking statements.
  These forward-looking statements involve risks and uncertainties, and actual
  results may differ materially from those projected in the forward-looking statements.
  Risks associated with our development, construction and land acquisition activities,
  which could impact the forward-looking statements made, include: development
  and acquisition opportunities may be abandoned; construction costs of a community
  may exceed original estimates, possibly making the community uneconomical; and
  construction and lease-up may not be completed on schedule, resulting in increased
  debt service and construction costs. Development of the undeveloped sites and
  development rights is subject to permits and other governmental approvals as
  well as our ongoing business review of the underlying real estate fundamentals
  and the impact on our capital structure. There can be no assurance that we will
  decide or be able to develop or sell the undeveloped sites, complete development
  of all or any of the communities subject to the development rights, or complete
  the number of apartment homes shown above.ITEM
  3. LEGAL PROCEEDINGS     Neither we nor any of our
  communities are presently subject to any material litigation or, to our knowledge,
  is any litigation threatened against us or any of our communities other than
  routine actions for negligence or other claims and administrative proceedings
  arising in the ordinary course of business, some of which are expected to be
  covered by liability insurance and all of which collectively are not expected
  to have a material adverse effect on our business or financial condition.ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
  HOLDERS    No matters were submitted to a vote
  of security holders during the fourth quarter of the year ended December 31,
  2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S
  COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Our common shares began
  trading on the NYSE on January 19, 1994 under the symbol GBP. The following
  table sets forth the high and low sales prices per share of our common shares
  for the periods indicated, as reported by the NYSE, as well as the quarterly
  per share dividends declared to shareholders for the period indicated.

Quarter
          Ended
      High
      Low
      Dividend DeclaredMarch 31, 2001
        June 30, 2001
        September 30, 2001
        December 31, 2001
        March 31, 2002 
        June 30, 2002
        September 30, 2002
        December 31, 2002
        March 31, 2003 (through March 14, 2003)
      $29.13
          29.95
          31.25
          30.92
          31.63
          32.90
          31.93
          26.90
          25.99
      $26.61
        27.26
        28.66
        26.25
        28.00
        29.45
        23.50
        21.25
        24.02
      $0.5675
        0.5675
        0.6025
        0.6025
        0.6025
        0.6025
        0.6025
        0.6025
        0.6025
      (a)
          (b)(a) Declared and
        paid monthly at a rate of $0.200833 per share for each month
        (b) Declared and paid monthly at a rate of $0.200833 per share for each
        of
              January and February and $0.200834 per
        share for March


We have determined that,
  for federal income tax purposes, approximately 36.0% of the distributions for
  each of the four quarters of 2002 represented ordinary dividend income, 34.3%
  represented capital gains and the remaining 29.7% represented return of capital
  to our common shareholders.
         We currently intend to pay monthly dividends
  to our shareholders. Distributions are declared at the discretion of the board
  of trustees and will depend on our financial liquidity from cash provided by
  recurring real estate activities that include both operating activities and
  asset disposition activities, our financial condition, capital requirements,
  annual distribution requirements under the REIT provisions of the Code and other
  factors the board of trustees may deem relevant. The board of trustees may modify
  our distribution policy from time to time.

Certain of our debt agreements
  contain customary representations, covenants and events of default, including
  covenants which restrict the ability of the Operating Partnership to make distributions
  in excess of stated amounts, which in turn restricts our discretion to declare
  and pay dividends. In general, during any fiscal year, the Operating Partnership
  may only distribute up to 100% of its consolidated income available for distribution
  (as defined in the related agreement). The applicable debt agreements contain
  exceptions to these limitations to allow the Operating Partnership to make any
  distributions necessary to (1) allow us to maintain our status as a REIT or
  (2) distribute 100% of our taxable income at the REIT level. We do not anticipate
  that this provision will adversely affect the ability of the Operating Partnership
  to make distributions or our ability to declare dividends under our current
  dividend policy.

On March 14, 2003, there
  were approximately 675 holders of record of our 24,493,262 outstanding common
  shares. This does not include beneficial owners for whom Cede & Co. or others
  act as nominee. 
         During the period commencing on October
  1, 2002 and ending on December 31, 2002, we issued to limited partners of the
  Operating Partnership 132 common shares (valued at approximately $3,402 at the
  time of issuance) in exchange for 132 Units. Such shares were issued in reliance
  on an exemption from registration under Section 4 (2) of the Securities Act
  of 1933, as amended, and the rules and regulations promulgated thereunder.
         On September 27, 2002, we sold 1,600,000
  shares of 7.875% Series C Cumulative Redeemable Preferred Shares (for an aggregate
  amount of approximately $40,000,000) to an institutional investor in reliance
  on an exemption from registration under Section 4(2) of the Securities Act of
  1933, as amended, and the rules and regulations promulgated thereunder.ITEM 6. SELECTED FINANCIAL AND OPERATING INFORMATION
         The following table sets forth selected
  financial and operating information. The following information should be read
  in conjunction with our consolidated financial statements and notes thereto
  and Management's Discussion and Analysis of Financial Condition and Results
  of Operations included elsewhere in this report.

GABLES
          RESIDENTIAL TRUST
          SELECTED FINANCIAL AND OPERATING INFORMATION(Amounts in Thousands, Except Property and Per Share Data)2002
      
      2001
      
      2000
      
      1999
      
      1998Operating Information:
        Rental revenues
        Other property revenues
             Total property revenues
        Other revenues
             Total revenues
        Property operating and maintenance
           (exclusive of items shown separately below)
        Depreciation and amortization
        Property management (owned and third party)
        Ancillary services 
        Interest expense and credit enhancement fees
        Amortization of deferred financing costs
        General and administrative
        Unusual items (a)
             Total expenses
        Income from continuing operations before equity in income
             of joint ventures, gain on sale and minority
        interest
        Equity in income of joint ventures
        Gain on sale of previously depreciated operating real estate assets
        Gain (loss) on sale of land and development rights
        Minority interest of common unitholders in Operating Partnership
        Minority interest of preferred unitholders in Operating Partnership
        Income from continuing operations
        Income from discontinued operations, net of minority interest
        Income before extraordinary loss, net
        Extraordinary loss from early extinguishment of debt, net of minority
        interest
        Net income
        Dividends to preferred shareholders
        Net income available to common shareholders
        Weighted average common shares outstanding - basic
        Weighted average common shares outstanding - dilutedPer Common Share Information:Income from continuing operations (net of preferred dividends) - basic
        Income from discontinued operations, net of minority interest - basic
        Income before extraordinary loss (net of preferred dividends) - basic
        Net income available to common shareholders - basic
        Income from continuing operations (net of preferred dividends) - diluted
        Income from discontinued operations - diluted
        Income before extraordinary loss (net of preferred dividends)  -
        diluted
        Net income available to common shareholders - diluted
        Dividends declared and paid Other Information:
        Cash flows provided by operating activities
        Cash flows (used in) provided by investing activities
        Cash flows (used in) provided by financing activities
        Funds from operations (b)
        Average monthly revenue per apartment home (c)
        Average physical occupancy for stabilized communities
        Gross operating margin (d)
        Completed communities at year-end
        Apartment homes in completed communities at year-end
        Total return to Gables shareholders (e)
        NAREIT Equity Residential REIT Total Return Index (f)Balance Sheet Information:
        Real estate assets, before accumulated depreciation
        Total assets
        Notes payable
        Shareholders' equity, minority interest and Series Z 
            Preferred SharesFunds From Operations Reconciliation:
        Net income available to common shareholders
        Minority interest of common unitholders in Operating Partnership (g)
        Real estate asset depreciation and amortization (g), (h)
        Extraordinary loss, net of minority interest
        Gain on sale of previously depreciated operating real estate assets (g),
        (h)
        Funds from operations$210,513
            11,906
          222,41916,704
            239,123
          79,512
          48,815
          12,897
          5,236
          43,984
           1,336
          7,377
           -199,15739,966
          2,900
           17,906
          2,100
          (10,103(  4,31248,4578,615 57,072(1,36055,712(  6,819$48,89324,618
          30,684
          $1.69
          0.35
          2.04
          1.99
          1.69
          0.35
          2.03
          1.98
          2.41
          $104,960
          (  17,361
          (  85,549
          81,488
          910
          93.5%
          64.3%
          84
          23,495
          (  8.3%
          (  6.1%
          $1,794,407
          1,583,934
          958,574
          563,051
          $48,893
          12,181
          49,400
          1,360
           ( 30,346$81,488
      )
          )
          )
          )
          )
          )
          )
          )
          )
      $216,24012,173228,41316,066
          244,47975,285
        47,060
        11,137
          5,806
        43,966
        1,038
        7,209
           8,847
         200,34844,131
        242
        34,110
         3,220
        ( 13,899( 4,31263,4921,35364,845
              -64,845( 9,771$55,074
        23,890
        30,314
        $2.25
        0.06
        2.30
        2.30
        2.23
        0.06
        2.29
        2.29
        2.34
        $100,551
        (  123,405
        22,833
        84,526
        880
        94.6%
        67.0%
        85
        24,374
        14.5%
        8.6%
        $1,760,803
        1,589,206
        877,231
        654,476
        $55,074
        14,249
        49,313
        - ( 34,110$84,526
      )
          )
          )
          )
          )
      $211,74811,970223,71816,821
          240,53973,101
        43,190
        10,007
        4,916
        44,788
        895
        7,154
                 -
        184,05156,488
        399
        28,622
        845
        ( 15,990(   4,31266,0521,298
        67,350-67,350( 9,771$57,579
        23,694
        30,439
        $2.38
        0.05
        2.43
        2.43
        2.37
        0.05
        2.43
        2.43
        2.20
        $105,885
        18,871
        (  128,467
        90,605
        830
        95.3%
        67.3%
        84
        25,094
        27.1%
        35.5%
        $1,598,170
        1,453,020
        765,927
        639,089
        $57,579
        16,359
        45,289
         - ( 28,622$90,605
      )
          )
          )
          )
          )
      $216,23311,773228,00619,377
            247,38376,266
          44,811
          8,893
          8,068
          43,544
          919
          5,7962,800
          191,09756,286
          478
          9,116
          (252
          ( 10,074(  4,31251,2421,13052,372-52,372( 9,771$42,601
          25,991
          32,796
          $1.60
          0.04
          1.64
          1.64
          1.59
          0.04
          1.64
          1.64
          2.08
          $105,029
          80,928
          (  185,048
          89,775
          810
          94.3%
          66.6%
          81
          23,941
          13.2%
          10.7%
          $1,601,208
          1,471,364
          755,485
          660,453
          $42,601
          10,348
          45,942
          - 
            ( 9,116$89,775
      )
          )
          )
          )
          )
          )
      $194,9209,713204,63310,459
            215,09268,870
          39,741
          7,977
          2,698
          39,472
          984
          6,2425,637
          171,62143,471
          359
                   -
          -
          ( 6,816
           (  58736,4271,27837,705-37,705( 9,665$28,040
          24,118
          30,340
          $1.11
          0.05
          1.16
          1.16
          1.11
          0.05
          1.16
          1.16
          2.02
          $90,555
          (  359,263
          272,583
          75,494
          780
          94.1%
          66.3%
          86
          25,288
          (  9.3%
          (  8.8%
          $1,682,122
          1,586,317
          812,788
          718,765
          $28,040
          7,142
          40,312
          - 
           -$75,494
      )
          )
          )
          )
          )
          )


NOTES TO SELECTED FINANCIAL AND OPERATING
  INFORMATION(Amounts in Thousands, Except Property and Per
  Share Data)

(a) Unusual items of $8,847 in 2001 are comprised
  of (1) a $5,006 charge associated with the write-off of building components
  at Gables State Thomas Ravello that are being replaced in connection with a
  remediation program, (2) $2,200 of severance charges, (3) $920 in reserves associated
  with certain technology investments and (4) $721 of abandoned real estate pursuit
  costs as a result of September 2001 events which impacted the U.S. economy.
  Unusual items of $2,800 in 1999 relate to severance charges. Unusual items of
  $5,637 in 1998 relate to loss on treasury locks resulting from decisions not
  to pursue an unsecured debt financing at that time.

(b) We consider funds from operations
  ("FFO") to be a useful performance measure of the operating performance
  of an equity REIT because, together with net income and cash flows, FFO provides
  investors with an additional basis to evaluate the ability of a REIT to incur
  and service debt and to fund distributions and capital expenditures. We believe
  that in order to facilitate a clear understanding of our operating results,
  FFO should be examined in conjunction with net income as presented in the financial
  statements and data included elsewhere in this report.  FFO is determined
  in accordance with the principles established by the Board of Governors of the
  National Association of Real Estate Investment Trusts ("NAREIT"). 
  FFO, as defined by NAREIT, represents net income (loss) determined in accordance
  with generally accepted accounting principles ("GAAP"), excluding
  extraordinary items as defined under GAAP and gains or losses from sales of
  previously depreciated operating real estate assets, plus certain non-cash items
  such as real estate asset depreciation and amortization, and after adjustments
  for unconsolidated partnerships and joint ventures. FFO presented herein is
  not necessarily comparable to FFO presented by other real estate companies due
  to the fact that not all real estate companies use the same definition. However,
  our FFO is comparable to the FFO of real estate companies that use the NAREIT
  definition. FFO should not be considered an alternative to net income as an
  indicator of our operating performance or an alternative to cash flows as a
  measure of liquidity. FFO does not measure whether cash flow is sufficient to
  fund all of our cash needs, including principal amortization, capital expenditures
  and distributions to shareholders and unitholders. Additionally, FFO does not
  represent cash flows from operating, investing or financing activities as defined
  by GAAP. Reference is made to "Management's Discussion and Analysis of
  Financial Condition and Results of Operations - Liquidity and Capital Resources"
  for a discussion of our cash needs and cash flows.

(c)  Average monthly revenue
  per apartment home is equal to the average monthly rental revenue collected
  during the year presented, divided by the average monthly number of apartment
  homes occupied during the year presented.
       (d)  Gross operating margin represents (1) total
  property revenues less property operating and maintenance expenses (as reflected
  in the table and consolidated statements of operations) as a percentage of (2)
  total property revenues.
       (e)  Total return to Gables shareholders is presented
  on an annual basis for each year presented.  Such computations assume an
  investment in our common shares on the first day of the year presented and the
  reinvestment of dividends through the end of the year presented.
       (f)  The NAREIT Equity Residential REIT Total
  Return Index (the "NAREIT Apartment Index") is an industry index of
  18 equity residential REITs, including us.  Total return is presented on
  an annual basis for each year presented.  Such computations assume an investment
  in the index on the first day of the year presented and the reinvestment of
  dividends through the end of the year presented.
       (g) Includes results attributable to both continuing
  and discontinued operations.  On January 1, 2002, we adopted SFAS No. 144,
  "Accounting for the Impairment or Disposal of Long-Lived Assets." 
  The implementation of SFAS No. 144 requires that the gains and losses from the
  disposition of certain real estate assets and the related historical operating
  results be reflected as discontinued operations in the consolidated statements
  of operations for all periods presented.  In the normal course of business,
  we recycle invested capital by disposing of existing assets and redeploying
  the proceeds in order to enhance total return to shareholders.
       (h) Includes our share of results of real estate
  assets owned by unconsolidated joint ventures.MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

ITEM 7.  MANAGEMENT'S DISCUSSION AND
  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSWe are a REIT focused within the multifamily
  industry in demand-driven markets throughout the United States that have exhibited
  high job growth and resiliency to economic downturns. Our operating performance
  is based predominantly on net operating income from our apartment communities.
  Net operating income, which represents total property revenues less property
  operating and maintenance expenses (as reflected in the consolidated statements
  of operations), is affected by the demand and supply dynamics within our markets.
  Our performance is also affected by the general availability and cost of capital
  and our ability to develop and acquire additional apartment communities with
  returns in excess of our long-term weighted average cost of capital.Business Objective and StrategiesOur objective is to increase shareholder
  value by producing consistent high quality earnings to sustain dividends and
  annual total returns that exceed the NAREIT Apartment Index. To achieve that
  objective, we employ a number of business strategies. First, our long-term investment
  strategy is research-driven, with the objective of creating a portfolio of high
  quality assets in strategically selected markets that are complementary through
  economic diversity and characterized by high job growth and resiliency to national
  economic downturns. We believe such a portfolio will provide predictable operating
  cash flow performance that exceeds the national average on a sustainable basis.
  Second, we adhere to a strategy of owning and operating high quality, class
  AA/A apartment communities under the Gables brand in Established Premium Neighborhoods,TM
  or EPNs. EPNs are generally characterized as areas with the highest prices for
  single-family homes on a per square foot basis. We believe that communities,
  when located in EPNs and supplemented with high quality service and amenities,
  attract the affluent renter-by-choice who is willing to pay a premium for location
  preference, superior service and high quality communities. The resulting portfolio
  should maintain high levels of occupancy and rental rates relative to overall
  market conditions. This, coupled with more predictable operating expenses and
  reduced capital expenditure requirements associated with high quality construction
  materials, should lead to operating margins that exceed national averages for
  the apartment sector and sustainable growth in operating cash flow. Third, our
  aim is to be recognized as the employer of choice within the industry. Our mission
  of Taking Care of the Way People Live® involves innovative human
  resource practices that we believe will attract and retain the highest caliber
  associates. Because of our long-established presence as a fully integrated apartment
  management, development, construction, acquisition and disposition company within
  our markets, we have the ability to offer multi-faceted career opportunities
  among the various disciplines within the industry. Finally, our capital strategy
  is to generate a return on invested capital that exceeds our long-term weighted
  average cost of capital while maintaining financial flexibility through a conservative,
  investment grade credit profile. We judiciously manage our capital and are able
  to recycle existing capital through asset dispositions.
        We believe we are well positioned to continue
  achieving our objectives because (1) the markets we have selected for investment
  are projected to continue to experience job growth that exceed national averages,
  (2) our EPN locations are expected to outperform local market results and (3)
  national demand for apartments is expected to increase during the next ten to
  fifteen years as the demographic group referred to as the Echo Boomer generation
  begins to form new households.
        Portfolio-wide occupancy levels and rental
  rates have declined slightly as a result of national economic weakness, coupled
  with low mortgage rates which have resulted in an increase in home purchases
  by apartment residents. We expect portfolio-wide property operating and maintenance
  expenses for 2003 to increase over 2002 at a rate ahead of inflation due primarily
  to increases in insurance costs and property taxes. In addition, we expect total
  property revenues on a same-store basis in 2003 to be consistent with, or slightly
  lower than, 2002 results. We expect that operating fundamentals for our business
  will improve as job growth improves in our markets. The job growth prospects
  for our markets are partially related to national economic conditions. It is
  uncertain whether, and to what extent, the national economy and related job
  growth will improve in 2003.
         Our ongoing evaluation of the fair market
  value for a specific asset may result in a determination to dispose of the asset.
  The net proceeds from any such sale may be used to invest in new assets expected
  to have better growth prospects, reduce indebtedness, repurchase outstanding
  common shares under our common equity repurchase program, or fund other liquidity
  needs. We maintain staffing levels sufficient to meet our existing development,
  construction, acquisition and property operating activities. When market conditions
  warrant, we adjust staffing levels in an attempt to mitigate a negative impact
  on our results of operations.Forward-Looking StatementsThis report contains forward-looking statements
  within the meaning of Section 27A of the Securities Act of 1933, as amended,
  and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results
  or developments could differ materially from those projected in such statements
  as a result of the risk factors set forth in the relevant paragraphs of "Management's
  Discussion and Analysis of Financial Condition and Results of Operations"
  and elsewhere in this report. The following discussion and analysis of our financial
  condition and results of operations should be read in conjunction with our accompanying
  consolidated financial statements and notes thereto.MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Common and Preferred Equity Activity

Secondary Common Share Offerings

Since our initial public
  offering in January 1994, we have issued a total of 14,831 common shares in
  eight offerings, generating $347.8 million in net proceeds which were generally
  used (1) to reduce outstanding indebtedness under interim financing vehicles
  utilized to fund our development and acquisition activities and (2) for general
  working capital purposes, including funding of future development and acquisition
  activities.

Preferred Share OfferingsOn September 27, 2002, we issued 1,600 shares of 7.875% Series C Cumulative
  Redeemable Preferred Shares (liquidation preference $25.00 per share) in a private
  placement to an institutional investor. The net proceeds from this issuance
  of $39.8 million, together with the net proceeds of $39.8 million from the concurrent
  issuance of $40 million of senior unsecured notes, were used to retire approximately
  $82.5 million of unsecured indebtedness at an interest rate of 8.3% that was
  scheduled to mature in December 2002. The Series C Preferred Shares may be redeemed
  at our option at $25.00 per share plus accrued and unpaid dividends on or after
  September 30, 2006. The Series C Preferred Shares are not subject to any sinking
  fund or convertible into any other Gables securities.
           On June 18, 1998, we issued
  180 shares of 5.0% Series Z Cumulative Redeemable Preferred Shares (liquidation
  preference $25.00 per share) in connection with the acquisition of a parcel
  of land for future development. The Series Z Preferred Shares, which are subject
  to mandatory redemption on June 18, 2018, may be redeemed at any time for $25.00
  per share plus accrued and unpaid dividends. The Series Z Preferred Shares are
  not subject to any sinking fund or convertible into any other Gables securities.
           On July 24, 1997, we issued
  4,600 shares of 8.30% Series A Cumulative Redeemable Preferred Shares (liquidation
  preference $25.00 per share). The net proceeds from this offering of $111 million
  were used to reduce outstanding indebtedness under interim financing vehicles.
  We redeemed all outstanding Series A Preferred Shares for $115 million on August
  9, 2002 with the proceeds from our $180 million senior unsecured note issuance
  on July 8, 2002.

Issuances of Common Operating Partnership Units

Since the IPO, the Operating
  Partnership has issued a total of 4,421 common units of limited partnership
  interest ("Units") in connection with the 1998 acquisition of the
  real estate assets and operations of Trammell Crow Residential South Florida,
  the acquisition of other operating apartment communities and the acquisition
  of a parcel of land for future development.

Issuance of Preferred Operating Partnership
  Units

On November 12, 1998, the
  Operating Partnership issued 2,000 of its 8.625% Series B Preferred Units to
  an institutional investor. The net proceeds from this issuance of $48.7 million
  were used to reduce outstanding indebtedness under interim financing vehicles.
  We have the option to redeem the Series B Preferred Units after November 14,
  2003. These Units are exchangeable by the holder into 8.625% Series B Cumulative
  Redeemable Preferred Shares of Gables on a one-for-one basis; however, this
  exchange right is generally not exercisable until after November 14, 2008. The
  Series B Preferred Units have no stated maturity, sinking fund or mandatory
  redemption.

Common Equity Repurchase Program

Our board of trustees implemented
  a common equity repurchase program pursuant to which we are authorized to purchase
  up to $200 million of our outstanding common shares or Units. We have repurchased
  shares from time to time in open market and privately negotiated transactions,
  depending on market prices and other conditions, using proceeds from sales of
  selected assets. Units have also been repurchased for cash upon their presentation
  for redemption by unitholders. As of December 31, 2002, we had repurchased 4,506
  common shares and 300 Units for a total of $116.0 million, including $0.2 million
  in related commissions.

