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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549


Form 10-K





















POST PROPERTIES, INC.


POST APARTMENT HOMES, L.P.




|                                                                                      |  |                                                                  
|------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------
|Georgia
    Georgia(State or other jurisdiction of
    incorporation or organization) |  | 58-1550675
    58-2053632(I.R.S. Employer
    Identification No.)

4401 Northside Parkway, Suite 800, Atlanta, Georgia
30327




(404) 846-5000









|                                                                              |  |                         
|----------------------------------------------------------------------------- |  | ------------------------
|                                                                              |  | Name of Each Exchange on
|Title of each class                                                           |  | Which Registered        
|                                                                              |  |                         
|Common Stock, $.01 par value                                                  |  | New York Stock Exchange 
|81/2%
    Series A Cumulative
    Redeemable Preferred Shares, $.01 par value |  | New York Stock Exchange 
|75/8%
    Series B Cumulative
    Redeemable Preferred Shares, $.01 par value |  | New York Stock Exchange 



|                    |  |                         
|------------------- |  | ------------------------
|                    |  | Name of Each Exchange on
|Title of each class |  | Which Registered        
|                    |  |                         
|None                |  | None                    






|                           |  |           |  |         
|-------------------------- |  | --------- |  | --------
|Post Properties, Inc.      |  | Yes   [X] |  | No   [ ]
|Post Apartment Homes, L.P. |  | Yes   [X] |  | No   [ ]



|                           |  |           |  |         
|-------------------------- |  | --------- |  | --------
|Post Properties, Inc.      |  | Yes   [ ] |  | No   [X]
|Post Apartment Homes, L.P. |  | Yes   [ ] |  | No   [X]



|                           |  |           |  |         
|-------------------------- |  | --------- |  | --------
|Post Properties, Inc.      |  | Yes   [X] |  | No   [ ]
|Post Apartment Homes, L.P. |  | Yes   [X] |  | No   [ ]

S-K 10-K 10-K.




12b-2


| |                            |  |  |  |                             |  |  |  |                       |  |  |  |                           | 
| | -------------------------- |  |  |  | --------------------------- |  |  |  | --------------------- |  |  |  | ------------------------- | 
| | Post Properties, Inc.      |  |  |  | Large Accelerated Filer [X] |  |  |  | Accelerated Filer [ ] |  |  |  | Non-Accelerated Filer [ ] | 
| | Post Apartment Homes, L.P. |  |  |  | Large Accelerated Filer [X] |  |  |  | Accelerated Filer [ ] |  |  |  | Non-Accelerated Filer [ ] | 

12b-2


|                           |  |           |  |         
|-------------------------- |  | --------- |  | --------
|Post Properties, Inc.      |  | Yes   [ ] |  | No   [X]
|Post Apartment Homes, L.P. |  | Yes   [ ] |  | No   [X]




DOCUMENTS INCORPORATED BY REFERENCE











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##### 










TABLE OF CONTENTS


FINANCIAL INFORMATION


|                                              |  |                                                                                                                              |  |      |    | 
|--------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|Item                                          |  |                                                                                                                              |  | Page |   
|No.                                           |  |                                                                                                                              |  | No.  |   
|                                              |  |                                                                                                                              |  |      |   
|PART I                                       
|1.                                            |  | Business                                                                                                                     |  |      | 1  | 
|1A.                                           |  | Risk Factors                                                                                                                 |  |      | 7  | 
|1B.                                           |  | Unresolved Staff Comments                                                                                                    |  |      | 15 | 
|2.                                            |  | Properties                                                                                                                   |  |      | 15 | 
|3.                                            |  | Legal Proceedings                                                                                                            |  |      | 19 | 
|4.                                            |  | Submission of Matters to a Vote of Security
    Holders                                                                      |  |      | 19 | 
|X.                                            |  | Executive Officers of the Registrant                                                                                         |  |      | 19 | 
|PART II                                      
|5.                                            |  | Market Price of the Registrants
    Common Stock, Related Shareholder Matters and Issuer Purchases
    of Equity Securities |  |      | 21 | 
|6.                                            |  | Selected Financial Data                                                                                                      |  |      | 22 | 
|7.                                            |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                    |  |      | 24 | 
|7A.                                           |  | Quantitative and Qualitative Disclosures
    about Market Risk                                                               |  |      | 49 | 
|8.                                            |  | Financial Statements and Supplementary
    Data                                                                              |  |      | 50 | 
|9.                                            |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                                     |  |      | 50 | 
|9A.                                           |  | Controls and Procedures                                                                                                      |  |      | 50 | 
|9B.                                           |  | Other Information                                                                                                            |  |      | 50 | 
|PART III                                     
|10.                                           |  | Directors and Executive Officers of the
    Registrant                                                                       |  |      | 51 | 
|11.                                           |  | Executive Compensation                                                                                                       |  |      | 51 | 
|12.                                           |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Shareholder Matters                           |  |      | 51 | 
|13.                                           |  | Certain Relationships and Related
    Transactions                                                                           |  |      | 51 | 
|14.                                           |  | Principal Accountant Fees and Services                                                                                       |  |      | 51 | 
|PART IV                                      
|15.                                           |  | Exhibits, Financial Statements and
    Schedules                                                                             |  |      | 51 | 
|EX-10.46 Form of 2003 Incentive Stock Plan   
|EX-21.1 LIST OF SUBSIDIARIES                 
|EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLP
|EX-23.2 CONSENT OF PRICEWATERHOUSECOOPER LLP 
|EX-31.1 SECTION 302, CERTIFICATION OF THE CEO
|EX-31.2 SECTION 302, CERTIFICATION OF THE CFO
|EX-32.1 SECTION 906, CERTIFICATION OF THE CEO
|EX-32.2 SECTION 906, CERTIFICATION OF THE CFO





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##### Table of Contents






PART I







|        |         
|------- | --------
|ITEM 1. | BUSINESS

The Company






®


The Operating Partnership

















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Business Strategy




Investment, Disposition and Acquisition Strategy


®


®




®


Post ® Brand Name Strategy


® ®













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on-site on-site




tm tm


Service and Associate Development Strategy




Operating Strategy




Financing Strategy




Operating Divisions




Post Apartment Management


day-to ®


Post Investment Group















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##### Table of Contents



Post Corporate Services




Operating Segments






|  |                                                                                                                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fully stabilized communities  those apartment
    communities which have been stabilized (the earlier of the point
    at which a property reaches 95% occupancy or one year after
    completion of construction) for both the current and prior year.     
| 
| | Communities stabilized during prior year  communities
    which reached stabilized occupancy in the prior year.                                                                                                                                             
| 
| | Condominium conversion communities  those portions of
    existing apartment communities being converted into condominiums
    that are reflected in continuing operations under
    SFAS No. 144 (see note 1 to the consolidated
    financial statements).
| 
| | Development and
    lease-up
    communities  those communities that are in
    lease-up but were not
    stabilized by the beginning of the current year, including
    communities that stabilized during the current year.                               
| 
| | Acquired communities  those communities acquired in
    the current or prior year.                                                                                                                                                                          

10-K.


Summary of Investment and Disposition Activity




|                                                                                                                  |  |      |         |      |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                                                                  |  | 2005 |         |      | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                                                                                                  |  |      |         |      |      |   |         |      |  |   |         |   |  |      |        
|Units developed and completed                                                                                     |  |      |        |      |      |   |        |      |  |   | 468     |   |  |      | 2,140   |   |  |   | 2,651   |  
|Units acquired                                                                                                    |  |      | 319     |      |      |   | 499     |      |  |   |        |   |  |      |        |   |  |   |        |  
|Units sold                                                                                                        |  |      | (3,051  | )(1) |      |   | (3,880  | )    |  |   | (2,236  | ) |  |      | (2,665  | ) |  |   | (2,799  | )
|Units sold as condominiums or currently being converted into
    for-sale condominiums                            |  |      | (731    | )(2) |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Total units completed and owned by the Company and its
    affiliates (including units held for sale) at year-end |  |      | 21,237  | (3)  |      |   | 24,700  |      |  |   | 28,081  |   |  |      | 29,849  |   |  |   | 30,374  |  
|Total revenues from continuing operations (in thousands)                                                          |  | $    | 296,803 |      |      | $ | 282,784 |      |  | $ | 268,159 |   |  | $    | 262,882 |   |  | $ | 293,986 |  


















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##### Table of Contents



Current Development Activity




|                                                        |  |                 |     |           |              |       |          |            |  |            |              |  |            |             |        |            |              |  |        |  |  |  |        | 
|------------------------------------------------------- |  | --------------- | --- | --------- | ------------ | ----- | -------- | ---------- |  | ---------- | ------------ |  | ---------- | ----------- | ------ | ---------- | ------------ |  | ------ |  |  |  | ------ | 
|                                                        |  |                 |     |           |              | Costs |          |            |  |            |              |  | Estimated  |            
|                                                        |  |                 |     | Estimated |              |       | Incurred |            |  | Quarter of |              |  | Quarter of |             |        | Quarter of |             
|                                                        |  | Number of       |     |           | Construction |       |          | as of      |  |            | Construction |  |            | First Units |        |            | Stabilized   | 
|Metropolitan Area                                       |  | Units           |     |           | Cost         |       |          | 12/31/2005 |  |            | Start        |  |            | Available   |        |            | Occupancy(1) | 
|                                                        |  |                 |     |           |              |       |          |            |  |            |              |  |            |             |        |            |              | 
|                                                        |  | ($ in millions) |    
|Construction/ Lease-up Communities                      |  |                 |     |           |              |       |          |            |  |            |              |  |            |             |        |            |              |  |        |  |  |  |        | 
|Washington D.C.                                         |  |                 |     |           |              |       |          |            |  |            |              |  |            |             |        |            |              |  |        |  |  |  |        | 
|Post
    Carlyletm 
    Apartments and Condominiums(2) |  |                 | 350 |           |              | $     | 99       |            |  | $          | 47           |  |            |             | 4Q 04 |            |              |  | 3Q 06 |  |  |  | 3Q 07 | 
|                                                        |  |                 |     |           |              |       |          |            |  |            |              |  |            |             |        |            |              | 
|Construction/ Lease-up Communities                      |  |                 | 350 |           |              | $     | 99       |            |  | $          | 47           |  |            |             |        |            |              |  |        |  |  |  |        | 
|                                                        |  |                 |     |           |              |       |          |            |  |            |              |  |            |             |        |            |              | 



|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company defines stabilized occupancy for apartment
    communities as the earlier to occur of (i) the attainment
    of 95% physical occupancy on the first day of any month or
    (ii) one year after completion of construction.
|(2) | The condominium component of the project, consisting of
    145 units, is being developed through a taxable REIT
    subsidiary in a majority owned joint venture with a Washington
    D.C. based developer.                          

Competition






Americans with Disabilities Act and Fair Housing Act















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Environmental Regulations



























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Where You Can Find More Information


l0-K, 10-Q, 8-K,







|         |             
|-------- | ------------
|ITEM 1A. | RISK FACTORS

(Dollars In thousands, except per share amounts)




Unfavorable changes in apartment markets and economic
conditions could adversely affect occupancy levels and rental
rates.






|  |                                                                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the economic climate, which may be adversely impacted by a
    reduction in jobs, industry slowdowns and other factors;                                                            
| 
| | local conditions, such as oversupply of, or reduced demand for,
    apartment homes;                                                                                               
| 
| | declines in household formation;                                                                                                                                                   
| 
| | favorable residential mortgage rates;                                                                                                                                              
| 
| | rent control or stabilization laws, or other laws regulating
    rental housing, which could prevent the Company from raising
    rents to offset increases in operating costs; and
| 
| | competition from other available apartments and other housing
    alternatives and changes in market rental rates.                                                                 














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Development and construction risks could impact the
companys profitability.






|  |                                                                                                                                                                                                                                              
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the Company 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 development costs;



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the Company may incur construction costs for a property that
    exceed original estimates due to increased materials, labor or
    other costs or unforeseen environmental conditions, which could
    make completion of the property uneconomical, and the Company
    may not be able to increase rents or for-sale
    (condominium) unit sales prices to compensate for the
    increase in construction costs;                      
| 
| | the Company may abandon development opportunities that it has
    already begun to explore, and it may fail to recover expenses
    already incurred in connection with exploring those
    opportunities;                                                                                                                                                                                                                                 
| 
| | the Company has at times been and may continue to be unable to
    complete construction and
    lease-up of a community
    on schedule and meet financial goals for development projects;                                                                                                                                                                                                                                                
| 
| | because occupancy rates and rents at a newly developed community
    may fluctuate depending on a number of factors, including market
    and economic conditions, the Company may be unable to meet its
    profitability goals for that community; and                                                                                                                                                                                   
| 
| | land costs and construction costs have been increasing in the
    Companys markets, and may continue to increase in the
    future and, in some cases, the costs of upgrading acquired
    communities have, and may continue to, exceed original estimates
    and the Company may be unable to charge rents, or sales prices
    with respect to for-sale (condominium) product, that would
    compensate for these increases in costs.

Possible difficulty of selling apartment communities could
limit the Companys operational and financial
flexibility.




Concentration of investments in certain markets.




Changing interest rates could increase interest costs and
could affect the market price of the Companys
securities.















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Failure to generate sufficient cash flows could affect the
Companys debt financing and create refinancing risk.






|  |                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------
| | the national and local economies;                                                                                             
| 
| | local real estate market conditions, such as an oversupply of
    apartment homes or competing for-sale (condominium) housing;



|  |                                                                                                                                                                                       
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the perceptions by prospective residents or buyers of the
    safety, convenience and attractiveness of the Companys
    communities and the neighborhoods in which they are located;



|  |                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------
| | the Companys ability to provide adequate management,
    maintenance and insurance for its apartment communities;                 
| 
| | rental expenses for its apartment communities, including real
    estate taxes and utilities; and                                  
| 
| | the level of mortgage interest rates and its impact on the
    demand for prospective buyers of for-sale
    (condominium) housing.



The Company could become more highly leveraged which could
result in an increased risk of default and in an increase in its
debt service requirements.

















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##### Table of Contents



Debt financing may not be available and equity issuances
could be dilutive to the companys shareholders.




Expansion of the Companys operations into condominium
conversion and for-sale (condominium) housing involves new
business risks and challenges for management.






|  |                                                                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the inability to obtain approvals to rezone the property and
    releases from financing obligations and increases in costs
    resulting from delays in obtaining such approvals and releases;



|  |                                                                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | understanding the costs necessary to bring a newly developed or
    converted for-sale (condominium) property up to standards
    required for its intended market position;



|  |                                                                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | lack of demand by prospective buyers;                                                                                                                                       
| 
| | over supply of condominiums in a given market;                                                                                                                              
| 
| | the inability of buyers to qualify for financing;                                                                                                                           
| 
| | lower than anticipated sale prices;                                                                                                                                         
| 
| | the inability to close on sales of individual units under
    contract;                                                                                                     
| 
| | competition from other condominiums and other types of
    residential housing; and                                                                                         
| 
| | liability claims from condominium associations or others
    asserting that construction performed was defective, resulting
    in litigation and/or settlement discussions.



Acquired apartment communities may not achieve anticipated
results.






|  |                                                                                                                                                                                       
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | an acquired community may fail to achieve expected occupancy and
    rental rates and may fail to perform as expected;                                                                
| 
| | the Company may not be able to successfully integrate acquired
    properties and operations; and                                                                                     
| 
| | the Companys estimates of the costs of repositioning or
    redeveloping the acquired property may prove inaccurate, causing
    the Company to fail to meet its profitability goals.












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##### Table of Contents



Increased competition and increased affordability of
residential homes could limit the Companys ability to
retain its residents, lease apartment homes or increase or
maintain rents.




Limited investment opportunities could adversely affect the
Companys growth.




The Company may not be able to maintain its current dividend
level.




Interest rate hedging contracts may be ineffective and may
result in material charges.




Failure to succeed in new markets may limit the
companys growth.






|  |                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------
| | an inability to evaluate accurately local apartment or for-sale
    (condominium) housing market conditions and local economies;
| 
| | an inability to obtain land for development or to identify
    appropriate acquisition opportunities;                           
| 
| | an inability to hire and retain key personnel; and                                                                              
| 
| | lack of familiarity with local governmental and permitting
    procedures.                                                      












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Any weaknesses identified in the Companys system of
internal controls by the Company and its independent registered
public accounting firm pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002 could have an adverse effect on the
Companys business.




Losses from natural catastrophes may exceed insurance
coverage.




Potential liability for environmental contamination could
result in substantial costs.


clean-up


Compliance or failure to comply with laws requiring access to
the Companys properties by disabled persons could result
in substantial cost.

















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##### Table of Contents





Costs associated with moisture infiltration and resulting
mold remediation may be costly.




The Companys joint ventures and joint ownership of
properties and partial interests in corporations and limited
partnerships could limit the Companys ability to control
such properties and partial interests.




The Company may be unable to renew leases or relet units as
leases expire.




The Company may fail to qualify as a REIT for federal income
tax purposes.















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##### Table of Contents







The Operating Partnership may fail to be treated as a
partnership for federal income tax purposes.




The Companys real estate assets may be subject to
impairment charges.






The Companys shareholders may not be able to effect a
change in control.




Preferred shares.













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##### Table of Contents



Consent Rights of the Unitholders.


Ownership Limit.


Terrorist attacks and the possibility of wider armed conflict
may have an adverse effect on the Companys business and
operating results and could decrease the value of the
Companys assets.









|         |                          
|-------- | -------------------------
|ITEM 1B. | UNRESOLVED STAFF COMMENTS








|        |           
|------- | ----------
|ITEM 2. | PROPERTIES

®


|                         |  |             |    |  |            |  |        |            |  |  |       |  
|------------------------ |  | ----------- | -- |  | ---------- |  | ------ | ---------- |  |  | ----- | -
|Metropolitan Area        |  | Communities |    |  | # of Units |  |        | % of Total | 
|                         |  |             |    |  |            |  |        |            | 
|Atlanta, GA              |  |             | 26 |  |            |  | 9,944  |            |  |  | 46.8  | %
|Dallas, TX               |  |             | 13 |  |            |  | 3,939  |            |  |  | 18.5  | %
|Greater Washington, D.C. |  |             | 5  |  |            |  | 1,972  |            |  |  | 9.3   | %
|Tampa, FL                |  |             | 3  |  |            |  | 1,883  |            |  |  | 8.9   | %
|Charlotte, NC            |  |             | 4  |  |            |  | 1,384  |            |  |  | 6.5   | %
|Houston, TX              |  |             | 2  |  |            |  | 837    |            |  |  | 3.9   | %
|Denver, CO               |  |             | 1  |  |            |  | 696    |            |  |  | 3.3   | %
|New York, NY             |  |             | 2  |  |            |  | 337    |            |  |  | 1.6   | %
|Orlando, FL              |  |             | 1  |  |            |  | 245    |            |  |  | 1.2   | %
|                         |  |             |    |  |            |  |        |            | 
|                         |  |             | 57 |  |            |  | 21,237 |            |  |  | 100.0 | %
|                         |  |             |    |  |            |  |        |            | 














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##### Table of Contents







COMMUNITY INFORMATION


|                          |                             |             |         |      |           |  |              |               |  |              |          |       |          |              |       |     |  |  |      |      |  
|------------------------- | --------------------------- | ----------- | ------- | ---- | --------- |  | ------------ | ------------- |  | ------------ | -------- | ----- | -------- | ------------ | ----- | --- |  |  | ---- | ---- | -
|                          |                             |             |         |      |           |  |              | December 2005 |  |              | 2005     |      
|                          |                             |             |         |      |           |  |              | Average       |  |              | Average  |      
|                          |                             |             |         | Year |           |  | No. of       |               |  | Rental Rates |          |       | Economic |             
|Communities               |                             | Location(1) |         |      | Completed |  |              | Units         |  |              | Per Unit |       |          | Occupancy(2) |      
|                          |                             |             |         |      |           |  |              |               |  |              |          |       |          |              |      
|Georgia                   |                             |             |         |      |           |  |              |               |  |              |          |       |          |              |       |     |  |  |      |     
|Post
    Ashford®         |                             |             | Atlanta |      |           |  | 1987         |               |  |              | 222      |       |          | $            | 778   |     |  |  | 94.2 | %   
|Post
    Biltmore(3)     |                             |             | Atlanta |      |           |  | 2001         |               |  |              | 276      |       |          |              | 1,066 |     |  |  | 95.5 | %   
|Post
    Briarcliff      |                             |             | Atlanta |      |           |  | 1999         |               |  |              | 688      |       |          |              | 1,020 |     |  |  | 92.4 | %   
|Post
    Brookhaven®      |                             |             | Atlanta |      |           |  | 1990-1992(4) |               |  |              | 735      |       |          |              | 912   |     |  |  | 91.6 | %   
|Post
    Chastain®        |                             |             | Atlanta |      |           |  | 1990         |               |  |              | 558      |       |          |              | 909   |     |  |  | 92.9 | %   
|Post Collier
    Hills®   |                             |             | Atlanta |      |           |  | 1997         |               |  |              | 396      |       |          |              | 937   |     |  |  | 91.8 | %   
|Post
    Crest®           |                             |             | Atlanta |      |           |  | 1996         |               |  |              | 410      |       |          |              | 980   |     |  |  | 93.4 | %   
|Post
    Crossing®        |                             |             | Atlanta |      |           |  | 1995         |               |  |              | 354      |       |          |              | 1,026 |     |  |  | 94.3 | %   
|Post
    Dunwoody®        |                             |             | Atlanta |      |           |  | 1989-1996(4) |               |  |              | 530      |       |          |              | 934   |     |  |  | 95.8 | %   
|Post
    Gardens®         |                             |             | Atlanta |      |           |  | 1998         |               |  |              | 397      |       |          |              | 1,068 |     |  |  | 89.8 | %   
|Post
    Glen®            |                             |             | Atlanta |      |           |  | 1997         |               |  |              | 314      |       |          |              | 1,124 |     |  |  | 94.3 | %   
|Post Lenox
    Park®      |                             |             | Atlanta |      |           |  | 1995         |               |  |              | 206      |       |          |              | 1,007 |     |  |  | 94.2 | %   
|Post
    Lindbergh®       |                             |             | Atlanta |      |           |  | 1998         |               |  |              | 396      |       |          |              | 985   |     |  |  | 94.0 | %   
|Post
    Oak             |                             |             | Atlanta |      |           |  | 1993         |               |  |              | 182      |       |          |              | 959   |     |  |  | 91.9 | %   
|Post
    Oglethorpe®      |                             |             | Atlanta |      |           |  | 1994         |               |  |              | 250      |       |          |              | 1,228 |     |  |  | 93.8 | %   
|Post
    Parkside        |                             |             | Atlanta |      |           |  | 2000         |               |  |              | 188      |       |          |              | 1,225 |     |  |  | 95.4 | %   
|Post Peachtree
    Hills® |                             |             | Atlanta |      |           |  | 1992-1994(4) |               |  |              | 300      |       |          |              | 982   |     |  |  | 93.4 | %   
|Post
    Renaissance®(5)  |                             |             | Atlanta |      |           |  | 1992-1994(4) |               |  |              | 342      |       |          |              | 972   |     |  |  | 95.3 | %   
|Post
    Ridge®           |                             |             | Atlanta |      |           |  | 1998         |               |  |              | 434      |       |          |              | 991   |     |  |  | 95.5 | %   
|Post
    Riverside®       |                             |             | Atlanta |      |           |  | 1998         |               |  |              | 523      |       |          |              | 1,368 |     |  |  | 93.9 | %   
|Post
    Spring          |                             |             | Atlanta |      |           |  | 2000         |               |  |              | 452      |       |          |              | 944   |     |  |  | 94.6 | %   
|Post
    Stratford(5)    |                             |             | Atlanta |      |           |  | 2000         |               |  |              | 250      |       |          |              | 1,136 |     |  |  | 93.9 | %   
|Post
    Summit®          |                             |             | Atlanta |      |           |  | 1990         |               |  |              | 148      |       |          |              | 860   |     |  |  | 93.0 | %   
|Post
    Valley®          |                             |             | Atlanta |      |           |  | 1988         |               |  |              | 496      |       |          |              | 658   |     |  |  | 93.2 | %   
|Post
    Vinings®         |                             |             | Atlanta |      |           |  | 1989-1991(4) |               |  |              | 403      |       |          |              | 786   |     |  |  | 95.0 | %   
|Post
    Woods®           |                             |             | Atlanta |      |           |  | 1977-1983(4) |               |  |              | 494      |       |          |              | 851   |     |  |  | 93.9 | %   
|                          |                             |             |         |      |           |  |              |               |  |              |          |       |          |              |      
|                          | Subtotal/ Average  Georgia |             |         |      |           |  |              |               |  |              |          | 9,944 |          |              |       | 979 |  |  |      | 93.6 | %
|                          |                             |             |         |      |           |  |              |               |  |              |          |       |          |              |      












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##### Table of Contents



|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |       |     |       |  |      |      |      |  
|-------------------------------- | ------------------------- | ---------------------------------- | --------- | ---- | --------- |  | ------------ | ------------- |  | ------------ | -------- | ----- | -------- | ------------ | ----- | --- | ----- |  | ---- | ---- | ---- | -
|                                 |                           |                                    |           |      |           |  |              | December 2005 |  |              | 2005     |      
|                                 |                           |                                    |           |      |           |  |              | Average       |  |              | Average  |      
|                                 |                           |                                    |           | Year |           |  | No. of       |               |  | Rental Rates |          |       | Economic |             
|Communities                      |                           | Location(1)                        |           |      | Completed |  |              | Units         |  |              | Per Unit |       |          | Occupancy(2) |      
|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |      
|Texas                            |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |       |     |       |  |      |     
|Post
    Abbey                  |                           |                                    | Dallas    |      |           |  | 1996         |               |  |              | 34       |       |          |              | 1,718 |     |       |  | 97.7 | %   
|Post Addison
    Circle         |                           |                                    | Dallas    |      |           |  | 1998-2000(4) |               |  |              | 1,334    |       |          |              | 940   |     |       |  | 92.5 | %   
|Post Coles
    Corner          |                           |                                    | Dallas    |      |           |  | 1998         |               |  |              | 186      |       |          |              | 988   |     |       |  | 94.7 | %   
|Post
    Square                 |                           |                                    | Dallas    |      |           |  | 1996         |               |  |              | 218      |       |          |              | 1,102 |     |       |  | 94.9 | %   
|Post
    Gallery                |                           |                                    | Dallas    |      |           |  | 1999         |               |  |              | 34       |       |          |              | 2,894 |     |       |  | 93.3 | %   
|Post
    Heights                |                           |                                    | Dallas    |      |           |  | 1998-1999(4) |               |  |              | 368      |       |          |              | 1,023 |     |       |  | 95.9 | %   
|Post Legacy                      |                           |                                    | Dallas    |      |           |  | 2000         |               |  |              | 384      |       |          |              | 888   |     |       |  | 95.2 | %   
|Post
    Meridian               |                           |                                    | Dallas    |      |           |  | 1991         |               |  |              | 133      |       |          |              | 1,066 |     |       |  | 94.0 | %   
|Post Midtown
    Square®         |                           |                                    | Houston   |      |           |  | 1999-2000(4) |               |  |              | 529      |       |          |              | 912   |     |       |  | 92.9 | %   
|Post Rice
    Lofts(5)          |                           |                                    | Houston   |      |           |  | 1998         |               |  |              | 308      |       |          |              | 1,218 |     |       |  | 89.4 | %   
|Post Uptown
    Village         |                           |                                    | Dallas    |      |           |  | 1995-2000(4) |               |  |              | 496      |       |          |              | 869   |     |       |  | 93.9 | %   
|Post
    Vineyard               |                           |                                    | Dallas    |      |           |  | 1996         |               |  |              | 116      |       |          |              | 955   |     |       |  | 94.6 | %   
|Post
    Vintage                |                           |                                    | Dallas    |      |           |  | 1993         |               |  |              | 161      |       |          |              | 919   |     |       |  | 93.0 | %   
|Post Wilson
    Building(5)     |                           |                                    | Dallas    |      |           |  | 1999         |               |  |              | 143      |       |          |              | 1,140 |     |       |  | 89.6 | %   
|Post
    Worthington            |                           |                                    | Dallas    |      |           |  | 1993         |               |  |              | 332      |       |          |              | 1,104 |     |       |  | 94.5 | %   
|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |      
|                                 | Subtotal/ Average  Texas |                                    |           |      |           |  |              |               |  |              |          | 4,776 |          |              |       | 999 |       |  |      | 93.3 | %   
|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |      
|Florida                          |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |       |     |       |  |      |     
|Post Harbour
    Place          |                           |                                    | Tampa     |      |           |  | 1999-2002(4) |               |  |              | 578      |       |          |              | 1,223 |     |       |  | 96.6 | %   
|Post Hyde
    Park®              |                           |                                    | Tampa     |      |           |  | 1996         |               |  |              | 389      |       |          |              | 1,170 |     |       |  | 98.2 | %   
|Post
    Parkside               |                           |                                    | Orlando   |      |           |  | 1999         |               |  |              | 245      |       |          |              | 1,247 |     |       |  | 98.1 | %   
|Post Rocky
    Point®            |                           |                                    | Tampa     |      |           |  | 1996-1998(4) |               |  |              | 916      |       |          |              | 1,058 |     |       |  | 97.8 | %   
|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |      
|                                 |                           | Subtotal/ Average  Florida        |           |      |           |  |              |               |  |              |          |       | 2,128    |              |       |     | 1,145 |  |      |      | 98.1 | %
|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |      
|North Carolina                   |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |       |     |       |  |      |     
|Post Ballantyne                  |                           |                                    | Charlotte |      |           |  | 2004         |               |  |              | 319      |       |          |              | 1,056 |     |       |  | 90.1 | %   
|Post Gateway
    Place          |                           |                                    | Charlotte |      |           |  | 2000         |               |  |              | 436      |       |          |              | 982   |     |       |  | 96.1 | %   
|Post Park at Phillips
    Place® |                           |                                    | Charlotte |      |           |  | 1998         |               |  |              | 402      |       |          |              | 1,180 |     |       |  | 94.8 | %   
|Post Uptown
    Place           |                           |                                    | Charlotte |      |           |  | 2000         |               |  |              | 227      |       |          |              | 1,023 |     |       |  | 97.4 | %   
|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |      
|                                 |                           | Subtotal/ Average  North Carolina |           |      |           |  |              |               |  |              |          |       | 1,384    |              |       |     | 1,064 |  |      |      | 94.9 | %
|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |      
|Colorado                         |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |       |     |       |  |      |     
|Post Uptown
    Square          |                           |                                    | Denver    |      |           |  | 1999-2001(4) |               |  |              | 696      |       |          |              | 922   |     |       |  | 92.0 | %   
|                                 |                           |                                    |           |      |           |  |              |               |  |              |          |       |          |              |      












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##### Table of Contents



|                                  |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |       |       |       |  |      |      |      |  
|--------------------------------- | ---------------------------------------- | ----------- | ----------------- | ---- | --------- |  | ------ | ------------- |  | ------------ | -------- | ----- | -------- | ------------ | ----- | ----- | ----- |  | ---- | ---- | ---- | -
|                                  |                                          |             |                   |      |           |  |        | December 2005 |  |              | 2005     |      
|                                  |                                          |             |                   |      |           |  |        | Average       |  |              | Average  |      
|                                  |                                          |             |                   | Year |           |  | No. of |               |  | Rental Rates |          |       | Economic |             
|Communities                       |                                          | Location(1) |                   |      | Completed |  |        | Units         |  |              | Per Unit |       |          | Occupancy(2) |      
|                                  |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |      
|Greater Washington, D.C.          |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |       |       |       |  |      |     
|Post Corners at Trinity Centre    |                                          |             | Fairfax Co., VA   |      |           |  | 1996   |               |  |              | 336      |       |          |              | 1,327 |       |       |  | 97.0 | %   
|Post
    Forest®                  |                                          |             | Fairfax Co., VA   |      |           |  | 1990   |               |  |              | 364      |       |          |              | 1,240 |       |       |  | 98.7 | %   
|Post Tysons
    Corner           |                                          |             | Fairfax Co., VA   |      |           |  | 1990   |               |  |              | 499      |       |          |              | 1,466 |       |       |  | 95.7 | %   
|Post Pentagon
    Row(5)         |                                          |             | Arlington Co., VA |      |           |  | 2001   |               |  |              | 504      |       |          |              | 1,988 |       |       |  | 97.9 | %   
|Post Massachusetts
    Avenue(3) |                                          |             | D.C.              |      |           |  | 2002   |               |  |              | 269      |       |          |              | 2,387 |       |       |  | 93.3 | %   
|                                  |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |      
|                                  | Subtotal/ Average 
    Washington, D.C. |             |                   |      |           |  |        |               |  |              |          | 1,972 |          |              |       | 1,660 |       |  |      | 97.9 | %   
|                                  |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |      
|New York                          |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |       |       |       |  |      |     
|Post
    Luminaria               |                                          |             | New York          |      |           |  | 2002   |               |  |              | 138      |       |          |              | 3,356 |       |       |  | 96.7 | %   
|Post
    Toscana                 |                                          |             | New York          |      |           |  | 2003   |               |  |              | 199      |       |          |              | 3,451 |       |       |  | 95.4 | %   
|                                  |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |      
|                                  | Subtotal/ Average  New York             |             |                   |      |           |  |        |               |  |              |          | 337   |          |              |       | 3,412 |       |  |      | 96.0 | %   
|                                  |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |      
|                                  |                                          | Total       |                   |      |           |  |        |               |  |              |          |       | 21,237   |              |       | $     | 1,106 |  |      |      | 94.4 | %
|                                  |                                          |             |                   |      |           |  |        |               |  |              |          |       |          |              |      



|    |                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Average economic occupancy is defined as gross potential rent
    less vacancy losses, model expenses and bad debt divided by
    gross potential rent for the period, expressed as a percentage.


















---



##### Table of Contents








|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS












|        |                                                    
|------- | ---------------------------------------------------
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS








|        |                                     
|------- | ------------------------------------
|ITEM X. | EXECUTIVE OFFICERS OF THE REGISTRANT



|                    |  |                                                                      
|------------------- |  | ---------------------------------------------------------------------
|NAME                |  | POSITIONS AND OFFICES HELD                                           
|                    |  |                                                                      
|David P. Stockert   |  | President and Chief Executive Officer                                
|Thomas D. Senkbeil  |  | Executive Vice President and Chief Investment Officer                
|Thomas L. Wilkes    |  | Executive Vice President and President, Post Apartment
    Management
|Christopher J. Papa |  | Executive Vice President and Chief Financial Officer                 
|Sherry W. Cohen     |  | Executive Vice President and Corporate Secretary                     
|Arthur J. Quirk     |  | Senior Vice President and Chief Accounting Officer                   












---



##### Table of Contents





David P. Stockert.


Thomas D. Senkbeil.


Thomas L. Wilkes.


Christopher J. Papa.


Sherry W. Cohen.


Arthur J. Quirk.













---



##### Table of Contents






PART II







|        |                                                                                                                         
|------- | ------------------------------------------------------------------------------------------------------------------------
|ITEM 5. | MARKET PRICE OF THE REGISTRANTS COMMON STOCK, RELATED
    SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(In thousands, except per share amounts)




|               |  |      |       |  |     |           |       |          |  |   |      | 
|-------------- |  | ---- | ----- |  | --- | --------- | ----- | -------- |  | - | ---- | 
|               |  |      |       |  |     | Dividends |      
|Quarter        |  | High |       |  | Low |           |       | Declared | 
|               |  |      |       |  |     |           |       |          | 
|2004           |  |      |       |  |     |           |       |          |  |   |      | 
|First Quarter  |  | $    | 29.78 |  |     | $         | 26.95 |          |  | $ | 0.45 | 
|Second Quarter |  |      | 30.14 |  |     |           | 25.95 |          |  |   | 0.45 | 
|Third Quarter  |  |      | 30.99 |  |     |           | 27.50 |          |  |   | 0.45 | 
|Fourth Quarter |  |      | 35.70 |  |     |           | 29.75 |          |  |   | 0.45 | 
|              
|2005           |  |      |       |  |     |           |       |          |  |   |      | 
|First Quarter  |  | $    | 35.25 |  |     | $         | 30.13 |          |  | $ | 0.45 | 
|Second Quarter |  |      | 37.74 |  |     |           | 30.47 |          |  |   | 0.45 | 
|Third Quarter  |  |      | 40.52 |  |     |           | 35.86 |          |  |   | 0.45 | 
|Fourth Quarter |  |      | 42.00 |  |     |           | 33.83 |          |  |   | 0.45 | 















|                                      |  |                  |     |  |                |                     |       |                   |                      |  |                     |  |  |   |         | 
|------------------------------------- |  | ---------------- | --- |  | -------------- | ------------------- | ----- | ----------------- | -------------------- |  | ------------------- |  |  | - | ------- | 
|                                      |  |                  |     |  |                | Total Number of     |       |                   | Approximate Dollar   | 
|                                      |  |                  |     |  |                | Shares Purchased as |       |                   | Value of Shares that | 
|                                      |  |                  |     |  |                | Part of Publicly    |       |                   | May Yet Be           | 
|                                      |  | Total Number of  |     |  | Average Price  |                     |       | Announced         |                      |  | Purchased Under the | 
|Period                                |  | Shares Purchased |     |  | Paid Per Share |                     |       | Plans or Programs |                      |  | Plans or Programs   | 
|                                      |  |                  |     |  |                |                     |       |                   |                      |  |                     | 
|October 1, 2005 to October 31, 2005   |  |                  | 282 |  |                | $                   | 35.23 |                   |                      |  | 282                 |  |  | $ | 165,600 | 
|November 1, 2005 to November 30, 2005 |  |                  |    |  |                |                     |      |                   |                      |  |                    |  |  |   | 165,600 | 
|December 1, 2005 to December 31, 2005 |  |                  |    |  |                |                     |      |                   |                      |  |                    |  |  |   | 165,600 | 
|Total                                 |  |                  | 282 |  |                | $                   | 35.23 |                   |                      |  | 282                 |  |  | $ | 165,600 | 












---



##### Table of Contents








|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA

Post Properties, Inc.


