##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
 FORM 10-K þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2004
 OR o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 1-12358 COLONIAL PROPERTIES TRUST  Alabama(State or other jurisdiction
of incorporation)
    
    59-7007599(IRS Employer
Identification Number)
 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama(Address of principal executive offices)
    
    35202(Zip Code)
 Registrants telephone number, including area code: (205) 250-8700 Securities registered pursuant to Section 12(b) of the Act: Title of each class
    
    Name of each exchange on which registeredCommon Shares of Beneficial Interest,$.01 par value per share
    
    New York Stock Exchange9.25% Series C Cumulative RedeemablePreferred Shares of Beneficial Interest,par value $.01 per share
    
    New York Stock ExchangeDepositary shares, each representing 1/10of a share of 8 1/8% Series D Cumulative RedeemablePreferred Shares of Beneficial Interest,par value $.01 per share
    
    New York Stock ExchangeDepositary shares, each representing 1/100of a share of 7.62% Series E CumulativeRedeemable Preferred Shares of Beneficial Interest,par value $.01 per share
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days. YES þ
NO o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ Indicate by check mark whether the registrant is an accelerated filer (as defined in
Exchange Act Rule 12-b-2). YES þ NO o The aggregate market value of the 25,811,072 Common Shares of Beneficial Interest held by
non-affiliates of the Registrant was approximately $994,500,596 based on the closing price on the
New York Stock Exchange for such Common Shares of Beneficial Interest on June 30, 2004. Number of the Registrants Common Shares of Beneficial Interest outstanding as of March 14,
2005: 27,993,282.




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TABLE OF CONTENTS  PART IItem 1. BusinessItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity and Related Shareholder MattersItem 6. Selected Financial Data.Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures about Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresPART IIIItem 10. Trustees and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesPart IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESEX-3.8 ARTICLES OF AMENDMENT TO DECLARATION OF TRUSTEX-3.9 ARTICLES SUPPLEMENTARY RECLASSIFYING PREFERRED SHARESEX-10.4.1 EIGHTH AMENDMENT TO THIRD AMENDMENT AND RESTATED AGREEMENTEX-12.1 RATIO OF EARNINGS TO FIXED CHARGESEX-21.1 LIST OF SUBSIDIARIESEX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLPEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO    Table of Contents  Documents Incorporated by Reference Portions of the proxy statement for the annual shareholders meeting to be held in 2005 are
incorporated by reference into Items 10, 11, 12 and 13 of Part III. We expect to file our proxy
statement within 120 days after December 31, 2004. 
 PART I This annual report on Form 10-K contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our, and our affiliates, or the industrys actual
results, performance, achievements or transactions to be materially different from any future
results, performance, achievements or transactions expressed or implied by such forward-looking
statements. Such factors include, among others, the following:  
    National, regional and local economic and business conditions that will, among other things, affect:  
    Demand for multifamily, office and retail properties,
    The ability of the general economy to continue to recover on a timely basis,
    Availability and creditworthiness of tenants,
    The level of lease rents, and
    The availability of financing for both tenants and us;  
    Adverse changes in the real estate markets, including, among other things:  
    Competition with other companies, and  
    Risks of real estate acquisition and development (including our Cornerstone
Realty Income Trust merger (discussed below) and the failure of pending
developments to be completed on time and within budget);  
    Actions, strategies and performance of affiliates that we may not control or
companies in which we have made investments;
    Ability to obtain insurance at a reasonable cost;
    Ability to maintain our status as a Real Estate Investment Trust (REIT) for
federal and state income tax purposes;
    Governmental actions and initiatives; and
    Environmental/safety requirements. 
 Item 1. Business. As used herein, the terms Company, Colonial, we, us and our refer to Colonial
Properties Trust, an Alabama real estate investment trust, and one or more of its subsidiaries and
other affiliates, including Colonial Realty Limited Partnership, Colonial Properties Services
Limited Partnership and Colonial Properties Services, Inc. or, as the context may require, Colonial
Properties Trust only or Colonial Realty Limited Partnership only. We are a self-administered equity REIT that is an owner, developer and operator of
multifamily, office and retail properties in the Sunbelt region of the United States. We are a
fully-integrated real estate company, which means that we are engaged in the acquisition,
development, ownership, management and leasing of commercial real estate property. Our activities
include ownership and operation of a diversified portfolio of 153 wholly and partially-owned
properties as of December 31, 2004, consisting of multifamily, office and retail properties located
in Alabama, Arizona, Florida, Georgia, Mississippi, Nevada, New Mexico, North Carolina, South
Carolina, Tennessee, Texas, and Virginia. As of December 31, 2004, we owned interests in 78 multifamily apartment communities (the
multifamily properties) containing a total of 25,009 apartment units (including 45 wholly-owned
consolidated properties and 33 properties owned through unconsolidated joint-venture entities
aggregating 15,489 and 9,520 units, respectively), 27 office properties (the office properties)
containing a total of approximately 5.9 million square feet of office space (including 26
wholly-owned consolidated properties and one partially-owned property owned through an
unconsolidated joint-venture entity aggregating 5.8 million and 30,000 square feet, respectively),
48 retail properties (the retail properties) containing a total of approximately 15.3 million
square feet of retail space (including 45 wholly-owned consolidated properties and three properties
owned through an unconsolidated joint-venture entity aggregating approximately 14.2 million and 1.1
million square feet, respectively) and parcels of land (the land) adjacent to or near certain of
these properties. The multifamily properties, the office properties, the retail properties and the
land are referred to collectively as the properties. As of December 31, 2004, the multifamily
properties, the office properties, and the retail properties that had achieved stabilized occupancy
were 94.6%, 92.2% and 91.4% leased, respectively. 2




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We are the direct general partner of, and hold approximately 72.7% of the interests in,
Colonial Realty Limited Partnership, a Delaware limited partnership (CRLP or the Operating
Partnership). We conduct all of our business through the Operating Partnership, Colonial
Properties Services Limited Partnership (CPSLP), which provides management services for the
properties, and Colonial Properties Services, Inc. (CPSI), which provides management,
construction, and development services for properties owned by third parties. Our executive offices are located at 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama,
35203 and our telephone number is (205) 250-8700. We were formed in Maryland on July 9, 1993. We
were reorganized as an Alabama real estate investment trust in 1995. Cornerstone Merger During October 2004, we entered into a definitive merger agreement with Cornerstone Realty
Income Trust, Inc. (Cornerstone), a Richmond, Virginia-based REIT focused on multifamily
communities. The transaction, which is expected to close during April of 2005, is valued at
approximately $1.5 billion, including the assumption or repayment of Cornerstone debt. The transaction is structured as a common and preferred share election merger, with
Cornerstone shareholders having the right to elect to receive the merger consideration in our
common or preferred depositary shares. More specifically, in the merger, Cornerstone shareholders
will have the right to elect to receive either:  
    a number of Colonial common shares equal to the common share conversion rate, which we currently expect to
be 0.2581; or  
    a number of Colonial 7.62% Series E preferred depositary shares, $25.00 liquidation
preference per depositary share, equal to the preferred depositary share conversion rate, which we currently expect to be
0.4194; for each outstanding common share of Cornerstone, subject to the restriction that the Colonial
Series E preferred
depositary shares issued will not exceed approximately 25% of the total merger consideration. If
the number of
Colonial Series E preferred depositary shares to be issued in the merger or the number of holders
of Colonial Series E
preferred depositary shares does not satisfy New York Stock Exchange listing conditions specified
in the merger
agreement, then each Cornerstone common share will be converted into a number of Colonial common
shares equal
to the common share conversion rate. In addition, the conversion rates are subject to various
adjustments provided for in the merger agreement, although Colonial and Cornerstone do not
currently expect any further material adjustments to the conversion rates. Depending upon the
shareholder elections, we expect to issue approximately 11 to 14 million new common shares and up
to approximately $150 million of new preferred securities and refinance or assume approximately
$850 million of Cornerstones existing secured debt. The transaction, which remains subject to
approval by the common shareholders of Colonial and Cornerstone, has been unanimously approved by
both boards. Cornerstone will have the right to terminate the transaction if our average share price for
the 20 trading days preceding 10 trading days prior to the close of the transaction is below
$31.00. However, in the event our share price is below such level, we have the right to continue
the transaction through the payment, at our sole option, of additional Colonial common shares or
cash to provide Cornerstone shareholders value equivalent to that which they would have received
had our share price been $31.00 for such measurement period. We have the right to terminate if our
average share price exceeds $49.00 for 20 consecutive trading days preceding 10 trading days prior
to the close of the transaction. Acquisitions and Developments The following table summarizes our acquisitions and developments that were completed in 2004.
For the purposes of the following table and throughout this Form 10-K, the size of a multifamily
property is measured by the number of units and the size of an office property and retail property
is measured in square feet. 3




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TotalTotal
    
    
    CostLocation
    
    Units/Sq. Feet
    
    
    (in thousands)Acquisitions:Multifamily PropertiesColonial Grand at Arringdon
    
    Raleigh, NC
    
    
    320
    
    
    $
    26,773Colonial Grand at Berkeley Lake
    
    Atlanta, GA
    
    
    180
    
    
    
    18,045Colonial Grand at Beverly Crest
    
    Charlotte, NC
    
    
    300
    
    
    
    23,225Colonial Grand at McGinnis Ferry
    
    Atlanta, GA
    
    
    434
    
    
    
    40,000Colonial Grand at Mt. Vernon
    
    Atlanta, GA
    
    
    213
    
    
    
    26,530Colonial Grand at Patterson Place
    
    Durham, NC
    
    
    252
    
    
    
    21,500Colonial Grand at River Oaks
    
    Atlanta, GA
    
    
    216
    
    
    
    19,900Colonial Grand at River Plantation
    
    Atlanta, GA
    
    
    232
    
    
    
    21,450Colonial Grand at Seven Oaks
    
    Tampa, FL
    
    
    318
    
    
    
    23,598Colonial Grand at Sugarloaf
    
    Atlanta, GA
    
    
    250
    
    
    
    23,225Colonial Village at Sierra Vista
    
    Austin, TX
    
    
    232
    
    
    
    14,0002,947
    
    
    
    258,246Office PropertiesDRS Building
    
    Huntsville, AL
    
    
    215,500
    
    
    
    13,100Research Park Office Center
    
    Huntsville, AL
    
    
    176,600
    
    
    
    16,774392,100
    
    
    
    29,874Retail PropertiesColonial Pinnacle Kingwood Commons
    
    Houston, TX
    
    
    164,356
    
    
    
    34,500Colonial Promenade Boulevard Square
    
    Pembroke Pines, FL
    
    
    220,656
    
    
    
    43,400Colonial Shoppes College Parkway
    
    Ft. Myers, FL
    
    
    78,879
    
    
    
    15,143Colonial Promenade Deerfield
    
    Deerfield Beach, FL
    
    
    378,745
    
    
    
    51,272Colonial Shoppes Pines Plaza
    
    Pembroke Pines, FL
    
    
    68,170
    
    
    
    15,250Village on the Parkway (1)
    
    Dallas, TX
    
    
    381,166
    
    
    
    60,3601,291,972
    
    
    
    219,925Total Consolidated Acquisitions
    
    
    
    
    
    
    
    $
    508,045Completed Developments / Redevelopments:Retail PropertiesColonial Promenade Trussville II
    
    Birmingham, AL
    
    
    59,000
    
    
    $
    8,315Colonial Shoppes Clay (redevelopment)
    
    Birmingham, AL
    
    
    66,000
    
    
    
    4,328125,000
    
    
    
    12,643Total Developments
    
    
    
    
    
    
    
    $
    12,643Total Consolidated
Acquisitions and Developments (2)
    
    
    
    
    
    
    
    $
    520,688
   (1)
    
    All acquisitions are 100% owned by us, with the exception of Village on the Parkway,
which is 90% owned by us. See discussion in Joint Ventures below.(2)
    
    We acquired an interest in one other entity, Colonnade Properties LLC, in 2004 that is
consolidated. See discussion in Joint Ventures below. Acquisitions During 2004, we acquired 11 multifamily properties, two office properties and six retail
properties, including one retail property which is 90% owned. In addition, we also acquired a
partnership interest in 21 multifamily properties and one office management company during the
twelve months ended December 31, 2004. 4




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Multifamily Properties Colonial Grand at Arringdon During April 2004, we acquired Colonial Grand at Arringdon, a
320-unit multifamily asset located in Raleigh, North Carolina. Colonial Grand at Arringdon was a
development that was completed in the second quarter of 2003 and was acquired with a 90.0% physical
occupancy. The total purchase price was $26.8 million and was funded through borrowings on our
unsecured line of credit. We served as development consultant and leasing and management agent for
the third-party developer in connection with this property. Colonial Grand at Berkeley Lake, Colonial Grand at River Plantation, Colonial Grand at Mount
Vernon, Colonial Grand at River Oaks, and Colonial Grand at Sugarloaf During June 2004, we
acquired five multifamily assets located in Atlanta, Georgia from Roberts Realty Investors, Inc.
The five assets total 1,091 units and include four properties located in the Gwinnett submarket and
one property located in the Dunwoody submarket. All five properties are class-A multifamily
assets. The assets were acquired for a total purchase price of $109.2 million, which consisted of
approximately $50.4 million of cash and the assumption of approximately $58.8 million of existing
mortgage debt that bears interest at a stated rate ranging from 5.54% to 7.38%. The cash portion
of the acquisition was funded through borrowings under our unsecured line of credit. Colonial Village at Sierra Vista During September 2004, we acquired Colonial Village at
Sierra Vista, a 232-unit multifamily property which is 94.0% occupied. The class-A property is
located in the Round Rock submarket in Austin, Texas. The asset was acquired for a total price of
$14.0 million, which was funded through borrowings under our unsecured line of credit. Colonial Grand at Seven Oaks During September 2004, we acquired Colonial Grand at Seven
Oaks, a 318-unit multifamily property located in Tampa, Florida, which was in lease-up upon
acquisition. The asset was acquired for a total price of $23.6 million, which was funded through
borrowings under our unsecured line of credit. We served as development consultant and leasing and
management agent for the third-party developer in connection with this property. Colonial Grand at Beverly Crest and Colonial Grand at Patterson Place During October 2004,
we acquired two multifamily assets for a total purchase price of $44.7 million. Colonial Village
at Patterson Place, a 252-unit complex, is located in Durham, North Carolina and Colonial Village
at Beverly Crest, a 300 unit complex, is located in Charlotte, North Carolina. The acquisition was
funded through borrowings under our bridge credit facility. Colonial Grand at McGinnis Ferry During December 2004, we acquired Colonial Grand at
McGinnis Ferry, a 434-unit complex located in Atlanta, Georgia. The total purchase price was $40.0
million and was funded through borrowings under our bridge credit facility. Office Properties DRS Building During February 2004, we acquired the DRS Building, a 215,500 square foot
office building, located in Huntsville, Alabama. The DRS Building was completed in 1984 and is
located adjacent to our existing development Colonial Center at Research Park. The total purchase
price was $13.1 million and was funded through borrowings under our unsecured line of credit. Research Park Office Center During October 2004, we acquired Research Park Office Center
comprising 176,600 square feet of office space in Huntsville, Alabama. The asset was acquired for
a total purchase price of $16.8 million, which was funded through borrowings under our unsecured
line of credit. Retail Properties Colonial Pinnacle Kingwood Commons During April 2004, we acquired Colonial Pinnacle Kingwood
Commons, a 164,356 square-foot retail lifestyle center located in the northeastern submarket of
Houston, Texas. The first development phase of Kingwood Commons was completed in 2001, which
positioned the property as a neighborhood grocery center, anchored by Randalls grocery store, a
division of Safeway, Inc. The property expanded and broadened its tenants, creating a lifestyle
center, through the next two phases of development, which completed construction in 2004. Upon
acquisition, Kingwood Commons included high-end retailers such as Talbots, Chicos, Ann Taylor
Loft, Jos. A. Banks, Bombay/Bombay Kids, James Avery, and Carrabbas Italian Grill. The total
purchase price was $34.5 million and was funded through borrowings under our unsecured line of
credit. 5




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Colonial Shoppes College Parkway, Colonial Promenade Deerfield and Colonial Shoppes Pines
Plaza During August 2004, we acquired three retail assets totaling approximately 526,000 square
feet in South Florida. The 378,745 square foot Colonial Promenade Deerfield is located in
Deerfield Beach, Florida, south of Boca Raton. With a current occupancy of 98.0%, the property is
anchored by Publix, Walgreens, Marshalls, Sports Authority, TJ Maxx and OfficeMax. With 100.0%
occupancy, the 78,879 square foot Colonial Shoppes College Parkway property is located in Fort
Myers, Florida and includes such tenants as Office Depot and the Blue Pepper Market. Colonial
Shoppes Pines Plaza, which is 100.0% occupied, is a 68,170 square foot center located in Pembroke
Pines, Florida and is anchored by Comp USA, Office Depot and Sound Advice. The assets were
acquired for a total purchase price of $81.7 million, which consisted of approximately $32.8
million of cash and the assumption of approximately $48.9 million of existing mortgage debt. The
cash portion of the acquisition was funded through borrowings under our unsecured line of credit. Colonial Promenade Boulevard Square During September 2004, we acquired Colonial Promenade
Boulevard Square, a 220,656 square foot retail shopping center in Pembroke Pines, Florida. The
center is anchored by Office Max, Ross Dress for Less, Sports Authority and TJ Maxx. The asset was
acquired for a total purchase price of $43.4 million, which consisted of approximately $16.2
million of cash and the assumption of approximately $27.2 million of existing mortgage debt. This
acquisition was funded through borrowings under our unsecured line of credit. Completed Development / Redevelopment Retail Property Colonial Promenade Trussville II During the third quarter of 2004, we completed the
development of Colonial Promenade Trussville II, a 59,000 square foot addition to Colonial
Promenade Trussville, a community shopping center located in Birmingham, Alabama. The center is
anchored by a Sams and Kohls. Project development costs, including land acquisitions costs, were
$8.3 million and were funded through our unsecured line of credit. Colonial Shoppes Clay(redevelopment)  During the first quarter of 2004, we completed the
redevelopment of Colonial Shoppes Clay, a 66,000 square foot community shopping center located in
Birmingham, Alabama. The center is anchored by a Publix Super Market. Project redevelopment costs
were $4.3 million and were funded through our unsecured line of credit. Joint Ventures The following summarizes the joint ventures that we entered into during 2004: Consolidated The Village on the Parkway During June 2004, we acquired a 90% partnership interest in The
Village on the Parkway, a 381,166 square foot retail lifestyle center located in Dallas, Texas.
Our 90% investment in the partnership was $56.4 million, which consisted of $14.1 million of equity
investment and $42.3 million of newly issued mortgage debt, representing our allocated portion of
mortgage debt for the property. As we maintain controlling financial interest of this property,
the assets, liabilities and results of operations of the property are consolidated within our
financial statements. The third partys partnership interest is reflected in the financial
statements as a minority interest in the consolidated partnership. Under the partnership
agreement, we will receive a 9% preferred return on its equity investment and 65% of any remaining
available cash. The 10% third-party equity partner will receive the remaining 35% of available
cash after payment of the 9% return on our equity investment. Our equity investment was funded
through borrowings under our unsecured line of credit. Colonnade Properties LLC During September 2004, we made a $9.0 million investment,
consisting of a $2.0 million equity investment and $7.0 million in debt, in the acquisition of a
majority interest in Colonnade Properties LLC, a New York based real estate investment company that
focuses on the acquisition, management, redevelopment and stabilization of office assets. At the
date of the acquisition, Colonnade Properties LLC had contracts to manage approximately 11 million
square feet of office space. In addition to the management contracts, Colonnade Properties LLC
also holds a 25% interest in the Douglas HCI, a five building complex located in Coral Gables,
Florida. Our investment was funded through borrowings under our unsecured line of credit. 6




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Equity Method Investments The Cunningham Apartments During June 2004, we entered into a partnership agreement with
Dreyfuss Real Estate Advisors (DRA), in which we maintain a 20% interest and manage The
Cunningham Apartments, a 280-unit multifamily asset located in Austin, Texas. Our total investment
in The Cunningham Apartments was $3.9 million, which consisted of $2.8 million of newly issued
mortgage debt and $1.1 million of cash, which was funded through borrowings under our unsecured
line of credit. Colonial Grand at Bayshore and Colonial Grand at Palma Sola During June 2004, we acquired a
25% partnership interest in Colonial Grand at Bayshore, a 376-unit multifamily asset and Colonial
Grand at Palma Sola, a 340-unit multifamily asset, both located in Bradenton, Florida. We acquired
the partnership interest from CMS Entrepreneurial III and IV Partners, a Delaware general
partnership. Our 25% investment in the partnership was $11.9 million, which consisted of $3.0
million of equity investment and $8.9 million of mortgage debt, representing our allocated portion
of mortgage debt for the property. Our equity investment was funded through available cash. Colonial Grand at Brentwood and Colonial Village at Hendersonville During August 2004, we
acquired a 25% partnership interest and the management of 618 multifamily units in two properties
in Nashville, Tennessee from CMS. Colonial Grand at Brentwood is located in the Brentwood
submarket and consists of 254 units. The 364-unit Colonial Village at Hendersonville is located in
the Hendersonville submarket. The assets were acquired for a total purchase price of $10.3
million, which consisted of approximately $2.9 million of cash and the assumption of approximately
$7.4 million of existing mortgage debt. The cash portion of the acquisition was funded through
borrowings under our unsecured line of credit. DRA Southwest Joint Venture During October 2004, we entered into a partnership agreement
with DRA in which we acquired a 20% interest and management of 16 multifamily properties located in
Arizona, New Mexico and Nevada containing a combined 4,223 units. Our total investment in the DRA
partnership was $64.5 million, which consisted of $45.4 million of newly issued mortgage debt and
$19.1 million of cash, which was funded through borrowings under our unsecured line of credit. Continuing Development Activity The following table summarizes our properties that are under construction, including
undeveloped land, at December 31, 2004: Continuing Development Schedule Total
    
    
    
    
    
    
    
    
    
    
    CostsUnits/
    
    
    
    
    
    
    Estimated
    
    
    CapitalizedSquare
    
    
    Estimated
    
    
    Total Costs
    
    
    to DateFeet
    
    
    Completion
    
    
    (in thousands)
    
    
    (in thousands)Multifamily Projects:Colonial Grand at Mallard Creek
    
    
    252
    
    
    
    2005
    
    
    $
    20,000
    
    
    $
    11,203Colonial Village at Twin Lakes
    
    
    460
    
    
    
    2005
    
    
    
    35,000
    
    
    
    31,006Colonial Grand at Silverado
    
    
    238
    
    
    
    2005
    
    
    
    19,900
    
    
    
    14,654Retail Projects:Colonial Mall Myrtle Beach (redevelopment)
    
    
    530,000
    
    
    
    2005
    
    
    
    27,500
    
    
    
    19,498Colonial Pinnacle Craft Farms
    
    
    440,000
    
    
    
    2006
    
    
    
    39,000
    
    
    
    7,074Colonial Pinnacle Turkey Creek
    
    
    520,000
    
    
    
    2006
    
    
    
    37,000
    (1)
    
    
    13,360
    (1)Colonial Pinnacle Tutwiler Farms
    
    
    450,000
    
    
    
    2006
    
    
    
    35,500
    
    
    
    2,915Colonial Promenade Alabaster
    
    
    650,000
    
    
    
    2005
    
    
    
    30,000
    
    
    
    15,029Colonial Shops Colonnade (redevelopment)
    
    
    122,000
    
    
    
    2005
    
    
    
    6,500
    
    
    
    3,242Colonial University Village (redevelopment)
    
    
    555,000
    
    
    
    2006
    
    
    
    18,700
    
    
    
    10,522Mixed Use Projects, Land and
Infrastructures:Colonial
TownPark -  Lake Mary
    
    
    
    
    
    
    
    
    
    
    16,075
    
    
    
    14,289Other Projects and Undeveloped Land
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,162$
    158,954
   (1)
    
    Represents 50% of the development costs, as we are a 50% equity partner in this
development. 7




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Continuing Multifamily Development Activity Colonial Grand at Mallard Creek During the fourth quarter of 2003, we began the
development of Colonial Grand at Mallard Creek, a 252-unit multifamily community located in
Charlotte, North Carolina. The new apartments will include numerous luxuries, including high-speed
internet access, fitness center, a swimming pool, and a resident business center. Project
development costs, including land acquisition costs, are expected to be $20.0 million and will be
funded through our unsecured line of credit. The development is expected to be completed in the
fourth quarter of 2005. Colonial Village at Twin Lakes During the fourth quarter of 2003, we began the
development of Colonial Village at Twin Lakes, a 460-unit multifamily community located in Orlando,
Florida. The new apartments will include numerous luxuries, including high-speed internet access,
fitness center, a swimming pool, and a resident business center. Project development costs,
including land acquisition costs, are expected to be $35.0 million and will be funded through our
unsecured line of credit. The development is expected to be completed during the second quarter of
2005. Colonial Grand at Silverado During the second quarter of 2004, we began the
development of Colonial Grand at Silverado, a 238-unit multifamily community located in Austin,
Texas. The new apartments will include numerous luxuries, including high-speed internet access,
fitness center, a swimming pool, and a resident business center. Project development costs,
including land acquisition costs, are expected to be $19.9 million and will be funded through our
unsecured line of credit. The development is expected to be completed during the third quarter of
2005. Continuing Retail Development and Redevelopment Activity Colonial Mall Myrtle Beach(redevelopment)  During 2003, we began the redevelopment of
Colonial Mall Myrtle Beach, a 530,000 square foot regional mall located in Myrtle Beach, South
Carolina. The redeveloped mall includes a new Bass Pro Shops Outdoor World, remodeling of the
common area and remerchandising. Project redevelopment costs are expected to total $27.5 million
and will be funded through our unsecured line of credit. We expect to complete the project in the
fourth quarter of 2005. Colonial Shops Colonnade(redevelopment) During 2004, we began the redevelopment of Colonial
Shops Colonnade, a 122,000 square foot shopping center located in Birmingham, Alabama. The
redeveloped shopping center will include the addition of a 30,000 square foot Golds Gym and three
new restaurants (Cracker Barrel, Fox & Hound and Logan Farms Deli) as well as an upgrade of the
landscaping and building exteriors. Project redevelopment costs are expected to total $6.5 million
and will be funded through our unsecured line of credit. We expect to complete the project in the
third quarter of 2005. Colonial Pinnacle Craft Farms During the third quarter of 2004, we began the development of
Colonial Pinnacle at Craft Farms, a 440,000 square foot development located in Gulf Shores,
Alabama. The center will include a 55,000 square foot Cobb Theatre cinema, upscale specialty
stores that offer fashion apparel, home décor, a book store, a music store and upscale restaurants.
We also plan to include a grocery store and a department store. Project development costs are
expected to total $39.0 million and will be funded through our unsecured line of credit. We expect
to complete the project in the second quarter of 2006. Colonial Pinnacle Turkey Creek During the second quarter of 2004, we began the development
of Colonial Pinnacle at Turkey Creek, a 50% joint venture development with Turkey Creek Land
Partners. The center is expected to total approximately 520,000 square feet and is located in
Knoxville, Tennessee. Anchors will include Proffitts, Bed Bath & Beyond and Regal Theaters. The
center will also include other large format stores, specialty fashion retailers and high-end
restaurants. Our portion of project development costs are expected to total $37.0 and will be
funded through our unsecured line of credit and a construction loan. We expect to complete the
project in the second quarter of 2006. Colonial Pinnacle Tutwiler Farms During the fourth quarter of 2004, we began the development
of Colonial Pinnacle at Tutwiler Farms, a 450,000 square foot development located in northeast
Birmingham, Alabama. The center anchors will include Belk, Parisian, JC Penney and Best Buy. The
center will also include other large format stores, specialty fashion retailers and high-end
restaurants. Project development costs are expected to total $35.5 million and will be funded
through our unsecured line of credit. We expect to complete the project in the fourth quarter of
2006. Colonial Promenade Alabaster During the second quarter of 2004, we began the development of
Colonial Promenade at Alabaster, a 650,000 square foot development located in Birmingham, Alabama.
The center will include Lowes, Wal-Mart, Ross Dress for Less, Pier-1 Imports, Belk,
Books-A-Million, Old Navy, Bed Bath & Beyond and an Amstar Theater. Project development costs are
expected to total $30.0 million and will be funded through our unsecured line of credit. We expect
to complete the project in the fourth quarter of 2005. 8