Shelf Registration Statement

We have an effective shelf registration
  statement on file with the Securities and Exchange Commission that currently
  provides $500 million of equity capacity. The debt portion of this shelf registration
  statement has been fully utilized as a result of our February 2001 and July
  2002 senior unsecured note offerings.MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Portfolio and Other Financing ActivityCommunity Dispositions Subject to Discontinued Operations Reporting       During 2002, we sold two apartment
  communities located in Houston comprising 660 apartment homes. The net proceeds
  from these sales were $43.2 million and were used to paydown outstanding borrowings
  under our interim financing vehicles and purchase common shares and Units under
  our common equity repurchase program. The aggregate gain from the sale of these
  two communities was $9.8 million.
         Historical operating results and gains
  are reflected as discontinued operations in our consolidated statements of operations. 
  See Notes 4 and 5 to the accompanying consolidated financial statements for
  further discussion.Community and Land Dispositions Not Subject to Discontinued Operations ReportingDuring 2002, we sold a 13.3 acre parcel
  of land in Houston that was adjacent to an apartment community sold, an apartment
  community located in Houston comprising 246 apartment homes and an apartment
  community located in Atlanta comprising 311 apartment homes. The net proceeds
  from these sales were $46.8 million and were used to paydown outstanding borrowings
  under our interim financing vehicles and purchase common shares and Units under
  our common equity repurchase program. The gain from the land sale was $0.8 million
  and the aggregate gain from the sale of the two communities was $17.9 million.  In
  addition, we recognized $1.3 million of deferred gain during the year ended
  December 31, 2002 associated with prior year sale transactions.
         During 2002, the Gables Residential Apartment
  Portfolio JV (the "GRAP JV") sold two apartment communities located
  in South Florida comprising 610 apartment homes, an apartment community in Dallas
  comprising 222 apartment homes and an apartment community located in Houston
  comprising 382 apartment homes. Our share of the net sales proceeds after repayment
  of construction loan indebtedness of $46.7 million was $10.7 million, resulting
  in a gain of $2.6 million.During 2001, we sold an apartment community
  located in Atlanta comprising 386 apartment homes, an apartment community located
  in Houston comprising 776 apartment homes, an apartment community located in
  Dallas comprising 536 apartment homes and a 2.5 acre parcel of land adjacent
  to one of our development communities located in Atlanta. The net proceeds from
  these sales totaled $93.6 million, $9 million of which was deposited into an
  escrow account and was used to fund acquisition activities. The balance of the
  net proceeds was used to repay a $16 million note assumed in connection with
  our September 2001 acquisition of the Gables State Thomas Ravello community
  and to paydown outstanding borrowings under interim financing vehicles. The
  gain from the land sale was $0.9 million and the aggregate gain from the sale
  of previously depreciated operating real estate assets was $34.1 million, all
  of which was recognized in 2001. In addition, we recognized $0.7 million of
  deferred gain associated with a parcel of land we sold in 2000 during the year
  ended December 31, 2001.
         During 2001, we contributed our interest
  in certain land and development rights to the Gables Residential Apartment Portfolio
  JV Two (the "GRAP JV Two") in return for (1) cash of $18.5 million
  and (2) capital account credit of $4.6 million. The $2.8 million of gain associated
  with this contribution was recognized when earned using the percentage of completion
  method since we serve as the developer and general contractor for the joint
  venture. We recognized $1.2 million and $1.6 million of this gain during the
  years ended December 31, 2002 and 2001, respectively.
         During 2000, we sold an apartment community
  located in Dallas comprising 126 apartment homes, an apartment community located
  in Houston comprising 228 apartment homes, two apartment communities located
  in San Antonio comprising 544 apartment homes and a parcel of land adjacent
  to an existing apartment community located in Atlanta. In addition, on December
  28, 2000, we sold substantially all of our interests in three apartment communities
  located in Nashville and Memphis, comprising 1,118 apartment homes, to the CMS
  Tennessee Multifamily JV. The net proceeds from these sales totaled $142.0 million,
  $30.2 million of which was deposited into an escrow account and was used to
  fund development and acquisition activities. The balance of the net proceeds
  was used to (1) repay an $18.6 million note that encumbered one of the assets
  sold, (2) paydown outstanding borrowings under interim financing vehicles and
  (3) purchase common shares and Units under our common equity repurchase program.
  The aggregate gain from the sale of previously depreciated operating real estate
  assets was $28.6 million, all of which was recognized in 2000. The gain from
  the land sale was $1.6 million, of which $0.8 million was recognized in 2000.
  Gain of $0.8 million associated with the land sale was deferred at December
  31, 2000 and was recognized when earned during 2001 and 2002 using the percentage
  of completion method because we served as the general contractor for the construction
  of an apartment community on the parcel of land sold.  
        Historical operating results and gains are included
  in continuing operations in our consolidated statements of operations. See Notes
  4 and 5 to the accompanying consolidated financial statements for further discussion.MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Community AcquisitionsOn September 28, 2001, we acquired
  the 80% membership interest of our venture partner in the GRAP JV in the Gables
  State Thomas Ravello apartment community located in Dallas comprising 290 apartment
  homes. In consideration for the interest in such community, we paid $12 million
  in cash and assumed a $16 million secured variable-rate note. This consideration
  was based on a valuation of the asset of $31 million and is net of our $3 million
  share of the venture distribution. We recorded a $5 million charge to unusual
  items in 2001 associated with the write-off of building components that are
  being replaced in connection with a remediation program to address water infiltration
  issues affecting the asset.On August 28, 2001, we acquired an
  apartment community located in Washington, D.C. comprising 82 apartment homes
  for approximately $25 million in cash.On August 1, 2001, we acquired the
  75% interest of our venture partner in the Gables Metropolitan Uptown apartment
  community located in Houston comprising 318 apartment homes with cash. The asset
  was valued at approximately $27 million.
         On March 30, 2001, we acquired the 80%
  membership interests of our venture partner in the GRAP JV in the Gables Palma
  Vista and Gables San Michelle II apartment communities located in South Florida
  comprising 532 apartment homes for $66 million. This cash consideration was
  based on a valuation of the assets of $75 million and is net of our $9 million
  share of the venture distribution.
        On September 1, 2000, we acquired an apartment
  community located in Austin comprising 160 apartment homes. In consideration
  for such community, we paid $6 million in cash and assumed a $14 million secured
  fixed-rate note.
        The cash portion of the consideration for each
  denoted acquisition was funded with advances under our interim financing vehicles.Other AcquisitionIn May 2001, we acquired a property
  management company based in Washington, D.C. that managed approximately 3,600
  units in 24 multifamily apartment communities located in Washington, D.C. and
  the surrounding area (the "D.C. Management Co."). Our total investment
  of approximately $1.6 million was structured to be paid in three installments
  based on results of the acquired business operations.  As of December 31,
  2002, we had funded $1.1 million of the $1.6 million total investment. 
  The final installment of $0.5 million is expected to be paid in 2003.

Senior Unsecured Note IssuanceOn September 27, 2002, we issued $40
  million of senior unsecured notes in two series in a private placement to an
  institutional investor: $30 million at an interest rate of 5.86% maturing in
  September 2009 and $10 million at an interest rate of 6.10% maturing in September
  2010. The net proceeds of $39.8 million, together with the net proceeds of $39.8
  million from the concurrent issuance of the 7.875% Series C Cumulative Redeemable
  Preferred Shares, were used to retire approximately $82.5 million of senior
  unsecured notes at an interest rate of 8.3% that were scheduled to mature in
  December 2002. We did not incur any prepayment costs in connection with the
  early debt retirement.On July 8, 2002, we issued $180 million
  of senior unsecured notes which bear interest at a rate of 5.75%, were priced
  to yield 5.81% and mature in July 2007. The net proceeds of $178 million were
  used to redeem all outstanding shares of the 8.3% Series A Cumulative Redeemable
  Preferred Shares totaling $115 million on August 9, 2002 and to reduce borrowings
  under our interim financing vehicles.On February 22, 2001, we issued $150
  million of senior unsecured notes which bear interest at a rate of 7.25%, were
  priced to yield 7.29% and mature in February 2006. The net proceeds of $148.5
  million were used to reduce borrowings under our unsecured credit facilities
  and repay our $40 million term loan, which had a November 2001 maturity date.Debt Refinancing       In May 2002, we called $48.4 million
  of secured tax-exempt bond indebtedness with an interest rate of 6.375% and
  reissued the bonds on an unsecured basis at a fixed interest rate of 4.75%.
  In connection with the early extinguishment of the debt, we incurred a prepayment
  penalty of $1,451 and wrote-off unamortized deferred financing costs of $236.
  Such charges totaling $1,687 are reflected as an extraordinary loss in our consolidated
  statements of operations and are presented net of minority interest of $327.
  The called bonds required monthly principal amortization payments that were
  retained in an escrow account and were not applied to reduce the outstanding
  principal balance of the loan. Such principal payments held in escrow totaling
  $4,121 were released in May 2002. This refinancing transaction allowed us to
  improve our debt constant by 2.75%, unencumber six communities comprising 2,028
  apartment homes and achieve a positive net present value result.MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Critical Accounting Policies and Recent Accounting PronouncementsOur financial statements are prepared in
  accordance with accounting principles generally accepted in the United States
  of America ("GAAP") and a summary of our significant accounting policies
  is included in Notes 4 and 6 to the accompanying consolidated financial statements.
  Notes 4 and 5 to the accompanying consolidated financial statements include
  a summary of recent accounting pronouncements and their actual or expected impact
  on our consolidated financial statements. Our preparation of the financial statements
  requires us to make estimates and assumptions that affect the reported amounts
  of assets and liabilities, disclosure of contingent assets and liabilities at
  the date of our financial statements, and the reported amounts of revenue and
  expenses during the reporting period. Our actual results may differ from these
  estimates. As an owner, operator and developer of apartment communities, our
  critical accounting policies relate to revenue recognition, cost capitalization
  and asset impairment evaluation.Revenue Recognition      Rental: We lease our residential
  properties under operating leases with terms generally equal to one year or
  less. Rental income is recognized when earned, which materially approximates
  revenue recognition on a straight-line basis.
        Property management: We provide
  property management services to third parties and unconsolidated joint ventures.
  Property management fees are recognized when earned.
        Ancillary services: We provide development
  and construction, corporate rental housing and brokerage services to third parties
  and unconsolidated joint ventures. Development and construction services are
  typically provided under "cost plus a fee" contracts.  Because
  our clients are obligated to fund the costs that are incurred on their behalf
  pursuant to the related contract, we net the reimbursement of these costs against
  the billings for such costs.  Development and construction fees are recognized
  when earned using the percentage of completion method. During the years ended
  December 31, 2002, 2001 and 2000, we recognized $2.4 million, $3.1 million and
  $4.9 million, respectively, in development and construction fees under related
  contracts with gross billings of $43.9 million, $81.1 million and $83.2 million,
  respectively. Corporate rental housing revenues and brokerage commissions are
  recognized when earned.Gains on sales of real estate assets:
  Gains on sales of real estate assets are recognized pursuant to the provisions
  of SFAS No. 66, "Accounting for Sales of Real Estate."  The specific
  timing of the recognition of the sale and the related gain is measured against
  the various criteria in SFAS No. 66 related to the terms of the transactions
  and any continuing involvement associated with the assets sold.  To the
  extent the sales criteria are not met, we defer gain recognition until the sales
  criteria are met.Cost Capitalization 
        As a vertically integrated real estate company,
  we have in-house investment professionals involved in the development, construction
  and acquisition of apartment communities. Direct internal costs associated with
  development and construction activities for wholly-owned assets are included
  in the capitalized development cost of such assets. Direct internal costs associated
  with development and construction activities for third parties and unconsolidated
  joint ventures are reflected in ancillary services expense as the related services
  are being rendered. As required by GAAP, we expense all internal costs associated
  with the acquisition of operating apartment communities to general and administrative
  expense in the period such costs are incurred. We maintain staffing levels sufficient
  to meet our existing development, construction and acquisition activities. When
  market conditions warrant, we adjust staffing levels in an attempt to mitigate
  a negative impact on our results of operations.
         Our real estate development pursuits are
  subject to obtaining permits and other governmental approvals, as well as our
  ongoing business review of the underlying real estate fundamentals and the impact
  on our capital structure. We do not always move forward with development of
  our real estate pursuits, and therefore, we evaluate the viability of real estate
  pursuits and the recoverability of capitalized pursuit costs regularly. Based
  on this periodic review, we expense any costs that are deemed unrealizable at
  that time to general and administrative expense.
         During the development and construction
  of a new apartment community, we capitalize related interest costs, as well
  as other carrying costs such as property taxes and insurance. We begin to expense
  these items as the construction of the community becomes substantially complete
  and the residential apartment homes become available for initial occupancy.
  Accordingly, we gradually reduce the amounts we capitalize as construction
  is being completed. During the lease-up period, as a community transitions from
  initial occupancy to stabilized occupancy, revenues are generally insufficient
  to cover interest, carrying costs and operating expenses. The size and duration
  of this lease-up deficit depends on how quickly construction is completed, how
  quickly the apartments available for occupancy are leased, and what rent levels
  are achieved at the community.MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Asset Impairment Evaluation        Under GAAP, real estate assets
  are stated at the lower of depreciated cost or fair value, if deemed impaired.
  As noted above, the cost of buildings and improvements includes interest, property
  taxes, insurance and direct internal development and construction costs incurred
  during the construction period. Expenditures in excess of $1 for purchases of
  a new asset with a useful life in excess of one year and for replacements and
  repairs that extend the useful life of the asset are capitalized and depreciated
  over their useful lives. Recurring value retention capital expenditures are
  typically incurred every year during the life of a community and include such
  expenditures as carpet, flooring and appliances. Non-recurring capital expenditures
  are costs that are generally incurred in connection with a major project impacting
  an entire community, such as roof replacement or parking lot resurfacing. Value-enhancing
  capital expenditures are costs for which an incremental value is expected to
  be achieved and include such costs as amenity upgrades and additions and security
  gates. Recurring value retention and non-recurring and/or value-enhancing capital
  expenditures do not include costs incurred in connection with a major renovation
  of an apartment community. Repairs and maintenance, such as landscaping maintenance,
  interior painting and cleaning and supplies used in such activities, are expensed
  as incurred.
         Depreciation is computed on a straight-line
  basis over the estimated useful lives of 20 to 40 years for buildings and improvements
  and 5 years for furniture, fixtures and equipment. As required by GAAP, we periodically
  evaluate our real estate assets to determine if there has been any impairment
  in their carrying value and record impairment losses if there are indicators
  of impairment and the undiscounted cash flows estimated to be generated by those
  assets are less than the assets carrying amounts. No such impairment losses
  have been recognized to date.Discontinued OperationsWe adopted SFAS No. 144 effective January
  1, 2002 which requires, among other things, that the operating results of certain
  real estate assets which have been sold subsequent to January 1, 2002, or otherwise
  qualify as held for disposition (as defined by SFAS No. 144), be reflected as
  discontinued operations in our consolidated statements of operations for all
  periods presented. We sold three wholly-owned operating real estate assets during
  the first quarter of 2002 and one wholly-owned operating real estate asset during
  the fourth quarter of 2002. We retained management of two of the assets sold
  during the first quarter of 2002. Due to our continuing involvement with the
  operations of the two assets sold that we are continuing to manage, the operating
  results of these assets are included in continuing operations. The operating
  results for the two remaining wholly-owned assets sold during the first and
  fourth quarters of 2002 for which we did not retain management are reflected
  as discontinued operations in our consolidated statements of operations for
  all periods presented. Interest expense has been allocated to the results of
  the discontinued operations in accordance with EITF No. 87-24. We had no assets
  that qualified as held for disposition as defined by SFAS No. 144 at December
  31, 2002 or 2001.Results of OperationsComparison of operating results for the year ended December 31, 2002 to the
  year ended December 31, 2001Our net income is generated primarily
  from the operation of our apartment communities and the disposition of assets
  that no longer meet our investment criteria.  For purposes of evaluating
  comparative operating performance, we categorize our operating communities based
  on the period each community reaches stabilized occupancy. A community is considered
  to have achieved stabilized occupancy on the earlier to occur of (1) attainment
  of 93% physical occupancy or (2) one year after completion of construction.
  The combined operating performance for all of our wholly-owned apartment communities
  that are included in continuing operations for the years ended December 31,
  2002 and 2001 is summarized as follows:




MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

|                                                                                                                                                                                                                                                                                                                                                                            | Years
      Ended December 31,                                                       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                            | 2002                                                                                 
|Rental and other
      property revenues:Same-store communities (a)
      Communities stabilized during 2002, but not 2001 (b)
      Triple net master lease communities (c)
      Development and lease-up communities (d)
      Renovation communities (e)
      Acquired communities (f)
      Sold communities (g)
         Total property revenues                     | $174,660
      -
      6,585
      10,332
      14,557
      15,387898
      $222,419
|Property operating
      and maintenance expenses(h):
      Same-store communities (a)
      Communities stabilized during 2002, but not 2001 (b)
      Triple net master lease communities (c)
      Development and lease-up communities (d)
      Renovation communities (e)
      Acquired communities (f)
      Sold communities (g)
         Total specified expenses | $62,720
      -
      -
      5,444
      6,192
      4,878278
      $79,512         
|Revenues in excess
      of specified expenses
      Revenues in excess of  specified expenses as a 
         percentage of total property revenues                                                                                                                                                                                                                         | $142,907
      64.3%                                                                 

(a)  Communities that were owned and fully
  stabilized throughout both 2002 and 2001 ("same-store").
  (b)  Communities that were stabilized during all of 2002, but were not
  stabilized during all of 2001.
  (c)  Communities that were subject to a triple net master lease agreement
  throughout both 2002 and 2001.
  (d)  Communities in the development and/or lease-up phase that were not
  fully stabilized during all or any of 2002.
  (e)  Communities that were in renovation subsequent to January 1, 2001.
  (f)  Communities that were acquired subsequent to January 1, 2001.
  (g)  Communities that were sold subsequent to January 1, 2001. 
  (h)  Represents direct property operating and maintenance expenses as reflected
  in our consolidated statements of operations and excludes 
         property management and other indirect
  operating expenses, interest expense and depreciation and amortization expense.Total property revenues decreased
  $5,994, or 2.6%, from $228,413 to $222,419 due to the sale of one apartment
  community in the first quarter of 2001, two apartment communities in the fourth
  quarter of 2001and two apartment communities in the first quarter of 2002; a
  decrease in same-store performance as a result of national economic weakness;
  and a decrease in the number of available apartment homes associated with renovation
  activities at five of our communities. These decreases were partially offset
  by an increase in the number of apartment homes resulting from the development
  and acquisition of additional communities. Following is additional data regarding
  the changes in total property revenues for two of the seven community categories
  presented in the preceding table:
  Same store communities:

MarketNumber ofCommunities
      Number of
        ApartmentHomes
      Percent
        of Total
      Physical
        Occupancy During 2002
      Change
        inOccupancy
      Change
        in
          Revenues
      
      Percent
        Change in
          Revenues


Houston
            So. Florida
            Atlanta
            Austin
            Dallas
            Other
              Total
      15
        13
        14
        7
        74
         60
      4,616
        3,845
        3,613
        1,677
        1,4231,243
        16,417
      28.1%
        23.4%
        22.0%
        10.2%
        8.7%7.6%100.0%
      94.1%
        94.6%
        92.3%
        93.3%
        95.4%90.7%
        93.7%
      (1.1%)
        (0.3%)
        (1.4%)
        (0.1%)
        (0.8%)(1.7%)
        (0.8%)$1,295 
        587 
        (2,274)
        (1,266)
        (331)(420)
        $(2,409)2.9% 
        1.4% 
        (6.1%)
        (5.4%)
        (1.8%)(4.0%)
        (1.4%)


---

Development and lease-up communities:

MarketNumber ofCommunities
      Number
        of 
        ApartmentHomes
      Percent
        of Total
      Physical
        OccupancyDuring 2002
      Change
        inRevenues


Dallas
          Orlando
          Houston
          Atlanta
             Total
      
      2
          1
          12
          6
      422
          315
          296263
          1,296
      32.6%
          24.3%
          22.8%20.3%
          100.0%
      63.6%
        65.9%
        52.2%39.8%
        55.3%
      $1,140
        1,437
        1,8152,126
        $6,518


---

Shares and $40 million of senior unsecured notes that bear interest at a weighted
  average interest rate of 5.9% and (2) $48.4 million of indebtedness that bore
  interest at a rate of 6.4% with $48.4 million of indebtedness that bears interest
  at a rate of 4.75% have served to reduce interest expense.
           Amortization of deferred financing
  costs increased $298, or 28.7%, from $1,038 to $1,336 due primarily to increased
  financing costs associated with the issuances of $180 million of senior unsecured
  notes in July 2002 and $40 million of senior unsecured notes in September 2002.
          General and administrative expense
  increased $168, or 2.3%, from $7,209 to $7,377 due primarily to an increase
  in abandoned real estate pursuit costs offset in part by a decrease in internal
  acquisition costs associated with the 2001 acquisitions of operating apartment
  communities and the D.C. Management Co.
         Corporate asset depreciation and amortization
  increased $902, or 110.0%, from $820 to $1,722 due primarily to an increase
  in amortization resulting from the depreciation of our new general ledger and
  web-based property management system, eGables, beginning in January 2002, and
  an increase in amortization resulting from the management contracts acquired
  in connection with the May 2001 acquisition of the D.C. Management Co. 
         Equity in income of  joint ventures
  increased $2,658, or 1,098.3%, from $242 to $2,900 due primarily to the 2002
  sales of four apartment communities by the GRAP JV, which resulted in the recognition
  of a $2,611 gain by us in 2002.

| | 2002         
| | -------------
| | Stabilized(a)

Our share of joint venture results:
          Rental and other revenues
          Property operating and maintenance expenses
          (exclusive of items shown separately below)
               Revenues in excess of specified expenses
          Interest expense and credit enhancement fees
          Amortization of deferred costs
          Other
               Funds from operations
          Gain on sale of real estate assets
          Real estate asset depreciation
               Equity in income of joint ventures
          Number of operating communities
          Number of units in operating communities
          Average percent occupied during the period
      $2,729( 1,181
          1,548
          (   611
           (     17(     25 895
          -(  733
          $   1625
          1,898
          92
      )
          )
          )
          )
          )
          %
      $ 1,071(  467  604
        (  184
         (    34(      8  378
        - (  408
        $   (303
        780
        47
      )
        )
        )
        )
        )
        )
        %
      $1,235(  536 699
          (   155
          (     19(      8  517
          2,611(  360
          $2,768
          4
          1,214
          94
      )
          )
          )
          )
          )
          %
      $5,035( 2,1842,851
        (  950
         (    70(    411,790
        2,611( 1,501
        $2,900
        12
        3,892
        84
      )
          )
          )
          )
          )
          %
      $6,312
         ( 2,602 3,710
        (1,708
         (     72201,950
        -  ( 1,708
        $   242
        15
        4,758
        76
      )
          )
          )
          )
          %(a)
        Communities that were owned and fully stabilized throughout 2002.
        (b) Communities in the development and/or lease-up phase that were not
        fully stabilized during all or any of 2002.
        (c) Communities that were sold subsequent to January 1, 2002.


---

Income from discontinued
  operations, net of minority interest, increased $7,262, or 536.7%, from $1,353
  to $8,615 due primarily to the $7,919 gain on disposition of discontinued operations,
  net of minority interest, recognized in 2002.
     
         Extraordinary loss, net of minority interest,
  of $1,360 in 2002 represents the write-off of unamortized deferred financing
  costs of $236 and a prepayment penalty of $1,451 associated with the early retirement
  of $48.4 million of secured tax-exempt bond indebtedness, net of the $327 portion
  of the loss attributable to the minority interest unitholders. These bonds had
  an interest rate of 6.375% which we were able to reissue on an unsecured basis
  at a rate of 4.75%, resulting in a positive net present value.
         Dividends to preferred shareholders decreased
  $2,952, or 30.2%, from $9,771 to $6,819 due to the $115 million redemption of
  our Series A Preferred Shares in August 2002, offset in part by the $40 million
  issuance of our Series C Preferred Shares in September 2002.Results of Operations

Comparison of operating results for the year
  ended December 31, 2001 to the year ended December 31, 2000

Our net income is generated
  primarily from the operation of our apartment communities and the disposition
  of assets that no longer meet our investment criteria. For purposes of evaluating
  comparative operating performance, we categorize our operating communities based
  on the period each community reaches stabilized occupancy. A community is considered
  to have achieved stabilized occupancy on the earlier to occur of (1) attainment
  of 93% physical occupancy or (2) one year after completion of construction.
  The combined operating performance for all of our wholly-owned apartment communities
  that are included in continuing operations for the years ended December 31,
  2001 and 2000 is summarized as follows:

Years
          Ended December 31,2001
      2000
      $ Change
      % ChangeRental and other property
        revenues:Same-store communities (a)
        Communities stabilized during 2001, but not 2000 (b)
        Triple net master lease communities (c)
        Development and lease-up communities (d)
        Renovation communities (e)
        Acquired communities (f)
        Sold communities (g)
           Total property revenues
      $186,290
        -
        2,776
        7,759
        10,365
        12,0029,221
        $228,413
      $181,457
        -
        2,367
        990
        10,412
        91427,578
        $223,718
      $4,833 
        - 
        409 
        6,769 
        (47)
        11,088 (18,357)$4,6952.7% 
        -% 
        17.3% 
        683.7% 
        (0.5%)
        1,213.1% (66.6%)2.1%Property operating and
          maintenance expenses(h):
          Same-store communities (a)
          Communities stabilized during 2001, but not 2000 (b)
          Triple net master lease communities (c)
          Development and lease-up communities (d)
          Renovation communities (e)
          Acquired communities (f)
          Sold communities (g)
             Total specified expenses
      $62,787 
        -  
        -  
        1,453  
        3,452  
        3,827  3,766  $75,285
      $59,780
        -
        -
        77
        3,229
        3239,692
        $73,101
      $ 3,007 
          -  
          -  
          1,376 
          223 
          3,504 (5,926)
          $  2,184
      5.0%
          -%
          -%
          1,787.0%
          6.9%
          1,084.8%(61.1%)
              3.0%Revenues
          in excess of specified expenses
      $153,128$150,617
      $2,511
      1.7%Revenues
          in excess of specified expenses as a 
          percentage of total property revenues
      67.0%
      67.3%
      -
      (0.3%)(a)
        Communities that were owned and fully stabilized throughout both 2001
        and 2000 ("same-store"). 
        (b) Communities that were stabilized during all of 2001, but were not
        stabilized during all of 2000. 
        (c) Communities that were subject to a triple net master lease agreement
        and fully stabilized throughout both 2001 and 2000.
        (d) Communities in the development and/or lease-up phase that were not
        fully stabilized during all or any of 2001.
        (e) Communities that were in renovation subsequent to January 1, 2000. 
        (f) Communities that were acquired subsequent to January 1, 2000.
        (g) Communities that were sold subsequent to January 1, 2000.
        (h) Represents direct property operating and maintenance expenses as reflected
        in our consolidated statements of operations and excludes 
              property management and other indirect
        operating expenses, interest expense and depreciation and amortization
        expense.


MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Total property revenues increased
  $4,695, or 2.1%, from $223,718 to $228,413 due primarily to an increase in the
  number of apartment homes resulting from the development and acquisition of
  additional communities and an increase in rental rates on same-store communities.
  This increase is offset by the sale of seven apartment communities in the second
  half of 2000, one apartment community during the second quarter of 2001 and
  two apartment communities in the fourth quarter of 2001.  Following is
  additional data regarding the increases in total property revenues for two of
  the seven community categories presented in the preceding table:     
  Same-store communities:

MarketNumber ofCommunities
      Number of
        ApartmentHomes
      Percent
        ofTotal
      Physical
        Occupancy During 2001
      Change
        inOccupancy
      Change
        in
          Revenues
      
      Percent
        Change in
          Revenues


Houston
            Atlanta
            So. Florida
            Austin
            Dallas
            Other
              Total
      16
          16
          14
          6
          7463
      4,862
        4,527
        4,017
        1,517
        1,4231,24317,589
      27.7%
        25.7%
        22.8%
        8.6%
        8.1%7.1%100.0%
      95.3%
        93.6%
        95.0%
        93.5%
        96.2%92.4%94.6%
      (0.3%)
        (1.5%)
        (0.1%)
        (3.5%)
        1.3% 
        (0.7%)(0.8%)$1,813 
          383 
        1,831 
        280 
        841 
        (315)$4,8333.9% 
          0.9% 
          4.3% 
          1.4% 
          4.9% 
          (2.9%)2.7%


Development and lease-up communities:

MarketNumber
        ofCommunities
      Number of 
        ApartmentHomes
      Percent
        of Total
      Physical
        OccupancyDuring 2001
      Change
        inRevenues


Orlando
          (a) Houston
          Atlanta
          Dallas
            Total
      
      2
          1
          115
      763
          296
          1831771,419
      53.7%
          20.9%
          12.9%12.5%100.0%
      61.4%
          4.3%
          14.1%62.0%55.6%
      $ 4,505
          65
          332,166$6,769(a) 
        One of these communities is leased to a single user group pursuant to
        a triple net master lease.