(In thousands, except per share and apartment unit data)


|                                                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |          |         | 
|-------------------------------------------------------------------------------------------------------------------- | --------------------------------------------- | ----------------------- | --------- | -------- | ------- | - | --------- | -------- | ------- | - | --------- | -------- | ------- | ---- | --------- | ------- | ------- | - | --------- | -------- | ------- | 
|                                                                                                                     |                                               | Year Ended December 31, |          
|                                                                                                                     |                                               |                         |          
|                                                                                                                     |                                               | 2005                    |           |          | 2004    |   |           | 2003     |         |   | 2002      |          |         | 2001 |          
|                                                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|STATEMENT OF OPERATIONS DATA                                                                                         |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|Revenues                                                                                                             |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|                                                                                                                     | Rental                                        |                         | $         | 279,508  |         |   | $         | 266,191  |         |   | $         | 253,345  |         |      | $         | 248,682 |         |   | $         | 265,035  |        
|                                                                                                                     | Other                                         |                         |           | 17,295   |         |   |           | 16,593   |         |   |           | 14,814   |         |      |           | 14,200  |         |   |           | 14,863   |        
|                                                                                                                     | Third-party services(1)                       |                         |           |         |         |   |           |         |         |   |           |         |         |      |           |        |         |   |           | 14,088   |        
|                                                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|                                                                                                                     |                                               | Total revenues          |           | $        | 296,803 |   |           | $        | 282,784 |   |           | $        | 268,159 |      |           | $       | 262,882 |   |           | $        | 293,986 | 
|                                                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|Income (loss) from continuing operations(2)                                                                          |                                               | $                       | 6,628     |          |         | $ | (26,282   | )        |         | $ | (26,885   | )        |         | $    | 23,784    |         |         | $ | 58,792    |         
|Income from discontinued operations(3)                                                                               |                                               |                         | 135,320   |          |         |   | 114,501   |          |         |   | 41,041    |          |         |      | 36,962    |         |         |   | 28,748    |         
|                                                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|Income before cumulative effect of accounting change                                                                 |                                               | $                       | 141,948   |          |         | $ | 88,219    |          |         | $ | 14,156    |          |         | $    | 60,746    |         |         | $ | 87,540    |         
|                                                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|Net income(4)                                                                                                        |                                               | $                       | 141,948   |          |         | $ | 88,219    |          |         | $ | 14,156    |          |         | $    | 60,746    |         |         | $ | 86,927    |         
|                                                                                                                     | Dividends to preferred shareholders           |                         |           | (7,637   | )       |   |           | (8,325   | )       |   |           | (11,449  | )       |      |           | (11,449 | )       |   |           | (11,768  | )      
|                                                                                                                     | Redemption costs on preferred stock and units |                         |           |         |         |   |           | (3,526   | )       |   |           |         |         |      |           |        |         |   |           | (239     | )      
|                                                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|Net income available to common shareholders                                                                          |                                               | $                       | 134,311   |          |         | $ | 76,368    |          |         | $ | 2,707     |          |         | $    | 49,297    |         |         | $ | 74,920    |         
|                                                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|PER COMMON SHARE DATA                                                                                                |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|Income (loss) from continuing operations (net of preferred
    dividends and redemption costs)  basic               |                                               | $                       | (0.03     | )        |         | $ | (0.96     | )        |         | $ | (1.02     | )        |         | $    | 0.33      |         |         | $ | 1.23      |         
|Income from discontinued operations  basic                                                                          |                                               |                         | 3.36      |          |         |   | 2.88      |          |         |   | 1.09      |          |         |      | 1.00      |         |         |   | 0.76      |         
|Income before cumulative effect of accounting change (net of
    preferred dividends and redemption costs)  basic   |                                               |                         | 3.34      |          |         |   | 1.92      |          |         |   | 0.07      |          |         |      | 1.33      |         |         |   | 1.98      |         
|Net income available to common shareholders  basic                                                                  |                                               |                         | 3.34      |          |         |   | 1.92      |          |         |   | 0.07      |          |         |      | 1.33      |         |         |   | 1.97      |         
|Income (loss) from continuing operations (net of preferred
    dividends and redemption costs)  diluted             |                                               | $                       | (0.03     | )        |         | $ | (0.96     | )        |         | $ | (1.02     | )        |         | $    | 0.33      |         |         | $ | 1.22      |         
|Income from discontinued operations  diluted                                                                        |                                               |                         | 3.36      |          |         |   | 2.88      |          |         |   | 1.09      |          |         |      | 1.00      |         |         |   | 0.75      |         
|Income before cumulative effect of accounting change (net of
    preferred dividends and redemption costs)  diluted |                                               |                         | 3.34      |          |         |   | 1.92      |          |         |   | 0.07      |          |         |      | 1.33      |         |         |   | 1.97      |         
|Net income available to common shareholders  diluted                                                                |                                               |                         | 3.34      |          |         |   | 1.92      |          |         |   | 0.07      |          |         |      | 1.33      |         |         |   | 1.96      |         
|Dividends declared                                                                                                   |                                               |                         | 1.80      |          |         |   | 1.80      |          |         |   | 1.80      |          |         |      | 3.12      |         |         |   | 3.12      |         
|Weighted average common shares outstanding  basic                                                                   |                                               |                         | 40,217    |          |         |   | 39,777    |          |         |   | 37,688    |          |         |      | 36,939    |         |         |   | 38,053    |         
|Weighted average common shares outstanding  diluted                                                                 |                                               |                         | 40,217    |          |         |   | 39,777    |          |         |   | 37,688    |          |         |      | 36,954    |         |         |   | 38,268    |         
|                                                                                                                    
|BALANCE SHEET DATA                                                                                                   |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|Real estate, before accumulated depreciation                                                                         |                                               | $                       | 2,416,335 |          |         | $ | 2,502,418 |          |         | $ | 2,596,376 |          |         | $    | 2,705,215 |         |         | $ | 2,777,980 |         
|Real estate, net of accumulated depreciation                                                                         |                                               |                         | 1,899,381 |          |         |   | 1,977,719 |          |         |   | 2,085,517 |          |         |      | 2,258,037 |         |         |   | 2,371,256 |         
|Total assets                                                                                                         |                                               |                         | 1,981,454 |          |         |   | 2,053,842 |          |         |   | 2,215,451 |          |         |      | 2,508,151 |         |         |   | 2,538,351 |         
|Total debt                                                                                                           |                                               |                         | 980,615   |          |         |   | 1,129,478 |          |         |   | 1,186,322 |          |         |      | 1,414,555 |         |         |   | 1,336,520 |         
|Shareholders equity                                                                                                 |                                               |                         | 881,009   |          |         |   | 788,070   |          |         |   | 796,526   |          |         |      | 833,699   |         |         |   | 901,517   |         
|                                                                                                                    
|OTHER DATA                                                                                                           |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|Cash flow provided by (used in):                                                                                     |                                               |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|                                                                                                                     | Operating activities                          |                         | $         | 86,761   |         |   | $         | 79,105   |         |   | $         | 91,549   |         |      | $         | 119,763 |         |   | $         | 161,564  |        
|                                                                                                                     | Investing activities                          |                         |           | 70,293   |         |   |           | 131,873  |         |   |           | 234,195  |         |      |           | (48,821 | )       |   |           | (51,213  | )      
|                                                                                                                     | Financing activities                          |                         |           | (150,767 | )       |   |           | (212,189 | )       |   |           | (330,800 | )       |      |           | (69,355 | )       |   |           | (113,007 | )      
|Total stabilized communities (at end of period)                                                                      |                                               |                         | 52        |          |         |   | 65        |          |         |   | 70        |          |         |      | 75        |         |         |   | 78        |         
|Total stabilized apartment units (at end of period)                                                                  |                                               |                         | 19,675    |          |         |   | 24,700    |          |         |   | 27,613    |          |         |      | 29,199    |         |         |   | 27,710    |         
|Average economic occupancy (fully stabilized communities)(5)                                                         |                                               |                         | 94.5      | %        |         |   | 93.5      | %        |         |   | 91.9      | %        |         |      | 90.9      | %       |         |   | 94.9      | %       



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consists of revenues from property management and landscape
    services provided to properties owned by third parties. These
    businesses were sold in the fourth quarter of 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(2) | Income (loss) from continuing operations in 2005 includes a
    $5,267 gain on sale of technology investment and severance
    charges of $796. Income (loss) from continuing operations in
    2004 included the impact of costs associated with the
    termination of a debt remarketing agreement (interest expense)
    and an early debt extinguishment loss totaling $14,626. See
    note 3 to the consolidated financial statements for a
    discussion of these costs. Income (loss) from continuing
    operations in 2003 included the impact of severance and proxy
    costs totaling $26,737. See note 7 to the consolidated
    financial statements for a discussion of these costs. Income
    from continuing operations in 2001 included the impact of
    project abandonment, employee severance and other charges
    totaling $17,450.                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | Upon the implementation of SFAS No. 144,
    Accounting for the Impairment or Disposal of Long-Lived
    Assets, on January 1, 2002, the operating results of
    real estate held for sale and sold are reported as discontinued
    operations for all years presented. Additionally, all gains and
    losses on the sale of assets classified as held for sale
    subsequent to January 1, 2002 are included in discontinued
    operations. As the operating results and gains or losses from
    the sale of real estate assets prior to January 1, 2002 are
    included in continuing operations, the presentation of results
    is not comparable between years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(4) | Includes the impact of $613, net of minority interest, resulting
    from the cumulative effect of accounting change from the
    Companys adoption of SFAS No. 133 in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(5) | Calculated based on fully stabilized communities as defined for
    each year (unadjusted for the impact of assets designated as
    held for sale in subsequent years). Average economic occupancy
    is defined as gross potential rent less vacancy losses, model
    expenses and bad debt divided by gross potential rent for the
    period, expressed as a percentage. The calculation of average
    economic occupancy does not include a deduction for net
    concessions and employee discounts (average economic occupancy,
    taking account of these amounts, would have been 93.9%, 93.0%,
    90.8%, 89.1% and 93.8% for the years ended December 31,
    2005, 2004, 2003, 2002 and 2001, respectively). Net concessions
    were $1,019, $621, $2,518, $4,215 and $1,860 for the years ended
    December 31, 2005, 2004, 2003, 2002 and 2001, respectively.
    Employee discounts were $420, $442, $535, $660 and $895 for the
    years ended December 31, 2005, 2004, 2003, 2002 and 2001,
    respectively. A community is considered by the Company to have
    achieved stabilized occupancy on the earlier to occur of
    (i) attainment of 95% physical occupancy on the first day
    of any month, or (ii) one year after completion of
    construction.












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##### Table of Contents



Post Apartment Homes, L.P.


(In thousands, except per unit and apartment unit data)


|                                                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |          |         | 
|------------------------------------------------------------------------------------------------------------------------ | -------------------------------------- | ----------------------- | --------- | -------- | ------- | - | --------- | -------- | ------- | - | --------- | -------- | ------- | ---- | --------- | ------- | ------- | - | --------- | -------- | ------- | 
|                                                                                                                         |                                        | Year Ended December 31, |          
|                                                                                                                         |                                        |                         |          
|                                                                                                                         |                                        | 2005                    |           |          | 2004    |   |           | 2003     |         |   | 2002      |          |         | 2001 |          
|                                                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|STATEMENT OF OPERATIONS DATA                                                                                             |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|Revenues                                                                                                                 |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|                                                                                                                         | Rental                                 |                         | $         | 279,508  |         |   | $         | 266,191  |         |   | $         | 253,345  |         |      | $         | 248,682 |         |   | $         | 265,035  |        
|                                                                                                                         | Other                                  |                         |           | 17,295   |         |   |           | 16,593   |         |   |           | 14,814   |         |      |           | 14,200  |         |   |           | 14,863   |        
|                                                                                                                         | Third-party services(1)                |                         |           |         |         |   |           |         |         |   |           |         |         |      |           |        |         |   |           | 14,088   |        
|                                                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|                                                                                                                         |                                        | Total revenues          |           | $        | 296,803 |   |           | $        | 282,784 |   |           | $        | 268,159 |      |           | $       | 262,882 |   |           | $        | 293,986 | 
|                                                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|Income (loss) from continuing operations(2)                                                                              |                                        | $                       | 6,575     |          |         | $ | (25,088   | )        |         | $ | (25,652   | )        |         | $    | 31,073    |         |         | $ | 70,686    |         
|Income from discontinued operations(3)                                                                                   |                                        |                         | 142,472   |          |         |   | 122,265   |          |         |   | 45,749    |          |         |      | 42,045    |         |         |   | 32,646    |         
|                                                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|Income before cumulative effect of accounting change                                                                     |                                        | $                       | 149,047   |          |         | $ | 97,177    |          |         | $ | 20,097    |          |         | $    | 73,118    |         |         | $ | 103,332   |         
|                                                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|Net income(4)                                                                                                            |                                        | $                       | 149,047   |          |         | $ | 97,177    |          |         | $ | 20,097    |          |         | $    | 73,118    |         |         | $ | 102,637   |         
|                                                                                                                         | Distributions to preferred unitholders |                         |           | (7,637   | )       |   |           | (12,105  | )       |   |           | (17,049  | )       |      |           | (17,049 | )       |   |           | (17,368  | )      
|                                                                                                                         | Redemption costs on preferred units    |                         |           |         |         |   |           | (3,526   | )       |   |           |         |         |      |           |        |         |   |           | (239     | )      
|                                                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|Net income available to common unitholders                                                                               |                                        | $                       | 141,410   |          |         | $ | 81,546    |          |         | $ | 3,048     |          |         | $    | 56,069    |         |         | $ | 85,030    |         
|                                                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |          
|PER COMMON UNIT DATA                                                                                                     |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|Income (loss) from continuing operations (net of preferred
    distributions and redemption costs)  basic               |                                        | $                       | (0.03     | )        |         | $ | (0.96     | )        |         | $ | (1.02     | )        |         | $    | 0.33      |         |         | $ | 1.23      |         
|Income from discontinued operations  basic                                                                              |                                        |                         | 3.36      |          |         |   | 2.88      |          |         |   | 1.09      |          |         |      | 1.00      |         |         |   | 0.76      |         
|Income before cumulative effect of accounting change (net of
    preferred distributions and redemption costs)  basic   |                                        |                         | 3.34      |          |         |   | 1.92      |          |         |   | 0.07      |          |         |      | 1.33      |         |         |   | 1.98      |         
|Net income available to common unitholders  basic                                                                       |                                        |                         | 3.34      |          |         |   | 1.92      |          |         |   | 0.07      |          |         |      | 1.33      |         |         |   | 1.97      |         
|Income (loss) from continuing operations (net of preferred
    distributions and redemption costs)  diluted             |                                        | $                       | (0.03     | )        |         | $ | (0.96     | )        |         | $ | (1.02     | )        |         | $    | 0.33      |         |         | $ | 1.22      |         
|Income from discontinued operations  diluted                                                                            |                                        |                         | 3.36      |          |         |   | 2.88      |          |         |   | 1.09      |          |         |      | 1.00      |         |         |   | 0.75      |         
|Income before cumulative effect of accounting change (net of
    preferred distributions and redemption costs)  diluted |                                        |                         | 3.34      |          |         |   | 1.92      |          |         |   | 0.07      |          |         |      | 1.33      |         |         |   | 1.97      |         
|Net income available to common unitholders  diluted                                                                     |                                        |                         | 3.34      |          |         |   | 1.92      |          |         |   | 0.07      |          |         |      | 1.33      |         |         |   | 1.96      |         
|Distributions declared                                                                                                   |                                        |                         | 1.80      |          |         |   | 1.80      |          |         |   | 1.80      |          |         |      | 3.12      |         |         |   | 3.12      |         
|Weighted average common units outstanding  basic                                                                        |                                        |                         | 42,353    |          |         |   | 42,474    |          |         |   | 42,134    |          |         |      | 42,021    |         |         |   | 43,212    |         
|Weighted average common units outstanding  diluted                                                                      |                                        |                         | 42,353    |          |         |   | 42,474    |          |         |   | 42,134    |          |         |      | 42,036    |         |         |   | 43,427    |         
|BALANCE SHEET DATA                                                                                                       |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|Real estate, before accumulated depreciation                                                                             |                                        | $                       | 2,416,335 |          |         | $ | 2,502,418 |          |         | $ | 2,596,376 |          |         | $    | 2,705,215 |         |         | $ | 2,777,980 |         
|Real estate, net of accumulated depreciation                                                                             |                                        |                         | 1,899,381 |          |         |   | 1,977,719 |          |         |   | 2,085,517 |          |         |      | 2,258,037 |         |         |   | 2,371,256 |         
|Total assets                                                                                                             |                                        |                         | 1,981,454 |          |         |   | 2,053,842 |          |         |   | 2,215,451 |          |         |      | 2,508,151 |         |         |   | 2,538,351 |         
|Total debt                                                                                                               |                                        |                         | 980,615   |          |         |   | 1,129,478 |          |         |   | 1,186,322 |          |         |      | 1,414,555 |         |         |   | 1,336,520 |         
|Partners equity                                                                                                         |                                        |                         | 907,773   |          |         |   | 831,411   |          |         |   | 928,935   |          |         |      | 993,976   |         |         |   | 1,077,670 |         
|OTHER DATA                                                                                                               |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|Cash flow provided by (used in):                                                                                         |                                        |                         |           |          |         |   |           |          |         |   |           |          |         |      |           |         |         |   |           |         
|                                                                                                                         | Operating activities                   |                         | $         | 86,761   |         |   | $         | 79,105   |         |   | $         | 91,549   |         |      | $         | 119,763 |         |   | $         | 161,564  |        
|                                                                                                                         | Investing activities                   |                         |           | 70,293   |         |   |           | 131,873  |         |   |           | 234,195  |         |      |           | (48,821 | )       |   |           | (51,213  | )      
|                                                                                                                         | Financing activities                   |                         |           | (150,767 | )       |   |           | (212,189 | )       |   |           | (330,800 | )       |      |           | (69,355 | )       |   |           | (113,007 | )      
|Total stabilized communities (at end of period)                                                                          |                                        |                         | 52        |          |         |   | 65        |          |         |   | 70        |          |         |      | 75        |         |         |   | 78        |         
|Total stabilized apartment units (at end of period)                                                                      |                                        |                         | 19,675    |          |         |   | 24,700    |          |         |   | 27,613    |          |         |      | 29,199    |         |         |   | 27,710    |         
|Average economic occupancy (fully stabilized communities)(5)                                                             |                                        |                         | 94.5      | %        |         |   | 93.5      | %        |         |   | 91.9      | %        |         |      | 90.9      | %       |         |   | 94.9      | %       



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consists of revenues from property management and landscape
    services provided to properties owned by third parties. These
    businesses were sold in the fourth quarter of 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(2) | Income (loss) from continuing operations in 2005 includes a
    $5,267 gain on sale of technology investment and severance
    charges of $796. Income (loss) from continuing operations in
    2004 included the impact of costs associated with the
    termination of a debt remarketing agreement (interest expense)
    and an early debt extinguishment loss totaling $14,626. See
    note 3 to the consolidated financial statements for a
    discussion of these costs. Income (loss) from continuing
    operations in 2003 included the impact of severance and proxy
    costs totaling $26,737. See note 7 to the consolidated
    financial statements for a discussion of these costs. Income
    from continuing operations in 2001 included the impact of
    project abandonment, employee severance and other charges
    totaling $17,450.                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | Upon the implementation of SFAS No. 144,
    Accounting for the Impairment or Disposal of Long-Lived
    Assets, on January 1, 2002, the operating results of
    real estate held for sale and sold are reported as discontinued
    operations for all years presented. Additionally, all gains and
    losses on the sale of assets classified as held for sale
    subsequent to January 1, 2002 are included in discontinued
    operations. As the operating results and gains or losses from
    the sale of real estate assets prior to January 1, 2002 are
    included in continuing operations, the presentation of results
    are not comparable between years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(4) | Includes the impact of $695 resulting from the cumulative effect
    of accounting change from the Companys adoption of
    SFAS No. 133 in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(5) | Calculated based on fully stabilized communities as defined for
    each year (unadjusted for the impact of assets designated as
    held for sale in subsequent years). Average economic occupancy
    is defined as gross potential rent less vacancy losses, model
    expenses and bad debt divided by gross potential rent for the
    period, expressed as a percentage. The calculation of average
    economic occupancy does not include a deduction for net
    concessions and employee discounts (average economic occupancy,
    taking account of these amounts, would have been 93.9%, 93.0%,
    90.8%, 89.1% and 93.8% for the years ended December 31,
    2005, 2004, 2003, 2002 and 2001, respectively). Net concessions
    were $1,019, $621, $2,518, $4,215 and $1,860 for the years ended
    December 31, 2005, 2004, 2003, 2002 and 2001, respectively.
    Employee discounts were $420, $442, $535, $660 and $895 for the
    years ended December 31, 2005, 2004, 2003, 2002 and 2001,
    respectively. A community is considered by the Company to have
    achieved stabilized occupancy on the earlier to occur of
    (i) attainment of 95% physical occupancy on the first day
    of any month, or (ii) one year after completion of
    construction.












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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS

(In thousands, except apartment unit data)


Company Overview












®


499-unit 319-unit 350-unit















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##### Table of Contents



tm




10-K




Disclosure Regarding Forward-Looking Statements






|  |                                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The success of the Companys business strategies described
    on pages 2-3 in this Annual Report on
    Form 10-K;                                                                                                          
| | Future local and national economic conditions, including changes
    in job growth, interest rates, the availability of financing and
    other factors;                                                                     
| | Demand for apartments in the Companys markets and the
    effect on occupancy and rental rates;                                                                                                                             
| | The impact of competition on the Companys business,
    including competition for residents in the Companys
    apartment communities and buyers of the Companys for-sale
    condominium units and development locations;
| | The Companys ability to obtain financing or self-fund the
    development or acquisition of additional apartment communities
    and for-sale condominium housing;                                                          












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##### Table of Contents



|  |                                                                                                                                                                                                      
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The uncertainties associated with the Companys real estate
    development, including actual costs exceeding the Companys
    budgets or development periods exceeding expectations;               
| | Uncertainties associated with the timing and amount of apartment
    community sales and the resulting gains/losses associated with
    such sales;                                                  
| | Uncertainties associated with the Companys condominium
    conversion and for-sale housing business, including the timing
    and volume of condominium sales;                                      
| | Conditions affecting ownership of residential real estate and
    general conditions in the multi-family residential real estate
    market;                                                         
| | Uncertainties associated with environmental and other regulatory
    matters, including the Americans with Disabilities Act and the
    Fair Housing Act;                                            
| | The effects of changes in accounting policies and other
    regulatory matters detailed in the Companys filings with
    the Securities and Exchange Commission and uncertainties of
    litigation;
| | The Companys ability to continue to qualify as a REIT
    under the Internal Revenue Code; and                                                                                                      
| | Other factors, including the risk factors discussed on
    pages 7 through 15 in this Annual Report on
    Form 10-K.                                                                                



Critical Accounting Policies and New Accounting
Pronouncements



















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##### Table of Contents


























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##### Table of Contents









Results of Operations



















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##### Table of Contents



lease-up lease-up lease-up




Comparison of Year Ended December 31, 2005 to Year Ended
December 31, 2004




|                                                                                             |  |                         |         |  |      |   |         |          |  |  |       |   
|-------------------------------------------------------------------------------------------- |  | ----------------------- | ------- |  | ---- | - | ------- | -------- |  |  | ----- | --
|                                                                                             |  | Year Ended December 31, |         |  |     
|                                                                                             |  |                         |         |  |     
|                                                                                             |  | 2005                    |         |  | 2004 |   |         | % Change | 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Rental and other property revenues                                                           |  |                         |         |  |      |   |         |          |  |  |       |   
|Fully stabilized communities(1)                                                              |  | $                       | 250,583 |  |      | $ | 243,430 |          |  |  | 2.9   | % 
|Communities stabilized in 2004                                                               |  |                         | 7,184   |  |      |   | 7,007   |          |  |  | 2.5   | % 
|Condominium conversion communities(2)                                                        |  |                         | 5,485   |  |      |   | 5,716   |          |  |  | (4.0  | )%
|Acquired communities(3)                                                                      |  |                         | 10,808  |  |      |   | 4,477   |          |  |  | 141.4 | % 
|Other property segments(4)                                                                   |  |                         | 22,488  |  |      |   | 21,154  |          |  |  | 6.3   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|                                                                                             |  |                         | 296,548 |  |      |   | 281,784 |          |  |  | 5.2   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Property operating and maintenance expenses (exclusive of
    depreciation and amortization) |  |                         |         |  |      |   |         |          |  |  |       |   
|Fully stabilized communities(1)                                                              |  |                         | 97,160  |  |      |   | 94,284  |          |  |  | 3.1   | % 
|Communities stabilized in 2004                                                               |  |                         | 2,227   |  |      |   | 2,122   |          |  |  | 4.9   | % 
|Condominium conversion communities(2)                                                        |  |                         | 1,872   |  |      |   | 2,041   |          |  |  | (8.3  | )%
|Acquired communities(3)                                                                      |  |                         | 3,578   |  |      |   | 1,313   |          |  |  | 172.5 | % 
|Other property segments and other expenses(5)                                                |  |                         | 29,173  |  |      |   | 27,593  |          |  |  | 5.7   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|                                                                                             |  |                         | 134,010 |  |      |   | 127,353 |          |  |  | 5.2   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Property net operating income(6)                                                             |  | $                       | 162,538 |  |      | $ | 154,431 |          |  |  | 5.2   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Capital Expenditures                                                                         |  |                         |         |  |      |   |         |          |  |  |       |   
|Recurring capital expenditures:(7)(8)                                                        |  |                         |         |  |      |   |         |          |  |  |       |   
|Carpet                                                                                       |  | $                       | 3,044   |  |      | $ | 2,572   |          |  |  | 18.4  | % 
|Other                                                                                        |  |                         | 6,140   |  |      |   | 5,282   |          |  |  | 16.2  | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Total                                                                                        |  | $                       | 9,184   |  |      | $ | 7,854   |          |  |  | 16.9  | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Non-recurring capital expenditures                                                           |  | $                       | 4,463   |  |      | $ | 3,712   |          |  |  | 20.2  | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Average apartment units in service                                                           |  |                         | 20,853  |  |      |   | 20,726  |          |  |  | 0.6   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 



|    |                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Communities which reached stabilization prior to January 1,
    2004.                                                                               
|(2) | Portions of existing apartment communities being converted into
    condominiums that are reflected in continuing operations under
    SFAS No. 144.












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|    |                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Communities acquired subsequent to January 1, 2004.                                                                                                                                                                                                                                                                                                                                                  
|(4) | Other property segment revenues include revenues from commercial
    properties, revenues from furnished apartment rentals above the
    unfurnished rental rates and any property revenue not directly
    related to property operations. Other property segment revenues
    exclude other corporate revenues of $255 and $1,000 for the
    years ended December 31, 2005 and 2004, respectively.
|(5) | Other expenses include certain indirect central office operating
    expenses related to management, grounds maintenance, and costs
    associated with commercial properties and furnished apartment
    rentals.                                                                                                                                                                                   
|(6) | A reconciliation of property net operating income to GAAP net
    income is detailed below.                                                                                                                                                                                                                                                                                                          

|                                           |                                                              |                         |         |         |      |   |         |         |  
|------------------------------------------ | ------------------------------------------------------------ | ----------------------- | ------- | ------- | ---- | - | ------- | ------- | -
|                                           |                                                              | Year Ended December 31, |        
|                                           |                                                              |                         |        
|                                           |                                                              | 2005                    |         |         | 2004 |  
|                                           |                                                              |                         |         |         |      |  
|Total same store NOI                       |                                                              | $                       | 153,423 |         |      | $ | 149,146 |        
|Property NOI from other operating segments |                                                              |                         | 9,115   |         |      |   | 5,285   |        
|                                           |                                                              |                         |         |         |      |  
|Consolidated property NOI                  |                                                              |                         | 162,538 |         |      |   | 154,431 |        
|Add (subtract):                            |                                                              |                         |         |         |      |   |         |        
|                                           | Other revenues                                               |                         |         | 255     |      |   |         | 1,000   |  
|                                           | Interest income                                              |                         |         | 661     |      |   |         | 817     |  
|                                           | Minority interest in consolidated property partnerships      |                         |         | 239     |      |   |         | 671     |  
|                                           | Depreciation                                                 |                         |         | (76,248 | )    |   |         | (79,473 | )
|                                           | Interest expense                                             |                         |         | (58,898 | )    |   |         | (63,552 | )
|                                           | Amortization of deferred financing costs                     |                         |         | (4,661  | )    |   |         | (4,304  | )
|                                           | General and administrative                                   |                         |         | (18,307 | )    |   |         | (18,205 | )
|                                           | Investment, development and other expenses                   |                         |         | (5,242  | )    |   |         | (2,930  | )
|                                           | Severance charges                                            |                         |         | (796    | )    |   |         |        |  
|                                           | Equity in income of unconsolidated entities                  |                         |         | 1,767   |      |   |         | 1,083   |  
|                                           | Gain on sale of technology investment                        |                         |         | 5,267   |      |   |         |        |  
|                                           | Termination of debt remarketing agreement (interest expense) |                         |         |        |      |   |         | (10,615 | )
|                                           | Loss on early extinguishment of indebtedness                 |                         |         |        |      |   |         | (4,011  | )
|                                           | Minority interest of preferred unitholders                   |                         |         |        |      |   |         | (3,780  | )
|                                           | Minority interest of common unitholders                      |                         |         | 53      |      |   |         | 2,586   |  
|                                           |                                                              |                         |         |         |      |  
|                                           | Income (loss) from continuing operations                     |                         |         | 6,628   |      |   |         | (26,282 | )
|                                           | Income from discontinued operations                          |                         |         | 135,320 |      |   |         | 114,501 |  
|                                           |                                                              |                         |         |         |      |  
|Net income                                 |                                                              | $                       | 141,948 |         |      | $ | 88,219  |        
|                                           |                                                              |                         |         |         |      |  



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | In addition to those expenses which relate to property
    operations, the Company incurs recurring and non-recurring
    expenditures relating to acquiring and developing new assets,
    materially enhancing the value of an existing asset, or
    substantially extending the useful life of an existing asset,
    all of which are capitalized. Recurring capital expenditures are
    those that are generally expected to be incurred on an annual
    basis. Non-recurring capital expenditures are those that
    generally occur less frequently than on an annual basis.
|(8) | A reconciliation of property capital expenditures from
    continuing operations to total recurring and non-recurring
    capital expenditures as presented in the consolidated statements
    of cash flows under GAAP is detailed below.                                                                                                                                                                                                                                                                                                                                            

|                                   |                                                                           |                         |   |       |      |  |   |       | 
|---------------------------------- | ------------------------------------------------------------------------- | ----------------------- | - | ----- | ---- |  | - | ----- | 
|                                   |                                                                           | Year Ended December 31, |  
|                                   |                                                                           |                         |  
|                                   |                                                                           | 2005                    |   |       | 2004 | 
|                                   |                                                                           |                         |   |       |      | 
|Recurring capital expenditures     |                                                                           |                         |   |       |      |  |   |      
|                                   | Continuing operations                                                     |                         | $ | 9,184 |      |  | $ | 7,854 | 
|                                   | Discontinued operations                                                   |                         |   | 737   |      |  |   | 2,030 | 
|                                   |                                                                           |                         |   |       |      | 
|                                   | Total recurring capital expenditures per statements of cash flows         |                         | $ | 9,921 |      |  | $ | 9,884 | 
|                                   |                                                                           |                         |   |       |      | 
|Non-recurring capital expenditures |                                                                           |                         |   |       |      |  |   |      
|                                   | Continuing operations                                                     |                         | $ | 4,463 |      |  | $ | 3,712 | 
|                                   | Discontinued operations                                                   |                         |   | 45    |      |  |   | 893   | 
|                                   |                                                                           |                         |   |       |      | 
|                                   | Total non-recurring capital expenditures per statements of cash
    flows |                         | $ | 4,508 |      |  | $ | 4,605 | 
|                                   |                                                                           |                         |   |       |      | 
















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lease-up


tax-exempt






ten-year


write-off















---



##### Table of Contents
























---



##### Table of Contents



Fully Stabilized (Same Store) Communities




|                                                                                          |                                                         |                               |         |       |        |   |         |          |        |  |     |      |      |     
|----------------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------- | ------- | ----- | ------ | - | ------- | -------- | ------ |  | --- | ---- | ---- | ----
|                                                                                          |                                                         | Year Ended December 31,       |         |       |       
|                                                                                          |                                                         |                               |         |       |       
|                                                                                          |                                                         | 2005                          |         |       | 2004   |   |         | % Change |       
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       
|Rental and other revenues                                                                 |                                                         | $                             | 250,583 |       |        | $ | 243,430 |          |        |  | 2.9 | %   
|Property operating and maintenance expenses (excluding
    depreciation and amortization) |                                                         |                               | 97,160  |       |        |   | 94,284  |          |        |  | 3.1 | %   
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       
|Same store net operating income(1)                                                        |                                                         | $                             | 153,423 |       |        | $ | 149,146 |          |        |  | 2.9 | %   
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       
|Capital expenditures(2)                                                                   |                                                         |                               |         |       |        |   |         |          |        |  |     |     
|                                                                                          | Recurring                                               |                               |         |       |        |   |         |          |        |  |     |      |     
|                                                                                          | Carpet                                                  |                               | $       | 2,673 |        |   | $       | 2,422    |        |  |     | 10.4 | %   
|                                                                                          | Other                                                   |                               |         | 5,705 |        |   |         | 5,130    |        |  |     | 11.2 | %(5)
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       
|                                                                                          |                                                         | Total recurring               |         |       | 8,378  |   |         |          | 7,552  |  |     |      | 10.9 | %(5)
|                                                                                          | Non-recurring                                           |                               |         | 3,385 |        |   |         | 2,968    |        |  |     | 14.0 | %(5)
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       
|                                                                                          |                                                         | Total capital expenditures(A) |         | $     | 11,763 |   |         | $        | 10,520 |  |     |      | 11.8 | %(5)
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       
|                                                                                          | Total capital expenditures per
    unit(A÷19,675 units) |                               | $       | 598   |        |   | $       | 535      |        |  |     | 11.8 | %(5)
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       
|Average monthly rental per apartment unit(3)                                              |                                                         | $                             | 1,048   |       |        | $ | 1,029   |          |        |  | 1.8 | %   
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       
|Average economic occupancy(4)                                                             |                                                         |                               | 94.5    | %     |        |   | 93.6    | %        |        |  | 0.9 | %   
|                                                                                          |                                                         |                               |         |       |        |   |         |          |       



|    |                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Net operating income of stabilized communities is a supplemental
    non-GAAP financial measure. See page 30 for a
    reconciliation of net operating income for stabilized
    communities to GAAP net income.                                    
|(2) | A reconciliation of these segment components of property capital
    expenditures to total recurring and non-recurring capital
    expenditures as presented in the consolidated statements of cash
    flows prepared under GAAP is detailed below.

|                                                                           |  |              |       |  |      |   |       |    
|-------------------------------------------------------------------------- |  | ------------ | ----- |  | ---- | - | ----- | ---
|                                                                           |  | Year Ended   |      
|                                                                           |  | December 31, |      
|                                                                           |  |              |      
|                                                                           |  | 2005         |       |  | 2004 |  
|                                                                           |  |              |       |  |      |  
|Recurring capital expenditures by operating segment                        |  |              |       |  |      |   |       |    
|Fully stabilized                                                           |  | $            | 8,378 |  |      | $ | 7,552 | (5)
|Stabilized in prior year                                                   |  |              | 13    |  |      |   | 25    |    
|Condominium conversion communities                                         |  |              | 132   |  |      |   | 84    | (5)
|Acquired                                                                   |  |              | 488   |  |      |   | 166   |    
|Other property segments, including discontinued operations                 |  |              | 910   |  |      |   | 2,057 |    
|                                                                           |  |              |       |  |      |  
|Total recurring capital expenditures per statements of cash flows          |  | $            | 9,921 |  |      | $ | 9,884 |    
|                                                                           |  |              |       |  |      |  
|Non-recurring capital expenditures by operating segment                    |  |              |       |  |      |   |       |    
|Fully stabilized                                                           |  | $            | 3,385 |  |      | $ | 2,968 | (5)
|Stabilized in prior year                                                   |  |              |      |  |      |   |      |    
|Condominium conversion communities                                         |  |              | 75    |  |      |   | 263   | (5)
|Acquired                                                                   |  |              | 69    |  |      |   | 5     |    
|Other property segments, including discontinued operations                 |  |              | 979   |  |      |   | 1,369 |    
|                                                                           |  |              |       |  |      |  
|Total non-recurring capital expenditures, per statements of cash
    flows |  | $            | 4,508 |  |      | $ | 4,605 |    
|                                                                           |  |              |       |  |      |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company uses same store
    recurring and non-recurring capital expenditures as cash flow
    measures. Same store recurring and non- recurring capital
    expenditures are supplemental non-GAAP financial measures. The
    Company believes that same store recurring and non-recurring
    capital expenditures are important indicators of the costs
    incurred by the Company in maintaining same store communities.
    The corresponding GAAP measures include information with respect
    to the Companys other operating segments consisting of
    communities stabilized in the prior year, condominium conversion
    communities, lease-up
    communities, and sold communities in addition to same store
    information. Therefore, the Company believes that its
    presentation of same store recurring and non-recurring capital
    expenditures is necessary to demonstrate same store replacement
    costs over time. The Company believes that the most directly
    comparable GAAP measure to same store recurring and
    non-recurring capital expenditures are the lines on the
    Companys consolidated statements of cash flows entitled
    recurring capital expenditures and
    non-recurring capital expenditures.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Average monthly rental rate is defined as the average of the
    gross actual rental rates for leased units and the average of
    the anticipated rental rates for unoccupied units, divided by
    total units. In the fourth quarter of 2005, the Company adjusted
    its stated market rents at the majority of its communities to be
    more reflective of current market conditions. The impact of this
    change is estimated to have reduced the average monthly rental
    rate per unit by less than 1% for the year ended
    December 31, 2005.












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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Average economic occupancy is defined as gross potential rent
    less vacancy losses, model expenses and bad debt expenses
    divided by gross potential rent for the period, expressed as a
    percentage. In the fourth quarter of 2005, the Company adjusted
    its stated market rents at the majority of its communities to be
    more reflective of current market conditions. The impact of this
    change is estimated to have increased the computed average
    economic occupancy amounts by less than 1% for the year ended
    December 31, 2005. Gross potential rent is defined as the
    sum of the gross actual rental rates for leased units and the
    anticipated rental rates for unoccupied units. The calculation
    of average economic occupancy does not include a deduction for
    net concessions and employee discounts. Average economic
    occupancy including these amounts would have been 93.9% and
    93.1% for the years ended December 31, 2005 and 2004,
    respectively. For the years ended December 31, 2005 and
    2004, net concessions were $1,019 and $746, respectively, and
    employee discounts were $420 and $456, respectively.
|(5) | These amounts were adjusted from previously reported amounts to
    properly reflect capital expenditures for partial condominium
    conversion communities and for stabilized communities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
















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##### Table of Contents



Comparison of Year Ended December 31, 2004 to Year Ended
December 31, 2003




|                                                                                             |  |                         |         |  |      |   |         |          |  |  |       |   
|-------------------------------------------------------------------------------------------- |  | ----------------------- | ------- |  | ---- | - | ------- | -------- |  |  | ----- | --
|                                                                                             |  | Year Ended December 31, |         |  |     
|                                                                                             |  |                         |         |  |     
|                                                                                             |  | 2004                    |         |  | 2003 |   |         | % Change | 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Rental and other property revenues                                                           |  |                         |         |  |      |   |         |          |  |  |       |   
|Fully stabilized communities(1)                                                              |  | $                       | 233,309 |  |      | $ | 231,437 |          |  |  | 0.8   | % 
|Communities stabilized in 2003                                                               |  |                         | 15,784  |  |      |   | 14,695  |          |  |  | 7.4   | % 
|Development and lease-up communities(2)                                                      |  |                         | 7,001   |  |      |   | 2,006   |          |  |  | 249.0 | % 
|Acquired communities(3)                                                                      |  |                         | 4,472   |  |      |   |        |          |  |  |      |   
|Other property segments(4)                                                                   |  |                         | 21,218  |  |      |   | 19,564  |          |  |  | 8.5   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|                                                                                             |  |                         | 281,784 |  |      |   | 267,702 |          |  |  | 5.3   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Property operating and maintenance expenses (exclusive of
    depreciation and amortization) |  |                         |         |  |      |   |         |          |  |  |       |   
|Fully stabilized communities(1)                                                              |  |                         | 90,349  |  |      |   | 86,751  |          |  |  | 4.1   | % 
|Communities stabilized in 2003                                                               |  |                         | 5,933   |  |      |   | 5,854   |          |  |  | 1.3   | % 
|Development and lease-up communities(2)                                                      |  |                         | 2,122   |  |      |   | 1,893   |          |  |  | 12.1  | % 
|Acquired communities(3)                                                                      |  |                         | 1,309   |  |      |   |        |          |  |  |      |   
|Other property segments and other expenses(5)                                                |  |                         | 27,640  |  |      |   | 23,273  |          |  |  | 18.8  | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|                                                                                             |  |                         | 127,353 |  |      |   | 117,771 |          |  |  | 8.1   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Property net operating income(6)                                                             |  | $                       | 154,431 |  |      | $ | 149,931 |          |  |  | 3.0   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Capital Expenditures                                                                         |  |                         |         |  |      |   |         |          |  |  |       |   
|Recurring capital expenditures:(7)(8)                                                        |  |                         |         |  |      |   |         |          |  |  |       |   
|Carpet                                                                                       |  | $                       | 2,618   |  |      | $ | 1,760   |          |  |  | 48.8  | % 
|Other                                                                                        |  |                         | 5,237   |  |      |   | 4,143   |          |  |  | 26.4  | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Total                                                                                        |  | $                       | 7,855   |  |      | $ | 5,903   |          |  |  | 33.1  | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Non-recurring capital expenditures                                                           |  | $                       | 3,712   |  |      | $ | 4,267   |          |  |  | (13.0 | )%
|                                                                                             |  |                         |         |  |      |   |         |          | 
|Average apartment units in service                                                           |  |                         | 20,726  |  |      |   | 20,607  |          |  |  | 0.6   | % 
|                                                                                             |  |                         |         |  |      |   |         |          | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Communities which reached stabilization prior to January 1,
    2003.                                                                                                                                                                                                                                                                                                                                
|(2) | Communities in the construction,
    development or lease-up stage during
    2003 and, therefore, not considered fully stabilized for all of
    the periods presented.                                                                                                                                                                                                                       
|(3) | Communities acquired subsequent to January 1, 2003.                                                                                                                                                                                                                                                                                                                                                  
|(4) | Other property segment revenues include revenues from commercial
    properties, revenues from furnished apartment rentals above the
    unfurnished rental rates and any property revenue not directly
    related to property operations. Other property segment revenues
    exclude other corporate revenues of $1,000 and $457 for the
    years ended December 31, 2004 and 2003, respectively.
|(5) | Other property segments and other expenses include expenses
    associated with commercial properties and furnished apartment
    rentals as well as certain indirect central office operating
    expenses related to management and grounds maintenance.                                                                                                                                           












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|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(6) | A reconciliation of property net operating income to GAAP net
    income is detailed below.

|                                           |                                                              |              |         |         |      |   |         |         |  
|------------------------------------------ | ------------------------------------------------------------ | ------------ | ------- | ------- | ---- | - | ------- | ------- | -
|                                           |                                                              | Year Ended   |        
|                                           |                                                              | December 31, |        
|                                           |                                                              |              |        
|                                           |                                                              | 2004         |         |         | 2003 |  
|                                           |                                                              |              |         |         |      |  
|Total same store NOI                       |                                                              | $            | 142,960 |         |      | $ | 144,686 |        
|Property NOI from other operating segments |                                                              |              | 11,471  |         |      |   | 5,245   |        
|                                           |                                                              |              |         |         |      |  
|Consolidated property NOI                  |                                                              |              | 154,431 |         |      |   | 149,931 |        
|Add (subtract):                            |                                                              |              |         |         |      |   |         |        
|                                           | Other revenues                                               |              |         | 1,000   |      |   |         | 457     |  
|                                           | Interest income                                              |              |         | 817     |      |   |         | 894     |  
|                                           | Minority interest in consolidated property partnerships      |              |         | 671     |      |   |         | 1,605   |  
|                                           | Depreciation                                                 |              |         | (79,473 | )    |   |         | (77,595 | )
|                                           | Interest expense                                             |              |         | (63,552 | )    |   |         | (61,640 | )
|                                           | Amortization of deferred financing costs                     |              |         | (4,304  | )    |   |         | (3,801  | )
|                                           | General and administrative                                   |              |         | (18,205 | )    |   |         | (13,841 | )
|                                           | Investment, development and other costs                      |              |         | (2,930  | )    |   |         | (2,715  | )
|                                           | Termination of debt remarketing agreement (interest expense) |              |         | (10,615 | )    |   |         |        |  
|                                           | Loss on early extinguishment of indebtedness                 |              |         | (4,011  | )    |   |         |        |  
|                                           | Proxy contest and related costs                              |              |         |        |      |   |         | (5,231  | )
|                                           | Severance charges                                            |              |         |        |      |   |         | (21,506 | )
|                                           | Equity in income of unconsolidated entities                  |              |         | 1,083   |      |   |         | 7,790   |  
|                                           | Minority interest of preferred unitholders                   |              |         | (3,780  | )    |   |         | (5,600  | )
|                                           | Minority interest of common unitholders                      |              |         | 2,586   |      |   |         | 4,367   |  
|                                           |                                                              |              |         |         |      |  
|                                           | Loss from continuing operations                              |              |         | (26,282 | )    |   |         | (26,885 | )
|                                           | Income from discontinued operations                          |              |         | 114,501 |      |   |         | 41,041  |  
|                                           |                                                              |              |         |         |      |  
|Net income                                 |                                                              | $            | 88,219  |         |      | $ | 14,156  |        
|                                           |                                                              |              |         |         |      |  



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | In addition to those expenses which relate to property
    operations, the Company incurs recurring and non-recurring
    expenditures relating to acquiring and developing new assets,
    materially enhancing the value of an existing asset, or
    substantially extending the useful life of an existing asset,
    all of which are capitalized. Recurring capital expenditures are
    those that are generally expected to be incurred on an annual
    basis. Non-recurring capital expenditures are those that
    generally occur less frequently than on an annual basis.
|(8) | A reconciliation of property capital expenditures from
    continuing operations to total recurring and non-recurring
    capital expenditures as presented in the consolidated statements
    of cash flows under GAAP is detailed below.                                                                                                                                                                                                                                                                                                                                            

|                                   |                                                                           |              |   |       |      |  |   |       | 
|---------------------------------- | ------------------------------------------------------------------------- | ------------ | - | ----- | ---- |  | - | ----- | 
|                                   |                                                                           | Year Ended   |  
|                                   |                                                                           | December 31, |  
|                                   |                                                                           |              |  
|                                   |                                                                           | 2004         |   |       | 2003 | 
|                                   |                                                                           |              |   |       |      | 
|Recurring capital expenditures     |                                                                           |              |   |       |      |  |   |      
|                                   | Continuing operations                                                     |              | $ | 7,854 |      |  | $ | 5,903 | 
|                                   | Discontinued operations                                                   |              |   | 2,030 |      |  |   | 3,570 | 
|                                   |                                                                           |              |   |       |      | 
|                                   | Total recurring capital expenditures per statements of cash flows         |              | $ | 9,884 |      |  | $ | 9,473 | 
|                                   |                                                                           |              |   |       |      | 
|Non-recurring capital expenditures |                                                                           |              |   |       |      |  |   |      
|                                   | Continuing operations                                                     |              | $ | 3,712 |      |  | $ | 4,267 | 
|                                   | Discontinued operations                                                   |              |   | 893   |      |  |   | 885   | 
|                                   |                                                                           |              |   |       |      | 
|                                   | Total non-recurring capital expenditures per statements of cash
    flows |              | $ | 4,605 |      |  | $ | 5,152 | 
|                                   |                                                                           |              |   |       |      | 



lease-up lease-up lease-up













---



##### Table of Contents







lease-up























---



##### Table of Contents







lease-up




Fully Stabilized (Same Store) Communities




|                                                                                          |                                                          |                                |                 |       |        |       |         |          |       |       |      |      |      |      |  
|----------------------------------------------------------------------------------------- | -------------------------------------------------------- | ------------------------------ | --------------- | ----- | ------ | ----- | ------- | -------- | ----- | ----- | ---- | ---- | ---- | ---- | -
|                                                                                          |                                                          | Year Ended December 31,        |                 |       |       
|                                                                                          |                                                          |                                |                 |       |       
|                                                                                          |                                                          | 2004                           |                 |       | 2003   |       |         | % Change |      
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      
|Rental and other revenues                                                                 |                                                          | $                              | 233,309         |       |        | $     | 231,437 |          |       |       | 0.8  | %   
|Property operating and maintenance expenses (excluding
    depreciation and amortization) |                                                          |                                | 90,349          |       |        |       | 86,751  |          |       |       | 4.1  | %   
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      
|Same store net operating income(1)                                                        |                                                          | $                              | 142,960         |       |        | $     | 144,686 |          |       |       | (1.2 | )%  
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      
|Capital expenditures(2)                                                                   |                                                          |                                |                 |       |        |       |         |          |       |       |      |     
|                                                                                          |                                                          | Recurring                      |                 |       |        |       |         |          |       |       |      |      |      |     
|                                                                                          |                                                          | Carpet                         |                 | $     | 2,422  |       |         | $        | 1,745 |       |      |      | 38.8 | %   
|                                                                                          |                                                          | Other                          |                 |       | 4,940  |       |         |          | 3,951 |       |      |      | 25.0 | %   
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      
|                                                                                          |                                                          |                                | Total recurring |       |        | 7,362 |         |          |       | 5,696 |      |      |      | 29.2 | %
|                                                                                          | Non-recurring                                            |                                |                 | 3,000 |        |       |         | 3,302    |       |       |      | (9.1 | )%  
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      
|                                                                                          |                                                          | Total capital expenditures (A) |                 | $     | 10,362 |       |         | $        | 8,998 |       |      |      | 15.2 | %   
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      
|                                                                                          | Total capital expenditures per unit
    (A÷19,106 units) |                                | $               | 542   |        |       | $       | 471      |       |       |      | 15.1 | %   
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      
|Average monthly rental per apartment unit(3)                                              |                                                          | $                              | 1,015           |       |        | $     | 1,040   |          |       |       | (2.4 | )%  
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      
|Average economic occupancy(4)                                                             |                                                          |                                | 93.4            | %     |        |       | 91.8    | %        |       |       | 1.6  | %   
|                                                                                          |                                                          |                                |                 |       |        |       |         |          |      



|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Net operating income of stabilized communities is a supplemental
    non-GAAP financial measure. See page 36 for a
    reconciliation of net operating income for stabilized
    communities to GAAP net income.