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Colonial University Village(redevelopment)  During 2003, we began the redevelopment of
Colonial University Village, a 555,000 square foot regional mall located in Auburn, Alabama. The
redeveloped mall will be anchored by J.C. Penney, Dillards, Sears and Belks Department Store.
The redevelopment will also add an additional 41,000 square feet of specialty shops and restaurants
to the existing mall. Project redevelopment costs are expected to total $18.7 million and will be
funded through our unsecured line of credit. We expect to complete the project in the first
quarter of 2006. Continuing Mixed Use Development Activity Colonial TownPark Lake Mary During 2004, we continued the development of Colonial TownPark
Lake Mary, a mixed use project located in Orlando, Florida. The activity in 2004 included the
development of a 67-unit multifamily apartment community, a 34,900 square foot office center and a
146,500 square foot retail center. The retail center is anchored by
Albertsons and AmStar Theater.
Project development costs of these phases are expected to total $16.1 million and will be funded
through our unsecured line of credit. We expect to complete the project in the second quarter of
2005. Dispositions During 2004, we disposed of two multifamily properties including one property representing 178
units and our 15% interest in a second property representing 240 units, one office property
representing 25,500 square feet, and four retail properties including three wholly-owned properties
representing 290,933 square feet and our 50% interest in a fourth property representing 1.1 million
square feet, including 0.4 million square feet owned by anchor tenants. The multifamily, office
and retail properties were sold for a total sales price of $105.1 million, which was used to repay
a portion of the borrowings under our unsecured line of credit and fund future investment
activities. Additionally, throughout 2004, the Company sold various parcels of land located
adjacent to our existing properties for an aggregate sales price of $16.7 million, which was also
used to repay a portion of the borrowings under the Companys unsecured line of credit and to
support our investment activities. The following table is a summary of our disposition activity in 2004: Gain on SalesUnits/Square
    
    
    Sales Price
    
    
    of PropertyProperty
    
    Location
    
    Feet
    
    
    (in thousands)
    
    
    (in thousands)MultifamilyColonial Village at Vernon Marsh
    
    Savannah, GA
    
    
    178
    
    
    $
    10,005
    
    
    $
    4,115Colonial Grand at Ponte Vedra (1)
    
    Jacksonville, FL
    
    
    240
    
    
    
    2,434
    
    
    
    794OfficeVillage at Roswell Summit
    
    Atlanta, GA
    
    
    25,500
    
    
    
    3,950
    
    
    
    935RetailColonial Promenade University Park I
    
    Orlando, FL
    
    
    215,590
    
    
    
    21,250
    
    
    
    9,084Colonial Shoppes at Stanly
    
    Locust, NC
    
    
    47,100
    
    
    
    2,435
    
    
    
    345Colonial Shoppes at Inverness
    
    Birmingham, AL
    
    
    28,243
    
    
    
    3,415
    
    
    
    286Orlando Fashion Square (2)
    
    Orlando, FL
    
    
    1,083,049
    
    
    
    61,575
    
    
    
    6,273Total
    
    
    
    
    
    
    
    $
    105,064
    
    
    $
    21,832
   (1)
    
    We disposed of our 15% interest in Colonial Grand at Ponte Vedra, which is reflected in the table
above.(2)
    
    We disposed of our 50% interest in Orlando Fashion Square, which is reflected in the table above. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, we record individual property sales as discontinued operations, unless we maintain a
continuing involvement with the properties that have
been sold. During 2004, all of the operating properties sold were classified as discontinued
operations and the sales of the parcels of land were classified within continuing operations. 9




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Recent Developments Distribution During January 2005, the Board of Trustees declared a cash distribution to the
shareholders and partners of CRLP in the amount of $0.675 per share and per partnership unit,
totaling $25.7 million. The distribution was made to shareholders and partners of record as of
January 31, 2005, and was paid on February 7, 2005. Portofino Shopping Center During January 2005, we acquired Portofino Shopping Center, a
373,000 square foot retail shopping center located in Houston, Texas. The center is anchored by
Home Depot and Sams Wholesale Club. Other tenants include Oshmans, Steinmart, Old Navy,
Petsmart, Michaels and Conns. The asset was acquired for a total purchase price of $60.3
million, which was funded through borrowings under our bridge credit facility. Westshore Place I & II During January 2005, we acquired Westshore Place I & II, two ten
story Class A office buildings comprising 370,994 square feet in Tampa, Florida. The asset was
acquired for a total purchase price of $54.9 million, which was funded through borrowings under our
bridge credit facility. Senior Notes Offering During January 2005, we completed, through CRLP, a $275 million
offering of 4.75% senior unsecured notes due February 1, 2010. Interest on the notes is payable
semi-annually on the 1st of every February and August beginning August 1, 2005. The net
proceeds of approximately $273.3 million were used to pay down our bridge credit facility and a
portion of our unsecured line of credit. Derivative Transactions- During January 2005, we entered into two interest rate swap
agreements to hedge the interest rate risk associated with forecasted debt issuances that are
expected to occur during 2005. The following table summarizes the notional values and other
characteristics these interest rate swap agreements: InterestProduct Type
    
    Notional Value
    
    
    Rate
    
    
    MaturityInterest Rate SWAP, Cash Flow
    
    $250 million
    
    
    4.721
    %
    
    
    8/3/15Interest Rate SWAP, Cash Flow
    
    $200 million
    
    
    4.830
    %
    
    
    2/15/16
 During January 2005, we settled one interest rate swap agreement and terminated one interest rate
swap agreement for approximately $0.8 million, both of which were outstanding at December 31, 2004.
This amount will remain in accumulated other comprehensive income and be reclassified to interest
expense over the applicable period of the associated debt. Colonial Village at Cahaba Heights During February 2005, we sold our 15% interest in
Colonial Village at Cahaba Heights, a 125-unit multifamily apartment community located in
Birmingham, Alabama. The asset was sold for a total sales price of $1.2 million and the proceeds
were used to repay a portion of the borrowings under our unsecured line of credit. Colonial Grand at River Hills During February 2005, we sold our 15% interest in Colonial
Grand at River Hills, a 776-unit multifamily apartment community located in Tampa, Florida. The
asset was sold for a total sales price of $6.9 million and the proceeds were used to repay a
portion of the borrowings under our unsecured line of credit. Financing Activity We funded our acquisition, development and redevelopment activities primarily through
proceeds received from the disposition of assets, unsecured senior notes offerings and advances
on our bank line of credit and bridge credit facility (the bridge facility). On February 18, 2004, CRLP modified the terms of the $100.0 million 8.875% Series B Preferred
Units (the Preferred Units), which were originally issued in a private placement. Under the
modified terms, the Preferred Units bear a distribution rate of 7.25% and are redeemable at the
option of CRLP, in whole or in part, after February 24, 2009, at the cost of the original capital
contribution plus the cumulative priority return, whether or not
declared. The terms of the Preferred Units were further modified on
March 14, 2005 to extend the redemption date from
February 24, 2009 to August 24, 2009. The Preferred Units are
exchangeable for 7.25% Series B Preferred Shares of the Company, in whole or in part at anytime on
or after January 1, 2014, at the option of the holders. On April 2, 2004, we completed a $100.0 million public debt offering of unsecured senior notes
by CRLP. The notes, which mature in April 2011 bear a coupon rate of 4.80%, and were priced to
yield an effective rate of 4.82% over the seven-year term. We used the net proceeds of the
offering to repay a portion of the outstanding balance on our unsecured line of
credit. On June 21, 2004, we entered into a reverse swap agreement on the $100.0 million senior
notes, maturing in April 2011, to a floating rate equal to the 6-month LIBOR rate, which was 2.17%
as of December 31, 2004. 10




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On June 17, 2004, we completed a $300.0 million public debt offering of unsecured senior notes
by CRLP. The notes, which mature in June 2014 bear a coupon rate of 6.25%, and were priced to
yield an effective rate of 6.35% over the ten-year term. We used the net proceeds of the offering
to repay the outstanding balance on our unsecured line of credit, and the remaining amount was used
for general corporate purposes and acquisitions of properties. In anticipation of closing the
above mentioned public debt offering, we entered into a $232.0 million treasury lock on June 14,
2004 with a fixed 10-year treasury rate of 4.84%. On June 17, 2004, we settled the treasury lock
agreement with a payment of approximately $2.1 million, which will be amortized over the life of
the associated debt. On October 28, 2004, we entered into an additional $200.0 million bridge facility with certain
participants of its current $320.0 million unsecured bank line of credit. Base rate loans and
euro-dollar loans are available under the bridge facility. Generally, base rate loans bear
interest at Wachovias designated base rate, plus a base rate margin ranging from 0.00% to 1.00%
based on our unsecured debt ratings from time to time. Euro-dollar loans bear interest at LIBOR
plus a margin ranging from 0.70% to 1.35% based on our unsecured debt ratings from time to time.
The bridge credit facility matures in November of 2005. We are currently in the process of negotiating a new unsecured credit facility that will
replace the existing unsecured bank line of credit and bridge facility. We expect to complete this
transaction in the first quarter of 2005. However, we are not able to predict the terms of this
new unsecured credit facility or whether we will be successful in completing this transaction. Over the last few years, we have maintained our asset recycling program, which we believe
allows us to maximize our investment returns through the sale of assets that have reached their
maximum investment potential and reinvest the proceeds into opportunities with more growth
potential. As noted above, during 2004, we disposed of two multifamily properties including one
property representing 178 units and our 15% interest in a second property representing 240 units,
one office property representing 25,500 square feet, and four retail properties including three
wholly owned properties representing 290,933 square feet and our 50% interest in a fourth property
representing 1.1 million square feet. The multifamily, office and retail properties were sold for
a total sales price of $105.1 million, which was used to repay a portion of the borrowings under
our unsecured line of credit and to support our investment activities. Our ability to generate
cash from asset sales is limited by market conditions and certain rules applicable to REITs. Our
ability to sell properties in the future to raise cash will be limited if market conditions make
such sales unattractive. Additionally, throughout 2004, we sold various parcels of land located
adjacent to our existing properties for an aggregate sales price of $16.7 million, which was also
used to repay a portion of the borrowings under our unsecured line of credit and to support our
investment activities. Business Strategy Our business objective is to generate stable and increasing cash flow and portfolio value for
our shareholders through a strategy of:  
    realizing growth in income from our existing portfolio of properties;
    developing, expanding, and selectively acquiring additional multifamily, office and
retail properties in growth markets located in the Sunbelt region of the United States,
where we have first-hand knowledge of growth patterns and local economic conditions;
    recycling capital by selectively disposing of assets that have reached their maximum
investment potential and reinvesting the proceeds into opportunities with more growth
potential;
    managing our own properties, which enables us to better control operating expenses
and establish long-term relationships with our office and retail tenants;
    maintaining our third-party property management business, which increases cash flow
and establishes additional relationships with investors and tenants; and
    employing a comprehensive capital maintenance program to maintain properties in
first-class condition. Our business strategy and the implementation of that strategy is determined by our Board of
Trustees and may be changed from time to time. Financing Strategy We seek to maintain a well-balanced, conservative and flexible capital structure by:  
    maintaining conservative debt service and fixed charge coverage ratios in order to
sustain our investment grade status;
    extending and sequencing the maturity dates of our debt; 11




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
    borrowing primarily at fixed rates; and
    generally pursuing long-term debt financings and refinancings on an unsecured basis. We believe that these strategies have enabled and should continue to enable us to access the
debt and equity capital markets to fund debt refinancings and the acquisition and development of
additional properties. As of December 31, 2004, we have an unsecured bank line of credit providing for total
borrowings of up to $320 million. This line of credit agreement bears interest at LIBOR plus a
spread calculated based on our unsecured debt ratings from time to time. Based on our current debt
ratings, the spread is 105 basis points. The line of credit is renewable in November 2005, and
provides for a one-year extension. The line of credit agreement includes a competitive bid feature
that will allow us to convert up to $160 million under the line of credit to a fixed rate, for a
fixed term not to exceed 90 days. The credit facility had an outstanding balance of $240.0 million
at December 31, 2004. The floating weighted average interest rate of this short-term borrowing
facility, including the competitive bid balance, was 3.14% at December 31, 2004. As of December 31, 2004, we have a $200.0 million bridge credit facility with certain
participants of our current $320.0 million unsecured bank line of credit. Base rate loans and
euro-dollar loans are available under the bridge facility. Generally, base rate loans bear
interest at Wachovias designated base rate, plus a base rate margin ranging from 0.00% to 1.00%
based on our unsecured debt ratings from time to time. Euro-dollar loans bear interest at LIBOR
plus a margin ranging from 0.70% to 1.35% based on our unsecured debt ratings from time to time.
The bridge facility had an outstanding balance of $119.0 million at December 31, 2004, with an
average interest rate of 3.45%. This facility matures in November of 2005. We are currently in the process of negotiating a new unsecured credit facility that will
replace the existing unsecured bank line of credit and bridge facility. We expect to complete this
transaction in the first quarter of 2005. However, we are not able to predict the terms of this
new unsecured credit facility or whether we will be successful in completing this transaction. At December 31, 2004, our total consolidated outstanding debt balance was $1.9 billion. The
outstanding balance includes fixed-rate debt of $1.3 billion, or 68.2% of the total debt balance,
and floating-rate debt of $590.0 million, or 31.8% of the total debt balance. Our total market
capitalization as of December 31, 2004 was $3.7 billion and our ratio of debt to market
capitalization was 49.7%. Total market capitalization is defined as the market value of
outstanding common shares of the Company and operating partnership units of CRLP, plus preferred
equity and consolidated debt of the Company. We have certain loan agreements that contain
restrictive covenants, which among other things require maintenance of various financial ratios.
At December 31, 2004, we were in compliance with these covenants. We may modify our borrowing policy and may increase or decrease our ratio of debt to total
market capitalization in the future. To the extent that our Board of Trustees determines to seek
additional capital, we may raise such capital through additional equity offerings, debt
financings, asset dispositions or retention of cash flow (subject to provisions in the Internal
Revenue Code of 1986 requiring the distribution by a REIT of a certain percentage of taxable
income and taking into account taxes that would be imposed on undistributed taxable income) or a
combination of these methods. We have entered into several different hedging transactions in an effort to manage our
exposure to changes in interest rates. The following table summarizes the notional values, fair
values and other characteristics of our derivative financial instruments at December 31, 2004. The
notional value at December 31, 2004 provides an indication of the extent of our involvement in
these instruments at that time, but does not represent exposure to credit, interest rate, or market
risk. Fair ValueAt December 31, 2004Asset (Liability)Product Type
    
    Notional Value
    
    Rate
    
    
    Maturity
    
    
    (in thousands)Interest Rate SWAP, Cash Flow
    
    $30.2 - $27.7 million
    
    
    5.932
    %
    
    
    1/1/06
    
    
    $
    (809
    )Interest Rate SWAP, Cash Flow
    
    $17.0 million
    
    
    7.380
    %
    
    
    5/5/06
    
    
    
    (610
    )Interest Rate SWAP, Fair Value
    
    $100.0 million
    
    
    4.803
    %
    
    
    4/1/11
    
    
    
    3,269Interest Rate SWAP, Cash Flow
    
    $72.9 million
    
    
    3.928
    %
    
    
    1/15/10
    
    
    
    284Interest Rate SWAP, Cash Flow
    
    $170.0 million
    
    
    4.250
    %
    
    
    8/15/10
    
    
    
    136Interest Rate CAP, Cash Flow
    
    $25.9 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    4Interest Rate CAP, Cash Flow
    
    $16.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    3Interest Rate CAP, Cash Flow
    
    $8.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    1Interest Rate CAP, Cash Flow
    
    $19.7 million
    
    
    6.850
    %
    
    
    6/29/07
    
    
    
    6Interest Rate CAP, Cash Flow
    
    $16.7 million
    
    
    6.850
    %
    
    
    7/3/07
    
    
    
    5
 We do not use derivatives for trading or speculative purposes. Further, we have a policy
of only entering into contracts with major financial institutions based upon their credit
ratings and other factors. When viewed in conjunction with the underlying and offsetting
exposure that the derivatives are designed to hedge, we have not sustained a material loss from
those instruments nor do we anticipate any material adverse effect on our net income or
financial position in the future from the use of derivatives. 12




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Property Management We are experienced in the management and leasing of multifamily, office and retail properties
and believe that the management and leasing of our own portfolio has helped maintain consistent
income growth and has resulted in reduced operating expenses from the properties. The third-party
management, leasing and brokerage businesses conducted through CPSI have provided us both with a
source of cash flow that is relatively stable and with the benefits of economies of scale in
conjunction with the management and leasing of our own properties. These businesses also allow us
to establish additional relationships with tenants who may require additional office or retail
space and to identify potential acquisitions. Operational Structure We manage our business with three separate and distinct operating divisions: multifamily,
office and retail. We have centralized functions that are common to each division, including
accounting, information technology and administrative services. Decisions regarding acquisitions,
developments and dispositions are also centralized. Each division has an Executive Vice President
that oversees growth and operations and has a separate management team that is responsible for
acquiring, developing, and leasing properties within each division. This structure allows us to
utilize specialized management personnel for each operating division. Although these divisions
operate independently from one another, constant communication among the Executive Vice Presidents
provides us with unique synergies allowing us to take advantage of a variety of investment
opportunities. In addition, the third-party management, leasing and brokerage businesses have
provided us both with a source of cash flow that is relatively stable and with the benefits of
economies of scale in conjunction with the management and leasing of our own properties. These
businesses also allow us to establish additional relations with tenants that may require additional
retail or office space and to identify potential acquisitions. See Note 7  Segment Information in
our Notes to Consolidated Financial Statements contained in this Form 10-K for information on our
three segments and the reconciliation of total segment revenues to total revenues, total segment
net operating income to income from continuing operations and minority interest, and total
divisional assets to total assets for the years ended December 31, 2004, 2003 and 2002.
Information regarding our segments contained in such Note 7  Segment Information in our Notes to
Consolidated Financial Statements is incorporated by reference herein. Additional information with
respect to each of the operating divisions is set forth below: Multifamily Division. Our multifamily division is responsible for all aspects of multifamily
operations, including day-to-day management and leasing of the 78 multifamily properties, as well
as the provision of third-party management services for apartment communities in which we do not
have an ownership interest or have a non-controlling ownership interest. Office Division.Our office division is responsible for all aspects of our commercial office
operations, including the provision of management and leasing services for the 27 office
properties, as well as the provision of third-party management services for office properties in
which we do not have an ownership interest and for brokerage services in other office property
transactions. Retail Division.Our retail division is responsible for all aspects of our retail operations,
including the provision of management and leasing services for the 48 retail properties, as well as
the provision of third-party management services for retail properties in which we do not have an
ownership interest and for brokerage services in other retail property transactions. Competition The ownership, development, operation and leasing of multifamily, office and retail properties
are highly competitive. We compete with domestic and foreign financial institutions, other REITs,
life insurance companies, pension trusts, trust funds, partnerships and individual investors for
the acquisition of properties. In addition, we compete for tenants in our markets primarily on the
basis of property location, rent charged, services provided and the design and condition of
improvements. Our diversified business strategy of investing in multifamily, office and retail
property types that are located in high-growth, demographically attractive cities primarily in key
Sunbelt states allows us to shift assets within our portfolio in order to take advantage of market
timing and economic cycles, and to maximize investment returns. Seasonality Our multifamily properties and office properties generally are not affected by seasonality.
However, the retail shopping center industry is seasonal in nature, with shopping center tenant
sales peaking during the fourth quarter due to the holiday season. As a result, a substantial
portion of the percentage rent at our retail properties is not recognized until the fourth quarter.
Furthermore, most new lease-up occurs towards the later part of the year in anticipation of the
holiday season and most vacancies occur toward the beginning of the year. In addition, the majority
of the temporary tenants take occupancy in the fourth quarter. Accordingly, cash flow and occupancy
levels are generally lowest in the first quarter and highest in the fourth quarter. 13




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Environmental Matters We believe that our properties are in compliance in all material respects with all federal,
state and local ordinances and regulations regarding hazardous or toxic substances. We are not
aware of any environmental condition which we believe would have a material adverse effect on our
financial condition or results of operations (before consideration of any potential insurance
coverage). Nevertheless, it is possible that there are material environmental liabilities of which
we are unaware. Moreover, no assurances can be given that (i) future laws, ordinances or
regulations will not impose any material environmental liability or (ii) the current environmental
condition of our properties have not been or will not be affected by tenants and occupants of our
properties, by the condition of properties in the vicinity of our properties or by third parties
unrelated to us. See Risk FactorsRisks Associated with Our Operations We could incur
significant costs related to environmental issues which could adversely affect our results of
operations through increased compliance costs or our financial condition if we become subject to a
significant liability for a further discussion. Insurance We carry comprehensive liability, fire, extended coverage and rental loss insurance on all of
our properties. We believe the policy specifications, insured limits of these policies and self
insurance reserves are adequate and appropriate. There are, however, certain types of losses, such
as lease and other contract claims, that generally are not insured. We anticipate that we will
review our insurance coverage and policies from time to time to determine the appropriate level of
coverage, but we cannot predict at this time if we will be able to obtain or maintain full coverage
at a reasonable cost in the future. In addition, as of December 31, 2004, we are self insured up
to $0.7 million, $0.7 million and $1.8 million for general liability, workers compensation and
property insurance, respectively. We are also self insured for health insurance and responsible
for claims up to $125,000 per claim and up to $1.0 million per person. Our policy for all self
insured risk is to accrue for expected losses on reported claims and for estimated losses related
to claims incurred but not reported as of the end of the reporting period. Employees As of December 31, 2004, CRLP employed approximately 1,110 persons, including on-site property
employees who provide services for the properties that we own and/or manage. Tax Status We are considered a corporation for federal income tax purposes. We qualify as a REIT and
generally will not be subject to federal income tax to the extent we distribute our REIT taxable
income to our shareholders. REITs are subject to a number of organizational and operational
requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal
income tax on our taxable income at regular corporate rates. We may be subject to certain state
and local taxes on our income and property. Distributions to shareholders are generally partially
taxable as ordinary income and long-term capital gains, and partially non-taxable as return of
capital. During 2004, our distributions had the following characteristics: Distribution
    
    Ordinary
    
    Return ofPer Share
    
    Income
    
    Capital
    
    Capital Gain$2.68
    
    
    53.09
    %
    
    
    45.26
    %
    
    
    1.65
    %
 In addition, our financial statements include the operations of a taxable REIT subsidiary,
CPSI, that is not entitled to dividends paid deduction and is subject to federal, state and local
income taxes. CPSI provides property management, construction management and development services
for third-party owned properties and administrative services to us. We generally reimburse CPSI
for payroll and other costs incurred in providing services to us. All inter-company transactions
are eliminated in the accompanying consolidated financial statements. We recognized tax expense
of $0.7 million in 2004 related to the taxable income of CPSI. Available Information Our
website address is www.colonialprop.com and provides access in the Investor Relations
section, free of charge, to our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and all amendments to these reports as soon as reasonably practicable after
such material is electronically filed with or furnished to the Securities and Exchange Commission.
Additionally, our corporate governance guidelines, charter of the governance committee, audit
committee charter, executive compensation committee charter, our code of ethics for our trustees,
officers and employees, and our code of ethical conduct for our chief executive officer and senior
financial officers are available on our website as well. If you are not able to access our
website, the information is available in print form to any shareholder who should request the
information directly from us. 14




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Executive Officers of the Company The following is a biographical summary of our executive officers: Thomas H. Lowder, 55, has been a trustee since our formation in July 1993. He has served as
our Chairman of the Board, President and Chief Executive Officer since July 1993. Mr. Lowder became
President of Colonial Properties, Inc., our predecessor, in 1976, and since that time has been
actively engaged in the acquisition, development, management, leasing and sale of multifamily,
office and retail properties for the Company and its predecessors. Mr. Lowder is a current member
of the National Association of Industrial and Office Parks (NAIOP) and the International Council of
Shopping Centers. He is also a member and past president of the Alabama Chapter of the Realtors
National Marketing Institute through which he successfully completed commercial real estate
investment courses to receive the CCIM (Certified Commercial Investment Member) designation. He
presently serves as the Chairman of the Board for Childrens Hospital and is on the Board of
Directors of the Community Foundation of Greater Birmingham, Birmingham-Southern College and
Crippled Childrens Foundation. Mr. Lowder is a past member of the National Association of Real
Estate Investment Trusts (NAREIT) Board, past Chairman of the Birmingham Area Chapter of the
American Red Cross and he served as Chairman of the 2001 United Way Campaign for Central Alabama.
He graduated with honors from Auburn University with a Bachelor of Science Degree. Mr. Lowder is
the brother of James K. Lowder, one of our trustees. C. Reynolds Thompson, III, 42, has been our Chief Operating Officer since September 1999,
responsible for the multifamily, office, retail and mixed-use divisions. Mr. Thompson oversees the
management, acquisition, leasing and development of properties within its three operating divisions
and development in the mixed-use division. Prior to his appointment as Chief Operating Officer, Mr.
Thompson was Chief Investment Officer, responsible for investment strategies, market research, due
diligence, mergers and acquisitions, joint venture development and cross-divisional acquisitions.
Prior to his position as Chief Investment Officer, Mr. Thompson served as Executive Vice
PresidentOffice Division, with responsibility for management of all office properties owned and/or
managed by us, from May 1997 to May 1998. Mr. Thompson joined us in February 1997 as Senior Vice
PresidentOffice Acquisitions, with responsibility for all acquisitions of office properties. Prior
to joining us, Mr. Thompson worked for CarrAmerica Realty Corporation in office building
acquisitions and due diligence. Mr. Thompson is a member of the Executive Committee of the
Metropolitan Development Board, a member of the NAIOP, and he serves on the Board of Visitors for
The University of Alabama Culverhouse College of Commerce and Business Administration. Mr.
Thompson holds a Bachelor of Science Degree from Washington and Lee University. Weston M. Andress, 44, joined our team as Chief Financial and Investment Officer in April of
2004 and is responsible for financing and investment matters. Prior to joining the Company, Mr.
Andress held the position of Managing Director of the Corporate and Investment Banking Department
of Bank of America. Prior to his 15 year tenure with Bank of America, he was Vice President in the
Real Estate Capital Markets Group of Salomon Brothers in New York. Mr. Andress holds a holds a
Masters of Business Administration from the University of North Carolina at Chapel Hill. John P. Rigrish, 56, has been our Chief Administrative Officer since 1998, and is responsible
for the supervision of Accounting Operations, Information Technology, Human Resources and Employee
Services. Prior to joining the Company, Mr. Rigrish worked for BellSouth Corporation in Corporate
Administration and Services. Mr. Rigrish holds a Bachelor of Science degree from Samford University
and did his postgraduate study at Birmingham-Southern College. He served on the Edward Lee Norton
Board of Advisors for Management and Professional Education at Birmingham-Southern College and the
Board of Directors of Senior Citizens, Inc. in Nashville, Tennessee. Paul F. Earle, 47, has been our Executive Vice-President-Multifamily Division since May 1997,
and is responsible for management of all multifamily properties we own and/or manage. He joined us
in 1991 and has served as Vice President  Acquisitions, as well as Senior Vice President 
Multifamily Division. Mr. Earle serves as Chairman of the Alabama Multifamily Council and is an
active member of the National Apartment Association. He also serves as President of the Board of
Directors of Big Brothers/Big Sisters and is a board member of the National Multifamily Housing
Council. Before joining us, Mr. Earle was the President and Chief Operating Officer of American
Residential Management, Inc., Executive Vice President of Great Atlantic Management, Inc. and
Senior Vice President of Balcor Property Management, Inc. Robert A. Bo Jackson, 50, has been our Executive Vice President-Office Division since
December 1997, and is responsible for leading all office properties owned and managed by us. Prior
to joining us, Mr. Jackson was involved in several of the signature office properties in Atlanta
including Concourse, One Ninety One Peachtree Tower, and Perimeter Center. Mr. Jackson has been
involved in over 15 million square feet of Southeastern U.S. urban and suburban office development.
Under his leadership, Colonial TownPark, our mixed-use community in Orlando, Florida, was
recognized by the National Association of Industrial and Office Parks (NAIOP) three times, twice as
Orlando Developer of the Year, and once as 2003 National Developer of the Year. Mr. Jackson
is a member of the Board of Directors of the CoreNet Global Atlanta Chapter and holds a Bachelor of
Science degree in Business Administration from the University of Delaware. 15