Property management
  revenues increased  $1,076, or 20.5%, from $5,241 to $6,317 due primarily
  to the May 2001 acquisition of the D.C. Management Co., in addition to increased
  joint venture activity for which we serve as the property manager.

Ancillary services
  revenues decreased $1,278, or 13.2%, from $9,711 to $8,433 due to a decrease
  in development and construction fee revenue of $1,798, offset by increases in
  corporate rental housing revenue of $354 and brokerage commission revenue of
  $166.  The decrease in development and construction fee revenue is comprised
  of $276 in revenue from unconsolidated joint ventures and $1,522 in revenue
  from third parties.  This decrease is due primarily to a portion of our
  projects nearing completion, coupled with fewer new project starts.  In
  addition, a $425 reduction in the estimated development revenues from the GRAP
  JV was recorded in 2001.  
       
         Interest income decreased $282, or 27.4%,
  from $1,029 to $747 due primarily to a decrease in interest rates.
         Property operating and maintenance expense
  (as reflected in the consolidated statements of operations) increased $2,184,
  or 3.0%, from $73,101 to $75,285 due to an increase in the number of apartment
  homes resulting from the development and acquisition of additional communities,
  as well as increased payroll, property taxes, insurance, utilities and maintenance
  costs at our same-store communities. This increase is offset in part by the
  sale of seven apartment communities in the second half of 2000, one apartment
  community during the second quarter of 2001 and two apartment communities during
  the fourth quarter of 2001.
        Ancillary services expense increased $890, or
  18.1%, from $4,916 to $5,806 due to increases in development and construction
  expenses of $392, corporate rental housing expenses of $411 and brokerage expenses
  of $87.  The increase in development and construction expenses is due to
  an increase in the allocation of direct costs associated with such activities,
  offset in part by a decrease in services rendered as certain of the related
  projects near completion.  The increase in corporate rental housing expenses
  is due to an expansion of the business services provided.

MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Real estate asset depreciation
  and amortization increased $3,721, or 8.8%, from $42,519 to $46,240 due primarily
  to the impact of the development and acquisition of additional communities and
  capital improvements made to existing operating communities, offset in part
  by the impact of the sale of seven apartment communities in the second half
  of 2000, one apartment community during the second quarter of 2001 and two apartment
  communities during the fourth quarter of 2001.
   
        Property management expense for owned communities
  and third-party properties on a combined basis increased $1,130, or 11.3%, from
  $10,007 to $11,137 due primarily to the May 2001 acquisition of the D.C. Management
  Co. We allocate property management expenses to both owned communities and third-party
  properties based on the proportionate share of total apartment homes owned and
  units managed.
        Interest expense and credit enhancement fees
  decreased $822, or 1.8%, from $44,788 to $43,966 due primarily to a decrease
  in interest rates and a decrease in outstanding indebtedness associated with
  the sale of seven apartment communities in the second half of 2000, one apartment
  community in the second quarter of 2001 and two apartment communities during
  the fourth quarter of 2001.  This decrease is offset in part by an increase
  in operating debt associated with the development and acquisition of additional
  communities.
   
        Amortization of deferred financing costs increased
  $143, or 16.0%, from $895 to $1,038 due primarily to increased financing costs
  associated with the issuance of $150 million of senior unsecured notes in February
  2001.
         General and administrative expense increased
  $55, or 0.8%, from $7,154 to $7,209 due primarily to an increase in (1) internal
  acquisition costs associated with the 2001 acquisitions of operating apartment
  communities and the D.C. Management Co., (2) long-term compensation expense
  and (3) inflationary increases in expenses. Such increases were offset in part
  by a decrease in abandoned real estate pursuit costs and marketing and branding
  campaign costs.
         Corporate asset depreciation and amortization
  increased $149, or 22.2%, from $671 to $820 due primarily to an increase in
  amortization resulting from the management contracts acquired in connection
  with the May 2001 acquisition of the D.C. Management Co.
         Unusual items of $8,847 in 2001 are comprised
  of (1) a $5,006 charge associated with the write-off of building components
  at Gables State Thomas Ravello that are being replaced in connection with a
  remediation program, (2) $2,200 of severance charges associated with organizational
  changes adopted in the fourth quarter of 2001, (3) $920 in reserves associated
  with certain technology investments and (4) $721 of abandoned real estate pursuit
  costs as a result of September 2001 events that impacted the U.S. economy.
         Equity in income of joint ventures
  decreased $157, or 39.3%, from $399 to $242 due primarily to the March 2001
  acquisition of the membership interests of our venture partner in two stabilized
  communities in the GRAP JV and the August 2001 acquisition of our venture partner's
  75% interest in Gables Metropolitan Uptown, a stabilized community. This decrease
  is also impacted by increased property taxes at certain of the communities and
  the suspension of lease-up activities at Gables State Thomas Ravello.    
         Our share of the operating results for
  the apartment communities owned by the unconsolidated joint ventures  in
  which we have an interest during 2001 and 2000 is as follows:

MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2001                                                                                                             |                                                                                                             
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Stabilized(a)                                                                                                    | Development& Lease-up (b)                                                                                   
|Our share of joint venture results:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                  |                                                                                                             
|Rental and other revenues
      Property operating and maintenance expenses
      (exclusive of items shown separately below)
         Revenues in excess of specified expenses
      Interest expense and credit enhancement fees
      Amortization of deferred costs
      Other
         Funds from operations
      Real estate asset depreciation
         Equity in income of joint ventures
      Number of operating communities
      Number of units in operating communities
      Average percent occupied during the period | $4,069 
      (1,642)2,427 
      (1,046)
      (38)151,358 
      (1,035)$  323
      7 
      2,502 
      93% | $1,137 
      (456)
       681 
      (276)
      (22)-383 
      (375)$   8
      4 
      1,116 
      41%

|(a)
        Communities that were owned and fully stabilized throughout 2001.
        (b) Communities in the development and/or lease-up phase that were not
        fully stabilized during all or any of 2001.
        (c) Communities that were sold subsequent to January 1, 2001.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Gain on sale of previously
  depreciated operating real estate assets of $34,110 in 2001 relates to the sale
  of an apartment community in Atlanta comprising 386 apartment homes, an apartment
  community in Houston comprising 776 apartment homes and an apartment community
  in Dallas comprising 536 apartment homes.Gain on sale of land and development
  rights of $3,220 in 2001 is comprised of (1) $934 associated with the 2001 sale
  of 2.5 acres of land in Atlanta, (2) $1,590 associated with the 2001 contribution
  of land and development rights into the GRAP JV Two and (3) recognition of $696
  of deferred gain associated with a land sale in 2000.
         Gain on sale of previously depreciated
  operating real estate assets in 2000 of $28,622 relates to the sale of an apartment
  community located in Dallas comprising 126 apartment homes, an apartment community
  in Houston comprising 228 apartment homes, two apartment communities located
  in San Antonio comprising 544 apartment homes, two apartment communities located
  in Nashville comprising 618 apartment homes and one apartment community in Memphis
  comprising 500 apartment homes.
         Gain on sale of land and development rights
  of $845 in 2000 relates to the sale of a parcel of land adjacent to an existing
  apartment community located in Atlanta.Liquidity and Capital Resources       Net cash provided by operating activities
  from continuing operations increased from $97,483 for the year ended December
  31, 2001 to $103,290 for the year ended December 31, 2002 due to (1) a change
  in other assets between periods of $10,586, (2) a change in restricted cash
  between periods of $1,941 and (3) a change in other liabilities between periods
  of $4,078. Such increases were offset in part by a decrease of $10,798 in income
  from continuing operations (a) before certain non-cash or non-operating items,
  including depreciation, amortization, equity in income of joint ventures, minority
  interest of unitholders in Operating Partnership, gain on sale of real estate
  assets, long-term compensation expense, extraordinary loss, and unusual items
  and (b) after operating distributions received from joint ventures. Net cash
  provided by operating activities from discontinued operations decreased from
  $3,068 to $1,670 due to the disposition of discontinued operations in 2002.
        We used $123,405 of net cash in investing activities
  for the year ended December 31, 2001 compared to $17,361 for the year ended
  December 31, 2002. During the year ended December 31, 2002, we expended $91,281
  related to acquisition, development, construction and renovation expenditures,
  $13,077 related to recurring value retention capital expenditures for operating
  apartment communities, $11,910 related to non-recurring and/or value-enhancing
  capital expenditures for operating apartment communities, $1,093 related to
  our investment in joint ventures and $1,059 related to other investments. During
  the year ended December 31, 2002, we received cash of (1) $46,803 in connection
  with the sale of wholly-owned real estate assets, (2) $43,227 in connection
  with the disposition of discontinued operations, (3) $10,680 in connection with
  our share of the net proceeds from the sale of joint venture real estate assets
  and (4) $349 of sale proceeds released from escrow to fund development activities.
  During the year ended December 31, 2001, we expended $215,552 related to acquisition,
  development, construction and renovation expenditures, $11,797 related to recurring
  value retention capital expenditures for operating apartment communities, $10,916
  related to non-recurring and/orMANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

value-enhancing capital expenditures for operating apartment communities,
  $4,248 related to our investment in joint ventures and $954 related to other
  investments. During the year ended December 31, 2001, we received cash of (1)
  $18,519 in connection with our contribution of interests in certain land and
  development rights to the GRAP JV Two and (2) $93,634 in connection with the
  sale of wholly-owned real estate assets. In addition, during the year ended
  December 31, 2001, $7,909 of sales proceeds were released from escrow to fund
  development activities.
          We had $22,833 of net cash provided
  by financing activities for the year ended December 31, 2001 compared to $85,549
  of net cash used in financing activities for the year ended December 31, 2002.
  During the year ended December 31, 2002, we expended (1) $115,000 in connection
  with the redemption of the Series A Preferred Shares, (2) $84,261 in common
  and preferred dividends and distributions, (3) $13,977 in connection with treasury
  share repurchases and Unit redemptions, (4)$2,935 in deferred financing costs
  and (5) $1,451 for a prepayment penalty incurred in connection with our tax-exempt
  debt refinancing. During the year ended December 31, 2002, we received net proceeds
  of (1) $81,343 from net borrowings, (2)$39,750 from the issuance of the Series
  C Preferred Shares, (3) $7,602 from the exercise of share options and (4) $3,380
  from principal payments released from escrow, net. During the year ended December
  31, 2001, we had net borrowings of $94,916 and proceeds from the exercise of
  share options of $15,144. These net borrowings and share option proceeds were
  offset by payments for common and preferred dividends and distributions totaling
  $84,593, deferred financing costs of $1,906 and principal escrow payments deposited
  into escrow, net of $728.
          We have elected to be taxed as a
  REIT under the Internal Revenue Code. To qualify as a REIT, we must meet a number
  of organizational and operational requirements, including a requirement that
  we currently distribute at least 90% of the REIT's ordinary taxable income to
  shareholders.  It is our current intention to adhere to these requirements
  and maintain our REIT status. As a REIT, we generally will not be subject to
  federal income tax on distributed taxable income. We utilize Gables Residential
  Services, a taxable REIT subsidiary, to provide management and other services
  to third parties that we, as a REIT, may be prohibited from providing. Taxable
  REIT subsidiaries are subject to federal, state and local income taxes.
           As of December 31, 2002, we
  had total indebtedness of $958,574, cash and cash equivalents of $6,281 and
  principal escrow deposits reflected in restricted cash of $755.  Our indebtedness
  has an average of four years to maturity at December 31, 2002. 
           The following information relating
  to the aggregate maturities of our notes payable at December 31, 2002 is presented
  below on a pro forma basis to reflect the February 2003 reissuance of the letters
  of credit enhancing $44,930 of tax-exempt bonds under the $252 million credit
  facility with a maturity date of May 2005.

Regularly 
        Scheduled
        Principal
        AmortizationPayments
      Balloon
         Principal
        Payment due at Maturity
      Total


|2003
        2004
        2005
        2006
        2007 
        2008 and thereafter | $1,925
        1,667
        1,735
        1,654
        1,77514,240$22,996 | $        
        - 
        76,759
        241,787
        203,240
        247,898165,894$935,578 | $    1,925
        78,426
        243,522
        204,894
        249,673180,134$958,574
|------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------

---

principal amortization payments, are also expected to be funded from recurring
  real estate activities that include both operating and asset disposition activities.
  We anticipate that acquisition, construction, development and renovation activities
  as well as land purchases, will be initially funded primarily through borrowings
  under our credit facilities described below. We expect to meet certain of our long-term
  liquidity requirements, such as scheduled debt maturities, repayment of short-term
  financing of construction, development and renovation activities and possible
  property acquisitions, through long-term secured and unsecured borrowings, the
  issuance of debt securities or equity securities, private equity investments
  in the form of joint ventures, or through the disposition of assets which, in
  our evaluation, may no longer meet our investment requirements.We currently have seven communities under
  development that are expected to comprise 2,015 apartment homes upon completion
  and an indirect 20% ownership interest in two development communities that are
  expected to comprise 373 apartment homes upon completion. The estimated costs
  to complete the development of these assets total $149 million at December 31,
  2002, including $2 million of costs that are obligated to fund for the co-investment
  development communities. These costs are expected to be initially funded by
  $39 million in construction loan proceeds and $110 million in borrowings under
  our credit facilities described below.$252 Million Credit Facility      At December 31, 2002, we had $40 million
  in borrowings outstanding under our $225 million unsecured revolving credit
  facility provided by a syndicate of banks. In February 2003, we closed a modification
  to this credit facility which, among other things, increased the committed capacity
  thereunder to $252 million from $225 million. We have the option to further
  increase the capacity under the facility to $300 million from $252 million to
  the extent banks (from the syndicate or otherwise) voluntarily agree to provide
  the additional commitment. The facility currently has a maturity date of May
  2005. Borrowings under the $252 million facility currently bear interest at
  our option of LIBOR plus 0.95% or prime minus 0.25%. Such scheduled interest
  rates may be adjusted up or down based on changes in our senior unsecured credit
  ratings and our leverage ratios. We may also enter into competitive bid loans
  with participating banks for up to $126 million at rates below the scheduled
  rates. In addition, we pay an annual facility fee currently equal to 0.20% of
  the $252 million commitment. In February 2003, approximately $46 million of
  letters of credit enhancing approximately $45 million of tax-exempt variable
  rate notes payable were reissued under this facility.$75 Million Borrowing Facility       We have a $75 million unsecured borrowing
  facility with a bank that currently has a maturity date of May 2005. The interest
  rate and maturity date related to each advance under this facility is agreed
  to by both parties prior to each advance. We had $34.7 million in borrowings
  outstanding under this facility at December 31, 2002 at an interest rate of
  1.85%.$10 Million Credit FacilityAt December 31, 2002, we had $0.9 million
  in borrowings outstanding under our $10 million unsecured revolving credit facility
  provided by a bank. The facility currently has a maturity date of December 31,
  2003 with unlimited one-year extension options. Borrowings under this facility
  bear interest at the same scheduled interest rates as the $252 million credit
  facility.Secured Variable-Rate Construction Loans       We have committed fundings under four
  construction-related financing vehicles for two wholly-owned development communities
  totaling $43 million from a bank. At December 31, 2002, we had drawn approximately
  $4 million under these vehicles and therefore have approximately $39 million
  of remaining capacity. Borrowings under these vehicles bear interest at a weighted
  average rate of 3.25% at December 31, 2002.Restrictive Covenants       Certain of our debt agreements contain
  customary representations, covenants and events of default, including covenants
  which restrict the ability of the Operating Partnership to make distributions
  in excess of stated amounts, which in turn restricts our ability to declare
  and pay dividends. In general, during any fiscal year, the Operating Partnership
  may only distribute up to 100% of its consolidated income available for distribution
  (as defined in the related agreement). The applicable debt agreements contain
  exceptions to these limitations to allow the Operating Partnership to make distributions
  necessary to (1) allow us to maintain our status as a REIT or (2) distribute
  100% of our taxable income at the REIT level. We do not anticipate that this
  provision will adversely affect the ability of the Operating Partnership to
  make distributions or our ability to declare dividends under our current dividend
  policy.

---

Inflation       Substantially all of the leases at
  our apartment communities are for a term of one year or less.  In the event
  of significant inflation, this may enable us to realize increased rents upon
  renewal of existing leases or the beginning of new leases. Short-term leases
  generally minimize our risk from the adverse effects of inflation, although
  these leases generally permit residents to leave at the end of the lease term
  without penalty and therefore expose us to the effect of a decline in market
  rents. In a deflationary rent environment, as is currently being experienced
  in certain of our markets, we are exposed to declining rents more quickly under
  these shorter term leases.Certain Factors Affecting Future Operating Results       This report contains forward-looking
  statements within the meaning of Section 27A of the Securities Act of 1933,
  as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
  The words "believe," "expect," "anticipate," "intend,"
  "plan," "estimate," "assume" and other similar
  expressions which are predictions of or indicate future events and trends and
  which do not relate solely to historical matters identify forward-looking statements.
  These statements include, among other things, statements regarding our intent,
  belief or expectations with respect to the following:

- our ability to increase shareholder value by producing consistent
      high quality earnings to sustain dividends and annual total returns that
      exceed the multifamily sector average;
- our ability to create a portfolio of high quality assets in
      strategically selected markets that are complementary through economic diversity
      and characterized by high job growth and resiliency to economic downturns;
- the ability of our portfolio to maintain high levels of occupancy
      and rental rates relative to overall market conditions;
- our ability to generate a return on invested capital that
      exceeds our long-term weighted average cost of capital while maintaining
      financial flexibility through a conservative, investment grade credit profile;
- our expectation that the markets we have selected for investment
      will continue to experience job growth that exceeds national averages, and
      that our EPN locations will outperform local market results;
- our ability to meet short-term liquidity requirements, including
      the payment of common and preferred dividends, through net cash provided
      by recurring real estate activities, and to meet long-term liquidity requirements
      through long-term secured and unsecured borrowings, the issuance of debt
      securities or equity securities, private equity investments in the form
      of joint ventures, or through the disposition of assets which, in our evaluation,
      may no longer meet our investment requirements; and
- estimated development and construction costs for our development
      and lease-up communities, and anticipated construction commencement, completion,
      lease-up and stabilization dates for these communities.

You should not rely on forward-looking statements
  because they involve known and unknown risks, uncertainties and other factors
  which are, in some cases, beyond our control and may cause our actual results,
  performance or achievements to differ materially from anticipated future results,
  or the performance or achievements expressed or implied by such forward-looking
  statements. Factors that might cause such a difference include, but are not
  limited to:

- national and local economic conditions generally, and the real estate market
    specifically, including changes in occupancy rates and market rents, a continued
    deceleration of economic conditions in our markets, and a failure of national
    and local economic conditions to rebound in a timely manner;
- changes in job growth, household formation and population growth in our
    markets;
- excess supply of and insufficient demand for apartment communities in our
    markets;
- competition, which could limit our ability to secure attractive investment
    opportunities, lease apartment homes or increase or maintain rents;
- the failure to sell apartment communities in a timely manner or on favorable
    terms;
- uncertainties associated with our development and construction activities,
    including the failure to obtain zoning and other approvals, actual development
    and construction costs exceeding our budgeted estimates and construction material
    defects;
- construction and lease-up may not be completed on schedule, resulting in
    increased debt service expense and construction costs and reduced rental revenues;
- new debt or equity financing may not be available or may not be available
    on favorable terms, and existing indebtedness may mature in an unfavorable
    credit environment, preventing such indebtedness from being refinanced or,
    if financed, causing such refinancing to occur on terms that are not as favorable
    as the terms of existing indebtedness;
- changes in interest rates;
- cash flow from recurring real estate activities may be insufficient to meet
    our short-term liquidity requirements, including the payment of common and
    preferred dividends;
- legislative, regulatory and accounting changes, including changes to laws
    governing the taxation of REITs or changes in GAAP; and
- potential liability for uninsured losses and environmental contamination.

---

While forward-looking statements
  reflect our good faith beliefs, they are not guarantees of future performance.
  We disclaim any obligation to publicly update or revise any forward-looking
  statement, whether as a result of new information, future events or otherwise.Supplemental Discussion - Funds From Operations and Adjusted Funds From OperationsWe consider funds from
  operations ("FFO") to be a useful performance measure of the operating
  performance of an equity REIT because, together with net income and cash flows,
  FFO provides investors with an additional basis to evaluate the ability of a
  REIT to incur and service debt and to fund distributions and capital expenditures.
  We believe that in order to facilitate a clear understanding of our operating
  results, FFO should be examined in conjunction with net income as presented
  in the financial statements and data included elsewhere in this report. 
  FFO is determined in accordance with the principles established by the Board
  of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). 
  FFO, as defined by NAREIT, represents net income (loss) determined in accordance
  with GAAP, excluding extraordinary items as defined under GAAP and gains or
  losses from sales of depreciable operating property, plus certain non-cash items
  such as real estate asset depreciation and amortization, and after adjustments
  for unconsolidated partnerships and joint ventures. FFO presented herein is
  not necessarily comparable to FFO presented by other real estate companies due
  to the fact that not all real estate companies use the same definition. However,
  our FFO is comparable to the FFO of real estate companies that use the NAREIT
  definition.  Adjusted funds from operations ("AFFO") is defined
  as FFO less recurring value retention capital expenditures. FFO and AFFO should
  not be considered alternatives to net income as indicators of our operating
  performance or as alternatives to cash flows as measures of liquidity. FFO does
  not measure whether cash flow is sufficient to fund all of our cash needs, including
  principal amortization, capital expenditures and distributions to shareholders
  and unitholders. Additionally, FFO does not represent cash flows from operating,
  investing or financing activities as defined by GAAP. Reference is made to "Management's
  Discussion and Analysis of Financial Condition and Results of Operations - Liquidity
  and Capital Resources" for a discussion of our cash needs and cash flows.
  A reconciliation of FFO and AFFO follows:

|                                                                                                                                                                                                                                                                                                                   |  | Years Ended December 31,                               |                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------ | -------------------------------
|                                                                                                                                                                                                                                                                                                                   |  | 2002                                                   |                                
|Net income available to common shareholders
      Minority interest of common unitholders in Operating Partnership:
           Continuing operations
           Discontinued operations
              Total                                                                                                        |  | $ 48,893
        10,103
          2,078
        12,181 |                                
|Extraordinary loss, net of minority interest
      Real estate asset depreciation and amortization:
           Wholly-owned real estate assets - continuing operations
           Wholly-owned real estate assets - discontinued
      operations
           Joint venture real estate assets 
              Total |  | 1,360
       
      47,093
      8061,50149,400        |                                
|Gain on sale of previously depreciated operating
      real estate assets:
      Wholly-owned real estate assets - continuing operations
      Wholly-owned real estate assets - discontinued operations
      Joint venture real estate assets 
             Total                                                |  | (17,906
      (  9,829(  2,611
        (30,346         | )
        )
        )
        )
|Funds from operations - basic and diluted                                                                                                                                                                                                                                                                          |  | $ 81,488                                               |                                
|Recurring value retention capital expenditures:
      Carpet and flooring
      Appliances
      Other additions and improvements
          Total                                                                                                                                                                  |  | $6,401
      8215,855
         13,077                  |                                
|Adjusted funds from operations - basic and diluted                                                                                                                                                                                                                                                                 |  | $ 68,411                                               |                                
|Average shares and Units outstanding - basic                                                                                                                                                                                                                                                                       |  | 30,571                                                 |                                
|Average shares and Units outstanding - diluted                                                                                                                                                                                                                                                                     |  | 30,684                                                 |                                

MANAGEMENT'S DISCUSSION AND ANALYSIS
  (Amounts in Thousands, Except Property and Per Share Data)

---

ITEM 7A.  QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK
         Our capital structure includes the use
  of fixed-rate and variable-rate indebtedness. As such, we are exposed to the
  impact of changes in interest rates. We periodically seek input from third-party
  consultants regarding market interest rate and credit risk in order to evaluate
  our interest rate exposure. In certain situations, we may utilize derivative
  financial instruments in the form of rate caps, rate swaps or rate locks to
  hedge interest rate exposure by modifying the interest rate characteristics
  of related balance sheet instruments and prospective financing transactions.
  We do not utilize such instruments for trading or speculative purposes. We did
  not have any derivative instruments in place at December 31, 2002 or 2001.

We typically refinance
  maturing debt instruments at the then-existing market interest rates and terms,
  which may be more or less favorable than the interest rates and terms on the
  maturing debt.

The following
  table provides information about our financial instruments that are sensitive
  to changes in interest rates and should be read in conjunction with the accompanying
  consolidated financial statements and notes thereto. For debt obligations, the
  table presents principal cash flows and related weighted average interest rates
  in effect at December 31, 2002 by expected maturity dates. The indebtedness
  outstanding under each of our credit facilities is reflected in the table using
  the May 2005 maturity date of our $252 million credit facility. Outstanding
  indebtedness for each tax-exempt bond issue is reflected in the table using
  the earlier of the related bond maturity date or the bond enhancement facility
  maturity date, as applicable. The table is presented on a pro forma basis to
  reflect the February 2003 reissuance of the letters of credit enhancing $44,930
  of tax-exempt bonds under the $252 million credit facility with a maturity date
  of May 2005. The weighted average interest rates presented in this table are
  inclusive of credit enhancement fees. There have been no substantial changes
  in our market risk profile from the preceding year and the assumptions are consistent
  with prior year assumptions.