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##### Table of Contents



|    |                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | A reconciliation of these segment components of property capital
    expenditures to total recurring and non-recurring capital
    expenditures as presented in the consolidated statements of cash
    flows prepared under GAAP is detailed below.

|                                                                           |  |              |       |  |      |   |       | 
|-------------------------------------------------------------------------- |  | ------------ | ----- |  | ---- | - | ----- | 
|                                                                           |  | Year Ended   |      
|                                                                           |  | December 31, |      
|                                                                           |  |              |      
|                                                                           |  | 2004         |       |  | 2003 |  
|                                                                           |  |              |       |  |      |  
|Recurring capital expenditures by operating segment                        |  |              |       |  |      |   |       | 
|Fully stabilized                                                           |  | $            | 7,362 |  |      | $ | 5,696 | 
|Communities stabilized in prior year                                       |  |              | 275   |  |      |   | 74    | 
|Construction and lease-up                                                  |  |              | 25    |  |      |   |      | 
|Acquired communities                                                       |  |              | 166   |  |      |   |      | 
|Other property segments, including discontinued operations                 |  |              | 2,056 |  |      |   | 3,703 | 
|                                                                           |  |              |       |  |      |  
|Total recurring capital expenditures per statements of cash flows          |  | $            | 9,884 |  |      | $ | 9,473 | 
|                                                                           |  |              |       |  |      |  
|Non-recurring capital expenditures by operating segment                    |  |              |       |  |      |   |       | 
|Fully stabilized                                                           |  | $            | 3,000 |  |      | $ | 3,302 | 
|Communities stabilized in prior year                                       |  |              | 231   |  |      |   | 335   | 
|Construction and lease-up                                                  |  |              |      |  |      |   |      | 
|Acquired communities                                                       |  |              | 5     |  |      |   |      | 
|Other property segments, including discontinued operations                 |  |              | 1,369 |  |      |   | 1,515 | 
|                                                                           |  |              |       |  |      |  
|Total non-recurring capital expenditures, per statements of cash
    flows |  | $            | 4,605 |  |      | $ | 5,152 | 
|                                                                           |  |              |       |  |      |  



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company uses same store recurring and non-recurring capital
    expenditures as cash flow measures. Same store recurring and
    non-recurring capital expenditures are supplemental non-GAAP
    financial measures. The Company believes that same store
    recurring and non-recurring capital expenditures are important
    indicators of the costs incurred by the Company in maintaining
    same store communities. The corresponding GAAP measures include
    information with respect to the Companys other operating
    segments consisting of communities stabilized in the prior year,
    lease-up communities,
    acquired communities and sold communities in addition to same
    store information. Therefore, the Company believes that the
    Companys presentation of same store recurring and
    non-recurring capital expenditures is necessary to demonstrate
    same store replacement costs over time. The Company believes
    that the most directly comparable GAAP measure to same store
    recurring and non-recurring capital expenditures are the lines
    on the Companys consolidated statements of cash flows
    entitled recurring capital expenditures and
    non-recurring capital expenditures.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Average monthly rental rate is defined as the average of the
    gross actual rental rates for leased units and the average of
    the anticipated rental rates for unoccupied units, divided by
    total units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(4) | Average economic occupancy is defined as gross potential rent
    less vacancy losses, model expenses and bad debt expenses
    divided by gross potential rent for the period, expressed as a
    percentage. Gross potential rent is defined as the sum of the
    gross actual rental rates for leased units and the anticipated
    rental rates for unoccupied units. The calculation of average
    economic occupancy does not include a deduction for net
    concessions and employee discounts. Average economic occupancy
    including these amounts would have been 93.0% and 90.5% for the
    years ended December 31, 2004 and 2003, respectively. For
    the years ended December 31, 2004 and 2003, net concessions
    were $594 and $2,451, respectively, and employee discounts were
    $422 and $491, respectively.


















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##### Table of Contents



Discontinued Operations








|                                                               |                                                                                    |                         |       |        |        |   |        |        |        |   |       |        |        | 
|-------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ----------------------- | ----- | ------ | ------ | - | ------ | ------ | ------ | - | ----- | ------ | ------ | 
|                                                               |                                                                                    | Year Ended December 31, |      
|                                                               |                                                                                    |                         |      
|                                                               |                                                                                    | 2005                    |       |        | 2004   |   |        | 2003   |       
|                                                               |                                                                                    |                         |       |        |        |   |        |        |       
|Revenues                                                       |                                                                                    |                         |       |        |        |   |        |        |        |   |       |       
|                                                               | Rental                                                                             |                         | $     | 13,222 |        |   | $      | 41,881 |        |   | $     | 68,330 |       
|                                                               | Other                                                                              |                         |       | 1,243  |        |   |        | 3,615  |        |   |       | 5,310  |       
|                                                               |                                                                                    |                         |       |        |        |   |        |        |       
|                                                               |                                                                                    | Total revenues          |       |        | 14,465 |   |        |        | 45,496 |   |       |        | 73,640 | 
|                                                               |                                                                                    |                         |       |        |        |   |        |        |       
|Expenses                                                       |                                                                                    |                         |       |        |        |   |        |        |        |   |       |       
|                                                               | Property operating and maintenance (exclusive of items shown
    separately below) |                         |       | 7,241  |        |   |        | 19,478 |        |   |       | 30,039 |       
|                                                               | Depreciation                                                                       |                         |       |       |        |   |        | 5,837  |        |   |       | 12,381 |       
|                                                               | Interest                                                                           |                         |       | 2,161  |        |   |        | 5,532  |        |   |       | 9,220  |       
|                                                               | Asset impairment charges                                                           |                         |       |       |        |   |        | 2,233  |        |   |       | 17,462 |       
|                                                               | Minority interest in consolidated property partnerships                            |                         |       | 14     |        |   |        | (238   | )      |   |       | (419   | )     
|                                                               |                                                                                    |                         |       |        |        |   |        |        |       
|                                                               |                                                                                    | Total expenses          |       |        | 9,416  |   |        |        | 32,842 |   |       |        | 68,683 | 
|                                                               |                                                                                    |                         |       |        |        |   |        |        |       
|Income from discontinued operations (before minority interest) |                                                                                    |                         | 5,049 |        |        |   | 12,654 |        |        |   | 4,957 |       
|Minority interest                                              |                                                                                    |                         | 317   |        |        |   | (343   | )      |        |   | (413  | )     
|                                                               |                                                                                    |                         |       |        |        |   |        |        |       
|Income from discontinued operations                            |                                                                                    | $                       | 5,366 |        |        | $ | 12,311 |        |        | $ | 4,544 |       
|                                                               |                                                                                    |                         |       |        |        |   |        |        |       


















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##### Table of Contents



2003 Management Transition and Severance and Proxy Contest
Charges
















Outlook for 2006

















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##### Table of Contents













Liquidity and Capital Resources



















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##### Table of Contents






























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##### Table of Contents











Contractual Obligations




|                                            |  |                     |           |           |      |   |         |       |  |     |         |  |       |         |         |  |  |   |         | 
|------------------------------------------- |  | ------------------- | --------- | --------- | ---- | - | ------- | ----- |  | --- | ------- |  | ----- | ------- | ------- |  |  | - | ------- | 
|                                            |  | Obligation Due Date |          
|                                            |  |                     |          
|                                            |  |                     |           | 1 Year or |      |   | 2-3     |       |  | 4-5 |         |  | After |        
|Contractual Obligations                     |  | Total               |           |           | Less |   |         | Years |  |     | Years   |  |       | 5 Years |        
|                                            |  |                     |           |           |      |   |         |       |  |     |         |  |       |         |        
|Long-term debt(1)                           |  | $                   | 879,236   |           |      | $ | 81,269  |       |  | $   | 162,750 |  |       | $       | 264,168 |  |  | $ | 371,049 | 
|Lines of credit(2)                          |  |                     | 101,379   |           |      |   |        |       |  |     | 101,379 |  |       |         |        |  |  |   |        | 
|Operating leases(3)                         |  |                     | 176,047   |           |      |   | 1,665   |       |  |     | 3,263   |  |       |         | 3,262   |  |  |   | 167,857 | 
|Other long-term obligations(4)              |  |                     | 22,053    |           |      |   | 4,695   |       |  |     | 6,542   |  |       |         | 5,324   |  |  |   | 5,492   | 
|Development and construction obligations(5) |  |                     | 52,227    |           |      |   | 47,004  |       |  |     | 5,223   |  |       |         |        |  |  |   |        | 
|                                            |  |                     |           |           |      |   |         |       |  |     |         |  |       |         |        
|                                            |  | $                   | 1,230,942 |           |      | $ | 134,633 |       |  | $   | 279,157 |  |       | $       | 272,754 |  |  | $ | 544,398 | 
|                                            |  |                     |           |           |      |   |         |       |  |     |         |  |       |         |        



|    |                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts include principal payments only. The Company made
    interest payments of $66,234, $66,992 and $78,822 for the years
    ended December 31, 2005, 2004 and 2003, respectively. The
    Company will pay interest in future periods on outstanding
    indebtedness based on the rates and terms summarized in
    note 3 to the consolidated financial statements.
|(2) | At December 31, 2005, the Company had issued letters of
    credit to third parties totaling $3,136 under its credit
    facility arrangements.                                                                                                                                                                                                                            
|(3) | Primarily includes ground leases underlying apartment
    communities owned by the Company.                                                                                                                                                                                                                                                                                
|(4) | Represents amounts committed to current and former executive
    officers under the terms of employment and settlement agreements.                                                                                                                                                                                                                                         
|(5) | Represents estimated remaining amounts necessary to complete one
    project currently under development, including amounts due under
    general construction contracts.                                                                                                                                                                                                  














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##### Table of Contents



10-K.


Off-Balance Sheet Arrangements




Long-term Debt Issuances and Retirements










Stock Repurchase Program






Capitalization of Fixed Assets and Community Improvements

















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##### Table of Contents







|                                                           |                                                                        |                         |         |       |      |   |        |       |  |   |        |       | 
|---------------------------------------------------------- | ---------------------------------------------------------------------- | ----------------------- | ------- | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                                           |                                                                        | Year Ended December 31, |        
|                                                           |                                                                        |                         |        
|                                                           |                                                                        | 2005                    |         |       | 2004 |   |        | 2003  | 
|                                                           |                                                                        |                         |         |       |      |   |        |       | 
|Land and community development and acquisition activity(1) |                                                                        | $                       | 116,710 |       |      | $ | 43,708 |       |  | $ | 24,914 |      
|Revenue generating additions and improvements(2)           |                                                                        |                         |        |       |      |   | 26     |       |  |   | 1,240  |      
|Nonrecurring capital expenditures(3)                       |                                                                        |                         | 4,508   |       |      |   | 4,605  |       |  |   | 5,152  |      
|Recurring capital expenditures(4)                          |                                                                        |                         |         |       |      |   |        |       |  |   |        |      
|                                                           | Carpet replacements, other community additions and improvements        |                         |         | 9,921 |      |   |        | 9,884 |  |   |        | 9,473 | 
|                                                           | Corporate additions and improvements                                   |                         |         | 1,771 |      |   |        | 681   |  |   |        | 799   | 
|                                                           |                                                                        |                         |         |       |      |   |        |       | 
|                                                           |                                                                        | $                       | 132,910 |       |      | $ | 58,904 |       |  | $ | 41,578 |      
|                                                           |                                                                        |                         |         |       |      |   |        |       | 
|Other Data                                                 |                                                                        |                         |         |       |      |   |        |       |  |   |        |      
|                                                           | Capitalized interest                                                   |                         | $       | 2,907 |      |   | $      | 1,078 |  |   | $      | 3,555 | 
|                                                           |                                                                        |                         |         |       |      |   |        |       | 
|                                                           | Capitalized development personnel and associated costs and
    fees(5) |                         | $       | 1,219 |      |   | $      | 998   |  |   | $      | 1,566 | 
|                                                           |                                                                        |                         |         |       |      |   |        |       | 



|    |                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Reflects aggregate land and community development and
    acquisition costs, exclusive of the change in construction
    payables between years.                       
|(2) | Represents expenditures for major renovations of communities,
    water sub-metering equipment and other upgrade costs that
    enhance the rental value of such units.
|(3) | Represents property improvement expenditures that generally
    occur less frequently than on an annual basis.                                                         
|(4) | Represents property improvement expenditures of a type that are
    expected to be incurred on an annual basis.                                                        
|(5) | Reflects development personnel and associated costs capitalized
    to construction and development activities.                                                        

Current Development Activity




|                                                        |  |           |     |                 |              |   |                 |            |  |            |              |           |            |             |       |            |              |  |       |  |  |  |       | 
|------------------------------------------------------- |  | --------- | --- | --------------- | ------------ | - | --------------- | ---------- |  | ---------- | ------------ | --------- | ---------- | ----------- | ----- | ---------- | ------------ |  | ----- |  |  |  | ----- | 
|                                                        |  |           |     |                 |              |   |                 |            |  |            |              | Estimated |           
|                                                        |  |           |     | Estimated       |              |   | Costs Incurred  |            |  | Quarter of |              |           | Quarter of |             |       | Quarter of |             
|                                                        |  | Number of |     |                 | Construction |   |                 | as of      |  |            | Construction |           |            | First Units |       |            | Stabilized   | 
|Metropolitan Area                                       |  | Units     |     |                 | Cost         |   |                 | 12/31/2005 |  |            | Start        |           |            | Available   |       |            | Occupancy(1) | 
|                                                        |  |           |     |                 |              |   |                 |            |  |            |              |           |            |             |       |            |              | 
|                                                        |  |           |     | ($ in millions) |              |   | ($ in millions) |            |  |            |              |           |            |            
|Construction/Lease-up Communities                       |  |           |     |                 |              |   |                 |            |  |            |              |           |            |             |       |            |              |  |       |  |  |  |       | 
|Washington D.C.                                         |  |           |     |                 |              |   |                 |            |  |            |              |           |            |             |       |            |              |  |       |  |  |  |       | 
|Post
    Carlyletm 
    Apartments and Condominiums(2) |  |           | 350 |                 |              | $ | 99              |            |  | $          | 47           |           |            |             | 4Q04 |            |              |  | 3Q06 |  |  |  | 3Q07 | 
|                                                        |  |           |     |                 |              |   |                 |            |  |            |              |           |            |             |       |            |              | 
|Construction/Lease-up Communities                       |  |           | 350 |                 |              | $ | 99              |            |  | $          | 47           |           |            |             |       |            |              |  |       |  |  |  |       | 
|                                                        |  |           |     |                 |              |   |                 |            |  |            |              |           |            |             |       |            |              | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company defines stabilized occupancy as the earlier to occur
    of (i) the attainment of 95% physical occupancy on the
    first day of any month or (ii) one year after completion of
    construction.                                                                                                                                                                                                                                                                                                                          
|(2) | The condominium component of the project, consisting of
    145 units, is being developed through a taxable REIT
    subsidiary in a majority owned joint venture with a Washington
    D.C. based developer. As of February 28, 2006, the Company
    has 81 units under contract for sale upon completion and
    delivery of the units. The first condominium units at this
    project are expected to be delivered in late 2006 or early 2007.
    There can be no assurance that condominium units under contract
    will close.

Inflation















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##### Table of Contents



Funds from Operations










|                                                                                                      |  |                         |          |   |      |   |          |      |  |   |          |  
|----------------------------------------------------------------------------------------------------- |  | ----------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                                                      |  | Year Ended December 31, |         
|                                                                                                      |  |                         |         
|                                                                                                      |  | 2005                    |          |   | 2004 |   |          | 2003 | 
|                                                                                                      |  |                         |          |   |      |   |          |      | 
|Net income available to common shareholders                                                           |  | $                       | 134,311  |   |      | $ | 76,368   |      |  | $ | 2,707    |  
|Minority interest of common unitholders  continuing
    operations                                   |  |                         | (53      | ) |      |   | (2,586   | )    |  |   | (4,367   | )
|Minority interest in discontinued operations(1)                                                       |  |                         | 7,152    |   |      |   | 7,764    |      |  |   | 4,708    |  
|Depreciation on wholly-owned real estate assets, net(2)                                               |  |                         | 73,189   |   |      |   | 81,433   |      |  |   | 84,530   |  
|Depreciation on real estate assets held in unconsolidated
    entities                                |  |                         | 969      |   |      |   | 1,328    |      |  |   | 1,567    |  
|Gains on sales of real estate assets, net of provision for
    income taxes  discontinued operations |  |                         | (140,643 | ) |      |   | (113,739 | )    |  |   | (40,792  | )
|Incremental gains on condominium sales, net of provision for
    income taxes(3)                      |  |                         | 8,811    |   |      |   |         |      |  |   |         |  
|Gains on sales of real estate assets  unconsolidated
    entities                                    |  |                         | (612     | ) |      |   |         |      |  |   | (8,395   | )
|Incremental gains on condominium sales 
    unconsolidated entities(3)                               |  |                         | 359      |   |      |   |         |      |  |   |         |  
|                                                                                                      |  |                         |          |   |      |   |          |      | 
|Funds from operations available to common shareholders and
    unitholders(4)                         |  | $                       | 83,483   |   |      | $ | 50,568   |      |  | $ | 39,958   |  
|                                                                                                      |  |                         |          |   |      |   |          |      | 
|Cash flow provided by (used in):                                                                      |  |                         |          |   |      |   |          |      |  |   |          |  
|Operating activities                                                                                  |  | $                       | 86,761   |   |      | $ | 79,105   |      |  | $ | 91,549   |  
|Investing activities                                                                                  |  | $                       | 70,293   |   |      | $ | 131,873  |      |  | $ | 234,195  |  
|Financing activities                                                                                  |  | $                       | (150,767 | ) |      | $ | (212,189 | )    |  | $ | (330,800 | )
|Weighted average shares outstanding  basic                                                           |  |                         | 40,217   |   |      |   | 39,777   |      |  |   | 37,688   |  
|Weighted average shares and units outstanding  basic                                                 |  |                         | 42,353   |   |      |   | 42,474   |      |  |   | 42,134   |  
|Weighted average shares outstanding  diluted(5)                                                      |  |                         | 40,616   |   |      |   | 39,892   |      |  |   | 37,699   |  
|Weighted average shares and units outstanding 
    diluted(5)                                        |  |                         | 42,752   |   |      |   | 42,589   |      |  |   | 42,145   |  



|    |                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the minority interest in earnings and gains (losses)
    on properties held for sale and sold reported as discontinued
    operations for the periods presented.












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##### Table of Contents



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Depreciation on wholly-owned real estate assets is net of the
    minority interest portion of depreciation in consolidated
    entities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(3) | The Company recognizes incremental gains on condominium sales in
    FFO, net of provision for income taxes, to the extent that net
    sales proceeds from the sale of condominium units exceeds the
    greater of their fair value or net book value as of the date the
    property is acquired by its taxable REIT subsidiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(4) | Funds from operations for the year ended December 31, 2005
    included a loss of $3,220 from the early extinguishment of debt
    associated with asset sales, a severance charge of $796 and a
    gain of $5,267 on the sale of a technology investment. Funds
    from operations for the year ended December 31, 2004
    included impairment charges of $2,333, losses on debt
    extinguishments of $8,139 and a loss on the termination of a
    debt remarketing agreement of $10,615. Additionally, FFO for the
    year ended December 31, 2004 includes a reduction for
    preferred stock and unit redemption costs of $3,526. FFO for the
    year ended December 31, 2003, included severance changes of
    $21,506, proxy and related costs of $5,231 and asset impairment
    charges of $17,462.
|(5) | Diluted weighted average shares and units for the years ended
    December 31, 2005, 2004 and 2003 include 400, 115 and 11 of
    common stock equivalent shares and units, respectively, that
    were antidilutive to all income (loss) per share computations
    under generally accepted accounting principles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 












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##### Table of Contents






ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK


Interest Rate Sensitivity








|  |                                                                                                                                                    
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | maintain a conservative ratio of fixed rate, long-term debt to
    total debt such that variable rate exposure is kept at an
    acceptable level; 
| 
| | fix certain long-term variable rate debt through the use of
    interest rate swaps or interest rate caps with appropriate
    matching maturities;
| 
| | use treasury locks where appropriate to fix rates on anticipated
    debt transactions; and                                                        
| 
| | take advantage of favorable market conditions for long-term debt
    and/or equity.                                                                





|                         |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |      |        |        |         |      |        |         |         |  |        |         | 
|------------------------ | ---------------------- | -------------------------- | --------------------------- | ------ | ----- | ----- | ------- | ---- | ------ | ------- | ----- | ---- | ----- | ----- | ------ | ---- | ----- | ----- | ------- | ----- | ----- | ----- | ------- | ---- | ------ | ------ | ------- | ---- | ------ | ------- | ------- |  | ------ | ------- | 
|                         |                        | Expected Maturity Date     |                            
|                         |                        |                            |                            
|                         |                        |                            |                             | There- |       |       |         |      | Fair   |        
|                         |                        | 2006                       |                             |        | 2007  |       |         | 2008 |        |         | 2009  |      |       | 2010  |        |      | after |       |         | Total |       |       | Value   |     
|                         |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |     
|                         |                        | (in thousands)             |                            
|Debt obligations         |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |      |        |        |         |      |        |         |         | 
|Long-term debt:          |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |      |        |        |         |      |        |         |         | 
|Fixed rate               |                        | $                          | 79,779                      |        |       | $     | 156,583 |      |        | $       | 2,822 |      |       | $     | 74,036 |      |       | $     | 185,857 |       |       | $     | 254,564 |      |        | $      | 753,641 |      |        | $       | 767,271 | 
|                         |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |     
|                         | Average interest rate  |                            |                             | 6.93   | %     |       |         | 6.43 | %      |         |       | 5.75 | %     |       |        | 5.47 | %     |       |         | 7.69  | %     |       |         | 5.33 | %      |        |         | 6.33 | %      |         |         |  |       
|Floating rate            |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |      |        |        |         |      |        |         |         | 
|                         | LIBOR-based and other: |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |      |        |        |         |      |        |         |         |  |       
|                         |                        | Cash management line(1)(2) |                             |        |      |       |         |      | 11,379 |         |       |      |      |       |        |      |      |       |         |       |      |       |         |      |       |        |         |      | 11,379 |         |         |  | 11,379 |        
|                         |                        | Revolver(1)(2)             |                             |        |      |       |         |      | 90,000 |         |       |      |      |       |        |      |      |       |         |       |      |       |         |      |       |        |         |      | 90,000 |         |         |  | 90,000 |        
|                         |                        | FNMA(3)                    |                             |        | 1,490 |       |         |      | 1,610  |         |       |      | 1,735 |       |        |      | 1,865 |       |         |       | 2,010 |       |         |      | 88,390 |        |         |      | 97,100 |         |         |  | 97,100 |        
|                         |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |     
|                         |                        |                            | Total LIBOR-based and other |        |       | 1,490 |         |      |        | 102,989 |       |      |       | 1,735 |        |      |       | 1,865 |         |       |       | 2,010 |         |      |        | 88,390 |         |      |        | 198,479 |         |  |        | 198,479 | 
|                         |                        | Tax-exempt(4)              |                             |        |      |       |         |      |       |         |       |      |      |       |        |      |      |       |         |       | 400   |       |         |      | 28,095 |        |         |      | 28,495 |         |         |  | 28,495 |        
|                         |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |     
|Total floating rate debt |                        | $                          | 1,490                       |        |       | $     | 102,989 |      |        | $       | 1,735 |      |       | $     | 1,865  |      |       |       | 2,410   |       |       |       | 116,485 |      |        |        | 226,974 |      |        |         | 226,974 | 
|                         |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |     
|Total debt               |                        | $                          | 81,269                      |        |       | $     | 259,572 |      |        | $       | 4,557 |      |       | $     | 75,901 |      |       | $     | 188,267 |       |       | $     | 371,049 |      |        | $      | 980,615 |      |        | $       | 994,245 | 
|                         |                        |                            |                             |        |       |       |         |      |        |         |       |      |       |       |        |      |       |       |         |       |       |       |         |     



|    |                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Interest on these debt instruments is based on LIBOR plus 0.75%
    at December 31, 2005. At December 31, 2005, the
    one-month LIBOR rate was 4.4%.                                                                                                                                                                                       
|(2) | Assumes the Companys Revolver and Cash Management lines of
    credit are repaid at their maturity dates.                                                                                                                                                                                                                                   
|(3) | In December 2000, the Company entered into a swap transaction
    that fixed the rate on the note at 6.975%, inclusive of credit
    enhancement and other fees, from January 1, 2001 through
    July 31, 2009.                                                                                                                             
|(4) | At December 31, 2005, the FNMA AAA tax exempt
    rate was 3.54%. Interest on these debt instruments is equal to
    the FNMA AAA tax exempt rate plus credit enhancement
    and other fees of 0.639%. The Company has purchased an interest
    rate cap that limits the Companys exposure to increases in
    the base rate to 5.00%.












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##### Table of Contents



|                          |                   |                 |                        |                   |       |  |              |          |               |            |  |  |               |  |  |   |        |   | 
|------------------------- | ----------------- | --------------- | ---------------------- | ----------------- | ----- |  | ------------ | -------- | ------------- | ---------- |  |  | ------------- |  |  | - | ------ | - | 
|                          |                   |                 |                        |                   |       |  |              | Expected |               |            | 
|                          |                   |                 |                        | Average           |       |  | Average      |          |               | Settlement |  |  | Fair Value    | 
|Interest Rate Derivatives |                   | Notional Amount |                        | Pay Rate/Cap Rate |       |  | Receive Rate |          |               | Date       |  |  | Asset (Liab.) | 
|                          |                   |                 |                        |                   |       |  |              |          |               |            |  |  |               | 
|Interest Rate Swaps       |                   |                 |                        |                   |       |  |              |          |               |            |  |  |               |  |  |   |        |  
|                          | Variable to fixed |                 | $104,000 amortizing to |                   |       |  |              |          |               |            |  |  |               |  |  |   |        |   | 
|                          |                   | $90,270         |                        |                   | 6.04% |  |              |          | 1 month LIBOR |            |  |  | 7/31/09       |  |  | $ | (4,021 | )
|Interest rate cap         |                   | $28,495         |                        |                   | 5.00% |  |              |          |              |            |  |  | 2/01/08       |  |  |   | 5      |  
|                          |                   |                 |                        |                   |       |  |              |          |               |            |  |  |               | 
|                          |                   |                 |                        |                   |       |  |              |          |               |            |  |  |               |  |  | $ | (4,016 | )
|                          |                   |                 |                        |                   |       |  |              |          |               |            |  |  |               | 








|        |                                            
|------- | -------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
    AND FINANCIAL DISCLOSURE






ITEM 9A.                       CONTROLS
AND PROCEDURES


10-K. 10-K. 13a-15(e) 15d-15(e)


13a-15(f) 15d-15(f)


10-K







|         |                  
|-------- | -----------------
|ITEM 9B. | OTHER INFORMATION














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##### Table of Contents






PART III







|         |                                                   
|-------- | --------------------------------------------------
|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



Code of Ethics









|         |                       
|-------- | ----------------------
|ITEM 11. | EXECUTIVE COMPENSATION








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT AND RELATED SHAREHOLDER MATTERS








|         |                                               
|-------- | ----------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS








|         |                                       
|-------- | --------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES






PART IV







|         |                                             
|-------- | --------------------------------------------
|ITEM 15. | EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES

(a) 1. and 2. Financial Statements and Schedules















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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS


|                                                                                           |                                                                                                                                       |      |  |     | 
|------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | --- | 
|                                                                                           |                                                                                                                                       | Page | 
|                                                                                           |                                                                                                                                       |      | 
|POST PROPERTIES, INC.                                                                      |                                                                                                                                       |      |  |    
|Consolidated Financial Statements:                                                         |                                                                                                                                       |      |  |    
|                                                                                           | Managements Report on Internal Control over Financial
    Reporting                                                                  |      |  | 54  | 
|                                                                                           | Report of Independent Registered Public Accounting Firm                                                                               |      |  | 55  | 
|                                                                                           | Consolidated Balance Sheets as of December 31, 2005 and 2004                                                                          |      |  | 56  | 
|                                                                                           | Consolidated Statements of Operations for the Years Ended
    December 31, 2005, 2004 and 2003                                        |      |  | 57  | 
|                                                                                           | Consolidated Statements of Shareholders Equity and
    Accumulated Earnings for the Years Ended December 31, 2005,
    2004 and 2003 |      |  | 58  | 
|                                                                                           | Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2005, 2004 and 2003                                        |      |  | 60  | 
|                                                                                           | Notes to the Consolidated Financial Statements                                                                                        |      |  | 61  | 
|POST APARTMENT HOMES, L.P.                                                                 |                                                                                                                                       |      |  |    
|Consolidated Financial Statements:                                                         |                                                                                                                                       |      |  |    
|                                                                                           | Managements Report on Internal Control over Financial
    Reporting                                                                  |      |  | 88  | 
|                                                                                           | Report of Independent Registered Public Accounting Firm                                                                               |      |  | 89  | 
|                                                                                           | Consolidated Balance Sheets as of December 31, 2005 and 2004                                                                          |      |  | 90  | 
|                                                                                           | Consolidated Statements of Operations for the Years Ended
    December 31, 2005, 2004 and 2003                                        |      |  | 91  | 
|                                                                                           | Consolidated Statements of Partners Equity for the Years
    Ended December 31, 2005, 2004 and 2003                                  |      |  | 92  | 
|                                                                                           | Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2005, 2004 and 2003                                        |      |  | 93  | 
|                                                                                           | Notes to the Consolidated Financial Statements                                                                                        |      |  | 94  | 
|Schedule III:                                                                              |                                                                                                                                       |      |  |    
|                                                                                           | Real Estate and Accumulated Depreciation                                                                                              |      |  | 120 | 
|All other schedules are omitted because they are either not
    applicable or not required |                                                                                                                                       |      |  |    
|POST PROPERTIES, INC.  2005 NON-QUALIFIED EMPLOYEE
    STOCK PURCHASE PLAN                |                                                                                                                                       |      |  |    
|Financial Statements:                                                                      |                                                                                                                                       |      |  |    
|                                                                                           | Report of Independent Registered Public Accounting Firm                                                                               |      |  | 124 | 
|                                                                                           | Statement of Net Assets Available for Plan Benefits as of
    December 31, 2005                                                       |      |  | 125 | 
|                                                                                           | Statement of Changes in Net Assets Available for Plan Benefits
    for the Year ended December 31, 2005                               |      |  | 126 | 
|                                                                                           | Notes to Financial Statements                                                                                                         |      |  | 127 | 










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##### Table of Contents



Post Properties, Inc.


Consolidated Financial Statements


December 31, 2005 and 2004













---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING


13a-15(f). Internal Control  Integrated
Framework Internal
Control  Integrated Framework,











---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Consolidated financial statements and financial statement
schedule




Internal control over financial reporting


Internal Control  Integrated Framework Internal Control 
Integrated Framework





















---



##### Table of Contents



POST PROPERTIES, INC.


CONSOLIDATED BALANCE SHEETS


(In thousands)


|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |           |           |           |           |           | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ------- | --------- | --------- | --------- | --------- | --------- | --------- | 
|                                     |                                                                                                                                     | December 31,                                                                                                              |                                                                                                                                   
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                   
|                                     |                                                                                                                                     | 2005                                                                                                                      |                                                                                                                                    |         | 2004      |          
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|Assets                               |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |           |           |          
|                                     | Real estate assets                                                                                                                  |                                                                                                                           |                                                                                                                                    |         |           |           |           |           |          
|                                     |                                                                                                                                     | Land                                                                                                                      |                                                                                                                                    | $       | 266,914   |           |           | $         | 266,520   |          
|                                     |                                                                                                                                     | Building and improvements                                                                                                 |                                                                                                                                    |         | 1,789,479 |           |           |           | 1,887,514 |          
|                                     |                                                                                                                                     | Furniture, fixtures and equipment                                                                                         |                                                                                                                                    |         | 207,497   |           |           |           | 214,954   |          
|                                     |                                                                                                                                     | Construction in progress                                                                                                  |                                                                                                                                    |         | 47,005    |           |           |           | 19,527    |          
|                                     |                                                                                                                                     | Land held for future development                                                                                          |                                                                                                                                    |         | 62,511    |           |           |           | 18,910    |          
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     |                                                                                                                                     |                                                                                                                           | 2,373,406                                                                                                                          |         |           |           | 2,407,425 |          
|                                     |                                                                                                                                     | Less: accumulated depreciation                                                                                            |                                                                                                                                    |         | (516,954  | )         |           |           | (498,367  | )        
|                                     |                                                                                                                                     | For-sale condominiums                                                                                                     |                                                                                                                                    |         | 38,338    |           |           |           |          |          
|                                     |                                                                                                                                     | Assets held for sale, net of accumulated depreciation of $0 and
    $26,332 at December 31, 2005 and 2004, respectively   |                                                                                                                                    |         | 4,591     |           |           |           | 68,661    |          
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     |                                                                                                                                     |                                                                                                                           | Total real estate assets                                                                                                           |         |           | 1,899,381 |           |           |           | 1,977,719 | 
|                                     | Investments in and advances to unconsolidated real estate
    entities                                                              |                                                                                                                           |                                                                                                                                    | 26,614  |           |           |           | 21,320    |          
|                                     | Cash and cash equivalents                                                                                                           |                                                                                                                           |                                                                                                                                    | 6,410   |           |           |           | 123       |          
|                                     | Restricted cash                                                                                                                     |                                                                                                                           |                                                                                                                                    | 4,599   |           |           |           | 1,844     |          
|                                     | Deferred charges, net                                                                                                               |                                                                                                                           |                                                                                                                                    | 11,624  |           |           |           | 15,574    |          
|                                     | Other assets                                                                                                                        |                                                                                                                           |                                                                                                                                    | 32,826  |           |           |           | 37,262    |          
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     |                                                                                                                                     |                                                                                                                           | Total assets                                                                                                                       |         | $         | 1,981,454 |           |           | $         | 2,053,842 | 
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|Liabilities and Shareholders Equity |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |           |           |          
|                                     | Notes payable, including $0 and $34,060 of debt secured by
    assets held for sale at December 31, 2005 and 2004,
    respectively |                                                                                                                           | $                                                                                                                                  | 980,615 |           |           | $         | 1,129,478 |          
|                                     | Accounts payable and accrued expenses                                                                                               |                                                                                                                           |                                                                                                                                    | 58,474  |           |           |           | 58,837    |          
|                                     | Dividend and distribution payable                                                                                                   |                                                                                                                           |                                                                                                                                    | 19,257  |           |           |           | 19,203    |          
|                                     | Accrued interest payable                                                                                                            |                                                                                                                           |                                                                                                                                    | 5,478   |           |           |           | 7,677     |          
|                                     | Deposits and prepaid rents                                                                                                          |                                                                                                                           |                                                                                                                                    | 9,857   |           |           |           | 7,236     |          
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     |                                                                                                                                     |                                                                                                                           | Total liabilities                                                                                                                  |         |           | 1,073,681 |           |           |           | 1,222,431 | 
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     | Minority interest of common unitholders in Operating Partnership                                                                    |                                                                                                                           |                                                                                                                                    | 26,764  |           |           |           | 43,341    |          
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     | Commitments and contingencies                                                                                                       |                                                                                                                           |                                                                                                                                    |         |           |           |           |           |          
|                                     | Shareholders equity                                                                                                                |                                                                                                                           |                                                                                                                                    |         |           |           |           |           |          
|                                     |                                                                                                                                     | Preferred stock, $.01 par value, 20,000 authorized:                                                                       |                                                                                                                                    |         |           |           |           |           |           |          
|                                     |                                                                                                                                     |                                                                                                                           | 81/2%
    Series A Cumulative Redeemable Shares, liquidation
    preference $50 per share, 900 shares issued and
    outstanding   |         |           | 9         |           |           |           | 9         | 
|                                     |                                                                                                                                     |                                                                                                                           | 75/8%
    Series B Cumulative Redeemable Shares, liquidation
    preference $25 per share, 2,000 shares issued and
    outstanding |         |           | 20        |           |           |           | 20        | 
|                                     | Common stock, $.01 par value, 100,000 authorized:                                                                                   |                                                                                                                           |                                                                                                                                    |         |           |           |           |           |          
|                                     |                                                                                                                                     | 41,394 and 40,164 shares issued, 41,394 and
    40,164 shares outstanding at December 31, 2005 and
    2004, respectively |                                                                                                                                    |         | 414       |           |           |           | 401       |          
|                                     |                                                                                                                                     | Additional paid-in capital                                                                                                |                                                                                                                                    |         | 803,765   |           |           |           | 775,221   |          
|                                     |                                                                                                                                     | Accumulated earnings                                                                                                      |                                                                                                                                    |         | 86,315    |           |           |           | 25,075    |          
|                                     |                                                                                                                                     | Accumulated other comprehensive income (loss)                                                                             |                                                                                                                                    |         | (4,208    | )         |           |           | (8,668    | )        
|                                     |                                                                                                                                     | Deferred compensation                                                                                                     |                                                                                                                                    |         | (3,625    | )         |           |           | (3,988    | )        
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     |                                                                                                                                     |                                                                                                                           | 882,690                                                                                                                            |         |           |           | 788,070   |          
|                                     | Less common stock in treasury, at cost, 44 and 0 shares at
    December 31, 2005 and 2004, respectively                             |                                                                                                                           |                                                                                                                                    | (1,681  | )         |           |           |          |          
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     |                                                                                                                                     |                                                                                                                           | Total shareholders equity                                                                                                         |         |           | 881,009   |           |           |           | 788,070   | 
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          
|                                     |                                                                                                                                     |                                                                                                                           | Total liabilities and shareholders equity                                                                                         |         | $         | 1,981,454 |           |           | $         | 2,053,842 | 
|                                     |                                                                                                                                     |                                                                                                                           |                                                                                                                                    |         |           |          