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Charles E. Chip Light, 44, has been our Executive Vice President, Retail Division since
February 2004, and is responsible for leading all retail properties owned and managed by us. Mr.
Light has 18 years of retail leasing experience with such companies as Faison Associates, Jacobs
Group, Homart Development and LaSalle Partners. Prior to joining us, Mr. Light was Managing
Director of Retail with Faison & Associates. Mr. Lights 18 year career includes leasing
assignments with the Jacobs Company, Homart and La Salle Partners which extended from coast to
coast. Mr. Light holds a Bachelor of Science degree from The University of Nebraska and a Master of
Business Administration from Southern Methodist University. Charles
A. McGehee, 59, has been our Executive Vice President - Mixed-Use Development Division
since September 1999 and is responsible for our development of properties with mixed-use
product types. Mr. McGehee also oversees land acquisitions and dispositions. From
September 1993 to September 1999 Mr. McGehee was responsible for Land Acquisitions and Development,
Brokerage and Dispositions for us. From January 1990 to September 1993 Mr. McGehee was Senior Vice
President  Office Division. He joined us in 1976 as Vice President of Retail Leasing and was
responsible for leasing all retail space owned and/or managed. Mr. McGehee has served as president
and as a board member of the NAIOP and is a member of the Board of Directors of the Birmingham Area
Board of Realtors. Mr. McGehee is currently on the Board of Trustees for the Birmingham Chamber of
Commerce. He holds a Bachelor of Science Degree from Auburn University. John E. Tomlinson, 36, has been our Executive Vice President and Chief Accounting Officer
since February 2005, and is responsible for Internal Control functions, compliance with generally
accepted accounting principles, SEC reporting, regulatory agency compliance and reporting,
management reporting and accounting operations. Mr. Tomlinson is a Certified Public Accountant
(CPA) with over 10 years of experience in public accounting. Mr. Tomlinson holds a Bachelor of
Science of Professional Accountancy and a Master of Business Administration from Mississippi State
University. Prior to joining us, Mr. Tomlinson served as a Senior Manager at Deloitte & Touche LLP
from May 2002 through January 2005 and as a Senior Manager / Manager at Arthur Andersen LLP from
September 1996 through May 2002. Mr. Tomlinsons previous experience includes independent audits
of public and private entity financial statements, merger and acquisition due diligence, business
risk assessment and registration statement work for public debt and stock offerings. Kenneth E. Howell, 54, our Senior Vice President of Accounting Operations, is responsible for
Accounts Payable, Accounts Receivable, Fixed Assets, management reports and compliance with
generally accepted accounting principles. Mr. Howell joined us in 1981, and served as Controller
for us from 1986 through 1998. From 1981 to 1986 he held the position of Assistant Controller of
the Colonial Company, parent company of the then private Colonial Properties, Inc. He serves on
the Auburn University School of Accountancy Advisory Board. Mr. Howell holds a Bachelor of Science
Degree in Accounting and a minor in Finance from Auburn University. 16




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Risk Factors Set forth below are the risks that we believe are material to investors who purchase or own
our common, preferred or debt securities. You should consider carefully the following risks,
together with the other information contained in and incorporated by reference in this Form 10-K,
and the descriptions included in our consolidated financial statements and accompanying notes. Risks Associated with Real Estate We face risks associated with numerous national, regional and local economic conditions that
are not in our control, any or all of which could adversely affect our results of operations
through decreased revenues. The modest strengthening of the U.S. economy during the last year has offset the dramatic
slowdown in the U.S. economy experienced in the recent prior years. The Sunbelt region has
similarly experienced a gradual strengthening during the last year. Related factors such as the
industry downturns, increased unemployment rates, and reduced demand for apartment homes of recent
prior years began to reverse during the last year. We expect the continued upturn to will continue
to positively impact our results of operations through increased revenues and leasing activity. In spite of the general strengthening of the economy, the low interest rate environment which
we have continued to experience during the last year has offset the positive growth to our
multifamily properties as more people considered buying their homes instead of renting. Any
worsening of current economic conditions generally and in our principal market areas may have a
negative impact on our results of operations. As a real estate company, we face numerous risks in real estate conditions that could
adversely affect our results of operations through decreased revenues or increased costs. In addition to the economic risks that we face, as a real estate company, we are subject to
various changes in real estate conditions, any negative trends of which may adversely affect our
results of operations through decreased revenues or increased costs. These conditions include:  
    the existence and quality of the competition, such as the attractiveness of our
property as compared to our competitors properties based on considerations such as
convenience of location, rental rates, amenities and safety record;
    increased operating costs, including increased real property taxes and utilities costs;
    oversupply of multifamily, office or retail space or a reduction in demand for real estate in the area; and
    changing trends in the demand by consumers for merchandise offered by retailers
conducting business at our retail properties. Moreover, other factors may affect our results of operations adversely, including changes in
government regulations and other laws, rules and regulations governing real estate, zoning or
taxes, changes in interest rate levels, the availability of financing and potential liability under
environmental and other laws and other unforeseen events, most of which are discussed elsewhere in
the following risk factors. Any or all of these factors could materially adversely affect our
results of operations through decreased revenues or increased costs. Because real estate investments are illiquid, we may not be able to sell our properties in
response to economic changes which could adversely affect our results of operations or financial
condition. Real estate investments generally are relatively illiquid and as a result cannot be sold
quickly in response to changes in the economy or other conditions when it may be prudent to do so.
This inability to respond quickly to changes in the performance of our properties could adversely
affect our results of operations if we cannot sell an unprofitable property. As well, our
financial condition could also be adversely affected if we were, for example, unable to sell one or
more of our properties in order to meet our debt obligations upon maturity. We are subject to significant regulation that inhibits our activities, which could adversely
affect our results of operations through increased costs or inability to pursue business
opportunities. Local zoning and use laws, environmental statutes and other governmental requirements restrict
our development, expansion, rehabilitation and reconstruction activities. These regulations may
prevent or delay us from taking advantage of economic opportunities. We cannot predict what
requirements may be enacted and there can be no assurance that such enactment will not increase our
costs of regulatory compliance or prohibit us from pursuing business opportunities that could be
profitable to us. 17




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Risks Associated with Our Operations Our properties may not generate sufficient income to pay our expenses, and we may not be able
to control our operating costs, either of which circumstances could adversely affect our results of
operations. A number of factors may adversely affect our ability to generate sufficient income. These
factors include:  
    whether or not we can attract tenants at favorable rental rates, which will depend
on several factors, including:
    local conditions such as an oversupply of, or reduction in demand for, multifamily,
office or retail properties;
    the attractiveness of our properties to residents, shoppers and tenants, and
    decreases in market rental rates;
    our ability to collect rent from our tenants. If we cannot generate sufficient income to pay our expenses, maintain our properties and service
our debt as a result of any of these factors, our results of operations may be adversely affected. Factors that may adversely affect our operating costs include:  
    the need to pay for insurance and other operating costs, including real estate
taxes, which could increase over time;
    the need periodically to repair, renovate and re-lease space;
    the cost of compliance with governmental regulation, including zoning and tax laws;
    the potential for liability under applicable laws;
    interest rate levels; and
    the availability of financing. If our operating costs increase as a result of any of the foregoing factors, our results of
operations may be adversely affected. Our expenses may remain constant even if our revenues decrease, causing our results of
operations to be adversely affected. The expense of owning and operating a property is not necessarily reduced when circumstances
such as market factors and competition cause a reduction in income from the property. As a result,
if revenues drop, we may not be able to reduce our expenses accordingly. Loan payments are an
example of a cost that will not be reduced if our revenues decrease. If a property is mortgaged
and we are unable to meet the mortgage payments, the lender could foreclose on the mortgage and
take the property, resulting in a further reduction in revenues. We may be unable to lease our new properties or renew leases or re-lease space at our existing
properties as leases expire, which may adversely affect our operating results. The tenants at our office properties generally enter into leases with an initial term ranging
from three to ten years and tenants at our retail properties generally enter into leases with an
initial term ranging from one to ten years. As leases expire at our existing properties, tenants
may elect not to renew them. Even if the tenants do renew or we can re-lease the space, the terms
of renewal or re-leasing, including the cost of required renovations, may be less favorable than
current lease terms. In addition, for new properties, we may be unable to attract enough tenants
and the occupancy rates and rents may not be sufficient to make the property profitable. If we are
unable to renew the leases or re-lease the space at our existing properties promptly or lease the
space at our new properties, or if the rental rates upon renewal or re-leasing at existing
properties are significantly lower than expected rates, our operating results will be negatively
affected. Due to our lack of geographic diversity, an economic downturn or natural disaster in an area
in which our properties are concentrated could adversely affect our results of operations or
financial condition. While our properties are diversified in three different segments, all of our properties are
located in the Sunbelt region of the United States. In particular, we derived an aggregate of
approximately 48.4% of our net operating income in 2004 from properties located in or near three
key cities: (a) Birmingham, Alabama, which accounted for 18.6% of our 2004 net operating income;
(b) Orlando, Florida, which accounted for 18.7% of our 2004 net operating income; and (c)
Huntsville/Decatur, Alabama, which accounted for 11.1% of our 2004 net operating income. If the
Sunbelt region of the United States, and in particular the areas of or near Birmingham, Orlando and
Huntsville/Decatur, experiences a slowdown in the economy or a 18




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natural disaster, our results of operations may be negatively affected through decreased
revenues or increased costs. Also, our financial condition may be negatively affected through the
damage or loss of assets. We have been and may continue to be affected negatively by tenant bankruptcies and downturns
in tenants businesses, which may adversely affect our operating results by decreasing our
revenues. At any time, a tenant may experience a downturn in its business that may weaken its financial
condition due to a slowing economy generally or a downturn in the retail sector. As a result, our
tenants may delay lease commencement, cease or defer making rental payments or declare bankruptcy.
If a tenant files for bankruptcy, the tenant may have the right to reject and terminate its lease
and we cannot be sure that it will affirm its leases and continue to make rental payments in a
timely manner. We also cannot be sure that we will be able to lease vacant space in our properties
on economically favorable terms. Any other bankruptcy or financial difficulties of our tenants may
negatively affect our operating results by decreasing our revenues. Risks associated with the property management, leasing and brokerage businesses could
adversely affect our results of operations by decreasing our revenues. In addition to the risks we face as a result of our ownership of real estate, we face risks
relating to the property management, leasing and brokerage businesses of CPSI, including risks
that:  
    management contracts or service agreements with third-party owners will be lost to
competitors;
    contracts will not be renewed upon expiration or will not be renewed on terms
consistent with current terms; and
    leasing and brokerage activity generally may decline. Each of these developments could adversely affect our results of operations by decreasing our
revenues. We could incur significant costs related to environmental issues which could adversely affect
our results of operations through increased compliance costs or our financial condition if we
become subject to a significant liability. Under federal, state and local laws and regulations relating to the protection of the
environment, a current or previous owner or operator of real property, and parties that generate or
transport hazardous substances that are disposed of on real property, may be liable for the costs
of investigating and remediating hazardous substances on or under or released from the property and
for damages to natural resources. The federal Comprehensive Environmental Response, Compensation &
Liability Act, and similar state laws, impose liability on a joint and several basis, regardless of
whether the owner, operator or other responsible party knew of or was at fault for the release or
presence of hazardous substances. In connection with the ownership or operation of our properties,
we could be liable for costs associated with investigation and remediation in the future. The costs
of any required remediation and related liability as to any property could be substantial under
these laws and could exceed the value of the property and/or our aggregate assets. The presence of
hazardous substances, or the failure to properly remediate those substances, also may adversely
affect our ability to sell or rent a property or to borrow funds using the property as collateral.
In addition, environmental laws may impose restrictions on the manner in which we use our
properties or operate our business, and these restrictions may require expenditures for compliance.
We cannot assure you that a material environmental claim or compliance obligation will not arise in
the future. The costs of defending against any claims of liability, of remediating a contaminated
property, or of complying with future environmental requirements could be substantial and affect
our operating results. In addition, if a judgment is obtained against us or we otherwise become
subject to a significant environmental liability, our financial condition may be adversely
affected. On December 29, 1998, we acquired Bel Air Mall in Mobile, Alabama. During the course of our
environmental due diligence, we identified several different areas of the property in which
contamination is present. One of those areas involves drycleaner solvent; the others involve
petroleum contamination. The Alabama Department of Environmental Management (ADEM) is overseeing
the investigation and cleanup of the drycleaner contamination. Under the terms of the purchase and
sale agreement, the former owner of the property purchased a $10 million environmental insurance
policy (including paying the $275,000 up front deductible) and established an escrow account
totaling $1,000,000 to cover any costs associated with investigation and remediation of the
contaminated areas not covered by the insurance policy. Under the agreement the seller is
currently performing all required remediation of the drycleaner contamination until a no further
action status is obtained from ADEM. In addition, an out parcel, previously occupied by an Amoco
Gas station, currently has ongoing remediation activity on the now vacant site. In addition, two
locations, which contained petroleum contamination, have now received a no further action status
from ADEM. Uninsured losses could adversely affect our financial condition. We carry comprehensive liability, fire, extended coverage and rental loss insurance on all of
our properties. We believe the policy specifications and insured limits of these policies are
adequate and appropriate. There are, however, certain types of losses, such as lease and other
contract claims that generally are not insured. Should an uninsured loss or a loss in excess of
insured limits occur, we could lose all or a portion of the capital we have invested in a property,
as well as the 19




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anticipated future revenue from the property. In such an event, we might nevertheless remain
obligated for any mortgage debt or other financial obligations related to the property, which could
have a materially adverse effect on our financial conditions. Competition for acquisitions could result in increased prices for properties, which could
adversely affect our return on properties we purchase. We compete with other major real estate investors with significant capital for attractive
investment opportunities in multifamily, office or retail properties. These competitors include
publicly traded REITs, private REITs, investment banking firms, private institutional investment
funds and national, regional and local real estate investors. This competition could increase the
prices that we have to pay for multifamily, office or retail properties, in which case our expected
return from investment in these properties will deteriorate. We may be unable to successfully integrate and effectively manage the properties we acquire,
which could adversely affect our results of operations. So long as we are able to obtain capital on commercially reasonable terms, we intend to
continue to selectively acquire multifamily, office or retail properties that meet our criteria for
investment opportunities, are consistent with our business strategies and we believe will be
profitable or will enhance the value of our portfolio. The success of these acquisitions will
depend, in part, on our ability to efficiently integrate the acquired properties into our
organization, and apply our business, operating, administrative, financial and accounting
strategies and controls to these acquired properties. If we are unable to successfully integrate
the acquired properties into our operations, our results of operations may be adversely affected. We may not be able to achieve the anticipated financial and operating results from our
acquisitions, which would adversely affect our operating results. We will continue to acquire multifamily, office or retail properties only if they meet our
criteria and we believe that that they will enhance our future financial performance and the value
of our portfolio. Our belief, however, is based on and is subject to risks, uncertainties and
other factors, many of which are forward-looking and are uncertain in nature or are beyond our
control. In addition, some of these properties may have unknown characteristics or deficiencies or
may not complement our portfolio of existing properties. As a result, some properties may be worth
less or may generate less revenue than, or simply not perform as well as, we believed at the time
of the acquisition, negatively affecting our operating results. We may be unable to develop new properties or redevelop existing properties successfully,
which could adversely affect our results of operations due to unexpected costs, delays and other
contingencies. To complement our acquisition strategy, we will continue to develop new properties or expand
or redevelop existing properties as opportunities arise. However, there are significant risks
associated with our development activities in addition to those generally associated with the
ownership and operation of developed properties. These risks include the following:  
    significant expenditure of money and time on projects that may be delayed or never be completed,
    higher than projected construction costs,
    lack of availability of debt or equity financing on acceptable terms,
    failure to meet anticipated occupancy or rent levels,
    failure to obtain zoning, occupancy or other governmental approvals,
    changes in applicable zoning and land use laws may require us to abandon projects
prior to their completion, resulting in the loss of development costs incurred up to
the time of abandonment, and
    late completion because of construction delays, delays in the receipt of zoning,
occupancy and other approvals or other factors outside of our control. Any one or more of these risks may cause us to incur unexpected costs in connection with our
development strategy, which would negatively affect our results of operations. Risks Associated with Our Indebtedness and Financing We have substantial indebtedness and our cash flow may not be sufficient to make required
payments on our indebtedness. We rely heavily on debt financing for our business. As of December 31, 2004, we had total
debt of approximately $1.97 billion,consisting of $1.86 billion of consolidated debt and $0.11
billion of our pro rata share of joint venture debt. Due to our high level of debt our cash flow
may be insufficient to meet required payments of principal and interest. If a property were
mortgaged to secure payment of indebtedness and we were unable to meet mortgage payments, the
mortgagee could foreclose upon that property, appoint a receiver and receive an assignment of rents
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In addition, if principal payments due at maturity cannot be refinanced, extended or paid with
proceeds of other capital transactions, such as new equity capital, our cash flow will not be
sufficient in all years to repay all maturing debt. We may be unable to repay our existing indebtedness as it matures, which could adversely
affect our financial condition and results of operations. Most of our indebtedness does not require significant principal payments prior to maturity.
However, we will need to raise additional equity capital, obtain secured or unsecured debt
financing, issue private or public debt, or sell some of our assets to either refinance or repay
our indebtedness as it matures. We cannot assure you that these sources of financing or
refinancing will be available to us at reasonable terms or at all. Our inability to obtain
financing or refinancing to repay our maturing indebtedness, and our inability to refinance
existing indebtedness on reasonable terms, may require us to make higher interest and principal
payments, issue additional equity securities, or sell some of our assets on disadvantageous terms,
all or any of which may result in foreclosure of properties, partial or complete loss on our
investment and otherwise adversely affect our financial conditions and results of operation. Our degree of leverage could limit our ability to obtain additional financing which would
negatively impact our results of operation and financial condition. As of December 31, 2004, our consolidated borrowings and pro rata share of unconsolidated
borrowings totaled approximately $1.97 billion (as described above), which represented
approximately 52.7% of our total market capitalization. Total market capitalization represents the
sum of the outstanding indebtedness (including our share of joint venture indebtedness), the total
liquidation preference of all our preferred shares and the total market value of our common shares
and units of partnership interest of our operating partnership, based on the closing price of our
common shares as of December 31, 2004. Our leverage and any future increases in our leverage could
adversely affect our ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, development or other general corporate purposes which would
negatively impact our results of operation and financial condition. Due to the significant amount of our variable rate debt, rising interest rates would adversely
affect our results of operation. As of December 31, 2004, we had approximately $627.6 million of variable rate debt
outstanding, consisting of $590.0 million of our consolidated debt and $37.6 million of our pro
rata share of variable rate unconsolidated joint venture debt. While we have sought to refinance
our variable rate debt with fixed rate debt or cap our exposure to interest rate fluctuations by
using interest rate swap agreements where appropriate, it is not possible for us to only have fixed
rate debt. In addition, as opportunities arise, we may borrow additional money with variable
interest rates in the future. As a result, a significant increase in interest rates would
adversely affect our results of operations. We have entered into debt agreements with covenants that restrict our operating activities,
which could adversely affect our results of operations, and violation of these restrictive
covenants could adversely affect our financial condition through debt defaults or acceleration. Our credit facility contains numerous customary restrictions, requirements and other
limitations on our ability to incur debt, including:  
    debt to assets ratios;
    secured debt to total assets ratios;
    debt service coverage ratios; and
    minimum ratios of unencumbered assets to unsecured debt. 21




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In addition, the indenture under which our senior unsecured debt is issued contains financial
and operating covenants including coverage ratios. Our indenture also limits our ability to:  
    incur secured and unsecured indebtedness;
    sell all or substantially all or our assets; and
    engage in mergers, consolidations and acquisitions. These restrictions will continue to hinder our operational flexibility through limitations on
our ability to incur additional indebtedness or make other changes to our business. These
limitations could adversely affect our results of operations. In addition, violations of these
covenants will result in adverse consequences to our financial condition, including through the
declaration of defaults and any related acceleration of indebtedness. Because we depend on third party financing for our development, expansion or acquisition
activities, an inability to obtain sufficient third party financing could adversely affect our
results of operations and financial condition. To qualify as a REIT, we must distribute to our shareholders each year at least 90% of our
REIT taxable income, excluding any net capital gain. Because of these distribution requirements, it
is not likely that we will be able to fund all future capital needs from income from operations. As
a result, as we continue to develop or acquire new properties or expand existing properties, we
will continue to rely on third-party sources of capital, including lines of credit, secured or
unsecured debt (both construction financing and permanent debt), and equity issuances. These
sources, however, may not be available on favorable terms or at all. Our access to third-party
sources of capital depends on a number of factors, including the markets perception of our growth
potential and our current and potential future earnings. Moreover, additional equity offerings may
result in substantial dilution of our shareholders interests, and additional debt financing may
substantially increase our leverage. There can be no assurance that we will be able to obtain the
financing necessary to fund new development or project expansions or our acquisition activities on
terms favorable to us or at all. If we are unable to obtain sufficient level of third party
financing to fund our growth, our results of operations and financial condition may be adversely
affected. Our senior notes do not have an established trading market. As a result, you may not be able
to sell your notes. Each series of the senior notes is a new issue of securities with no established trading
market. We do not intend to apply for listing of any series of notes on any national securities
exchange. The underwriters in an offering of senior notes may advise us that they intend to make a
market in the notes, but they are not obligated to do so and may discontinue market making at any
time without notice. We can give no assurance as to the liquidity of or any trading market for any
series of our notes. Risks Associated with Our Organization Some of our trustees and officers have conflicts of interest and could exercise influence in a
manner inconsistent with the interests of our shareholders. As a result of their substantial ownership of common shares and units, Messrs. Thomas Lowder,
our Chairman of the Board, Chief Executive Officer and President, and James Lowder, Harold Ripps,
Herbert Meisler, M. Miller Gorrie, and William Johnson, each of whom is our trustee, might seek to
exert influence over our decisions as to sales or re-financings of particular properties we own.
Any such exercise of influence might produce decisions that are not in the best interest of all of
the holders of interests in us. The Lowder family and their affiliates hold interests in companies that have performed
construction, insurance brokerage and other services with respect to our properties. These
companies may perform similar services for us in the future. As a result, the Lowder family may
realize benefits from transactions between such companies and us that are not realized by other
holders of interests in us. In addition, Thomas and James Lowder, as our trustees, may be in a
position to influence us to do business with companies in which the Lowder family has a financial
interest. Our policies may not be successful in eliminating the influence of conflicts. Moreover,
transactions with companies controlled by the Lowder family, if any, may not be on terms as
favorable to us as we could obtain in an arms-length transaction with a third party. Restrictions on the acquisition and change in control of the Company may have adverse effects
on the value of our common shares. Various provisions of our Declaration of Trust restrict the possibility for acquisition or
change in control of us, even if the acquisition or change in control were in the shareholders
interest. As a result, the value of our common shares may be less than they would otherwise be in
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We may change our business policies in the future, which could adversely affect our financial
condition or results of operations. Our major policies, including our policies with respect to development, acquisitions,
financing, growth, operations, debt capitalization and distributions, are determined by our Board
of Trustees. Although it has no present intention to do so, our Board of Trustees may amend or
revise these and other policies from time to time. A change in these policies could adversely
affect our financial condition or results of operations, including our ability to service debt. Risks Related to Our Capital Stock Market interest rates and low trading volume may have an adverse effect on the market value of
our common shares. The market price of shares of a REIT may be affected by the distribution rate on those shares,
as a percentage of the price of the shares, relative to market interest rates. If market interest
rates increase, prospective purchasers of our shares may expect a higher annual distribution rate.
Higher interest rates would not, however, result in more funds for us to distribute and, in fact,
would likely increase our borrowing costs and potentially decrease funds available for
distribution. This could cause the market price of our common shares to go down. In addition,
although our common shares are listed on the New York Stock Exchange, the daily trading volume of
our shares may be lower than the trading volume for other industries. As a result, our investors
who desire to liquidate substantial holdings may find that they are unable to dispose of their
shares in the market without causing a substantial decline in the market value of the shares. A large number of shares available for future sale could adversely affect the market price of
our common shares. The sales of a substantial number of common shares, or the perception that such sales could
occur, could adversely affect prevailing market prices for shares. We may currently issue up to
10,372,650 common shares upon redemption of currently outstanding units. No prediction can be made
about the effect that future sales of common shares will have on the market price of our common
shares. A failure to meet the markets expectations with regard to our earnings and cash distributions
could adversely affect the market price of our common shares. We believe that the market value of a REITs equity securities is based primarily upon the
markets perception of the REITs growth potential and its current and potential future cash
distributions, and is secondarily based upon the real estate market value of the underlying assets.
For that reason, our shares may trade at prices that are higher or lower than the net asset value
per share. To the extent we retain operating cash flow for investment purposes, working capital
reserves or other purposes, these retained funds, while increasing the value of our underlying
assets, may not correspondingly increase the market price of our common shares. In addition, we
are subject to the risk that our cash flow will be insufficient to meet the required payments on
our preferred shares and the Operating Partnerships preferred units. Our failure to meet the
markets expectations with regard to future earnings and cash distributions would likely adversely
affect the market price of our shares. Risks Associated with Income Tax Laws Our failure to qualify as a REIT would decrease the funds available for distribution to our
shareholders and adversely affect the market price of our common shares. We believe that we have qualified for taxation as a REIT for federal income tax purposes
commencing with our taxable year ended December 31, 1993. We intend to continue to meet the
requirements for taxation as a REIT, but we cannot assure shareholders that we will qualify as a
REIT. If we fail to qualify for taxation as a REIT in any taxable year, we will face serious tax
consequences that will substantially reduce the funds available for dividend distributions due to
the following reasons:  
    we will be subject to tax on our taxable income at regular corporate rates;
    we will not be able to deduct, and will not be required to make, distributions to
shareholders in any year in which we fail to qualify as a REIT;
    we could be subject to federal alternative minimum tax or increased state and local
taxes;
    unless we are entitled to relief under specific statutory provisions, we will be
disqualified from taxation as a REIT for the four taxable years following the year
during which we lost our qualification;
    provided we are entitled to relief under specific statutory provisions that would
allow us to maintain our REIT status and avoid the above consequences, we will be
subject to a tax, which in some case will be equal to the greater of $50,000 or the
amount determined by multiplying the income generated by assets that caused us to
violate certain REIT rules by the highest rate of tax applicable to corporations. 23




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##### Table of Contents



Many of the REIT requirements are highly technical and complex. The determination that we are
a REIT requires an analysis of various factual matters and circumstances that may not be totally
within our control. For example, to qualify as a REIT, at least 95% of our gross income must come
from sources that are itemized in the REIT tax laws. We generally are prohibited from owning more
than 10% of the voting securities or more than 10% of the value of the outstanding securities of
any one issuer, subject to certain exceptions, including an exception with respect to certain debt
instruments and corporations electing to be taxable REIT subsidiaries. We are also required to
distribute to shareholders at least 90% of our REIT taxable income, excluding net capital gains.
The fact that we hold most of our assets through the Operating Partnership further complicates the
application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize our
REIT status. Furthermore, Congress or the Internal Revenue Service might make changes to the tax
laws and regulations, or the courts might issue new rulings that make it more difficult, or
impossible, for us to remain qualified as a REIT. We do not believe, however, that any pending or
proposed tax law changes would jeopardize our REIT status. We cannot guarantee, however, that we
will continue to be qualified and taxed as a REIT because our qualification and taxation as a REIT
will depend upon our ability to meet the requirements imposed under the Internal Revenue Code of
1986, as amended, on an ongoing basis. If we failed to qualify as a REIT and are unable to avail ourselves of certain savings
provisions, we would be subject to federal income tax at regular corporate rates. Also, unless the
Internal Revenue Service granted us relief under certain statutory provisions, we would remain
disqualified as a REIT for the four years following the year we first failed to qualify. If we
failed to qualify as a REIT, we would have to pay significant income taxes and would therefore have
less money available for investments or for distributions to shareholders. This would likely have a
significant adverse affect on the value of our common shares. In addition, we would no longer be
required to make any distributions to shareholders, but we would still be required to distribute
quarterly substantially all of our net cash revenues to our unitholders. Changes in taxation of corporate dividends may adversely affect the value of our stock. The maximum marginal rate of tax payable by individuals on dividends received from a regular C
corporation through December 31, 2008 has been reduced to 15%. This reduced tax rate, however,
will not apply to dividends paid to individuals by a REIT on its stock, except for certain limited
amounts. While the earnings of a REIT that are distributed to its stockholders still generally
will be subject to less federal income taxation than earnings of a non-REIT C corporation that are
distributed to its stockholders net of corporate-level income tax, this reduction of the tax rate
could cause individual investors to view the stock of regular C corporations as more attractive
relative to the stock of a REIT than was the case prior to the enactment of the legislation.
Individual investors could hold this view because the dividends from regular C corporations will
generally be taxed at a lower rate while dividends from REITs will generally be taxed at the same
rate as the individuals other ordinary income. We cannot predict what effect, if any, the
reduction of the tax rate on non-REIT corporate dividends may have on the value of the stock of
REITs in general or on the value of our capital stock in particular, either in terms of price or
relative to other investments. Risks Associated with Cornerstone Merger The operations of Colonial and Cornerstone may not be integrated successfully and intended
benefits of the merger may not be realized, which could materially harm the combined companys
operating results and financial condition. The Cornerstone merger involves the integration of two large and complex real estate
businesses that currently operate independently. In addition, the merger poses specific risks for
our ongoing operations following completion of the merger, including that:  
    we may not achieve the expected operating efficiencies, value-creation potential,
economies of scale or other benefits;
    we may not have adequate financial, personnel and other resources to successfully handle
our substantially increased operations;
    the combined portfolio may not perform at the level we anticipate; and
    we may experience difficulties and incur unforeseen expenses in connection with
assimilating and retaining Cornerstone employees and assimilating Cornerstones business
and properties. If we fail to successfully integrate Cornerstone and/or fail to realize the intended benefits
of the merger, our operating results and financial condition following completion of the merger may
be materially harmed. 24