Expected Year of Maturity

2003
      2004
      2005
      2006
      2007
      2008 andThereafter
      2002Total
      2002Fair Value
      2001TotalDebt:Conventional fixed rate
        Average interest rate
      $1,720
        7.19%
      $20,021
        7.13%
      $108,280
        6.80%
      $178,909
        7.28%
      $207,913
        6.13%
      $121,659
        7.34%
      $638,502
        6.83%
      $692,223
        4.46%
      $504,062
        7.53%Tax-exempt fixed rate
        Average interest rate
      $2057.63%
      $58,4054.91%
      $2307.63%
      $2457.63%
      $2607.63%
      $9,7757.63%
      $69,1205.33%
      $72,1453.17%
      $69,3106.47%Total fixed-rate debt
           Average interest rate
      $1,9257.24%
      $78,4265.48%
      $108,5106.80%
      $179,1547.28%
      $208,1736.13%
      $131,4347.36%
      $707,6226.68%
      $764,3684.34%
      $573,3727.40%Tax-exempt variable rate
        Average interest rate
      -
        -
      -
        -
      $55,015
        2.47%
      $25,740
        2.45%
      $41,500
        2.35%
      $48,700
        2.36%
      $170,955
        2.41%
      $170,955
        2.41%
      $170,955
        2.47%Variable-rate credit facilities
        Average interest rate
      -
        -
      -
        -
      $75,608
        1.89%
      -
        -
      -
        -
      -
        -
      $75,608
        1.89%
      $75,608
        1.89%
      $132,904
        2.94%Variable-rate construction loans
        Average interest rate
      --
      --
      $4,3893.25%
      --
      -
          -
      --
      $4,3893.25%
      $4,3893.25%
      --Total variable-rate debt
           Average interest rate
      --
      --
      $135,0122.17%
      $25,7402.45%
      $41,5002.35%
      $48,7002.36%
      $250,9522.26%
      $250,9522.26%
      $303,8592.68%Total debt
              Average interest rate
      $1,9257.24%
      $78,4265.48%
      $243,522
          4.23%
      $204,8946.67%
      $249,6735.50%
      $180,1346.01%
      $958,5745.53%
      $1,015,3203.83%
      $877,2315.77%


The estimated fair value
  of our debt at December 31, 2002 is based on a discounted cash flow analysis
  using current borrowing rates for debt with similar terms and remaining maturities.
  Such fair value is subject to changes in interest rates. Generally, the fair
  value will increase as interest rates fall and decrease as interest rates rise.

ITEM 8.  FINANCIAL STATEMENTS
  AND SUPPLEMENTARY DATAThe financial statements and supplementary
  data are listed under Item 15(a) and filed as part of this report on the pages
  indicated.ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
  ON ACCOUNTING AND FINANCIAL DISCLOSUREAs discussed more fully in the Proxy
  Statement to be filed relating to the 2003 Annual Meeting of the Registrant's
  Shareholders, during 2002 we dismissed Arthur Andersen LLP and engaged Deloitte
  & Touche LLP to be our independent public auditors.

PART III

ITEM 10.  DIRECTORS
  AND EXECUTIVE OFFICERS OF THE REGISTRANTThe information concerning the Directors and Executive
  Officers of the Registrant required by Item 10 shall be included in the Proxy
  Statement to be filed relating to the 2003 Annual Meeting of the Registrant's
  Shareholders and is incorporated herein by reference.ITEM 11.  EXECUTIVE COMPENSATIONThe information concerning Executive Compensation required
  by Item 11 shall be included in the Proxy Statement to be filed relating to
  the 2003 Annual Meeting of the Registrant's Shareholders and is incorporated
  herein by reference.ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
  OWNERS AND MANAGEMENTWe maintain the 1994 Share Option and Incentive
  Plan pursuant to which common shares or other equity awards may be issued or
  granted to eligible persons.  The following table provides information
  about equity awards under the 1994 Share Option and Incentive Plan as of December
  31, 2002.

Equity Compensation
  Plan Information
Number of securities
      to be
      issued upon exercise of
      outstanding options, 
      warrants and rights
      (a)
    Weighted-average
      exercise
      price of outstanding
      options, warrants and rights
      (b)
    Number of securities
      remaining available
      for 
      future issuance under
      equity compensation plans
      (excluding securities reflected
      in column (a)) 
      (c)

Plan
          CategoryEquity compensation plans approved by security
        holders (1)
      901,332
      (2)
      $25.64
      (3)
      151,645(4)Equity compensation plans not approved by
        security holders
      N/A
      
      N/A
      
      N/ATotal
      901,332
      
      $25.64
      
      151,645(1)  Includes information
        related to our 1994 Share Option and Incentive Plan.
        (2)  Does not include restricted shares as they have been reflected
        in our total common shares outstanding.
        (3)  Does not include outstanding deferred share awards granted to
        members of the board of trustees as there is no associated exercise price.
        (4)  Certain securities may be issued in the form of unrestricted
        or restricted shares.


Additional information concerning Security Ownership
  of Certain Beneficial Owners and Management required by Item 12 shall be included
  in the Proxy Statement to be filed relating to the 2003 Annual Meeting of the
  Registrant's Shareholders and is incorporated herein by reference.ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONSThe information concerning Certain Relationships
  and Related Transactions required by Item 13 shall be included in the Proxy
  Statement to be filed relating to the 2003 Annual Meeting of the Registrant's
  Shareholders and is incorporated herein by reference.ITEM 14.  CONTROLS AND PROCEDURES(a)  Evaluation of disclosure controls and procedures.
         As required by new Rule 13a-15 under the
  Securities Exchange Act of 1934, as amended (the "Exchange Act"),
  within the 90 days prior to the date of this report, we carried out an evaluation
  under the supervision and with the participation of senior management, including
  our Chief Executive Officer and Chief Financial Officer, of the effectiveness
  of the design and operation of our disclosure controls and procedures. 
  Based upon that evaluation, our Chief Executive Officer and Chief Financial
  Officer concluded that our disclosure controls and procedures are effective
  to ensure that information required to be disclosed by us in the reports we
  file or submit under the Exchange Act is recorded, processed, summarized and
  reported within the time periods specified in the Securities and Exchange Commission's
  rules and forms. We continue to review and document our disclosure controls
  and procedures, including our internal controls and procedures for financial
  reporting, and may from time to time make changes aimed at enhancing their effectiveness
  and to ensure that our systems evolve with our business.
     (b)  Changes in internal controls
         None

PART IV

ITEM 15.  EXHIBITS,
  FINANCIAL STATEMENTS AND SCHEDULE AND REPORTS ON FORM 8-K
     (a)   Financial Statements and ScheduleThe financial statements and schedule listed below are filed as part of
  this annual report on the pages indicated.

Report of Independent Public
        AuditorsConsolidated Balance Sheets as of December 31, 2002
        and December 31, 2001Consolidated Statements of Operations for the years
        ended December 31, 2002, 2001 and 2000Consolidated Statements of Shareholders' Equity
        for the years ended December 31, 2002, 2001 and 2000Consolidated Statements of Cash Flows for the years
        ended December 31, 2002, 2001 and 2000Notes to Consolidated Financial StatementsSchedule III - Real Estate Investments and Accumulated
        Depreciation as of December 31, 2002
      50
        51
        52
        53
        54
        55
        76


(b)   Reports on Form
  8-KNone(c)   ExhibitsCertain of the exhibits required by
  Item 601 of Regulation S-K have been filed with previous reports by the Registrant
  (File No. 1-12590), referred to herein as Gables, or the Operating Partnership
  (File No. 0-22683) and are incorporated herein by reference to the filing in
  the corresponding numbered footnote.

Exhibit
          No.
      Description3.1
          3.1
          3.1
          3.1
          3.1
          3.1
          3.1
          4.1
          4.2
          4.3
          4.4
          4.5
          4.6
          4.7
          4.8
          4.9
          4.10
          4.11
          4.12
          4.13
          10.1
          10.2
          10.3
          10.4
          10.5
          10.6
          10.7
          10.8
          10.9
          10.10
          10.11
          10.12
          10.13
          10.14
          10.15
          10.16
          10.17
          10.18
          10.19
          10.20
          10.21
          10.22
          10.23
          10.24
          10.25
          21.1
          23.1
      (i)(a)
        (i)(b)
        (i)(c)
        (i)(d)
        (i)(e)
        (i)(f)
        (ii)
        *
        *
        *
        *
        *
      ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
        ---
      Gables' Amended and Restated
        Declaration of Trust (1)
        Articles of Amendment to Gables' Amended and Restated Declaration of Trust
        (2)
        Articles Supplementary to Gables' Amended and Restated Declaration of
        Trust creating the 8.30% Series A Cumulative Redeemable Preferred Shares
        (3)
        Articles Supplementary to Gables' Amended and Restated Declaration of
        Trust creating the 5.00% Series Z Cumulative Redeemable Preferred Shares
        (2)
        Articles Supplementary to Gables' Amended and Restated Declaration of
        Trust creating the 8.625% Series B Cumulative Redeemable Preferred Shares
        (4)
        Articles Supplementary to Gables' Amended and Restated Declaration of
        Trust creating the 7.875% Series C Cumulative Redeemable Preferred Shares
        (5)
        Gables' Second Amended and Restated Bylaws, as amended (6)
        Indenture, dated as of March 23, 1998, between the Operating Partnership
        and First Union National Bank (7)
        Supplemental Indenture No. 1, dated March 23, 1998, between the Operating
        Partnership and First Union National Bank (7)
        The Operating Partnership 6.80% Senior Notes due 2005 (7)
        Supplemental Indenture No. 4, dated February 22, 2001, between the Operating
        Partnership and First Union National Bank (8)
        The Operating Partnership 7.25% Senior Notes due 2006 (8)
        Supplemental Indenture No. 5, dated July 8, 2002, between the Operating
        Partnership and Wachovia Bank, National Association (9)
        The Operating Partnership 5.75% Senior Notes due 2007 (9)
        Supplemental Indenture No. 6, dated September 27, 2002, between the Operating
        Partnership and Wachovia Bank, National Association (5)
        The Operating Partnership 5.86% Senior Notes due 2009 (5)
        Supplemental Indenture No. 7, dated September 27, 2002, between the Operating
        Partnership and Wachovia Bank, National Association (5)
        The Operating Partnership 6.10% Senior Notes due 2010 (5)
        Registration Rights Agreement, dated September 27, 2002, between Gables
        and Teachers Insurance and Annuity Association of America (5)
        Registration Rights Agreement, dated September 27, 2002, between the Operating
        Partnership and Teachers Insurance and Annuity Association of America
        (5)
        Fifth Amended and Restated Agreement of Limited Partnership of Operating
        Partnership (5)
        Fourth Amended and Restated 1994 Share Option and Incentive Plan (10)
        Form of Employment Agreement as signed by Gables and each of Chris D.
        Wheeler (Chairman of the Board of Trustees, President and Chief Executive
        Officer; base salary of $365,581), Marvin R. Banks, Jr. (Senior Vice President
        and Chief Financial Officer; base salary of $253,094) and
        Michael M. Hefley (Senior Vice President and Chief Operating Officer;
        base salary of $253,094) (10)
        Form of Amendment to Employment Agreement as signed by Gables and each
        of Chris D. Wheeler,   Marvin R. Banks, Jr. and Michael M. Hefley 
        (11)
        Employment Agreement as signed by Gables and David D. Fitch (Senior Vice
        President and Chief
        Investment Officer) (5)
        Form of 2001 Restricted Share Award Agreement as signed by Gables and
        each of Chris D. Wheeler (8,999 shares), Marvin R. Banks, Jr. (5,999 shares),
        Michael M. Hefley (5,999 shares), Gregory W. Iglehart (1,400 shares) and
        Dawn H. Severt (3,599 shares) (12)
        Form of 2002 Restricted Share Award Agreement as signed by Gables and
        each of Chris D. Wheeler (12,600 shares), Marvin R. Banks, Jr. (8,400
        shares), Michael M. Hefley (8,400 shares), Gregory W. Iglehart (830 shares)
        and Dawn H. Severt (5,040 shares) (13)
        Form of 2003 Restricted Share Award Agreement as signed by Gables and
        each of Chris D. Wheeler (7,560 shares), Marvin R. Banks, Jr. (5,040 shares),
        Michael M. Hefley (5,040 shares), Douglas G. Chesnut (1,680 shares), Gregory
        W. Iglehart (839 shares) and Dawn H. Severt (3,024 shares)
        Restricted Share Award Agreement between Gables and Gregory W. Iglehart
        (5)
        2003 Restricted Share Award Agreement between Gables and David D. Fitch
        Senior Executive Severance Agreement between Gables and Chris D. Wheeler
        (14)
        Form of Senior Executive Severance Agreement as signed by Gables and each
        of Marvin R. Banks, Jr., David D. Fitch and Michael M. Hefley (14)
        Senior Executive Severance Agreement between Gables and Dawn H. Severt
        (14)
        Senior Executive Severance Agreement between Gables and Douglas G. Chesnut
        (11)
        Separation Agreement between Gables and Catherine K. Cabell dated January
        18, 2002 (11)
        Separation Agreement between Gables and C. Jordan Clark dated February
        25, 2002 (11)
        Separation Agreement between Gables and Stephen G. Sweet, dated May 3,
        2002 (15)
        Form of Indemnification Agreement as signed by Gables and each of Chris
        D. Wheeler, Marvin R. Banks, Jr., David D. Fitch, Michael M. Hefley, Dawn
        H. Severt, Marcus E. Bromley, C. Jordan Clark, Lauralee E. Martin, John
        W. McIntyre, Mike E. Miles, and James D. Motta (11)
        Unsecured Note No. 2 for $29,681,000 dated August 13, 1997 between the
        Operating Partnership, Gables-Tennessee Properties and Teachers Insurance
        and Annuity Association of America (16)
        Securities Purchase Agreement dated September 27, 2002 between Gables,
        Gables GP, Inc., the Operating Partnership and Teachers Insurance and
        Annuity Association of America (5)
        Third Amended and Restated $225,000,000 Revolving Credit Facility dated
        May 14, 2001, by and among Gables Realty Limited Partnership and Gables-Tennessee
        Properties, L.L.C. (as the Borrowers) and Wachovia Bank, N.A., First Union
        National Bank, The Chase Manhattan Bank, AmSouth Bank, PNC Bank, National
        Association, SouthTrust Bank, and Bank of America, N.A. (collectively,
        as Lenders) and Wachovia Bank, N.A. (as agent) (17)
        Fourth Amended and Restated $225,000,000 Revolving Credit Facility dated
        June 27, 2002, by and among Gables Realty Limited Partnership and Gables-Tennessee
        Properties, L.L.C. (as the Borrowers) and Wachovia Bank, N.A., Wachovia
        Securities, Inc., JPMorgan Chase Bank, AmSouth Bank, PNC Bank, National
        Association, SouthTrust Bank, Bank of America, N.A., Wells Fargo
        Bank, N.A., and Suntrust Bank (collectively, as Lenders) and Wachovia
        Bank, N.A. (as agent) (15)
        Fifth Amended and Restated Revolving Credit Facility dated February 20,
        2003 (with a current committed capacity level of $252,000,000) by and
        among Gables Realty Limited Partnership and Gables-Tennessee Properties,
        L.L.C. (as the Borrowers) and Wachovia Securities, Inc., Wachovia Bank,
        National Association, JPMorgan Chase Bank, PNC Bank, National Association,
        AmSouth Bank, SouthTrust Bank, Bank of America, N.A., Wells Fargo Bank,
        N.A. and Suntrust Bank (collectively, as Lenders) and Wachovia Bank, National
        Association (as agent)
        Contribution Agreement with an effective date of March 16, 1998 between
        Gables, the Operating Partnership and specified representatives of Trammell
        Crow Residential executed in connection with Gables' April 1, 1998 acquisition
        of the real estate assets and operations of South Florida (18)
        Amendment No. 1 to Contribution Agreement dated April 1, 1998 (19)
        Schedule of Gables' Subsidiaries
        Consent of Deloitte & Touche LLP
        __________________
        * Filed herewith


|(1)
      (2)
      (3)
      (4)
      (5)
      (6)
      (7)
      (8)
      (9)
      (10)
      (11)
      (12)
      (13)
      (14)
      (15)
      (16)
      (17)
      (18)
      (19) | Gables' Registration Statement
      on Form S-11, as amended (File No. 33-70570).
      Gables' Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
      (File No. 1-12590).
      Gables' Current Report on Form 8-K dated July 24, 1997 (File No. 1-12590).
      Gables' Current Report on Form 8-K dated November 12, 1998 (File No. 1-12590).
      Gables' Quarterly Report on Form 10-Q for the quarter ended September 30,
      2002 (File No. 1-12590).
      Gables' Annual Report on Form 10-K for the fiscal year ended December 31,
      1999 (File No. 1-12590).
      The Operating Partnership's Current Report on Form 8-K dated March 23, 1998
      (File No. 0-22683).
      The Operating Partnership's Current Report on Form 8-K dated February 22,
      2001 (File No. 0-22683).
      The Operating Partnership's Current Report on Form 8-K dated July 8, 2002
      (File No. 0-22683).
      Gables' Annual Report on Form 10-K for the fiscal year ended December 31,
      1998 (File No. 1-12590).
      Gables' Annual Report on Form 10-K for the fiscal year ended December 31,
      2001 (File No. 1-12590).
      Gables' Registration Statement on Form S-8 (File No. 333-56334).
      Gables' Registration Statement on Form S-8 (File No. 333-83916).
      Gables' Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
      (File No. 1-12590).
      Gables' Quarterly Report on Form 10-Q for the quarter ended June 30, 2002
      (File No. 1-12590).
      Gables' Quarterly Report on Form 10-Q for the quarter ended September 30,
      1997 (File No. 1-12590).
      Gables' Quarterly Report on Form 10-Q for the quarter ended June 30, 2001
      (File No. 1-12590).
      Gables' Current Report on Form 8-K dated March 16, 1998 (File No. 1-12590).
      Gables' Current Report on Form 8-K dated April 1, 1998, as amended (File
      No. 1-12590).
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Registrant's Proxy Statement is to be filed with the Securities
  and Exchange Commission not later than 120 days after December 31, 2002 (the
  end of the fiscal year covered by this Annual Report on Form 10-K).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of
  the Securities Exchange Act of 1934, Gables Residential Trust certifies that
  it has duly caused this report to be signed on its behalf by the undersigned,
  thereunto duly authorized.

| |  |  |                                  |  |  |                                                                                                                                       
| |  |  | -------------------------------- |  |  | --------------------------------------------------------------------------------------------------------------------------------------
| |  |  | GABLES RESIDENTIAL
        TRUST
|
| |  |  | By                               |  |  | /s/ Chris D. Wheeler
        Chris D. Wheeler
        Chairman of the Board of Trustees,
        President and Chief Executive Officer
| |  |  |                                  |  | 
| |  |  |                                  |  | 
| |  |  |                                  |  | 
| |  |  |                                  |  | 
| |  |  |                                  |  |  | March 14, 2003                                                                                                                        

Pursuant to the requirements of the Securities Exchange Act
  of 1934, this report has been signed by the following persons on behalf of Gables
  Residential Trust and in the capacities and on the dates indicated.

Signatures
      Title
      Date/s/ Chris D. WheelerChris D. Wheeler/s/ Marvin R. Banks, Jr.Marvin R. Banks, Jr./s/ Dawn H. SevertDawn H. Severt/s/ Marcus E. BromleyMarcus E. Bromley/s/ C. Jordan ClarkC. Jordan Clark/s/ Lauralee E. MartinLauralee E. Martin/s/ John W. McIntyreJohn W. McIntyre/s/ Mike E. MilesMike E. Miles/s/ James D. MottaJames D. Motta
      Chairman of the Board of Trustees, President and
        Chief Executive Officer 
        (Principal Executive Officer)
        Senior Vice President and Chief Financial Officer
        (Principal Financial Officer)
        Vice President and Chief Accounting Officer
        (Principal Accounting Officer)
        Trustee
        Trustee
        Trustee
        Trustee
        Trustee
        Trustee
      March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003


CERTIFICATION PURSUANT TO SECTION 302(a)
  OF THE SARBANES-OXLEY ACT OF 2002

I, Chris D. Wheeler, certify that:
  1. I have reviewed this annual report on Form 10-K of Gables Residential Trust;
  2. Based on my knowledge, this annual report does not contain any untrue statement
  of a material fact or omit to state a material fact necessary to make the statements
  made, in light of the circumstances under which such statements were made, not
  misleading with respect to the period covered by this annual report;
  3. Based on my knowledge, the financial statements, and other financial information
  included in this annual report, fairly present in all material respects the
  financial condition, results of operations and cash flows of the registrant
  as of, and for, the periods presented in this annual report;
  4. The registrant's other certifying officer and I are responsible for establishing
  and maintaining disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and we have:
            a) Designed such disclosure
  controls and procedures to ensure that material information relating to the
  registrant, including its consolidated subsidiaries, is made known to us by
  others within those entities, particularly during the period in which this annual
  report is being prepared;
            b) Evaluated the effectiveness
  of the registrant's disclosure controls and procedures as of a date within 90
  days prior to the filing date of this annual report (the "Evaluation Date");
  and
            c) Presented in this
  annual report our conclusions about the effectiveness of the disclosure controls
  and procedures based on our evaluation as of the Evaluation Date;
  5. The registrant's other certifying officer and I have disclosed, based on
  our most recent evaluation, to the registrant's auditors and the audit committee
  of the registrant's board of directors (or persons performing the equivalent
  function):
            a) All significant deficiencies
  in the design or operation of internal controls which could adversely affect
  the registrant's ability to record, process, summarize and report financial
  data and have identified for the registrant's auditors any material weaknesses
  in internal controls; and
            b) Any fraud, whether
  or not material, that involves management or other employees who have a significant
  role in the registrant's internal controls; and
  6. The registrant's other certifying officer and I have indicated in this annual
  report whether or not there were significant changes in internal controls or
  in other factors that could significantly affect internal controls subsequent
  to the date of our most recent evaluation, including any corrective actions
  with regard to significant deficiencies and material weaknesses.
  Date: March 14, 2003

/s/ Chris D. WheelerChris D. Wheeler                                     
                                   
  President and Chief Executive Officer

CERTIFICATION PURSUANT TO SECTION 302(a)
  OF THE SARBANES-OXLEY ACT OF 2002

I, Marvin R. Banks, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Gables Residential
  Trust;
  2. Based on my knowledge, this annual report does not contain any untrue statement
  of a material fact or omit to state a material fact necessary to make the statements
  made, in light of the circumstances under which such statements were made, not
  misleading with respect to the period covered by this annual report;
  3. Based on my knowledge, the financial statements, and other financial information
  included in this annual report, fairly present in all material respects the
  financial condition, results of operations and cash flows of the registrant
  as of, and for, the periods presented in this annual report;
  4. The registrant's other certifying officer and I are responsible for establishing
  and maintaining disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and we have:
            a) Designed such disclosure
  controls and procedures to ensure that material information relating to the
  registrant, including its consolidated subsidiaries, is made known to us by
  others within those entities, particularly during the period in which this annual
  report is being prepared;
            b) Evaluated the effectiveness
  of the registrant's disclosure controls and procedures as of a date within 90
  days prior to the filing date of this annual report (the "Evaluation Date");
  and
            c) Presented in this
  annual report our conclusions about the effectiveness of the disclosure controls
  and procedures based on our evaluation as of the Evaluation Date;
  5. The registrant's other certifying officer and I have disclosed, based on
  our most recent evaluation, to the registrant's auditors and the audit committee
  of the registrant's board of directors (or persons performing the equivalent
  function):
            a) All significant deficiencies
  in the design or operation of internal controls which could adversely affect
  the registrant's ability to record, process, summarize and report financial
  data and have identified for the registrant's auditors any material weaknesses
  in internal controls; and
            b) Any fraud, whether
  or not material, that involves management or other employees who have a significant
  role in the registrant's internal controls; and
  6. The registrant's other certifying officer and I have indicated in this annual
  report whether or not there were significant changes in internal controls or
  in other factors that could significantly affect internal controls subsequent
  to the date of our most recent evaluation, including any corrective actions
  with regard to significant deficiencies and material weaknesses.
  Date:  March 14, 2003

/s/ Marvin R. Banks, Jr.
  Marvin R. Banks, Jr.                                
                       
  Senior Vice President and Chief Financial Officer

REPORT OF INDEPENDENT PUBLIC AUDITORS

To Gables Residential Trust:

We have audited the accompanying
  consolidated balance sheets of Gables Residential Trust and subsidiaries as
  of December 31, 2002 and 2001 and the related consolidated statements of
  operations, shareholders' equity and cash flows for each of the three years
  in the period ended December 31, 2002.  Our audits also included the
  financial statement schedule listed in the Index to Financial Statements at
  Item 15.  These financial statements and the financial statement schedule
  are the responsibility of the management of Gables Residential Trust. Our responsibility
  is to express an opinion on the financial statements and the financial statement
  schedule based on our audits.

We conducted our audits
  in accordance with auditing standards generally accepted in the United States
  of America. 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 provide a reasonable basis for our opinion.

In our opinion, such financial
  statements present fairly, in all material respects, the financial position
  of Gables Residential Trust and subsidiaries as of December 31, 2002 and
  2001 and the results of their operations and their cash flows for each of the
  three years in the period ended December 31, 2002 in conformity with accounting
  principles generally accepted in the United States of America.  Also, in
  our opinion, such financial statement schedule, when considered in relation
  to the basic consolidated financial statements taken as a whole, presents fairly
  in all material respects, the information set forth therein.

As discussed in Note 5 to
  the consolidated financial statements, in connection with the adoption of 
  SFAS No. 144 effective January 1, 2002, the 2001 and 2000 results of operations
  and cash flows were restated in accordance with the provisions of such standard.