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











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##### Table of Contents



POST PROPERTIES, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)


|                                            |                                                                                                           |                                          |         |         |         |   |        |         |         |   |        |         |         |  
|------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ------- | ------- | ------- | - | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                            |                                                                                                           | Year Ended December 31,                  |        
|                                            |                                                                                                           |                                          |        
|                                            |                                                                                                           | 2005                                     |         |         | 2004    |   |        | 2003    |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|Revenues                                    |                                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                            | Rental                                                                                                    |                                          | $       | 279,508 |         |   | $      | 266,191 |         |   | $      | 253,345 |        
|                                            | Other property revenues                                                                                   |                                          |         | 17,040  |         |   |        | 15,593  |         |   |        | 14,357  |        
|                                            | Other                                                                                                     |                                          |         | 255     |         |   |        | 1,000   |         |   |        | 457     |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            |                                                                                                           | Total revenues                           |         |         | 296,803 |   |        |         | 282,784 |   |        |         | 268,159 |  
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|Expenses                                    |                                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                            | Property operating and maintenance (exclusive of items shown
    separately below)                        |                                          |         | 134,010 |         |   |        | 127,353 |         |   |        | 117,771 |        
|                                            | Depreciation                                                                                              |                                          |         | 76,248  |         |   |        | 79,473  |         |   |        | 77,595  |        
|                                            | General and administrative                                                                                |                                          |         | 18,307  |         |   |        | 18,205  |         |   |        | 13,841  |        
|                                            | Investment, development and other                                                                         |                                          |         | 5,242   |         |   |        | 2,930   |         |   |        | 2,715   |        
|                                            | Proxy contest and related costs                                                                           |                                          |         |        |         |   |        |        |         |   |        | 5,231   |        
|                                            | Severance charges                                                                                         |                                          |         | 796     |         |   |        |        |         |   |        | 21,506  |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            |                                                                                                           | Total expenses                           |         |         | 234,603 |   |        |         | 227,961 |   |        |         | 238,659 |  
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|Operating income                            |                                                                                                           |                                          | 62,200  |         |         |   | 54,823 |         |         |   | 29,500 |        
|                                            | Interest income                                                                                           |                                          |         | 661     |         |   |        | 817     |         |   |        | 894     |        
|                                            | Interest expense                                                                                          |                                          |         | (58,898 | )       |   |        | (63,552 | )       |   |        | (61,640 | )      
|                                            | Amortization of deferred financing costs                                                                  |                                          |         | (4,661  | )       |   |        | (4,304  | )       |   |        | (3,801  | )      
|                                            | Equity in income of unconsolidated real estate entities                                                   |                                          |         | 1,767   |         |   |        | 1,083   |         |   |        | 7,790   |        
|                                            | Gains on sale of technology investment                                                                    |                                          |         | 5,267   |         |   |        |        |         |   |        |        |        
|                                            | Termination of debt remarketing agreement (interest expense)                                              |                                          |         |        |         |   |        | (10,615 | )       |   |        |        |        
|                                            | Loss on early extinguishment of indebtedness                                                              |                                          |         |        |         |   |        | (4,011  | )       |   |        |        |        
|                                            | Minority interest in consolidated property partnerships                                                   |                                          |         | 239     |         |   |        | 671     |         |   |        | 1,605   |        
|                                            | Minority interest of preferred unitholders                                                                |                                          |         |        |         |   |        | (3,780  | )       |   |        | (5,600  | )      
|                                            | Minority interest of common unitholders                                                                   |                                          |         | 53      |         |   |        | 2,586   |         |   |        | 4,367   |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            |                                                                                                           | Income (loss) from continuing operations |         |         | 6,628   |   |        |         | (26,282 | ) |        |         | (26,885 | )
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|Discontinued operations                     |                                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                            | Income from discontinued operations, net of minority interest                                             |                                          |         | 5,366   |         |   |        | 12,311  |         |   |        | 4,544   |        
|                                            | Gains on sales of real estate assets, net of minority interest
    and provision for income taxes         |                                          |         | 132,997 |         |   |        | 106,039 |         |   |        | 36,497  |        
|                                            | Loss on early extinguishment of indebtedness associated with
    property sales, net of minority interest |                                          |         | (3,043  | )       |   |        | (3,849  | )       |   |        |        |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            |                                                                                                           | Income from discontinued operations      |         |         | 135,320 |   |        |         | 114,501 |   |        |         | 41,041  |  
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|Net income                                  |                                                                                                           |                                          | 141,948 |         |         |   | 88,219 |         |         |   | 14,156 |        
|                                            | Dividends to preferred shareholders                                                                       |                                          |         | (7,637  | )       |   |        | (8,325  | )       |   |        | (11,449 | )      
|                                            | Redemption costs on preferred stock and units                                                             |                                          |         |        |         |   |        | (3,526  | )       |   |        |        |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|Net income available to common shareholders |                                                                                                           | $                                        | 134,311 |         |         | $ | 76,368 |         |         | $ | 2,707  |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|Per common share data  Basic               |                                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                            | Loss from continuing operations (net of preferred dividends and
    redemption costs)                     |                                          | $       | (0.03   | )       |   | $      | (0.96   | )       |   | $      | (1.02   | )      
|                                            | Income from discontinued operations                                                                       |                                          |         | 3.36    |         |   |        | 2.88    |         |   |        | 1.09    |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            | Net income available to common shareholders                                                               |                                          | $       | 3.34    |         |   | $      | 1.92    |         |   | $      | 0.07    |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            | Weighted average common shares outstanding  basic                                                        |                                          |         | 40,217  |         |   |        | 39,777  |         |   |        | 37,688  |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|Per common share data  Diluted             |                                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                            | Loss from continuing operations (net of preferred dividends and
    redemption costs)                     |                                          | $       | (0.03   | )       |   | $      | (0.96   | )       |   | $      | (1.02   | )      
|                                            | Income from discontinued operations                                                                       |                                          |         | 3.36    |         |   |        | 2.88    |         |   |        | 1.09    |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            | Net income available to common shareholders                                                               |                                          | $       | 3.34    |         |   | $      | 1.92    |         |   | $      | 0.07    |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            | Weighted average common shares outstanding  diluted                                                      |                                          |         | 40,217  |         |   |        | 39,777  |         |   |        | 37,688  |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        
|                                            | Common dividends declared                                                                                 |                                          | $       | 1.80    |         |   | $      | 1.80    |         |   | $      | 1.80    |        
|                                            |                                                                                                           |                                          |         |         |         |   |        |         |        

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











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##### Table of Contents





POST PROPERTIES, INC.


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
ACCUMULATED EARNINGS


FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


(In thousands, except per share data)


|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |   |        |        |   |   |         |        |   |   |         |         |        |        | 
|-------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | -------------------------- | ------ | ------ | - | ------ | --------- | - | ---------- | ------ | --- | - | ----------- | ----- | - | ----------- | - | ------- | ------------- | - | - | ------------ | ------- | ------ | -------- | ------- | - | ----- | - | ------ | ------ | - | - | ------- | ------ | - | - | ------- | ------- | ------ | ------ | 
|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   |            |        |     |   | Accumulated |       |   |             |   |         |               |  
|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   | Additional |        |     |   |             | Other |   |             |   |         |               |   |  
|                                                                     |                                                                                                                                                                   | Preferred                                                |                            |        | Common |   |        | Preferred |   |            | Common |     |   | Paid-in     |       |   | Accumulated |   |         | Comprehensive |   |   | Deferred     |         |        | Treasury |         |   |      
|                                                                     |                                                                                                                                                                   | Shares                                                   |                            |        | Shares |   |        | Stock     |   |            | Stock  |     |   | Capital     |       |   | Earnings    |   |         | Income (Loss) |   |   | Compensation |         |        | Stock    |         |   | Total |  
|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |  
|Shareholders Equity and Accumulated Earnings,
    December 31, 2002 |                                                                                                                                                                   |                                                          | 4,900                      |        |        |   | 37,202 |           |   | $          | 49     |     |   | $           | 396   |   |             | $ | 940,122 |               |   | $ |             |         |        | $        | (14,822 | ) |       | $ | (639   | )      |   | $ | (91,407 | )      |   | $ | 833,699 |        
|                                                                     | Comprehensive income                                                                                                                                              |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |   |        |        |   |   |         |        |   |   |         |         |       
|                                                                     |                                                                                                                                                                   | Net income                                               |                            |        |       |   |        |           |  |            |        |     |  |             |       |   |            |   |         |               |  |   |              |         | 14,156 |          |         |   |      |   |        |        |  |   |         |        |  |   |         |         | 14,156 |       
|                                                                     |                                                                                                                                                                   | Net change in derivative value, net of minority interest |                            |        |       |   |        |           |  |            |        |     |  |             |       |   |            |   |         |               |  |   |              |         |       |          |         |   | 2,460 |   |        |        |  |   |         |        |  |   |         |         | 2,460  |       
|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |  
|                                                                     |                                                                                                                                                                   |                                                          | Total comprehensive income |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |   |        |        |   |   |         |        |   |   |         |         |        | 16,616 | 
|                                                                     | Proceeds from employee stock purchase and stock option plans                                                                                                      |                                                          |                            |       |        |   |        | 148       |   |            |        |    |   |             |       |  |             |   |         | (1,341        | ) |   |              |        |        |          |         |  |       |   |        |       |   |   |         | 5,480  |   |   |         | 4,139   |       
|                                                                     | Adjustment for minority interest of unitholders in Operating
    Partnership upon conversion of units into common shares and at
    dates of capital transactions |                                                          |                            |       |        |   |        | 1,162     |   |            |        |    |   |             |       |  |             |   |         | (22,096       | ) |   |              |        |        |          |         |  |       |   |        |       |   |   |         | 42,898 |   |   |         | 20,802  |       
|                                                                     | Stock-based compensation                                                                                                                                          |                                                          |                            |       |        |   |        |          |   |            |        |    |   |             |       |  |             |   |         | 218           |   |   |              |        |        |          |         |  |       |   |        |       |   |   |         |       |   |   |         | 218     |       
|                                                                     | Restricted stock issuances, net of forfeitures                                                                                                                    |                                                          |                            |       |        |   |        | 174       |   |            |        |    |   |             |       |  |             |   |         | (1,737        | ) |   |              |        |        |          |         |  |       |   |        | (4,527 | ) |   |         | 6,264  |   |   |         |        |       
|                                                                     | Amortization of deferred compensation                                                                                                                             |                                                          |                            |       |        |   |        |          |   |            |        |    |   |             |       |  |             |   |         |              |   |   |              |        |        |          |         |  |       |   |        | 742    |   |   |         |       |   |   |         | 742     |       
|                                                                     | Dividends to preferred shareholders                                                                                                                               |                                                          |                            |       |        |   |        |          |   |            |        |    |   |             |       |  |             |   |         |              |   |   |              | (11,449 | )      |          |         |  |       |   |        |       |   |   |         |       |   |   |         | (11,449 | )     
|                                                                     | Dividends to common shareholders ($1.80 per share)                                                                                                                |                                                          |                            |       |        |   |        |          |   |            |        |    |   |             |       |  |             |   |         | (65,534       | ) |   |              | (2,707  | )      |          |         |  |       |   |        |       |   |   |         |       |   |   |         | (68,241 | )     
|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |  
|Shareholders Equity and Accumulated Earnings,
    December 31, 2003 |                                                                                                                                                                   |                                                          | 4,900                      |        |        |   | 38,686 |           |   |            | 49     |     |   |             | 396   |   |             |   | 849,632 |               |   |   |             |         |        |          | (12,362 | ) |       |   | (4,424 | )      |   |   | (36,765 | )      |   |   | 796,526 |        
|                                                                     | Comprehensive income                                                                                                                                              |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |   |        |        |   |   |         |        |   |   |         |         |       
|                                                                     |                                                                                                                                                                   | Net income                                               |                            |        |       |   |        |           |  |            |        |     |  |             |       |   |            |   |         |               |  |   |              |         | 88,219 |          |         |   |      |   |        |        |  |   |         |        |  |   |         |         | 88,219 |       
|                                                                     |                                                                                                                                                                   | Net change in derivative value, net of minority interest |                            |        |       |   |        |           |  |            |        |     |  |             |       |   |            |   |         |               |  |   |              |         |       |          |         |   | 3,694 |   |        |        |  |   |         |        |  |   |         |         | 3,694  |       
|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |  
|                                                                     |                                                                                                                                                                   |                                                          | Total comprehensive income |        |        |  |        |           |   |           |        |     |   |            |       |   |             |  |         |               |   |  |              |         |        |         |         |   |       |  |        |        |   |  |         |        |   |  |         |         |        | 91,913 | 
|                                                                     | Proceeds from employee stock purchase and stock option plans                                                                                                      |                                                          |                            |       |        |   |        | 367       |   |            |        |    |   |             |       | 5 |             |   |         | 6,115         |   |   |              |        |        |          |         |  |       |   |        |       |   |   |         | 4,345  |   |   |         | 10,465  |       
|                                                                     | Adjustment for minority interest of unitholders in Operating
    Partnership upon conversion of units into common shares and at
    dates of capital transactions |                                                          |                            |       |        |   |        | 1,168     |   |            |        |    |   |             |       |  |             |   |         | (14,042       | ) |   |              |        |        |          |         |  |       |   |        |       |   |   |         | 33,890 |   |   |         | 19,848  |       
|                                                                     | Redemption of preferred stock                                                                                                                                     |                                                          |                            | (2,000 | )      |   |        |          |   |            |        | (20 | ) |             |       |  |             |   |         | (49,980       | ) |   |              |        |        |          |         |  |       |   |        |       |   |   |         |       |   |   |         | (50,000 | )     
|                                                                     | Stock-based compensation                                                                                                                                          |                                                          |                            |       |        |   |        |          |   |            |        |    |   |             |       |  |             |   |         | 633           |   |   |              |        |        |          |         |  |       |   |        |       |   |   |         |       |   |   |         | 633     |       
|                                                                     | Restricted stock issuances, net of forfeitures                                                                                                                    |                                                          |                            |       |        |   |        | 25        |   |            |        |    |   |             |       |  |             |   |         | (125          | ) |   |              |        |        |          |         |  |       |   |        | (673   | ) |   |         | 798    |   |   |         |        |       
|                                                                     | Amortization of deferred compensation                                                                                                                             |                                                          |                            |       |        |   |        |          |   |            |        |    |   |             |       |  |             |   |         |              |   |   |              |        |        |          |         |  |       |   |        | 1,109  |   |   |         |       |   |   |         | 1,109   |       
|                                                                     | Treasury stock acquisitions                                                                                                                                       |                                                          |                            |       |        |   |        | (82       | ) |            |        |    |   |             |       |  |             |   |         |              |   |   |              |        |        |          |         |  |       |   |        |       |   |   |         | (2,268 | ) |   |         | (2,268  | )     
|                                                                     | Dividends to preferred shareholders                                                                                                                               |                                                          |                            |       |        |   |        |          |   |            |        |    |   |             |       |  |             |   |         |              |   |   |              | (8,325  | )      |          |         |  |       |   |        |       |   |   |         |       |   |   |         | (8,325  | )     
|                                                                     | Dividends to common shareholders ($1.80 per share)                                                                                                                |                                                          |                            |       |        |   |        |          |   |            |        |    |   |             |       |  |             |   |         | (17,012       | ) |   |              | (54,819 | )      |          |         |  |       |   |        |       |   |   |         |       |   |   |         | (71,831 | )     
|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |  
|Shareholders Equity and Accumulated Earnings,
    December 31, 2004 |                                                                                                                                                                   |                                                          | 2,900                      |        |        |   | 40,164 |           |   | $          | 29     |     |   | $           | 401   |   |             | $ | 775,221 |               |   | $ | 25,075       |         |        | $        | (8,668  | ) |       | $ | (3,988 | )      |   | $ |        |        |   | $ | 788,070 |        
|                                                                     |                                                                                                                                                                   |                                                          |                            |        |        |   |        |           |   |            |        |     |   |             |       |   |             |   |         |               |   |   |              |         |        |          |         |   |       |  










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##### Table of Contents





POST PROPERTIES, INC.


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND


ACCUMULATED EARNINGS (contd)


FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


(In thousands, except per share data)


|                                                                     |                                                                                                                                                                   |                                                          |       |   |        |  |        |           |   |            |        |   |   |             |       |   |             |   |         |               |   |   |              |         |         |          |        |        |       |   |        |        |   |   |        |         |   |   |         |         |         | 
|-------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ----- | - | ------ |  | ------ | --------- | - | ---------- | ------ | - | - | ----------- | ----- | - | ----------- | - | ------- | ------------- | - | - | ------------ | ------- | ------- | -------- | ------ | ------ | ----- | - | ------ | ------ | - | - | ------ | ------- | - | - | ------- | ------- | ------- | 
|                                                                     |                                                                                                                                                                   |                                                          |       |   |        |  |        |           |   |            |        |   |   | Accumulated |       |   |             |   |         |               |  
|                                                                     |                                                                                                                                                                   |                                                          |       |   |        |  |        |           |   | Additional |        |   |   |             | Other |   |             |   |         |               |   |  
|                                                                     |                                                                                                                                                                   | Preferred                                                |       |   | Common |  |        | Preferred |   |            | Common |   |   | Paid-in     |       |   | Accumulated |   |         | Comprehensive |   |   | Deferred     |         |         | Treasury |        |        |      
|                                                                     |                                                                                                                                                                   | Shares                                                   |       |   | Shares |  |        | Stock     |   |            | Stock  |   |   | Capital     |       |   | Earnings    |   |         | Income (Loss) |   |   | Compensation |         |         | Stock    |        |        | Total |  
|                                                                     |                                                                                                                                                                   |                                                          |       |   |        |  |        |           |   |            |        |   |   |             |       |   |             |   |         |               |   |   |              |         |         |          |        |        |       |  
|Shareholders Equity and Accumulated Earnings,
    December 31, 2004 |                                                                                                                                                                   |                                                          | 2,900 |   |        |  | 40,164 |           |   | $          | 29     |   |   | $           | 401   |   |             | $ | 775,221 |               |   | $ | 25,075       |         |         | $        | (8,668 | )      |       | $ | (3,988 | )      |   | $ |       |         |   | $ | 788,070 |        
|                                                                     | Comprehensive income                                                                                                                                              |                                                          |       |   |        |  |        |           |   |            |        |   |   |             |       |   |             |   |         |               |   |   |              |         |         |          |        |        |       |   |        |        |   |   |        |         |   |   |         |         |        
|                                                                     |                                                                                                                                                                   | Net income                                               |       |   |       |  |        |           |  |            |        |   |  |             |       |   |            |   |         |               |  |   |              |         | 141,948 |          |        |        |      |   |        |        |  |   |        |         |  |   |         |         | 141,948 | 
|                                                                     |                                                                                                                                                                   | Net change in derivative value, net of minority interest |       |   |       |  |        |           |  |            |        |   |  |             |       |   |            |   |         |               |  |   |              |         |        |          |        |        | 5,559 |   |        |        |  |   |        |         |  |   |         |         | 5,559   | 
|                                                                     |                                                                                                                                                                   |                                                          |       |   |        |  |        |           |   |            |        |   |   |             |       |   |             |   |         |               |   |   |              |         |         |          |        |        |       |  
|                                                                     |                                                                                                                                                                   | Total comprehensive income                               |       |   |        |  |        |           |   |            |        |   |   |             |       |   |             |   |         |               |   |   |              |         |         |          |        |        |       |   |        |        |   |   |        |         |   |   |         |         | 147,507 | 
|                                                                     | Proceeds from employee stock purchase and stock option plans                                                                                                      |                                                          |       |  |        |  |        | 1,138     |   |            |        |  |   |             |       | 8 |             |   |         | 16,181        |   |   |              |        |         |          |        |       |       |   |        |       |   |   |        | 21,652  |   |   |         | 37,841  |        
|                                                                     | Adjustment for minority interest of unitholders in Operating
    Partnership upon conversion of units into common shares and at
    dates of capital transactions |                                                          |       |  |        |  |        | 1,097     |   |            |        |  |   |             |       | 5 |             |   |         | 10,065        |   |   |              |        |         |          |        | (1,099 | )     |   |        |       |   |   |        | 11,473  |   |   |         | 20,444  |        
|                                                                     | Stock-based compensation                                                                                                                                          |                                                          |       |  |        |  |        |          |   |            |        |  |   |             |       |  |             |   |         | 888           |   |   |              |        |         |          |        |       |       |   |        |       |   |   |        |        |   |   |         | 888     |        
|                                                                     | Restricted stock issuances, net of forfeitures                                                                                                                    |                                                          |       |  |        |  |        | 26        |   |            |        |  |   |             |       |  |             |   |         | 1,410         |   |   |              |        |         |          |        |       |       |   |        | (1,004 | ) |   |        | (406    | ) |   |         |        |        
|                                                                     | Amortization of deferred compensation                                                                                                                             |                                                          |       |  |        |  |        |          |   |            |        |  |   |             |       |  |             |   |         |              |   |   |              |        |         |          |        |       |       |   |        | 1,367  |   |   |        |        |   |   |         | 1,367   |        
|                                                                     | Treasury stock acquisitions                                                                                                                                       |                                                          |       |  |        |  |        | (1,031    | ) |            |        |  |   |             |       |  |             |   |         |              |   |   |              |        |         |          |        |       |       |   |        |       |   |   |        | (34,400 | ) |   |         | (34,400 | )      
|                                                                     | Dividends to preferred shareholders                                                                                                                               |                                                          |       |  |        |  |        |          |   |            |        |  |   |             |       |  |             |   |         |              |   |   |              | (7,637  | )       |          |        |       |       |   |        |       |   |   |        |        |   |   |         | (7,637  | )      
|                                                                     | Dividends to common shareholders ($1.80 per share)                                                                                                                |                                                          |       |  |        |  |        |          |   |            |        |  |   |             |       |  |             |   |         |              |   |   |              | (73,071 | )       |          |        |       |       |   |        |       |   |   |        |        |   |   |         | (73,071 | )      
|                                                                     |                                                                                                                                                                   |                                                          |       |   |        |  |        |           |   |            |        |   |   |             |       |   |             |   |         |               |   |   |              |         |         |          |        |        |       |  
|Shareholders Equity and Accumulated Earnings,
    December 31, 2005 |                                                                                                                                                                   |                                                          | 2,900 |   |        |  | 41,394 |           |   | $          | 29     |   |   | $           | 414   |   |             | $ | 803,765 |               |   | $ | 86,315       |         |         | $        | (4,208 | )      |       | $ | (3,625 | )      |   | $ | (1,681 | )       |   | $ | 881,009 |        
|                                                                     |                                                                                                                                                                   |                                                          |       |   |        |  |        |           |   |            |        |   |   |             |       |   |             |   |         |               |   |   |              |         |         |          |        |        |       |  

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











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##### Table of Contents



POST PROPERTIES, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands, except per share data)


|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |          |   |        |          |         |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ----- | -------- | -------- | - | ------ | -------- | -------- | - | ------ | -------- | ------- | -
|                                                     |                                                                                       | Year Ended December 31,                                                 |      
|                                                     |                                                                                       |                                                                         |      
|                                                     |                                                                                       | 2005                                                                    |       |          | 2004     |   |        | 2003     |         
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         
|Cash Flows From Operating Activities                 |                                                                                       |                                                                         |       |          |          |   |        |          |          |   |        |         
|                                                     | Net income                                                                            |                                                                         | $     | 141,948  |          |   | $      | 88,219   |          |   | $      | 14,156   |        
|                                                     | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                         |       |          |          |   |        |          |          |   |        |          |        
|                                                     |                                                                                       | Depreciation                                                            |       |          | 76,248   |   |        |          | 85,310   |   |        |          | 89,975  |  
|                                                     |                                                                                       | Amortization of deferred financing costs                                |       |          | 4,661    |   |        |          | 4,304    |   |        |          | 3,801   |  
|                                                     |                                                                                       | Minority interest of preferred unitholders in Operating
    Partnership |       |          |         |   |        |          | 3,780    |   |        |          | 5,600   |  
|                                                     |                                                                                       | Minority interest of common unitholders in Operating Partnership        |       |          | (53      | ) |        |          | (2,586   | ) |        |          | (4,367  | )
|                                                     |                                                                                       | Minority interest in discontinued operations                            |       |          | 7,152    |   |        |          | 7,764    |   |        |          | 4,708   |  
|                                                     |                                                                                       | Gains on sales of real estate assets  discontinued
    operations      |       |          | (140,643 | ) |        |          | (113,739 | ) |        |          | (40,792 | )
|                                                     |                                                                                       | Gain on sale of technology investment                                   |       |          | (5,267   | ) |        |          |         |   |        |          |        |  
|                                                     |                                                                                       | Asset impairment charges                                                |       |          |         |   |        |          | 2,233    |   |        |          | 17,462  |  
|                                                     |                                                                                       | Equity in income of unconsolidated real estate entities                 |       |          | (1,634   | ) |        |          | (941     | ) |        |          | (7,790  | )
|                                                     |                                                                                       | Distributions of earnings of unconsolidated entities                    |       |          | 2,033    |   |        |          | 1,928    |   |        |          |        |  
|                                                     |                                                                                       | Stock-based compensation                                                |       |          | 2,293    |   |        |          | 1,785    |   |        |          | 1,071   |  
|                                                     |                                                                                       | Deferred compensation                                                   |       |          | 194      |   |        |          |         |   |        |          |        |  
|                                                     |                                                                                       | Loss on early extinguishment of indebtedness                            |       |          | 2,264    |   |        |          | 4,302    |   |        |          |        |  
|                                                     | Changes in assets, (increase) decrease in:                                            |                                                                         |       |          |          |   |        |          |          |   |        |          |        
|                                                     |                                                                                       | Restricted cash                                                         |       |          | (2,755   | ) |        |          | 221      |   |        |          | (696    | )
|                                                     |                                                                                       | Other assets                                                            |       |          | (1,257   | ) |        |          | (2,858   | ) |        |          | 4,676   |  
|                                                     |                                                                                       | Deferred charges                                                        |       |          | (1,082   | ) |        |          | (361     | ) |        |          | (2,210  | )
|                                                     | Changes in liabilities, increase (decrease) in:                                       |                                                                         |       |          |          |   |        |          |          |   |        |          |        
|                                                     |                                                                                       | Accrued interest payable                                                |       |          | (2,199   | ) |        |          | 754      |   |        |          | (2,071  | )
|                                                     |                                                                                       | Accounts payable and accrued expenses                                   |       |          | 2,237    |   |        |          | (356     | ) |        |          | 8,386   |  
|                                                     |                                                                                       | Deposits and prepaid rents                                              |       |          | 2,621    |   |        |          | (654     | ) |        |          | (360    | )
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         
|                                                     | Net cash provided by operating activities                                             |                                                                         |       | 86,761   |          |   |        | 79,105   |          |   |        | 91,549   |        
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         
|Cash Flows From Investing Activities                 |                                                                                       |                                                                         |       |          |          |   |        |          |          |   |        |         
|                                                     | Construction and acquisition of real estate assets, net of
    payables               |                                                                         |       | (112,527 | )        |   |        | (42,777  | )        |   |        | (24,179  | )      
|                                                     | Net proceeds from sales of real estate assets                                         |                                                                         |       | 199,546  |          |   |        | 138,637  |          |   |        | 163,560  |        
|                                                     | Proceeds from sale of technology investment                                           |                                                                         |       | 5,267    |          |   |        |         |          |   |        |         |        
|                                                     | Capitalized interest                                                                  |                                                                         |       | (2,907   | )        |   |        | (1,078   | )        |   |        | (3,555   | )      
|                                                     | Recurring capital expenditures                                                        |                                                                         |       | (9,921   | )        |   |        | (9,884   | )        |   |        | (9,473   | )      
|                                                     | Non-recurring capital expenditures                                                    |                                                                         |       | (4,508   | )        |   |        | (4,605   | )        |   |        | (5,152   | )      
|                                                     | Revenue generating capital expenditures                                               |                                                                         |       |         |          |   |        | (26      | )        |   |        | (1,240   | )      
|                                                     | Corporate additions and improvements                                                  |                                                                         |       | (1,771   | )        |   |        | (681     | )        |   |        | (799     | )      
|                                                     | Distributions from (investments in and advances to)
    unconsolidated entities       |                                                                         |       | (5,846   | )        |   |        | 52,287   |          |   |        | 115,033  |        
|                                                     | Notes receivable collections                                                          |                                                                         |       | 2,960    |          |   |        |         |          |   |        |         |        
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         
|                                                     | Net cash provided by investing activities                                             |                                                                         |       | 70,293   |          |   |        | 131,873  |          |   |        | 234,195  |        
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         
|Cash Flows From Financing Activities                 |                                                                                       |                                                                         |       |          |          |   |        |          |          |   |        |         
|                                                     | Proceeds from indebtedness                                                            |                                                                         |       | 100,000  |          |   |        | 135,000  |          |   |        |         |        
|                                                     | Payments on indebtedness                                                              |                                                                         |       | (217,934 | )        |   |        | (115,753 | )        |   |        | (103,875 | )      
|                                                     | Payments of financing costs                                                           |                                                                         |       | (1,211   | )        |   |        | (5,631   | )        |   |        |         |        
|                                                     | Lines of credit proceeds (repayments), net                                            |                                                                         |       | 50,631   |          |   |        | (21,262  | )        |   |        | (124,358 | )      
|                                                     | Redemption of preferred stock                                                         |                                                                         |       |         |          |   |        | (50,000  | )        |   |        |         |        
|                                                     | Redemption of preferred units                                                         |                                                                         |       |         |          |   |        | (70,000  | )        |   |        |         |        
|                                                     | Treasury stock acquisitions                                                           |                                                                         |       | (34,400  | )        |   |        | (2,268   | )        |   |        |         |        
|                                                     | Proceeds from employee stock purchase and stock option plans                          |                                                                         |       | 36,084   |          |   |        | 10,465   |          |   |        | 4,139    |        
|                                                     | Capital contributions (distributions) of minority interest                            |                                                                         |       | 283      |          |   |        | (3,806   | )        |   |        |         |        
|                                                     | Distributions to preferred unitholders                                                |                                                                         |       |         |          |   |        | (4,246   | )        |   |        | (5,600   | )      
|                                                     | Distributions to common unitholders                                                   |                                                                         |       | (4,060   | )        |   |        | (5,219   | )        |   |        | (9,789   | )      
|                                                     | Dividends paid to preferred shareholders                                              |                                                                         |       | (7,637   | )        |   |        | (8,325   | )        |   |        | (11,449  | )      
|                                                     | Dividends paid to common shareholders                                                 |                                                                         |       | (72,523  | )        |   |        | (71,144  | )        |   |        | (79,868  | )      
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         
|                                                     | Net cash used in financing activities                                                 |                                                                         |       | (150,767 | )        |   |        | (212,189 | )        |   |        | (330,800 | )      
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         
|Net increase (decrease) in cash and cash equivalents |                                                                                       |                                                                         | 6,287 |          |          |   | (1,211 | )        |          |   | (5,056 | )       
|Cash and cash equivalents, beginning of period       |                                                                                       |                                                                         | 123   |          |          |   | 1,334  |          |          |   | 6,390  |         
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         
|Cash and cash equivalents, end of period             |                                                                                       | $                                                                       | 6,410 |          |          | $ | 123    |          |          | $ | 1,334  |         
|                                                     |                                                                                       |                                                                         |       |          |          |   |        |          |         

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











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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(In thousands, except per share data)







|   |                                                           
|-- | ----------------------------------------------------------
|1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

Organization








Basis of presentation

















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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)





Cost capitalization








Real estate assets, depreciation and impairment















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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)











Revenue recognition



















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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







Long-term ground leases




Apartment community acquisitions




Stock-based compensation















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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







|                                            |                                                                                               |      |   |         |      |  |   |        |   |  |   |        |  
|------------------------------------------- | --------------------------------------------------------------------------------------------- | ---- | - | ------- | ---- |  | - | ------ | - |  | - | ------ | -
|                                            |                                                                                               | 2005 |   |         | 2004 |  |   | 2003   |  
|                                            |                                                                                               |      |   |         |      |  |   |        |  
|Net income available to common shareholders |                                                                                               |      |   |         |      |  |   |        |   |  |   |       
|                                            | As reported                                                                                   |      | $ | 134,311 |      |  | $ | 76,368 |   |  | $ | 2,707  |  
|                                            | Stock-based compensation included in net income as reported, net
    of minority interest     |      |   | 2,184   |      |  |   | 1,672  |   |  |   | 958    |  
|                                            | Stock-based compensation determined under the fair value method,
    net of minority interest |      |   | (2,210  | )    |  |   | (1,735 | ) |  |   | (1,088 | )
|                                            |                                                                                               |      |   |         |      |  |   |        |  
|                                            | Pro forma                                                                                     |      | $ | 134,285 |      |  | $ | 76,305 |   |  | $ | 2,577  |  
|                                            |                                                                                               |      |   |         |      |  |   |        |  
|Net income per common share  basic         |                                                                                               |      |   |         |      |  |   |        |   |  |   |       
|                                            | As reported                                                                                   |      | $ | 3.34    |      |  | $ | 1.92   |   |  | $ | 0.07   |  
|                                            | Pro forma                                                                                     |      | $ | 3.34    |      |  | $ | 1.92   |   |  | $ | 0.07   |  
|Net income per common share  diluted       |                                                                                               |      |   |         |      |  |   |        |   |  |   |       
|                                            | As reported                                                                                   |      | $ | 3.34    |      |  | $ | 1.92   |   |  | $ | 0.07   |  
|                                            | Pro forma                                                                                     |      | $ | 3.34    |      |  | $ | 1.92   |   |  | $ | 0.07   |  

Derivative financial instruments




Cash and cash equivalents




Restricted cash




Deferred financing costs




Per share data













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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)





Conversion of common units in the Operating Partnership




Use of estimates




New accounting pronouncements



















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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







|   |                 
|-- | ----------------
|2. | DEFERRED CHARGES



|                               |  |              |         |   |      |   |         |  
|------------------------------ |  | ------------ | ------- | - | ---- | - | ------- | -
|                               |  | December 31, |        
|                               |  |              |        
|                               |  | 2005         |         |   | 2004 |  
|                               |  |              |         |   |      |  
|Deferred financing costs       |  | $            | 26,050  |   |      | $ | 33,542  |  
|Other                          |  |              | 5,399   |   |      |   | 4,350   |  
|                               |  |              |         |   |      |  
|                               |  |              | 31,449  |   |      |   | 37,892  |  
|Less: accumulated amortization |  |              | (19,825 | ) |      |   | (22,318 | )
|                               |  |              |         |   |      |  
|                               |  | $            | 11,624  |   |      | $ | 15,574  |  
|                               |  |              |         |   |      |  



|   |             
|-- | ------------
|3. | INDEBTEDNESS



|                                         |  |                |  |               |                |          |      |              |           |      |  |          |  |           
|---------------------------------------- |  | -------------- |  | ------------- | -------------- | -------- | ---- | ------------ | --------- | ---- |  | -------- |  | ----------
|                                         |  |                |  |               |                |          |      | December 31,
|                                         |  |                |  |               |                | Maturity |      |              |          
|Description                              |  | Payment Terms  |  | Interest Rate |                |          | Date |              |           | 2005 |  | 2004    
|                                         |  |                |  |               |                |          |      |              |           |      |  |         
|Unsecured Notes                          |  |                |  |               |                |          |      |              |           |      |  |          |  |           
|Senior Notes                             |  | Int.           |  |               | 5.125% - 7.70% |          |      |              | 2006-2012 |      |  | $485,000 |  | $385,000  
|Medium Term Notes                        |  | Int.           |  |               |               |          |      |              |          |      |  |         |  | 212,043   
|                                         |  |                |  |               |                |          |      |              |           |      |  |         
|                                         |  |                |  |               |                |          |      |              |           |      |  | 485,000  |  | 597,043   
|                                         |  |                |  |               |                |          |      |              |           |      |  |         
|Unsecured Lines of Credit                |  |                |  |               |                |          |      |              |           |      |  |          |  |           
|Syndicated Line of Credit                |  | N/A            |  |               | LIBOR + 0.75%  | (1)      |      |              | 2007      |      |  | 90,000   |  | 40,000    
|Cash Management Line                     |  | N/A            |  |               | LIBOR + 0.75%  |          |      |              | 2007      |      |  | 11,379   |  | 10,748    
|                                         |  |                |  |               |                |          |      |              |           |      |  |         
|                                         |  |                |  |               |                |          |      |              |           |      |  | 101,379  |  | 50,748    
|                                         |  |                |  |               |                |          |      |              |           |      |  |         
|Conventional Fixed Rate (Secured)        |  |                |  |               |                |          |      |              |           |      |  |          |  |           
|FNMA                                     |  | Prin. and Int. |  |               | 6.975%         | (2)      |      |              | 2029      |      |  | 97,100   |  | 98,500    
|Other                                    |  | Prin. and Int. |  |               | 4.27% - 7.69%  |          |      |              | 2007-2013 |      |  | 268,641  |  | 273,132   
|                                         |  |                |  |               |                |          |      |              |           |      |  |         
|                                         |  |                |  |               |                |          |      |              |           |      |  | 365,741  |  | 371,632   
|                                         |  |                |  |               |                |          |      |              |           |      |  |         
|Tax Exempt Floating Rate Bonds (Secured) |  | Int.           |  |               | 3.54%          | (3)      |      |              | 2025      |      |  | 28,495   |  | 110,055   
|                                         |  |                |  |               |                |          |      |              |           |      |  |         
|Total                                    |  |                |  |               |                |          |      |              |           |      |  | $980,615 |  | $1,129,478
|                                         |  |                |  |               |                |          |      |              |           |      |  |         



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents stated rate. At December 31, 2005, the weighted
    average interest rate was 4.75%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(2) | Interest rate is fixed at 6.975%, inclusive of credit
    enhancement and other fees, to 2009 through an interest rate
    swap arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(3) | FNMA credit enhanced bond indebtedness. Interest based on FNMA
    AAA tax-exempt rate plus credit enhancement and
    other fees of 0.639%. Interest rate represents the rate at
    December 31, 2005 before credit enhancements. The Company
    has outstanding interest rate cap arrangements that limit the
    Companys exposure to increases in the base interest rate
    to 5%. At December 31, 2005 and 2004, approximately $0 and
    $34,060, respectively, of this debt was secured by assets held
    for sale. In June 2005, the Company executed an amendment to its
    master reimbursement agreement with FNMA, which agreement, among
    other things, sets forth the Companys payment obligations
    under its variable-rate, tax-exempt bond indebtedness. The
    amendment deferred the commencement of principal repayments
    under the bonds by five years from the originally scheduled
    commencement date. The original maturity date for the bonds
    remains unchanged and the amortization schedule of the bonds was
    changed commensurate with the five-year deferral of the start of
    principal amortization.










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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)





Debt maturities




|           |  |   |         |    
|---------- |  | - | ------- | ---
|2006       |  | $ | 81,269  |    
|2007       |  |   | 259,572 | (1)
|2008       |  |   | 4,557   |    
|2009       |  |   | 75,901  |    
|2010       |  |   | 188,267 |    
|Thereafter |  |   | 371,049 |    
|           |  |   |        
|           |  | $ | 980,615 |    
|           |  |   |        



|    |                                                                       
|--- | ----------------------------------------------------------------------
|(1) | Includes outstanding balance on lines of credit totaling
    $101,379.