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##### Table of Contents



Cornerstones outstanding debt obligations could materially adversely affect our future
financial condition and operating results. As of December 31, 2004, Cornerstone had approximately $807.0 million in total debt
outstanding, all of which was secured by its properties and $233.6 million of which was subject to
variable interest rates. As part of the merger, we will assume the debt of Cornerstone. We
currently expect to repay a portion of Cornerstones outstanding debt with proceeds from debt
financings, asset sales, and our renegotiated unsecured line of credit. However, we cannot assure
you that we can obtain a new unsecured line of credit on favorable terms, if at all or complete the
asset sales. Our increased leverage as a result of the merger could have negative consequences to
our shareholders, including:  
    requiring us to use a significant portion of our cash flow from operations to make
interest and principal payments on debt rather than for other purposes such as working
capital, capital expenditures or dividends;
    limiting our ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, development or other general corporate purposes;
    limiting our flexibility to plan for or react to changes in business and economic conditions; and
    making us more vulnerable to a downturn in our business or the economy generally. As a result of these debt obligations, we may not have sufficient cash flow from operations to
meet required payments of principal and interest, pay distributions on our securities, which could
affect our ability to qualify as a REIT, or make necessary investments in new business activities.
In addition, our ability to refinance Cornerstones debt may be adversely affected by increases in
interest rates. Moreover, higher interest rates would increase our interest expense under the
variable interest rate debt assumed from Cornerstone. 
 Item 2. Properties. General As of December 31, 2004, our real estate portfolio consisted of 153 properties consisting of
whole or partial ownership interests, located in twelve states in the Sunbelt region of the United
States. We maintain non-controlling partial interests of 10% to 50% in 37 of the 153 operating
properties. The 153 properties we owned or maintained partial ownership in at December 31, 2004
consisted of the following: Summary of Properties Total 2004
    
    
    Percent ofUnits/
    
    
    Property
    
    
    Total 2004
    
    
    PercentageNumber of
    
    
    GRA/
    
    
    Revenue (2)
    
    
    Property
    
    
    Occupancy atType of Property
    
    Properties
    
    
    NRA (1)
    
    
    (in thousands)
    
    
    Revenue (2)
    
    
    Dec. 31, 2004 (3)Multifamily
    
    
    78
    
    
    
    25,009
    (4)
    
    $
    123,413
    
    
    
    31.5
    %
    
    
    94.6
    %Office
    
    
    27
    
    
    
    5,870,155
    (5)
    
    
    98,690
    
    
    
    25.2
    %
    
    
    92.2
    %Retail
    
    
    48
    
    
    
    15,293,475
    (6)
    
    
    169,217
    
    
    
    43.3
    %
    
    
    91.4
    %Total
    
    
    153
    
    
    
    
    
    
    $
    391,320
    (7)
    
    
    100.0
    % (7)
   (1)
    
    Units (in this table only) refers to multifamily units, GRA refers to gross retail
area, which includes gross leasable area and space owned by anchor tenants and NRA refers to
net rentable area of office space. Information is presented as of December 31, 2004.(2)
    
    Includes our proportionate share of revenue from those multifamily, office and retail
properties accounted for under the equity method, and our share of the properties disposed of
in 2004.(3)
    
    Excludes the units/square feet of development or expansion phases of four multifamily
properties, one office property and one retail property that had not achieved stabilized
occupancy as of December 31, 2004.(4)
    
    Amount includes 9,520 units at 33 multifamily properties, in which we maintain a 10.0%
- 25.0% ownership interest.(5)
    
    Amount includes 29,988 square feet at one office property, in which we maintain a
33.33% ownership interest.(6)
    
    Amount includes 556,000 square feet at three retail properties, in which we maintain a
10.0% - 45.0% ownership interest.(7)
    
    Amount includes $18,299 of our proportionate share of revenue from unconsolidated
properties and $43,985 of revenue from properties classified as discontinued operations during
2004. In order to arrive at consolidated property revenues of $329,036, in accordance with
GAAP, these amounts must be removed from the total property revenue. Management believes
including our proportionate share of revenue from unconsolidated properties and revenues from
discontinued operations provides investors with a more complete description of our gross
revenues. 25




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##### Table of Contents



Multifamily Properties The 78 multifamily properties contain a total of 25,009 garden-style apartments and range in
size from 125 to 1,080 units. Twenty-one multifamily properties (containing a total of 7,902
apartment units) are located in Alabama, ten multifamily properties (containing a total of 2,340
units) are located in Arizona, sixteen multifamily properties (containing a total of 5,998 units)
are located in Florida, eleven multifamily properties (containing a total of 2,729 units) are
located in Georgia, two multifamily properties (containing a total of 498 units) are located in
Mississippi, three multifamily properties (containing a total of 858 units) are located in Nevada,
three multifamily properties (containing a total of 1,025 units) are located in New Mexico, three
multifamily properties (containing 872 units) are located in North Carolina, two multifamily
properties (containing a total of 764 units) are located in South Carolina, two multifamily
properties (containing 618 units) are located in Tennessee and five multifamily properties
(containing 1,405 units) are located in Texas. Each of the multifamily properties is established
in its local market and provides residents with numerous amenities, which may include a swimming
pool, exercise room, jacuzzi, clubhouse, laundry room, tennis court(s), and/or a playground. All
of the multifamily properties are managed by us. The following table sets forth certain additional information relating to the multifamily
properties as of and for the year ended December 31, 2004. 26




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##### Table of Contents



Multifamily Properties Average
    
    
    
    
    
    
    Total Multifamily
    
    
    
    
    
    
    Percent of TotalYear
    
    Number
    
    
    Approximate
    
    
    
    
    
    
    
    
    
    
    Rental
    
    
    
    
    
    
    Property
    
    
    
    
    
    
    2004 MultifamilyMultifamily
    
    
    
    Completed
    
    of
    
    
    Rentable Area
    
    
    Percent
    
    
    
    
    
    
    Rate
    
    
    
    
    
    
    Revenue for
    
    
    
    
    
    
    PropertyProperty (1)
    
    Location
    
    (2)
    
    Units (3)
    
    
    (Square Feet)
    
    
    Occupied
    
    
    
    
    
    
    Per Unit
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    Revenue (4)Alabama:CG at Edgewater
    
    Huntsville
    
    1990
    
    
    500
    
    
    
    541,650
    
    
    
    91.2
    %
    
    
    
    
    
    $
    726
    
    
    
    
    
    
    $
    4,051,689
    
    
    
    
    
    
    
    3.3
    %CG at Galleria
    
    Birmingham
    
    1986/96
    
    
    1,080
    
    
    
    1,195,186
    
    
    
    95.3
    %
    
    
    
    
    
    
    694
    
    
    
    
    
    
    
    8,285,544
    
    
    
    
    
    
    
    6.7
    %CG at Galleria Woods
    
    Birmingham
    
    1994
    
    
    244
    
    
    
    260,720
    
    
    
    98.8
    %
    
    
    
    
    
    
    731
    
    
    
    
    
    
    
    2,041,770
    
    
    
    
    
    
    
    1.7
    %CG at Inverness Lakes II (7)
    
    Mobile
    
    1996
    
    
    312
    
    
    
    329,926
    
    
    
    88.5
    %
    
    
    
    
    
    
    736
    
    
    
    
    
    
    
    328,716
    
    
    
    
    
    
    
    0.3
    %CG at Liberty Park
    
    Birmingham
    
    2000
    
    
    300
    
    
    
    338,684
    
    
    
    93.7
    %
    
    
    
    
    
    
    991
    
    
    
    
    
    
    
    3,189,075
    
    
    
    
    
    
    
    2.6
    %CG at Madison
    
    Huntsville
    
    2000
    
    
    336
    
    
    
    354,592
    
    
    
    95.8
    %
    
    
    
    
    
    
    796
    
    
    
    
    
    
    
    3,058,991
    
    
    
    
    
    
    
    2.5
    %CG at Mountain Brook (7)
    
    Birmingham
    
    1987/91
    
    
    392
    
    
    
    392,700
    
    
    
    97.7
    %
    
    
    
    
    
    
    736
    
    
    
    
    
    
    
    448,638
    
    
    
    
    
    
    
    0.4
    %CG at Promenade
    
    Montgomery
    
    2000
    
    
    384
    
    
    
    424,372
    
    
    
    90.1
    %
    
    
    
    
    
    
    867
    
    
    
    
    
    
    
    3,822,966
    
    
    
    
    
    
    
    3.1
    %CG at Riverchase
    
    Birmingham
    
    1984/91
    
    
    468
    
    
    
    745,840
    
    
    
    96.2
    %
    
    
    
    
    
    
    838
    
    
    
    
    
    
    
    4,335,096
    
    
    
    
    
    
    
    3.5
    %Colony Woods (7)
    
    Birmingham
    
    1988
    
    
    414
    
    
    
    450,682
    
    
    
    96.1
    %
    
    
    
    
    
    
    702
    
    
    
    
    
    
    
    86,471
    
    
    
    
    
    
    
    0.1
    %CV at Ashford Place
    
    Mobile
    
    1983
    
    
    168
    
    
    
    139,128
    
    
    
    97.0
    %
    
    
    
    
    
    
    578
    
    
    
    
    
    
    
    990,322
    
    
    
    
    
    
    
    0.8
    %CV at Cahaba Heights (7)
    
    Birmingham
    
    1992
    
    
    125
    
    
    
    131,230
    
    
    
    92.0
    %
    
    
    
    
    
    
    830
    
    
    
    
    
    
    
    160,210
    
    
    
    
    
    
    
    0.1
    %CV at Hillwood (7)
    
    Montgomery
    
    1984
    
    
    160
    
    
    
    150,912
    
    
    
    86.3
    %
    
    
    
    
    
    
    644
    
    
    
    
    
    
    
    169,288
    
    
    
    
    
    
    
    0.1
    %CV at Huntleigh Woods
    
    Mobile
    
    1978
    
    
    233
    
    
    
    199,052
    
    
    
    95.3
    %
    
    
    
    
    
    
    559
    
    
    
    
    
    
    
    1,249,230
    
    
    
    
    
    
    
    1.0
    %CV at Inverness
    
    Birmingham
    
    1986/87/90
    
    
    586
    
    
    
    551,597
    
    
    
    95.2
    %
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    4,167,012
    
    
    
    
    
    
    
    3.4
    %CV at Inverness Lakes I (7)
    
    Mobile
    
    1983
    
    
    186
    
    
    
    176,460
    
    
    
    96.2
    %
    
    
    
    
    
    
    627
    
    
    
    
    
    
    
    172,109
    
    
    
    
    
    
    
    0.1
    %CV at Research Park
    
    Huntsville
    
    1987/94
    
    
    736
    
    
    
    809,343
    
    
    
    95.1
    %
    
    
    
    
    
    
    628
    
    
    
    
    
    
    
    5,386,180
    
    
    
    
    
    
    
    4.4
    %CV at Rocky Ridge (7)
    
    Birmingham
    
    1984
    
    
    226
    
    
    
    258,900
    
    
    
    92.9
    %
    
    
    
    
    
    
    727
    
    
    
    
    
    
    
    258,037
    
    
    
    
    
    
    
    0.2
    %CV at Trussville
    
    Birmingham
    
    1996/97
    
    
    376
    
    
    
    410,340
    
    
    
    94.7
    %
    
    
    
    
    
    
    771
    
    
    
    
    
    
    
    3,187,538
    
    
    
    
    
    
    
    2.6
    %Madison at Shoal Run (7)
    
    Birmingham
    
    1985
    
    
    276
    
    
    
    249,300
    
    
    
    97.1
    %
    
    
    
    
    
    
    626
    
    
    
    
    
    
    
    52,454
    
    
    
    
    
    
    
    0.0
    %Meadows at Brook Highland (7)
    
    Birmingham
    
    1987
    
    
    400
    
    
    
    465,605
    
    
    
    99.5
    %
    
    
    
    
    
    
    698
    
    
    
    
    
    
    
    77,140
    
    
    
    
    
    
    
    0.1
    %Subtotal - Alabama
    
    
    
    
    
    
    7,902
    
    
    
    8,576,219
    
    
    
    94.8
    %
    
    
    
    
    
    
    720
    
    
    
    
    
    
    
    45,518,476
    
    
    
    
    
    
    
    36.9
    %ArizonaArabian Trials (7)
    
    Scottsdale
    
    1986
    
    
    384
    
    
    
    347,240
    
    
    
    94.8
    %
    
    
    
    
    
    
    1,061
    
    
    
    
    
    
    
    93,174
    
    
    
    (6
    )
    
    
    0.1
    %Casa Lindas (7)
    
    Tucson
    
    1986
    
    
    144
    
    
    
    160,624
    
    
    
    92.4
    %
    
    
    
    
    
    
    764
    
    
    
    
    
    
    
    37,294
    
    
    
    (6
    )
    
    
    0.0
    %Colonia del Rio (7)
    
    Tucson
    
    1985
    
    
    176
    
    
    
    177,892
    
    
    
    91.5
    %
    
    
    
    
    
    
    733
    
    
    
    
    
    
    
    46,917
    
    
    
    (6
    )
    
    
    0.0
    %Fairway Crossing (7)
    
    Phoenix
    
    1986
    
    
    310
    
    
    
    303,170
    
    
    
    94.8
    %
    
    
    
    
    
    
    765
    
    
    
    
    
    
    
    77,104
    
    
    
    (6
    )
    
    
    0.1
    %Hacienda del Rio (7)
    
    Tucson
    
    1983
    
    
    248
    
    
    
    152,504
    
    
    
    91.1
    %
    
    
    
    
    
    
    477
    
    
    
    
    
    
    
    47,934
    
    
    
    (6
    )
    
    
    0.0
    %La Entrada (7)
    
    Scottsdale
    
    1988
    
    
    130
    
    
    
    112,810
    
    
    
    96.9
    %
    
    
    
    
    
    
    806
    
    
    
    
    
    
    
    34,587
    
    
    
    (6
    )
    
    
    0.0
    %Pinnancle Heights (7)
    
    Tucson
    
    1995
    
    
    310
    
    
    
    339,364
    
    
    
    94.5
    %
    
    
    
    
    
    
    851
    
    
    
    
    
    
    
    91,266
    
    
    
    (6
    )
    
    
    0.1
    %Posada del Este (7)
    
    Phoenix
    
    1979
    
    
    148
    
    
    
    128,894
    
    
    
    94.6
    %
    
    
    
    
    
    
    803
    
    
    
    
    
    
    
    41,591
    
    
    
    (6
    )
    
    
    0.0
    %Rancho Viejo (7)
    
    Phoenix
    
    1985
    
    
    266
    
    
    
    207,366
    
    
    
    91.7
    %
    
    
    
    
    
    
    671
    
    
    
    
    
    
    
    54,204
    
    
    
    (6
    )
    
    
    0.0
    %Springhill (7)
    
    Tucson
    
    1988
    
    
    224
    
    
    
    175,520
    
    
    
    88.4
    %
    
    
    
    
    
    
    614
    
    
    
    
    
    
    
    46,075
    
    
    
    (6
    )
    
    
    0.0
    %Subtotal - Arizona
    
    
    
    
    
    
    2,340
    
    
    
    2,105,384
    
    
    
    93.1
    %
    
    
    
    
    
    
    772
    
    
    
    
    
    
    
    570,146
    
    
    
    
    
    
    
    0.5
    %Florida:CG at Bayshore (7)
    
    Bradenton
    
    1997
    
    
    376
    
    
    
    368,900
    
    
    
    98.4
    %
    
    
    
    
    
    
    826
    
    
    

    
    
    
    
    448,146
    
    
    
    (6
    )
    
    
    0.4
    %CG at Cypress Crossing
    
    Orlando
    
    1999
    
    
    250
    
    
    
    314,596
    
    
    
    96.4
    %
    
    
    
    
    
    
    1,045
    
    
    
    
    
    
    
    2,664,538
    
    
    
    
    
    
    
    2.2
    %CG at Gainesville
    
    Gainesville
    
    1989/93/94
    
    
    560
    
    
    
    488,624
    
    
    
    96.1
    %
    
    
    
    
    
    
    825
    
    
    
    
    
    
    
    4,561,856
    
    
    
    
    
    
    
    3.7
    %CG at Heather Glen
    
    Orlando
    
    2000
    
    
    448
    
    
    
    524,074
    
    
    
    98.9
    %
    
    
    
    
    
    
    953
    
    
    
    
    
    
    
    4,468,945
    
    
    
    
    
    
    
    3.6
    %CG at Heathrow
    
    Orlando
    
    1997
    
    
    312
    
    
    
    370,028
    
    
    
    99.8
    %
    
    
    
    
    
    
    993
    
    
    
    
    
    
    
    3,080,753
    
    
    
    
    
    
    
    2.5
    %CG at Hunters Creek
    
    Orlando
    
    1997
    
    
    496
    
    
    
    624,464
    
    
    
    99.0
    %
    
    
    
    
    
    
    970
    
    
    
    
    
    
    
    5,063,906
    
    
    
    
    
    
    
    4.1
    %CG at Lakewood Ranch
    
    Sarasota
    
    1999
    
    
    288
    
    
    
    301,656
    
    
    
    96.5
    %
    
    
    
    
    
    
    1,014
    
    
    
    
    
    
    
    3,197,060
    
    
    
    
    
    
    
    2.6
    %CG at Metrowest
    
    Orlando
    
    1997
    
    
    311
    
    
    
    313,500
    
    
    
    97.1
    %
    
    
    
    
    
    
    858
    
    
    
    
    
    
    
    2,852,278
    
    
    
    
    
    
    
    2.3
    %CG at Palma Sola (7)
    
    Bradenton
    
    1992
    
    
    340
    
    
    
    291,796
    
    
    
    96.2
    %
    
    
    
    
    
    
    801
    
    
    
    
    
    
    
    375,727
    
    
    
    (6
    )
    
    
    0.3
    %CG at River Hills (7)
    
    Tampa
    
    1991/97
    
    
    776
    
    
    
    690,312
    
    
    
    91.4
    %
    
    
    
    
    
    
    700
    
    
    
    
    
    
    
    837,237
    
    
    
    
    
    
    
    0.7
    %CG at Seven Oaks
    
    Tampa
    
    2004
    
    
    318
    
    
    
    301,131
    
    
    LU
    
    
    (9
    )
    
    
    959
    
    
    
    
    
    
    
    735,008
    
    
    
    (6
    )
    
    
    0.6
    %CG at TownPark
    
    Orlando
    
    2002
    
    
    456
    
    
    
    584,664
    
    
    
    97.4
    %
    
    
    
    
    
    
    1,061
    
    
    
    
    
    
    
    4,857,509
    
    
    
    
    
    
    
    3.9
    %CG at TownPark Reserve
    
    Orlando
    
    2004
    
    
    67
    
    
    
    64,900
    
    
    LU
    
    
    (9
    )
    
    
    1,317
    
    
    
    
    
    
    
    241,341
    
    
    
    
    
    
    
    0.2
    %CV at Lake Mary
    
    Orlando
    
    1991/95
    
    
    504
    
    
    
    431,396
    
    
    
    98.0
    %
    
    
    
    
    
    
    775
    
    
    
    
    
    
    
    3,977,076
    
    
    
    
    
    
    
    3.2
    %CV at Ponte Vedra (7)(8)
    
    Jacksonville
    
    1988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133,989
    
    
    
    
    
    
    
    0.1
    %CV at TownPark
    
    Sarasota
    
    2002
    
    
    272
    
    
    
    316,370
    
    
    
    94.1
    %
    
    
    
    
    
    
    1,063
    
    
    
    
    
    
    
    2,921,914
    
    
    
    
    
    
    
    2.4
    %CV at Twin Lakes
    
    Orlando
    
    2004
    
    
    224
    
    
    
    138,200
    
    
    LU
    
    
    (9
    )
    
    
    1,205
    
    
    
    
    
    
    
    191,728
    
    
    
    
    
    
    
    0.2
    %Subtotal - Florida
    
    
    
    
    
    
    5,998
    
    
    
    6,124,611
    
    
    
    96.6
    %
    
    
    
    
    
    
    909
    
    
    
    
    
    
    
    40,609,011
    
    
    
    
    
    
    
    32.9
    %Georgia:CG at Barrington Club (7)
    
    Macon
    
    1996
    
    
    176
    
    
    
    191,940
    
    
    
    93.2
    %
    
    
    
    
    
    
    743
    
    
    
    
    
    
    
    195,663
    
    
    
    
    
    
    
    0.2
    %CG at Berkeley Lake
    
    Atlanta
    
    1998
    
    
    180
    
    
    
    243,941
    
    
    
    95.0
    %
    
    
    
    
    
    
    1,060
    
    
    
    
    
    
    
    1,153,379
    
    
    
    (6
    )
    
    
    0.9
    %CG at McGinnis Ferry
    
    Atlanta
    
    1997
    
    
    434
    
    
    
    510,000
    
    
    
    97.5
    %
    
    
    
    
    
    
    658
    
    
    
    
    
    
    
    282,763
    
    
    
    (6
    )
    
    
    0.2
    %CG at Mount Vernon
    
    Atlanta
    
    1997
    
    
    213
    
    
    
    257,180
    
    
    
    96.2
    %
    
    
    
    
    
    
    1,118
    
    
    
    
    
    
    
    1,453,847
    
    
    
    (6
    )
    
    
    1.2
    %CG at River Oaks
    
    Atlanta
    
    1992
    
    
    216
    
    
    
    276,208
    
    
    
    95.4
    %
    
    
    
    
    
    
    1,023
    
    
    
    
    
    
    
    1,284,900
    
    
    
    (6
    )
    
    
    1.0
    %CG at River Plantation
    
    Atlanta
    
    1994
    
    
    232
    
    
    
    311,000
    
    
    
    96.1
    %
    
    
    
    
    
    
    1,039
    
    
    
    
    
    
    
    1,527,523
    
    
    
    (6
    )
    
    
    1.2
    %CG at Sugarloaf
    
    Atlanta
    
    2002
    
    
    250
    
    
    
    329,600
    
    
    
    96.0
    %
    
    
    
    
    
    
    995
    
    
    
    
    
    
    
    1,468,202
    
    
    
    (6
    )
    
    
    1.2
    %CG at Wesleyan
    
    Macon
    
    1997
    
    
    328
    
    
    
    382,946
    
    
    
    93.6
    %
    
    
    
    
    
    
    775
    
    
    
    
    
    
    
    2,411,095
    
    
    
    
    
    
    
    2.0
    %CV at Stockbridge (7)
    
    Stockbridge
    
    1993/94
    
    
    240
    
    
    
    253,200
    
    
    
    95.0
    %
    
    
    
    
    
    
    797
    
    
    
    
    
    
    
    276,170
    
    
    
    
    
    
    
    0.2
    %CV at Timothy Woods
    
    Athens
    
    1996
    
    
    204
    
    
    
    211,444
    
    
    
    92.2
    %
    
    
    
    
    
    
    821
    
    
    
    
    
    
    
    1,749,301
    
    
    
    
    
    
    
    1.4
    %CV at Vernon Marsh (8)
    
    Savannah
    
    1986/87
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,055,901
    
    
    
    
    
    
    
    0.9
    %CV at Walton Way
    
    Augusta
    
    1984
    
    
    256
    
    
    
    254,264
    
    
    
    92.2
    %
    
    
    
    
    
    
    676
    
    
    
    
    
    
    
    2,157,308
    
    
    
    
    
    
    
    1.7
    %Subtotal - Georgia
    
    
    
    
    
    
    2,729
    
    
    
    3,221,723
    
    
    
    95.0
    %
    
    
    
    
    
    
    858
    
    
    
    
    
    
    
    15,016,052
    
    
    
    
    
    
    
    12.2
    %Mississippi:CG at The Reservoir
    
    Jackson
    
    2000
    
    
    170
    
    
    
    195,605
    
    
    
    92.4
    %
    
    
    
    
    
    
    892
    
    
    
    
    
    
    
    1,793,013
    
    
    
    
    
    
    
    1.5
    %CV at Natchez Trace
    
    Jackson
    
    1995/97
    
    
    328
    
    
    
    342,800
    
    
    
    90.2
    %
    
    
    
    
    
    
    759
    
    
    
    
    
    
    
    2,801,645
    
    
    
    
    
    
    
    2.3
    %Subtotal - Mississippi
    
    
    
    
    
    
    498
    
    
    
    538,405
    
    
    
    91.0
    %
    
    
    
    
    
    
    804
    
    
    
    
    
    
    
    4,594,658
    
    
    
    
    
    
    
    3.7
    %NevadaDesert Lakes (7)
    
    Las Vegas
    
    1991
    
    
    184
    
    
    
    188,360
    
    
    
    96.2
    %
    
    
    
    
    
    
    912
    
    
    
    
    
    
    
    61,087
    
    
    
    (6
    )
    
    
    0.0
    %Pinnacle Flamingo West (7)
    
    Las Vegas
    
    1986
    
    
    324
    
    
    
    320,364
    
    
    
    92.9
    %
    
    
    
    
    
    
    881
    
    
    
    
    
    
    
    107,992
    
    
    
    (6
    )
    
    
    0.1
    %Talavera (7)
    
    Las Vegas
    
    1995
    
    
    350
    
    
    
    353,724
    
    
    
    94.6
    %
    
    
    
    
    
    
    928
    
    
    
    
    
    
    
    128,297
    
    
    
    (6
    )
    
    
    0.1
    %Subtotal - Nevada
    
    
    
    
    
    
    858
    
    
    
    862,448
    
    
    
    94.3
    %
    
    
    
    
    
    
    907
    
    
    
    
    
    
    
    297,376
    
    
    
    
    
    
    
    0.2
    %New MexicoPinnacle Estates (7)
    
    Albuquerque
    
    1998
    
    
    294
    
    
    
    313,420
    
    
    
    91.2
    %
    
    
    
    
    
    
    891
    
    
    
    
    
    
    
    101,103
    
    
    
    (6
    )
    
    
    0.1
    %Pinnacle High Desert (7)
    
    Albuquerque
    
    1986
    
    
    430
    
    
    
    478,036
    
    
    
    93.0
    %
    
    
    
    
    
    
    966
    
    
    
    
    
    
    
    159,650
    
    
    
    (6
    )
    
    
    0.1
    %Pinnacle High Resort (7)
    
    Albuquerque
    
    1998
    
    
    301
    
    
    
    322,770
    
    
    
    86.0
    %
    
    
    
    
    
    
    829
    
    
    
    
    
    
    
    92,192
    
    
    
    (6
    )
    
    
    0.1
    %Subtotal - New Mexico
    
    
    
    
    
    
    1,025
    
    
    
    1,114,226
    
    
    
    90.4
    %
    
    
    
    
    
    
    904
    
    
    
    
    
    
    
    352,945
    
    
    
    
    
    
    
    0.3
    %North Carolina:CG at Arringdon
    
    Raleigh/Durham
    
    2003
    
    
    320
    
    
    
    336,000
    
    
    
    86.8
    %
    
    
    
    
    
    
    920
    
    
    
    
    
    
    
    1,825,256
    
    
    
    (6
    )
    
    
    1.5
    %CG at Beverly Crest
    
    Charlotte
    
    1996
    
    
    300
    
    
    
    278,685
    
    
    
    88.7
    %
    
    
    
    
    
    
    848
    
    
    
    
    
    
    
    424,769
    
    
    
    (6
    )
    
    
    0.3
    %CG at Patterson Place
    
    Durham
    
    1997
    
    
    252
    
    
    
    238,700
    
    
    
    88.5
    %
    
    
    
    
    
    
    936
    
    
    
    
    
    
    
    395,038
    
    
    
    (6
    )
    
    
    0.3
    %Subtotal - North Carolina
    
    
    
    
    
    
    872
    
    
    
    853,385
    
    
    
    87.9
    %
    
    
    
    
    
    
    900
    
    
    
    
    
    
    
    2,645,063
    
    
    
    
    
    
    
    2.1
    %South Carolina:CV at Ashley Plantation
    
    Bluffton
    
    1998/2000
    
    
    414
    
    
    