/s/ Deloitte & Touche  LLP

Atlanta, Georgia
  March 14, 2003

GABLES
          RESIDENTIAL TRUST
          CONSOLIDATED BALANCE SHEETS
          (Amounts in Thousands, Except Per Share Data)December
          31, 2002
      December
          31, 2001ASSETS:Real estate assets:
             Land
             Buildings
             Furniture, fixtures and equipment
             Construction in progress
             Investment in joint ventures
             Undeveloped land
               Real estate assets before accumulated depreciation
             Less: accumulated depreciation
               Net real estate assets
          Cash and cash equivalents
          Restricted cash
          Deferred financing costs,  net of accumulated amortization of $4,903
          and 
              $5,450 at December 31, 2002 and 2001, respectively
          Other assets, net
             Total assets
      $250,095 
          1,259,232 
          130,547 
          129,159 
          12,423 12,951 1,794,407 
           (266,139)1,528,268 
          6,281 
          7,632 
          5,555 36,198  $1,583,934
      $248,955 
          1,204,680 
          109,324 
          157,570 
          20,898 19,376 
          1,760,803 (230,118)
          1,530,685 
          4,231 
          12,013 
          4,351 37,926 $1,589,206LIABILITIES
            AND SHAREHOLDERS' EQUITY:Notes payable
            Accrued interest payable
            Preferred dividends payable
            Real estate taxes payable
            Accounts payable and accrued expenses - construction
            Accounts payable and accrued expenses - operating
            Security deposits
               Total liabilities
            Minority interest of common unitholders in Operating Partnership
            Minority interest of Series B preferred unitholders in Operating Partnership
            Series Z Preferred Shares at $25.00 liquidation preference,
               180 shares issued and outstanding
            Commitments and contingencies
            Shareholders' equity:
               Excess shares, $0.01 par value, 51,000 shares authorized
               Preferred shares, $0.01 par value, 20,000 shares authorized,
                   Series A Preferred Shares at
            $25.00 liquidation preference,
                      4,600 shares
            issued and outstanding at December 31, 2001 
                   Series C Preferred Shares at
            $25.00 liquidation preference,
                      1,600 shares
            issued and outstanding at December 31, 2002 
                   Series Z Preferred Shares and
            Series B Preferred Units, 
                     exchangeable into 
            Series B Preferred Shares, reported above
                  Common shares, $0.01 par value, 100,000
            shares authorized,
                     28,856 and 28,293
            shares issued at December 31, 2002 and 
                     2001, respectively
               Additional paid-in capital
               Treasury shares at cost, 4,385 and 3,929 common shares
            at
                 December 31, 2002 and 2001, respectively
               Deferred long-term compensation
               Accumulated earnings
                 Total shareholders' equity
                 Total liabilities and shareholders' equity
        $958,574 
            14,081 
            1,834 
            16,172 
            7,275 
            18,814 4,133  
            1,020,883 89,882 
            50,192 4,500-- 
            40,000 
            - 
            289 
            485,694 
            (106,190)
            (1,316)- 418,477  $1,583,934
        $877,231 
            8,384 
            1,220 
            17,065 
            9,082 
            16,914 4,834  
            934,730 
            96,952 
            50,192 
            4,500-115,000 
            - 
             
            - 
            283 
            478,731 
            (94,144)
            (1,628)4,590 
              502,832 $1,589,206
    See
          notes to consolidated financial statements.


|GABLES RESIDENTIAL TRUST
        CONSOLIDATED STATEMENTS OF OPERATIONS
        (Amounts in Thousands, Except Per Share Data)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Years
        ended December 31,                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 2002                                                                                                                           
|Revenues:Rental revenues
        Other property revenues
             Total property revenues
        Property management revenues
        Ancillary services revenues
        Interest income
        Other revenues
             Total other revenues
             Total revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $210,51311,906
        222,419
        7,309
        8,317
        37870016,704239,123                                         
|Expenses:Property operating and maintenance (exclusive of items shown separately
        below)
        Real estate asset depreciation and amortization
        Property management - owned
        Property management - third party
        Ancillary services
        Interest expense and credit enhancement fees
        Amortization of deferred financing costs
        General and administrative
        Corporate asset depreciation and amortization
        Unusual items
             Total expenses                                                                                                                                                                                                                                                                                                                                                                                  | 79,512
      47,093
      6,334
      6,563
      5,236
      43,984
      1,336
      7,377
      1,722-
      199,157        
|Income from continuing operations
        before equity in income of joint ventures,
             gain on sale and minority interest
        Equity in income of joint ventures
        Gain on sale of previously depreciated operating real estate assets
        Gain on sale of land and development rights
        Minority interest of common unitholders in Operating Partnership
        Minority interest of preferred unitholders in Operating Partnership
        Income from continuing operations
        Operating income from discontinued operations, net of minority interest
        Gain on disposition of discontinued operations, net of minority interest
        Income from discontinued operations, net of minority interest
        Income before extraordinary loss, net
        Extraordinary loss from early extinguishment of debt, net of minority
        interest | 39,966
      2,900
      17,906
      2,100
       ( 10,103(4,312
      48,457
      696 7,919 
      8,615 
      57,072(1,360
|Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 55,712                                                                                                                         
|Dividends to preferred shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (6,819                                                                                                                         
|Net income available to common
        shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $48,893                                                                                                                        
|Weighted average number of
        common shares outstanding - basic
        Weighted average number of common shares outstanding - diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 24,618
      30,684                                                                                                            
|Per Common Share Information
      - Basic:Income from continuing operations (net of preferred dividends)
      Income from discontinued operations, net of minority interest
      Income before extraordinary loss (net of preferred dividends)
      Extraordinary loss,  net of minority interest
      Net income available to common shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $1.69
        $0.35
        $2.04
        ( $0.06
        $1.99                                                                
|Per Common Share Information
      - Diluted:Income from continuing operations (net of preferred dividends)
      Income from discontinued operations
      Income before extraordinary loss (net of preferred dividends)
      Extraordinary loss
      Net income available to common shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $1.69
      $0.35
      $2.03
      ( $0.05
      $1.98                                                                        
|See
      notes to consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                

GABLES RESIDENTIAL TRUST
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS'  EQUITY
  (Amounts in Thousands, Except Per Share Data)

Preferred
          Shares at
          Liquidation Preference
      CommonShares
      Additional
        Paid-inCapital
      Treasury
        Shares atCost
      Deferred
        Long-TermCompensation
      AccumulatedEarnings
      Total


Balance, December 31, 1999
      $115,000
      
      $   
        268
      $443,094
      
      $(  50,058
      )
      $(  1,537
      )
      $     
        -
      
      $506,767Purchase of treasury
        shares
        Proceeds from the exercise of share options
        Issuance of shares for trustee compensation
        Issuance of share grants, net of forfeitures
        Deferred long-term compensation, net
        Adjustment for minority interest of 
           unitholders in Operating Partnership
        Net income available to common shareholders
        Dividends declared and paid ($2.20 per share)
      -
        -
        -
        -
        -
        -
        --
      
      -
        2
        -
        1
        -
        -
        --
      - 
        4,697
        58
        2,148
        -
        5,205
        --
      
      ( 
        45,225
        -
        -
        -
        -
          -
        --
      )
      -
        -
        -
        -
        81
        -
        --
      
      -
        -
        -
          -
        -
        -
        57,579
        ( 51,909
      )
      (
        45,225
        4,699
        58
        2,149
        81
        5,205
        57,579
        ( 51,909
      )
          )Balance, December 31, 2000
      115,000
      
      271
      455,202
      
      (  95,283
      )
      ( 1,456
      )
      5,670
      
      479,404Proceeds
        from the exercise of share options
        Issuance of shares for trustee compensation
        Issuance of share grants, net of forfeitures
        Deferred long-term compensation, net
        Adjustment for minority interest of 
           unitholders in Operating Partnership
        Net income available to common shareholders
        Dividends declared and paid ($2.34 per share)
      -
        -
        -
        -
        -
        --
      
      6
        -
        -
        -
        6
        --
      15,138
        88
        600
        -
        7,703
        --
      
      -
        -
        1,139
        -
        -
        --
      
      -
        -
        -
        (    172
        -
        --
      )
      -
        -
        -
        -
        -
        55,074
        ( 56,154
      )
      15,144
        88
        1,739
        (     172
        7,709
        55,074
        ( 56,154
      )
          )Balance, December 31, 2001
      115,000
      
      283
      478,731
      
      (  94,144
      )
      (  1,628
      )
      4,590
      
      502,832Purchase of treasury
        shares
        Redemption of Series A Preferred Shares
        Issuance of Series C Preferred Shares
        Proceeds from the exercise of share options
        Issuance of shares for trustee compensation
        Issuance of share grants, net of forfeitures
        Deferred long-term compensation, net
        Adjustment for minority interest of 
           unitholders in Operating Partnership
        Net income available to common shareholders
        Dividends declared and paid ($2.41 per share)
      -
        (  115,000
        40,000
        -
        -
        -
        -
        -
        -
         -
      )
      -
        -
        -
        3
        -
        -
        -
        3
        --
      -
        -
        (  250
        7,599
        114
        1,191
        -
        4,226
        - (  5,917
      )
          )
      ( 
        13,625
        -
        -
        -
        -
        1,579
        -
        -
        --
      )
      -
        -
        -
        -
        -
        -
        312
        -
        -
         -
      
      -
        -
        -
        -
        -
        -
        -
        -
        48,893( 53,483
      )
      ( 
        13,625
        ( 115,000
        39,750
        7,602
        114
        2,770
        312
        4,229
        48,893(  59,400
      )
          )
          )Balance, December 31, 2002
      $40,000
      
      $289
      $485,694
      
      $(  106,190
      )
      $(  1,316
      )
      $0
      
      $418,477See
          notes to consolidated financial statements.


|GABLES
        RESIDENTIAL TRUST
        CONSOLIDATED STATEMENTS OF CASH FLOWS
        (Amounts in Thousands, Except Per Share Data)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Years
        Ended December 31,2002           
        2001   2000                                                                                                                                                             
|CASH FLOWS FROM OPERATING
        ACTIVITIES:Net income
        Adjustments to reconcile net income to net cash provided 
             by operating activities of continuing operations:
             Income from discontinued operations, net of minority
        interest
             Depreciation and amortization
             Equity in income of joint ventures
             Minority interest of unitholders in Operating
        Partnership
             Gain on sale of real estate assets
             Long-term compensation expense
             Extraordinary loss from early extinguishment
        of debt, net of minority interest
             Unusual items
             Operating distributions received from joint
        ventures 
             Change in operating assets and liabilities:
                Restricted cash
                Other assets
                Other liabilities, net
                  Net cash provided
        by operating activities from continuing operations
                  Net cash provided
        by operating activities from discontinued operations 
                    Net
        cash provided by operating activities | $55,712
        (  8,615
        50,151
        (  2,900
        14,415
        (  20,006
        1,230
        1,360
        -
        1,745
        649
        (   1219,670
        103,290
            1,670
        104,960
|CASH FLOWS FROM INVESTING
        ACTIVITIES:Acquisition, development, construction and renovation of real estate assets
        Recurring value retention capital expenditures
        Non-recurring and/or value-enhancing capital expenditures
        Restricted cash released from (held in) escrow, net
        Net proceeds from sale of wholly-owned real estate assets
        Net proceeds from disposition of discontinued operations
        Investment in joint ventures
        Net proceeds from sale of joint venture real estate assets
        Proceeds from contribution of real estate assets to joint venture
        Other
                  Net cash (used
        in) provided by investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | (  91,281
      (  13,077
      (  11,910
      349
      46,803
      43,227
      (  1,093
      10,680
      -(  1,059
        (17,361                                                                                       
|CASH FLOWS FROM FINANCING
        ACTIVITIES:Redemption of Series A Preferred Shares
        Net proceeds from issuance of Series C Preferred Shares
        Proceeds from the exercise of share options
        Treasury share purchases and Unit redemptions
        Payments of deferred financing costs
        Notes payable proceeds
        Notes payable repayments
        Prepayment penalty
        Principal escrow payments released from (deposited into) escrow, net
        Preferred dividends paid
        Preferred distributions paid
        Common dividends paid ($2.41, $2.34 and $2.20 per share, respectively)
        Common distributions paid ($2.41, $2.34 and $2.20 per Unit, respectively)
               Net cash  (used in) provided
        by financing activities
        Net change in cash and cash equivalents
        Cash and cash equivalents, beginning of year
        Cash and cash equivalents, end of year                                                                                                                                                                                                                                      | (115,000
      39,750
      7,602
      (  13,977
      (2,935
      224,562
      ( 143,219
      (   1,451
      3,380
      (  6,205
      (  4,312
      (  59,400(  14,344 (  85,549  2,0504,231
      $  6,281            
|Supplemental disclosure
        of cash flow information:Cash paid for interest
           Interest capitalized
           Cash paid for interest, net of amounts capitalized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $45,7878,875$36,912                                                                                                                                                                                                             
|See
        notes to consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

NOTES TO CONSOLIDATED FINANCIAL
  STATEMENTS(Amounts in Thousands, Except Property and Per Share Data)

---

Unless the context otherwise
  requires, all references to "we," "our" or "us"
  in this report refer collectively to Gables Residential Trust ("Gables"),
  a Maryland real estate investment trust ("REIT"), and its subsidiaries,
  including Gables Realty Limited Partnership, a Delaware limited partnership,
  considered as a single enterprise. Gables GP, Inc., a wholly-owned subsidiary
  of Gables Residential Trust, is the sole general partner of Gables Realty Limited
  Partnership.1. ORGANIZATION AND FORMATIONWe are a REIT formed in 1993 under Maryland
  law to continue and expand the operations of our privately owned predecessor
  organization. We completed our initial public offering on January 26, 1994. We are a fully integrated
  real estate company engaged in the multifamily apartment community management,
  development, construction, acquisition and disposition businesses. We also provide
  management, development and construction, corporate rental housing and brokerage
  services to third parties and unconsolidated joint ventures.  Substantially
  all of these businesses are conducted through Gables Realty Limited Partnership
  (the "Operating Partnership"). We control the Operating Partnership
  through Gables GP, Inc., a wholly-owned subsidiary and the sole general partner
  of the Operating Partnership. This structure is commonly referred to as an umbrella
  partnership REIT or "UPREIT." At December 31, 2002, we were an
  80.8% economic owner of the common equity of the Operating Partnership. 
  Substantially all of our third-party management businesses are conducted through
  a wholly-owned subsidiary, Gables Residential Services.
        Our limited partnership and indirect general
  partnership interests in the Operating Partnership entitle us to share in cash
  distributions from, and in the profits and losses of, the Operating Partnership
  in proportion to our ownership interest therein and entitle us to vote on all
  matters requiring a vote of the limited partners. Generally, the other limited
  partners of the Operating Partnership are persons who contributed their direct
  or indirect interests in certain real estate assets to the Operating Partnership
  primarily in connection with the IPO and the 1998 acquisition of the real estate
  assets and operations of Trammell Crow Residential South Florida ("South
  Florida"). The Operating Partnership is obligated to redeem each common
  unit of limited partnership interest ("Unit") held by a person other
  than us at the request of the holder for an amount equal to the fair market
  value of one of our common shares at the time of such redemption, provided that
  we, at our option, may elect to acquire each Unit presented for redemption for
  one common share or cash. With each redemption, our percentage ownership interest
  in the Operating Partnership will increase. In addition, whenever we issue common
  shares or preferred shares, we are obligated to contribute any net proceeds
  to the Operating Partnership, and the Operating Partnership is obligated to
  issue an equivalent number of common or preferred units with substantially identical
  rights as the common or preferred shares, as applicable, to us.
        As of December 31, 2002, we managed
  a total of 159 multifamily apartment communities comprising 44,676 apartment
  homes for assets owned by us and our third-party clients.  At December
  31, 2002, we owned 74 stabilized multifamily apartment communities comprising
  20,422 apartment homes, an indirect 25% interest in one stabilized apartment
  community comprising 345 apartment homes, an indirect 20% interest in two stabilized
  apartment communities comprising 621 apartment homes and an indirect 8.3% interest
  in three stabilized apartment communities comprising 1,118 apartment homes.
  We also owned nine multifamily apartment communities under development or in
  lease-up at December 31, 2002 that are expected to comprise 2,410 apartment
  homes upon completion and an indirect 20% interest in four apartment communities
  under development or in lease-up at December 31, 2002 that are expected
  to comprise 967 apartment homes upon completion. In addition, as of December 31,
  2002, we owned a parcel of land on which we intend to develop an apartment community
  that we currently expect will comprise an estimated 450 apartment homes. We
  also have rights to acquire additional parcels of land on which we believe we
  could develop communities. Any future development is subject to obtaining permits
  and other governmental approvals, as well as our ongoing business review, and
  may not be undertaken or completed.2. COMMON AND PREFERRED EQUITY ACTIVITYSecondary Common Share OfferingsSince the IPO, we have issued a total of
  14,831 common shares in eight offerings, generating $347.8 million in net proceeds
  which were generally used (1) to reduce outstanding indebtedness under
  interim financing vehicles utilized to fund our development and acquisition
  activities and (2) for general working capital purposes, including funding
  of future development and acquisition activities.Preferred Share OfferingsOn September 27, 2002, we issued 1,600 shares
  of 7.875% Series C Cumulative Redeemable Preferred Shares (liquidation preference
  $25.00 per share) in a private placement to an institutional investor. The net
  proceeds from this issuance of $39.8 million, together with the net proceeds
  of $39.8 million from the concurrent issuance of $40 million of senior unsecured
  notes, were used to retire approximately $82.5 million of  unsecured indebtedness
  at an interest rate of 8.3% that was scheduled to mature in DecemberNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

2002. The Series C Preferred Shares may be redeemed at
  our option at $25.00 per share plus accrued and unpaid dividends on or after
  September 30, 2006. The Series C Preferred Shares are not subject to any sinking
  fund or convertible into any other Gables securities.
           On June 18, 1998, we issued
  180 shares of 5.0% Series Z Cumulative Redeemable Preferred Shares (liquidation
  preference $25.00 per share) in connection with the acquisition of a parcel
  of land for future development. The Series Z Preferred Shares, which are subject
  to mandatory redemption on June 18, 2018, may be redeemed at any time for $25.00
  per share plus accrued and unpaid dividends. The Series Z Preferred Shares are
  not subject to any sinking fund or convertible into any other Gables securities.
           On July 24, 1997, we issued
  4,600 shares of 8.30% Series A Cumulative Redeemable Preferred Shares (liquidation
  preference $25.00 per share). The net proceeds from this offering of $111.0
  million were used to reduce outstanding indebtedness under interim financing
  vehicles.  We redeemed all outstanding Series A Preferred Shares for $115
  million on August 9, 2002 with proceeds from our $180 million senior unsecured
  note issuance on July 8, 2002.Issuances of Common Operating Partnership UnitsSince the IPO, the Operating Partnership
  has issued a total of 4,421 Units in connection with the 1998 acquisition of
  the real estate assets and operations of South Florida, the acquisition of other
  operating apartment communities and the acquisition of a parcel of land for
  future development. The 4,421 Units issued include 470 Units valued at $10.4
  million that were issued on January 1, 2000, related to a deferred portion
  of the South Florida acquisition purchase price.Issuance of Preferred Operating Partnership UnitsOn November 12, 1998, the Operating
  Partnership issued 2,000 of its 8.625% Series B Preferred Units to an institutional
  investor. The net proceeds from this issuance of $48.7 million were used
  to reduce outstanding indebtedness under interim financing vehicles. We have
  the option to redeem the Series B Preferred Units after November 14,
  2003. These Units are exchangeable by the holder into 8.625% Series B Cumulative
  Redeemable Preferred Shares of Gables on a one-for-one basis; however, this
  exchange right is generally not exercisable until after November 14, 2008.
  The Series B Preferred Units have no stated maturity, sinking fund or mandatory
  redemption.Common Equity Repurchase ProgramOur board of trustees implemented a common equity
  repurchase program pursuant to which we are authorized to purchase up to $200 million
  of our outstanding common shares or Units. We have repurchased shares from time
  to time in open market and privately negotiated transactions, depending on market
  prices and other conditions, using proceeds from sales of selected assets. Units
  have also been repurchased for cash upon their presentation for redemption by
  unitholders. As of December 31, 2002, we had repurchased 4,506 common shares
  and 300 Units for a total of $116.0 million, including $0.2 million in related
  commissions.Shelf Registration StatementWe have an effective shelf registration
  statement on file with the Securities and Exchange Commission providing $500 million
  of equity capacity.  The debt portion of this shelf registration statement
  has been fully utilized as a result of our February 2001and July 2002 senior
  unsecured note offerings.3.  PORTFOLIO AND OTHER FINANCING ACTIVITYCommunity Dispositions Subject to Discontinued Operations Reporting       During 2002, we sold two apartment
  communities located in Houston comprising 660 apartment homes. The net proceeds
  from these sales were $43.2 million and were used to paydown outstanding borrowings
  under our interim financing vehicles and purchase common shares and Units under
  our common equity repurchase program. The aggregate gain from the sale of these
  two communities was $9.8 million.Historical operating results and gains
  are included as discontinued operations in the accompanying consolidated statements
  of operations.  See Notes 4 and 5 for further discussion.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Community and Land Dispositions Not Subject
  to Discontinued Operations ReportingDuring 2002, we sold a 13.3 acre parcel
  of land in Houston that was adjacent to an apartment community sold, an apartment
  community located in Houston comprising 246 apartment homes and an apartment
  community located in Atlanta comprising 311 apartment homes. The net proceeds
  from these sales were $46.8 million and were used to paydown outstanding borrowings
  under our interim financing vehicles and purchase common shares and Units
  under our common equity repurchase program. The gain from the land sale was
  $0.8 million and the aggregate gain from the sale of the two communities was
  $17.9 million.  In addition, we recognized $1.3 million of deferred
  gain during the year ended December 31, 2002 associated with prior year sale
  transactions.During 2002,
  the Gables Residential Apartment Portfolio JV (the "GRAP JV") sold
  two apartment communities located in South Florida comprising 610 apartment
  homes, an apartment community in Dallas comprising 222 apartment homes and an
  apartment community located in Houston comprising 382 apartment homes. Our share
  of the net sales proceeds after repayment of construction loan indebtedness
  of $46.7 million was $10.7 million, resulting in a gain of $2.6 million.During 2001, we sold an apartment community
  located in Atlanta comprising 386 apartment homes, an apartment community located
  in Houston comprising 776 apartment homes, an apartment community located in
  Dallas comprising 536 apartment homes and a 2.5 acre parcel of land adjacent
  to one of our development communities located in Atlanta. The net proceeds from
  these sales totaled $93.6 million, $9 million of which was deposited into an
  escrow account and was used to fund acquisition activities. The balance of the
  net proceeds was used to repay a $16 million note assumed in connection with
  our September 2001 acquisition of the Gables State Thomas Ravello community
  and to paydown outstanding borrowings under interim financing vehicles. The
  gain from the land sale was $0.9 million and the aggregate gain from the sale
  of previously depreciated operating real estate assets was $34.1 million, all
  of which was recognized in 2001. In addition, we recognized $0.7 million of
  deferred gain associated with a parcel of land we sold in 2000 during the year
  ended December 31, 2001.
         During 2001, we contributed our interest
  in certain land and development rights to the Gables Residential Apartment Portfolio
  JV Two (the "GRAP JV Two") in return for (1) cash of $18.5 million
  and (2) capital account credit of $4.6 million. The $2.8 million of gain associated
  with this contribution was recognized when earned using the percentage of completion
  method since we serve as the developer and general contractor for the joint
  venture. We recognized $1.2 million and $1.6 million of this gain during the
  years ended December 31, 2002 and 2001, respectively.
         During 2000, we sold an apartment community
  located in Dallas comprising 126 apartment homes, an apartment community located
  in Houston comprising 228 apartment homes, two apartment communities located
  in San Antonio comprising 544 apartment homes and a parcel of land adjacent
  to an existing apartment community located in Atlanta. In addition, on December
  28, 2000, we sold substantially all of our interests in three apartment communities
  located in Nashville and Memphis, comprising 1,118 apartment homes, to the CMS
  Tennessee Multifamily JV. The net proceeds from these sales totaled $142.0 million,
  $30.2 million of which was deposited into an escrow account and was used to
  fund development and acquisition activities. The balance of the net proceeds
  was used to (1) repay an $18.6 million note that encumbered one of the assets
  sold, (2) paydown outstanding borrowings under interim financing vehicles and
  (3) purchase common shares and Units under our common equity repurchase program.
  The aggregate gain from the sale of previously depreciated operating real estate
  assets was $28.6 million, all of which was recognized in 2000. The gain from
  the land sale was $1.6 million, of which $0.8 million was recognized in 2000.
  Gain of $0.8 million associated with the land sale was deferred at December
  31, 2000 and was recognized when earned during 2001 and 2002 using the percentage
  of completion method because we served as the general contractor for the construction
  of an apartment community on the parcel of land sold.  Historical operating results and gains
  are included in continuing operations in the accompanying consolidated statements
  of operations.  See Notes 4 and 5 for further discussion.Community AcquisitionsOn September 28, 2001, we acquired
  the 80% membership interest of our venture partner in the GRAP JV in the Gables
  State Thomas Ravello apartment community located in Dallas comprising 290 apartment
  homes. In consideration for the interest in such community, we paid $12 million
  in cash and assumed a $16 million secured variable-rate note. This consideration
  was based on a valuation of the asset of $31 million and is net of our $3 million
  share of the venture distribution. We recorded a $5 million charge to unusual
  items in 2001 associated with the write-off of building components that are
  being replaced in connection with a remediation program to address water infiltration
  issues affecting the asset.On August 28, 2001, we acquired an
  apartment community located in Washington, D.C. comprising 82 apartment homes
  for approximately $25 million in cash.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