Debt issuances, retirements and modifications


2005








2004


30-year















---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)











Unsecured lines of credit






Interest paid




Pledged assets






|   |                                                   
|-- | --------------------------------------------------
|4. | INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES












---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)













|                                                                                           |                                       |              |        |         |      |   |         |         | 
|------------------------------------------------------------------------------------------ | ------------------------------------- | ------------ | ------ | ------- | ---- | - | ------- | ------- | 
|                                                                                           |                                       | December 31, |       
|                                                                                           |                                       |              |       
|Balance Sheet Data                                                                         |                                       | 2005         |        |         | 2004 |  
|                                                                                           |                                       |              |        |         |      |  
|Real estate assets, net of accumulated depreciation of $8,349
    and $9,712, respectively |                                       | $            | 96,000 |         |      | $ | 124,072 |        
|Assets held for sale, net                                                                  |                                       |              | 17,715 |         |      |   |        |        
|Cash and other                                                                             |                                       |              | 1,770  |         |      |   | 2,797   |        
|                                                                                           |                                       |              |        |         |      |  
|                                                                                           | Total assets                          |              | $      | 115,485 |      |   | $       | 126,869 | 
|                                                                                           |                                       |              |        |         |      |  
|Mortgage notes payable                                                                     |                                       | $            | 66,999 |         |      | $ | 83,468  |        
|Mortgage notes payable to Company                                                          |                                       |              | 5,967  |         |      |   |        |        
|Other liabilities                                                                          |                                       |              | 996    |         |      |   | 1,296   |        
|                                                                                           |                                       |              |        |         |      |  
|                                                                                           | Total liabilities                     |              |        | 73,962  |      |   |         | 84,764  | 
|Members equity                                                                            |                                       |              | 41,523 |         |      |   | 42,105  |        
|                                                                                           |                                       |              |        |         |      |  
|                                                                                           | Total liabilities and members equity |              | $      | 115,485 |      |   | $       | 126,869 | 
|                                                                                           |                                       |              |        |         |      |  
|Companys equity investment                                                                |                                       | $            | 20,647 |         |      | $ | 21,320  |        
|                                                                                           |                                       |              |        |         |      |  










---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)





|                                           |                                      |                         |       |        |      |   |       |        |   |   |        |        |  
|------------------------------------------ | ------------------------------------ | ----------------------- | ----- | ------ | ---- | - | ----- | ------ | - | - | ------ | ------ | -
|                                           |                                      | Year Ended December 31, |      
|                                           |                                      |                         |      
|Income Statement Data                      |                                      | 2005                    |       |        | 2004 |   |       | 2003   |  
|                                           |                                      |                         |       |        |      |   |       |        |  
|Revenues                                   |                                      |                         |       |        |      |   |       |        |   |   |        |       
|                                           | Rental                               |                         | $     | 10,789 |      |   | $     | 10,451 |   |   | $      | 6,757  |  
|                                           | Other                                |                         |       | 840    |      |   |       | 776    |   |   |        | 392    |  
|                                           |                                      |                         |       |        |      |   |       |        |  
|                                           | Total revenues                       |                         |       | 11,629 |      |   |       | 11,227 |   |   |        | 7,149  |  
|                                           |                                      |                         |       |        |      |   |       |        |  
|Expenses                                   |                                      |                         |       |        |      |   |       |        |   |   |        |       
|                                           | Property operating and maintenance   |                         |       | 3,689  |      |   |       | 3,555  |   |   |        | 3,416  |  
|                                           | Depreciation and amortization        |                         |       | 2,621  |      |   |       | 2,579  |   |   |        | 2,481  |  
|                                           | Interest                             |                         |       | 2,752  |      |   |       | 2,658  |   |   |        | 2,338  |  
|                                           |                                      |                         |       |        |      |   |       |        |  
|                                           | Total expenses                       |                         |       | 9,062  |      |   |       | 8,792  |   |   |        | 8,235  |  
|                                           |                                      |                         |       |        |      |   |       |        |  
|Income (loss) from continuing operations   |                                      |                         | 2,567 |        |      |   | 2,435 |        |   |   | (1,086 | )     
|                                           |                                      |                         |       |        |      |   |       |        |  
|Discontinued Operations                    |                                      |                         |       |        |      |   |       |        |   |   |        |       
|                                           | Loss from discontinued operations    |                         |       | (176   | )    |   |       | (355   | ) |   |        | (683   | )
|                                           | Gain on sales of real estate assets  |                         |       | 2,834  |      |   |       |       |   |   |        | 26,179 |  
|                                           | Loss on early extinguishment of debt |                         |       | (273   | )    |   |       |       |   |   |        |       |  
|                                           |                                      |                         |       |        |      |   |       |        |  
|Income (loss) from discontinued operations |                                      |                         | 2,385 |        |      |   | (355  | )      |   |   | 25,496 |       
|                                           |                                      |                         |       |        |      |   |       |        |  
|Net income                                 |                                      | $                       | 4,952 |        |      | $ | 2,080 |        |   | $ | 24,410 |       
|                                           |                                      |                         |       |        |      |   |       |        |  
|Companys share of net income              |                                      | $                       | 1,767 |        |      | $ | 1,083 |        |   | $ | 7,790  |       
|                                           |                                      |                         |       |        |      |   |       |        |  

25-year






|   |                                          
|-- | -----------------------------------------
|5. | REAL ESTATE ACQUISITIONS AND DISPOSITIONS

Acquisitions


319-unit


499-unit













---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)





Dispositions










|                                                                 |                                                                                    |                |       |        |        |   |        |        |        |   |       |        |        | 
|---------------------------------------------------------------- | ---------------------------------------------------------------------------------- | -------------- | ----- | ------ | ------ | - | ------ | ------ | ------ | - | ----- | ------ | ------ | 
|                                                                 |                                                                                    | 2005           |       |        | 2004   |   |        | 2003   |       
|                                                                 |                                                                                    |                |       |        |        |   |        |        |       
|Revenues                                                         |                                                                                    |                |       |        |        |   |        |        |        |   |       |       
|                                                                 | Rental                                                                             |                | $     | 13,222 |        |   | $      | 41,881 |        |   | $     | 68,330 |       
|                                                                 | Other                                                                              |                |       | 1,243  |        |   |        | 3,615  |        |   |       | 5,310  |       
|                                                                 |                                                                                    |                |       |        |        |   |        |        |       
|                                                                 |                                                                                    | Total revenues |       |        | 14,465 |   |        |        | 45,496 |   |       |        | 73,640 | 
|                                                                 |                                                                                    |                |       |        |        |   |        |        |       
|Expenses                                                         |                                                                                    |                |       |        |        |   |        |        |        |   |       |       
|                                                                 | Property operating and maintenance (exclusive of items shown
    separately below) |                |       | 7,241  |        |   |        | 19,478 |        |   |       | 30,039 |       
|                                                                 | Depreciation                                                                       |                |       |       |        |   |        | 5,837  |        |   |       | 12,381 |       
|                                                                 | Interest                                                                           |                |       | 2,161  |        |   |        | 5,532  |        |   |       | 9,220  |       
|                                                                 | Asset impairment charges                                                           |                |       |       |        |   |        | 2,233  |        |   |       | 17,462 |       
|                                                                 | Minority interest in consolidated property partnerships                            |                |       | 14     |        |   |        | (238   | )      |   |       | (419   | )     
|                                                                 |                                                                                    |                |       |        |        |   |        |        |       
|                                                                 |                                                                                    | Total expenses |       |        | 9,416  |   |        |        | 32,842 |   |       |        | 68,683 | 
|                                                                 |                                                                                    |                |       |        |        |   |        |        |       
|Income from discontinued operations before minority
    interest |                                                                                    |                | 5,049 |        |        |   | 12,654 |        |        |   | 4,957 |       
|                                                                 | Minority interest                                                                  |                |       | 317    |        |   |        | (343   | )      |   |       | (413   | )     
|                                                                 |                                                                                    |                |       |        |        |   |        |        |       
|Income from discontinued operations                              |                                                                                    | $              | 5,366 |        |        | $ | 12,311 |        |        | $ | 4,544 |       
|                                                                 |                                                                                    |                |       |        |        |   |        |        |       














---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







|                                                                                        |  |      |         |  
|--------------------------------------------------------------------------------------- |  | ---- | ------- | -
|                                                                                        |  | 2005 |        
|                                                                                        |  |      |        
|Condominium revenues, net                                                               |  | $    | 51,857  |  
|Condominium costs and expenses                                                          |  |      | (35,045 | )
|                                                                                        |  |      |        
|Gains on condominium sales, before minority interest and income
    taxes               |  |      | 16,812  |  
|Minority interest                                                                       |  |      | (814    | )
|Provision for income taxes                                                              |  |      | (594    | )
|                                                                                        |  |      |        
|Gains on condominium sales, net of minority interest and
    provision for income taxes |  | $    | 15,404  |  
|                                                                                        |  |      |        







|   |                                        
|-- | ---------------------------------------
|6. | SHAREHOLDERS EQUITY/ MINORITY INTEREST

Preferred Stock




|            |  |             |       |             |             |   |          |            |  |            |             |  |        |          |       |          |             |  |        |  |  |   |      | 
|----------- |  | ----------- | ----- | ----------- | ----------- | - | -------- | ---------- |  | ---------- | ----------- |  | ------ | -------- | ----- | -------- | ----------- |  | ------ |  |  | - | ---- | 
|            |  |             |       | Liquidation |             |   | Optional |            |  | Redemption |             |  | Stated |          |       | Dividend |            
|            |  | Outstanding |       |             | Preference  |   |          | Redemption |  |            | Price (1)   |  |        | Dividend |       |          | Rate        | 
|Description |  | Shares      |       |             | (per share) |   |          | Date (1)   |  |            | (per share) |  |        | Yield    |       |          | (per share) | 
|            |  |             |       |             |             |   |          |            |  |            |             |  |        |          |       |          |             | 
|Series A    |  |             | 900   |             |             | $ | 50.00    |            |  |            | 10/01/26    |  |        | $        | 50.00 |          |             |  | 8.5%   |  |  | $ | 4.25 | 
|Series B    |  |             | 2,000 |             |             | $ | 25.00    |            |  |            | 10/28/07    |  |        | $        | 25.00 |          |             |  | 7.625% |  |  | $ | 1.91 | 



|    |                                                                          
|--- | -------------------------------------------------------------------------
|(1) | The preferred stock is redeemable, at the Companys option,
    for cash.



Preferred Units













---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)





Common Stock Purchases




Computation of Earnings Per Common Share




|                                                                 |  |                              |        |   |               |  |        |           |  |   |       |  
|---------------------------------------------------------------- |  | ---------------------------- | ------ | - | ------------- |  | ------ | --------- |  | - | ----- | -
|                                                                 |  | Year Ended December 31, 2005 |       
|                                                                 |  |                              |       
|                                                                 |  | Income                       |        |   | Shares        |  |        | Per-Share | 
|                                                                 |  | (Numerator)                  |        |   | (Denominator) |  |        | Amount    | 
|                                                                 |  |                              |        |   |               |  |        |           | 
|Income from continuing operations                                |  | $                            | 6,628  |   |               |  |        |           |  |   |       |  
|Less: Preferred stock dividends                                  |  |                              | (7,637 | ) |               |  |        |           |  |   |       |  
|                                                                 |  |                              |        |   |               |  |        |           | 
|Basic EPS                                                        |  |                              |        |   |               |  |        |           |  |   |       |  
|Loss from continuing operations available to common shareholders |  |                              | (1,009 | ) |               |  | 40,217 |           |  | $ | (0.03 | )
|                                                                 |  |                              |        |   |               |  |        |           | 
|Effect of dilutive securities                                    |  |                              |        |   |               |  |        |           |  |   |       |  
|Stock options and awards                                         |  |                              |       |   |               |  |       | (1)       |  |   |       |  
|                                                                 |  |                              |        |   |               |  |        |           | 
|Diluted EPS                                                      |  |                              |        |   |               |  |        |           |  |   |       |  
|Loss from continuing operations available to common shareholders |  | $                            | (1,009 | ) |               |  | 40,217 |           |  | $ | (0.03 | )
|                                                                 |  |                              |        |   |               |  |        |           | 

|                                                                 |  |                              |         |   |               |  |        |           |  |   |       |  
|---------------------------------------------------------------- |  | ---------------------------- | ------- | - | ------------- |  | ------ | --------- |  | - | ----- | -
|                                                                 |  | Year Ended December 31, 2004 |        
|                                                                 |  |                              |        
|                                                                 |  | Income                       |         |   | Shares        |  |        | Per-Share | 
|                                                                 |  | (Numerator)                  |         |   | (Denominator) |  |        | Amount    | 
|                                                                 |  |                              |         |   |               |  |        |           | 
|Loss from continuing operations                                  |  | $                            | (26,282 | ) |               |  |        |           |  |   |       |  
|Less: Preferred stock dividends                                  |  |                              | (8,325  | ) |               |  |        |           |  |   |       |  
|Less: Preferred stock and unit redemption costs                  |  |                              | (3,526  | ) |               |  |        |           |  |   |       |  
|                                                                 |  |                              |         |   |               |  |        |           | 
|Basic EPS                                                        |  |                              |         |   |               |  |        |           |  |   |       |  
|Loss from continuing operations available to common shareholders |  |                              | (38,133 | ) |               |  | 39,777 |           |  | $ | (0.96 | )
|                                                                 |  |                              |         |   |               |  |        |           | 
|Effect of dilutive securities                                    |  |                              |         |   |               |  |        |           |  |   |       |  
|Stock options and awards                                         |  |                              |        |   |               |  |       | (1)       |  |   |       |  
|                                                                 |  |                              |         |   |               |  |        |           | 
|Diluted EPS                                                      |  |                              |         |   |               |  |        |           |  |   |       |  
|Loss from continuing operations available to common shareholders |  | $                            | (38,133 | ) |               |  | 39,777 |           |  | $ | (0.96 | )
|                                                                 |  |                              |         |   |               |  |        |           | 

|                                                                 |  |                              |         |   |               |  |        |           |  |   |       |  
|---------------------------------------------------------------- |  | ---------------------------- | ------- | - | ------------- |  | ------ | --------- |  | - | ----- | -
|                                                                 |  | Year Ended December 31, 2003 |        
|                                                                 |  |                              |        
|                                                                 |  | Income                       |         |   | Shares        |  |        | Per-Share | 
|                                                                 |  | (Numerator)                  |         |   | (Denominator) |  |        | Amount    | 
|                                                                 |  |                              |         |   |               |  |        |           | 
|Loss from continuing operations                                  |  | $                            | (26,885 | ) |               |  |        |           |  |   |       |  
|Less: Preferred stock dividends                                  |  |                              | (11,449 | ) |               |  |        |           |  |   |       |  
|                                                                 |  |                              |         |   |               |  |        |           | 
|Basic EPS                                                        |  |                              |         |   |               |  |        |           |  |   |       |  
|Loss from continuing operations available to common shareholders |  |                              | (38,334 | ) |               |  | 37,688 |           |  | $ | (1.02 | )
|                                                                 |  |                              |         |   |               |  |        |           | 
|Effect of dilutive securities                                    |  |                              |         |   |               |  |        |           |  |   |       |  
|Stock options and awards                                         |  |                              |        |   |               |  |       | (1)       |  |   |       |  
|                                                                 |  |                              |         |   |               |  |        |           | 
|Diluted EPS                                                      |  |                              |         |   |               |  |        |           |  |   |       |  
|Loss from continuing operations available to common shareholders |  | $                            | (38,334 | ) |               |  | 37,688 |           |  | $ | (1.02 | )
|                                                                 |  |                              |         |   |               |  |        |           | 



|    |                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the years ended December 31, 2005, 2004 and 2003, the
    potential dilution from the Companys outstanding stock
    options and awards of 400, 115 and 11 shares, respectively,
    was antidilutive to the loss from continuing operations per
    share calculation. As such, these amounts were excluded from
    weighted average shares.










---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)









|   |                                    
|-- | -----------------------------------
|7. | SEVERANCE AND PROXY CONTEST CHARGES







|                                             |  |      |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                             |  | 2005 |        |   | 2004 |   |        | 2003 | 
|                                             |  |      |        |   |      |   |        |      | 
|Accrued severance charges, beginning of year |  | $    | 15,317 |   |      | $ | 19,171 |      |  | $ |       |  
|Severance charges                            |  |      | 796    |   |      |   |       |      |  |   | 21,506 |  
|Payments for period                          |  |      | (2,694 | ) |      |   | (4,858 | )    |  |   | (3,237 | )
|Interest accretion                           |  |      | 906    |   |      |   | 1,004  |      |  |   | 902    |  
|                                             |  |      |        |   |      |   |        |      | 
|Accrued severance charges, end of year       |  | $    | 14,325 |   |      | $ | 15,317 |      |  | $ | 19,171 |  
|                                             |  |      |        |   |      |   |        |      | 







|   |             
|-- | ------------
|8. | INCOME TAXES












---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







Reconciliation of net income to taxable income




|                                                          |                                                     |            |          |        |          |   |         |          |   |   |         |        |  
|--------------------------------------------------------- | --------------------------------------------------- | ---------- | -------- | ------ | -------- | - | ------- | -------- | - | - | ------- | ------ | -
|                                                          |                                                     | 2005       |          |        | 2004     |   |         | 2003     |  
|                                                          |                                                     | (Estimate) |          |        | (Actual) |   |         | (Actual) |  
|                                                          |                                                     |            |          |        |          |   |         |          |  
|Net income                                                |                                                     | $          | 141,948  |        |          | $ | 88,219  |          |   | $ | 14,156  |       
|Add net loss (income) of taxable REIT subsidiaries        |                                                     |            | (6,881   | )      |          |   | 402     |          |   |   | 691     |       
|                                                          |                                                     |            |          |        |          |   |         |          |  
|Adjusted net income                                       |                                                     |            | 135,067  |        |          |   | 88,621  |          |   |   | 14,847  |       
|                                                          | Book/tax depreciation difference                    |            |          | (1,320 | )        |   |         | (1,719   | ) |   |         | (4,309 | )
|                                                          | Book/tax difference on gains from real estate sales |            |          | (9,409 | )        |   |         | (9,806   | ) |   |         | 3,010  |  
|                                                          | Other book/tax differences, net                     |            |          | (9,223 | )        |   |         | (9,489   | ) |   |         | 20,005 |  
|                                                          |                                                     |            |          |        |          |   |         |          |  
|Taxable income before allocation of taxable capital gains |                                                     |            | 115,115  |        |          |   | 67,607  |          |   |   | 33,553  |       
|Income taxable as capital gains                           |                                                     |            | (116,739 | )      |          |   | (89,393 | )        |   |   | (35,620 | )     
|                                                          |                                                     |            |          |        |          |   |         |          |  
|Taxable ordinary income (loss)                            |                                                     | $          | (1,624   | )      |          | $ | (21,786 | )        |   | $ | (2,067  | )     
|                                                          |                                                     |            |          |        |          |   |         |          |  

Income tax characterization of dividends




|                                |  |        |      |  |      |  |       |        |  |   |      |  |  |        |       |   |   |   |      |  |  |  |       |  
|------------------------------- |  | ------ | ---- |  | ---- |  | ----- | ------ |  | - | ---- |  |  | ------ | ----- | - | - | - | ---- |  |  |  | ----- | -
|                                |  | 2005   |      |  | 2004 |  |       | 2003   | 
|                                |  |        |      |  |      |  |       |        | 
|                                |  | Amount |      |  | %    |  |       | Amount |  |   | %    |  |  | Amount |       |   | % |  
|                                |  |        |      |  |      |  |       |        |  |   |      |  |  |        |       |   |   |  
|Ordinary income                 |  | $      |     |  |      |  |      |        |  | $ |     |  |  |        |      |   |   | $ | 0.16 |  |  |  | 7.4   | %
|Capital gains                   |  |        | 0.99 |  |      |  | 55.1  | %      |  |   | 0.74 |  |  |        | 40.9  | % |   |   | 0.36 |  |  |  | 16.8  | %
|Unrecaptured Section 1250 gains |  |        | 0.81 |  |      |  | 44.9  | %      |  |   | 1.06 |  |  |        | 59.1  | % |   |   | 0.31 |  |  |  | 14.5  | %
|Return of capital               |  |        |     |  |      |  |      |        |  |   |     |  |  |        |      |   |   |   | 1.30 |  |  |  | 61.3  | %
|                                |  |        |      |  |      |  |       |        |  |   |      |  |  |        |       |   |   |  
|                                |  | $      | 1.80 |  |      |  | 100.0 | %      |  | $ | 1.80 |  |  |        | 100.0 | % |   | $ | 2.13 |  |  |  | 100.0 | %
|                                |  |        |      |  |      |  |       |        |  |   |      |  |  |        |       |   |   |  














---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)





Taxable REIT subsidiaries








|                                             |         |      |      |     | 
|-------------------------------------------- | ------- | ---- | ---- | --- | 
|                                             |         | 2005 |     
|                                             |         |      |     
|Current tax expense                          |         |      |      |    
|                                             | Federal |      | $    | 251 | 
|                                             | State   |      |      | 343 | 
|                                             |         |      |     
|                                             |         |      | 594  |    
|                                             |         |      |     
|Deferred tax expense                         |         |      |      |    
|                                             | Federal |      |      |    | 
|                                             | State   |      |      |    | 
|                                             |         |      |     
|                                             |         |      |     |    
|                                             |         |      |     
|Total income tax expense                     |         |      | 594  |    
|Income tax expense  discontinued operations |         |      | (594 | )  
|                                             |         |      |     
|Income tax expense  continuing operations   |         | $    |     |    
|                                             |         |      |     





|                                                     |                                     |      |        |       |      |   |        |       |  
|---------------------------------------------------- | ----------------------------------- | ---- | ------ | ----- | ---- | - | ------ | ----- | -
|                                                     |                                     | 2005 |        |       | 2004 |  
|                                                     |                                     |      |        |       |      |  
|Deferred tax assets                                  |                                     |      |        |       |      |   |        |      
|                                                     | Real estate asset basis differences |      | $      | 1,106 |      |   | $      | 1,106 |  
|                                                     | Tax NOLs                            |      |        | 415   |      |   |        | 3,300 |  
|                                                     | Accrued liabilities                 |      |        | 641   |      |   |        |      |  
|                                                     | Other                               |      |        | 269   |      |   |        | 769   |  
|                                                     |                                     |      |        |       |      |  
|                                                     |                                     |      | 2,431  |       |      |   | 5,175  |      
|                                                     |                                     |      |        |       |      |  
|Deferred tax liabilities                             |                                     |      |        |       |      |   |        |      
|                                                     | Amortization                        |      |        | (797  | )    |   |        | (824  | )
|                                                     |                                     |      |        |       |      |  
|                                                     |                                     |      | (797   | )     |      |   | (824   | )    
|                                                     |                                     |      |        |       |      |  
|Net deferred tax assets, before valuation allowances |                                     |      | 1,634  |       |      |   | 4,351  |      
|Valuation allowances                                 |                                     |      | (1,634 | )     |      |   | (4,351 | )    
|                                                     |                                     |      |        |       |      |  
|Net deferred tax assets (liabilities)                |                                     | $    |       |       |      | $ |       |      
|                                                     |                                     |      |        |       |      |  












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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)









|                                                     |  |      |     |   
|---------------------------------------------------- |  | ---- | --- | --
|                                                     |  | 2005 |    
|                                                     |  |      |    
|Federal tax rate                                     |  |      | 35  | % 
|State income tax, net of federal benefit             |  |      | 4   | % 
|Federal alternative minimum taxes                    |  |      | 3   | % 
|Change in valuation allowance of deferred tax assets |  |      | (35 | )%
|                                                     |  |      |    
|                                                     |  |      | 7   | % 
|                                                     |  |      |    



|   |                               
|-- | ------------------------------
|9. | STOCK-BASED COMPENSATION PLANS

Stock Compensation Plans




Incentive Stock Plans















---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







|                        |  |         |  |         |  |        
|----------------------- |  | ------- |  | ------- |  | -------
|                        |  | 2005    |  | 2004    |  | 2003   
|                        |  |         |  |         |  |        
|Dividend yield          |  | 5.5%    |  | 6.3%    |  | 6.5%   
|Expected volatility     |  | 17.1%   |  | 16.9%   |  | 17.1%  
|Risk-free interest rate |  | 3.1%    |  | 3.1%    |  | 2.9%   
|Expected option life    |  | 5 years |  | 5 years |  | 5 years



|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |   |       |   |  |   |    | 
|-------------------------------------------------------------- |  | ------ | ------ | -------- | -------------- | - | -- | ------ | -------- | - | -------------- | - |  | -------- | -- |  | -------------- | - | ----- | - |  | - | -- | 
|                                                               |  | 2005   |        |          | 2004           |   |    | 2003   |         
|                                                               |  |        |        |          |                |   |    |        |         
|                                                               |  |        |        | Weighted |                |   |    |        | Weighted |   |                |   |  | Weighted |   
|                                                               |  |        |        | Average  |                |   |    |        | Average  |   |                |   |  | Average  |   
|                                                               |  | Shares |        |          | Exercise Price |   |    | Shares |          |   | Exercise Price |   |  | Shares   |    |  | Exercise Price |  
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  
|Outstanding at beginning of year                               |  |        | 4,491  |          |                | $ | 33 |        |          |   | 4,735          |   |  | $        | 34 |  |                |   | 4,089 |   |  | $ | 35 | 
|Granted                                                        |  |        | 277    |          |                |   | 33 |        |          |   | 283            |   |  |          | 28 |  |                |   | 1,252 |   |  |   | 26 | 
|Exercised                                                      |  |        | (1,105 | )        |                |   | 33 |        |          |   | (277           | ) |  |          | 29 |  |                |   | (217  | ) |  |   | 28 | 
|Forfeited                                                      |  |        | (129   | )        |                |   | 30 |        |          |   | (250           | ) |  |          | 36 |  |                |   | (389  | ) |  |   | 32 | 
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  
|Outstanding at end of year                                     |  |        | 3,534  |          |                |   | 34 |        |          |   | 4,491          |   |  |          | 33 |  |                |   | 4,735 |   |  |   | 34 | 
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  
|Options exercisable at year-end                                |  |        | 2,437  |          |                |   |    |        |          |   | 3,131          |   |  |          |    |  |                |   | 3,233 |   |  |   |    | 
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  
|Weighted-average fair value of options granted during the year |  | $      | 2.73   |          |                |   |    |        |          | $ | 1.86           |   |  |          |    |  |                | $ | 1.59  |   |  |   |    | 
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  





Employee Stock Purchase Plan













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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)









|    |                      
|--- | ---------------------
|10. | EMPLOYEE BENEFIT PLAN





|    |                              
|--- | -----------------------------
|11. | COMMITMENTS AND CONTINGENCIES

Land, office and equipment leases




|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2006                |  | $ | 1,665   | 
|2007                |  |   | 1,625   | 
|2008                |  |   | 1,638   | 
|2009                |  |   | 1,628   | 
|2010                |  |   | 1,634   | 
|2011 and thereafter |  |   | 167,857 | 



Legal proceedings















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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)











|    |                           
|--- | --------------------------
|12. | RELATED PARTY TRANSACTIONS









|    |                                 
|--- | --------------------------------
|13. | DERIVATIVE FINANCIAL INSTRUMENTS














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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)













|    |                                    
|--- | -----------------------------------
|14. | FAIR VALUE OF FINANCIAL INSTRUMENTS


















---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







|    |                    
|--- | -------------------
|15. | SEGMENT INFORMATION

Segment Description








| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Fully stabilized communities  those apartment
    communities which have been stabilized (the earlier of the point
    at which a property reaches 95% occupancy or one year after
    completion of construction) for both the current and prior year.
|
| |  | Communities stabilized during prior year  communities
    which reached stabilized occupancy in the prior year.                                                                                                                                        
|
| |  | Condominium conversion communities  those portions of
    existing apartment communities being converted into condominiums
    that are reflected in continuing operations under
    SFAS No. 144 (see note 1).                                        
|
| |  | Acquired communities  those communities acquired in
    the current or prior year.                                                                                                                                                                     

Segment Performance Measure













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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)





Segment Information




|                                                                 |                       |                         |         |         |      |   |         |         |  |   |         |         | 
|---------------------------------------------------------------- | --------------------- | ----------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                 |                       | Year Ended December 31, |        
|                                                                 |                       |                         |        
|                                                                 |                       | 2005                    |         |         | 2004 |   |         | 2003    | 
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Revenues                                                         |                       |                         |         |         |      |   |         |         |  |   |         |        
|Fully stabilized communities                                     |                       | $                       | 250,583 |         |      | $ | 243,430 |         |  | $ | 240,613 |        
|Communities stabilized during prior year                         |                       |                         | 7,184   |         |      |   | 7,007   |         |  |   | 2,008   |        
|Condominium conversion communities                               |                       |                         | 5,485   |         |      |   | 5,716   |         |  |   | 5,523   |        
|Acquired communities                                             |                       |                         | 10,808  |         |      |   | 4,477   |         |  |   |        |        
|Other property segments                                          |                       |                         | 22,488  |         |      |   | 21,154  |         |  |   | 19,558  |        
|Other                                                            |                       |                         | 255     |         |      |   | 1,000   |         |  |   | 457     |        
|                                                                 |                       |                         |         |         |      |   |         |         | 
|                                                                 | Consolidated revenues |                         | $       | 296,803 |      |   | $       | 282,784 |  |   | $       | 268,159 | 
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Contribution to Property Net Operating Income                    |                       |                         |         |         |      |   |         |         |  |   |         |        
|Fully stabilized communities                                     |                       | $                       | 153,423 |         |      | $ | 149,146 |         |  | $ | 149,963 |        
|Communities stabilized during prior year                         |                       |                         | 4,957   |         |      |   | 4,885   |         |  |   | 115     |        
|Condominium conversion communities                               |                       |                         | 3,613   |         |      |   | 3,675   |         |  |   | 3,569   |        
|Acquired communities                                             |                       |                         | 7,230   |         |      |   | 3,163   |         |  |   |        |        
|Other property segments, including corporate management expenses |                       |                         | (6,685  | )       |      |   | (6,438  | )       |  |   | (3,716  | )      
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Consolidated property net operating income                       |                       |                         | 162,538 |         |      |   | 154,431 |         |  |   | 149,931 |        
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Interest income                                                  |                       |                         | 661     |         |      |   | 817     |         |  |   | 894     |        
|Other revenues                                                   |                       |                         | 255     |         |      |   | 1,000   |         |  |   | 457     |        
|Minority interest in consolidated property partnerships          |                       |                         | 239     |         |      |   | 671     |         |  |   | 1,605   |        
|Depreciation                                                     |                       |                         | (76,248 | )       |      |   | (79,473 | )       |  |   | (77,595 | )      
|Interest                                                         |                       |                         | (58,898 | )       |      |   | (63,552 | )       |  |   | (61,640 | )      
|Amortization of deferred financing costs                         |                       |                         | (4,661  | )       |      |   | (4,304  | )       |  |   | (3,801  | )      
|General and administrative                                       |                       |                         | (18,307 | )       |      |   | (18,205 | )       |  |   | (13,841 | )      
|Investment, development and other                                |                       |                         | (5,242  | )       |      |   | (2,930  | )       |  |   | (2,715  | )      
|Termination of debt remarketing agreement (interest expense)     |                       |                         |        |         |      |   | (10,615 | )       |  |   |        |        
|Loss on early extinguishment of indebtedness                     |                       |                         |        |         |      |   | (4,011  | )       |  |   |        |        
|Severance charges                                                |                       |                         | (796    | )       |      |   |        |         |  |   | (21,506 | )      
|Proxy contest and related costs                                  |                       |                         |        |         |      |   |        |         |  |   | (5,231  | )      
|Equity in income of unconsolidated real estate entities          |                       |                         | 1,767   |         |      |   | 1,083   |         |  |   | 7,790   |        
|Gain on sale of technology investment                            |                       |                         | 5,267   |         |      |   |        |         |  |   |        |        
|Minority interest of preferred unitholders                       |                       |                         |        |         |      |   | (3,780  | )       |  |   | (5,600  | )      
|Minority interest of common unitholders                          |                       |                         | 53      |         |      |   | 2,586   |         |  |   | 4,367   |        
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Income (loss) from continuing operations                         |                       |                         | 6,628   |         |      |   | (26,282 | )       |  |   | (26,885 | )      
|Income from discontinued operations                              |                       |                         | 135,320 |         |      |   | 114,501 |         |  |   | 41,041  |        
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Net income                                                       |                       | $                       | 141,948 |         |      | $ | 88,219  |         |  | $ | 14,156  |        
|                                                                 |                       |                         |         |         |      |   |         |         | 










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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







|    |                                   
|--- | ----------------------------------
|16. | SUPPLEMENTAL CASH FLOW INFORMATION

















|    |                              
|--- | -----------------------------
|17. | SALE OF TECHNOLOGY INVESTMENT












---



##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(In thousands, except per share data)







|    |                                            
|--- | -------------------------------------------
|18. | QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

10-Q 10-Qs.


|                                                      |  |                              |        |   |        |   |        |       |  |   |        |   |  |   |        |  
|----------------------------------------------------- |  | ---------------------------- | ------ | - | ------ | - | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                                                      |  | Year Ended December 31, 2005 |       
|                                                      |  |                              |       
|                                                      |  | First                        |        |   | Second |   |        | Third |  |   | Fourth |  
|                                                      |  |                              |        |   |        |   |        |       |  |   |        |  
|Revenues                                              |  | $                            | 71,580 |   |        | $ | 73,119 |       |  | $ | 76,071 |   |  | $ | 76,033 |  
|                                                      |  |                              |        |   |        |   |        |       |  |   |        |  
|Income (loss) from continuing operations              |  |                              | 1,230  |   |        |   | (709   | )     |  |   | 1,983  |   |  |   | 4,124  |  
|Income from discontinued operations                   |  |                              | 3,446  |   |        |   | 59,154 |       |  |   | 71,258 |   |  |   | 1,462  |  
|                                                      |  |                              |        |   |        |   |        |       |  |   |        |  
|Net income                                            |  |                              | 4,676  |   |        |   | 58,445 |       |  |   | 73,241 |   |  |   | 5,586  |  
|Dividends to preferred shareholders                   |  |                              | (1,909 | ) |        |   | (1,910 | )     |  |   | (1,909 | ) |  |   | (1,909 | )
|                                                      |  |                              |        |   |        |   |        |       |  |   |        |  
|Net income available to common shareholders           |  | $                            | 2,767  |   |        | $ | 56,535 |       |  | $ | 71,332 |   |  | $ | 3,677  |  
|                                                      |  |                              |        |   |        |   |        |       |  |   |        |  
|Earnings per common share:                            |  |                              |        |   |        |   |        |       |  |   |        |   |  |   |        |  
|Net income available to common shareholders  basic   |  | $                            | 0.07   |   |        | $ | 1.42   |       |  | $ | 1.77   |   |  | $ | 0.09   |  
|Net income available to common shareholders  diluted |  | $                            | 0.07   |   |        | $ | 1.42   |       |  | $ | 1.75   |   |  | $ | 0.09   |  

|                                                                 |  |                              |        |   |        |   |         |       |  |   |        |   |  |   |         |  
|---------------------------------------------------------------- |  | ---------------------------- | ------ | - | ------ | - | ------- | ----- |  | - | ------ | - |  | - | ------- | -
|                                                                 |  | Year Ended December 31, 2004 |       
|                                                                 |  |                              |       
|                                                                 |  | First                        |        |   | Second |   |         | Third |  |   | Fourth |  
|                                                                 |  |                              |        |   |        |   |         |       |  |   |        |  
|Revenues                                                         |  | $                            | 68,686 |   |        | $ | 69,860  |       |  | $ | 72,912 |   |  | $ | 71,326  |  
|                                                                 |  |                              |        |   |        |   |         |       |  |   |        |  
|Loss from continuing operations                                  |  |                              | (3,343 | ) |        |   | (3,708  | )     |  |   | (3,994 | ) |  |   | (15,237 | )
|Income from discontinued operations                              |  |                              | 6,754  |   |        |   | 104,816 |       |  |   | 2,201  |   |  |   | 730     |  
|                                                                 |  |                              |        |   |        |   |         |       |  |   |        |  
|Net income (loss)                                                |  |                              | 3,411  |   |        |   | 101,108 |       |  |   | (1,793 | ) |  |   | (14,507 | )
|Dividends to preferred shareholders                              |  |                              | (2,597 | ) |        |   | (1,910  | )     |  |   | (1,909 | ) |  |   | (1,909  | )
|Redemption costs on preferred stock and units                    |  |                              | (1,716 | ) |        |   |        |       |  |   | (1,810 | ) |  |   |        |  
|                                                                 |  |                              |        |   |        |   |         |       |  |   |        |  
|Net income (loss) available to common shareholders               |  | $                            | (902   | ) |        | $ | 99,198  |       |  | $ | (5,512 | ) |  | $ | (16,416 | )
|                                                                 |  |                              |        |   |        |   |         |       |  |   |        |  
|Earnings per common share:                                       |  |                              |        |   |        |   |         |       |  |   |        |   |  |   |         |  
|Net income (loss) available to common shareholders 
    basic   |  | $                            | (0.02  | ) |        | $ | 2.49    |       |  | $ | (0.14  | ) |  | $ | (0.41   | )
|Net income (loss) available to common shareholders 
    diluted |  | $                            | (0.02  | ) |        | $ | 2.49    |       |  | $ | (0.14  | ) |  | $ | (0.41   | )










---



##### Table of Contents



Post Apartment Homes, L.P.


Consolidated Financial Statements


December 31, 2005 and 2004













---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING


13a-15(f). Internal Control  Integrated
Framework Internal
Control  Integrated Framework,











---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Consolidated financial statements and financial statement
schedule




Internal control over financial reporting























---



##### Table of Contents



POST APARTMENT HOMES, L.P.


CONSOLIDATED BALANCE SHEETS


(In thousands)


|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |         |           |           |           |         | 
|-------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------- | --------------- | ------- | --------- | ------- | --------- | --------- | --------- | ------- | 
|                                 |                                                                                                                                | December 31,                                                                                                            |                
|                                 |                                                                                                                                |                                                                                                                         |                
|                                 |                                                                                                                                | 2005                                                                                                                    |                 |         | 2004      |        
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|Assets                           |                                                                                                                                |                                                                                                                         |                 |         |           |         |           |          
|                                 | Real estate assets                                                                                                             |                                                                                                                         |                 |         |           |         |           |           |          
|                                 |                                                                                                                                | Land                                                                                                                    |                 | $       | 266,914   |         |           | $         | 266,520   |        
|                                 |                                                                                                                                | Building and improvements                                                                                               |                 |         | 1,789,479 |         |           |           | 1,887,514 |        
|                                 |                                                                                                                                | Furniture, fixtures and equipment                                                                                       |                 |         | 207,497   |         |           |           | 214,954   |        
|                                 |                                                                                                                                | Construction in progress                                                                                                |                 |         | 47,005    |         |           |           | 19,527    |        
|                                 |                                                                                                                                | Land held for future development                                                                                        |                 |         | 62,511    |         |           |           | 18,910    |        
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|                                 |                                                                                                                                |                                                                                                                         | 2,373,406       |         |           |         | 2,407,425 |          
|                                 |                                                                                                                                | Less: accumulated depreciation                                                                                          |                 |         | (516,954  | )       |           |           | (498,367  | )      
|                                 |                                                                                                                                | For-sale condominiums                                                                                                   |                 |         | 38,338    |         |           |           |          |        
|                                 |                                                                                                                                | Assets held for sale, net of accumulated depreciation of $0 and
    $26,332 at December 31, 2005 and 2004, respectively |                 |         | 4,591     |         |           |           | 68,661    |        
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|                                 |                                                                                                                                | Total real estate assets                                                                                                |                 |         | 1,899,381 |         |           |           | 1,977,719 |        
|                                 | Investments in and advances to unconsolidated real estate
    entities                                                         |                                                                                                                         |                 | 26,614  |           |         |           | 21,320    |          
|                                 | Cash and cash equivalents                                                                                                      |                                                                                                                         |                 | 6,410   |           |         |           | 123       |          
|                                 | Restricted cash                                                                                                                |                                                                                                                         |                 | 4,599   |           |         |           | 1,844     |          
|                                 | Deferred charges, net                                                                                                          |                                                                                                                         |                 | 11,624  |           |         |           | 15,574    |          
|                                 | Other assets                                                                                                                   |                                                                                                                         |                 | 32,826  |           |         |           | 37,262    |          
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|                                 |                                                                                                                                | Total assets                                                                                                            |                 | $       | 1,981,454 |         |           | $         | 2,053,842 |        
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|                                
|Liabilities and Partners Equity |                                                                                                                                |                                                                                                                         |                 |         |           |         |           |          
|                                 | Indebtedness, including $0 and $34,060 of debt secured by assets
    held for sale at December 31, 2005 and 2004, respectively |                                                                                                                         | $               | 980,615 |           |         | $         | 1,129,478 |          
|                                 | Accounts payable and accrued expenses                                                                                          |                                                                                                                         |                 | 58,474  |           |         |           | 58,837    |          
|                                 | Dividend and distribution payable                                                                                              |                                                                                                                         |                 | 19,257  |           |         |           | 19,203    |          
|                                 | Accrued interest payable                                                                                                       |                                                                                                                         |                 | 5,478   |           |         |           | 7,677     |          
|                                 | Deposits and prepaid rents                                                                                                     |                                                                                                                         |                 | 9,857   |           |         |           | 7,236     |          
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|                                 |                                                                                                                                | Total liabilities                                                                                                       |                 |         | 1,073,681 |         |           |           | 1,222,431 |        
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|                                 | Commitments and contingencies                                                                                                  |                                                                                                                         |                 |         |           |         |           |           |          
|                                 | Partners equity                                                                                                               |                                                                                                                         |                 |         |           |         |           |           |          
|                                 |                                                                                                                                | Preferred units                                                                                                         |                 |         | 95,000    |         |           |           | 95,000    |        
|                                 |                                                                                                                                | Common units                                                                                                            |                 |         |           |         |           |           |           |        
|                                 |                                                                                                                                |                                                                                                                         | General partner |         |           | 9,722   |           |           |           | 8,673   | 
|                                 |                                                                                                                                |                                                                                                                         | Limited partner |         |           | 807,403 |           |           |           | 737,940 | 
|                                 |                                                                                                                                | Accumulated other comprehensive income (loss)                                                                           |                 |         | (4,352    | )       |           |           | (10,202   | )      
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|                                 |                                                                                                                                | Total partners equity                                                                                                  |                 |         | 907,773   |         |           |           | 831,411   |        
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        
|                                 |                                                                                                                                | Total liabilities and partners equity                                                                                  |                 | $       | 1,981,454 |         |           | $         | 2,053,842 |        
|                                 |                                                                                                                                |                                                                                                                         |                 |         |           |        

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











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##### Table of Contents



POST APARTMENT HOMES, L.P.


CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per unit data)


|                                           |                                                                                           |                                          |         |         |         |   |        |         |         |   |        |         |         |  
|------------------------------------------ | ----------------------------------------------------------------------------------------- | ---------------------------------------- | ------- | ------- | ------- | - | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                           |                                                                                           | Year Ended December 31,                  |        
|                                           |                                                                                           |                                          |        
|                                           |                                                                                           | 2005                                     |         |         | 2004    |   |        | 2003    |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|Revenues                                   |                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                           | Rental                                                                                    |                                          | $       | 279,508 |         |   | $      | 266,191 |         |   | $      | 253,345 |        
|                                           | Other property revenues                                                                   |                                          |         | 17,040  |         |   |        | 15,593  |         |   |        | 14,357  |        
|                                           | Other                                                                                     |                                          |         | 255     |         |   |        | 1,000   |         |   |        | 457     |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           |                                                                                           | Total revenues                           |         |         | 296,803 |   |        |         | 282,784 |   |        |         | 268,159 |  
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|Expenses                                   |                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                           | Property operating and maintenance (exclusive of items shown
    separately below)        |                                          |         | 134,010 |         |   |        | 127,353 |         |   |        | 117,771 |        
|                                           | Depreciation                                                                              |                                          |         | 76,248  |         |   |        | 79,473  |         |   |        | 77,595  |        
|                                           | General and administrative                                                                |                                          |         | 18,307  |         |   |        | 18,205  |         |   |        | 13,841  |        
|                                           | Investment, development and other                                                         |                                          |         | 5,242   |         |   |        | 2,930   |         |   |        | 2,715   |        
|                                           | Proxy contest and related costs                                                           |                                          |         |        |         |   |        |        |         |   |        | 5,231   |        
|                                           | Severance charges                                                                         |                                          |         | 796     |         |   |        |        |         |   |        | 21,506  |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           |                                                                                           | Total expenses                           |         |         | 234,603 |   |        |         | 227,961 |   |        |         | 238,659 |  
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|Operating income                           |                                                                                           |                                          | 62,200  |         |         |   | 54,823 |         |         |   | 29,500 |        
|                                           | Interest income                                                                           |                                          |         | 661     |         |   |        | 817     |         |   |        | 894     |        
|                                           | Interest expense                                                                          |                                          |         | (58,898 | )       |   |        | (63,552 | )       |   |        | (61,640 | )      
|                                           | Amortization of deferred financing costs                                                  |                                          |         | (4,661  | )       |   |        | (4,304  | )       |   |        | (3,801  | )      
|                                           | Equity in income of unconsolidated real estate entities                                   |                                          |         | 1,767   |         |   |        | 1,083   |         |   |        | 7,790   |        
|                                           | Gains on sale of technology investment                                                    |                                          |         | 5,267   |         |   |        |        |         |   |        |        |        
|                                           | Termination of debt remarketing agreement (interest expense)                              |                                          |         |        |         |   |        | (10,615 | )       |   |        |        |        
|                                           | Loss on early extinguishment of indebtedness                                              |                                          |         |        |         |   |        | (4,011  | )       |   |        |        |        
|                                           | Minority interest in consolidated property partnerships                                   |                                          |         | 239     |         |   |        | 671     |         |   |        | 1,605   |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           |                                                                                           | Income (loss) from continuing operations |         |         | 6,575   |   |        |         | (25,088 | ) |        |         | (25,652 | )
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|Discontinued operations                    |                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                           | Income from discontinued operations                                                       |                                          |         | 5,049   |         |   |        | 12,654  |         |   |        | 4,957   |        
|                                           | Gains on sales of real estate assets, net of provision for
    income tax                 |                                          |         | 140,643 |         |   |        | 113,739 |         |   |        | 40,792  |        
|                                           | Loss on early extinguishment of indebtedness associated with
    property sales           |                                          |         | (3,220  | )       |   |        | (4,128  | )       |   |        |        |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           |                                                                                           | Income from discontinued operations      |         |         | 142,472 |   |        |         | 122,265 |   |        |         | 45,749  |  
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|Net income                                 |                                                                                           |                                          | 149,047 |         |         |   | 97,177 |         |         |   | 20,097 |        
|                                           | Distributions to preferred unitholders                                                    |                                          |         | (7,637  | )       |   |        | (12,105 | )       |   |        | (17,049 | )      
|                                           | Redemption costs on preferred units                                                       |                                          |         |        |         |   |        | (3,526  | )       |   |        |        |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|Net income available to common unitholders |                                                                                           | $                                        | 141,410 |         |         | $ | 81,546 |         |         | $ | 3,048  |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|Per common unit data  Basic               |                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                           | Loss from continuing operations (net of preferred distributions
    and redemption costs) |                                          | $       | (0.03   | )       |   | $      | (0.96   | )       |   | $      | (1.02   | )      
|                                           | Income from discontinued operations                                                       |                                          |         | 3.36    |         |   |        | 2.88    |         |   |        | 1.09    |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           | Net income available to common unitholders                                                |                                          | $       | 3.34    |         |   | $      | 1.92    |         |   | $      | 0.07    |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           | Weighted average common units outstanding                                                 |                                          |         | 42,353  |         |   |        | 42,474  |         |   |        | 42,134  |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|Per common unit data  Diluted             |                                                                                           |                                          |         |         |         |   |        |         |         |   |        |        
|                                           | Loss from continuing operations (net of preferred distributions
    and redemption costs) |                                          | $       | (0.03   | )       |   | $      | (0.96   | )       |   | $      | (1.02   | )      
|                                           | Income from discontinued operations                                                       |                                          |         | 3.36    |         |   |        | 2.88    |         |   |        | 1.09    |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           | Net income available to common unitholders                                                |                                          | $       | 3.34    |         |   | $      | 1.92    |         |   | $      | 0.07    |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           | Weighted average common units outstanding                                                 |                                          |         | 42,353  |         |   |        | 42,474  |         |   |        | 42,134  |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        
|                                           | Common distributions declared                                                             |                                          | $       | 1.80    |         |   | $      | 1.80    |         |   | $      | 1.80    |        
|                                           |                                                                                           |                                          |         |         |         |   |        |         |        

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











---



##### Table of Contents



POST APARTMENT HOMES, L.P.


CONSOLIDATED STATEMENTS OF PARTNERS EQUITY


FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


(In thousands, except per unit data)


|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |         |   |         |   |       |   |         |          |         | 
|----------------------------------- | -------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ----- | ------ | -------------- |  | ------ | --------- | - | - | ------- | ----------------- | ------ | ------- | ----- | ---- | ------------- | - | ------- | ------- | ------- | - | ------- | - | ----- | - | ------- | -------- | ------- | 
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         | Accumulated Other |        |         |      
|                                    |                                                                                                                | Preferred                                                |       |        | Common         |  |        | Preferred |   |   | General |                   |        | Limited |       |      | Comprehensive |   |         |        
|                                    |                                                                                                                | Units                                                    |       |        | Units          |  |        | Units     |   |   | Partner |                   |        | Partner |       |      | Income (Loss) |   |         | Total   |        
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |        
|                                    |                                                                                                                | (No. of Units)                                           |       |        | (No. of Units) |  |        |           |   |   |         |                   |        |         |       |     
|Partners Equity, December 31, 2002 |                                                                                                                |                                                          | 7,700 |        |                |  | 42,032 |           |   | $ | 215,000 |                   |        | $       | 9,143 |      |               | $ | 786,682 |         |         | $ | (16,849 | ) |       | $ | 993,976 |         
|                                    | Comprehensive income                                                                                           |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |         |   |         |   |       |   |         |          |        
|                                    |                                                                                                                | Net income                                               |       |        |               |  |        |           |  |   |         |                   | 17,049 |         |       |      | 30            |   |         |         | 3,018   |   |         |   |      |   |         |          | 20,097  | 
|                                    |                                                                                                                | Net change in derivative value                           |       |        |               |  |        |           |  |   |         |                   |       |         |       |      |              |   |         |         |        |   |         |   | 2,702 |   |         |          | 2,702   | 
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |        
|                                    |                                                                                                                | Total comprehensive income                               |       |        |               |  |        |           |  |   |         |                   |        |         |       |      |               |   |         |         |         |   |         |   |       |   |         |          | 22,799  | 
|                                    | Contributions from the Company related to employee stock
    purchase and stock option plans                   |                                                          |       |       |                |  |        | 148       |   |   |         |                  |        |         |       | 41   |               |   |         | 4,098   |         |   |         |  |       |   |         | 4,139    |        
|                                    | Contributions from the Company related to shares issued for
    restricted stock, net of deferred compensation |                                                          |       |       |                |  |        | 174       |   |   |         |                  |        |         |       | 7    |               |   |         | 735     |         |   |         |  |       |   |         | 742      |        
|                                    | Equity-based compensation                                                                                      |                                                          |       |       |                |  |        |          |   |   |         |                  |        |         |       | 2    |               |   |         | 242     |         |   |         |  |       |   |         | 244      |        
|                                    | Distributions to preferred Unitholders                                                                         |                                                          |       |       |                |  |        |          |   |   |         | (17,049           | )      |         |       |     |               |   |         |        |         |   |         |  |       |   |         | (17,049  | )      
|                                    | Distributions to common Unitholders ($1.80 per unit)                                                           |                                                          |       |       |                |  |        |          |   |   |         |                  |        |         |       | (759 | )             |   |         | (75,157 | )       |   |         |  |       |   |         | (75,916  | )      
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |        
|Partners Equity, December 31, 2003 |                                                                                                                |                                                          | 7,700 |        |                |  | 42,354 |           |   |   | 215,000 |                   |        |         | 8,464 |      |               |   | 719,618 |         |         |   | (14,147 | ) |       |   | 928,935 |         
|                                    | Comprehensive income                                                                                           |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |         |   |         |   |       |   |         |          |        
|                                    |                                                                                                                | Net income                                               |       |        |               |  |        |           |  |   |         |                   | 12,105 |         |       |      | 851           |   |         |         | 84,221  |   |         |   |      |   |         |          | 97,177  | 
|                                    |                                                                                                                | Net change in derivative value, net of minority interest |       |        |               |  |        |           |  |   |         |                   |       |         |       |      |              |   |         |         |        |   |         |   | 3,945 |   |         |          | 3,945   | 
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |        
|                                    |                                                                                                                | Total comprehensive income                               |       |        |               |  |        |           |  |   |         |                   |        |         |       |      |               |   |         |         |         |   |         |   |       |   |         |          | 101,122 | 
|                                    | Contributions from the Company related to employee stock
    purchase and stock option plans                   |                                                          |       |       |                |  |        | 366       |   |   |         |                  |        |         |       | 105  |               |   |         | 10,360  |         |   |         |  |       |   |         | 10,465   |        
|                                    | Contributions from the Company related to shares issued for
    restricted stock, net of deferred compensation |                                                          |       |       |                |  |        | 25        |   |   |         |                  |        |         |       | 11   |               |   |         | 1,098   |         |   |         |  |       |   |         | 1,109    |        
|                                    | Redemption of preferred units                                                                                  |                                                          |       | (4,800 | )              |  |        |          |   |   |         | (120,000          | )      |         |       |     |               |   |         |        |         |   |         |  |       |   |         | (120,000 | )      
|                                    | Equity-based compensation                                                                                      |                                                          |       |       |                |  |        |          |   |   |         |                  |        |         |       | 7    |               |   |         | 669     |         |   |         |  |       |   |         | 676      |        
|                                    | Purchase of common units                                                                                       |                                                          |       |       |                |  |        | (82       | ) |   |         |                  |        |         |       |     |               |   |         | (2,268  | )       |   |         |  |       |   |         | (2,268   | )      
|                                    | Distributions to preferred Unitholders                                                                         |                                                          |       |       |                |  |        |          |   |   |         | (12,105           | )      |         |       |     |               |   |         |        |         |   |         |  |       |   |         | (12,105  | )      
|                                    | Distributions to common Unitholders ($1.80 per unit)                                                           |                                                          |       |       |                |  |        |          |   |   |         |                  |        |         |       | (765 | )             |   |         | (75,758 | )       |   |         |  |       |   |         | (76,523  | )      
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |        
|Partners Equity, December 31, 2004 |                                                                                                                |                                                          | 2,900 |        |                |  | 42,663 |           |   |   | 95,000  |                   |        |         | 8,673 |      |               |   | 737,940 |         |         |   | (10,202 | ) |       |   | 831,411 |         
|                                    | Comprehensive income                                                                                           |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |         |   |         |   |       |   |         |          |        
|                                    |                                                                                                                | Net income                                               |       |        |               |  |        |           |  |   |         |                   | 7,637  |         |       |      | 1,414         |   |         |         | 139,996 |   |         |   |      |   |         |          | 149,047 | 
|                                    |                                                                                                                | Net change in derivative value                           |       |        |               |  |        |           |  |   |         |                   |       |         |       |      |              |   |         |         |        |   |         |   | 5,850 |   |         |          | 5,850   | 
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |        
|                                    |                                                                                                                | Total comprehensive income                               |       |        |               |  |        |           |  |   |         |                   |        |         |       |      |               |   |         |         |         |   |         |   |       |   |         |          | 154,897 | 
|                                    | Contributions from the Company related to employee stock
    purchase and stock option plans                   |                                                          |       |       |                |  |        | 1,138     |   |   |         |                  |        |         |       | 378  |               |   |         | 37,463  |         |   |         |  |       |   |         | 37,841   |        
|                                    | Contributions from the Company related to shares issued for
    restricted stock, net of deferred compensation |                                                          |       |       |                |  |        | 26        |   |   |         |                  |        |         |       | 14   |               |   |         | 1,353   |         |   |         |  |       |   |         | 1,367    |        
|                                    | Equity-based compensation                                                                                      |                                                          |       |       |                |  |        |          |   |   |         |                  |        |         |       | 9    |               |   |         | 917     |         |   |         |  |       |   |         | 926      |        
|                                    | Purchase of common units                                                                                       |                                                          |       |       |                |  |        | (1,031    | ) |   |         |                  |        |         |       |     |               |   |         | (34,400 | )       |   |         |  |       |   |         | (34,400  | )      
|                                    | Distributions to preferred Unitholders                                                                         |                                                          |       |       |                |  |        |          |   |   |         | (7,637            | )      |         |       |     |               |   |         |        |         |   |         |  |       |   |         | (7,637   | )      
|                                    | Distributions to common Unitholders ($1.80 per unit)                                                           |                                                          |       |       |                |  |        |          |   |   |         |                  |        |         |       | (766 | )             |   |         | (75,866 | )       |   |         |  |       |   |         | (76,632  | )      
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |        
|Partners Equity, December 31, 2005 |                                                                                                                |                                                          | 2,900 |        |                |  | 42,796 |           |   | $ | 95,000  |                   |        | $       | 9,722 |      |               | $ | 807,403 |         |         | $ | (4,352  | ) |       | $ | 907,773 |         
|                                    |                                                                                                                |                                                          |       |        |                |  |        |           |   |   |         |                   |        |         |       |      |               |   |         |         |        

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











---



##### Table of Contents



POST APARTMENT HOMES, L.P.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands, except per unit data)


|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |          |   |        |          |         |  
|---------------------------------------------------- | ---------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ----- | -------- | -------- | - | ------ | -------- | -------- | - | ------ | -------- | ------- | -
|                                                     |                                                                                          | Year Ended December 31,                                            |      
|                                                     |                                                                                          |                                                                    |      
|                                                     |                                                                                          | 2005                                                               |       |          | 2004     |   |        | 2003     |         
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         
|Cash Flows From Operating Activities                 |                                                                                          |                                                                    |       |          |          |   |        |          |          |   |        |         
|                                                     | Net income                                                                               |                                                                    | $     | 149,047  |          |   | $      | 97,177   |          |   | $      | 20,097   |        
|                                                     | Adjustments to reconcile net income to net cash provided by
    operating activities:    |                                                                    |       |          |          |   |        |          |          |   |        |          |        
|                                                     |                                                                                          | Depreciation                                                       |       |          | 76,248   |   |        |          | 85,310   |   |        |          | 89,975  |  
|                                                     |                                                                                          | Amortization of deferred loan costs                                |       |          | 4,661    |   |        |          | 4,304    |   |        |          | 3,801   |  
|                                                     |                                                                                          | Gains on sales of real estate assets  discontinued
    operations |       |          | (140,643 | ) |        |          | (113,739 | ) |        |          | (40,792 | )
|                                                     |                                                                                          | Gains on sale of technology investment                             |       |          | (5,267   | ) |        |          |         |   |        |          |        |  
|                                                     |                                                                                          | Asset impairment charges                                           |       |          |          |   |        |          | 2,233    |   |        |          | 17,462  |  
|                                                     |                                                                                          | Equity in income of unconsolidated real estate entities            |       |          | (1,634   | ) |        |          | (941     | ) |        |          | (7,790  | )
|                                                     |                                                                                          | Distribution of earnings of unconsolidated entities                |       |          | 2,033    |   |        |          | 1,928    |   |        |          |        |  
|                                                     |                                                                                          | Equity-based compensation                                          |       |          | 2,293    |   |        |          | 1,785    |   |        |          | 1,071   |  
|                                                     |                                                                                          | Deferred compensation                                              |       |          | 194      |   |        |          |         |   |        |          |        |  
|                                                     |                                                                                          | Loss on early extinguishment of indebtedness                       |       |          | 2,264    |   |        |          | 4,302    |   |        |          |        |  
|                                                     | Changes in assets, (increase) decrease in:                                               |                                                                    |       |          |          |   |        |          |          |   |        |          |        
|                                                     |                                                                                          | Restricted cash                                                    |       |          | (2,755   | ) |        |          | 221      |   |        |          | (696    | )
|                                                     |                                                                                          | Other assets                                                       |       |          | (1,257   | ) |        |          | (2,858   | ) |        |          | 4,676   |  
|                                                     |                                                                                          | Deferred charges                                                   |       |          | (1,082   | ) |        |          | (361     | ) |        |          | (2,210  | )
|                                                     | Changes in liabilities, increase (decrease) in:                                          |                                                                    |       |          |          |   |        |          |          |   |        |          |        
|                                                     |                                                                                          | Accrued interest payable                                           |       |          | (2,199   | ) |        |          | 754      |   |        |          | (2,071  | )
|                                                     |                                                                                          | Accounts payable and accrued expenses                              |       |          | 2,237    |   |        |          | (356     | ) |        |          | 8,386   |  
|                                                     |                                                                                          | Deposits and prepaid rents                                         |       |          | 2,621    |   |        |          | (654     | ) |        |          | (360    | )
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         
|                                                     | Net cash provided by operating activities                                                |                                                                    |       | 86,761   |          |   |        | 79,105   |          |   |        | 91,549   |        
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         
|Cash Flows From Investing Activities                 |                                                                                          |                                                                    |       |          |          |   |        |          |          |   |        |         
|                                                     | Construction and acquisition of real estate assets, net of
    payables                  |                                                                    |       | (112,527 | )        |   |        | (42,777  | )        |   |        | (24,179  | )      
|                                                     | Net proceeds from property sales                                                         |                                                                    |       | 199,546  |          |   |        | 138,637  |          |   |        | 163,560  |        
|                                                     | Proceeds from sale of technology investment                                              |                                                                    |       | 5,267    |          |   |        |         |          |   |        |         |        
|                                                     | Capitalized interest                                                                     |                                                                    |       | (2,907   | )        |   |        | (1,078   | )        |   |        | (3,555   | )      
|                                                     | Recurring capital expenditures                                                           |                                                                    |       | (9,921   | )        |   |        | (9,884   | )        |   |        | (9,473   | )      
|                                                     | Non-recurring capital expenditures                                                       |                                                                    |       | (4,508   | )        |   |        | (4,605   | )        |   |        | (5,152   | )      
|                                                     | Revenue generating capital expenditures                                                  |                                                                    |       |         |          |   |        | (26      | )        |   |        | (1,240   | )      
|                                                     | Corporate additions and improvements                                                     |                                                                    |       | (1,771   | )        |   |        | (681     | )        |   |        | (799     | )      
|                                                     | Distributions from (investments in and advances to)
    unconsolidated entities          |                                                                    |       | (5,846   | )        |   |        | 52,287   |          |   |        | 115,033  |        
|                                                     | Note receivable collections                                                              |                                                                    |       | 2,960    |          |   |        |         |          |   |        |         |        
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         
|                                                     | Net cash provided by investing activities                                                |                                                                    |       | 70,293   |          |   |        | 131,873  |          |   |        | 234,195  |        
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         
|Cash Flows From Financing Activities                 |                                                                                          |                                                                    |       |          |          |   |        |          |          |   |        |         
|                                                     | Proceeds from indebtedness                                                               |                                                                    |       | 100,000  |          |   |        | 135,000  |          |   |        |         |        
|                                                     | Payments on indebtedness                                                                 |                                                                    |       | (217,934 | )        |   |        | (115,753 | )        |   |        | (103,875 | )      
|                                                     | Payment of financing costs                                                               |                                                                    |       | (1,211   | )        |   |        | (5,631   | )        |   |        |         |        
|                                                     | Lines of credit proceeds (repayments), net                                               |                                                                    |       | 50,631   |          |   |        | (21,262  | )        |   |        | (124,358 | )      
|                                                     | Redemption of preferred units                                                            |                                                                    |       |         |          |   |        | (120,000 | )        |   |        |         |        
|                                                     | Redemption of common units                                                               |                                                                    |       | (34,400  | )        |   |        | (2,268   | )        |   |        |         |        
|                                                     | Contributions from company related to employee stock purchase
    and stock option plans |                                                                    |       | 36,084   |          |   |        | 10,465   |          |   |        | 4,139    |        
|                                                     | Capital contributions (distributions) of minority interests                              |                                                                    |       | 283      |          |   |        | (3,806   | )        |   |        |         |        
|                                                     | Distributions to preferred unitholders                                                   |                                                                    |       | (7,637   | )        |   |        | (12,571  | )        |   |        | (17,049  | )      
|                                                     | Distributions to common unitholders                                                      |                                                                    |       | (76,583  | )        |   |        | (76,363  | )        |   |        | (89,657  | )      
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         
|                                                     | Net cash used in financing activities                                                    |                                                                    |       | (150,767 | )        |   |        | (212,189 | )        |   |        | (330,800 | )      
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         
|Net increase (decrease) in cash and cash equivalents |                                                                                          |                                                                    | 6,287 |          |          |   | (1,211 | )        |          |   | (5,056 | )       
|Cash and cash equivalents, beginning of period       |                                                                                          |                                                                    | 123   |          |          |   | 1,334  |          |          |   | 6,390  |         
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         
|Cash and cash equivalents, end of period             |                                                                                          | $                                                                  | 6,410 |          |          | $ | 123    |          |          | $ | 1,334  |         
|                                                     |                                                                                          |                                                                    |       |          |          |   |        |          |         

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











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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|   |                                                           
|-- | ----------------------------------------------------------
|1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

Organization










Basis of presentation













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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)









Cost capitalization








Real estate assets, depreciation and impairment













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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)













Revenue recognition

















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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)









Long-term ground leases




Apartment community acquisitions




Equity-based compensation















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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|                                                       |                                                                  |      |         |         |      |   |        |        |   |   |       |        |  
|------------------------------------------------------ | ---------------------------------------------------------------- | ---- | ------- | ------- | ---- | - | ------ | ------ | - | - | ----- | ------ | -
|                                                       |                                                                  | 2005 |         |         | 2004 |   |        | 2003   |  
|                                                       |                                                                  |      |         |         |      |   |        |        |  
|Net income available to common unitholders As reported |                                                                  | $    | 141,410 |         |      | $ | 81,546 |        |   | $ | 3,048 |       
|                                                       | Equity-based compensation included in net income, as reported    |      |         | 2,299   |      |   |        | 1,785  |   |   |       | 1,071  |  
|                                                       | Equity-based compensation determined under the fair value method |      |         | (2,327  | )    |   |        | (1,853 | ) |   |       | (1,216 | )
|                                                       |                                                                  |      |         |         |      |   |        |        |  
|                                                       | Pro forma                                                        |      | $       | 141,382 |      |   | $      | 81,478 |   |   | $     | 2,903  |  
|                                                       |                                                                  |      |         |         |      |   |        |        |  
|Net income per common unit- basic As reported          |                                                                  | $    | 3.34    |         |      | $ | 1.92   |        |   | $ | 0.07  |       
|                                                       | Pro forma                                                        |      | $       | 3.34    |      |   | $      | 1.92   |   |   | $     | 0.07   |  
|Net income per common unit- diluted As reported        |                                                                  | $    | 3.34    |         |      | $ | 1.92   |        |   | $ | 0.07  |       
|                                                       | Pro forma                                                        |      | $       | 3.34    |      |   | $      | 1.92   |   |   | $     | 0.07   |  

Derivative financial instruments




Cash and cash equivalents




Restricted cash




Deferred financing costs




Per unit data













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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)





Use of estimates




New accounting pronouncements












|   |                 
|-- | ----------------
|2. | DEFERRED CHARGES



|                               |  |              |         |   |      |   |         |  
|------------------------------ |  | ------------ | ------- | - | ---- | - | ------- | -
|                               |  | December 31, |        
|                               |  |              |        
|                               |  | 2005         |         |   | 2004 |  
|                               |  |              |         |   |      |  
|Deferred financing costs       |  | $            | 26,050  |   |      | $ | 33,542  |  
|Other                          |  |              | 5,399   |   |      |   | 4,350   |  
|                               |  |              |         |   |      |  
|                               |  |              | 31,449  |   |      |   | 37,892  |  
|Less: accumulated amortization |  |              | (19,825 | ) |      |   | (22,318 | )
|                               |  |              |         |   |      |  
|                               |  | $            | 11,624  |   |      | $ | 15,574  |  
|                               |  |              |         |   |      |  










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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|   |             
|-- | ------------
|3. | INDEBTEDNESS



|                                         |  |                |  |               |               |          |      |              |      |          |      |           
|---------------------------------------- |  | -------------- |  | ------------- | ------------- | -------- | ---- | ------------ | ---- | -------- | ---- | ----------
|                                         |  |                |  |               |               |          |      | December 31,
|                                         |  |                |  |               |               | Maturity |      |             
|Description                              |  | Payment Terms  |  | Interest Rate |               |          | Date |              | 2005 |          | 2004
|                                         |  |                |  |               |               |          |      |              |      |          |     
|Unsecured Notes                          |  |                |  |               |               |          |      |              |      |          |      |           
|Senior Notes                             |  | Int.           |  |               | 5.125% - 7.70 | %        |      | 2006-2012    |      | $485,000 |      | $385,000  
|Medium Term Notes                        |  | Int.           |  |               |              |          |      |             |      |         |      | 212,043   
|                                         |  |                |  |               |               |          |      |              |      |          |     
|                                         |  |                |  |               |               |          |      |              |      | 485,000  |      | 597,043   
|                                         |  |                |  |               |               |          |      |              |      |          |     
|Unsecured Lines of Credit                |  |                |  |               |               |          |      |              |      |          |      |           
|Syndicated Line of Credit                |  | N/A            |  |               | LIBOR + 0.75  | %(1)     |      | 2007         |      | 90,000   |      | 40,000    
|Cash Management Line                     |  | N/A            |  |               | LIBOR + 0.75  | %        |      | 2007         |      | 11,379   |      | 10,748    
|                                         |  |                |  |               |               |          |      |              |      |          |     
|                                         |  |                |  |               |               |          |      |              |      | 101,379  |      | 50,748    
|                                         |  |                |  |               |               |          |      |              |      |          |     
|Conventional Fixed Rate (Secured)        |  |                |  |               |               |          |      |              |      |          |      |           
|FNMA                                     |  | Prin. and Int. |  |               | 6.975         | %(2)     |      | 2029         |      | 97,100   |      | 98,500    
|Other                                    |  | Prin. and Int. |  |               | 4.27% - 7.69  | %        |      | 2007-2013    |      | 268,641  |      | 273,132   
|                                         |  |                |  |               |               |          |      |              |      |          |     
|                                         |  |                |  |               |               |          |      |              |      | 365,741  |      | 371,632   
|                                         |  |                |  |               |               |          |      |              |      |          |     
|Tax Exempt Floating Rate Bonds (Secured) |  | Int.           |  |               | 3.54          | %(3)     |      | 2025         |      | 28,495   |      | 110,055   
|                                         |  |                |  |               |               |          |      |              |      |          |     
|Total                                    |  |                |  |               |               |          |      |              |      | $980,615 |      | $1,129,478
|                                         |  |                |  |               |               |          |      |              |      |          |     



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents stated rate. At December 31, 2005, the weighted
    average interest rate was 4.75%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(2) | Interest rate is fixed at 6.975%, inclusive of credit
    enhancement and other fees, to 2009 through an interest rate
    swap arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | FNMA credit enhanced bond indebtedness. Interest based on FNMA
    AAA tax-exempt rate plus credit enhancement and
    other fees of 0.639%. Interest rate represents the rate at
    December 31, 2005 before credit enhancements. The Operating
    Partnership has outstanding interest rate cap arrangements that
    limit the Operating Partnerships exposure to increases in
    the base interest rate to 5%. At December 31, 2005 and
    2004, approximately $0 and $34,060, respectively, of this debt
    was secured by assets held for sale. In June 2005, the Operating
    Partnership executed an amendment to its master reimbursement
    agreement with FNMA, which agreement, among other things, sets
    forth the Operating Partnerships payment obligations under
    its variable-rate, tax-exempt bond indebtedness. The amendment
    deferred the commencement of principal repayments under the
    bonds by five years from the originally scheduled commencement
    date. The original maturity date for the bonds remains unchanged
    and the amortization schedule of the bonds was changed
    commensurate with the five-year deferral of the start of
    principal amortization.

Debt maturities




|           |  |   |         |    
|---------- |  | - | ------- | ---
|2006       |  | $ | 81,269  |    
|2007       |  |   | 259,572 | (1)
|2008       |  |   | 4,557   |    
|2009       |  |   | 75,901  |    
|2010       |  |   | 188,267 |    
|Thereafter |  |   | 371,049 |    
|           |  |   |        
|           |  | $ | 980,615 |    
|           |  |   |        



|    |                                                                       
|--- | ----------------------------------------------------------------------
|(1) | Includes outstanding balance on lines of credit totaling
    $101,379.

Debt issuances, retirements and modifications


2005













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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)









2004


30-year












Unsecured lines of credit













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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)









Interest paid




Pledged assets






|   |                                                   
|-- | --------------------------------------------------
|4. | INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
















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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|                                                                                           |                                       |              |        |         |      |   |         |         | 
|------------------------------------------------------------------------------------------ | ------------------------------------- | ------------ | ------ | ------- | ---- | - | ------- | ------- | 
|                                                                                           |                                       | December 31, |       
|                                                                                           |                                       |              |       
|Balance Sheet Data                                                                         |                                       | 2005         |        |         | 2004 |  
|                                                                                           |                                       |              |        |         |      |  
|Real estate assets, net of accumulated depreciation of $8,349
    and $9,712, respectively |                                       | $            | 96,000 |         |      | $ | 124,072 |        
|Assets held for sale, net                                                                  |                                       |              | 17,715 |         |      |   |        |        
|Cash and other                                                                             |                                       |              | 1,770  |         |      |   | 2,797   |        
|                                                                                           |                                       |              |        |         |      |  
|                                                                                           | Total assets                          |              | $      | 115,485 |      |   | $       | 126,869 | 
|                                                                                           |                                       |              |        |         |      |  
|Mortgage notes payable                                                                     |                                       | $            | 66,999 |         |      | $ | 83,468  |        
|Mortgage notes payable to Operating Partnership                                            |                                       |              | 5,967  |         |      |   |        |        
|Other liabilities                                                                          |                                       |              | 996    |         |      |   | 1,296   |        
|                                                                                           |                                       |              |        |         |      |  
|                                                                                           | Total liabilities                     |              |        | 73,962  |      |   |         | 84,764  | 
|Members equity                                                                            |                                       |              | 41,523 |         |      |   | 42,105  |        
|                                                                                           |                                       |              |        |         |      |  
|                                                                                           | Total liabilities and members equity |              | $      | 115,485 |      |   | $       | 126,869 | 
|                                                                                           |                                       |              |        |         |      |  
|Operating Partnerships equity investment                                                  |                                       | $            | 20,647 |         |      | $ | 21,320  |        
|                                                                                           |                                       |              |        |         |      |  

|                                            |                                      |                         |       |        |      |   |       |        |   |   |        |        |  
|------------------------------------------- | ------------------------------------ | ----------------------- | ----- | ------ | ---- | - | ----- | ------ | - | - | ------ | ------ | -
|                                            |                                      | Year Ended December 31, |      
|                                            |                                      |                         |      
|Income Statement Data                       |                                      | 2005                    |       |        | 2004 |   |       | 2003   |  
|                                            |                                      |                         |       |        |      |   |       |        |  
|Revenues                                    |                                      |                         |       |        |      |   |       |        |   |   |        |       
|                                            | Rental                               |                         | $     | 10,789 |      |   | $     | 10,451 |   |   | $      | 6,757  |  
|                                            | Other                                |                         |       | 840    |      |   |       | 776    |   |   |        | 392    |  
|                                            |                                      |                         |       |        |      |   |       |        |  
|                                            | Total revenues                       |                         |       | 11,629 |      |   |       | 11,227 |   |   |        | 7,149  |  
|                                            |                                      |                         |       |        |      |   |       |        |  
|Expenses                                    |                                      |                         |       |        |      |   |       |        |   |   |        |       
|                                            | Property operating and maintenance   |                         |       | 3,689  |      |   |       | 3,555  |   |   |        | 3,416  |  
|                                            | Depreciation and amortization        |                         |       | 2,621  |      |   |       | 2,579  |   |   |        | 2,481  |  
|                                            | Interest                             |                         |       | 2,752  |      |   |       | 2,658  |   |   |        | 2,338  |  
|                                            |                                      |                         |       |        |      |   |       |        |  
|                                            | Total expenses                       |                         |       | 9,062  |      |   |       | 8,792  |   |   |        | 8,235  |  
|                                            |                                      |                         |       |        |      |   |       |        |  
|Income (loss) from continuing operations    |                                      |                         | 2,567 |        |      |   | 2,435 |        |   |   | (1,086 | )     
|                                            |                                      |                         |       |        |      |   |       |        |  
|Discontinued Operations                     |                                      |                         |       |        |      |   |       |        |   |   |        |       
|                                            | Loss from discontinued operations    |                         |       | (176   | )    |   |       | (355   | ) |   |        | (683   | )
|                                            | Gain on sales of real estate assets  |                         |       | 2,834  |      |   |       |       |   |   |        | 26,179 |  
|                                            | Loss on early extinguishment of debt |                         |       | (273   | )    |   |       |       |   |   |        |       |  
|                                            |                                      |                         |       |        |      |   |       |        |  
|Income (loss) from discontinued operations  |                                      |                         | 2,385 |        |      |   | (355  | )      |   |   | 25,496 |       
|                                            |                                      |                         |       |        |      |   |       |        |  
|Net income                                  |                                      | $                       | 4,952 |        |      | $ | 2,080 |        |   | $ | 24,410 |       
|                                            |                                      |                         |       |        |      |   |       |        |  
|Operating Partnerships share of net income |                                      | $                       | 1,767 |        |      | $ | 1,083 |        |   | $ | 7,790  |       
|                                            |                                      |                         |       |        |      |   |       |        |  

25-year













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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)









|   |                                          
|-- | -----------------------------------------
|5. | REAL ESTATE ACQUISITIONS AND DISPOSITIONS

Acquisitions


319-unit


499-unit




Dispositions

















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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|                                    |                                                                                    |                |       |        |        |   |        |        |        |   |       |        |        | 
|----------------------------------- | ---------------------------------------------------------------------------------- | -------------- | ----- | ------ | ------ | - | ------ | ------ | ------ | - | ----- | ------ | ------ | 
|                                    |                                                                                    | 2005           |       |        | 2004   |   |        | 2003   |       
|                                    |                                                                                    |                |       |        |        |   |        |        |       
|Revenues                            |                                                                                    |                |       |        |        |   |        |        |        |   |       |       
|                                    | Rental                                                                             |                | $     | 13,222 |        |   | $      | 41,881 |        |   | $     | 68,330 |       
|                                    | Other                                                                              |                |       | 1,243  |        |   |        | 3,615  |        |   |       | 5,310  |       
|                                    |                                                                                    |                |       |        |        |   |        |        |       
|                                    |                                                                                    | Total revenues |       |        | 14,465 |   |        |        | 45,496 |   |       |        | 73,640 | 
|                                    |                                                                                    |                |       |        |        |   |        |        |       
|Expenses                            |                                                                                    |                |       |        |        |   |        |        |        |   |       |       
|                                    | Property operating and maintenance (exclusive of items shown
    separately below) |                |       | 7,241  |        |   |        | 19,478 |        |   |       | 30,039 |       
|                                    | Depreciation                                                                       |                |       |       |        |   |        | 5,837  |        |   |       | 12,381 |       
|                                    | Interest                                                                           |                |       | 2,161  |        |   |        | 5,532  |        |   |       | 9,220  |       
|                                    | Asset impairment charges                                                           |                |       |       |        |   |        | 2,233  |        |   |       | 17,462 |       
|                                    | Minority interest in consolidated property partnerships                            |                |       | 14     |        |   |        | (238   | )      |   |       | (419   | )     
|                                    |                                                                                    |                |       |        |        |   |        |        |       
|                                    |                                                                                    | Total expenses |       |        | 9,416  |   |        |        | 32,842 |   |       |        | 68,683 | 
|                                    |                                                                                    |                |       |        |        |   |        |        |       
|Income from discontinued operations |                                                                                    | $              | 5,049 |        |        | $ | 12,654 |        |        | $ | 4,957 |       
|                                    |                                                                                    |                |       |        |        |   |        |        |       







|                                                                                        |  |      |         |  
|--------------------------------------------------------------------------------------- |  | ---- | ------- | -
|                                                                                        |  | 2005 |        
|                                                                                        |  |      |        
|Condominium revenues, net                                                               |  | $    | 51,857  |  
|Condominium costs and expenses                                                          |  |      | (35,045 | )
|                                                                                        |  |      |        
|Gains on condominium sales, before minority interest and income
    taxes               |  |      | 16,812  |  
|Provision for income taxes                                                              |  |      | (594    | )
|                                                                                        |  |      |        
|Gains on condominium sales, net of minority interest and
    provision for income taxes |  | $    | 16,218  |  
|                                                                                        |  |      |        














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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|   |                 
|-- | ----------------
|6. | PARTNERS EQUITY

Common and Preferred Units












Common Unit Purchases













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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)





Computation of Earnings per Common Unit




|                                                                |  |                              |        |   |               |  |        |          |  |   |       |  
|--------------------------------------------------------------- |  | ---------------------------- | ------ | - | ------------- |  | ------ | -------- |  | - | ----- | -
|                                                                |  | Year Ended December 31, 2005 |       
|                                                                |  |                              |       
|                                                                |  | Income                       |        |   | Units         |  |        | Per-Unit | 
|                                                                |  | (Numerator)                  |        |   | (Denominator) |  |        | Amount   | 
|                                                                |  |                              |        |   |               |  |        |          | 
|Income from continuing operations                               |  | $                            | 6,575  |   |               |  |        |          |  |   |       |  
|Less: Preferred Unit distributions                              |  |                              | (7,637 | ) |               |  |        |          |  |   |       |  
|                                                                |  |                              |        |   |               |  |        |          | 
|Basic EPU                                                       |  |                              |        |   |               |  |        |          |  |   |       |  
|Loss from continuing operations available to common unitholders |  |                              | (1,062 | ) |               |  | 42,353 |          |  | $ | (0.03 | )
|                                                                |  |                              |        |   |               |  |        |          | 
|Effect of dilutive securities                                   |  |                              |        |   |               |  |        |          |  |   |       |  
|Stock options                                                   |  |                              |       |   |               |  |       | (1)      |  |   |       |  
|                                                                |  |                              |        |   |               |  |        |          | 
|Diluted EPU                                                     |  |                              |        |   |               |  |        |          |  |   |       |  
|Loss from continuing operations available to common unitholders |  | $                            | (1,062 | ) |               |  | 42,353 |          |  | $ | (0.03 | )
|                                                                |  |                              |        |   |               |  |        |          | 

|                                                                |  |                              |         |   |               |  |        |          |  |   |       |  
|--------------------------------------------------------------- |  | ---------------------------- | ------- | - | ------------- |  | ------ | -------- |  | - | ----- | -
|                                                                |  | Year Ended December 31, 2004 |        
|                                                                |  |                              |        
|                                                                |  | Income                       |         |   | Units         |  |        | Per-Unit | 
|                                                                |  | (Numerator)                  |         |   | (Denominator) |  |        | Amount   | 
|                                                                |  |                              |         |   |               |  |        |          | 
|Loss from continuing operations                                 |  | $                            | (25,088 | ) |               |  |        |          |  |   |       |  
|Less: Preferred Unit distributions                              |  |                              | (12,105 | ) |               |  |        |          |  |   |       |  
|Less: Redemption costs on preferred units                       |  |                              | (3,526  | ) |               |  |        |          |  |   |       |  
|                                                                |  |                              |         |   |               |  |        |          | 
|Basic EPU                                                       |  |                              |         |   |               |  |        |          |  |   |       |  
|Loss from continuing operations available to common unitholders |  |                              | (40,719 | ) |               |  | 42,474 |          |  | $ | (0.96 | )
|                                                                |  |                              |         |   |               |  |        |          | 
|Effect of dilutive securities                                   |  |                              |         |   |               |  |        |          |  |   |       |  
|Stock options                                                   |  |                              |        |   |               |  |       |          |  |   |       |  
|                                                                |  |                              |         |   |               |  |        |          | 
|Diluted EPU                                                     |  |                              |         |   |               |  |        |          |  |   |       |  
|Loss from continuing operations available to common unitholders |  | $                            | (40,719 | ) |               |  | 42,474 |          |  | $ | (0.96 | )
|                                                                |  |                              |         |   |               |  |        |          | 

|                                                                |  |                              |         |   |               |  |        |          |  |   |       |  
|--------------------------------------------------------------- |  | ---------------------------- | ------- | - | ------------- |  | ------ | -------- |  | - | ----- | -
|                                                                |  | Year Ended December 31, 2003 |        
|                                                                |  |                              |        
|                                                                |  | Income                       |         |   | Units         |  |        | Per-Unit | 
|                                                                |  | (Numerator)                  |         |   | (Denominator) |  |        | Amount   | 
|                                                                |  |                              |         |   |               |  |        |          | 
|Loss from continuing operations                                 |  | $                            | (25,652 | ) |               |  |        |          |  |   |       |  
|Less: Preferred unit distributions                              |  |                              | (17,049 | ) |               |  |        |          |  |   |       |  
|                                                                |  |                              |         |   |               |  |        |          | 
|Basic EPU                                                       |  |                              |         |   |               |  |        |          |  |   |       |  
|Loss from continuing operations available to common unitholders |  |                              | (42,701 | ) |               |  | 42,134 |          |  | $ | (1.02 | )
|                                                                |  |                              |         |   |               |  |        |          | 
|Effect of dilutive securities                                   |  |                              |         |   |               |  |        |          |  |   |       |  
|Stock options                                                   |  |                              |        |   |               |  |       |          |  |   |       |  
|                                                                |  |                              |         |   |               |  |        |          | 
|Diluted EPU                                                     |  |                              |         |   |               |  |        |          |  |   |       |  
|Loss from continuing operations available to common unitholders |  | $                            | (42,701 | ) |               |  | 42,134 |          |  | $ | (1.02 | )
|                                                                |  |                              |         |   |               |  |        |          | 



|    |                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the years ended December 31, 2005, 2004 and 2003, the
    potential dilution from the Companys outstanding stock
    options of 400, 115 and 11, respectively, was antidilutive
    to the loss from continuing operations per unit calculation. As
    such, these amounts were excluded from weighted average units in
    these years.