    425,095
    
    
    
    89.4
    %
    
    
    
    
    
    
    829
    
    
    
    
    
    
    
    3,229,950
    
    
    
    
    
    
    
    2.6
    %CV at Caledon Wood
    
    Greenville
    
    1995/96
    
    
    350
    
    
    
    348,305
    
    
    
    96.0
    %
    
    
    
    
    
    
    730
    
    
    
    
    
    
    
    2,382,477
    
    
    
    
    
    
    
    1.9
    %Subtotal - South Carolina
    
    
    
    
    
    
    764
    
    
    
    773,400
    
    
    
    92.4
    %
    
    
    
    
    
    
    784
    
    
    
    
    
    
    
    5,612,427
    
    
    
    
    
    
    
    4.5
    %TennesseeCG at Brentwood (7)
    
    Nashville
    
    1995
    
    
    254
    
    
    
    242,200
    
    
    
    85.4
    %
    
    
    
    
    
    
    956
    
    
    
    
    
    
    
    202,493
    
    
    
    (6
    )
    
    
    0.2
    %CV at Hendersonville (7)
    
    Nashville
    
    1992
    
    
    364
    
    
    
    250,400
    
    
    
    84.1
    %
    
    
    
    
    
    
    677
    
    
    
    
    
    
    
    203,818
    
    
    
    (6
    )
    
    
    0.2
    %Subtotal - Tennessee
    
    
    
    
    
    
    618
    
    
    
    492,600
    
    
    
    84.6
    %
    
    
    
    
    
    
    794
    
    
    
    
    
    
    
    406,311
    
    
    
    
    
    
    
    0.3
    %Texas:The Cunningham Apartments (7)
    
    Austin
    
    2000
    
    
    280
    
    
    
    257,380
    
    
    
    92.9
    %
    
    
    
    
    
    
    849
    
    
    
    
    
    
    
    260,230
    
    
    
    (6
    )
    
    
    0.2
    %CV at Haverhill
    
    San Antonio
    
    1997
    
    
    322
    
    
    
    326,914
    
    
    
    93.2
    %
    
    
    
    
    
    
    992
    
    
    
    
    
    
    
    3,049,436
    
    
    
    
    
    
    
    2.5
    %CV at Quarry Oaks
    
    Austin
    
    1996
    
    
    533
    
    
    
    459,800
    
    
    
    94.0
    %
    
    
    
    
    
    
    797
    
    
    
    
    
    
    
    3,958,335
    
    
    
    
    
    
    
    3.2
    %CV at Sierra Vista
    
    Austin
    
    1999
    
    
    232
    
    
    
    204,400
    
    
    
    94.8
    %
    
    
    
    
    
    
    769
    
    
    
    
    
    
    
    522,678
    
    
    
    (6
    )
    
    
    0.4
    %CV at Silverado
    
    Austin
    
    2004
    
    
    38
    
    
    
    38,100
    
    
    LU
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %Subtotal - Texas
    
    
    
    
    
    
    1,405
    
    
    
    1,286,594
    
    
    
    93.7
    %
    
    
    
    
    
    
    849
    
    
    
    
    
    
    
    7,790,679
    
    
    
    
    
    
    
    6.3
    %TOTAL
    
    
    
    
    
    
    25,009
    
    
    
    25,948,995
    
    
    
    94.6
    %
    
    
    
    
    
    $
    818
    
    
    
    (5
    )
    
    $
    123,413,144
    
    
    
    
    
    
    
    100.0
    %
   (footnotes on next page) 27




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##### Table of Contents



(1)
    
    All multifamily properties are 100% owned by us with the exception of the properties
noted in (7) below. In the listing of multifamily property names, CG has been used as an
abbreviation for Colonial Grand and CV as an abbreviation for Colonial Village.(2)
    
    Year initially completed and, where applicable, year(s) in which additional phases were
completed at the property.(3)
    
    Units (in this table only) refers to multifamily apartment units. Number of units
includes all apartment units occupied or available for occupancy at December 31, 2004.(4)
    
    Percent of Total Multifamily 2004 Property Revenue represents each propertys
proportionate share of revenue from our 78 multifamily properties, including the
partially-owned properties.(5)
    
    Represents weighted average rental rate per unit of the 78 multifamily properties at
December 31, 2004.(6)
    
    Represents revenues from the date of our acquisition of this property in 2004 through
December 31, 2004.(7)
    
    We hold a 10% - 25% non-controlling interest in these joint ventures.(8)
    
    These properties were sold during 2004.(9)
    
    These properties are currently in lease-up (LU) and are not included in the Percent
Occupied and Average Rental Rate per Unit totals. The following table sets forth the total number of units, percent leased and average base
rental rate per unit as of the end of each of the last five years for the multifamily properties: Average BaseNumber
    
    
    Percent
    
    
    Rental RateYear-End
    
    of Units (1)
    
    
    Leased (2)
    
    
    Per UnitDecember 31, 2004
    
    
    25,009
    
    
    
    94.6
    %
    
    $
    818December 31, 2003
    
    
    15,224
    
    
    
    92.9
    %
    
    $
    794December 31, 2002
    
    
    14,556
    
    
    
    88.1
    %
    
    $
    785December 31, 2001
    
    
    16,256
    
    
    
    92.8
    %
    
    $
    752December 31, 2000
    
    
    17,189
    
    
    
    94.0
    %
    
    $
    707
   (1)
    
    Units (in this table only) refers to multifamily units owned at year end, which
includes 9,520 units that we partially owned at December 31, 2004.(2)
    
    Represents weighted average occupancy of the multifamily properties that had achieved
stabilized occupancy at the end of the respective period. Office Properties The 27 office properties contain a total of approximately 5.9 million net rentable square
feet. Seventeen of the office properties are located in Alabama (representing 54.7% of the office
portfolios net rentable square feet), seven are located in Florida, and three are located in
Atlanta, Georgia. The office properties range in size from approximately 20,900 square feet to
807,100 square feet. All of the office properties are managed by us. The following table sets forth certain additional information relating to the office
properties as of and for the year ended December 31, 2004. 28




---



##### Table of Contents



Office Properties Average Base
    
    
    Total Office
    
    
    
    
    
    
    Percent ofYear
    
    Net Rentable
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    Rent Per
    
    
    Property
    
    
    
    
    
    
    Total 2004Completed
    
    Area
    
    
    Percent
    
    
    
    
    
    
    Annualized
    
    
    Leased
    
    
    Revenue for
    
    
    
    
    
    
    Office PropertyOffice Property (1)
    
    Location
    
    (2)
    
    Square Feet
    
    
    Leased
    
    
    
    
    
    
    Base Rent
    
    
    Square Foot
    
    
    2004 (3)
    
    
    
    
    
    
    Revenue (4)Alabama:250 Commerce St
    
    Montgomery
    
    1904/81
    
    
    37,447
    
    
    
    100.0
    %
    
    
    
    
    
    $
    469,284
    
    
    $
    14.57
    
    
    $
    480,017
    
    
    
    
    
    
    
    0.5
    %AmSouth Center
    
    Huntsville
    
    1990
    
    
    154,521
    
    
    
    93.2
    %
    
    
    
    
    
    
    2,741,554
    
    
    
    19.73
    
    
    
    3,131,476
    
    
    
    
    
    
    
    3.2
    %Colonial Center Blue Lake
    
    Birmingham
    
    1982/95
    
    
    165,144
    
    
    
    79.8
    %
    
    
    
    
    
    
    1,794,570
    
    
    
    19.17
    
    
    
    2,512,773
    
    
    
    
    
    
    
    2.5
    %Colonial Center Colonnade
    
    Birmingham
    
    1989/99
    
    
    421,434
    
    
    
    97.5
    %
    
    
    
    
    
    
    7,132,550
    
    
    
    17.90
    
    
    
    9,290,697
    
    
    
    
    
    
    
    9.4
    %Colonial Center Lakeside
    
    Huntsville
    
    1989/90
    
    
    121,513
    
    
    
    100.0
    %
    
    
    
    
    
    
    1,925,003
    
    
    
    15.84
    
    
    
    2,018,452
    
    
    
    
    
    
    
    2.0
    %Colonial Center Research Park
    
    Huntsville
    
    1999
    
    
    133,482
    
    
    
    98.9
    %
    
    
    
    
    
    
    2,059,682
    
    
    
    16.87
    
    
    
    2,263,888
    
    
    
    
    
    
    
    2.3
    %Colonial Center Research Place
    
    Huntsville
    
    1979/84/88
    
    
    272,558
    
    
    
    100.0
    %
    
    
    
    
    
    
    3,581,075
    
    
    
    13.14
    
    
    
    3,489,936
    
    
    
    
    
    
    
    3.5
    %Colonial Plaza
    
    Birmingham
    
    1999
    
    
    170,850
    
    
    
    89.0
    %
    
    
    
    
    
    
    2,936,520
    
    
    
    22.06
    
    
    
    3,540,214
    
    
    
    
    
    
    
    3.6
    %DRS building
    
    Huntsville
    
    1972/86/90/03
    
    
    215,500
    
    
    
    100.0
    %
    
    
    
    
    
    
    1,681,571
    
    
    
    7.80
    
    
    
    1,564,624
    
    
    
    (6
    )
    
    
    1.6
    %Independence Plaza
    
    Birmingham
    
    1979
    
    
    105,963
    
    
    
    98.4
    %
    
    
    
    
    
    
    1,950,611
    
    
    
    24.03
    
    
    
    1,925,214
    
    
    
    
    
    
    
    2.0
    %International Park
    
    Birmingham
    
    1987/89/99
    
    
    210,733
    
    
    
    98.9
    %
    
    
    
    
    
    
    4,271,876
    
    
    
    26.13
    
    
    
    4,100,384
    
    
    
    
    
    
    
    4.2
    %Interstate Park
    
    Montgomery
    
    1982-85/89
    
    
    230,500
    
    
    
    95.5
    %
    
    
    
    
    
    
    3,453,241
    
    
    
    15.34
    
    
    
    3,278,378
    
    
    
    
    
    
    
    3.3
    %Land Title Bldg.
    
    Birmingham
    
    1975
    
    
    29,988
    
    
    
    100.0
    %
    
    
    
    
    
    
    396,855
    
    
    
    14.28
    
    
    
    172,176
    
    
    
    
    
    
    
    0.2
    %Perimeter Corporate Park
    
    Huntsville
    
    1986/89
    
    
    234,700
    
    
    
    91.6
    %
    
    
    
    
    
    
    3,463,249
    
    
    
    15.99
    
    
    
    3,846,066
    
    
    
    
    
    
    
    3.9
    %Progress Center
    
    Huntsville
    
    1983-91
    
    
    224,400
    
    
    
    96.7
    %
    
    
    
    
    
    
    2,194,163
    
    
    
    11.25
    
    
    
    2,644,488
    
    
    
    
    
    
    
    2.7
    %Research Park Office Center
    
    Huntsville
    
    1984/00
    
    
    176,600
    
    
    
    96.2
    %
    
    
    
    
    
    
    1,768,663
    
    
    
    10.41
    
    
    
    370,994
    
    
    
    (6
    )
    
    
    0.4
    %Riverchase Center
    
    Birmingham
    
    1984-88
    
    
    305,200
    
    
    
    87.1
    %
    
    
    
    
    
    
    2,778,848
    
    
    
    10.61
    
    
    
    3,798,611
    
    
    
    
    
    
    
    3.8
    %Subtotal-Alabama
    
    
    
    
    
    
    3,210,533
    
    
    
    95.0
    %
    
    
    
    
    
    
    44,599,315
    
    
    
    19.49
    
    
    
    48,428,388
    
    
    
    
    
    
    
    49.1
    %Florida:901 Maitland Center
    
    Orlando
    
    1985
    
    
    154,600
    
    
    
    67.8
    %
    
    
    
    
    
    
    1,925,143
    
    
    
    19.19
    
    
    
    2,193,781
    
    
    
    
    
    
    
    2.2
    %Colonial Center 100 at TownPark
    
    Orlando
    
    2001
    
    
    153,569
    
    
    
    99.1
    %
    
    
    
    
    
    
    3,202,103
    
    
    
    21.28
    
    
    
    3,314,310
    
    
    
    
    
    
    
    3.4
    %Colonial Center 200 at TownPark
    
    Orlando
    
    2003
    
    
    155,200
    
    
    
    98.8
    %
    
    
    
    
    
    
    2,886,579
    
    
    
    19.25
    
    
    
    2,786,089
    
    
    
    
    
    
    
    2.8
    %Colonial Center 600 at TownPark
    
    Orlando
    
    2002
    
    
    199,585
    
    
    
    100.0
    %
    
    
    
    
    
    
    3,850,567
    
    
    
    19.29
    
    
    
    3,999,161
    
    
    
    
    
    
    
    4.1
    %Colonial TownPark Office
    
    Orlando
    
    2004
    
    
    34,900
    
    
    LU
    
    
    (7
    )
    
    
    397,334
    
    
    LU
    
    
    173,438
    
    
    
    (6
    )
    
    
    0.2
    %Colonial Center Heathrow
    
    Orlando
    
    1988/96/00
    
    
    807,100
    
    
    
    85.0
    %
    
    
    
    
    
    
    13,783,769
    
    
    
    18.19
    
    
    
    15,483,705
    
    
    
    
    
    
    
    15.7
    %Concourse Center
    
    Tampa
    
    1981/85
    
    
    292,200
    
    
    
    93.0
    %
    
    
    
    
    
    
    3,018,204
    
    
    
    15.44
    
    
    
    4,793,763
    
    
    
    
    
    
    
    4.9
    %Subtotal-Florida
    
    
    
    
    
    
    1,797,154
    
    
    
    87.2
    %
    
    
    
    
    
    
    29,063,699
    
    
    
    19.04
    
    
    
    32,744,247
    
    
    
    
    
    
    
    33.2
    %Georgia:Colonial Center at Mansell Overlook
    
    Atlanta
    
    1987/96/97/00
    
    
    652,800
    
    
    
    94.6
    %
    
    
    
    
    
    
    12,643,848
    
    
    
    23.98
    
    
    
    14,713,945
    
    
    
    
    
    
    
    14.9
    %Colonial Center at Mansell Overlook 400
    
    Atlanta
    
    1987/96/97/00
    
    
    188,800
    
    
    
    72.5
    %
    
    
    
    
    
    
    1,560,088
    
    
    
    12.73
    
    
    
    1,994,511
    
    
    
    
    
    
    
    2.0
    %Shoppes at Mansell
    
    Atlanta
    
    1996/97
    
    
    20,868
    
    
    
    100.0
    %
    
    
    
    
    
    
    462,206
    
    
    
    22.15
    
    
    
    571,701
    
    
    
    
    
    
    
    0.6
    %Village at Roswell Summit
    
    Atlanta
    
    1988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236,792
    
    
    
    (5
    )
    
    
    0.2
    %Subtotal-Georgia
    
    
    
    
    
    
    862,468
    
    
    
    90.0
    %
    
    
    
    
    
    
    14,666,142
    
    
    
    21.77
    
    
    
    17,516,949
    
    
    
    
    
    
    
    17.7
    %TOTAL
    
    
    
    
    
    
    5,870,155
    
    
    
    92.2
    %
    
    
    
    
    
    $
    88,329,156
    
    
    $
    17.48
    
    
    $
    98,689,584
    
    
    
    
    
    
    
    100.0
    %
   (1)
    All office properties are 100% owned by us with the exception of
Land Title Building, which is 33.33% owned by us.(2)
    Year initially completed and, where applicable, most recent
year in which the property was substantially renovated or in which an additional phase of the
property was completed.(3)
    Total 2004 Office Property Revenue is our share (based on its
percentage ownership of the property) of Total Office Property Revenue, unless otherwise
noted.(4)
    Percent of Total Office 2004 Property Revenue represents each
propertys proportionate share of revenue from our 27 office properties, including partially
owned properties.(5)
    The Village at Roswell Summit building, a 25,500 square foot
building, was sold during 2004.(6)
    Represents revenues from the date of our acquisition or completion of development of
this property in 2004 through December 31, 2004.(7)
    This property is currently in lease-up (LU) and is not included in the Percent Leased
and Average Base Rent per Leased Square Foot property totals. 29




---



##### Table of Contents



The following table sets out a schedule of the lease expirations for leases in place as
of December 31, 2004, for the office properties (including all lease expirations for
partially-owned properties). Net Rentable
    
    
    Annualized
    
    
    Percent of TotalYear of
    
    Number of
    
    
    Area Of
    
    
    Base Rent of
    
    
    Annual Base RentLease
    
    Tenants with
    
    
    Expiring Leases
    
    
    Expiring
    
    
    Represented byExpiration
    
    Expiring Leases
    
    
    (Square Feet) (1)
    
    
    Leases (1)(2)
    
    
    Expiring Leases (1)2005
    
    
    119
    
    
    
    578,283
    
    
    $
    10,084,518
    
    
    
    11.2
    %2006
    
    
    110
    
    
    
    806,468
    
    
    
    14,219,647
    
    
    
    15.8
    %2007
    
    
    116
    
    
    
    1,003,077
    
    
    
    17,981,590
    
    
    
    20.0
    %2008
    
    
    75
    
    
    
    510,494
    
    
    
    8,213,229
    
    
    
    9.1
    %2009
    
    
    72
    
    
    
    518,124
    
    
    
    8,717,147
    
    
    
    9.6
    %2010
    
    
    33
    
    
    
    557,569
    
    
    
    8,256,110
    
    
    
    9.2
    %2011
    
    
    13
    
    
    
    331,722
    
    
    
    5,595,869
    
    
    
    6.2
    %2012
    
    
    6
    
    
    
    385,484
    
    
    
    7,564,866
    
    
    
    8.4
    %2013
    
    
    5
    
    
    
    306,140
    
    
    
    3,201,762
    
    
    
    3.5
    %2014
    
    
    2
    
    
    
    25,154
    
    
    
    456,105
    
    
    
    0.5
    %Thereafter
    
    
    8
    
    
    
    391,186
    
    
    
    5,836,890
    
    
    
    6.5
    %559
    
    
    
    5,413,701
    
    
    $
    90,127,733
    
    
    
    100.0
    %
   (1)
    
    Excludes approximately 430,000 square feet of space not leased
as of December 31, 2004.(2)
    
    Annualized base rent is calculated using base rents as of
December 31, 2004. The following sets forth the net rentable area, total percent leased and average base
rent per leased square foot for each of the last five years for the office properties: Average BaseRentable Area
    
    
    Total
    
    
    Rent Per LeasedYear-End
    
    (Square Feet) (2)
    
    
    Percent Leased
    
    
    Square Foot (1)December 31, 2004
    
    
    5,870,000
    
    
    
    92.2
    %
    
    $
    17.48December 31, 2003
    
    
    5,464,000
    
    
    
    89.7
    %
    
    $
    18.56December 31, 2002
    
    
    5,185,000
    
    
    
    91.0
    %
    
    $
    18.24December 31, 2001
    
    
    3,518,000
    
    
    
    92.1
    %
    
    $
    18.02December 31, 2000
    
    
    3,244,000
    
    
    
    94.6
    %
    
    $
    16.43
   (1)
    
    Average base rent per leased square foot is calculated using
base rents as of December 31 for each respective year.(2)
    
    Rentable square feet includes 29,988 square feet that is
partially owned by us at December 31, 2004. Retail Properties The 48 retail properties contain a total of approximately 15.3 million square feet (including
space owned by anchor tenants). Nineteen of the retail properties are located in Alabama, twelve
are located in Florida, six are located in Georgia, five are located in North Carolina, one is
located in South Carolina, one is located in Tennessee, three are located in Texas, and one is
located in Virginia. The retail properties consist of 16 enclosed regional malls and 32 community
shopping centers. All of the retail properties are managed by us. The following table sets forth certain information relating to the retail properties as of and
for the year ended December 31, 2004. 30




---



##### Table of Contents



Retail Properties AverageGross
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BaseRetail
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rent Per
    
    
    Total Retail
    
    
    
    
    
    
    Percent ofYear
    
    Area
    
    
    
    
    
    
    Number
    
    
    
    
    
    
    Total
    
    
    Leased
    
    
    Property
    
    
    
    
    
    
    Total 2004Completed
    
    (Square
    
    
    
    
    
    
    Of
    
    
    Percent
    
    
    Annualized
    
    
    Square
    
    
    Revenue for
    
    
    
    
    
    
    Retail PropertyRetail Property (1)
    
    Location
    
    (2)
    
    Feet) (3)
    
    
    
    
    
    
    Stores
    
    
    Leased (3)
    
    
    Base Rent
    
    
    Foot (4)
    
    
    2004
    
    
    
    
    
    
    Revenue (5)Alabama:Brookwood Village Center
    
    Birmingham
    
    1973/91/02
    
    
    88,158
    
    
    
    
    
    
    
    7
    
    
    
    93.0
    %
    
    $
    775,707
    
    
    $
    14.48
    
    
    $
    960,076
    
    
    
    
    
    
    
    0.6
    %Colonial Brookwood Village
    
    Birmingham
    
    1973/91/02
    
    
    368,955
    
    
    
    
    
    
    
    68
    
    
    
    94.8
    %
    
    
    6,344,935
    
    
    
    27.32
    
    
    
    9,479,585
    
    
    
    
    
    
    
    5.6
    %Colonial Brookwood Village
    
    
    
    
    
    
    232,000
    
    
    
    (6
    )Colonial Mall Bel Air
    
    Mobile
    
    1966/90/97
    
    
    1,001,568
    
    
    
    
    
    
    
    116
    
    
    
    96.5
    %
    
    
    10,461,931
    
    
    
    24.96
    
    
    
    14,873,903
    
    
    
    
    
    
    
    8.8
    %Colonial Mall Bel Air
    
    
    
    
    
    
    333,990
    
    
    
    (6
    )Colonial Mall Decatur
    
    Decatur
    
    1979/89
    
    
    495,146
    
    
    
    
    
    
    
    49
    
    
    
    83.7
    %
    
    
    3,569,114
    
    
    
    19.37
    
    
    
    5,064,706
    
    
    
    
    
    
    
    3.0
    %Colonial Mall Decatur
    
    
    
    
    
    
    80,866
    
    
    
    (6
    )Colonial Mall Gadsden
    
    Gadsden
    
    1974/91
    
    
    516,989
    
    
    
    
    
    
    
    58
    
    
    
    95.5
    %
    
    
    3,941,916
    
    
    
    22.64
    
    
    
    6,775,632
    
    
    
    (9
    )
    
    
    4.0
    %Colonial Promenade Hoover
    
    Birmingham
    
    2002
    
    
    164,831
    
    
    
    
    
    
    
    35
    
    
    
    98.8
    %
    
    
    2,125,339
    
    
    
    18.39
    
    
    
    268,734
    
    
    
    
    
    
    
    0.2
    %Colonial Promenade Hoover
    
    
    
    
    
    
    215,766
    
    
    
    (6
    )Colonial Promenade Madison
    
    Madison
    
    2000
    
    
    110,712
    
    
    
    
    
    
    
    15
    
    
    
    100.0
    %
    
    
    1,201,489
    
    
    
    13.88
    
    
    
    361,960
    
    
    
    
    
    
    
    0.2
    %Colonial Promenade Montgomery
    
    Montgomery
    
    1990/97
    
    
    165,114
    
    
    
    
    
    
    
    20
    
    
    
    75.0
    %
    
    
    1,267,024
    
    
    
    13.99
    
    
    
    2,121,127
    
    
    
    
    
    
    
    1.3
    %Colonial Promenade Montgomery
    
    
    
    
    
    
    44,000
    
    
    
    (6
    )Colonial Promenade Montgomery North
    
    Montgomery
    
    1990/97
    
    
    108,082
    
    
    
    
    
    
    
    9
    
    
    
    98.0
    %
    
    
    1,051,233
    
    
    
    16.12
    
    
    
    1,183,739
    
    
    
    
    
    
    
    0.7
    %Colonial Promenade Montgomery North
    
    
    
    
    
    
    101,830
    
    
    
    (6
    )Colonial Promenade Trussville
    
    Birmingham
    
    2000
    
    
    388,302
    
    
    
    
    
    
    
    20
    
    
    
    97.7
    %
    
    
    3,193,214
    
    
    
    13.11
    
    
    
    4,067,677
    
    
    
    
    
    
    
    2.4
    %Colonial Promenade Trussville II
    
    Birmingham
    
    2004
    
    
    58,182
    
    
    
    
    
    
    
    17
    
    
    
    97.3
    %
    
    
    866,627
    
    
    
    16.37
    
    
    
    694,728
    
    
    
    (7
    )
    
    
    0.4
    %Colonial Promenade Tutwiler Farm
    
    Birmingham
    
    2000
    
    
    514,120
    
    
    
    
    
    
    
    17
    
    
    
    100.0
    %
    
    
    2,639,635
    
    
    
    15.39
    
    
    
    3,691,822
    
    
    
    
    
    
    
    2.2
    %Colonial Shops Colonnade
    
    Birmingham
    
    1989
    
    
    116,676
    
    
    
    
    
    
    
    26
    
    
    
    54.8
    %
    
    
    957,742
    
    
    
    15.69
    
    
    
    1,279,197
    
    
    
    
    
    
    
    0.8
    %Colonial Shoppes Bellwood
    
    Montgomery
    
    1988
    
    
    88,482
    
    
    
    
    
    
    
    18
    
    
    
    95.1
    %
    
    
    738,219
    
    
    
    12.86
    
    
    
    865,461
    
    
    
    
    
    
    
    0.5
    %Colonial Shoppes Clay
    
    Birmingham
    
    1982
    
    
    66,302
    
    
    
    
    
    
    
    11
    
    
    
    95.3
    %
    
    
    741,051
    
    
    
    14.03
    
    
    
    740,719
    
    
    
    (7
    )
    
    
    0.4
    %Colonial Shoppes Inverness
    
    Birmingham
    
    1984
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    215,700
    
    
    
    (8
    )
    
    
    0.1
    %Colonial Shoppes McGehee
    
    Montgomery
    
    1986
    
    
    98,255
    
    
    
    
    
    
    
    10
    
    
    
    77.6
    %
    
    
    532,639
    
    
    
    9.65
    
    
    
    750,365
    
    
    
    
    
    
    
    0.4
    %Colonial University Village
    
    Auburn
    
    1973/84/89
    
    
    404,718
    
    
    
    
    
    
    
    49
    
    
    
    83.1
    %
    
    
    2,283,959
    
    
    
    21.23
    
    
    
    4,111,284
    
    
    
    
    
    
    
    2.4
    %Olde Town
    
    Montgomery
    
    1978/90
    
    
    38,814
    
    
    
    
    
    
    
    8
    
    
    
    59.7
    %
    
    
    184,163
    
    
    
    6.44
    
    
    
    224,386
    
    
    
    
    
    
    
    0.1
    %Parkway Place
    
    Huntsville
    
    1975
    
    
    280,056
    
    
    
    
    
    
    
    70
    
    
    
    81.9
    %
    
    
    5,823,122
    
    
    
    28.82
    
    
    
    4,417,020
    
    
    
    
    
    
    
    2.6
    %Parkway Place
    
    
    
    
    
    
    348,164
    
    
    
    (6
    )Subtotal-Alabama
    
    
    
    
    
    
    6,430,078
    
    
    
    
    
    
    
    623
    
    
    
    91.4
    %
    
    
    48,699,059
    
    
    
    20.16
    
    
    
    62,147,821
    
    
    
    
    
    
    
    36.7
    %Florida:Colonial Promenade Bear Lake
    
    Orlando
    
    1990
    
    
    131,552
    
    
    
    
    
    
    
    23
    
    
    
    71.6
    %
    
    
    1,272,639
    
    
    
    15.44
    
    
    
    1,472,168
    
    
    
    
    
    
    
    0.9
    %Colonial Promenade Boulevard Square
    
    Pembroke Pines
    
    2001
    
    
    220,656
    
    
    
    
    
    
    
    33
    
    
    
    94.9
    %
    
    
    3,353,834
    
    
    
    26.34
    
    
    
    1,451,161
    
    
    
    (7
    )
    
    
    0.9
    %Colonial Promenade Burnt Store
    
    Punta Gorda
    
    1990
    
    
    95,023
    
    
    
    
    
    
    
    24
    
    
    
    96.1
    %
    
    
    895,545
    
    
    
    13.40
    
    
    
    1,384,250
    
    
    
    
    
    
    
    0.8
    %Colonial Promenade Deerfield
    
    Deerfield Beach
    
    1988/2003
    
    
    378,745
    
    
    
    
    
    
    
    58
    
    
    
    97.6
    %
    
    
    4,089,679
    
    
    
    16.34
    
    
    
    2,140,310
    
    
    
    (7
    )
    