On
  August 1, 2001, we acquired the 75% interest of our venture partner in the Gables
  Metropolitan Uptown apartment community located in Houston comprising 318 apartment
  homes with cash. The asset was valued at approximately $27 million.
         On March 30, 2001, we acquired the 80%
  membership interests of our venture partner in the GRAP JV in the Gables Palma
  Vista and Gables San Michelle II apartment communities located in South Florida
  comprising 532 apartment homes for $66 million. This cash consideration was
  based on a valuation of the assets of $75 million and is net of our $9 million
  share of the venture distribution.       On September 1, 2000, we acquired an
  apartment community located in Austin comprising 160 apartment homes. In consideration
  for such community, we paid $6 million in cash and assumed a $14 million secured
  fixed-rate note.The cash portion of the consideration
  for each denoted acquisition was funded with advances under our interim financing
  vehicles.Other AcquisitionIn May 2001, we acquired a property
  management company based in Washington, D.C. that managed approximately 3,600
  units in 24 multifamily apartment communities located in Washington, D.C. and
  the surrounding area (the "D.C. Management Co.").  Our total
  investment of approximately $1.6 million was structured to be paid in three
  installments based on results of the acquired business operations.  As
  of December 31, 2002, we had funded $1.1 million of the $1.6 million total investment. 
  The final installment of $0.5 million is expected to be paid in 2003.Senior Unsecured Note IssuanceOn September 27, 2002, we issued $40
  million of senior unsecured notes in two series in a private placement to an
  institutional investor: $30 million at an interest rate of 5.86% maturing in
  September 2009 and $10 million at an interest rate of 6.10% maturing in September
  2010. The net proceeds of $39.8 million, together with the net proceeds of $39.8
  million from the concurrent issuance of the 7.875% Series C Cumulative Redeemable
  Preferred Shares, were used to retire approximately $82.5 million of senior
  unsecured notes at an interest rate of 8.3% that were scheduled to mature in
  December 2002. We did not incur any prepayment costs in connection with the
  early debt retirement.On July 8, 2002, we issued $180 million
  of senior unsecured notes which bear interest at a rate of 5.75%, were priced
  to yield 5.81% and mature in July 2007. The net proceeds of $178 million were
  used to redeem all outstanding shares of the 8.3% Series A Cumulative Redeemable
  Preferred Shares totaling $115 million on August 9, 2002 and to reduce borrowings
  under our interim financing vehicles.On February 22, 2001, we issued $150
  million of senior unsecured notes which bear interest at a rate of 7.25%, were
  priced to yield 7.29% and mature in February 2006. The net proceeds of $148.5
  million were used to reduce borrowings under our unsecured credit facilities
  and repay our $40 million term loan, which had a November 2001 maturity date.4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESNature of Operations
        We are a fully integrated real estate company
  engaged in the multifamily apartment community management, development, construction,
  acquisition and disposition businesses. We also provide management, development
  and construction, corporate rental housing and brokerage services to third parties
  and unconsolidated joint ventures.  Our operating performance is based
  predominantly on net operating income from the multifamily apartment communities
  we own, which are located in major markets in Texas, Georgia, Florida, Washington,
  D.C. and Tennessee.  See Note 11.Basis of PresentationThe accompanying consolidated financial
  statements are prepared in accordance with accounting principles generally accepted
  in the United States of America ("GAAP") and  include the consolidated
  accounts of Gables and its subsidiaries, including the Operating Partnership
  and Gables Residential Services. We consolidate the financial statements of
  all entities in which we have a controlling financial interest, as that term
  is defined under GAAP, through either majority voting interest or contractual
  agreements.   Our investments in non-controlled joint ventures are
  accounted for using the equity method.  Information regarding these unconsolidated
  joint ventures is included in Note 6.  All significant intercompany accounts
  and transactions have been eliminated in consolidation. The consolidated financial
  statements have been adjusted for the minority interest of common unitholders
  in the Operating Partnership. Common Units, if presented for redemption, can
  be exchanged for Gables common shares on a one-for-one basis.  Minority
  interest of common unitholders in the Operating Partnership, as reflected in
  the accompanying consolidated balance sheets,NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

is calculated at the balance sheet date based upon
  the percentage of common Units outstanding owned by partners other than Gables
  to the total number of common Units outstanding.  Minority interest of
  common unitholders in the Operating Partnership's earnings is calculated based
  upon the weighted average number of common Units outstanding during the applicable
  period.ReclassificationsCertain amounts in the 2001 and 2000 financial
  statements have been reclassified to conform to the 2002 presentation.Use of EstimatesThe preparation of financial statements in conformity
  with GAAP requires us to make estimates and assumptions that affect the reported
  amounts of assets and liabilities and disclosure of contingent assets and liabilities
  at the date of the financial statements, and the reported amounts of revenue
  and expenses during the reporting period. Actual results could differ from those
  estimates.Revenue RecognitionRental: We lease our residential
  properties under operating leases with terms generally equal to one year or
  less. Rental income is recognized when earned, which materially approximates
  revenue recognition on a straight-line basis.
        Property management: We provide
  property management services to third parties and unconsolidated joint ventures. 
  Property management fees are recognized when earned.
        Ancillary services: We provide
  development and construction, corporate rental housing and brokerage services
  to third parties and unconsolidated joint ventures. Development and construction
  services are typically provided under "cost plus a fee" contracts.
  Because our clients are obligated to fund the costs that are incurred on their
  behalf pursuant to the related contract, we net the reimbursement of these costs
  against the billings for such costs. Development and construction fees are recognized
  when earned using the percentage of completion method. During the years ended
  December 31, 2002, 2001 and 2000, we recognized $2.4 million, $3.1 million and
  $4.9 million, respectively, in development and construction fees under related
  contracts with gross billings of $43.9 million, $81.1 million and $83.2 million,
  respectively. Corporate rental housing revenues and brokerage commissions are
  recognized when earned.  Gains on sales of real estate assets:Gains
  on sales of real estate assets are recognized pursuant to the provisions of
  SFAS No. 66, "Accounting for Sales of Real Estate." The specific timing
  of the recognition of the sale and the related gain is measured against the
  various criteria in SFAS No. 66 related to the terms of the transactions and
  any continuing involvement associated with the assets sold. To the extent the
  sales criteria are not met, we defer gain recognition until the sales criteria
  are met.Cost Capitalization       As a vertically integrated real estate
  company, we have in-house investment professionals involved in the development,
  construction and acquisition of apartment communities. Direct internal costs
  associated with development and construction activities for wholly-owned assets
  are included in the capitalized development cost of such assets. Direct internal
  costs associated with development and construction activities for third parties
  and unconsolidated joint ventures are reflected in ancillary services expense
  as the related services are being rendered. As required by GAAP, we expense
  all internal costs associated with the acquisition of operating apartment communities
  to general and administrative expense in the period such costs are incurred.      Our real estate development pursuits are
  subject to obtaining permits and other governmental approvals, as well as our
  ongoing business review of the underlying real estate fundamentals and the impact
  on our capital structure. We do not always move forward with development of
  our real estate pursuits, and therefore, we evaluate the viability of real estate
  pursuits and the recoverability of capitalized pursuit costs regularly. Based
  on this periodic review, we expense any costs that are deemed unrealizable at
  that time to general and administrative expense.       During the development and construction
  of a new apartment community, we capitalize related interest costs, as well
  as other carrying costs such as property taxes and insurance. We begin to expense
  these items as the construction of the community becomes substantially complete
  and the residential apartment homes become available for initial occupancy.
  Accordingly, we gradually reduce the amounts we capitalize as construction is
  being completed.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Real Estate Assets and Depreciation
        Real estate assets are stated at depreciated
  cost, which in the opinion of management is not in excess of each individual
  asset's estimated undiscounted future cash flows, including estimated proceeds
  from disposition. As noted above, the cost of buildings and improvements includes
  interest, property taxes, insurance and direct internal development and construction
  costs incurred during the construction period. Expenditures in excess of $1
  for purchases of a new asset with a useful life in excess of one year and for
  replacements and repairs that extend the useful life of the asset are capitalized
  and depreciated over their useful lives. Recurring value retention capital expenditures
  are typically incurred every year during the life of an apartment community
  and include such expenditures as carpet, flooring and appliances. Non-recurring
  capital expenditures are costs that are generally incurred in connection with
  a major project impacting an entire community, such as roof replacement or parking
  lot resurfacing. Value-enhancing capital expenditures are costs for which an
  incremental value is expected to be achieved and include such costs as amenity
  upgrades and additions and security gates. Recurring value retention and non-recurring
  and/or value-enhancing capital expenditures do not include costs incurred in
  connection with a major renovation of an apartment community. Repairs and maintenance,
  such as landscaping maintenance, interior painting and cleaning and supplies
  used in such activities, are expensed as incurred.
         Construction in progress represents total
  capitalized costs incurred on our wholly-owned development communities and incremental
  capitalized costs incurred on our wholly-owned communities that are undergoing
  a major renovation.  A reclassification of such costs into operating real
  estate assets is not made until construction or major renovation activities
  are 100% complete.
         Depreciation is computed on a straight-line
  basis over the estimated useful lives of 20 to 40 years for buildings and improvements
  and 5 years for furniture, fixtures and equipment. We periodically evaluate
  our real estate assets to determine if there has been any impairment in the
  carrying value of the assets in accordance with SFAS No. 144, "Accounting
  for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 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 amounts.
  No such impairment losses have been recognized to date.Cash and Cash EquivalentsAll investments purchased with an original
  maturity of three months or less are considered to be cash equivalents.Restricted CashRestricted cash is primarily comprised
  of residential security deposits, tax escrow funds, repairs and maintenance
  reserve funds and principal escrow deposits for tax-exempt bonds. In certain
  situations, we have deposited sales proceeds into escrow accounts to fund development
  and acquisition activities.Deferred Financing Costs and AmortizationDeferred financing costs include fees and
  costs incurred to obtain financing and are capitalized and amortized over the
  terms of the related notes payable.Interest Rate Protection Agreements and Derivative
  InstrumentsIn the ordinary course of business, we
  are exposed to interest rate risks. We periodically seek input from third party
  consultants regarding market interest rate and credit risk in order to evaluate
  our interest rate exposure. In certain situations, we may utilize derivative
  financial instruments in the form of rate caps, rate swaps or rate locks to
  hedge interest rate exposure by modifying the interest rate characteristics
  of related balance sheet instruments and prospective financing transactions.
  We do not utilize such instruments for trading or speculative purposes.
  Derivatives used as hedges must be effective at reducing the risk associated
  with the exposure being hedged; correlate in notional amount, rate, and term
  with the balance sheet instrument being hedged and be designated as a hedge
  at the inception of the derivative contract. SFAS No. 133, "Accounting for
  Derivative Instruments and Hedging Activities," as amended, was effective
  for us beginning January 1, 2001.  This statement establishes accounting
  and reporting standards requiring that every derivative instrument, including
  certain derivative instruments embedded in other contracts, be recorded in the
  balance sheet as either an asset or liability measured at its fair value. SFAS
  No. 133 requires that changes in the derivative's fair value be recognized currently
  in earnings unless specific hedge accounting criteria are met. Special accounting
  for qualifying hedges allows a derivative's gains and losses to offset related
  results on the hedged item in the statements of operations, and requires that
  a company must formally document, designate, and assess the effectiveness of
  transactions that receive hedge accounting.  We had no derivative instruments
  in place as of January 1, 2001 and we have not put any new derivative instruments
  in place since then.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Stock Options      At December 31, 2002,
  we had one stock-based employee compensation plan, which is described more fully
  in Note 14.  Through December 31, 2002, we have accounted for options issued
  under this plan in accordance with APB Opinion No. 25, "Accounting for
  Stock Issued to Employees," under which no compensation cost has been recognized
  since all options have been granted with an exercise price equal to the fair
  value of our common shares on the date of grant.  Had compensation cost
  been determined consistent with  SFAS No. 123, "Accounting for Stock-Based
  Compensation," our net income and earnings per share would have been reduced
  to the following pro forma amounts:

|                                                                                                                                              | 2002                                      | 2001                                      | 2000                                     
|--------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | -----------------------------------------
|Net income available to common shareholders,
      as reported                                                                                | $48,893                                   | $55,074                                   | $57,579                                  
|Deduct: Total stock-based employee compensation
      expense
           determined under fair value based method for all
      option awards | (283)                                     | (  438)                                   | (636)                                    
|Net income available to common shareholders,
      pro forma                                                                                  | $48,610                                   | $54,636                                   | $56,943                                  
|Earnings Per Share:
        Basic - as reported
        Basic - pro forma
        Diluted - as reported
        Diluted - pro forma           | $1.99
      $1.97
      $1.98
      $1.97 | $2.30
      $2.29
      $2.29
      $2.27 | $2.43
      $2.40
      $2.43
      $2.40

To date, options
  have been granted with an exercise price equal to the fair value of our common
  shares on the dates the options were granted.  At December 31, 2002,
  893 common shares are subject to outstanding options granted to our officers,
  employees and trustees. These outstanding options have exercise prices ranging
  from $19.50 to $30.20 and a weighted average remaining contractual life of 5.5 years
  at December 31, 2002.   A summary of the options
  activity for the years ended December 31, 2002, 2001 and 2000 is as follows:

2002
      
      2001
      
      2000Shares
      Weighted
        Average
        ExercisePrice
      
      Shares
      Weighted
        Average
        ExercisePrice
      
      Shares
      Weighted
        Average
        ExercisePriceOutstanding at
        beginning of year
        Granted
        Forfeited
        Exercised
        Outstanding at end of year
        Exercisable at end of year
      1,196 
        15 
        ( 23)(295)893628
      $25.64
          30.20
          26.5325.77
          $25.64$25.10
      1,794 
          13 
          (13)(598)1,196716
        $25.52
            27.95
            26.0225.34
            $25.64$25.14
        
        2,051 
          20 
          (71)(206)1,794
          1,129
        $25.29
          24.50
          26.4522.77$25.52
          $25.10


The weighted average fair
  value of options granted is $4.29,  $3.18 and $2.62  for 2002, 2001
  and 2000, respectively. The fair value of each option grant as of the date of
  grant has been estimated using the Black-Scholes option pricing model with the
  following weighted average assumptions for grants in 2002, 2001 and 2000, respectively:
  risk-free interest rates of 4.36%, 5.12% and 6.71%; expected lives of 4.67,
  5.20 and 5.83; dividend yields of 7.98%,  8.62% and 9.27%; and expected
  volatility of 31%, 27% and 25%.Treasury Shares       Our share repurchases under our common
  equity repurchase program are reflected as treasury shares utilizing the cost
  method of accounting and are presented as a reduction to shareholders' equity. 
  As disclosed in Note 14, we have made certain grants of unrestricted and restricted
  shares with treasury shares.  The value of such share grants issued is
  recorded to the additional paid-in capital component of shareholders' equity
  after relieving the treasury shares component of shareholders' equity utilizing
  the first-in, first-out method of accounting.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Property Management Expenses
         We manage owned properties as well as properties
  owned by third parties and unconsolidated joint ventures for which we provide
  services for a fee. Property management expenses have been allocated between
  owned and third-party properties in the accompanying statements of operations
  based on the proportionate number of owned and third-party apartment homes managed
  by us during the applicable periods.Recent Accounting Pronouncements In June 2001, SFAS No. 141, "Business
  Combinations," (effective for us July 1, 2001) and SFAS No. 142, "Goodwill
  and Other Intangible Assets," (effective for us January 1, 2002) were issued.
  SFAS No. 141 prohibits pooling-of-interests accounting for acquisitions. SFAS
  No. 142 specifies that goodwill and some intangible assets will no longer be
  amortized but instead will be subject to periodic impairment testing. We have
  not accounted for any of our business combinations since our IPO using the pooling
  method of accounting and did not have goodwill or other intangible assets at
  December 31, 2002 or 2001.  As a result, the adoption of SFAS No. 141 and
  SFAS No. 142 did not have a significant impact on our financial statements.
         In August 2001, SFAS No. 143, "Accounting
  for Asset Retirement Obligations," (effective for us January 1, 2003) was
  issued. SFAS No. 143 requires that entities recognize the fair value of a liability
  for an asset retirement obligation in the period in which it is incurred if
  a reasonable estimate of fair value can be made. We believe that the adoption
  of SFAS No. 143 will not have a significant impact on our financial statements.        In August 2001, SFAS No.
  144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
  (effective for us January 1, 2002) was issued. SFAS No. 144 addresses financial
  accounting and reporting for the impairment of long-lived assets and for long-lived
  assets to be disposed of. The statement supersedes SFAS No. 121, "Accounting
  for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
  Of," and among other factors, establishes criteria beyond that previously
  specified in SFAS No. 121 to determine when a long-lived asset is to be considered
  as held for sale. The impairment provisions of SFAS No. 144 are similar
  to SFAS No. 121 and the adoption thereof did not have a significant impact on
  our financial statements.  As discussed further in Note 5, SFAS No. 144
  also requires that the gains and losses from the disposition of certain real
  estate assets and the related historical operating results be reflected as discontinued
  operations in the statements of operations for all periods presented. In the
  normal course of business, we recycle invested capital by disposing of existing
  assets and redeploying the proceeds in order to enhance total returns to shareholders.
  Although net income is not affected, we expect to continue to reclassify results
  previously included in continuing operations to discontinued operations for
  any future qualifying dispositions in accordance with SFAS No. 144.   
       
           In April 2002, SFAS No. 145,
  "Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13, and Technical
  Corrections," was issued.  SFAS No. 145 (effective for us January
  1, 2003), among other things, eliminates the requirement that all gains and
  losses from the extinguishment of debt be aggregated and, if material, classified
  as an extraordinary item. However, a gain or loss arising from such an event
  or transaction would continue to be classified as an extraordinary item if the
  event or transaction is both unusual in nature and infrequent in occurrence
  per the criteria in APB No. 30, "Reporting the Results of Operations -
  Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
  Unusual and Infrequently Occurring Events and Transactions."  As part
  of the transition guidance, although net income would not be affected, gains
  and losses from debt extinguishment in prior periods that do not meet the criteria
  in APB No. 30 must be reclassified to continuing operations for all periods
  presented.  We will adopt SFAS No. 145 in the first quarter of 2003 and,
  as a result, will reclassify our fiscal 2002 extraordinary loss on early extinguishment
  of debt, net of minority interest, of $1.4 million to the appropriate categories
  within continuing operations.  In June 2002, SFAS
  No. 146, "Accounting for Costs Associated with Exit or Disposal Activities,"
  was issued. SFAS No. 146 requires the recording of costs associated with exit
  or disposal activities at their fair values when a liability has been incurred.
  Under previous guidance, certain exit costs were accrued upon management's commitment
  to an exit plan, which is generally before an actual liability has been incurred.
  Adoption of SFAS No. 146 is to be applied prospectively to exit or disposal
  activities initiated after December 31, 2002. We believe that the adoption of
  SFAS No. 146 will not have a significant impact on our financial statements.
           In November 2002, FIN 45, "Guarantor's
  Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees
  of Indebtedness of Others," was issued.  FIN 45 elaborates on the
  disclosures to be made by a guarantor in its interim and annual financial statements
  about its obligations under certain guarantees that it has issued.  It
  also clarifies that a guarantor is required to recognize, at the inception of
  a guarantee, a liability for the fair value of the obligation undertaken in
  issuing the guarantee.  The disclosure requirements of FIN 45 are currently
  effective (see Note 6).  We will apply the initial recognition and initial
  measurement provisions of FIN 45 on a prospective basis for any guarantees issued
  or modified after December 31, 2002, but do not expect the adoption of FIN 45
  to have a material impact on our financial statements.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

In December
  2002, SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
  and Disclosure," was issued.  SFAS No. 148 amends SFAS No. 123, "Accounting
  for Stock-Based Compensation," to provide alternative methods for transition
  for an entity that voluntarily changes to the fair value based method of accounting
  for stock-based employee compensation.  It also amends the disclosure provisions
  of SFAS No. 123 to require prominent disclosure about the effects on reported
  net income of an entity's accounting policy decisions with respect to stock-based
  employee compensation.  We have adopted this standard effective for our
  fiscal year ended December 31, 2002, resulting in additional disclosures related
  to our stock-based compensation plan as presented above under "stock options."
  This standard had no effect on our financial position or results of operations
  through December 31, 2002.  We intend to expense stock-based employee compensation
  under the fair value recognition provisions of SFAS No. 123 on a prospective
  basis beginning January 1, 2003.  Due to our limited use of options as
  a form of compensation since 1999, we do not believe the adoption of this accounting
  standard will have a significant impact on our financial statements.
         In January 2003, FIN 46, "Consolidation
  of Variable Interest Entities," was issued.  In general, a variable
  interest entity ("VIE") is an entity that either (a) does not have
  equity investors with voting rights or (b) has equity investors that do not
  provide sufficient financial resources for the entity to support its activities. 
  Until now, a company generally has only consolidated another entity in its financial
  statements if it controlled the entity through voting interests.  FIN 46
  changes that by requiring a VIE to be consolidated by a company if that company
  is subject to a majority of the risk of loss from the VIE's activities or is
  entitled to receive a majority of the entity's residual returns or both. 
  The provisions of FIN 46 are to be applied effective immediately for VIEs created
  after January 31, 2003, and effective July 1, 2003 for VIEs created prior to
  February 1, 2003.  If it is reasonably possible that an enterprise will
  consolidate or disclose information about a VIE when FIN 46 becomes effective,
  the enterprise should make certain disclosures in all financial statements initially
  issued after January 31, 2003, regardless of the date on which the VIE was created. 
  We do not believe that it is reasonably possible that the adoption of FIN 46
  will result in the consolidation of any previously unconsolidated entities.5.  DISCONTINUED OPERATIONSWe adopted SFAS No. 144 effective January
1, 2002 which requires, among other things, that the operating results of certain
real estate assets which have been sold subsequent to January 1, 2002, or otherwise
qualify as held for disposition (as defined by SFAS No. 144), be reflected as
discontinued operations in the statements of operations for all periods presented.
We sold three wholly-owned operating real estate assets during the first quarter
of 2002 and one wholly-owned operating real estate asset during the fourth quarter
of 2002. We retained management of two of the assets sold during the first quarter
of 2002. Due to our continuing involvement with the operations of the two assets
sold that we are continuing to manage, the operating results of these assets are
included in continuing operations. The operating results for the two remaining
wholly-owned assets sold during the first and fourth quarters of 2002 for which
we did not retain management are reflected as discontinued operations in the accompanying
statements of operations for all periods presented. Interest expense has been
allocated to the results of the discontinued operations in accordance with EITF
No. 87-24. We had no assets that qualified as held for disposition as defined
by SFAS No. 144 at December 31, 2002 or 2001.
   Condensed financial information of the results of operations for
the real estate assets sold reflected as discontinued operations is as follows:
For the Years Ended
            December 31,2002
      
      2001
      
      2000Total property revenues
      $3,845
      
      $6,265$6,071Property operating and maintenance
        expense
           (exclusive of items shown separately below)
        Real estate asset depreciation and amortization
        Interest expense
           Total expenses
      1,688
          806487  2,981
      
        2,473
           1,365724  4,562
      
      2,343
          1,310751  4,404Minority interest of common
        unitholders in Operating Partnership
        Operating income from discontinued operations, net of minority interest
      (  168696
      )
      ( 
        3501,353
      )
      (3691,298
      )Gain on disposition of discontinued
        operations
        Minority interest of common unitholders in Operating Partnership
        Gain on disposition of discontinued operations, net of minority interest
      9,829(1,9107,919
      
      )
      ---
      
      
      ---Income from discontinued operations,
        net of minority interest
      $8,615
      
      $1,353
      
      $1,298

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

6.   INVESTMENT IN UNCONSOLIDATED
  JOINT VENTURESOur interests in the following unconsolidated
  joint ventures are accounted for using the equity method of accounting:

Ownership
          Interest 
          as of December 31,Joint Venture
      2002
      2001Arbors of Harbortown JV ("Harbortown
        JV")
      25.00%
      25.00%Gables Residential Apartment Portfolio JV
        ("GRAP JV")
      20.00%
      20.00%Gables Residential Apartment Portfolio JV
        Two ("GRAP JV Two")
      20.00%
      20.00%CMS Tennessee Multifamily JV ("CMS JV")
      8.26%
      8.26%


Condensed financial information of the unconsolidated
  joint ventures is as follows:

Balance Sheet Summary:
      December 31, 2002
      December 31,  2001Harbor-town
      GRAP
      GRAP Two
      CMS
      Total
      TotalReal estate assets
          Less: accumulated depreciation
            Net real estate assets
          Other assets
            Total assets
        $16,201 
             (4,734)
          11,467 3,294  $14,761
        $47,821 (5,450)
          42,371 857  $43,228
        $96,824 (2,155)
          94,669 1,851  $96,520
        $63,709(5,158)
          58,551 2,988 $61,539
        $224,555 (17,497)
          207,058 8,990  $216,048
        $283,883 
          (16,690)
          267,193 10,027 $277,220Mortgage debt
          Other liabilities
          Partners' capital
            Total liabilities and partners' capital
        $16,350 
          715 (2,304)
          $14,761
        $24,632 
          179 18,417 $43,228
        $53,493 
          4,104 38,923 $96,520
        $52,100 
          1,494 7,945 $61,539
        $146,575 
          6,492 62,981 $216,048
        $157,787 
          11,123 108,310 $277,220Our  investment in JV
        $ 500
        $4,129
        $8,070
        $ (276)
        $12,423
        $20,898


Income Statement Summary:
      
      Years
          Ended December 31,2002
      2001
      2000Revenues
        Property operating and maintenance expense
           (exclusive of items shown separately below)
        Interest expense
        Depreciation and amortization expense
        Other expense
             Total expenses
      $22,927 
         
        9,784 
        6,008 
        7,256 
          350 23,398
      $23,617 
        10,170 
        7,933 
        6,981 
          806  25,890
      $19,924
        6,886 
        6,102 
        5,011 59  18,058Income (loss) before gain on
        sale
        Gain on sale of real estate assets
        Income (loss) from continuing operations
        Income (loss) from discontinued operations,
            including gain on sale
        Net income
        Our equity in income of  JV
      (471)-  
              (471)   16,920$16,449 $2,900
      (2,273)12,170 9,897   
         1,008   $10,905$242
      1,866 -
         1,866 (407)$ 1,459 
        $399


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Arbors of Harbortown JV       The Arbors of Harbortown JV was formed
  in May 1990 to develop, own and operate the Arbors of Harbortown community located
  in Memphis comprising 345 apartment homes.  We have a 25% ownership interest
  in this venture.  The Arbors of Harbortown apartment community is secured
  by a $16.4 million tax-exempt bond obligation which bears interest at a low-floater
  rate.  The credit enhancement for the bond obligation is provided by our
  venture partner and expires in May 2006.  The maturity date of the underlying
  bond issue is April 2013.  The bond obligation is recourse to us up to
  $1.0 million. The recourse amount is fully cash-collateralized and held by the
  venture.  We have not recorded a liability on our accompanying consolidated
  balance sheets in connection with this recourse obligation.