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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)









|   |                                    
|-- | -----------------------------------
|7. | SEVERANCE AND PROXY CONTEST CHARGES







|                                             |  |      |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                             |  | 2005 |        |   | 2004 |   |        | 2003 | 
|                                             |  |      |        |   |      |   |        |      | 
|Accrued severance charges, beginning of year |  | $    | 15,317 |   |      | $ | 19,171 |      |  | $ |       |  
|Severance charges                            |  |      | 796    |   |      |   |       |      |  |   | 21,506 |  
|Payments for period                          |  |      | (2,694 | ) |      |   | (4,858 | )    |  |   | (3,237 | )
|Interest accretion                           |  |      | 906    |   |      |   | 1,004  |      |  |   | 902    |  
|                                             |  |      |        |   |      |   |        |      | 
|Accrued severance charges, end of year       |  | $    | 14,325 |   |      | $ | 15,317 |      |  | $ | 19,171 |  
|                                             |  |      |        |   |      |   |        |      | 







|   |             
|-- | ------------
|8. | INCOME TAXES












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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)









Taxable REIT subsidiaries






|                                             |         |      |      |     | 
|-------------------------------------------- | ------- | ---- | ---- | --- | 
|                                             |         | 2005 |     
|                                             |         |      |     
|Current tax expense                          |         |      |      |    
|                                             | Federal |      | $    | 251 | 
|                                             | State   |      |      | 343 | 
|                                             |         |      |     
|                                             |         |      | 594  |    
|                                             |         |      |     
|Deferred tax expense                         |         |      |      |    
|                                             | Federal |      |      |    | 
|                                             | State   |      |      |    | 
|                                             |         |      |     
|                                             |         |      |     |    
|                                             |         |      |     
|Total income tax expense                     |         |      | 594  |    
|Income tax expense  discontinued operations |         |      | (594 | )  
|                                             |         |      |     
|Income tax expense  continuing operations   |         | $    |     |    
|                                             |         |      |     












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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|                                                     |                                     |      |        |       |      |   |        |       |  
|---------------------------------------------------- | ----------------------------------- | ---- | ------ | ----- | ---- | - | ------ | ----- | -
|                                                     |                                     | 2005 |        |       | 2004 |  
|                                                     |                                     |      |        |       |      |  
|Deferred tax assets                                  |                                     |      |        |       |      |   |        |      
|                                                     | Real estate asset basis differences |      | $      | 1,106 |      |   | $      | 1,106 |  
|                                                     | Tax NOLs                            |      |        | 415   |      |   |        | 3,300 |  
|                                                     | Accrued liabilities                 |      |        | 641   |      |   |        |      |  
|                                                     | Other                               |      |        | 269   |      |   |        | 769   |  
|                                                     |                                     |      |        |       |      |  
|                                                     |                                     |      | 2,431  |       |      |   | 5,175  |      
|                                                     |                                     |      |        |       |      |  
|Deferred tax liabilities                             |                                     |      |        |       |      |   |        |      
|                                                     | Amortization                        |      |        | (797  | )    |   |        | (824  | )
|                                                     |                                     |      |        |       |      |  
|                                                     |                                     |      | (797   | )     |      |   | (824   | )    
|                                                     |                                     |      |        |       |      |  
|Net deferred tax assets, before valuation allowances |                                     |      | 1,634  |       |      |   | 4,351  |      
|Valuation allowances                                 |                                     |      | (1,634 | )     |      |   | (4,351 | )    
|                                                     |                                     |      |        |       |      |  
|Net deferred tax assets (liabilities)                |                                     | $    |       |       |      | $ |       |      
|                                                     |                                     |      |        |       |      |  





|                                                     |  |      |     |   
|---------------------------------------------------- |  | ---- | --- | --
|                                                     |  | 2005 |    
|                                                     |  |      |    
|Federal tax rate                                     |  |      | 35  | % 
|State income tax, net of federal benefit             |  |      | 4   | % 
|Federal alternative minimum taxes                    |  |      | 3   | % 
|Change in valuation allowance of deferred tax assets |  |      | (35 | )%
|                                                     |  |      |    
|                                                     |  |      | 7   | % 
|                                                     |  |      |    



|   |                                
|-- | -------------------------------
|9. | EQUITY-BASED COMPENSATION PLANS

Equity Compensation Plans













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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)





Incentive Stock Plans








|                        |  |         |  |         |  |        
|----------------------- |  | ------- |  | ------- |  | -------
|                        |  | 2005    |  | 2004    |  | 2003   
|                        |  |         |  |         |  |        
|Dividend yield          |  | 5.5%    |  | 6.3%    |  | 6.5%   
|Expected volatility     |  | 17.1%   |  | 16.9%   |  | 17.1%  
|Risk-free interest rate |  | 3.1%    |  | 3.1%    |  | 2.9%   
|Expected option life    |  | 5 years |  | 5 years |  | 5 years



|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |   |       |   |  |   |    | 
|-------------------------------------------------------------- |  | ------ | ------ | -------- | -------------- | - | -- | ------ | -------- | - | -------------- | - |  | -------- | -- |  | -------------- | - | ----- | - |  | - | -- | 
|                                                               |  | 2005   |        |          | 2004           |   |    | 2003   |         
|                                                               |  |        |        |          |                |   |    |        |         
|                                                               |  |        |        | Weighted |                |   |    |        | Weighted |   |                |   |  | Weighted |   
|                                                               |  |        |        | Average  |                |   |    |        | Average  |   |                |   |  | Average  |   
|                                                               |  | Shares |        |          | Exercise Price |   |    | Shares |          |   | Exercise Price |   |  | Shares   |    |  | Exercise Price |  
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  
|Outstanding at beginning of year                               |  |        | 4,491  |          |                | $ | 33 |        |          |   | 4,735          |   |  | $        | 34 |  |                |   | 4,089 |   |  | $ | 35 | 
|Granted                                                        |  |        | 277    |          |                |   | 33 |        |          |   | 283            |   |  |          | 28 |  |                |   | 1,252 |   |  |   | 26 | 
|Exercised                                                      |  |        | (1,105 | )        |                |   | 33 |        |          |   | (277           | ) |  |          | 29 |  |                |   | (217  | ) |  |   | 28 | 
|Forfeited                                                      |  |        | (129   | )        |                |   | 30 |        |          |   | (250           | ) |  |          | 36 |  |                |   | (389  | ) |  |   | 32 | 
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  
|Outstanding at end of year                                     |  |        | 3,534  |          |                |   | 34 |        |          |   | 4,491          |   |  |          | 33 |  |                |   | 4,735 |   |  |   | 34 | 
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  
|Options exercisable at year-end                                |  |        | 2,437  |          |                |   |    |        |          |   | 3,131          |   |  |          |    |  |                |   | 3,233 |   |  |   |    | 
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  
|Weighted-average fair value of options granted during the year |  | $      | 2.73   |          |                |   |    |        |          | $ | 1.86           |   |  |          |    |  |                | $ | 1.59  |   |  |   |    | 
|                                                               |  |        |        |          |                |   |    |        |          |   |                |   |  |          |    |  |                |  














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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







Employee Stock Purchase Plan








|    |                      
|--- | ---------------------
|10. | EMPLOYEE BENEFIT PLAN





|    |                              
|--- | -----------------------------
|11. | COMMITMENTS AND CONTINGENCIES

Land, office and equipment leases




|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2006                |  | $ | 1,665   | 
|2007                |  |   | 1,625   | 
|2008                |  |   | 1,638   | 
|2009                |  |   | 1,628   | 
|2010                |  |   | 1,634   | 
|2011 and thereafter |  |   | 167,857 | 












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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)





Legal proceedings










|    |                           
|--- | --------------------------
|12. | RELATED PARTY TRANSACTIONS












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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)











|    |                                 
|--- | --------------------------------
|13. | DERIVATIVE FINANCIAL INSTRUMENTS











|    |                                    
|--- | -----------------------------------
|14. | FAIR VALUE OF FINANCIAL INSTRUMENTS












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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)















|    |                    
|--- | -------------------
|15. | SEGMENT INFORMATION

Segment Description








|  |                                                                                                                                                                                                                                                         
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fully stabilized communities  those apartment
    communities which have been stabilized (the earlier of the point
    at which a property reaches 95% occupancy or one year after
    completion of construction) for both the current and prior year.
| 
| | Communities stabilized during prior year  communities
    which reached stabilized occupancy in the prior year.                                                                                                                                        
| 
| | Condominium conversion communities  those portions of
    existing apartment communities being converted into condominiums
    that are reflected in continuing operations under
    SFAS No. 144 (see note 1).                                        
| 
| | Acquired communities  those communities acquired in
    the current or prior year.                                                                                                                                                                     










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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)





Segment Performance Measure













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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)





Segment Information




|                                                                 |                       |                         |         |         |      |   |         |         |  |   |         |         | 
|---------------------------------------------------------------- | --------------------- | ----------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                 |                       | Year Ended December 31, |        
|                                                                 |                       |                         |        
|                                                                 |                       | 2005                    |         |         | 2004 |   |         | 2003    | 
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Revenues                                                         |                       |                         |         |         |      |   |         |         |  |   |         |        
|Fully stabilized communities                                     |                       | $                       | 250,583 |         |      | $ | 243,430 |         |  | $ | 240,613 |        
|Communities stabilized during prior year                         |                       |                         | 7,184   |         |      |   | 7,007   |         |  |   | 2,008   |        
|Condominium conversion communities                               |                       |                         | 5,485   |         |      |   | 5,716   |         |  |   | 5,523   |        
|Acquired communities                                             |                       |                         | 10,808  |         |      |   | 4,477   |         |  |   |        |        
|Other property segments                                          |                       |                         | 22,488  |         |      |   | 21,154  |         |  |   | 19,558  |        
|Other                                                            |                       |                         | 255     |         |      |   | 1,000   |         |  |   | 457     |        
|                                                                 |                       |                         |         |         |      |   |         |         | 
|                                                                 | Consolidated revenues |                         | $       | 296,803 |      |   | $       | 282,784 |  |   | $       | 268,159 | 
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Contribution to Property Net Operating Income                    |                       |                         |         |         |      |   |         |         |  |   |         |        
|Fully stabilized communities                                     |                       | $                       | 153,423 |         |      | $ | 149,146 |         |  | $ | 149,963 |        
|Communities stabilized during prior year                         |                       |                         | 4,957   |         |      |   | 4,885   |         |  |   | 115     |        
|Condominium conversion communities                               |                       |                         | 3,613   |         |      |   | 3,675   |         |  |   | 3,569   |        
|Acquired communities                                             |                       |                         | 7,230   |         |      |   | 3,163   |         |  |   |        |        
|Other property segments, including corporate management expenses |                       |                         | (6,685  | )       |      |   | (6,438  | )       |  |   | (3,716  | )      
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Consolidated property net operating income                       |                       |                         | 162,538 |         |      |   | 154,431 |         |  |   | 149,931 |        
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Interest income                                                  |                       |                         | 661     |         |      |   | 817     |         |  |   | 894     |        
|Other revenues                                                   |                       |                         | 255     |         |      |   | 1,000   |         |  |   | 457     |        
|Minority interest in consolidated property partnerships          |                       |                         | 239     |         |      |   | 671     |         |  |   | 1,605   |        
|Depreciation                                                     |                       |                         | (76,248 | )       |      |   | (79,473 | )       |  |   | (77,595 | )      
|Interest                                                         |                       |                         | (58,898 | )       |      |   | (63,552 | )       |  |   | (61,640 | )      
|Amortization of deferred loan costs                              |                       |                         | (4,661  | )       |      |   | (4,304  | )       |  |   | (3,801  | )      
|General and administrative                                       |                       |                         | (18,307 | )       |      |   | (18,205 | )       |  |   | (13,841 | )      
|Investment, development and other                                |                       |                         | (5,242  | )       |      |   | (2,930  | )       |  |   | (2,715  | )      
|Termination of debt remarketing agreement (interest expense)     |                       |                         |        |         |      |   | (10,615 | )       |  |   |        |        
|Loss on early extinguishment of indebtedness                     |                       |                         |        |         |      |   | (4,011  | )       |  |   |        |        
|Severance charges                                                |                       |                         | (796    | )       |      |   |        |         |  |   | (21,506 | )      
|Proxy contest and related costs                                  |                       |                         |        |         |      |   |        |         |  |   | (5,231  | )      
|Equity in income (losses) of unconsolidated real estate entities |                       |                         | 1,767   |         |      |   | 1,083   |         |  |   | 7,790   |        
|Gain on sale of technology investment                            |                       |                         | 5,267   |         |      |   |        |         |  |   |        |        
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Income (loss) from continuing operations                         |                       |                         | 6,575   |         |      |   | (25,088 | )       |  |   | (25,652 | )      
|Income from discontinued operations                              |                       |                         | 142,472 |         |      |   | 122,265 |         |  |   | 45,749  |        
|                                                                 |                       |                         |         |         |      |   |         |         | 
|Net income                                                       |                       | $                       | 149,047 |         |      | $ | 97,177  |         |  | $ | 20,097  |        
|                                                                 |                       |                         |         |         |      |   |         |         | 










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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|    |                                   
|--- | ----------------------------------
|16. | SUPPLEMENTAL CASH FLOW INFORMATION















|    |                              
|--- | -----------------------------
|17. | SALE OF TECHNOLOGY INVESTMENT












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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands, except per unit data)







|    |                                            
|--- | -------------------------------------------
|18. | QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

10-Q 10-Qs.


|                                                     |  |                              |        |   |        |   |        |       |  |   |        |   |  |   |        |  
|---------------------------------------------------- |  | ---------------------------- | ------ | - | ------ | - | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                                                     |  | Year Ended December 31, 2005 |       
|                                                     |  |                              |       
|                                                     |  | First                        |        |   | Second |   |        | Third |  |   | Fourth |  
|                                                     |  |                              |        |   |        |   |        |       |  |   |        |  
|Revenues                                             |  | $                            | 71,580 |   |        | $ | 73,119 |       |  | $ | 76,071 |   |  | $ | 76,033 |  
|                                                     |  |                              |        |   |        |   |        |       |  |   |        |  
|Income (loss) from continuing operations             |  |                              | 1,188  |   |        |   | (867   | )     |  |   | 1,995  |   |  |   | 4,259  |  
|Income from discontinued operations                  |  |                              | 3,656  |   |        |   | 62,728 |       |  |   | 75,250 |   |  |   | 838    |  
|                                                     |  |                              |        |   |        |   |        |       |  |   |        |  
|Net income                                           |  |                              | 4,844  |   |        |   | 61,861 |       |  |   | 77,245 |   |  |   | 5,097  |  
|Distributions to preferred unitholders               |  |                              | (1,909 | ) |        |   | (1,910 | )     |  |   | (1,909 | ) |  |   | (1,909 | )
|Net income available to common unitholders           |  | $                            | 2,935  |   |        | $ | 59,951 |       |  | $ | 75,336 |   |  | $ | 3,188  |  
|                                                     |  |                              |        |   |        |   |        |       |  |   |        |  
|Earnings per Common Unit:                            |  |                              |        |   |        |   |        |       |  |   |        |   |  |   |        |  
|Net income available to common unitholders  basic   |  | $                            | 0.07   |   |        | $ | 1.42   |       |  | $ | 1.77   |   |  | $ | 0.08   |  
|Net income available to common unitholders  diluted |  | $                            | 0.07   |   |        | $ | 1.42   |       |  | $ | 1.75   |   |  | $ | 0.08   |  

|                                                                |  |                              |        |   |        |   |         |       |  |   |        |   |  |   |         |  
|--------------------------------------------------------------- |  | ---------------------------- | ------ | - | ------ | - | ------- | ----- |  | - | ------ | - |  | - | ------- | -
|                                                                |  | Year Ended December 31, 2004 |       
|                                                                |  |                              |       
|                                                                |  | First                        |        |   | Second |   |         | Third |  |   | Fourth |  
|                                                                |  |                              |        |   |        |   |         |       |  |   |        |  
|Revenues                                                        |  | $                            | 68,686 |   |        | $ | 69,860  |       |  | $ | 72,912 |   |  | $ | 71,326  |  
|                                                                |  |                              |        |   |        |   |         |       |  |   |        |  
|Loss from continuing operations                                 |  |                              | (2,542 | ) |        |   | (2,674  | )     |  |   | (3,513 | ) |  |   | (16,359 | )
|Income from discontinued operations                             |  |                              | 7,282  |   |        |   | 112,391 |       |  |   | 2,021  |   |  |   | 571     |  
|                                                                |  |                              |        |   |        |   |         |       |  |   |        |  
|Net income (loss)                                               |  |                              | 4,740  |   |        |   | 109,717 |       |  |   | (1,492 | ) |  |   | (15,788 | )
|Distributions to preferred unitholders                          |  |                              | (3,997 | ) |        |   | (3,310  | )     |  |   | (2,889 | ) |  |   | (1,909  | )
|Redemption costs on preferred stock and units                   |  |                              | (1,716 | ) |        |   |        |       |  |   | (1,810 | ) |  |   |        |  
|                                                                |  |                              |        |   |        |   |         |       |  |   |        |  
|Net income (loss) available to common unitholders               |  | $                            | (973   | ) |        | $ | 106,407 |       |  | $ | (6,191 | ) |  | $ | (17,697 | )
|                                                                |  |                              |        |   |        |   |         |       |  |   |        |  
|Earnings per Common Unit:                                       |  |                              |        |   |        |   |         |       |  |   |        |   |  |   |         |  
|Net income (loss) available to common unitholders 
    basic   |  | $                            | (0.02  | ) |        | $ | 2.49    |       |  | $ | (0.14  | ) |  | $ | (0.42   | )
|Net income (loss) available to common unitholders 
    diluted |  | $                            | (0.02  | ) |        | $ | 2.49    |       |  | $ | (0.14  | ) |  | $ | (0.42   | )










---



##### Table of Contents





POST PROPERTIES, INC.


POST APARTMENT HOMES, L.P.


REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION


December 31, 2005


(Dollars in thousands)


|                          |  |             |            |         |              |               |        |             |              |                       |                            |  |                |   |   |              |  |   |              |  |  |          |        |  |  |   |         |  |  |   |         | 
|------------------------- |  | ----------- | ---------- | ------- | ------------ | ------------- | ------ | ----------- | ------------ | --------------------- | -------------------------- |  | -------------- | - | - | ------------ |  | - | ------------ |  |  | -------- | ------ |  |  | - | ------- |  |  | - | ------- | 
|                          |  |             |            |         |              |               |        |             |              | Gross amount at which |                           
|                          |  |             |            |         |              | Initial costs |        | Costs       |              |                       | Carried at close of period | 
|                          |  |             |            |         |              |               |        | Capitalized |              |                       |                            | 
|                          |  |             |            | Related |              |               |        |             | Building and |                       | Subsequent                 |  |                |   |   | Building and |  |   |             
|                          |  | Description |            |         | Encumbrances |               |        | Land        |              |                       | Improvements               |  | to Acquisition |   |   | Land         |  |   | Improvements |  |  | Total(1) |       
|                          |  |             |            |         |              |               |        |             |              |                       |                            |  |                |   |   |              |  |   |              |  |  |          |       
|Georgia                   |  |             |            |         |              |               |        |             |              |                       |                            |  |                |   |   |              |  |   |              |  |  |          |        |  |  |   |         |  |  |   |         | 
|Post
    Ashford®         |  |             | Apartments |         |              | $             | 9,895  | (2)         |              | $                     | 1,906                      |  |                | $ |  |              |  | $ | 9,183        |  |  | $        | 1,906  |  |  | $ | 9,183   |  |  | $ | 11,089  | 
|Post
    Briarclifftm     |  |             | Apartments |         |              |               |       |             |              |                       | 13,344                     |  |                |   |  |              |  |   | 47,589       |  |  |          | 13,344 |  |  |   | 47,589  |  |  |   | 60,933  | 
|Post
    Brookhaven®      |  |             | Apartments |         |              |               |       |             |              |                       | 7,921                      |  |                |   |  |              |  |   | 33,575       |  |  |          | 7,921  |  |  |   | 33,575  |  |  |   | 41,496  | 
|Post
    Chastain®        |  |             | Apartments |         |              |               | 28,607 |             |              |                       | 6,352                      |  |                |   |  |              |  |   | 41,829       |  |  |          | 6,779  |  |  |   | 41,402  |  |  |   | 48,181  | 
|Post Collier
    Hills®   |  |             | Apartments |         |              |               |       |             |              |                       | 6,487                      |  |                |   |  |              |  |   | 25,955       |  |  |          | 7,203  |  |  |   | 25,239  |  |  |   | 32,442  | 
|Post
    Crest®           |  |             | Apartments |         |              |               | 24,546 |             |              |                       | 4,733                      |  |                |   |  |              |  |   | 25,499       |  |  |          | 4,763  |  |  |   | 25,469  |  |  |   | 30,232  | 
|Post
    Crossing®        |  |             | Apartments |         |              |               |       |             |              |                       | 3,951                      |  |                |   |  |              |  |   | 20,372       |  |  |          | 3,951  |  |  |   | 20,372  |  |  |   | 24,323  | 
|Post
    Dunwoody®        |  |             | Apartments |         |              |               |       |             |              |                       | 4,917                      |  |                |   |  |              |  |   | 29,936       |  |  |          | 4,961  |  |  |   | 29,892  |  |  |   | 34,853  | 
|Post
    Gardens®         |  |             | Apartments |         |              |               |       |             |              |                       | 5,859                      |  |                |   |  |              |  |   | 34,768       |  |  |          | 5,931  |  |  |   | 34,696  |  |  |   | 40,627  | 
|Post
    Glen®            |  |             | Apartments |         |              |               | 18,799 |             |              |                       | 5,591                      |  |                |   |  |              |  |   | 22,186       |  |  |          | 5,784  |  |  |   | 21,993  |  |  |   | 27,777  | 
|Post Lenox
    Park®      |  |             | Apartments |         |              |               | 10,561 |             |              |                       | 3,132                      |  |                |   |  |              |  |   | 11,336       |  |  |          | 3,132  |  |  |   | 11,336  |  |  |   | 14,468  | 
|Post
    Lindbergh®       |  |             | Apartments |         |              |               |       |             |              |                       | 6,268                      |  |                |   |  |              |  |   | 27,614       |  |  |          | 6,652  |  |  |   | 27,230  |  |  |   | 33,882  | 
|Post
    Oaktm            |  |             | Apartments |         |              |               |       |             |              |                       | 2,027                      |  |                |   |  |              |  |   | 8,844        |  |  |          | 2,027  |  |  |   | 8,844   |  |  |   | 10,871  | 
|Post
    Oglethorpe®      |  |             | Apartments |         |              |               |       |             |              |                       | 3,662                      |  |                |   |  |              |  |   | 17,817       |  |  |          | 3,662  |  |  |   | 17,817  |  |  |   | 21,479  | 
|Post
    Parksidetm       |  |             | Mixed Use  |         |              |               |       |             |              |                       | 3,402                      |  |                |   |  |              |  |   | 20,349       |  |  |          | 3,465  |  |  |   | 20,286  |  |  |   | 23,751  | 
|Post Peachtree
    Hills® |  |             | Apartments |         |              |               |       |             |              |                       | 4,215                      |  |                |   |  |              |  |   | 14,944       |  |  |          | 4,857  |  |  |   | 14,302  |  |  |   | 19,159  | 
|Post
    Renaissance®(3)  |  |             | Apartments |         |              |               |       |             |              |                       |                           |  |                |   |  |              |  |   | 21,046       |  |  |          |       |  |  |   | 21,046  |  |  |   | 21,046  | 
|Post
    Ridge®           |  |             | Apartments |         |              |               |       |             |              |                       | 5,150                      |  |                |   |  |              |  |   | 32,162       |  |  |          | 5,150  |  |  |   | 32,162  |  |  |   | 37,312  | 
|Post
    Springtm         |  |             | Apartments |         |              |               |       |             |              |                       | 2,105                      |  |                |   |  |              |  |   | 38,416       |  |  |          | 2,105  |  |  |   | 38,416  |  |  |   | 40,521  | 
|Post
    Summit®          |  |             | Apartments |         |              |               |       |             |              |                       | 1,575                      |  |                |   |  |              |  |   | 6,733        |  |  |          | 1,575  |  |  |   | 6,733   |  |  |   | 8,308   | 
|Post
    Valley®          |  |             | Apartments |         |              |               | 18,600 | (2)         |              |                       | 1,117                      |  |                |   |  |              |  |   | 20,351       |  |  |          | 1,117  |  |  |   | 20,351  |  |  |   | 21,468  | 
|Post
    Vinings®         |  |             | Apartments |         |              |               |       |             |              |                       | 4,322                      |  |                |   |  |              |  |   | 22,945       |  |  |          | 5,668  |  |  |   | 21,599  |  |  |   | 27,267  | 
|Post
    Woods®           |  |             | Apartments |         |              |               | 25,326 |             |              |                       | 1,378                      |  |                |   |  |              |  |   | 29,126       |  |  |          | 3,070  |  |  |   | 27,434  |  |  |   | 30,504  | 
|Post
    Stratfordtm(3)   |  |             | Apartments |         |              |               |       |             |              |                       | 328                        |  |                |   |  |              |  |   | 24,487       |  |  |          | 620    |  |  |   | 24,195  |  |  |   | 24,815  | 
|Post
    Riverside®       |  |             | Mixed Use  |         |              |               |       |             |              |                       | 11,130                     |  |                |   |  |              |  |   | 110,567      |  |  |          | 12,457 |  |  |   | 109,240 |  |  |   | 121,697 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                          |  |              |        |  |              |  |               |               |  |             |               |  |  |  |            | 
|------------------------- |  | ------------ | ------ |  | ------------ |  | ------------- | ------------- |  | ----------- | ------------- |  |  |  | ---------- | 
|                          |  | Accumulated  |        |  | Date of      |  |               |               |  | Depreciable |              
|                          |  | Depreciation |        |  | Construction |  |               | Date Acquired |  |             | Lives Years   | 
|                          |  |              |        |  |              |  |               |               |  |             |               | 
|Georgia                   |  |              |        |  |              |  |               |               |  |             |               |  |  |  |            | 
|Post
    Ashford®         |  | $            | 4,751  |  |              |  | 04/86  06/87 |               |  |             | 04/86         |  |  |  | 5-40 Years | 
|Post
    Briarclifftm     |  |              | 13,661 |  |              |  | 12/96         |               |  |             | 09/96         |  |  |  | 5-40 Years | 
|Post
    Brookhaven®      |  |              | 16,762 |  |              |  | 07/89  12/92 |               |  |             | 03/89         |  |  |  | 5-40 Years | 
|Post
    Chastain®        |  |              | 20,173 |  |              |  | 06/88  10/90 |               |  |             | 06/88         |  |  |  | 5-40 Years | 
|Post Collier
    Hills®   |  |              | 8,163  |  |              |  | 10/95         |               |  |             | 06/95         |  |  |  | 5-40 Years | 
|Post
    Crest®           |  |              | 8,624  |  |              |  | 09/95         |               |  |             | 10/94         |  |  |  | 5-40 Years | 
|Post
    Crossing®        |  |              | 6,682  |  |              |  | 04/94  08/95 |               |  |             | 11/93         |  |  |  | 5-40 Years | 
|Post
    Dunwoody®        |  |              | 11,389 |  |              |  | 11/88         |               |  |             | 12/84 & 8/94  |  |  |  | 5-40 Years | 
|Post
    Gardens®         |  |              | 9,845  |  |              |  | 07/96         |               |  |             | 05/96         |  |  |  | 5-40 Years | 
|Post
    Glen®            |  |              | 6,976  |  |              |  | 07/96         |               |  |             | 05/96         |  |  |  | 5-40 Years | 
|Post Lenox
    Park®      |  |              | 3,839  |  |              |  | 03/94  05/95 |               |  |             | 03/94         |  |  |  | 5-40 Years | 
|Post
    Lindbergh®       |  |              | 7,682  |  |              |  | 11/96         |               |  |             | 08/96         |  |  |  | 5-40 Years | 
|Post
    Oaktm            |  |              | 3,807  |  |              |  | 09/92  12/93 |               |  |             | 09/92         |  |  |  | 5-40 Years | 
|Post
    Oglethorpe®      |  |              | 6,119  |  |              |  | 03/93  10/94 |               |  |             | 03/93         |  |  |  | 5-40 Years | 
|Post
    Parksidetm       |  |              | 5,266  |  |              |  | 02/99         |               |  |             | 12/97         |  |  |  | 5-40 Years | 
|Post Peachtree
    Hills® |  |              | 5,562  |  |              |  | 02/92  09/94 |               |  |             | 02/92 & 09/92 |  |  |  | 5-40 Years | 
|Post
    Renaissance®(3)  |  |              | 8,422  |  |              |  | 07/91  12/94 |               |  |             | 06/91 & 01/94 |  |  |  | 5-40 Years | 
|Post
    Ridge®           |  |              | 8,809  |  |              |  | 10/96         |               |  |             | 07/96         |  |  |  | 5-40 Years | 
|Post
    Springtm         |  |              | 8,154  |  |              |  | 09/99         |               |  |             | 09/99         |  |  |  | 5-40 Years | 
|Post
    Summit®          |  |              | 3,551  |  |              |  | 01/90  12/90 |               |  |             | 01/90         |  |  |  | 5-40 Years | 
|Post
    Valley®          |  |              | 10,378 |  |              |  | 03/86  04/88 |               |  |             | 12/85         |  |  |  | 5-40 Years | 
|Post
    Vinings®         |  |              | 11,354 |  |              |  | 05/88  09/91 |               |  |             | 05/88         |  |  |  | 5-40 Years | 
|Post
    Woods®           |  |              | 15,013 |  |              |  | 03/76  09/83 |               |  |             | 06/76         |  |  |  | 5-40 Years | 
|Post
    Stratfordtm(3)   |  |              | 6,282  |  |              |  | 04/99         |               |  |             | 01/99         |  |  |  | 5-40 Years | 
|Post
    Riverside®       |  |              | 31,734 |  |              |  | 07/96         |               |  |             | 01/96         |  |  |  | 5-40 Years | 












---



##### Table of Contents





POST PROPERTIES, INC.


POST APARTMENT HOMES, L.P.


REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION


December 31, 2005


(Dollars in thousands)


|                              |  |             |            |         |              |               |        |      |              |                       |              |                            |  |                |        |  |              |  |         |              |  |  |          |  |  |  |         |  |  |  |         | 
|----------------------------- |  | ----------- | ---------- | ------- | ------------ | ------------- | ------ | ---- | ------------ | --------------------- | ------------ | -------------------------- |  | -------------- | ------ |  | ------------ |  | ------- | ------------ |  |  | -------- |  |  |  | ------- |  |  |  | ------- | 
|                              |  |             |            |         |              |               |        |      |              | Gross amount at which |             
|                              |  |             |            |         |              | Initial costs |        |      | Costs        |                       |              | Carried at close of period | 
|                              |  |             |            |         |              |               |        |      | Capitalized  |                       |              |                            | 
|                              |  |             |            | Related |              |               |        |      | Building and |                       |              | Subsequent                 |  |                |        |  | Building and |  |         |             
|                              |  | Description |            |         | Encumbrances |               |        | Land |              |                       | Improvements |                            |  | to Acquisition |        |  | Land         |  |         | Improvements |  |  | Total(1) | 
|                              |  |             |            |         |              |               |        |      |              |                       |              |                            |  |                |        |  |              |  |         |              |  |  |          | 
|Texas                         |  |             |            |         |              |               |        |      |              |                       |              |                            |  |                |        |  |              |  |         |              |  |  |          |  |  |  |         |  |  |  |         | 
|Post Addison
    Circletm     |  |             | Mixed Use  |         |              |               | 86,061 |      |              |                       | 2,885        |                            |  |                | 41,482 |  |              |  | 122,393 |              |  |  | 8,382    |  |  |  | 158,378 |  |  |  | 166,760 | 
|Post Coles Corner
    tm     |  |             | Mixed Use  |         |              |               |       |      |              |                       | 1,886        |                            |  |                | 18,006 |  |              |  | 2,115   |              |  |  | 2,086    |  |  |  | 19,921  |  |  |  | 22,007  | 
|Post
    Squaretm             |  |             | Mixed Use  |         |              |               |       |      |              |                       | 4,565        |                            |  |                | 24,595 |  |              |  | 1,377   |              |  |  | 4,565    |  |  |  | 25,972  |  |  |  | 30,537  | 
|Post
    Heightstm/ Gallery   |  |             | Mixed Use  |         |              |               |       |      |              |                       | 5,455        |                            |  |                | 15,559 |  |              |  | 30,211  |              |  |  | 5,812    |  |  |  | 45,413  |  |  |  | 51,225  | 
|Post Legacy                   |  |             | Mixed Use  |         |              |               |       |      |              |                       | 684          |                            |  |                |       |  |              |  | 33,389  |              |  |  | 811      |  |  |  | 33,262  |  |  |  | 34,073  | 
|Post Midtown
    Square®      |  |             | Mixed Use  |         |              |               |       |      |              |                       | 4,408        |                            |  |                | 1,412  |  |              |  | 47,584  |              |  |  | 3,436    |  |  |  | 49,968  |  |  |  | 53,404  | 
|Post
    Abbeytm              |  |             | Apartments |         |              |               |       |      |              |                       | 575          |                            |  |                | 6,276  |  |              |  | 1,748   |              |  |  | 575      |  |  |  | 8,024   |  |  |  | 8,599   | 
|Post
    Meridiantm           |  |             | Apartments |         |              |               |       |      |              |                       | 1,535        |                            |  |                | 11,605 |  |              |  | 1,265   |              |  |  | 1,535    |  |  |  | 12,870  |  |  |  | 14,405  | 
|Post Rice
    Loftstm(3)      |  |             | Mixed Use  |         |              |               |       |      |              |                       | 449          |                            |  |                | 13,393 |  |              |  | 27,085  |              |  |  | 449      |  |  |  | 40,478  |  |  |  | 40,927  | 
|Post
    Vineyardtm           |  |             | Apartments |         |              |               |       |      |              |                       | 1,133        |                            |  |                | 8,560  |  |              |  | 491     |              |  |  | 1,133    |  |  |  | 9,051   |  |  |  | 10,184  | 
|Post
    Vintagetm            |  |             | Apartments |         |              |               |       |      |              |                       | 2,614        |                            |  |                | 12,188 |  |              |  | 771     |              |  |  | 2,614    |  |  |  | 12,959  |  |  |  | 15,573  | 
|Post Worthington
    tm       |  |             | Mixed Use  |         |              |               |       |      |              |                       | 3,744        |                            |  |                | 34,700 |  |              |  | 2,964   |              |  |  | 3,744    |  |  |  | 37,664  |  |  |  | 41,408  | 
|Post Uptown
    Villagetm     |  |             | Apartments |         |              |               | 15,380 |      |              |                       | 3,955        |                            |  |                | 22,120 |  |              |  | 19,215  |              |  |  | 6,682    |  |  |  | 38,608  |  |  |  | 45,290  | 
|Post Wilson
    Buildingtm(3) |  |             | Mixed Use  |         |              |               |       |      |              |                       |             |                            |  |                | 689    |  |              |  | 20,835  |              |  |  |         |  |  |  | 21,524  |  |  |  | 21,524  | 
|Florida                       |  |             |            |         |              |               |        |      |              |                       |              |                            |  |                |        |  |              |  |         |              |  |  |          |  |  |  |         |  |  |  |         | 
|Post Harbour Place
    tm     |  |             | Mixed Use  |         |              |               |       |      |              |                       | 3,854        |                            |  |                |       |  |              |  | 64,921  |              |  |  | 8,312    |  |  |  | 60,463  |  |  |  | 68,775  | 
|Post Hyde
    Park®           |  |             | Apartments |         |              |               |       |      |              |                       | 3,498        |                            |  |                |       |  |              |  | 26,900  |              |  |  | 5,108    |  |  |  | 25,290  |  |  |  | 30,398  | 
|Post
    Parksidetm           |  |             | Mixed Use  |         |              |               |       |      |              |                       | 2,493        |                            |  |                |       |  |              |  | 31,260  |              |  |  | 2,493    |  |  |  | 31,260  |  |  |  | 33,753  | 
|Post Rocky
    Point®         |  |             | Apartments |         |              |               | 57,000 |      |              |                       | 10,510       |                            |  |                |       |  |              |  | 62,752  |              |  |  | 10,567   |  |  |  | 62,695  |  |  |  | 73,262  | 
|Virginia                      |  |             |            |         |              |               |        |      |              |                       |              |                            |  |                |        |  |              |  |         |              |  |  |          |  |  |  |         |  |  |  |         | 
|Post
    Corners®             |  |             | Apartments |         |              |               | 17,226 |      |              |                       | 4,404        |                            |  |                |       |  |              |  | 24,517  |              |  |  | 4,493    |  |  |  | 24,428  |  |  |  | 28,921  | 
|Post
    Forest®              |  |             | Apartments |         |              |               |       |      |              |                       | 8,590        |                            |  |                |       |  |              |  | 27,030  |              |  |  | 9,106    |  |  |  | 26,514  |  |  |  | 35,620  | 
|Post Pentagon Row
    tm(3)   |  |             | Apartments |         |              |               |       |      |              |                       | 2,359        |                            |  |                | 7,659  |  |              |  | 82,404  |              |  |  | 3,470    |  |  |  | 88,952  |  |  |  | 92,422  | 
|Post Carlyle                  |  |             | Mixed Use  |         |              |               |       |      |              |                       |             |                            |  |                |       |  |              |  | 46,934  |              |  |  |         |  |  |  | 46,934  |  |  |  | 46,934  | 
|Post Tysons Corner
    tm     |  |             | Apartments |         |              |               | 47,235 |      |              |                       | 20,000       |                            |  |                | 65,478 |  |              |  | 1,205   |              |  |  | 20,000   |  |  |  | 66,683  |  |  |  | 86,683  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                              |  |              |        |  |              |  |               |               |  |             |             |  |  |  |            | 
|----------------------------- |  | ------------ | ------ |  | ------------ |  | ------------- | ------------- |  | ----------- | ----------- |  |  |  | ---------- | 
|                              |  | Accumulated  |        |  | Date of      |  |               |               |  | Depreciable |            
|                              |  | Depreciation |        |  | Construction |  |               | Date Acquired |  |             | Lives Years | 
|                              |  |              |        |  |              |  |               |               |  |             |             | 
|Texas                         |  |              |        |  |              |  |               |               |  |             |             |  |  |  |            | 
|Post Addison
    Circletm     |  |              | 40,839 |  |              |  | 10/97         |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post Coles Corner
    tm     |  |              | 5,763  |  |              |  | N/A           |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post
    Squaretm             |  |              | 5,694  |  |              |  | N/A           |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post
    Heightstm/ Gallery   |  |              | 11,006 |  |              |  | 10/97         |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post Legacy                   |  |              | 6,520  |  |              |  | 03/99         |               |  |             | 03/99       |  |  |  | 5-40 Years | 
|Post Midtown
    Square®      |  |              | 11,045 |  |              |  | 10/97         |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post
    Abbeytm              |  |              | 1,736  |  |              |  | N/A           |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post
    Meridiantm           |  |              | 3,339  |  |              |  | N/A           |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post Rice
    Loftstm(3)      |  |              | 7,471  |  |              |  | 10/97         |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post
    Vineyardtm           |  |              | 1,939  |  |              |  | N/A           |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post
    Vintagetm            |  |              | 3,118  |  |              |  | N/A           |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post Worthington
    tm       |  |              | 9,116  |  |              |  | N/A           |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post Uptown
    Villagetm     |  |              | 8,300  |  |              |  | N/A           |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Post Wilson
    Buildingtm(3) |  |              | 3,025  |  |              |  | 10/97         |               |  |             | 10/97       |  |  |  | 5-40 Years | 
|Florida                       |  |              |        |  |              |  |               |               |  |             |             |  |  |  |            | 
|Post Harbour Place
    tm     |  |              | 12,559 |  |              |  | 03/97         |               |  |             | 01/97       |  |  |  | 5-40 Years | 
|Post Hyde
    Park®           |  |              | 7,585  |  |              |  | 09/94         |               |  |             | 07/94       |  |  |  | 5-40 Years | 
|Post
    Parksidetm           |  |              | 6,780  |  |              |  | 03/99         |               |  |             | 03/99       |  |  |  | 5-40 Years | 
|Post Rocky
    Point®         |  |              | 17,552 |  |              |  | 04/94  11/96 |               |  |             | 02/94&09/96 |  |  |  | 5-40 Years | 
|Virginia                      |  |              |        |  |              |  |               |               |  |             |             |  |  |  |            | 
|Post
    Corners®             |  |              | 7,206  |  |              |  | 06/94         |               |  |             | 06/94       |  |  |  | 5-40 Years | 
|Post
    Forest®              |  |              | 14,747 |  |              |  | 01/89  12/90 |               |  |             | 03/88       |  |  |  | 5-40 Years | 
|Post Pentagon Row
    tm(3)   |  |              | 10,223 |  |              |  | 06/99         |               |  |             | 2/99        |  |  |  | 5-40 Years | 
|Post Carlyle                  |  |              |       |  |              |  | 12/04         |               |  |             | N/A         |  |  |  | 5-40 Years | 
|Post Tysons Corner
    tm     |  |              | 3,316  |  |              |  | N/A           |               |  |             | 06/04       |  |  |  | 5-40 Years | 












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##### Table of Contents





POST PROPERTIES, INC.


POST APARTMENT HOMES, L.P.


REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION


December 31, 2005


(Dollars in thousands)


|                                 |       |             |            |         |              |               |        |         |              |  |                       |                            |  |             |        |         |              |  |         |              |  |  |          |         |  |  |         |           |     |  |         |           |    
|-------------------------------- | ----- | ----------- | ---------- | ------- | ------------ | ------------- | ------ | ------- | ------------ |  | --------------------- | -------------------------- |  | ----------- | ------ | ------- | ------------ |  | ------- | ------------ |  |  | -------- | ------- |  |  | ------- | --------- | --- |  | ------- | --------- | ---
|                                 |       |             |            |         |              |               |        | Costs   |              |  | Gross Amount at Which |                           
|                                 |       |             |            |         |              | Initial Costs |        |         | Capitalized  |  |                       | Carried at Close of Period | 
|                                 |       |             |            |         |              |               |        |         | Subsequent   |  |                       |                            | 
|                                 |       |             |            | Related |              |               |        |         | Building and |  |                       | to                         |  |             |        |         | Building and |  |         |             
|                                 |       | Description |            |         | Encumbrances |               |        | Land    |              |  | Improvements          |                            |  | Acquisition |        |         | Land         |  |         | Improvements |  |  | Total(1) |        
|                                 |       |             |            |         |              |               |        |         |              |  |                       |                            |  |             |        |         |              |  |         |              |  |  |          |        
|New York                         |       |             |            |         |              |               |        |         |              |  |                       |                            |  |             |        |         |              |  |         |              |  |  |          |         |  |  |         |           |     |  |         |          
|Post
    Toscanatm               |       |             | Mixed Use  |         |              |               |       |         |              |  | 15,976                |                            |  |             |       |         |              |  | 76,515  |              |  |  | 17,156   |         |  |  | 75,335  |           |     |  | 92,491  |          
|Post
    Luminariatm             |       |             | Mixed Use  |         |              |               | 35,000 |         |              |  | 4,938                 |                            |  |             |       |         |              |  | 45,885  |              |  |  | 4,938    |         |  |  | 45,885  |           |     |  | 50,823  |          
|North Carolina                   |       |             |            |         |              |               |        |         |              |  |                       |                            |  |             |        |         |              |  |         |              |  |  |          |         |  |  |         |           |     |  |         |          
|Post Ballantyne                  |       |             | Apartments |         |              |               |       |         |              |  | 6,400                 |                            |  |             | 30,850 |         |              |  | 1,693   |              |  |  | 6,400    |         |  |  | 32,543  |           |     |  | 38,943  |          
|Post Uptown Place
    tm         |       |             | Mixed Use  |         |              |               |       |         |              |  | 2,336                 |                            |  |             |       |         |              |  | 28,766  |              |  |  | 2,363    |         |  |  | 28,739  |           |     |  | 31,102  |          
|Post Gateway Place
    tm        |       |             | Mixed Use  |         |              |               |       |         |              |  | 2,424                 |                            |  |             |       |         |              |  | 60,948  |              |  |  | 3,481    |         |  |  | 59,891  |           |     |  | 63,372  |          
|Post Park at Phillips
    Place® |       |             | Mixed Use  |         |              |               |       |         |              |  | 4,305                 |                            |  |             |       |         |              |  | 37,675  |              |  |  | 4,307    |         |  |  | 37,673  |           |     |  | 41,980  |          
|Colorado                         |       |             |            |         |              |               |        |         |              |  |                       |                            |  |             |        |         |              |  |         |              |  |  |          |         |  |  |         |           |     |  |         |          
|Post Uptown Square
    tm        |       |             | Mixed Use  |         |              |               |       |         |              |  | 2,963                 |                            |  |             | 580    |         |              |  | 101,826 |              |  |  | 3,991    |         |  |  | 101,378 |           |     |  | 105,369 |          
|Miscellaneous Investments        |       |             |            |         |              |               |       |         |              |  | 13,212                |                            |  |             | 5,496  |         |              |  | 69,433  |              |  |  | 63,316   |         |  |  | 24,825  |           |     |  | 88,141  |          
|                                 |       |             |            |         |              |               |        |         |              |  |                       |                            |  |             |        |         |              |  |         |              |  |  |          |        
|                                 | Total |             |            |         |              |               | $      | 394,236 |              |  | $                     | 253,022                    |  |             | $      | 320,648 |              |  | $       | 1,799,736    |  |  | $        | 329,425 |  |  | $       | 2,043,981 | (4) |  | $       | 2,373,406 | (4)
|                                 |       |             |            |         |              |               |        |         |              |  |                       |                            |  |             |        |         |              |  |         |              |  |  |          |        

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                 |       |              |        |         |              |  |       |          |  |  |             |  |  |  |            |  | 
|-------------------------------- | ----- | ------------ | ------ | ------- | ------------ |  | ----- | -------- |  |  | ----------- |  |  |  | ---------- |  | 
|                                 |       | Accumulated  |        |         | Date of      |  |       | Date     |  |  | Depreciable | 
|                                 |       | Depreciation |        |         | Construction |  |       | Acquired |  |  | Lives Years | 
|                                 |       |              |        |         |              |  |       |          |  |  |             | 
|New York                         |       |              |        |         |              |  |       |          |  |  |             |  |  |  |            | 
|Post
    Toscanatm               |       |              | 5,237  |         |              |  | 01/02 |          |  |  | 01/02       |  |  |  | 5-40 Years | 
|Post
    Luminariatm             |       |              | 7,336  |         |              |  | 03/01 |          |  |  | 03/01       |  |  |  | 5-40 Years | 
|North Carolina                   |       |              |        |         |              |  |       |          |  |  |             |  |  |  |            | 
|Post Ballantyne                  |       |              | 748    |         |              |  | N/A   |          |  |  | 05/05       |  |  |  | 5-40 Years | 
|Post Uptown Place
    tm         |       |              | 5,637  |         |              |  | 09/98 |          |  |  | 09/98       |  |  |  | 5-40 Years | 
|Post Gateway Place
    tm        |       |              | 9,533  |         |              |  | 11/00 |          |  |  | 08/99       |  |  |  | 5-40 Years | 
|Post Park at Phillips
    Place® |       |              | 11,372 |         |              |  | 01/96 |          |  |  | 11/95       |  |  |  | 5-40 Years | 
|Colorado                         |       |              |        |         |              |  |       |          |  |  |             |  |  |  |            | 
|Post Uptown Square
    tm        |       |              | 17,328 |         |              |  | 10/97 |          |  |  | 10/97       |  |  |  | 5-40 Years | 
|Miscellaneous Investments        |       |              | 17,886 |         |              |  |       |          |  |  |             |  |  |  | 5-40 Years | 
|                                 |       |              |        |         |              |  |       |          |  |  |             | 
|                                 | Total |              | $      | 516,954 |              |  |       |          |  |  |             |  |  |  |            |  | 
|                                 |       |              |        |         |              |  |       |          |  |  |             | 



|    |                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The aggregate cost for Federal Income Tax purposes to the
    Company was approximately $2,029,012 at December 31, 2005,
    taking into account the special allocation of gain to the
    partners contributing property to the Operating Partnership.
|(2) | These properties serve as collateral for the Federal National
    Mortgage Association credit enhancement.                                                                                                                                             
|(3) | The Company has a leasehold interest in the land underlying
    these communities.                                                                                                                                                                     
|(4) | This total excludes for-sale condominiums and assets held for
    sale of $38,338 and $4,591, respectively, at December 31,
    2005.                                                                                                                  



|                         |                              |                                                  |   |           |          |   |   |           |         |   |   |           |          |   |  | 
|------------------------ | ---------------------------- | ------------------------------------------------ | - | --------- | -------- | - | - | --------- | ------- | - | - | --------- | -------- | - |  | 
|                         |                              | 2005                                             |   |           | 2004     |   |   | 2003      |         |   |  
|                         |                              |                                                  |   |           |          |   |   |           |         |   |  
|Real estate investments  |                              |                                                  |   |           |          |   |   |           |         |   |   |           |          |  
|                         | Balance at beginning of year |                                                  | $ | 2,407,425 |          |   | $ | 2,376,524 |         |   | $ | 2,614,325 |          |   | 
|                         |                              | Improvements                                     |   |           | 129,101  |   |   |           | 106,621 |   |   |           | 50,957   |   |  | 
|                         |                              | Disposition of property(a)                       |   |           | (163,120 | ) |   |           | (75,720 | ) |   |           | (288,758 | ) |  | 
|                         |                              |                                                  |   |           |          |   |   |           |         |   |  
|                         | Balance at end of year       |                                                  | $ | 2,373,406 |          |   | $ | 2,407,425 |         |   | $ | 2,376,524 |          |   | 
|                         |                              |                                                  |   |           |          |   |   |           |         |   |  
|Accumulated depreciation |                              |                                                  |   |           |          |   |   |           |         |   |   |           |          |  
|                         | Balance at beginning of year |                                                  | $ | 498,367   |          |   | $ | 436,245   |         |   | $ | 430,224   |          |   | 
|                         |                              | Depreciation(b)                                  |   |           | 75,185   |   |   |           | 83,271  |   |   |           | 88,122   |   |  | 
|                         |                              | Accumulated depreciation on disposed property(a) |   |           | (56,598  | ) |   |           | (21,149 | ) |   |           | (82,101  | ) |  | 
|                         |                              |                                                  |   |           |          |   |   |           |         |   |  
|                         | Balance at end of year(c)    |                                                  | $ | 516,954   |          |   | $ | 498,367   |         |   | $ | 436,245   |          |   | 
|                         |                              |                                                  |   |           |          |   |   |           |         |   |  



|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents reductions for assets classified as held for sale and
    converted into for-sale condominiums.                                                                                                      
|(b) | Represents depreciation expense of real estate assets. Amounts
    exclude depreciation and amortization of lease intangible
    assets, commercial leasing costs and excess joint venture
    investments.     
|(c) | Accumulated depreciation on the balance sheet excludes
    accumulated depreciation on assets held for sale in the amounts
    of $0, $26,332 and $74,614 at December 31, 2005, 2004 and
    2003, respectively.












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##### Table of Contents



Post Properties, Inc.


2005 Non-Qualified Employee Stock Purchase Plan


December 31, 2005













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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM























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##### Table of Contents



POST PROPERTIES, INC.


2005 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN


STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS


AS OF DECEMBER 31, 2005


|                                       |                                           |  |   |         | 
|-------------------------------------- | ----------------------------------------- |  | - | ------- | 
|ASSETS                                 |                                           |  |   |        
|                                       | Receivable from Post Apartment Homes, L.P |  | $ | 457,306 | 
|                                       |                                           |  |  
|NET ASSETS AVAILABLE FOR PLAN BENEFITS |                                           |  |   |        
|                                       | Net assets available for plan benefits    |  | $ | 457,306 | 
|                                       |                                           |  |  

The accompanying notes are an integral part of this financial
statement.











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##### Table of Contents



POST PROPERTIES, INC.


2005 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN


STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN
BENEFITS


FOR THE YEAR ENDED DECEMBER 31, 2005


|                                                              |                                           |   |         |          |  
|------------------------------------------------------------- | ----------------------------------------- | - | ------- | -------- | -
|NET ASSETS AVAILABLE FOR PLAN BENEFITS, JANUARY 1,
    2005   |                                           | $ |        |         
|DEDUCTIONS:                                                   |                                           |   |         |         
|                                                              | Purchase of participants shares          |   |         | (220,124 | )
|ADDITIONS:                                                    |                                           |   |         |         
|                                                              | Participant contributions, net of refunds |   |         | 677,430  |  
|                                                              |                                           |   |        
|NET ASSETS AVAILABLE FOR PLAN BENEFITS, DECEMBER 31,
    2005 |                                           | $ | 457,306 |         
|                                                              |                                           |   |        

The accompanying notes are an integral part of this financial
statement.











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##### Table of Contents



POST PROPERTIES, INC.


2005 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN


NOTES TO FINANCIAL STATEMENTS


December 31, 2005





NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES




|    |  |                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) |  | Post Properties, Inc. (the Company) established the
    2005 Non-Qualified Employee Stock Purchase Plan (the
    Plan) to encourage stock ownership by eligible
    directors and employees.
|   
|(B) |  | The financial statements have been prepared on the accrual basis
    of accounting.                                                                                                             
|   
|(C) |  | All expenses incurred in the administration of the Plan are paid
    by the Company and are excluded from these financial statements.                                                           

NOTE 2  THE PLAN












NOTE 3  FEDERAL INCOME TAXES













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##### Table of Contents





|   |         
|-- | --------
|3. | Exhibits

S-K




|        |    |         |  |             |  |   |  |                                                                                                                                                                                                      
|------- | -- | ------- |  | ----------- |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |         |  |            
|No.     |    |         |  | Description
|        |    |         |  |            
|        | 3  | .1(a)   |  |             |  |  |  | Articles of Incorporation of the Company                                                                                                                                                             
|        | 3  | .2(b)   |  |             |  |  |  | Articles of Amendment to the Articles of Incorporation of the
    Company                                                                                                                            
|        | 3  | .3(b)   |  |             |  |  |  | Articles of Amendment to the Articles of Incorporation of the
    Company                                                                                                                            
|        | 3  | .4(b)   |  |             |  |  |  | Articles of Amendment to the Articles of Incorporation of the
    Company                                                                                                                            
|        | 3  | .5(c)   |  |             |  |  |  | Articles of Amendment to the Articles of Incorporation of the
    Company                                                                                                                            
|        | 3  | .6(d)   |  |             |  |  |  | Bylaws of the Company (as Amended and Restated as of
    November 5, 2003)                                                                                                                           
|        | 3  | .7(e)   |  |             |  |  |  | Amendment No. 1 to the Amended and Restated By-Laws of the
    Company                                                                                                                               
|        | 4  | .1(f)   |  |             |  |  |  | Indenture between the Company and SunTrust Bank, as Trustee                                                                                                                                          
|        | 4  | .2(f)   |  |             |  |  |  | Form of First Supplemental Indenture to the Indenture between
    the Company and SunTrust Bank, as Trustee                                                                                          
|        | 10 | .1(b)   |  |             |  |  |  | Second Amended and Restated Agreement of Limited Partnership of
    the Operating Partnership                                                                                                        
|        | 10 | .2(b)   |  |             |  |  |  | First Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                             
|        | 10 | .3(b)   |  |             |  |  |  | Second Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                            
|        | 10 | .4(g)   |  |             |  |  |  | Third Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                             
|        | 10 | .5(g)   |  |             |  |  |  | Fourth Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                            
|        | 10 | .6(c)   |  |             |  |  |  | Fifth Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                             
|        | 10 | .7(h)   |  |             |  |  |  | Sixth Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                             
|        | 10 | .8(i)*  |  |             |  |  |  | Employee Stock Plan                                                                                                                                                                                  
|        | 10 | .9(b)*  |  |             |  |  |  | Amendment to Employee Stock Plan                                                                                                                                                                     
|        | 10 | .10(b)* |  |             |  |  |  | Amendment No. 2 to Employee Stock Plan                                                                                                                                                               
|        | 10 | .11(b)* |  |             |  |  |  | Amendment No. 3 to Employee Stock Plan                                                                                                                                                               
|        | 10 | .12(b)* |  |             |  |  |  | Amendment No. 4 to Employee Stock Plan                                                                                                                                                               
|        | 10 | .13(j)* |  |             |  |  |  | 2003 Incentive Stock Plan                                                                                                                                                                            
|        | 10 | .14(b)  |  |             |  |  |  | Form of Indemnification Agreement for officers and directors                                                                                                                                         
|        | 10 | .15(a)* |  |             |  |  |  | Profit Sharing Plan of the Company                                                                                                                                                                   
|        | 10 | .16(b)* |  |             |  |  |  | Amendment Number One to Profit Sharing Plan                                                                                                                                                          
|        | 10 | .17(b)* |  |             |  |  |  | Amendment Number Two to Profit Sharing Plan                                                                                                                                                          
|        | 10 | .18(b)* |  |             |  |  |  | Amendment Number Three to Profit Sharing Plan                                                                                                                                                        
|        | 10 | .19(b)* |  |             |  |  |  | Amendment Number Four to Profit Sharing Plan                                                                                                                                                         
|        | 10 | .20(a)  |  |             |  |  |  | Form of General Partner 1% Exchange Agreement                                                                                                                                                        
|        | 10 | .21(k)* |  |             |  |  |  | Dividend Reinvestment Stock Purchase Plan                                                                                                                                                            
|        | 10 | .22(l)  |  |             |  |  |  | Credit Agreement dated as of January 16, 2004 among Post
    Apartment Homes, L.P., Wachovia Bank, N.A., and certain other
    lenders                                                               
|        | 10 | .23(m)  |  |             |  |  |  | First Amendment to Credit Agreement                                                                                                                                                                  
|        | 10 | .24(n)  |  |             |  |  |  | Letter Agreement, dated as of December 22, 2004, by and
    among Post Apartment Homes, L.P., certain lenders under the
    Credit Agreement and Wachovia Bank, N.A., as the Administrative
    Agent
|        | 10 | .25(n)  |  |             |  |  |  | Letter Agreement, dated as of December 23, 2004, by and
    among Post Apartment Homes, L.P. and Fannie Mae                                                                                          
|        | 10 | .26(o)* |  |             |  |  |  | Deferred Compensation Plan for Directors and Eligible Employees
    (as amended and restated effective as of January 1, 2005)                                                                        
|        | 10 | .27(p)* |  |             |  |  |  | Form of Change in Control Agreement (3.0X) and schedule of
    executive officers who have entered into such agreement                                                                               
|        | 10 | .28(p)* |  |             |  |  |  | Form of Change in Control Agreement (2.0X) and schedule of
    executive officers who have entered into such agreement                                                                               
|        | 10 | .29(q)* |  |             |  |  |  | Form of Change in Control Agreement (1.5X) and schedule of
    executive officers who have entered into such agreement                                                                               
|        | 10 | .30(q)* |  |             |  |  |  | Form of Change in Control Agreement (1.0X) and schedule of
    executive officers who have entered into such agreement                                                                               












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##### Table of Contents



|        |    |          |  |             |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- | -- | -------- |  | ----------- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |          |  |            
|No.     |    |          |  | Description
|        |    |          |  |            
|        | 10 | .31(q)*  |  |             |  |  |  | Form of Amendment No. 1 to Change in Control Agreement and
    schedule of executive officers who have entered into such
    amendment                                                                                                                                                                                                                                                                                  
|        | 10 | .32(q)*  |  |             |  |  |  | Version One Amendment No. 2 to Change in Control Agreement
    and schedule of executive officers who have entered into such
    amendment                                                                                                                                                                                                                                                                              
|        | 10 | .33(q)*  |  |             |  |  |  | Version Two Amendment No. 2 to Change in Control Agreement
    and schedule of executive officers who have entered into such
    amendment                                                                                                                                                                                                                                                                              
|        | 10 | .34(q)*  |  |             |  |  |  | Employment Agreement with David P. Stockert                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .35(d)*  |  |             |  |  |  | Amendment No. 1 to Employment Agreement with David P.
    Stockert                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .36(q)*  |  |             |  |  |  | Employment Agreement with Thomas D. Senkbeil                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .37(q)*  |  |             |  |  |  | Amendment No. 1 to Employment Agreement with Thomas D.
    Senkbeil                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .38(d)*  |  |             |  |  |  | Amendment No. 2 to Employment Agreement with Thomas D.
    Senkbeil                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .39(d)*+ |  |             |  |  |  | Restricted Stock Grant Certificate for Robert C.
    Goddard, III, dated July 17, 2003                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .40(d)*  |  |             |  |  |  | Non-Incentive Stock Option Certificate for Robert C.
    Goddard, III, dated July 17, 2003                                                                                                                                                                                                                                                                                                                              
|        | 10 | .41(r)*  |  |             |  |  |  | Form of 2003 Incentive Stock Plan, Non-Incentive Stock Option
    and Stock Appreciation Right Certificate for Key Employees                                                                                                                                                                                                                                                                                            
|        | 10 | .42(r)*  |  |             |  |  |  | Form of 2003 Incentive Stock Plan, Non-Incentive Stock Option
    and Stock Appreciation Right Certificate for Directors                                                                                                                                                                                                                                                                                                
|        | 10 | .43(s)*  |  |             |  |  |  | Employment and Change in Control Agreement, dated as of
    October 17, 2005, by and among Thomas L. Wilkes, Post
    Properties, Inc., Post Apartment Homes, L.P., and Post Services,
    Inc.                                                                                                                                                                                                                         
|        | 10 | .44(s)*  |  |             |  |  |  | Employment and Change in Control Agreement, dated as of
    October 17, 2005, by and among Sherry W. Cohen, Post
    Properties, Inc., Post Apartment Homes, L.P., and Post Services,
    Inc.                                                                                                                                                                                                                          
|        | 10 | .45(s)*  |  |             |  |  |  | Amended and Restated Employment and Change in Control Agreement,
    dated as of October 17, 2005, by and among
    Christopher J. Papa, Post Properties, Inc., Post Apartment
    Homes, L.P., and Post Services, Inc.                                                                                                                                                                                                 
|        | 10 | .46*     |  |             |  |  |  | Form of 2003 Incentive Stock Plan Restricted Stock Grant
    Certificate for Key Employees                                                                                                                                                                                                                                                                                                                              
|        | 11 | .1(t)    |  |             |  |  |  | Statement Regarding Computation of Per Share Earnings                                                                                                                                                                                                                                                                                                                                                                   
|        | 21 | .1       |  |             |  |  |  | List of Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 23 | .1       |  |             |  |  |  | Consent of PricewaterhouseCoopers LLP for Registration
    Statements on Form S-3 (No. 33-81772), Form S-3 (No.
    333-47399), Form S-3 (No. 333-80427), Form S-3 (No.
    333-44722), Form S-8 (No. 333-62243), Form S-8 (No.
    33-00020), Form S-8 (No. 333-94121), Form S-8 (No.
    333-38725), Form S-8 (No. 333-02374), Form S-8 (No.
    333-107092), Form S-8 (No. 333-107093), Form S-8 (No.
    333-125390)
|        | 23 | .2       |  |             |  |  |  | Consent of PricewaterhouseCoopers LLP for Registration
    Statements on Form S-3 (No. 333-36595), Form S-3 (No.
    333-42884), Form S-3 (No. 333-55994), Form S-8 (No.
    333-127580)                                                                                                                                                                                                                                
|        | 31 | .1       |  |             |  |  |  | Certification of the Chief Executive Officer pursuant to
    Rule 13a-14(a) or Rule 15d-14(a) of the Securities
    Exchange Act of 1934, as amended, and adopted under
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                               
|        | 31 | .2       |  |             |  |  |  | Certification of the Chief Financial Officer pursuant to
    Rule 13a-14(a) or Rule 15d-14(a) of the Securities
    Exchange Act of 1934, as amended, and adopted under
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                               
|        | 32 | .1       |  |             |  |  |  | Certification of the Chief Executive Officer pursuant to
    18 U.S.C. 1350, as adopted under Section 906 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                         
|        | 32 | .2       |  |             |  |  |  | Certification of the Chief Financial Officer pursuant to
    18 U.S.C. 1350, as adopted under Section 906 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                         



|    |  |                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   |  | Identifies each management contract or compensatory plan
    required to be filed.                                                                                      
|+   |  | Also serves as the of restricted stock grant certificate for
    directors under the 2003 Incentive Stock Plan.                                                         
|(a) |  | Filed as an exhibit to the Registration Statement on
    Form S-11 (SEC
    File
    No. 33-61936), as
    amended, of the Company and incorporated herein by reference.
|(b) |  | Filed as an exhibit to the Annual Report on
    Form 10-K of the
    Registrants for the year ended December 31, 2002 and
    incorporated herein by reference.         
|(c) |  | Filed as an exhibit to the Quarterly Report on
    Form 10-Q of the
    Registrants for the quarter ended September 30, 1999 and
    incorporated herein by reference.  












---



##### Table of Contents



|    |  |                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) |  | Filed as an exhibit to the Quarterly Report on
    Form 10-Q of the
    Registrants for the quarter ended September 30, 2003 and
    incorporated herein by reference.  
|(e) |  | Filed as Appendix A to the 2004 proxy statement and
    incorporated herein by reference.                                                                               
|(f) |  | Filed as an exhibit to the Registration Statement on
    Form S-3 (SEC File
    No. 333-42884), as
    amended, of the Company and incorporated herein by reference.    
|(g) |  | Filed as an exhibit to the Annual Report on
    Form 10-K of the
    Registrants for the year ended December 31, 1998 and
    incorporated herein by reference.         
|(h) |  | Filed as an exhibit to the Annual Report on
    Form 10-K of the
    Registrants for the year ended December 31, 2000 and
    incorporated herein by reference.         
|(i) |  | Filed as an exhibit to the Registration Statement on
    Form S-11 (SEC
    File
    No. 33-71650), as
    amended, of the Company and incorporated herein by reference.
|(j) |  | Filed as Appendix A to the 2003 proxy statement and
    incorporated herein by reference.                                                                               
|(k) |  | Filed as part of the Registration Statement on
    Form S-3 (File
    No. 333-39461) of
    the Company and incorporated herein by reference.                           
|(l) |  | Filed as an exhibit to the Annual Report on
    Form 10-K for the
    Registrants for the year ended December 31, 2003 and
    incorporated herein by reference.        
|(m) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed December 22, 2004 and incorporated herein
    by reference.                      
|(n) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed December 28, 2004 and incorporated herein
    by reference.                      
|(o) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed August 15, 2005 and incorporated herein
    by reference.                        
|(p) |  | Filed as an exhibit to the Annual Report on
    Form 10-K of the
    Registrants for the year ended December 31, 2001 and
    incorporated herein by reference.         
|(q) |  | Filed as an exhibit to the Quarterly Report on
    Form 10-Q of the
    Registrants for the quarter ended June 30, 2003 and
    incorporated herein by reference.       
|(r) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed January 24, 2006 and incorporated herein
    by reference.                       
|(s) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed October 18, 2005 and incorporated herein
    by reference.                       
|(t) |  | The information required by this exhibit is included in
    note 6 to the consolidated financial statement and
    incorporated herein by reference.                    












---



##### Table of Contents



SIGNATURES




|               |  |                                                                                                                                
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|               |  | POST PROPERTIES, INC.                                                                                                          
|               |  | (Registrant)                                                                                                                   
|              
|March 15, 2006 |  | By  /s/ David P.
    StockertDavid P. Stockert, President and
    Chief
    Executive Officer
    (Principal Executive Officer)



|                                                     |  |                                                                                        |  |                |  | 
|---------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                            |  | Title                                                                                  |  | Date          
|                                                     |  |                                                                                        |  |               
|                                                    
|/s/ Robert C.
    Goddard, IIIRobert C. Goddard, III |  | Chairman of the Board and Director                                                     |  | March 15, 2006
|                                                    
|/s/ David P. StockertDavid P. Stockert               |  | President, Chief Executive Officer and Director (Principal
    Executive Officer)      |  | March 15, 2006
|                                                    
|/s/ Christopher J. PapaChristopher J. Papa           |  | Executive Vice President and Chief Financial Officer (Principal
    Financial Officer) |  | March 15, 2006
|                                                    
|/s/ Arthur J. QuirkArthur J. Quirk                   |  | Senior Vice President and Chief Accounting Officer (Principal
    Accounting Officer)  |  | March 15, 2006
|                                                    
|/s/ Herschel M. BloomHerschel M. Bloom               |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Douglas
    Crocker IIDouglas Crocker II         |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Walter M.
    Deriso, Jr.Walter M. Deriso, Jr.   |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Russell R. FrenchRussell R. French               |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Nicholas B.
    PaumgartenNicholas B. Paumgarten |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Charles E. RiceCharles E. Rice                   |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Stella F. ThayerStella F. Thayer                 |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Ronald de WaalRonald de Waal                     |  | Director                                                                               |  | March 15, 2006












---



##### Table of Contents



SIGNATURES




|               |  |                                                                                                                                
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|               |  | POST APARTMENT HOMES, L.P.                                                                                                     
|               |  | By: Post G.P. Holdings, Inc., as General Partner                                                                               
|              
|March 15, 2006 |  | By  /s/ David P.
    StockertDavid P. Stockert, President and
    Chief
    Executive Officer
    (Principal Executive Officer)



|                                                     |  |                                                                                        |  |                |  | 
|---------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                            |  | Title                                                                                  |  | Date          
|                                                     |  |                                                                                        |  |               
|                                                    
|/s/ Robert C.
    Goddard, IIIRobert C. Goddard, III |  | Chairman of the Board and Director                                                     |  | March 15, 2006
|                                                    
|/s/ David P. StockertDavid P. Stockert               |  | President, Chief Executive Officer and Director (Principal
    Executive Officer)      |  | March 15, 2006
|                                                    
|/s/ Christopher J. PapaChristopher J. Papa           |  | Executive Vice President and Chief Financial Officer (Principal
    Financial Officer) |  | March 15, 2006
|                                                    
|/s/ Arthur J. QuirkArthur J. Quirk                   |  | Senior Vice President and Chief Accounting Officer (Principal
    Accounting Officer)  |  | March 15, 2006
|                                                    
|/s/ Herschel M. BloomHerschel M. Bloom               |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Douglas
    Crocker IIDouglas Crocker II         |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Walter M.
    Deriso, Jr.Walter M. Deriso, Jr.   |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Russell R. FrenchRussell R. French               |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Nicholas B.
    PaumgartenNicholas B. Paumgarten |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Charles E. RiceCharles E. Rice                   |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Stella F. ThayerStella F. Thayer                 |  | Director                                                                               |  | March 15, 2006
|                                                    
|/s/ Ronald de WaalRonald de Waal                     |  | Director                                                                               |  | March 15, 2006












---



##### Table of Contents



Exhibit Index


|        |    |         |  |             |  |   |  |                                                                                                                                                                                                      
|------- | -- | ------- |  | ----------- |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |         |  |            
|No.     |    |         |  | Description
|        |    |         |  |            
|        | 3  | .1(a)   |  |             |  |  |  | Articles of Incorporation of the Company                                                                                                                                                             
|        | 3  | .2(b)   |  |             |  |  |  | Articles of Amendment to the Articles of Incorporation of the
    Company                                                                                                                            
|        | 3  | .3(b)   |  |             |  |  |  | Articles of Amendment to the Articles of Incorporation of the
    Company                                                                                                                            
|        | 3  | .4(b)   |  |             |  |  |  | Articles of Amendment to the Articles of Incorporation of the
    Company                                                                                                                            
|        | 3  | .5(c)   |  |             |  |  |  | Articles of Amendment to the Articles of Incorporation of the
    Company                                                                                                                            
|        | 3  | .6(d)   |  |             |  |  |  | Bylaws of the Company (as Amended and Restated as of
    November 5, 2003)                                                                                                                           
|        | 3  | .7(e)   |  |             |  |  |  | Amendment No. 1 to the Amended and Restated By-Laws of the
    Company                                                                                                                               
|        | 4  | .1(f)   |  |             |  |  |  | Indenture between the Company and SunTrust Bank, as Trustee                                                                                                                                          
|        | 4  | .2(f)   |  |             |  |  |  | Form of First Supplemental Indenture to the Indenture between
    the Company and SunTrust Bank, as Trustee                                                                                          
|        | 10 | .1(b)   |  |             |  |  |  | Second Amended and Restated Agreement of Limited Partnership of
    the Operating Partnership                                                                                                        
|        | 10 | .2(b)   |  |             |  |  |  | First Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                             
|        | 10 | .3(b)   |  |             |  |  |  | Second Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                            
|        | 10 | .4(g)   |  |             |  |  |  | Third Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                             
|        | 10 | .5(g)   |  |             |  |  |  | Fourth Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                            
|        | 10 | .6(c)   |  |             |  |  |  | Fifth Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                             
|        | 10 | .7(h)   |  |             |  |  |  | Sixth Amendment to Second Amended and Restated Partnership
    Agreement                                                                                                                             
|        | 10 | .8(i)*  |  |             |  |  |  | Employee Stock Plan                                                                                                                                                                                  
|        | 10 | .9(b)*  |  |             |  |  |  | Amendment to Employee Stock Plan                                                                                                                                                                     
|        | 10 | .10(b)* |  |             |  |  |  | Amendment No. 2 to Employee Stock Plan                                                                                                                                                               
|        | 10 | .11(b)* |  |             |  |  |  | Amendment No. 3 to Employee Stock Plan                                                                                                                                                               
|        | 10 | .12(b)* |  |             |  |  |  | Amendment No. 4 to Employee Stock Plan                                                                                                                                                               
|        | 10 | .13(j)* |  |             |  |  |  | 2003 Incentive Stock Plan                                                                                                                                                                            
|        | 10 | .14(b)  |  |             |  |  |  | Form of Indemnification Agreement for officers and directors                                                                                                                                         
|        | 10 | .15(a)* |  |             |  |  |  | Profit Sharing Plan of the Company                                                                                                                                                                   
|        | 10 | .16(b)* |  |             |  |  |  | Amendment Number One to Profit Sharing Plan                                                                                                                                                          
|        | 10 | .17(b)* |  |             |  |  |  | Amendment Number Two to Profit Sharing Plan                                                                                                                                                          
|        | 10 | .18(b)* |  |             |  |  |  | Amendment Number Three to Profit Sharing Plan                                                                                                                                                        
|        | 10 | .19(b)* |  |             |  |  |  | Amendment Number Four to Profit Sharing Plan                                                                                                                                                         
|        | 10 | .20(a)  |  |             |  |  |  | Form of General Partner 1% Exchange Agreement                                                                                                                                                        
|        | 10 | .21(k)* |  |             |  |  |  | Dividend Reinvestment Stock Purchase Plan                                                                                                                                                            
|        | 10 | .22(l)  |  |             |  |  |  | Credit Agreement dated as of January 16, 2004 among Post
    Apartment Homes, L.P., Wachovia Bank, N.A., and certain other
    lenders                                                               
|        | 10 | .23(m)  |  |             |  |  |  | First Amendment to Credit Agreement                                                                                                                                                                  
|        | 10 | .24(n)  |  |             |  |  |  | Letter Agreement, dated as of December 22, 2004, by and
    among Post Apartment Homes, L.P., certain lenders under the
    Credit Agreement and Wachovia Bank, N.A., as the Administrative
    Agent
|        | 10 | .25(n)  |  |             |  |  |  | Letter Agreement, dated as of December 23, 2004, by and
    among Post Apartment Homes, L.P. and Fannie Mae                                                                                          
|        | 10 | .26(o)* |  |             |  |  |  | Deferred Compensation Plan for Directors and Eligible Employees
    (as amended and restated effective as of January 1, 2005)                                                                        
|        | 10 | .27(p)* |  |             |  |  |  | Form of Change in Control Agreement (3.0X) and schedule of
    executive officers who have entered into such agreement                                                                               
|        | 10 | .28(p)* |  |             |  |  |  | Form of Change in Control Agreement (2.0X) and schedule of
    executive officers who have entered into such agreement                                                                               
|        | 10 | .29(q)* |  |             |  |  |  | Form of Change in Control Agreement (1.5X) and schedule of
    executive officers who have entered into such agreement                                                                               
|        | 10 | .30(q)* |  |             |  |  |  | Form of Change in Control Agreement (1.0X) and schedule of
    executive officers who have entered into such agreement                                                                               
|        | 10 | .31(q)* |  |             |  |  |  | Form of Amendment No. 1 to Change in Control Agreement and
    schedule of executive officers who have entered into such
    amendment                                                               












---



##### Table of Contents



|        |    |          |  |             |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- | -- | -------- |  | ----------- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |          |  |            
|No.     |    |          |  | Description
|        |    |          |  |            
|        | 10 | .32(q)*  |  |             |  |  |  | Version One Amendment No. 2 to Change in Control Agreement
    and schedule of executive officers who have entered into such
    amendment                                                                                                                                                                                                                                                                              
|        | 10 | .33(q)*  |  |             |  |  |  | Version Two Amendment No. 2 to Change in Control Agreement
    and schedule of executive officers who have entered into such
    amendment                                                                                                                                                                                                                                                                              
|        | 10 | .34(q)*  |  |             |  |  |  | Employment Agreement with David P. Stockert                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .35(d)*  |  |             |  |  |  | Amendment No. 1 to Employment Agreement with David P.
    Stockert                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .36(q)*  |  |             |  |  |  | Employment Agreement with Thomas D. Senkbeil                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .37(q)*  |  |             |  |  |  | Amendment No. 1 to Employment Agreement with Thomas D.
    Senkbeil                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .38(d)*  |  |             |  |  |  | Amendment No. 2 to Employment Agreement with Thomas D.
    Senkbeil                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .39(d)*+ |  |             |  |  |  | Restricted Stock Grant Certificate for Robert C.
    Goddard, III, dated July 17, 2003                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .40(d)*  |  |             |  |  |  | Non-Incentive Stock Option Certificate for Robert C.
    Goddard, III, dated July 17, 2003                                                                                                                                                                                                                                                                                                                              
|        | 10 | .41(r)*  |  |             |  |  |  | Form of 2003 Incentive Stock Plan, Non-Incentive Stock Option
    and Stock Appreciation Right Certificate for Key Employees                                                                                                                                                                                                                                                                                            
|        | 10 | .42(r)*  |  |             |  |  |  | Form of 2003 Incentive Stock Plan, Non-Incentive Stock Option
    and Stock Appreciation Right Certificate for Directors                                                                                                                                                                                                                                                                                                
|        | 10 | .43(s)*  |  |             |  |  |  | Employment and Change in Control Agreement, dated as of
    October 17, 2005, by and among Thomas L. Wilkes, Post
    Properties, Inc., Post Apartment Homes, L.P., and Post Services,
    Inc.                                                                                                                                                                                                                         
|        | 10 | .44(s)*  |  |             |  |  |  | Employment and Change in Control Agreement, dated as of
    October 17, 2005, by and among Sherry W. Cohen, Post
    Properties, Inc., Post Apartment Homes, L.P., and Post Services,
    Inc.                                                                                                                                                                                                                          
|        | 10 | .45(s)*  |  |             |  |  |  | Amended and Restated Employment and Change in Control Agreement,
    dated as of October 17, 2005, by and among
    Christopher J. Papa, Post Properties, Inc., Post Apartment
    Homes, L.P., and Post Services, Inc.                                                                                                                                                                                                 
|        | 10 | .46*     |  |             |  |  |  | Form of 2003 Incentive Stock Plan Restricted Stock Grant
    Certificate for Key Employees                                                                                                                                                                                                                                                                                                                              
|        | 11 | .1(t)    |  |             |  |  |  | Statement Regarding Computation of Per Share Earnings                                                                                                                                                                                                                                                                                                                                                                   
|        | 21 | .1       |  |             |  |  |  | List of Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 23 | .1       |  |             |  |  |  | Consent of PricewaterhouseCoopers LLP for Registration
    Statements on Form S-3 (No. 33-81772), Form S-3 (No.
    333-47399), Form S-3 (No. 333-80427), Form S-3 (No.
    333-44722), Form S-8 (No. 333-62243), Form S-8 (No.
    33-00020), Form S-8 (No. 333-94121), Form S-8 (No.
    333-38725), Form S-8 (No. 333-02374), Form S-8 (No.
    333-107092), Form S-8 (No. 333-107093), Form S-8 (No.
    333-125390)
|        | 23 | .2       |  |             |  |  |  | Consent of PricewaterhouseCoopers LLP for Registration
    Statements on Form S-3 (No. 333-36595), Form S-3 (No.
    333-42884), Form S-3 (No. 333-55994), Form S-8 (No.
    333-127580)                                                                                                                                                                                                                                
|        | 31 | .1       |  |             |  |  |  | Certification of the Chief Executive Officer pursuant to
    Rule 13a-14(a) or Rule 15d-14(a) of the Securities
    Exchange Act of 1934, as amended, and adopted under
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                               
|        | 31 | .2       |  |             |  |  |  | Certification of the Chief Financial Officer pursuant to
    Rule 13a-14(a) or Rule 15d-14(a) of the Securities
    Exchange Act of 1934, as amended, and adopted under
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                               
|        | 32 | .1       |  |             |  |  |  | Certification of the Chief Executive Officer pursuant to
    18 U.S.C. 1350, as adopted under Section 906 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                         
|        | 32 | .2       |  |             |  |  |  | Certification of the Chief Financial Officer pursuant to
    18 U.S.C. 1350, as adopted under Section 906 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                         



|    |  |                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   |  | Identifies each management contract or compensatory plan
    required to be filed.                                                                                      
|+   |  | Also serves as the of restricted stock grant certificate for
    directors under the 2003 Incentive Stock Plan.                                                         
|(a) |  | Filed as an exhibit to the Registration Statement on
    Form S-11 (SEC
    File
    No. 33-61936), as
    amended, of the Company and incorporated herein by reference.
|(b) |  | Filed as an exhibit to the Annual Report on
    Form 10-K of the
    Registrants for the year ended December 31, 2002 and
    incorporated herein by reference.         
|(c) |  | Filed as an exhibit to the Quarterly Report on
    Form 10-Q of the
    Registrants for the quarter ended September 30, 1999 and
    incorporated herein by reference.  
|(d) |  | Filed as an exhibit to the Quarterly Report on
    Form 10-Q of the
    Registrants for the quarter ended September 30, 2003 and
    incorporated herein by reference.  
|(e) |  | Filed as Appendix A to the 2004 proxy statement and
    incorporated herein by reference.                                                                               












---



##### Table of Contents



|    |  |                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(f) |  | Filed as an exhibit to the Registration Statement on
    Form S-3 (SEC File
    No. 333-42884), as
    amended, of the Company and incorporated herein by reference.    
|(g) |  | Filed as an exhibit to the Annual Report on
    Form 10-K of the
    Registrants for the year ended December 31, 1998 and
    incorporated herein by reference.         
|(h) |  | Filed as an exhibit to the Annual Report on
    Form 10-K of the
    Registrants for the year ended December 31, 2000 and
    incorporated herein by reference.         
|(i) |  | Filed as an exhibit to the Registration Statement on
    Form S-11 (SEC
    File
    No. 33-71650), as
    amended, of the Company and incorporated herein by reference.
|(j) |  | Filed as Appendix A to the 2003 proxy statement and
    incorporated herein by reference.                                                                               
|(k) |  | Filed as part of the Registration Statement on
    Form S-3 (File
    No. 333-39461) of
    the Company and incorporated herein by reference.                           
|(l) |  | Filed as an exhibit to the Annual Report on
    Form 10-K for the
    Registrants for the year ended December 31, 2003 and
    incorporated herein by reference.        
|(m) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed December 22, 2004 and incorporated herein
    by reference.                      
|(n) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed December 28, 2004 and incorporated herein
    by reference.                      
|(o) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed August 15, 2005 and incorporated herein
    by reference.                        
|(p) |  | Filed as an exhibit to the Annual Report on
    Form 10-K of the
    Registrants for the year ended December 31, 2001 and
    incorporated herein by reference.         
|(q) |  | Filed as an exhibit to the Quarterly Report on
    Form 10-Q of the
    Registrants for the quarter ended June 30, 2003 and
    incorporated herein by reference.       
|(r) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed January 24, 2006 and incorporated herein
    by reference.                       
|(s) |  | Filed as an exhibit to the Current Report on
    Form 8-K of the
    Registrants filed October 18, 2005 and incorporated herein
    by reference.                       
|(t) |  | The information required by this exhibit is included in
    note 6 to the consolidated financial statement and
    incorporated herein by reference.