    
    1.3
    %Colonial Promenade Hunters Creek
    
    Orlando
    
    1993/95
    
    
    222,136
    
    
    
    
    
    
    
    25
    
    
    
    50.6
    %
    
    
    1,400,250
    
    
    
    18.25
    
    
    
    2,606,605
    
    
    
    
    
    
    
    1.5
    %Colonial Promenade Lakewood
    
    Jacksonville
    
    1995
    
    
    195,159
    
    
    
    
    
    
    
    49
    
    
    
    87.6
    %
    
    
    1,829,443
    
    
    
    13.63
    
    
    
    2,545,242
    
    
    
    
    
    
    
    1.5
    %Colonial Promenade Northdale
    
    Tampa
    
    1988
    
    
    175,917
    
    
    
    
    
    
    
    24
    
    
    
    98.0
    %
    
    
    1,710,468
    
    
    
    15.17
    
    
    
    2,370,279
    
    
    
    
    
    
    
    1.4
    %Colonial Promenade Northdale
    
    
    
    
    
    
    55,000
    
    
    
    (6
    )Colonial Promenade TownPark
    
    Orlando
    
    2003
    
    
    146,523
    
    
    
    
    
    
    
    26
    
    
    LU
    
    
    2,860,943
    
    
    LU
    
    
    2,895,362
    
    
    
    (10
    )
    
    
    1.7
    %Colonial Promenade University Park
    
    Orlando
    
    1986/89
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    374,208
    
    
    
    (8
    )
    
    
    0.2
    %Colonial Promenade Wekiva
    
    Orlando
    
    1990
    
    
    208,568
    
    
    
    
    
    
    
    24
    
    
    
    83.3
    %
    
    
    1,745,276
    
    
    
    13.95
    
    
    
    2,547,766
    
    
    
    
    
    
    
    1.5
    %Colonial Promenade Winter Haven
    
    Orlando
    
    1986
    
    
    197,472
    
    
    
    
    
    
    
    20
    
    
    
    74.9
    %
    
    
    1,071,888
    
    
    
    11.77
    
    
    
    2,076,037
    
    
    
    
    
    
    
    1.2
    %Colonial Shoppes College Parkway
    
    Ft. Myers
    
    1986
    
    
    78,879
    
    
    
    
    
    

    
    13
    
    
    
    100.0
    %
    
    
    1,162,107
    
    
    
    16.31
    
    
    
    732,827
    
    
    
    (7
    )
    
    
    0.4
    %Colonial Shoppes Pines Plaza
    
    Pembroke Pines
    
    2002
    
    
    68,170
    
    
    
    
    
    
    
    4
    
    
    
    100.0
    %
    
    
    1,157,980
    
    
    
    30.00
    
    
    
    607,826
    
    
    
    (7
    )
    
    
    0.4
    %Orlando Fashion Square
    
    Orlando
    
    1973/89/93
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,204,798
    
    
    
    (8
    )
    
    
    4.3
    %Subtotal-Florida
    
    
    
    

    
    
    2,173,800
    
    
    
    
    
    
    
    323
    
    
    
    84.9
    %
    
    
    22,550,052
    
    
    
    17.69
    
    
    
    30,408,839
    
    
    
    
    
    
    
    18.0
    %Georgia:Britt David
    
    Columbus
    
    1990
    
    
    109,630
    
    
    
    
    
    
    
    10
    
    
    
    70.0
    %
    
    
    550,061
    
    
    
    13.40
    
    
    
    684,396
    
    
    
    
    
    
    
    0.4
    %Colonial Mall Glynn Place
    
    Brunswick
    
    1986
    
    
    282,182
    
    
    
    
    
    
    
    56
    
    
    
    90.8
    %
    
    
    2,448,756
    
    
    
    16.74
    
    
    
    4,417,033
    
    
    
    
    
    
    
    2.6
    %Colonial Mall Glynn Place
    
    
    
    
    
    
    225,558
    
    
    
    (6
    )Colonial Mall Lakeshore
    
    Gainesville
    
    1984/97
    
    
    518,290
    
    
    
    
    
    
    
    47
    
    
    
    86.3
    %
    
    
    2,687,673
    
    
    
    19.34
    
    
    
    4,454,580
    
    
    
    
    
    
    
    2.6
    %Colonial Mall Macon
    
    Macon
    
    1975/88/97
    
    
    764,208
    
    
    
    
    
    
    
    143
    
    
    
    90.6
    %
    
    
    10,536,595
    
    
    
    26.33
    
    
    
    17,865,944
    
    
    
    (9
    )
    
    
    10.6
    %Colonial Mall Macon
    
    
    
    
    
    
    682,160
    
    
    
    (6
    )Colonial Mall Valdosta
    
    Valdosta
    
    1982/85
    
    
    325,206
    
    
    
    
    
    
    
    50
    
    
    
    89.1
    %
    
    
    3,047,532
    
    
    
    20.68
    
    
    
    5,799,394
    
    
    
    
    
    
    
    3.4
    %Colonial Mall Valdosta
    
    
    
    
    
    
    73,723
    
    
    
    (6
    )Colonial Promenade Beechwood
    
    Athens
    
    1963/92
    
    
    339,095
    
    
    
    
    
    
    
    36
    
    
    
    75.3
    %
    
    
    2,503,561
    
    
    
    17.62
    
    
    
    3,019,310
    
    
    
    
    
    
    
    1.8
    %Subtotal-Georgia
    
    
    
    
    
    
    3,320,052
    
    
    
    
    
    
    
    342
    
    
    
    86.3
    %
    
    
    21,774,178
    
    
    
    21.16
    
    
    
    36,240,657
    
    
    
    
    
    
    
    21.4
    %North Carolina:Colonial Mall Burlington
    
    Burlington
    
    1969/86/94
    
    
    415,194
    
    
    
    
    
    
    
    42
    
    
    
    94.3
    %
    
    
    2,617,072
    
    
    
    21.25
    
    
    
    5,285,116
    
    
    
    (9
    )
    
    
    3.1
    %Colonial Mall Greenville
    
    Greenville
    
    1965/89/99
    
    
    404,106
    
    
    
    
    
    
    
    56
    
    
    
    94.9
    %
    
    
    3,285,755
    
    
    
    20.60
    
    
    
    5,910,030
    
    
    
    
    
    
    
    3.5
    %Colonial Mall Greenville
    
    
    
    
    
    
    46,100
    
    
    
    (6
    )Colonial Mayberry Mall
    
    Mount Airy
    
    1968/86
    
    
    149,016
    
    
    
    
    
    
    
    20
    
    
    
    93.0
    %
    
    
    764,983
    
    
    
    12.93
    
    
    
    1,234,044
    
    
    
    (9
    )
    
    
    0.7
    %Colonial Mayberry Mall
    
    
    
    
    
    
    57,843
    
    
    
    (6
    )Colonial Shoppes Quaker
    
    Greensboro
    
    1968/88/97
    
    
    102,223
    
    
    
    
    
    
    
    24
    
    
    
    79.9
    %
    
    
    913,904
    
    
    
    14.82
    
    
    
    1,396,345
    
    
    
    
    
    
    
    0.8
    %Colonial Shoppes Stanly
    
    Locust
    
    1987/96
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169,059
    
    
    
    (8
    )
    
    
    0.1
    %Colonial Shoppes Yadkinville
    
    Yadkinville
    
    1971/97
    
    
    90,917
    
    
    
    
    
    
    
    12
    
    
    
    94.7
    %
    
    
    656,296
    
    
    
    8.22
    
    
    
    851,481
    
    
    
    
    
    
    
    0.5
    %Subtotal-North Carolina
    
    
    
    
    
    
    1,265,399
    
    
    
    
    
    
    
    154
    
    
    
    93.1
    %
    
    
    8,238,010
    
    
    
    18.43
    
    
    
    14,846,075
    
    
    
    
    
    
    
    8.8
    %South Carolina:Colonial Mall Myrtle Beach
    
    Myrtle Beach
    
    1986
    
    
    506,388
    
    
    
    
    
    
    
    63
    
    
    
    91.6
    %
    
    
    4,271,418
    
    
    
    23.20
    
    
    
    7,984,906
    
    
    
    
    
    
    
    4.7
    %Subtotal-South Carolina
    
    
    
    
    
    
    506,388
    
    
    
    
    
    
    
    63
    
    
    
    91.6
    %
    
    
    4,271,418
    
    
    
    23.20
    
    
    
    7,984,906
    
    
    
    

    
    
    
    4.7
    %Tennessee:Colonial Pinnacle Turkey Creek (10)
    
    Knoxville
    
    2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,538
    
    
    
    (11
    )
    
    
    0.0
    %Rivermont Shopping Center
    
    Chattanooga
    
    1986/97
    
    
    73,481
    
    
    
    
    
    
    
    11
    
    
    
    100.0
    %
    
    
    434,439
    
    
    
    7.52
    
    
    
    500,587
    
    
    
    
    
    
    
    0.3
    %Subtotal-Tennessee
    
    
    
    
    
    
    73,481
    
    
    
    
    
    
    
    11
    
    
    
    100.0
    %
    
    
    434,439
    
    
    
    7.52
    
    
    
    532,125
    
    
    
    
    
    
    
    0.3
    %TexasColonial Mall Temple
    
    Temple
    
    1981/96
    
    
    446,434
    
    
    
    
    
    
    
    61
    
    
    
    89.6
    %
    
    
    3,637,041
    
    
    
    20.47
    
    
    
    6,688,576
    
    
    
    (9
    )
    
    
    4.0
    %Colonial Mall Temple
    
    
    
    
    
    
    108,977
    
    
    
    (6
    )Colonial Pinnacle Kingwood Commons
    
    Houston
    
    2003
    
    
    164,356
    
    
    
    
    
    
    
    26
    
    
    
    84.9
    %
    
    
    2,266,774
    
    
    
    21.70
    
    
    
    1,986,965
    
    
    
    (7
    )
    
    
    1.2
    %Village on Parkway
    
    Dallas
    
    1980
    
    
    381,166
    
    
    
    
    
    
    
    48
    
    
    
    94.7
    %
    
    
    5,530,619
    
    
    
    18.65
    
    
    
    4,618,146
    
    
    
    (7
    )
    
    
    2.7
    %Subtotal-Texas
    
    
    
    
    
    
    1,100,933
    
    
    
    
    
    
    
    135
    
    
    
    90.3
    %
    
    
    11,434,434
    
    
    
    19.93
    
    
    
    13,293,687
    
    
    
    
    
    
    
    7.9
    %Virginia:Colonial Mall Staunton
    
    Staunton
    
    1969/86/97
    
    
    423,344
    
    
    
    
    
    
    
    50
    
    
    
    93.8
    %
    
    
    2,305,837
    
    
    
    12.10
    
    
    
    3,762,465
    
    
    
    (9
    )
    
    
    2.2
    %Subtotal-Virginia
    
    
    
    
    
    
    423,344
    
    
    
    
    
    
    
    50
    
    
    
    93.8
    %
    
    
    2,305,837
    
    
    
    12.10
    
    
    
    3,762,465
    
    
    
    
    
    
    
    2.2
    %Total
    
    
    
    
    
    
    15,293,475
    
    
    
    
    
    
    
    1,701
    
    
    
    91.4
    %
    
    $
    119,707,427
    
    
    $
    19.45
    
    
    $
    169,216,575
    
    
    
    
    
    
    
    100.0
    %
   (footnotes on next page) 31




---



##### Table of Contents



(1)
    
    All retail properties are 100% owned by us, with the exception of Village on the Parkway,
Orlando Fashion Square, Parkway Place, Colonial Promenade Madison, and Colonial Promenade
Hoover, which are owned 90%, 50%, 45%, 25%, and 10%, respectively, by us at December 31,
2004.(2)
    
    Year initially completed and, where applicable, year(s) in which the property was
substantially renovated or an additional phase of the property was completed.(3)
    
    Total GRA refers to gross retail area, which includes gross leasable area and space
owned by anchor tenants, but Percent Leased excludes anchor owned space.(4)
    
    Includes specialty store space only.(5)
    
    Percent of Total Retail 2004 Property Revenue represents each
propertys proportionate share of revenue from our 48 retail properties, including partially
owned properties.(6)
    
    Represents space owned by anchor tenants.(7)
    
    Represents revenues from the date of our acquisition or
completion of development of the property in 2004 through December 31, 2004.(8)
    
    This property was sold during 2004.(9)
    
    These properties were reclassified to held for sale and are
included as discontinued operations at December 31, 2004.(10)
    
    This property is currently in lease-up and is not
included in Percent Leased and Average Base Rent per Leased Square Foot property totals.(11)
    
    This property is a 50% joint venture and is currently
under development. The following table sets out a schedule of the lease expirations for leases in place as
of December 31, 2004, for the retail properties: Net Rentable
    
    
    Annualized
    
    
    Percent of TotalYear of
    
    Number of
    
    
    Area Of
    
    
    Base Rent of
    
    
    Annual Base RentLease
    
    Tenants with
    
    
    Expiring Leases
    
    
    Expiring
    
    
    Represented byExpiration
    
    Expiring Leases
    
    
    (Square Feet) (1)
    
    
    Leases (1)(2)
    
    
    Expiring Leases (1)2005
    
    
    304
    
    
    
    1,235,590
    
    
    $
    17,999,745
    
    
    
    13.7
    %2006
    
    
    265
    
    
    
    1,351,676
    
    
    
    14,289,956
    
    
    
    10.9
    %2007
    
    
    291
    
    
    
    1,447,452
    
    
    
    15,746,923
    
    
    
    12.0
    %2008
    
    
    161
    
    
    
    1,105,207
    
    
    
    10,436,968
    
    
    
    7.9
    %2009
    
    
    202
    
    
    
    1,529,909
    
    
    
    13,034,323
    
    
    
    9.9
    %2010
    
    
    105
    
    
    
    974,335
    
    
    
    10,376,345
    
    
    
    7.9
    %2011
    
    
    109
    
    
    
    614,466
    
    
    
    9,472,193
    
    
    
    7.2
    %2012
    
    
    75
    
    
    
    1,136,493
    
    
    
    11,597,957
    
    
    
    8.8
    %2013
    
    
    64
    
    
    
    515,338
    
    
    
    7,139,348
    
    
    
    5.4
    %2014
    
    
    67
    
    
    
    685,851
    
    
    
    6,410,732
    
    
    
    4.9
    %Thereafter
    
    
    58
    
    
    
    1,607,786
    
    
    
    15,123,514
    
    
    
    11.4
    %1,701
    
    
    
    12,204,103
    
    
    $
    131,628,004
    
    
    
    100.0
    %
   (1)
    
    Excludes 1,107,238 square feet of space not leased as of December
31, 2004.(2)
    
    Annualized base rent is calculated using base rents as of
December 31, 2004. The following table sets forth the total gross retail area, percent leased and average
base rent per leased square foot as of the end of each of the last five years for the retail
properties: Gross
    
    
    
    
    
    
    AverageRetail Area
    
    
    Percent
    
    
    Base Rent PerYear-End
    
    (Square Feet) (1)
    
    
    Leased
    
    
    Leased Square Foot (2)December 31, 2004
    
    
    15,294,000
    
    
    
    91.4
    %
    
    $
    19.45December 31, 2003
    
    
    15,343,000
    
    
    
    89.6
    %
    
    $
    19.84December 31, 2002
    
    
    15,475,000
    
    
    
    89.2
    %
    
    $
    18.36December 31, 2001
    
    
    14,951,000
    
    
    
    89.6
    %
    
    $
    18.03December 31, 2000
    
    
    15,184,000
    
    
    
    90.2
    %
    
    $
    17.38
   (1)
    
    Includes 1,119,500 square feet partially owned by us at
December 31, 2004.(2)
    
    Average base rent per leased square foot is calculated using
specialty store year-end base rent figures. 32




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##### Table of Contents



Undeveloped Land We own various parcels of land, which are held for future development (collectively, the
land). Land adjacent to multifamily properties typically will be considered for potential
development of another phase of an existing multifamily property if we determine that the
particular market can absorb additional apartment units. For expansions at office and retail
properties, we own parcels both contiguous to the boundaries of the properties, which would
accommodate additional office buildings, expansion of the mall or shopping center, and outparcels
which are suitable for restaurants, financial institutions, hotels, or free standing retailers. Property Markets The table below sets forth certain information with respect to the geographic concentration of
the properties as of December 31, 2004. Geographic Concentration of Properties Total 2004
    
    
    
    
    
    
    PercentTotal 2004
    
    
    Discontinued
    
    
    Total 2004
    
    
    Of TotalUnits
    
    
    NRA
    
    
    GRA
    
    
    Total 2004
    
    
    Unconsolidated
    
    
    Operations
    
    
    Consolidated
    
    
    2004 PropertyState
    
    (Multifamily) (1)
    
    
    (Office)(3)
    
    
    (Retail) (2)
    
    
    Property Revenue (4)
    
    
    Property Revenue
    
    
    Property Revenue
    
    
    Property Revenue
    
    
    RevenueAlabama
    
    
    7,902
    
    
    
    3,210,533
    
    
    
    6,430,078
    
    
    $
    156,094,684
    
    
    $
    6,908,506
    
    
    $
    6,807,299
    
    
    $
    142,378,879
    
    
    
    43.3
    %Arizona
    
    
    2,340
    
    
    
    
    
    
    
    
    
    
    
    570,146
    
    
    
    570,146
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %Florida
    
    
    5,998
    
    
    
    1,797,154
    
    
    
    2,173,800
    
    
    
    103,762,097
    
    
    
    8,999,897
    
    
    
    374,208
    
    
    
    94,387,992
    
    
    
    28.7
    %Georgia
    
    
    2,729
    
    
    
    862,468
    
    
    
    3,320,052
    
    
    
    68,773,658
    
    
    
    471,833
    
    
    
    19,163,212
    
    
    
    49,138,613
    
    
    
    14.9
    %Mississippi
    
    
    498
    
    
    
    
    
    
    
    
    
    
    
    4,594,658
    
    
    
    
    
    
    
    
    
    
    
    4,594,658
    
    
    
    1.4
    %New Mexico
    
    
    1,025
    
    
    
    
    
    
    
    
    
    
    
    352,945
    
    
    
    352,945
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %Nevada
    
    
    858
    
    
    
    
    
    
    
    
    
    
    
    297,376
    
    
    
    297,376
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %North Carolina
    
    
    872
    
    
    
    
    
    
    
    1,265,399
    
    
    
    17,491,137
    
    
    
    
    
    
    
    6,688,219
    
    
    
    10,802,918
    
    
    
    3.3
    %South Carolina
    
    
    764
    
    
    
    
    
    
    
    506,388
    
    
    
    13,597,333
    
    
    
    
    
    
    
    
    
    
    
    13,597,333
    
    
    
    4.1
    %Tennessee
    
    
    618
    
    
    
    
    
    
    
    73,481
    
    
    
    938,436
    
    
    
    437,849
    
    
    
    500,587
    
    
    
    
    
    
    
    0.0
    %Texas
    
    
    1,405
    
    
    
    
    
    
    
    1,100,933
    
    
    
    21,084,366
    
    
    
    260,230
    
    
    
    6,688,576
    
    
    
    14,135,560
    
    
    
    4.3
    %Virginia
    
    
    
    
    
    
    
    
    
    
    423,344
    
    
    
    3,762,465
    
    
    
    
    
    
    
    3,762,465
    
    
    
    
    
    
    
    0.0
    %Total
    
    
    25,009
    
    
    
    5,870,155
    
    
    
    15,293,475
    
    
    $
    391,319,301
    
    
    $
    18,298,782
    
    
    $
    43,984,566
    
    
    $
    329,035,953
    
    
    
    100.0
    %
   (1)
    
    Units (in this table only) refer to multifamily apartment units.(2)
    
    GRA refers to gross retail area, which includes gross leasable
area and space owned by anchor tenants.(3)
    
    NRA refers to net rentable area of office space.(4)
    
    Includes our proportionate share of revenue from those
multifamily, office and retail properties accounted for under the equity method and our share
of revenue of the properties disposed in 2004. We believe that the demographic and economic trends and conditions in the markets where
the properties are located indicate a potential for continued growth in property net operating
income. The properties are located in a variety of distinct submarkets within Alabama, Arizona,
Florida, Georgia, Mississippi, New Mexico, Nevada, North Carolina, South Carolina, Tennessee, Texas
and Virginia. However, Birmingham and Huntsville, Alabama, Orlando, Tampa and Sarasota, Florida,
and Macon and Atlanta, Georgia, are our primary markets. We believe that our markets in these
twelve states, which are characterized by stable and increasing population and employment growth,
should continue to provide a steady demand for multifamily, office, and retail properties. Mortgage Financing As of December 31, 2004, we had approximately $1.86 billion of secured and unsecured
indebtedness outstanding with a weighted average interest rate of 5.6% and a weighted average
maturity of 5.8 years. Of this amount, approximately $502.3 million was secured mortgage financing
and $1,353.5 million was unsecured debt. Our mortgaged indebtedness was secured by 29 of our
consolidated properties and carried a weighted average interest rate of 5.9% and a weighted average
maturity of 8.8 years. The following table sets forth our secured and unsecured indebtedness in
more detail. 33




---



##### Table of Contents



Mortgage Debt and Notes Payable AnticipatedAnnual DebtPrincipal
    
    
    Service
    
    
    
    
    
    
    
    
    
    
    EstimatedInterest
    
    
    
    
    
    
    Balance (as of
    
    
    (1/1/05-
    
    
    Maturity
    
    
    
    
    
    
    Balance DueProperty (1)
    
    Rate
    
    
    
    
    
    
    12/31/04)
    
    
    12/31/05)
    
    
    Date (2)
    
    
    
    
    
    
    on MaturityMultifamily Properties:CG at Edgewater
    
    
    6.810
    %
    
    
    
    
    
    $
    20,994,895
    
    
    $
    1,722,841
    
    
    
    01/01/11
    
    
    
    
    
    
    $
    18,830,199CG at Galleria
    
    
    2.650
    %
    
    
    (8
    )
    
    
    22,400,000
    
    
    
    605,230
    
    
    
    06/15/26
    
    
    
    (2
    )
    
    
    22,400,000CG at Galleria Woods
    
    
    6.910
    %
    
    
    
    
    
    
    9,110,878
    
    
    
    770,502
    
    
    
    07/01/09
    
    
    
    
    
    
    
    8,459,760CG at Hunters Creek
    
    
    7.980
    %
    
    
    
    
    
    
    18,999,000
    
    
    
    1,516,120
    
    
    
    06/30/10
    
    
    
    
    
    
    
    18,999,000CG at Hunters Creek
    
    
    6.590
    %
    
    
    
    
    
    
    10,514,755
    
    
    
    1,003,232
    
    
    
    06/30/10
    
    
    
    (5
    )
    
    
    4,373,743CG at Madison
    
    
    3.060
    %
    
    
    (8
    )
    
    
    16,506,727
    
    
    
    1,090,637
    
    
    
    08/01/11
    
    
    
    
    
    
    
    4,132,410CG at Natchez Trace
    
    
    8.300
    %
    
    
    
    
    
    
    6,600,433
    
    
    
    577,801
    
    
    
    09/01/35
    
    
    
    
    
    
    
    47,813CG at Natchez Trace
    
    
    8.250
    %
    
    
    
    
    
    
    3,946,802
    
    
    
    351,254
    
    
    
    02/01/37
    
    
    
    
    
    
    
    29,071CG at Berkeley Lake
    
    
    7.150
    %
    
    
    
    
    
    
    8,310,790
    
    
    
    845,238
    
    
    
    06/15/08
    
    
    
    
    
    
    
    7,313,602CG at Mount Vernon
    
    
    7.180
    %
    
    
    
    
    
    
    13,020,146
    
    
    
    1,303,190
    
    
    
    02/01/08
    
    
    
    
    
    
    
    11,640,624CG at River Oaks
    
    
    5.540
    %
    
    
    
    
    
    
    10,670,609
    
    
    
    747,117
    
    
    
    09/01/13
    
    
    
    
    
    
    
    9,061,735CG at River Plantation
    
    
    7.090
    %
    
    
    
    
    
    
    11,886,988
    
    
    
    1,188,652
    
    
    
    10/15/08
    
    
    
    
    
    
    
    10,421,328CG at Sugarloaf
    
    
    7.380
    %
    
    
    
    
    
    
    17,729,018
    
    
    
    2,057,149
    
    
    
    04/05/06
    
    
    
    
    
    
    
    15,757,361CG at Promenade
    
    
    6.810
    %
    
    
    
    
    
    
    21,901,493
    
    
    
    4,362,853
    
    
    
    01/01/11
    
    
    
    
    
    
    
    19,643,321CG at Research Park
    
    
    2.720
    %
    
    
    (8
    )
    
    
    12,775,000
    
    
    
    346,523
    
    
    
    06/15/26
    
    
    
    (2
    )
    
    
    12,775,000CG at Reservoir
    
    
    3.520
    %
    
    
    (8
    )
    
    
    8,173,996
    
    
    
    578,903
    
    
    
    04/01/12
    
    
    
    
    
    
    
    7,192,133CG at Riverchase
    
    
    3.060
    %
    
    
    (8
    )
    
    
    19,444,358
    
    
    
    923,469
    
    
    
    07/01/11
    
    
    
    
    
    
    
    6,240,833CG at Wesleyan
    
    
    7.490
    %
    
    
    
    
    
    
    11,598,394
    
    
    
    1,063,210
    
    
    
    08/27/09
    
    
    
    
    
    
    
    10,694,650CV at Ashley Plantation
    
    
    7.980
    %
    
    
    
    
    
    
    15,090,000
    
    
    
    1,204,182
    
    
    
    06/30/10
    
    
    
    
    
    
    
    15,090,000CV at Ashley Plantation
    
    
    6.590
    %
    
    
    
    
    
    
    8,803,724
    
    
    
    834,308
    
    
    
    06/30/10
    
    
    
    (5
    )
    
    
    4,339,741CV at Gainesville
    
    
    3.520
    %
    
    
    (8
    )
    
    
    25,344,175
    
    
    
    1,794,816
    

    
    
    04/01/12
    
    
    
    
    
    
    
    22,243,422CV at Inverness
    
    
    2.640
    %
    
    
    (8
    )
    
    
    9,900,000
    
    
    
    267,491
    
    
    
    06/15/26
    
    
    
    (2
    )
    
    
    9,900,000CV at Lake Mary
    
    
    7.980
    %
    
    
    
    
    
    
    14,100,000
    
    
    
    1,125,180
    
    
    
    06/30/10
    
    
    
    
    
    
    
    14,100,000CV at Lake Mary
    
    
    6.590
    %
    
    
    
    
    
    
    8,140,281
    
    
    
    730,002
    
    
    
    06/30/10
    
    
    
    (5
    )
    
    
    3,620,835CV at Timothy Woods
    
    
    7.490
    %
    
    
    
    
    
    
    9,182,097
    
    
    
    831,711
    
    
    
    09/01/09
    
    
    
    
    
    
    
    8,466,599CV at Trussville
    
    
    3.520
    %
    
    
    (8
    )
    
    
    16,048,385
    
    
    
    808,411
    
    
    
    04/01/12
    
    
    
    
    
    
    
    14,074,930Office Properties:Colonial
Center at Mansell Overlook 100
    
    
    8.250
    %
    
    
    
    
    
    
    16,194,048
    
    
    
    1,325,962
    
    
    
    01/10/08
    
    
    
    
    
    
    
    15,313,506Retail Properties:CP Montgomery
    
    
    7.490
    %
    
    
    
    
    
    
    11,823,529
    
    
    
    879,863
    
    
    
    09/01/06
    
    
    
    
    
    
    
    10,876,590Village on Parkway
    
    
    5.770
    %
    
    
    
    
    
    
    47,000,000
    
    
    
    2,747,469
    
    
    
    07/11/11
    
    
    
    
    
    
    
    47,000,000CP Boulevard Square
    
    
    7.220
    %
    
    
    
    
    
    
    27,087,264
    
    
    
    2,226,897
    
    
    
    08/01/32
    
    
    
    
    
    
    
    24,161,598CS Pines Plaza
    
    
    5.420
    %
    
    
    
    
    
    
    9,288,128
    
    
    
    509,629
    
    
    
    10/01/10
    
    
    
    
    
    
    
    8,605,981CP Deerfield
    
    
    5.900
    %
    
    
    
    
    
    
    31,866,395
    
    
    
    1,898,521
    
    
    
    02/01/13
    
    
    
    
    
    
    
    27,710,438CP College Parkway
    
    
    7.100
    %
    
    
    
    
    
    
    7,415,491
    
    
    
    535,705
    
    
    
    07/01/09
    
    
    
    
    
    
    
    7,117,418Other debt:Land Loan
    
    
    3.470
    %
    
    
    
    
    
    
    418,104
    
    
    
    14,508
    
    
    