Gables Residential Apartment Portfolio JV       The Gables Residential Apartment Portfolio
  JV was formed in March 1999 to develop, own and operate eight multifamily apartment
  communities comprising 2,471 apartment homes located in four of our markets. 
  Our economic ownership interest in the venture was 22% for the year ended December
  31, 2002 and 20% for the period from inception to December 31, 2001.  During
  1999, we contributed our interest in the land and development rights associated
  with these eight communities to the venture in return for (1) cash of $65.1
  million and (2) capital account credit of $16.4 million.We serve as the
  managing member of the venture and have responsibility for all day-to-day operating
  matters.  We also serve as the property manager, developer and general
  contractor for construction activities.  The $238 million capital
  budget for the development of the eight communities was funded with 50% equity
  and 50% debt.  The equity component was funded 80% by our venture partner
  and 20% by us.  Our portion of the equity was funded through contributions
  of cash and property.  As of December 31, 2002, we had 
  funded our total equity commitment of $23.8 million to the joint venture. 
         On March 30, 2001, we acquired the membership
  interests of our venture partner in two of the stabilized communities comprising
  532 apartment homes.  In April 2001, development and lease-up activities
  at Gables State Thomas Ravello comprising 290 apartment homes were suspended
  due to water infiltration issues, and all residents were subsequently relocated. 
  On September 28, 2001, we acquired the membership interest of our venture partner
  in this community.   In March 2002, the venture sold an
  apartment community located in South Florida comprising 320 apartment homes
  and an apartment community located in Houston comprising 382 apartment homes. 
  In July 2002, the venture sold an apartment community located in Dallas comprising
  222 apartment homes.  In September 2002, the venture sold an apartment
  community located in South Florida comprising 290 apartment homes.  Our
  share of the net proceeds after repayment of construction loan indebtedness
  of $46.7 million was $10.7 million, resulting in a gain of $2.6 million.The remaining community owned by the venture
  is secured by a construction loan.  The construction loan has a maturity
  of March 25, 2003, with a one-year extension option.  We expect the construction
  loan to be extended for a one-year period prior to maturity.   As
  of December 31, 2002, there was $24.6 million of indebtedness outstanding under
  this construction loan which currently bears interest at LIBOR plus 1.5%. 
  None of this indebtedness is recourse to us.Gables Residential Apartment Portfolio JV Two       The Gables Residential Apartment Portfolio
  JV Two was formed in March 2001 to develop, own and operate five multifamily
  apartment communities comprising 1,153 apartment homes, located in three of
  our markets.  Since inception, our economic ownership interest in the venture
  has been 20%.  During 2001, we contributed our interest in the land and
  development rights associated with three of these communities in return for
  (1) cash of $18.5 million and (2) capital account credit of $4.6 million. The
  venture subsequently acquired the parcels of land for the remaining two communities
  directly from the seller.
         We serve as the managing member of the
  venture and have responsibility for all day-to-day operating matters. 
  We also serve as the property manager, developer and general contractor for
  construction activities.  The capital budget for the development of the
  five communities is $118 million which is expected to be funded with equity
  of $51 million and debt of $67 million.  The equity component is being
  funded 80% by our venture partner and 20% by us.  Our portion of the equity
  will be funded through contributions of cash and property.  As of December
  31, 2002, we had funded $8 million of our budgeted $10 million equity commitment
  to the joint venture.  As of December 31, 2002, construction was complete
  with respect to three of the communities and one of these completed communities
  had reached a stabilized occupancy level.
        Each of the five communities owned by the venture
  is secured by a construction loan.  The construction loans have initial
  maturity dates ranging from April 1, 2004 to June 5, 2005, with various extension
  options.  As of December 31, 2002, there was an aggregate of $53.5 million
  of indebtedness outstanding under these construction loans which currently bears
  interest at spreads over LIBOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

ranging from 1.60% to 1.70%.We have a limited
  repayment guaranty on two of these loans with committed fundings aggregating
  $21.3 million.  The portion of the outstanding indebtedness under the loans
  that is recourse to us is $2.5 million at December 31, 2002 and will be $6.4
  million when the construction loans are fully funded.  We have not recorded
  a liability on our accompanying consolidated balance sheets in connection with
  this recourse obligation.CMS Tennessee Multifamily JV      In December 2000, we sold substantially
  all of our interests in three apartment communities located in Nashville and
  Memphis, comprising 1,118 apartment homes, to the CMS Tennessee Multifamily
  JV which was created to own and operate these apartment communities.  At
  inception, we had a 1% general partner interest and an 8% limited partner interest
  in this venture.  Our venture partner contributed additional capital to
  the venture in 2001 which diluted our limited partner interest to 7.26%. 
  Our initial capital investment in the joint venture of $1.0 million has been
  substantially offset by $1.0 million in deferred gain associated with our minority
  interest ownership in the underlying assets sold.  Each of the three apartment
  communities owned by the venture is secured by a conventional fixed-rate loan
  with a maturity of January 2011.  As of December 31, 2002, there was an
  aggregate $52.1 million of indebtedness outstanding under these loans which
  bears interest at a rate of 7.22%.  None of this indebtedness is recourse
  to us.Metropolitan Apartments JV       The Metropolitan Apartments JV was
  formed in December 1993 to develop, own and operate the Gables Metropolitan
  Uptown community located in Houston comprising 318 apartment homes.  We
  held a 25% ownership interest in this venture through July 31, 2001.  On
  August 1, 2001, we acquired the 75% interest of our venture partner in the Gables
  Metropolitan Uptown community.Related-Party Transactions and Relevant Accounting PoliciesManagement fees for services provided
  to these unconsolidated joint ventures totaled $1,090, $1,276 and $931 for the
  years ended December 31, 2002, 2001 and 2000, respectively.  We provide
  development and construction services to the GRAP JV and GRAP JV Two in return
  for development and construction fees.  We calculate our net development
  profit associated with these services based on the fees contractually owed to
  us by the venture and the amount of direct internal overhead associated with
  the provision of such services that will be charged against those fees. 
  We then recognize into income 80% of the net development profit when earned
  using the percentage of completion method.  The remaining 20% is deferred
  and classified as a reduction to our investment in joint venture account. 
  As general contractor, we are responsible for funding any construction cost
  overruns.  As general contractor and venture partner, we are entitled to
  an incentive fee on any construction cost savings.  During 1999, we had
  accrued $425 in incentive fees from the GRAP JV that were reversed in 2001 as
  a result of the cost overruns associated with the water infiltration issues
  at Gables State Thomas Ravello.  Development  and construction fees
  of $1,577, $2,092 and $2,368 for the years ended December 31, 2002, 2001 and
  2000, respectively, were recognized in ancillary services revenues in the accompanying
  statements of operations.
        We generated a gain of $3.5 million in connection
  with our contribution of land and development rights to the GRAP JV Two. 
  We recognized 80% or $2.8 million of the gain into income when earned using
  the percentage of completion method.  The $0.7 million in deferred gain
  has been classified as a reduction to our investment in joint venture account. 
  During the years ended December 31, 2002 and 2001, we recognized $1.2 million
  and $1.6 million, respectively, of the $2.8 million gain.  We generated
  a gain of $10.9 million in connection with the sale of our real estate asset
  interests to the CMS JV.  We recognized 91% or $9.9 million of the gain
  into income on the December 2000 sale date.  The $1.0 million in deferred
  gain has been classified as a reduction to our investment in joint venture account. 
  There was no gain or loss in connection with the contribution of land and development
  rights to the GRAP JV.
         We record our share of income from unconsolidated
  joint ventures based on our economic ownership interest therein, after making
  any necessary adjustments to conform to our accounting policies. The gain on
  sale of real estate assets by the GRAP JV of $12,170 in 2001 pertains entirely
  to sales of real estate assets from the venture to us.  We eliminated our
  share of the gain on sale in consolidation and, as a result, our equity in income
  of joint ventures of $242 in 2001 excludes our share of the gain.
         Our investment in joint ventures is based
  on the fair value of our cash and real estate asset contributions thereto and
  includes capitalized interest on our investment account during the construction
  period of the underlying real estate assets.  Deferrals of any development
  and construction fees and gains, as applicable, associated with our minority
  ownership interest in the joint ventures are classified as a reduction to our
  investment in joint ventures.
         The initial basis in the real estate assets
  we acquired from our joint ventures is equal to the purchase price paid to the
  venture or venture partner, as applicable, after elimination of our share of
  any underlying gain.  In addition, other outside basis differences associated
  with capitalized interest and the 20% development and construction fee deferrals
  are included in real estate assets.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

7.  NOTES PAYABLE
  Notes payable consist of the following:

December 31,20022001Unsecured
        senior notes payable
        Tax-exempt variable-rate notes payable
        Secured conventional fixed-rate notes payable
        Unsecured variable-rate credit facilities
        Unsecured conventional fixed-rate notes payable
        Unsecured tax-exempt fixed-rate notes payable
        Secured tax-exempt fixed-rate notes payable
        Secured variable-rate construction loans
                 Total notes payable
      $470,000
        170,955
        137,351
        75,608
        31,151
        48,365
        20,7554,389 $958,574
      
      $250,000
        170,955
        139,143
        132,904
        114,919
        -  
        69,310 -  $877,231


Unsecured Senior Notes PayableIn March 1998, we issued $100,000
  of senior unsecured notes which bear interest at 6.80%, were priced to yield
  6.84% and mature in March 2005. In October 1998, we issued (1) $50,000
  of senior unsecured notes which bore interest at 6.55%, were priced to yield
  6.59%, and matured in October 2000 and (2) $15,000 of senior unsecured notes
  which bore interest at 6.60%, were priced at par, and matured in October 2001.
  We repaid the $50,000 and $15,000 notes at maturity.  In February 2001,
  we issued $150,000 of senior unsecured notes which bear interest at 7.25%, were
  priced to yield 7.29% and mature in February 2006.  In July 2002, we issued
  $180,000 of senior unsecured notes which bear interest at 5.75%, were priced
  to yield 5.81% and mature in July 2007.  In September 2002, we issued $40,000
  of senior unsecured notes in two series in a private placement to an institutional
  investor: $30,000 of notes which bear interest at 5.86% and mature in September
  2009 and $10,000 of notes which bear interest at 6.10% and mature in September
  2010.Tax-Exempt Variable-Rate Notes Payable Totaling $44,930        At December 31, 2002 and
  2001, the variable-rate mortgage notes payable securing tax-exempt bonds totaling
  $44,930 were comprised of four loans, each of which is collateralized by an
  apartment community included in real estate assets. These bonds bear interest
  at variable rates of interest that are adjusted weekly based upon a negotiated
  rate. The interest rates in effect at both December 31, 2002 and 2001 were 1.6%. 
  Effective interest rates were 1.4%, 2.7% and 4.2% for the years ended December 31,
  2002, 2001 and 2000, respectively.  From October 1997 to February 2003,
  the bonds were enhanced by four letters of credit provided by a $45,820 
  letter of credit facility that had a maturity date of October 2003.  The
  fee for the letters of credit under this facility was 0.95% per annum. 
         In February 2003, the $45,820 of letters
  of credit were reissued under our $252 million credit facility with a maturity
  date of May 2005.  The fee for the letters of credit under this facility
  is currently 0.95% per annum.  Three of the underlying bond issues mature
  in December 2007 and the fourth matures in August 2024.Tax-Exempt Variable-Rate Notes Payable Totaling $126,025We have seven variable-rate bond issues
  totaling $126,025 at December 31, 2002 and 2001 that were assumed in connection
  with the South Florida acquisition.  One of these bond issues for $10,085
  was refinanced in August 2000 from a fixed rate of 4.75% to a variable rate. 
  Another of these bond issues for $10,800 was refinanced in April 2001 from a
  fixed rate of 4.75% to a variable rate.  At December 31, 2002 and 2001,
  the interest rates on these variable-rate bonds averaged 1.4% and 1.5%, 
  respectively.   Effective interest rates averaged 1.4%, 2.7% and 4.2%
  for the years ended December 31, 2002, 2001 and 2000, respectively.  
  These bond issues are enhanced by letters of credit provided by a $138,816 letter
  of credit facility entered into on April 1, 1998.  The fee for the
  letters of credit under this facility is 1.0% per annum. The facility has an
  initial term of ten years with three five-year extension options and is
  collateralized by (1) each apartment community induced for tax-exempt financing
  for which a letter of credit is issued and outstanding and (2) two additional
  communities. The maturity dates of the underlying bond issues range from December
  2005 to April 2036.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Secured Conventional Fixed-Rate Notes Payable      At December 31, 2002 and 2001, the fixed-rate
  notes payable were comprised of nine loans collateralized by 12 apartment communities
  included in real estate assets.  The interest rates on these notes payable
  range from 6.75% to 8.77% (weighted average of 7.72%) and the maturity dates
  range from February 2004 to December 2015.  Principal amortization payments
  are required for seven of the nine loans based on amortization schedules
  ranging from 25 to 30 years.$252 Million Credit FacilityAt December 31, 2002 and 2001, we had $40,000
  and $80,000, respectively, of borrowings outstanding under our $225 million
  unsecured revolving credit facility provided by a syndicate of banks.  
  These borrowings bore interest at rates of 1.91% and 3.11% at December 31, 2002
  and 2001, respectively.  In February 2003, we closed a modification to
  this credit facility which, among other things, increased the committed capacity
  thereunder to $252 million from $225 million.  We have the option to further
  increase the capacity under the facility to $300 million from $252 million to
  the extent banks (from the syndicate or otherwise) agree to provide the additional
  commitment. The facility currently has a maturity date of May 2005. Borrowings
  under the $252 million facility currently bear interest at our option of LIBOR
  plus 0.95% or prime minus 0.25%. Such scheduled interest rates may be adjusted
  up or down based on changes in our senior unsecured credit ratings and our leverage
  ratios. We may also enter into competitive bid loans with participating banks
  for up to $126 million at rates below the scheduled rates. In addition, we pay
  an annual facility fee currently equal to 0.20% of the $252 million commitment. 
  In February 2003, $45,820 of letters of credit enhancing four tax-exempt variable
  rate notes payable totaling $44,930 were reissued under this facility.$75 Million Borrowing FacilityWe have a $75 million unsecured borrowing
  facility with a bank that currently has a maturity date of May 2005.  
  The interest rate and maturity date related to each advance under this facility
  is agreed to by both parties prior to each advance.  At December 31,
  2002 and 2001, we had $34,723 and $52,192, respectively, in borrowings outstanding
  under this facility at an interest rate of 1.85% and 2.7%, respectively.$10 Million Credit FacilityAt December 31, 2001, we had a $25 million
  unsecured revolving credit facility with a bank.  In December 2002, the
  availability under the facility was decreased to $10 million.  The facility
  currently has a maturity date of December 2003 with unlimited one-year extension
  options.   Borrowings under this facility bear interest at the same
  scheduled interest rates as the $252 million credit facility described above.  
  At December 31, 2002 and 2001, we had $885 and $712, respectively,  in
  borrowings outstanding under this facility at an interest rate of 2.35% and
  2.97%, respectively.Unsecured Conventional Fixed-Rate Notes PayableAt December 31, 2001, the unsecured
  fixed-rate notes payable totaling $114,919 were comprised of four loans. 
  During 2002, an $82.5 million loan that bore interest at a rate of 8.3% was
  retired in connection with the issuance of $40 million of senior unsecured notes
  and $40 million of Series C Preferred Shares.  The three remaining notes
  payable totaling $31,151 at December 31, 2002 have interest rates that range
  from 5.25% to 8.62% (weighted average of 8.38%) and maturity dates that range
  from December 2007 to November 2018. Principal amortization payments
  are required based on amortization schedules ranging from 20 to 30 years.Secured and Unsecured Tax-Exempt Fixed-Rate Notes PayableAt December 31, 2002 and 2001, the
  tax-exempt fixed-rate indebtedness was comprised of three loans. One loan outstanding
  at December 31, 2002 and 2001 represents a bond issuance with a principal
  balance of $48,365 that was collateralized by three communities induced
  for tax-exempt financing and three additional communities through May 2002. 
  In May 2002, we called these bonds which had an interest rate of 6.375%
  and reissued the bonds on an unsecured basis at an interest rate of 4.75% with
  a maturity date of July 2004. In connection with the early extinguishment of
  the debt, we incurred a prepayment penalty of $1,451 and wrote-off unamortized
  deferred loan costs of $236. Such charges totaling $1,687 are reflected as an
  extraordinary loss in the accompanying consolidated statements of operations
  and are presented net of minority interest of $327. The called bonds required
  monthly principal amortization payments based on a 30-year amortization schedule
  that were retained in an escrow account and were not applied to reduce the outstanding
  principal balance of the loan. Such principal payments held in escrow totaling
  $4,121 were released in May 2002. There are no required principal amortization
  payments on the reissued bonds. This refinancing transaction allowed us to improve
  our debt constant by 2.75%, unencumber six communities comprising 2,028 apartment
  homes and achieve a net present value result. The three underlying tax-exempt
  bond issues mature in July 2024.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

The second loan, with an
  outstanding principal balance of $10,930 and $11,120 as of December 31, 2002
  and 2001, respectively, represents a tax-exempt bond financing secured by one
  apartment community. The bond issue, which has a maturity date of January 2025,
  was credit enhanced for an annual fee of 0.60% and bears interest at a rate
  of 7.03%. Monthly escrow payments are required each year based on the annual
  principal payment due to the bondholders.
          The third loan represents a tax-exempt
  bond issue for $9,825 assumed in connection with the South Florida acquisition
  that bears interest at a rate of 4.65% and is enhanced by the $138,816 letter
  of credit facility described above. The bonds have a maturity date of February
  2004 and do not require principal amortization payments.Secured Variable-Rate Construction Loans       We have committed fundings under four
  construction-related financing vehicles for two wholly-owned development communities
  totaling $42,972 from a bank. At December 31, 2002, we had drawn $4,389 under
  these vehicles and therefore have $38,583 of remaining capacity. Borrowings
  under two of these vehicles with committed fundings totaling $39,065 bear interest
  at LIBOR plus 1.50% and borrowings under the remaining two vehicles with committed
  fundings totaling $3,907 bear interest at the greater of LIBOR plus 3.0% or
  7.5%. Borrowings under these secured financing vehicles are made pari passu
  with each advance and bear interest at a weighted average rate of 3.25% at December
  31, 2002.MaturitiesThe following information relating to the aggregate
  maturities of our notes payable at December 31, 2002 is presented on  a
  pro forma basis to reflect the February 2003 reissuance of the letters of credit
  enhancing $44,930 of tax-exempt bonds under the $252 million credit facility
  with a maturity date of May 2005.

2003
        2004
        2005
        2006
        2007 
        2008 and thereafter
           Total
      $1,925
          78,426
          243,522
          204,894
          249,673180,134$958,574


The indebtedness outstanding
  under each of our credit facilities is reflected in the preceding table using
  the May 2005 maturity date of our $252 million credit facility.  Outstanding
  indebtedness for each tax-exempt bond issue is reflected in the preceding table
  using the earlier of the related bond maturity date or the bond enhancement
  facility maturity date, as applicable.Restrictive Covenants      Certain of our debt agreements contain
  customary representations, covenants and events of default, including covenants
  which restrict the ability of the Operating Partnership to make distributions
  in excess of stated amounts, which in turn restricts our ability to declare
  and pay dividends. In general, during any fiscal year, the Operating Partnership
  may only distribute up to 100% of its consolidated income available for distribution
  (as defined in the related agreement). The applicable debt agreements contain
  exceptions to these limitations to allow the Operating Partnership to make any
  distributions necessary to (1) allow us to maintain our status as a REIT or
  (2) distribute 100% of our taxable income at the REIT level. We do not anticipate
  that this provision will adversely affect the ability of the Operating
  Partnership to make distributions or our ability to declare dividends under
  our current dividend policy.
         The tax-exempt bonds contain certain covenants
  which require a certain percentage of the apartments in such communities to
  be rented to individuals based upon income levels specified by U.S. government
  programs.Pledged Assets

The aggregate net book value
  at December 31, 2002 of real estate assets pledged as collateral for indebtedness
  was $433,531.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

8. COMMITMENTS AND CONTINGENCIESDevelopment and Construction Commitments       We currently have seven communities
  under development that are expected to comprise 2,015 apartment homes upon completion
  and an indirect 20% ownership interest in two development communities that are
  expected to comprise 373 apartment homes upon completion.  The estimated
  costs to complete the development of these assets total $149 million at December
  31, 2002, including $2 million of costs that we are obligated to fund for the
  co-investment development communities.  These costs are expected to be
  initially funded by $39 million in construction loan proceeds and $110 million
  in borrowings under our credit facilities.
         We have letter of credit and performance
  obligations of approximately $10.7 million related to our wholly-owned development
  and construction activities.  As the related development and construction
  activities are completed, such obligations will be reduced accordingly.
         We are currently serving as general contractor
  for the construction of four apartment communities for third parties and unconsolidated
  joint ventures under "cost plus a fee" contracts with guaranteed maximum
  prices on the costs of construction of approximately $65 million in aggregate. 
  The construction of these assets was 34% complete in aggregate at December 31,
  2002.  Under these contracts, we are obligated to fund any construction
  cost overruns that are not recovered through a change order.  In addition,
  we are entitled to a share of the savings generated under these contracts, if
  any, in the form of an incentive fee.  Ground Leases      We are party to two long-term ground leases
  for two apartment communities in Austin with initial terms expiring in 2044
  and 2065. We have paid the ground lease rent in full for these leases through
  the initial term. The prepaid lease payments, net of accumulated amortization,
  are included in other assets, net in the accompanying balance sheets. We are
  party to a long-term ground lease for an apartment community in Atlanta with
  an initial term expiring in 2075. The payments under this lease are made on
  a monthly basis. Future minimum lease payments and rent expense for these ground
  leases are not material.Office Leases

We are party to operating
  leases for office space with various terms. Future minimum lease payments and
  rent expense for such leases are not material.ContingenciesThe entities comprising Gables are subject
  to various legal proceedings and claims that arose in the ordinary course of
  business.  We believe that these matters are generally covered by insurance.
  While the resolution of these matters cannot be predicted with certainty, we
  believe that the final outcome of such matters will not have a material adverse
  effect on our financial statements.9.   DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTSDisclosure about the estimated fair value
  of financial instruments is based on pertinent information available to us as
  of December 31, 2002 and 2001.   Such amounts have not been comprehensively
  revalued for purposes of these financial statements since those dates and current
  estimates of fair value may differ significantly from the amounts presented
  herein.
        We estimate that the fair value of our cash
  and cash equivalents, restricted cash, accounts receivable, accounts payable,
  accrued expenses and security deposits approximates the carrying value due to
  the relatively short term nature of these instruments.
        Notes payable with an aggregate carrying value
  of $958,574 and $877,231 had an estimated fair value of $1,015,320 and $906,777
  at December 31, 2002 and 2001, respectively. The estimated fair value of our
  notes payable is based on a discounted cash flow analysis using current borrowing
  rates for notes payable with similar terms and remaining maturities. Such fair
  value is subject to changes in interest rates. Generally, the fair value will
  increase as interest rates fall and decrease as interest rates rise.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

10.  EARNINGS PER SHARE       Basic earnings per share are computed
based on net income available to common shareholders and the weighted average
number of common shares outstanding.  Diluted earnings per share reflect
the assumed issuance of common shares under our share option and incentive plan
and upon conversion of Units.  The numerator and denominator used for both
basic and diluted earnings per share computations are as follows:

|                                                                                                                                                                                                                                                                                                     |             | Years Ended December
      31,             
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | -------------------------------------------
|Basic and diluted income available to common
      shareholders (numerator):                                                                                                                                                                                                                         |             | 2002                                       
|Income from continuing operations (net of
      preferred dividends) - basic
      Minority interest of common unitholders in Operating Partnership  
           attributable to continuing operations
      Income from continuing operations (net of preferred dividends)-diluted                  | $
        $ | 41,63810,103
      51,741                  
|Income from discontinued operations, net of
      minority interest -basic
      Minority interest of common unitholders in Operating Partnership
           attributable to discontinued operations
      Income from discontinued operations - diluted                                             | $
      $   | 8,6152,078
      10,693                    
|Income before extraordinary loss (net of preferred
      dividends) - basic
      Minority interest of common unitholders in Operating Partnership
      Income before extraordinary loss (net of preferred dividends) - diluted                                                                     | $
      $   | 50,25312,181
      62,434                  
|Extraordinary loss from early extinguishment
      of debt, 
          net of minority interest - basic
      Minority interest of common unitholders in Operating Partnership 
            attributable to extraordinary loss
      Extraordinary loss from early extinguishment of debt  - diluted | $
      $   | (  1,360(  327
      (  1,687              
|Net income available to common shareholders
        - basic
        Minority interest of common unitholders in Operating Partnership,
             including minority interest attributable to extraordinary
        loss
        Net income available to common shareholders  - diluted             | $
      $   | 48,89311,854
      60,747                  
|Common shares (denominator):                                                                                                                                                                                                                                                                         |             |                                            
|Average shares outstanding - basic
        Incremental shares from assumed conversions of:
           Outstanding common Units
           Stock options
           Other
        Average shares outstanding - diluted                                                                                |             | 24,618
      5,953
      1067 
      30,684

Options to purchase 578 
  and 1,130 shares were outstanding at December 31, 2002 and 2000, respectively, 
  but were not included in the computation of diluted earnings per share because
  the effect was anti-dilutive.  There were no anti-dilutive options outstanding
  at December 31, 2001.11. SEGMENT REPORTINGOperating segments are defined as components
  of an enterprise about which separate financial information is available that
  is evaluated regularly by the chief operating decision maker in deciding how
  to allocate resources and in assessing performance. Our chief operating decision
  maker is our senior management group.
        We own, operate and develop multifamily
  apartment communities in major markets located in Texas, Georgia, Florida, Washington,
  D.C. and Tennessee.  Such apartment communities generate rental revenue
  and other income through the leasing of apartment homes to a diverse base of
  residents.  The operating performance of each of our communities is affected
  by the supply and demand dynamics within the immediate submarket or neighborhood
  of the major market that each community is located in.  We evaluate the
  performance of each of our apartment communities on an individual basis. However,
  because each of our apartment communities has similar economic characteristics,
  residents, and products and services, our apartment communities have been aggregated
  into one reportable segment. This segment comprises 93% of our total revenues
  for each of the three years in the period ended December 31, 2002.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