    09/30/06
    
    
    
    
    
    
    
    418,104Line of Credit (3)
    
    
    3.140
    %
    
    
    (8
    )
    
    
    239,970,000
    
    
    
    11,549,602
    
    
    
    11/22/05
    
    
    
    (4
    )
    
    
    239,970,000Bridge Credit Facility
    
    
    3.450
    %
    
    
    (8
    )
    
    
    119,000,000
    
    
    
    122,763,375
    
    
    
    11/22/05
    
    
    
    (6
    )
    
    
    119,000,000Unsecured Senior Notes
    
    
    8.050
    %
    
    
    
    
    
    
    65,000,000
    
    
    
    5,232,500
    
    
    
    07/15/06
    
    
    
    
    
    
    
    65,000,000Unsecured Senior Notes
    
    
    7.000
    %
    
    
    
    
    
    
    175,000,000
    
    
    
    12,219,564
    
    
    
    07/14/07
    
    
    
    
    
    
    
    175,000,000Unsecured Senior Notes
    
    
    6.880
    %
    
    
    
    
    
    
    100,000,000
    
    
    
    6,766,250
    
    
    
    08/15/12
    
    
    
    
    
    
    
    100,000,000Unsecured Senior Notes
    
    
    6.150
    %
    
    
    
    
    
    
    125,000,000
    
    
    
    7,664,028
    
    
    
    04/15/13
    
    
    
    
    
    
    
    125,000,000Unsecured Senior Notes
    
    
    2.170
    %
    
    
    (7
    )
    
    
    100,000,000
    
    
    
    2,170,000
    
    
    
    04/01/11
    
    
    
    
    
    
    
    100,000,000Unsecured Senior Notes
    
    
    6.250
    %
    
    
    
    
    
    
    300,000,000
    
    
    
    18,750,000
    
    
    
    06/15/14
    
    
    
    
    
    
    
    300,000,000Medium Term Notes
    
    
    6.960
    %
    
    
    
    
    
    
    25,000,000
    
    
    
    1,740,000
    
    
    
    08/01/05
    
    
    
    
    
    
    
    25,000,000Medium Term Notes
    
    
    6.980
    %
    
    
    
    
    
    
    25,000,000
    
    
    
    1,745,000
    
    
    
    09/26/05
    
    
    
    
    
    
    
    25,000,000Medium Term Notes
    
    
    8.820
    %
    
    
    
    
    
    
    25,000,000
    
    
    
    2,205,000
    
    
    
    02/07/05
    
    
    
    
    
    
    
    25,000,000Medium Term Notes
    
    
    8.800
    %
    
    
    
    
    
    
    20,000,000
    
    
    
    1,760,000
    
    
    
    02/01/10
    
    
    
    
    
    
    
    20,000,000Medium Term Notes
    
    
    8.800
    %
    
    
    
    
    
    
    5,000,000
    
    
    
    440,000
    
    
    
    03/15/10
    
    
    
    
    
    
    
    5,000,000Medium Term Notes
    
    
    8.050
    %
    
    
    
    
    
    
    10,000,000
    
    
    
    805,000
    
    
    
    12/27/10
    
    
    
    
    
    
    
    10,000,000Medium Term Notes
    
    
    8.080
    %
    
    
    
    
    
    
    10,000,000
    
    
    
    808,000
    
    
    
    12/24/10
    
    
    
    
    
    
    
    10,000,000Medium Term Notes
    
    
    7.460
    %
    
    
    
    
    
    
    10,000,000
    
    
    
    746,000
    
    
    
    12/20/06
    
    
    
    
    
    
    
    10,000,000FASB 133
Fair Value of Hedged Item (7)
    
    
    
    
    
    
    
    
    
    
    3,269,442
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,269,442Unamortized
Discount on Senior Notes
    
    
    
    
    
    
    
    
    
    
    (3,737,844
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,737,844
    )TOTAL CONSOLIDATED DEBT
    
    
    
    
    
    
    
    
    
    $
    1,855,787,498
    
    
    $
    236,152,895
    
    
    
    
    
    
    
    
    
    
    $
    1,774,553,343
   (footnotes on next page) 34




---



##### Table of Contents



(1)
    
    As noted in the table, certain properties were developed in phases and
separate mortgage indebtedness may encumber each of the various phases. In the listing of
property names, CG has been used as an abbreviation for Colonial Grand, CP as an abbreviation
for Colonial Promenade, CS as an abbreviation for Colonial Shoppes and CV as an abbreviation
for Colonial Village.(2)
    
    The maturity date noted represents the date on which credit
enhancement expires for the tax-exempt municipal bonds put in place as part of the original
financing for the property. The stated maturity date for the loans is August 1, 2022.(3)
    
    This line of credit facility bears interest at a variable rate, based
on LIBOR plus a spread of 105 basis points. The facility also includes a competitive bid
feature that allows us to convert up to $160 million under the line of credit to a fixed rate,
for a fixed term not to exceed 90 days. At December 31, 2004, we had $160.0 million
outstanding under the competitive bid feature.(4)
    
    This credit facility is renewable in November 2005 and provides for a
one-year extension.(5)
    
    Represents floating rate debt that has been swapped to a fixed rate of
6.59%.(6)
    
    This bridge facility was entered into in October 2004 and matures in
November 2005.(7)
    
    Represents fixed rate debt that has been swapped to a floating rate of
2.17% at December 31, 2004 and is accounted for as a fair-value hedge.(8)
    
    Represents variable rate debt. In addition, the properties in which we own partial interests (and are not consolidated
in our financial statements) also are subject to existing mortgage indebtedness. Our pro-rata
share of such indebtedness as of December 31, 2004 was as follows: Companys ShareCompanys
    
    
    of PrincipalPercentage
    
    
    Balance (as of
    
    
    Interest
    
    
    
    
    
    
    MaturityUnconsolidated Entity
    
    Ownership
    
    
    12/31/04)
    
    
    Rate
    
    
    
    
    
    
    DateMultifamily Properties:Barrington, LLC
    
    
    15.0
    %
    
    $
    950,014
    
    
    
    7.60
    %
    
    
    
    
    
    
    10/01/09Cahaba Heights, LLC
    
    
    15.0
    %
    
    
    792,659
    
    
    
    7.60
    %
    
    

    
    
    
    
    10/01/09Mountain Brook, LLC
    
    
    15.0
    %
    
    
    2,367,537
    
    
    
    7.60
    %
    
    
    
    
    
    
    10/01/09River Hills, LLC
    
    
    15.0
    %
    
    
    3,756,326
    
    
    
    7.60
    %
    
    
    
    
    
    
    10/01/09Stockbridge, LLC
    
    
    15.0
    %
    
    
    1,493,937
    
    
    
    7.60
    %
    
    
    
    
    
    
    10/01/09Hillwood, LLC
    
    
    15.0
    %
    
    
    499,500
    
    
    
    3.31
    %
    
    
    (1
    )
    
    
    12/15/30Hillwood, LLC
    
    
    15.0
    %
    
    
    289,563
    
    
    
    7.80
    %
    
    
    
    
    
    
    10/01/20Inverness Lakes I, LLC
    
    
    15.0
    %
    
    
    600,000
    
    
    
    3.44
    %
    
    
    (1
    )
    
    
    12/15/30Inverness Lakes I, LLC
    
    
    15.0
    %
    
    
    318,881
    
    
    
    7.80
    %
    
    
    
    
    
    
    07/01/20Inverness Lakes II, LLC
    
    
    15.0
    %
    
    
    1,954,775
    
    
    
    8.11
    %
    
    
    
    
    
    
    05/01/10Rocky Ridge, LLC
    
    
    15.0
    %
    
    
    900,000
    
    
    
    3.31
    %
    
    
    (1
    )
    
    
    12/15/30Rocky Ridge, LLC
    
    
    15.0
    %
    
    
    275,658
    
    
    
    7.74
    %
    
    
    
    
    
    
    10/01/16Bayshore (CG)
    
    
    25.0
    %
    
    
    4,901,245
    
    
    
    6.85
    %
    
    
    
    
    
    
    11/01/11Palma Sola (CG)
    
    
    25.0
    %
    
    
    3,926,935
    
    
    
    7.03
    %
    
    
    
    
    
    
    04/01/12The Cunningham Apartments
    
    
    20.0
    %
    
    
    2,793,554
    
    
    
    5.18
    %
    
    
    
    
    
    
    06/15/09Colony Woods
    
    
    10.0
    %
    
    
    1,715,000
    
    
    
    4.18
    %
    
    
    (1
    )
    
    
    11/04/08Madison at Shoal Run
    
    
    10.0
    %
    
    
    980,000
    
    
    
    4.18
    %
    
    
    (1
    )
    
    
    11/04/08Meadows at Brook Highland
    
    
    10.0
    %
    
    
    1,536,000
    
    
    
    4.18
    %
    
    
    (1
    )
    
    
    11/04/08Brentwood (CG)
    
    
    25.0
    %
    
    
    3,734,679
    
    
    
    7.22
    %
    
    
    
    
    
    
    01/01/11Hendersonville (CV)
    
    
    25.0
    %
    
    
    3,660,968
    
    
    
    7.22
    %
    
    
    
    
    
    
    01/01/11Pinnacle High Resort
    
    
    20.0
    %
    
    
    2,966,000
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Pinnacle High Resort
    
    
    20.0
    %
    
    
    741,600
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Pinnacle Estates
    
    
    20.0
    %
    
    
    3,312,200
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Pinnacle Estates
    
    
    20.0
    %
    
    
    828,000
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Hacienda Del Rio
    
    
    20.0
    %
    
    
    972,640
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Hacienda Del Rio
    
    
    20.0
    %
    
    
    243,160
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Pinnacle at High Desert
    
    
    20.0
    %
    
    
    5,535,000
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Pinnacle at High Desert
    
    
    20.0
    %
    
    
    1,383,800
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Desert Lakes
    
    
    20.0
    %
    
    
    1,903,680
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Desert Lakes
    
    
    20.0
    %
    
    
    475,920
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Flamingo West
    
    
    20.0
    %
    
    
    3,151,040
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Flamingo West
    
    
    20.0
    %
    
    
    787,760
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Talavera
    
    
    20.0
    %
    
    
    3,780,000
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Talavera
    
    
    20.0
    %
    
    
    945,000
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Colonial Del Rio
    
    
    20.0
    %
    
    
    1,306,800
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Colonial Del Rio
    
    
    20.0
    %
    
    
    326,800
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Fairway Crossings
    
    
    20.0
    %
    
    
    2,050,560
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Fairway Crossings
    
    
    20.0
    %
    
    
    512,640
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Posada Del Este
    
    
    20.0
    %
    
    
    890,880
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Posada Del Este
    
    
    20.0
    %
    
    
    222,720
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Casalindas
    
    
    20.0
    %
    
    
    990,880
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Casalindas
    
    
    20.0
    %
    
    
    247,720
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Pinnacle Heights
    
    
    20.0
    %
    
    
    2,775,040
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Pinnacle Heights
    
    
    20.0
    %
    
    
    693,760
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Spring Hill
    
    
    20.0
    %
    
    
    1,301,000
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Spring Hill
    
    
    20.0
    %
    
    
    325,200
    
    
    
    3.40
    %
    
    
    (1
    )
    
    
    11/01/11Rancho Viejo
    
    
    20.0
    %
    
    
    1,533,800
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Rancho Viejo
    
    
    20.0
    %
    
    
    383,400
    
    
    
    3.40
    %
    
    
    (1
    )
    
    
    11/01/11La Entrada
    
    
    20.0
    %
    
    
    889,920
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11La Entrada
    
    
    20.0
    %
    
    
    222,480
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Arabian Trails
    
    
    20.0
    %
    
    
    3,043,680
    
    
    
    4.67
    %
    
    
    
    
    
    
    11/01/11Arabian Trails
    
    
    20.0
    %
    
    
    760,920
    
    
    
    3.10
    %
    
    
    (1
    )
    
    
    11/01/11Office Property:Land Title Building
    
    
    33.3
    %
    
    
    478,440
    
    
    
    8.10
    %
    
    
    
    
    
    
    02/01/15Retail Properties:Highway 150, LLC
    
    
    10.0
    %
    
    
    1,737,050
    
    
    
    5.94
    %
    
    
    
    
    
    
    01/11/13Parkway Place
    
    
    45.0
    %
    
    
    26,470,797
    
    
    
    3.09
    %
    
    
    (1
    )
    
    
    12/20/05Total Unconsolidated Debt
    
    
    
    
    
    $
    111,637,518
    
    
    
    4.85
    %
   (1)
    
    Represents variable rate debt. 35




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##### Table of Contents



Item 3. Legal
Proceedings. Neither we nor the properties are presently subject to any material litigation nor, to our
knowledge, is any material litigation threatened against us or the properties, other than routine
litigation arising in the ordinary course of business, which is expected to primarily be covered by
liability insurance. 
 Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of our shareholders during the fourth quarter of 2004. 
 PART II 
 Item 5. Market for Registrants Common Equity and Related Shareholder Matters. The Companys common shares are traded on the New York Stock Exchange under the symbol CLP.
The following sets forth the high and low sale prices for the common shares for each quarter in the
two-year period ended December 31, 2004, as reported by the New York Stock Exchange Composite Tape,
and the dividends paid by us with respect to each such period. Calendar Period
    
    High
    
    
    Low
    
    
    Distribution2004:First Quarter
    
    $
    41.70
    
    
    $
    37.93
    
    
    $
    .670Second Quarter
    
    $
    41.22
    
    
    $
    33.10
    
    
    $
    .670Third Quarter
    
    $
    42.00
    
    
    $
    37.23
    
    
    $
    .670Fourth Quarter
    
    $
    42.79
    
    
    $
    38.63
    
    
    $
    .6702003:First Quarter
    
    $
    34.65
    
    
    $
    30.69
    
    
    $
    .665Second Quarter
    
    $
    36.00
    
    
    $
    32.70
    
    
    $
    .665Third Quarter
    
    $
    36.70
    
    
    $
    33.20
    
    
    $
    .665Fourth Quarter
    
    $
    40.45
    
    
    $
    36.00
    
    
    $
    .665
 On
March 14, 2005, the last reported sale price of the common shares on the New York Stock
Exchange was $36.60. On March 8, 2005, we had approximately
1,985 shareholders of record. 36




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##### Table of Contents



Item 6. Selected Financial Data. The following table sets forth selected financial and operating information on a historical
basis for the Company for each of the five years ended December 31, 2004. 37




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##### Table of Contents



(in thousands, except per share data)
    
    2004
    
    
    2003
    
    
    2002
    
    
    
    
    
    
    2001
    
    
    
    
    
    
    2000OPERATING DATATotal revenue
    
    $
    337,410
    
    
    $
    290,004
    
    
    $
    280,596
    
    
    
    
    
    
    $
    266,023
    
    
    
    
    
    
    $
    253,630Expenses:Depreciation and amortization
    
    
    97,886
    
    
    
    79,855
    
    
    
    73,347
    
    
    
    
    
    
    
    62,918
    
    
    
    
    
    
    
    55,512Other operating
    
    
    132,237
    
    
    
    109,345
    
    
    
    98,297
    
    
    
    
    
    
    
    87,275
    
    
    
    
    
    
    
    82,601Income from operations
    
    
    107,287
    
    
    
    100,804
    
    
    
    108,952
    
    
    
    
    
    
    
    115,830
    
    
    
    
    
    
    
    115,517Interest expense
    
    
    78,933
    
    
    
    66,613
    
    
    
    63,760
    
    
    
    
    
    
    
    69,187
    
    
    
    
    
    
    
    69,445Other income (expense), net
    
    
    5,294
    
    
    
    7,352
    
    
    
    35,855
    
    
    
    
    
    
    
    16,656
    
    
    
    
    
    
    
    8,539Income from continuing operations
    
    
    22,810
    
    
    
    28,848
    
    
    
    53,413
    
    
    
    
    
    
    
    40,053
    
    
    
    
    
    
    
    33,400Income from discontinued operations
    
    
    31,808
    
    
    
    23,417
    
    
    
    19,964
    
    
    
    
    
    
    
    15,556
    
    
    
    
    
    
    
    16,190Dividends to preferred shareholders
    
    
    14,781
    
    
    
    15,284
    
    
    
    15,565
    
    
    
    
    
    
    
    13,407
    
    
    
    
    
    
    
    10,940Distributions to preferred unitholders
    
    
    7,493
    
    
    
    8,873
    
    
    
    8,873
    
    
    
    
    
    
    
    8,873
    
    
    
    
    
    
    
    8,873Net income available to common shareholders
    
    
    39,837
    
    
    
    32,530
    
    
    
    57,812
    
    
    
    
    
    
    
    42,202
    
    
    
    
    
    
    
    38,650Per share - basic:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.36
    
    
    $
    1.71
    
    
    
    
    
    
    $
    1.28
    
    
    
    
    
    
    $
    1.06Income from discontinued operations
    
    
    1.17
    
    
    
    0.94
    
    
    
    0.90
    
    
    
    
    
    
    
    0.75
    
    
    
    
    
    
    $
    0.76Net income per share - basic
    
    $
    1.47
    
    
    $
    1.30
    
    
    $
    2.61
    
    
    
    
    
    
    $
    2.03
    
    
    
    
    
    
    $
    1.82Per share - diluted:Income from continuing operations
    
    $
    0.29
    
    
    $
    0.36
    
    
    $
    1.69
    
    
    
    
    
    
    $
    1.27
    
    
    
    
    
    
    $
    1.06Income from discontinued operations
    
    
    1.16
    
    
    
    0.93
    
    
    
    0.89
    
    
    
    
    
    
    
    0.74
    
    
    
    
    
    
    $
    0.76Net income per share - diluted
    
    $
    1.45
    
    
    $
    1.29
    
    
    $
    2.58
    
    
    
    
    
    
    $
    2.02
    
    
    
    
    
    
    $
    1.82Dividends declared
    
    $
    2.68
    
    
    $
    2.66
    
    
    $
    2.64
    
    
    
    
    
    
    $
    2.52
    
    
    
    
    
    
    $
    2.40BALANCE SHEET DATALand, buildings and equipment, net
    
    $
    2,426,381
    
    
    $
    1,970,699
    
    
    $
    1,947,078
    
    
    
    
    
    
    $
    1,756,260
    
    
    
    
    
    
    $
    1,769,506Total assets
    
    
    2,801,343
    
    
    
    2,194,927
    
    
    
    2,129,856
    
    
    
    
    
    
    
    2,014,623
    
    
    
    
    
    
    
    1,944,099Total debt
    
    
    1,855,787
    
    
    
    1,267,865
    
    
    
    1,262,193
    
    
    
    
    
    
    
    1,191,791
    
    
    
    
    
    
    
    1,179,095OTHER DATAFunds from operations (1) *
    
    
    137,610
    
    
    
    123,050
    
    
    
    128,110
    
    
    
    (2
    )
    
    
    120,402
    
    
    
    (2
    )
    
    
    114,818
    
    
    
    (2
    )Total market capitalization (3)
    
    
    3,621,947
    
    
    
    2,998,390
    
    
    
    2,679,607
    
    
    
    
    
    
    
    2,466,524
    
    
    
    
    
    
    
    2,237,256Cash flow provided by (used in)Operating activities
    
    
    135,529
    
    
    
    137,803
    
    
    
    141,993
    
    
    
    
    
    
    
    136,559
    
    
    
    
    
    
    
    105,646Investing activities
    
    
    (442,323
    )
    
    
    (122,555
    )
    
    
    (99,861
    )
    
    
    
    
    
    
    (88,872
    )
    
    
    
    
    
    
    (114,018
    )Financing activities
    
    
    309,449
    
    
    
    (13,414
    )
    
    
    (46,025
    )
    
    
    
    
    
    
    (41,835
    )
    
    
    
    
    
    
    8,009Total properties (at end of year)
    
    
    153
    
    
    
    112
    
    
    
    106
    
    
    
    
    
    
    
    108
    
    
    
    
    
    
    
    115
   (1) Pursuant to the definition of Funds from Operations (FFO) adopted by the Board of Governors of the National Association of Real
Estate Investment Trusts (NAREIT), FFO is calculated by adjusting net income (loss) (computed in accordance with GAAP), excluding
gains (or losses) from sales of depreciated property, plus depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the
same
basis.
 The Company believes that FFO is useful to investors because it provides an additional indicator of the Companys financial and
operating
performance. This is because, by excluding the effect of real estate depreciation and gains (or losses) from sales of properties (all
of which
are based on historical costs which may be of limited relevance in evaluating current performance), FFO can facilitate comparison of
operating performance among equity REITs. FFO is a widely recognized measure in the Companys industry. FFO does not represent cash
generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net cash
flows
from operating activities (determined in accordance with GAAP), as a measure of our liquidity, or as an indicator of our ability to
make cash
distributions. (2) FFO has been revised for years ended 2002, 2001 and 2000 to conform to NAREITs FFO definition. For more information, see Item 7
- Managements Discussion and Analysis of Financial Condition and Results of Operations - Funds from
Operations. (3) Total market capitalization is defined as the market value of outstanding common shares of the Company and operating partnership
units
of CRLP, plus preferred equity and consolidated debt of the Company. This amount was calculated assuming the conversion of 10,372,650,
10,361,034, 10,788,341, 11,159,027 and 11,225,726, units of minority interest in CRLP into the Companys
Common Shares for 2004,
2003, 2002, 2001 and 2000, respectively. * Non-GAAP financial measure. See Item 7 - Managements Discussion and Analysis of Financial Condition and
Results of
Operations- Funds from Operations for reconciliation. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations. 38




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##### Table of Contents



The following discussion and analysis of the consolidated financial condition and
consolidated results of operations should be read together with the consolidated financial
statements of the Company and notes thereto contained in this Form 10-K. General We are a self-administered equity REIT that owns, develops and operates multifamily, office
and retail properties in the Sunbelt region of the United States. We are a fully-integrated real
estate company, which means that we are engaged in the acquisition, development, ownership,
management and leasing of commercial real estate property. Our activities include full or partial
ownership of a diversified portfolio of 153 properties as of December 31, 2004, located in Alabama,
Arizona, Florida, Georgia, Mississippi, Nevada, New Mexico, North Carolina, South Carolina,
Tennessee, Texas, and Virginia, development of new properties, acquisition of existing properties,
build-to-suit development, and the provision of management, leasing, and brokerage services for
commercial real estate. As a lessor, the majority of our revenue is derived from tenants under existing leases at our
properties. Therefore, our operating cash flow is dependent upon the rents that we are able to
charge to our tenants, and the ability of these tenants to make their rental payments. We believe
that the diversified nature of the properties in which we typically invest  multifamily, office
and retail  provides a more stable revenue flow in uncertain economic times, in that our
diversified property types generally do not have the same economic cycles and while one property type may be experiencing
difficulty, the other property types may be maintaining their strength. The following table summarizes certain key operating performance measures for our properties
as of and for the years ended December 31, 2004 and 2003: Consolidated Properties
    
    
    Unconsolidated Properties
    
    
    Total PropertiesAs of and for the Year
    
    
    
    As of and for the Year
    
    
    
    As of and for the YearEnded December 31,
    
    
    Ended December 31,
    
    
    Ended December 31,2004
    
    
    2003
    
    
    
    2004
    
    
    2003
    
    
    
    2004
    
    
    2003Multifamily PropertiesPhysical Occupancy
    
    
    
    94.7
    %
    
    
    92.9
    %
    
    
    
    92.9
    %
    
    
    90.5
    %
    
    
    
    94.6
    %
    
    
    92.9
    %Same-Property Economic Occupancy (1)
    
    
    
    81.8
    %
    
    
    79.7
    %
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    
    81.8
    %
    
    
    79.7
    %Same-Property NOI Growth (2)
    
    
    
    3.4
    %
    
    
    -3.9
    %
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    
    3.4
    %
    
    
    -3.9
    %End of Month Scheduled Base
Rent per Unit per Month
    
    
    $
    851
    
    
    $
    742
    
    
    
    $
    782
    
    
    $
    718
    
    
    
    $
    844
    
    
    $
    794Capital Expenditures per Unit
    
    
    $
    690
    
    
    $
    450
    
    
    
    $
    487
    
    
    $
    624
    
    
    
    $
    609
    
    
    $
    460Office PropertiesPhysical Occupancy
    
    
    
    92.2
    %
    
    
    89.7
    %
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    
    92.2
    %
    
    
    89.7
    %Same-Property NOI Growth (2)
    
    
    
    -3.0
    %
    
    
    -8.5
    %
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    
    -3.0
    %
    
    
    -8.5
    %Base Rent per Square Foot
    
    
    $
    18.28
    
    
    $
    18.78
    
    
    
    $
    14.86
    
    
    $
    16.48
    
    
    
    $
    17.48
    
    
    $
    18.50Capital Expenditures per Square Foot
    
    
    $
    2.48
    
    
    $
    2.47
    
    
    
    $
    
    
    
    $
    
    
    
    
    $
    2.48
    
    
    $
    2.47Retail PropertiesSame-Property NOI Growth (2)
    
    
    
    1.0
    %
    
    
    0.2
    %
    
    
    
    18.8
    %
    
    
    -9.1
    %
    
    
    
    1.5
    %
    
    
    -2.0
    %Regional Malls:Physical Occupancy
    
    
    
    93.8
    %
    
    
    91.8
    %
    
    
    
    81.9
    %
    
    
    79.8
    %
    
    
    
    93.4
    %
    
    
    91.4
    %Base Rent per Square Foot
    
    
    $
    22.25
    
    
    $
    21.97
    
    
    
    $
    22.86
    
    
    $
    32.06
    
    
    
    $
    22.86
    
    
    $
    22.06Tenant Gross Sales per Square Foot
    
    
    $
    271.03
    
    
    $
    271.37
    
    
    
    $
    272.05
    
    
    $
    253.03
    
    
    
    $
    271.19
    
    
    $
    270.23Shopping Centers:Physical Occupancy
    
    
    
    87.9
    %
    
    
    85.4
    %
    
    
    
    99.3
    %
    
    
    98.8
    %
    
    
    
    88.5
    %
    
    
    86.3
    %Base Rent per Square Foot
    
    
    $
    16.61
    
    
    $
    14.08
    
    
    
    $
    17.23
    
    
    $
    16.02
    
    
    
    $
    16.65
    
    
    $
    14.38Tenant Gross Sales per Square Foot
    
    
    $
    212.70
    
    
    $
    220.65
    
    
    
    $
    237.48
    
    
    $
    218.78
    
    
    
    $
    214.16
    
    
    $
    220.53
   (1)
    
    Economic Occupancy represents scheduled base rents, less vacancy loss, all concessions adjusted for
straightline (including
but not limited to: renewals, move-ins, models, employee units), and bad debts divided by
scheduled base rents.(2)
    
    NOI amounts are based on our segment data. See Note 7 - Segment Information in our Notes to Consolidated
Condensed
Financial Statements. As shown in the table above, multifamily occupancy and base rents continued to trend upward
in 2004. Improvements in 2004 were due primarily to the strengthening of the overall economy
and acquisitions during 2004 of 39