The primary financial measure for our
  reportable business segment is net operating income ("NOI"), which
  represents total property revenues less property operating and maintenance expenses
  (as reflected in the accompanying statements of operations). Accordingly, NOI
  excludes certain expenses included in the determination of net income such as
  property management and other indirect operating expenses, interest expense
  and depreciation and amortization expense.  Current year NOI is compared
  to prior year NOI and current year budgeted NOI as a measure of financial performance. The
  NOI yield or return on total capitalized costs is an additional measure of financial
  performance. NOI from our wholly-owned apartment communities included in continuing
  operations totaled $142,907, $153,128 and $150,617 for the years ended
  December 31, 2002, 2001 and 2000, respectively. All other measurements
  for our reportable business segment are disclosed in our consolidated financial
  statements.We also
  provide management, development and construction, corporate apartment home and
  brokerage services to third parties and unconsolidated joint ventures. These
  operations, on an individual and aggregate basis, do not meet the quantitative
  thresholds for segment reporting set forth in SFAS No. 131.12.  INCOME TAXES      We have elected to be taxed as a REIT
  under the Internal Revenue Code.  To qualify as a REIT, we must meet a
  number of organizational and operational requirements, including a requirement
  that we currently distribute at least 90% of the REIT's ordinary taxable income
  to shareholders.  It is our current intention to adhere to these requirements
  and maintain our REIT status.  As a REIT, we generally will not be subject
  to federal income tax on distributed taxable income.  Even if we qualify
  as a REIT, we may be subject to certain state and local taxes on our income
  and real estate assets, and to federal income and excise taxes on our undistributed
  taxable income.  No provision for federal income taxes has been made in
  the accompanying consolidated financial statements because we made distributions
  in excess of our taxable income in each of the three years in the period ended
  December 31, 2002.
        We utilize Gables Residential Services, a taxable
  REIT subsidiary, to provide management and other services to third parties that
  a REIT may be prohibited from providing. Taxable REIT subsidiaries are subject
  to federal, state and local income taxes.  The tax attributes of Gables
  Residential Services are immaterial to the accompanying consolidated financial
  statements.    Reconciliation of Net Income to Taxable Income  Taxable income differs from net income
  reported for financial reporting purposes due to differences in the estimated
  useful lives and methods used to compute depreciation and the carrying value
  (basis) of the investment in real estate assets, among other things.  Taxable
  gain on real estate sales can also differ from gain reported for financial reporting
  purposes due to the use of like-kind exchanges that result in deferral of all
  or a portion of the gain for tax purposes.As discussed in Note 1, the REIT conducts
  substantially all of its operations through the Operating Partnership. 
  For income tax reporting purposes, the REIT receives an allocable share of the
  Operating Partnership's ordinary income and capital gains based on its weighted
  average ownership interest therein adjusted for certain specially allocated
  items.  In addition, taxable income of the Operating Partnership excludes
  taxable income or loss of Gables Residential Services. The REIT's allocable
  share of the Operating Partnership's  taxable income for the years ended
  December 31, 2002, 2001 and 2000 is detailed below:

|                                                                                                               | 2002(estimate) | 2001(actual) | 2000(actual) | 
|-------------------------------------------------------------------------------------------------------------- | -------------- | ------------ | ------------ | 
|REIT share of Operating
      Partnership taxable ordinary income
      (subject to REIT dividend requirement) | $23,836        | $46,140      | $47,364      | 
|REIT share of Operating
      Partnership taxable capital gains                                                | 22,690         | 8,674        | 10,295       | 
|REIT total taxable
      income                                                                                | $46,526        | $54,814      | $57,659      | 
|Cash dividends paid,
      including preferred                                                                 | $65,605        | $65,700      | $61,455      | 

Income Tax Characterization of Dividends Paid to Common
  Shareholders       The income tax characterization of
  dividends paid to common shareholders is based on the calculation of taxable
  earnings and profits, as defined in the Internal Revenue Code.  Taxable
  earnings and profits differ from taxable income due primarily to differences
  in the estimated useful lives and methods used to compute depreciation and in
  the recognition of gain on sale of real estate assets.  For income tax
  purposes, dividends paid to common shareholders consist of ordinary income,
  capital gains, return of capital or a combination thereof.  Dividends paid
  per common share were taxable as follows:NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Years Ended
      December 31,2002
    
    2001
    
    2000$
    %
    
    $
    %
    
    $
    %Ordinary income
      Return of capital
      Capital gains
      Unrecaptured Section 1250 gain
           Total
    $0.868
      0.716
      0.6030.223$2.410
    36.0%
      29.7%
      25.0%9.3%100.0%
    
    $1.587
      0.431
      0.2560.066$2.340
    67.8%
      18.4%
      11.0%2.8%100.0%
    
    $1.726
      0.089
      0.1720.208$2.195
    78.7%
      4.0%
      7.8%9.5%100.0%


13.   PROFIT SHARING PLANEligible employees may participate in a
  profit sharing plan pursuant to Section 401(k) of the Internal Revenue
  Code. Under the plan, employees may defer a portion of their salary on a pre-tax
  basis. We also make discretionary matching contributions currently equal to
  50% of an employee's first 4% salary deferral contribution. Expenses under this
  plan for the years ended December 31, 2002, 2001 and 2000 were not material.
        During January 1996, we added the Gables
  Residential Trust Stock Fund as an investment option under the plan. The fund
  is comprised of our common shares. In connection with the addition of this fund
  to the plan, 100 common shares were registered for issuance under the plan.
  The plan trustee will purchase our common shares for the fund at the direction
  of the plan investment committee, either on the open market or directly from
  us.14. 1994 SHARE OPTION AND INCENTIVE PLAN AND OTHER
  SHARE GRANTSWe adopted the 1994 Share Option and Incentive
  Plan to provide incentives to officers, employees and non-employee trustees.
  The plan provides for the grant of options to purchase a specified number of
  common shares and the grant of restricted or unrestricted common shares. 
  The total number of shares reserved for issuance under the plan, as amended,
  is the greater of 2,953 shares or 9% of the total number of outstanding common
  shares and Units. At December 31, 2002, the number of shares reserved for
  issuance was 2,953. The number of common shares which may be issued as restricted
  or unrestricted shares is equal to 50% of the number of shares available for
  issuance under the plan at such time.  See Note 4 for a discussion of stock
  options issued under the plan.       We have made the
  following grants of unrestricted shares and restricted shares:

GrantDate
      Unrestricted
        SharesGranted
      Restricted
        SharesGranted
      Total
      Per Share
        GrantValue
      General
          Vesting Period for Restricted Shares02-97
          02-98
          04-98
          02-99
          02-99
          04-99
          11-99
          01-00
          03-00
          03-00
          10-00
          02-01
          02-01
          10-01
          02-02
          05-02
          11-02
          11-02
          03-03
      23
        13
        3
        11
        5
        9
        2
        12
        6
        3
        2
        12
        1
        2
        24
        1
        -
        111
      46
        40
        9
        34
        9
        19
        16
        36
        20
        5
        13
        36
        2
        13
        47
        1
        1
        1236
      69
        53
        12
        45
        14
        28
        18
        48
        26
        8
        15
        48
        3
        15
        71
        2
        1
        1347
      $25.8750
        26.6875
        27.0625
        23.2500
        23.2500
        21.9375
        24.6250
        22.6250
        21.8750
        21.8750
        25.8125
        27.3000
        27.3000
        26.9500
        29.7500
        30.3000
        23.7100
        23.7100
        25.4000
      Two equal annual installments,
        beginning 1-1-98
        Three equal annual installments, beginning 1-1-99
        Three equal annual installments, beginning 4-1-99
        Three equal annual installments, beginning 1-1-00
        Two equal annual installments, beginning 1-1-00
        Two equal annual installments, beginning 4-1-00
        One installment, on 12-1-02
        Three equal annual installments, beginning 1-1-01
        Three equal annual installments, beginning 1-1-01
        Two equal annual installments, beginning 1-1-01
        One installment, on 12-1-03
        Three equal annual installments, beginning 1-1-02
        Two equal annual installments, beginning 1-1-02
        One installment, on 12-1-04
        Three equal installments, beginning 1-1-03
        Three equal installments, beginning 1-1-03
        Three equal installments, beginning 1-1-03
        One installment, on 12-1-05
        Three equal annual installments, beginning 1-1-04Total
      141
      395
      536


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

All of the share grants
  have been made under the plan with the exception of the February 2001,
  February 2002 and March 2003 grants, which were satisfied with shares acquired
  by us pursuant to our common equity repurchase program.

The value of the unrestricted
  shares granted is recorded as long-term compensation expense in the year the
  related service was provided. Upon issuance of the share grants, (1) the value
  of the shares issued is recorded to the additional paid-in capital component
  of shareholders' equity, after relieving the treasury shares component of shareholders'
  equity for share grants issued out of treasury and (2) the value of the restricted
  shares is recorded to the deferred long-term compensation component of shareholders'
  equity. Such deferred compensation is amortized ratably over the term of the
  vesting period.  Long-term compensation expense included in general and
  administrative expense in the accompanying consolidated statements of operations
  was $1,230, $1,331 and $1,128 for the years ended December 31, 2002, 2001 and
  2000, respectively.15.  UNUSUAL ITEMSUnusual items of $8,847 in 2001 are comprised
  of  (1) a $5,006 charge associated with the write-off of building components
  at Gables State Thomas Ravello that are being replaced in connection with a
  remediation program, (2) $2,200 of severance charges, (3) $920 in reserves associated
  with certain technology investments and (4) $721 of abandoned real estate pursuit
  costs resulting from September 2001 events which impacted the U.S. economy. 
       
         The $2,200 severance charge in 2001 is
  associated with organizational changes adopted in the fourth quarter of 2001,
  including (1) the departure of the chief investment officer effective January
  1, 2002, who became entitled to severance benefits in accordance with the terms
  of his employment agreement and (2) the departure of two senior vice presidents
  effective in early 2002.  These severance costs were paid in 2002 and included
  approximately $400 of deferred compensation related to the accelerated vesting
  of restricted shares unvested at the effective date of separation and approximately
  $730 related to the modification of certain outstanding share options to extend
  the exercise period and accelerate the vesting thereof.16. RELATED-PARTY TRANSACTIONSTransactions with our unconsolidated joint
  ventures are disclosed in Note 6.

On September
  1, 2000, we acquired an apartment community located in Austin comprising 160
  apartment homes from a partnership in which our chairman, president and chief
  executive officer held a 15% limited partnership interest. In consideration
  for such community, we paid $5.7 million in cash and assumed a $14.1 million
  secured fixed-rate note. The purchase price and other terms of this transaction
  were negotiated at arms' length between us and representatives of the seller.17.  EXTRAORDINARY LOSS, NET       Extraordinary loss, net of minority
  interest, of $1,360 in 2002 represents the write-off of unamortized deferred
  financing costs of $236 and a prepayment penalty of $1,451 associated with the
  early retirement of $48,365 of secured tax-exempt bond indebtedness, net of
  the $327 portion of the loss attributable to the minority interest unitholders. 
  These bonds had an interest rate of 6.375% which we were able to reissue on
  an unsecured basis at a rate of 4.75%, resulting in a positive net present value.

18. QUARTERLY FINANCIAL INFORMATION (Unaudited)The operating results of two wholly-owned
  real estate assets sold during the first and fourth quarters of 2002 are reflected
  as discontinued operations in the statements of operations for all periods presented
  in this report as further discussed in Note 5.  As a result, we are presenting
  the quarterly financial information to reflect the reclassification of the operating
  results of these assets to discontinued operations, which differs from the basis
  of presentation in our financial statements previously filed in our quarterly
  reports on Form 10-Q.
        In addition, during the first quarter of 2002,
  an operating real estate asset owned by the GRAP JV (an unconsolidated joint
  venture described in Note 6) was sold.  Because we did not continue to
  manage the asset subsequent to the sale, we reflected our share of the operating
  results of the asset as discontinued operations in our financial statements
  previously filed in our quarterly reports on Form 10-Q.  Upon further consideration
  of the technical issues involved, during the fourth quarter of 2002, we determined
  that our share of the results of operations associated with assets sold by unconsolidated
  joint ventures should not be classified as discontinued operations.  Accordingly,
  we are presenting the quarterly financial information to reflect our share of
  the operating results of the asset within continuing operations, which differs
  from the previously reported quarterly results.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Amounts in Thousands, Except Property and Per Share Data)

---

Quarterly financial information
  for the years ended December 31, 2002 and 2001, as revised to reflect the changes
  noted above is as follows:

Year Ended December 31, 2002FirstQuarter
      SecondQuarterThirdQuarter
      FourthQuarterTotal revenues
        Gain on sale of previously depreciated operating real estate assets
        Gain on sale of land and development rights
        Income from continuing operations
        Income from discontinued operations, net of minority interest
        Income before extraordinary loss, net
        Extraordinary loss, net of minority interest
        Net income
        Net income available to common shareholders
        Net income per common share - basic (a)
        Net income per common share - diluted
      $60,528
        17,906
        1,339
        26,169
        2,027
        28,196
        -
        28,196
        25,753
        1.05
        1.04
      $58,989
        -
        462
        8,484
        178
        8,662
        1,360
        7,302
        4,860
        0.20
        0.19
      $60,011
        -
        267
        7,779
        146
        7,925
        -
        7,925
        6,834
        0.28
        0.28
      $59,595
        -
        32
        6,025
        6,264
        12,289
        -
        12,289
        11,446
        0.47
        0.47(a)  The total
        of the four quarterly amounts for net income per common share does not
        equal the net income per common share for the year ended December 31,
        2002. The difference results from the use of a weighted average to compute
        the number of common shares outstanding for each quarter and for the year.


Year
          Ended December 31, 2001FirstQuarter
      SecondQuarter
      ThirdQuarter
      FourthQuarterTotal revenues
        Gain on sale of previously depreciated operating real estate assets
        Gain on sale of land and development rights
        Unusual items
        Income from continuing operations
        Income from discontinued operations, net of minority interest
        Income before extraordinary loss, net
        Extraordinary loss, net of minority interest
        Net income
        Net income available to common shareholders
        Net income per common share - basic 
        Net income per common share - diluted
      $57,980
        -
        1,638
        400
        10,915
        325
        11,240
        -
        11,240
        8,797
        0.38
        0.38
      $61,330
        7,386
        580
        -
        17,140
        308
        17,448
        -
        17,448
        15,006
        0.63
        0.62
      $62,980
        -
        515
        6,247
        5,900
        337
        6,237
        -
        6,237
        3,794
        0.16
        0.16
      $62,189
        26,724
        487
        2,200
        29,537
        383
        29,920
        -
        29,920
        27,477
        1.13
        1.13


19.  SUBSEQUENT EVENTS      In February 2003, we sold an apartment community
  in Dallas comprising 300 apartment homes.  The net proceeds from this sale
  were approximately $19 million and were used to paydown outstanding borrowings
  under our interim financing vehicles.  The gain from this sale was approximately
  $5 million.  This apartment community did not qualify as held for disposition
  as defined by SFAS No. 144 at December 31, 2002.
        In February 2003, we acquired an apartment community
  located in Austin that is subject to a long-term ground lease and is comprised
  of 239 apartment homes and 7,366 square feet of retail space for approximately
  $30 million.  The acquisition was financed through borrowings under our
  interim financing vehicles.
        In February 2003, we closed a modification to
  our $225 million credit facility increasing the capacity thereunder to $252
  million, among other things.  See Note 7.

Gables Residential TrustReal
  Estate Investments and Accumulated Depreciation as of December 31, 2002
  (Dollars in Thousands)

Schedule III

Initial Costs
      Costs
        Capitalized
        SubsequentTo Acquisition
      Gross
        Amount at WhichCarried at Close of Period
      
      Year
        Original
        ConstructionCompleteProperty Typeand Location
      RelatedEncumbrances
      Land
      Buildings andImprovements
      LandBuildings andImprovements
      Total
      AccumulatedDepreciation
      YearAcquired


|Completed Apartment Communities:                         |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |             |            
|-------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | --------- | --------- | --------- | --------- | ----------- | ----------- | -----------
|                                                         | South FL                                                                                                                                                                                                                                                                                                                              | $ 135,850 | $ 69,417  | $ 361,141 | $ 28,113  | $ 69,417  | $ 389,254   | $ 458,671   |            
|                                                         | Atlanta, GA                                                                                                                                                                                                                                                                                                                           |           | 78,378    | 58,747    | 86,145    | 212,940   | 58,747      | 299,085     | 357,832    
|                                                         | Houston, TX                                                                                                                                                                                                                                                                                                                           | 59,339    | 59,191    | 139,954   | 133,020   | 59,191    | 272,974     | 332,165     |            
|                                                         | Dallas, TX                                                                                                                                                                                                                                                                                                                            |           | 15,541    | 25,009    | 38,234    | 81,958    | 25,009      | 120,192     | 145,201    
|                                                         | Orlando, FL                                                                                                                                                                                                                                                                                                                           |           | -         | 14,917    | -         | 118,236   | 14,917      | 118,236     | 133,153    
|                                                         | Austin, TX                                                                                                                                                                                                                                                                                                                            |           | 13,803    | 12,388    | 49,878    | 66,743    | 12,388      | 116,621     | 129,009    
|                                                         | Nashville, TN                                                                                                                                                                                                                                                                                                                         | 26,150    | 2,001     | -         | 27,643    | 2,001     | 27,643      | 29,644      |            
|                                                         | Memphis, TN                                                                                                                                                                                                                                                                                                                           | -         | 1,865     | -         | 27,606    | 1,865     | 27,606      | 29,471      |            
|                                                         | Washington, D.C.                                                                                                                                                                                                                                                                                                                      | -         | 6,560     | 18,037    | 131       | 6,560     | 18,168      | 24,728      |            
|                                                         | Total                                                                                                                                                                                                                                                                                                                                 |           | $ 329,061 | $ 250,095 | $ 693,389 | $ 696,390 | $ 250,095   | $ 1,389,779 | $ 1,639,874
|                                                         |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |             |            
|Apartment Communities Under Development and/or Lease-up: |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |            
|                                                         | Dallas, TX                                                                                                                                                                                                                                                                                                                            |           | $ -       | $ 15,848  | $ 22,612  | $ 42,200  | $ 15,848    | $ 64,812    | $ 80,660   
|                                                         | Austin, TX                                                                                                                                                                                                                                                                                                                            |           | 906       | 11,863    | -         | 2,412     | 11,863      | 2,412       | 14,275     
|                                                         | South FL                                                                                                                                                                                                                                                                                                                              | -         | 4,577     | -         | 2,720     | 4,577     | 2,720       | 7,297       |            
|                                                         | Houston, TX                                                                                                                                                                                                                                                                                                                           | 3,483     | 5,424     | -         | 1,711     | 5,424     | 1,711       | 7,135       |            
|                                                         | Atlanta, GA ( c)                                                                                                                                                                                                                                                                                                                      | -         | -         | -         | 6,807     | -         | 6,807       | 6,807       |            
|                                                         | Tampa, FL                                                                                                                                                                                                                                                                                                                             |           | -         | 4,019     | -         | 1,156     | 4,019       | 1,156       | 5,175      
|                                                         | Total                                                                                                                                                                                                                                                                                                                                 |           | $ 4,389   | $ 41,731  | $ 22,612  | $ 57,006  | $ 41,731    | $ 79,618    | $ 121,349  
|                                                         |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |             |            
|Apartment Communities Under Renovation (d):              |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |            
|                                                         | Atlanta, GA                                                                                                                                                                                                                                                                                                                           |           | $ -       | $ -       | $ -       | $ 5,699   | $ -         | $ 5,699     | $ 5,699    
|                                                         | South FL                                                                                                                                                                                                                                                                                                                              | -         | -         | -         | 2,111     | -         | 2,111       | 2,111       |            
|                                                         | Total                                                                                                                                                                                                                                                                                                                                 |           | $ -       | $ -       | $ -       | $ 7,810   | $ -         | $ 7,810     | $ 7,810    
|                                                         |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |             |            
|Undeveloped Land:                                        |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |             |            
|                                                         | South FL                                                                                                                                                                                                                                                                                                                              | $ -       | $ 6,340   | $ -       | $ 3,516   | $ 9,856   | $ -         | $ 9,856     |            
|                                                         | San Antonio, TX                                                                                                                                                                                                                                                                                                                       | -         | 1,202     | -         | 471       | 1,673     | -           | 1,673       |            
|                                                         | Dallas, TX                                                                                                                                                                                                                                                                                                                            |           | -         | 600       | -         | 198       | 798         | -           | 798        
|                                                         | Memphis, TN                                                                                                                                                                                                                                                                                                                           | -         | 606       | -         | 18        | 624       | -           | 624         |            
|                                                         | Total                                                                                                                                                                                                                                                                                                                                 |           | $ -       | $ 8,748   | $ -       | $ 4,203   | $ 12,951    | $ -         | $ 12,951   
|                                                         |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |             |            
|Grand Totals                                             |                                                                                                                                                                                                                                                                                                                                       | $ 333,450 | $ 300,574 | $ 716,001 | $ 765,409 | $ 304,777 | $ 1,477,207 | $ 1,781,984 | (e)        
|                                                         |                                                                                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |             |            
|                                                         | (a) Depreciation of apartment communities is calculated
        on a straight-line basis over an estimated useful life ranging from 20
        to 40 years for buildings and building
              improvements and an estimated useful life
        of 5 years for furniture, fixtures and equipment.                              
|                                                        
|                                                         | (b) The year acquired represents the year we acquired a
        completed community or the year we acquired the real estate for the development
        of an apartment community.                                                                                                                                                   
|                                                         | (c) Represents costs incurred to date associated with the
        reconstruction of 100 apartment homes previously owned and operated by
        us into 233 apartment homes. The
              remaining information applicable to
        this community is included in the Completed Apartment Communities category
        above.
|                                                         | (d) Represents renovation costs incurred to date on two
        completed communities; the remaining information applicable to these communities
        is included in the Completed
              Apartment Communities category above.                                                                                            
|                                                         | (e) Excludes our investment in joint ventures totaling $12,423.                                                                                                                                                                                                                                                                       |           |           |           |           |           |             |            




|                                                                                                                                                                                                                                                                                                                                               |          |          |          |          |             |                          |             | Schedule III
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | -------- | -------- | -------- | ----------- | ------------------------ | ----------- | ------------
|Gables
        Residential Trust                                                                                                                                                                                                                                                                                                              
|Real Estate Investments and Accumulated Depreciation as
        of December 31, 2002 (Dollars in Thousands)                                                                                                                                                                                                                                   
|A summary of activity for real estate investments and accumulated
        depreciation is as follows:                                                                                                                                                                                                                                          |          |         
|                                                                                                                                                                                                                                                                                                                                               |          |          |          |          |             | Years ended December 31,
|                                                                                                                                                                                                                                                                                                                                               |          |          |          |          |             | 2002                     | 2001        | 2000        
|Real estate investments:                                                                                                                                                                                                                                                                                                                       |          |          |          |          |             |                          |            
|Balance, beginning of year                                                                                                                                                                                                                                                                                                                     |          |          |          |          | $ 1,739,905 | $ 1,573,544              | $ 1,577,737
|Additions:                                                                                                                                                                                                                                                                                                                                     |          |          |          |          |             |                          |             |             
|Operating apartment community acquisitions                                                                                                                                                                                                                                                                                                     |          |          | -        | 99,206   | 20,036     
|Development , construction and renovation costs
        incurred,
               including related land acquisitions                                                                                                                                                                                                                           |          | 90,465   | 128,513  | 86,251  
|Recurring value retention capital expenditures                                                                                                                                                                                                                                                                                                 |          |          | 13,077   | 11,797   | 10,910     
|Non-recurring and/or value-enhancing capital
        expenditures                                                                                                                                                                                                                                                                              |          | 11,910   | 10,916   | 9,609   
|Total additions                                                                                                                                                                                                                                                                                                                                |          |          |          |          | 115,452     | 250,432                  | 126,806    
|Contributions to GRAP JV Two                                                                                                                                                                                                                                                                                                                   |          |          |          | -        | (18,020)    | -                       
|Sales                                                                                                                                                                                                                                                                                                                                          |          |          |          |          |             | (73,373)                 | (66,051)    | (130,999)   
|Balance, end of year (a)                                                                                                                                                                                                                                                                                                                       |          |          |          |          | $ 1,781,984 | $ 1,739,905              | $ 1,573,544
|                                                                                                                                                                                                                                                                                                                                               |          |          |          |          |             |                          |             |             
|Accumulated depreciation:                                                                                                                                                                                                                                                                                                                      |          |          |          |          |             |                          |            
|Balance, beginning of year                                                                                                                                                                                                                                                                                                                     |          |          |          |          | $ 230,118   | $ 195,706                | $ 172,247  
|Depreciation                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |             | 47,815                   | 47,521      | 43,745      
|Sales                                                                                                                                                                                                                                                                                                                                          |          |          |          |          |             | (11,794)                 | (13,109)    | (20,286)    
|Balance, end of year                                                                                                                                                                                                                                                                                                                           |          |          |          |          | $ 266,139   | $ 230,118                | $ 195,706  
|                                                                                                                                                                                                                                                                                                                                               |          |          |          |          |             |                          |             |             
|Reconciliation of depreciation above to consolidated statements
        of operations:                                                                                                                                                                                                                                                         |          |          |         
|Depreciation in rollforward of accumulated depreciation
        above                                                                                                                                                                                                                                                                          |          | $ 47,815 | $ 47,521 | $ 43,745
|Depreciation relating to discontinued operations                                                                                                                                                                                                                                                                                               |          |          | (806)    | (1,365)  | (1,310)    
|Amortization of prepaid land lease payments (b)                                                                                                                                                                                                                                                                                                |          |          | 84       | 84       | 84         
|Real estate asset depreciation and amortization
        expense reflected in continuing
               operations in the accompanying consolidated
        statements of operations                                                                                                                                                            | $ 47,093 | $ 46,240 | $ 42,519
|                                                                                                                                                                                                                                                                                                                                               |          |          |          |          |             |                          |             |             
|                                                                                                                                                                                                                                                                                                                                               |          |          |          |          |             |                          |             |             
|(a) Excludes our investment in joint ventures totaling $12,423,
        $20,898 and $24,626 at December 31, 2002, 2001 and 2000,   
              respectively.                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                               |          |          |          |          |             |                          |             |             
|(b) We have leased two parcels of land pursuant to long-term
        ground lease agreements which required the lease payments to be
              made upfront. The prepaid lease payments,
        net of accumulated amortization, are included in other assets, net in
        the
              accompanying consolidated balance sheets.