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multifamily properties in cities such as Atlanta, GA, Austin, TX, Charlotte, NC,
Raleigh-Durham, NC, and Tampa, FL. We expect to continue to make acquisitions of attractive
multifamily properties in existing markets as well as in new markets as a result of our exposure
to those new markets through joint ventures in multifamily properties. As previously disclosed,
our pending merger with Cornerstone is expected to close in April 2005. In the event we
complete the merger, we will be more subject to the economic trends specific to the multifamily
sector, such as:  
    changes in job growth, household formation and population growth in our markets;
    changes in interest rates;
    supply and demand for apartment properties in our current markets; and
    competition, which could limit our ability to secure attractive investment
opportunities, lease apartment properties, or increase or maintain rents. As shown in the above table, physical occupancy of our office properties increased from 89.7%
in 2003 to 92.2% in 2004. This increase was due primarily to improved leasing activity throughout
the year. Our office properties continued to be negatively impacted by the absence of corporate
hiring and a buyers market for office space in which increased tenant leverage put pressure on
current rental rates. As a result, our office divisions base rent per square foot decreased from
$18.50 in 2003 to $17.48 in 2004, or a -5.5% change. Additionally, for the year ended December 31,
2004, we had approximately 103,957 square feet of early lease terminations and received lease
termination fees on a portion of the terminations of approximately $1.7 million from our office
properties. Future rental income from our office properties may be affected by future lease
terminations because we may be unable to collect the full amount that was due under the lease and
may incur additional cost in re-leasing the space. Although there is no way of predicting future
lease terminations, we currently anticipate they continue to decrease in 2005. We also presently
believe the challenges that have faced the office division will continue to decrease throughout
2005 and that improved operating performance will be achieved throughout the year. During 2004, our retail property performance indicators all signaled continued improvement.
Our average rents for malls and shopping centers showed continued growth. Tenant sales in our
same properties continued to mirror the increase in rents (even though the tenant sales for all
properties declined slightly due to trade-offs resulting from property acquisitions and
dispositions). We had 444,000 square feet more leasing activity in 2004 than the previous year at
higher average rental rates and lower average tenant improvement and leasing costs per square foot.
Our occupancy for all retail properties rose from 88.7% in 2003 to 91.3% in 2004 (a 260 basis
point increase also reflected in our same properties) with increases in occupancies in the anchor
and big box spaces as well as in our specialty retail spaces. We acquired six new properties
(all shopping centers) and sold four (one mall and three shopping centers). We completed one new
development and one re-development in 2004 and have four new developments and three re-developments
in progress. Our total retail assets have grown with a shift from traditional malls to lifestyle
and power centers. We currently expect these retail occupancy and rental rate trends to continue
in 2005. With our diversified strategy of investing in multifamily, office and retail property types,
we are able to alter our asset mix to leverage market timing and maximize our investment returns.
Currently, we are encouraged to see the multifamily market beginning to stabilize, and we are
positioning our portfolio to benefit from that stabilization. Our diversified strategy allows us
to balance risk and reward, and to leverage changing market conditions in three distinct sectors,
which we believe lowers our risk profile, adds stability and sets us apart from our industry peers
that are invested in a single property type. Cornerstone Merger During October 2004, we entered into a definitive merger agreement with Cornerstone Realty
Income Trust, Inc. (Cornerstone), a Richmond, Virginia-based REIT focused on multifamily
communities. The transaction, which is expected to close during April of 2005, is valued at
approximately $1.5 billion, including the assumption or repayment of Cornerstone debt. The transaction is structured as a common and preferred share election merger, with
Cornerstone shareholders having the right to elect to receive the merger consideration in our
common or preferred depositary shares. More specifically, in the merger, Cornerstone shareholders
will have the right to elect to receive either:  
    a number of Colonial common shares equal to the common share conversion rate, which we currently expect to
be 0.2581; or
    a number of Colonial 7.62% Series E preferred depositary shares, $25.00 liquidation
preference per depositary share,
equal to the preferred depositary share conversion rate, which we currently expect to be
0.4194; for each outstanding common share of Cornerstone, subject to the restriction that the Colonial
Series E preferred 40




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depositary shares issued will not exceed approximately 25% of the total merger consideration. If
the number of
Colonial Series E preferred depositary shares to be issued in the merger or the number of holders
of Colonial Series E
preferred depositary shares does not satisfy New York Stock Exchange listing conditions specified
in the merger
agreement, then each Cornerstone common share will be converted into a number of Colonial common
shares equal
to the common share conversion rate. In addition, the conversion rates are subject to various
adjustments provided for in the merger agreement, although Colonial and Cornerstone do not
currently expect any further material adjustments to the conversion rates. Depending upon the
shareholder elections, we expect to issue approximately 11 to 14 million new common shares and up
to approximately $150 million of new preferred securities and refinance or assume approximately
$850 million of Cornerstones existing secured debt. The transaction, which remains subject to
approval by the common shareholders of Colonial and Cornerstone, has been unanimously approved by
both boards. Cornerstone will have the right to terminate the transaction if our average share price for
the 20 trading days preceding 10 trading days prior to the close of the transaction is below
$31.00. However, in the event our share price is below such level, we have the right to continue
the transaction through the payment, at our sole option, of additional Colonial Properties common
shares or cash to provide Cornerstone shareholders value equivalent to that which they would have
received had our share price been $31.00 for such measurement period. We have the right to
terminate if our average share price exceeds $49.00 for 20 consecutive trading days preceding 10
trading days prior to the close of the transaction. Recent Developments Fluctuations in our results of operations from period to period are affected by acquisitions,
dispositions, new developments placed in service and other business transactions resulting from our
efforts to develop new properties, and expand existing properties. During 2004, we completed the
following new property openings, acquisitions, dispositions and business transactions:  
    In December 2004, we acquired Colonial Grand at McGinnis Ferry, a 434-unit
multifamily apartment community located in Atlanta, Georgia.
    In December 2004, we disposed of our interest in Orlando Fashion Square, a 1.0
million square foot retail asset located in Orlando, Florida.
    In October 2004, we acquired Colonial Grand at Patterson Place, a 252-unit
multifamily apartment community located in Durham, North Carolina and Colonial Grand at
Beverly Crest, a 300 unit multifamily apartment community located in Charlotte, North
Carolina.
    In October 2004, we entered into a partnership agreement with Dreyfuss Real Estate
Advisors (DRA) in which we acquired a 20% interest and management of sixteen
multifamily properties located in Arizona, New Mexico, and Nevada containing a combined
4,223 units.
    In October 2004, we acquired Research Park Office Center, a 176,600 square foot
office asset located in Huntsville, Alabama.
    In October 2004, we disposed of Colonial Village at Vernon Marsh, a 178-unit
multifamily apartment community located in Savannah, Georgia.
    In October 2004, we entered into an additional $200.0 million bridge facility with
certain participants of our current $320.0 million unsecured bank line of credit. Base
rate loans and euro-dollar loans are available under the bridge facility.
    In September 2004, we acquired Colonial Grand at Seven Oaks, a 318-unit multifamily
apartment community located in Tampa, Florida.
    In September 2004, we acquired Colonial Village at Sierra Vista, a 232-unit
multifamily apartment community located in Austin, Texas.
    In September 2004, we acquired Colonial Promenade Boulevard Square, a 220,656 square
foot retail asset in Pembroke Pines, Florida. 41




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
    In September 2004, we made a $9.0 million investment in the acquisition of a majority
interest in Colonnade Properties LLC, a New York based real estate investment company
focused on the acquisition, management, redevelopment and stabilization of 11 million
square feet of office assets.
    In September 2004, we disposed of Colonial Shoppes at Inverness, a 28,243 square foot
retail asset located in Birmingham, Alabama.
    In August 2004, we acquired a 25% partnership interest and the management of Colonial
Grand at Brentwood and Colonial Village at Hendersonville, two multifamily apartment
communities located in Nashville, Tennessee comprising a total of 618 units.
    In August 2004, we acquired three retail assets totaling approximately 526,000 square
feet in South Florida. Deerfield Mall is located in Deerfield Beach, Florida, College
Parkway is located in Fort Myers, Florida and Pines Plaza is located in Pembroke Pines,
Florida.
    In July 2004, we disposed of a Colonial Shoppes at Stanly, a 47,100 square foot
retail asset located in Locust, North Carolina.
    In July 2004, we disposed of Village at Roswell Summit, a 25,500 square foot office
asset located in Atlanta, Georgia.
    In June 2004, we entered into a partnership agreement with Dreyfus Real Estate
Advisors (DRA) in which we acquired a 20% interest and management of The Cunningham
Apartments, a 280 unit multifamily apartment community located in Austin, Texas.
    In June 2004, we acquired a 25% partnership interest in Colonial Grand at Bayshore, a
376-unit multifamily apartment community, and in Colonial Grand at Palma Sola, a
340-unit multifamily apartment community. Both properties are located in Bradenton,
Florida.
    In June 2004, we acquired a 90% partnership interest in The Village on Parkway, a
381,166 square foot retail lifestyle center located in Dallas, Texas.
    In June 2004, we acquired Colonial Grand at Berkeley Lake, Colonial Grand at River
Plantation, Colonial Grand at Mount Vernon, Colonial Grand at River Oaks and Colonial
Grand at Sugarloaf. These five multifamily apartment communities are located in
Atlanta, Georgia and total 1,091 units.
    In June 2004, completed a $300.0 million public debt offering of unsecured senior
notes by CRLP. The notes, which mature in June 2014 bear a coupon rate of 6.25%, and
were priced to yield an effective rate of 6.35% over the ten-year term.
    In May 2004, we completed the development of Colonial Promenade Trussville II, a
59,000 square foot addition to Colonial Promenade Trussville, a community shopping
center located in Birmingham, Alabama.
    In May 2004, we disposed of our 15% interest in Colonial Grand at Ponte Vedra, a
240-unit multifamily apartment community located in Jacksonville, Florida.
    In April 2004, we acquired Colonial Grand at Arringdon, a 320-unit multifamily
apartment community located in Raleigh/Durham, North Carolina.
    In April 2004, we acquired Kingwood Commons, a 164,356 square-foot retail lifestyle
center located in Houston, Texas.
    In April 2004, we completed a $100.0 million public debt offering of unsecured senior
notes by CRLP. The notes, which mature in April 2011 bear a coupon rate of 4.80%, and
were priced to yield an effective rate of 4.82% over the seven-year term.
    In March 2004, we sold Colonial Promenade University Park I, a 215,590 square foot
retail asset located in Orlando, Florida. 42




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
    In February 2004, we acquired the DRS Building, a 215,485 square foot office asset
located in Huntsville, Alabama.
    In February 2004, we completed the redevelopment of Colonial Shoppes Clay, a 66,000
square foot community shopping center located in Birmingham, Alabama.
    In February 2004, through CRLP, we modified the terms of the $100.0 million 8.875%
Series B Preferred Units (the Preferred Units), which were originally issued in a private
placement. Under the modified terms, the Preferred Units bear a distribution rate of 7.25%
and are redeemable at the option of CRLP, in whole or in part, after February 24, 2009, at
the cost of the original capital contribution plus the cumulative priority return, whether
or not declared. The terms of the Preferred
Units were further modified on March 14, 2005 to extend the
redemption date from February 24, 2009 to August 24, 2009. The Preferred Units are exchangeable for 7.25% Series B Preferred Shares
of the Company, in whole or in part at anytime on or after January 1, 2014, at the option
of the holders.
    Throughout 2004, we sold various parcels of land for an aggregate sales price of
approximately $16.7 million. Comparison of the year ended December 31, 2004 to the year ended December 31, 2003 Base rentfor the year ended December 31, 2004 increased $40.5 million or 17.2% as compared
with the year ended December 31, 2003. Base rent increased $30.6 million as a result of the
2004 and 2003 acquisitions and $1.2 million as a result of the completed developments in 2004.
The remaining increase is primarily a result of a decrease in move-in concessions at our
multifamily properties and an increase in occupancy at our retail properties. Percentage rentfor the year ended December 31, 2004 increased $0.2 million or 9.7% as
compared with the year ended December 31, 2003. The increase was primarily due to an increase
in gross sales per square foot at our retail malls and the addition of new tenants at our retail
malls that have recently completed redevelopment projects. Tenant recoveriesfor the year ended December 31, 2004 increased $1.4 million or 4.7% as
compared with the year ended December 31, 2003. The increase was primarily the result of our
2004 and 2003 acquisitions. Other property related revenuefor the year ended December 31, 2004 increased $1.8 million
or 9.8% as compared with the year ended December 31, 2003. Of the increase, $1.4 million is
attributable to a full year of operations for the properties acquired and developed in 2004 and
2003. The remaining increase is a result of ancillary income from our existing properties. Other non-property related revenuefor the year ended December 31, 2004 increased $3.6
million as compared with the year ended December 31, 2003. The increase is primarily due to an
increase in property management and leasing income of $3.0 million, as a result of the new
multifamily third party management agreements and the acquisition of Colonnade Properties, LLC.
The remaining increase is a result of an increase in development and third party construction
fees. General operating expensesof our operating properties for the year ended December 31, 2004
increased $3.3 million or 15.3% as compared to the year ended December 31, 2003. General
operating expenses of the properties acquired and developed during 2004 and 2003 increased $2.5
million in 2004 as compared to 2003. The remaining increase is a result of increased operating
costs at our existing properties. Salaries and benefitsof our operating properties for the year ended December 31, 2004
increased $3.0 million or 20.9% as compared to the year ended December 31, 2003. Of the
increase, $2.2 million is related to properties acquired during 2004 and 2003 and developed in
2004. The remaining increase is a result of an increase in payroll costs as a result of general
salary increases to cover cost of living increases. Repairs and maintenanceof our operating properties for the year ended December 31, 2004
increased $4.1 million or 15.3% as compared to the year ended December 31, 2003. Of the
increase, $2.6 million is a result of a full year of operations of the properties acquired and
developed in 2004 and 2003. The remaining increase is related to repairs that occurred on
certain of our multifamily and retail assets in 2004 as compared to 2003. Taxes, licenses and insurancefor our operating properties for the year ended December 31,
2004 increased $4.8 million or 17.6% as compared to the year ended December 31, 2003. The
properties acquired and developed in 2004 and 43




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2003 contributed $4.6 million of the increase. The remaining increase is a result of an
increase in overall property taxes on a number of our operating properties. General and administrativecorporate expenses for the year ended December 31, 2004
increased $7.7 million or 39.7% as compared to the year ended December 31, 2003. The increase
is primarily attributable to a $3.5 million increase in management compensation as a result of
the Companys continued growth, a $0.5 million increase in professional fees associated with
Sarbanes-Oxley compliance and $1.6 million related to the acquisition of Colonnade Properties,
LLC during 2004. Depreciation and amortizationexpenses for the year ended December 31, 2004 increased $18.0
million or 22.6% as compared to the year ended December 31, 2003. Approximately $12.9 million
of the increase is related to a full year of depreciation and amortization on the properties
acquired and developed during 2004 and 2003. Additionally, the amortization of prepaid leasing
commissions and tenant improvements on our existing properties increased approximately $2.8
million as a result of an increase in leasing activity in 2004. Interest expensefor the year ended December 31, 2004 increased $12.3 million, or 18.5%, to
$78.9 million as compared to the year ended December 31, 2003. The increase reflects the
issuance of $400 million of senior notes by CRLP during 2004 and interest on $246.2 million of
debt assumed in connection with the acquisitions during 2004. Additionally, the increase is
offset by a decrease in the LIBOR rate in 2003 and lower interest expense on our line of credit
due to a lower average loan balance resulting from our equity offering and disposition
activities in the early to mid part of 2003. Income from partially owned entitiesfor the year ended December 31, 2004 increased $0.9
million compared to the same period for 2003. The increase is primarily the result of our
interest in the joint venture with DRA in Arizona, New Mexico and Nevada and certain other joint
ventures entered into in 2004. Ineffectiveness of hedging activitiesfor the year ended December 31, 2004 increased $0.7
million as compared to the same period for 2003 and is due to the mark to market adjustment
related to a $17.0 million swap on a property acquired during 2004. The swap does not qualify
for hedge accounting in accordance with SFAS 133. Therefore the fair value of the swap is
recognized currently in earnings. Gains from sales of propertyincluded in continuing operations for the year ended December
31, 2004 decreased $3.1 million to $4.6 million as compared to the year ended December 31, 2003.

The decrease is a result of the reduction in the sales of various parcels of land in 2004 as
compared to the sale of certain parcels of land in 2003. Other income (expense)for the year ended December 31, 2004 increased $0.6 million as
compared to the same period in 2003. The increase is primarily attributable to an increase in
income tax expense as a result of the increase in income from unrelated third parties to CPSI in
2004 as compared to 2003. CPSI provides property development, leasing and management services
for third party owned properties and administrative services to us. Comparison of the year ended December 31, 2003 to the year ended December 31, 2002 Base rentfor the year ended December 31, 2003 increased $10.7 million or 4.8% as compared
with the year ended December 31, 2002. Base rent increased $16.8 million as a result of the
acquisitions of 901 Maitland Center, Colonial Center at Colonnade and Colonial Center Heathrow
in 2002, coupled with a full year of operations of Colonial Grand TownPark and Colonial Center
600 TownPark, which were completed developments in 2002. The increase was offset by multifamily
properties sold in 2002, which are classified as continuing operations, due to us retaining the
management of the multifamily properties sold. The 2002 multifamily property sales resulted in
decreased base rent of $4.9 million in 2003 as compared to 2002. The remaining decrease is
primarily a result of an increase in move-in concessions at our multifamily properties, which is
a function of the declining employment growth and a robust single family housing market driven
by lower interest rates. Percentage rentfor the year ended December 31, 2003 increased $0.2 million or 7.2% as
compared with the year ended December 31, 2002. The increase was primarily due to an increase
in gross sales per square foot at our retail malls and the addition of new tenants at our retail
malls that have recently completed redevelopment projects. Tenant recoveriesfor the year ended December 31, 2003 decreased $0.6 million or 2.0% as
compared with the year ended December 31, 2002. The decrease was primarily due to a decrease in
occupancy percentage as a result of early terminations at our office properties and the
redevelopment of Colonial University Village in Auburn, Alabama during 44




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2003. The decrease was
partially offset by a full year of operations as a result of the acquisition of 901 Maitland
Center, Colonial Center Colonnade, and Colonial Center Heathrow in 2002. Other property related revenuefor the year ended December 31, 2003 increased $1.8 million
or 11.1% as compared with the year ended December 31, 2002. Of the increase, $2.8 million is
attributable to a full year of operations for the properties acquired and developed in 2002 and
an increase in lease buy out income of $0.6 million primarily as a result of early lease
terminations within our office division in 2003 as compared to 2002. The increase was partially
offset by a decrease in other ancillary income at our multifamily and retail properties. Other non-property related revenuefor the year ended December 31, 2003 decreased $2.7
million or 36.5% as compared with the year ended December 31, 2002. The decrease is primarily
due to a decrease in the recognition of development and leasing fees from unrelated third
parties, as a result of the completion of the associated developments in 2002. Additionally, in
2002 we recognized $0.3 million of interest income, as a result of the sale of Colonial Grand at
Spring Creek in December 2001, in which the Company held a note receivable on a portion of the
sales price of the property through May 2002. General operating expensesof our operating properties for the year ended December 31, 2003
increased $1.1 million or 5.3% as compared to the year ended December 31, 2002. General
operating expenses of the properties acquired and developed during 2002 increased $1.6 million
in 2003 as compared to 2002. The increase was offset by a decrease of $0.5 million, which is
attributable to the multifamily properties sold in 2002 that are classified within continuing
operations. Salaries and benefitsof our operating properties for the year ended December 31, 2003
increased $1.4 million or 11.1% as compared to the year ended December 31, 2002. Of the
increase, $0.6 million is related to a full year of the salaries and benefits expenses of the
properties acquired and developed during 2002, offset by a decrease related to the multifamily
properties sold in 2002. The remaining increase is a result of an increase in payroll costs as
a result of general salary increases to cover cost of living increases. Repairs and maintenanceof our operating properties for the year ended December 31, 2003
increased $1.8 million or 7.1% as compared to the year ended December 31, 2002. Of the
increase, $1.7 million is a result of a full year of operations of the properties acquired and
developed in 2002, offset by a decrease of $0.4 million related to the multifamily properties
sold in 2002. The remaining increase is related to repairs that occurred on certain of our
older multifamily and retail assets in 2003 as compared to 2002. Taxes, licenses and insurancefor our operating properties for the year ended December 31,
2003 increased $2.8 million or 11.4% as compared to the year ended December 31, 2002. The
properties acquired and developed in 2002 contributed $2.2 million of the increase, offset by a
decrease of $0.5 million related to the multifamily properties sold in 2002. The remaining
increase is a result of an increase in overall property taxes on a number of our operating
properties. General and administrativecorporate expenses for the year ended December 31, 2003
increased $4.0 million or 25.7% as compared to the year ended December 31, 2002. The increase
is attributable to an increase in management salaries as a result of the Companys continued
growth, an increase in the expense recognized as a result of the issuance of restricted stock to
executive management, an increase in professional fees in order to comply with the
Sarbanes-Oxley Act, a reduction in the amount of direct salaries capitalized to development
projects, and a charge of $1.1 million was recognized as a result of a retirement package
granted to our chief financial officer in 2003. Depreciation and amortizationexpenses for the year ended December 31, 2003 increased $6.5
million or 8.9% as compared to the year ended December 31, 2002. Approximately $4.7 million of
the increase is related to a full year of depreciation and amortization on the properties
acquired and developed during 2002, offset by $1.2 million related to the multifamily properties
sold in 2002. Additionally, the amortization of prepaid leasing commissions and tenant
improvements on our existing properties increased approximately $4.5 million as a result of an
increase in leasing activity in late 2002 and 2003. Interest expensefor the year ended December 31, 2003 increased $2.9 million, or 4.5%, to
$66.6 million as compared to the year ended December 31, 2002. The increase reflects the
issuance of $125 million of senior notes by CRLP at 6.15% during April 2003 and a full year of
interest on the debt assumed with the acquisition of Colonial Center Heathrow in 2002.
Additionally, the increase is offset by a decrease in the LIBOR rate in 2003 and lower interest
expense on our line of credit due to a lower average loan balance resulting from our equity
offering and disposition activity in the early to mid part of 2003. 45




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Income from partially owned entitiesfor the year ended December 31, 2003 decreased $0.9
million compared to the same period for 2002. The decrease reflects a $1.1 million increase in
depreciation expense and a $0.9 million increase in interest expense at our partially owned
entities, which primarily relates to a full year of depreciation and interest of
Parkway Place in 2003 that was placed-in-service in late 2002. Parkway Place is a joint venture
in which we maintain a 45.0% interest. Additionally, in 2002, we recognized a $0.6 million gain
on sale of 25.0% of our investment in Colonial Promenade Madison Joint Venture. Prior to the
sale of this interest, we held a 50.0% interest in the Colonial Promenade Madison Joint Venture.
The decrease is partially offset by the increase in income from operations as a result of a
full year of operations of Parkway Place. Ineffectiveness of hedging activitiesfor the year ended December 31, 2003 increased $0.3
million as compared to the same period for 2002. The increase is primarily attributable to the
reduction of our outstanding line of credit below the $150.0 million total hedged notional
amount. In accordance with SFAS 133, we were required to dedesignate one of our $50.0 million
interest rate swaps; therefore a charge of $0.2 million was recorded in the first quarter of
2003. The remaining decrease is a result of hedge ineffectiveness on our remaining outstanding
interest rate swap agreements. Gains from sales of propertyincluded in continuing operations for the year ended December
31, 2003 decreased $27.8 million to $7.7 million as compared to the year ended December 31,
2002. The decrease is a result of the sale of ten operating properties and various parcels of
land in 2002 as compared to the sale of no operating properties in 2003 and various parcels of
land. In 2003, all operating property sales are classified as discontinued operations. The
operating property sales that occurred in 2002 are classified within continuing operations, as a
result of us maintaining a continuing interest in the properties through the management of the
properties sold. Other income (expense)for the year ended December 31, 2003 decreased $0.5 million as
compared to the same period in 2002. The decrease is primarily attributable to a decrease in
income tax expense as a result of the decrease in income from unrelated third parties to CPSI in
2003 as compared to 2002. CPSI provides property development, leasing and management services
for third party owned properties and administrative services to us. Summary of Critical Accounting Policies We believe our accounting policies are in conformity with accounting principles generally
accepted in the United States of America (GAAP). The preparation of financial statements in
conformity with GAAP requires management to use judgment in the application of accounting policies,
including making estimates and assumptions. These judgments affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenue and expenses during the reporting periods. If our
judgment or interpretation of the facts and circumstances relating to various transactions had been
different, it is possible that different accounting policies would have been applied resulting in a
different presentation of our financial statements. We consider the following accounting policies
to be critical to our reported operating results: Land, Buildings, and Equipment Land, buildings, and equipment is stated at the lower of cost, less accumulated depreciation,
or fair value. We review long-lived assets and certain intangible assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of the asset to future net cash flows expected to be generated by the asset. If an
asset is considered to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the asset exceeds the assets fair value. Assets to be disposed of
are reported at the lower of their carrying amount or fair value less cost to sell. Depreciation
is computed using the straight-line method over the estimated useful lives of the assets, as
follows: Useful LivesBuildings
    
    40 yearsFurniture and fixtures
    
    5 or 7 yearsEquipment
    
    3 or 5 yearsLand improvements
    
    10 or 15 yearsTenant improvements
    
    Life of lease
 Repairs and maintenance are charged to expense as incurred. Replacements and improvements are
capitalized and depreciated over the estimated remaining useful lives of the assets. When items of
land, buildings, or equipment are sold or retired, the related cost and accumulated depreciation
are removed from the accounts and any gain or loss is recorded. The Company recognizes sales of
real estate properties only upon the closing of a transaction. Payments received from purchasers
prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full
accrual method upon closing 46




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when the collectibility of the sales price is reasonably assured and
the Company is not obligated to perform significant
activities after the sale. Profit may be deferred in whole or part until the sale meets the
requirements of profit recognition on sales of real estate under GAAP. For properties sold to a
joint venture in which the Company retains an ownership percentage, the Company limits the profit
recognized from the sale to the portion sold to the outside party. Further, the profit is limited
by the amount of cash received for which the Company has no commitment to reinvest. Acquisition of Real Estate Assets We account for acquisitions of investments in real estate by allocating the purchase price to
acquired tangible assets, consisting of land, building and tenant improvements, and to identifiable
intangible assets and liabilities, consisting of the value of above-market and below-market leases,
other value of in-place leases and value of other tenant relationships, based in each case on their
fair values. We consider acquisitions of operating real estate assets to be businesses as that
term is contemplated in Emerging Issues Task Force Issue No. 98-3, Determining Whether a
Non-monetary Transaction Involves Receipt of Productive Assets or of a Business. We allocate purchase price to the fair value of the tangible assets of an acquired property
(which includes the land and building) determined by valuing the property as if it were vacant. The
as-if-vacant value is allocated to land and buildings based on managements determination of the
relative fair values of these assets. We also allocate value to tenant improvements based on the
estimated costs of similar tenants with similar terms. Above-market and below-market in-place lease values for acquired properties are recorded based
on the present value (using an interest rate which reflects the risks associated with the leases
acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place
leases and (ii) managements estimate of fair market lease rates for the corresponding in-place
leases, measured over a period equal to the remaining non-cancelable term of the lease. The
capitalized above-market lease values are amortized as a reduction of rental income over the
remaining non-cancelable terms of the respective leases. The capitalized below-market lease values
are amortized as an increase to rental income over the initial term and any fixed-rate renewal
periods in the respective leases. The aggregate value of other intangible assets acquired are measured based on the difference
between (i) the property valued with existing in-place leases adjusted to market rental rates and
(ii) the property valued as if vacant. We may engage independent third-party appraisers to perform
these valuations and those appraisals use commonly employed valuation techniques, such as
discounted cash flow analyses. Factors considered in these analyses include an estimate of carrying
costs during hypothetical expected lease-up periods considering current market conditions, and
costs to execute similar leases. We also consider information obtained about each property as a
result of its pre-acquisition due diligence, marketing and leasing activities in estimating the
fair value of the tangible and intangible assets acquired. In estimating carrying costs, management
also includes real estate taxes, insurance and other operating expenses and estimates of lost
rentals at market rates during the expected lease-up periods depending on specific local market
conditions and depending on the type of property acquired. We also estimate costs to execute
similar leases including leasing commissions, legal and other related expenses to the extent that
such costs are not already incurred in connection with a new lease origination as part of the
transaction. The total amount of other intangible assets acquired is further allocated to in-place leases,
which includes other tenant relationship intangible values based on managements evaluation of the
specific characteristics of each tenants lease and the Companys overall relationship with that
respective tenant. Characteristics considered by management in allocating these values include the
nature and extent of the Companys existing business relationships with the tenant, growth
prospects for developing new business with the tenant, the tenants credit quality and expectations
of lease renewals (including those existing under the terms of the lease agreement or managements
expectation for renewal), among other factors. The value of in-place leases and tenant relationships are amortized as a leasing cost expense
over the initial term of the respective leases and any renewal periods, which are primarily
expected to range from 11 to 28 years and which have a current weighted-average composite life of
19 years. In no event does the amortization period for intangible assets exceed the remaining
depreciable life of the building. Should a tenant terminate its lease, the unamortized portion of
the in-place lease value and customer relationship intangibles would be charged to expense. We are actively pursuing acquisition opportunities and will not be successful in all cases.
Costs incurred related to these acquisition opportunities are expensed when it becomes probable
that we will not be successful in the acquisition. 47




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Real Estate Development We capitalize all costs, including interest and real estate taxes that are associated with a
development, construction, expansion, or leasing of real estate investments as a cost of the
property. All other expenditures necessary to maintain a property in ordinary operating condition
are expensed as incurred. Costs incurred during predevelopment are capitalized after we have identified a development
site, determined that a project is feasible, and concluded that it is probable that the project
will proceed. While we believe we will recover this capital through the successful development of
such projects, it is possible that a write-off of unrecoverable amounts could occur. Once it
becomes probable that a development will not be successful, the predevelopment costs that have been
previously capitalized are expensed. Principles of Consolidation The consolidated financial statements include the accounts of the Company, CRLP, CPSI and
CPSLP. The minority limited partnership interests in CRLP are reflected as minority interest in
our consolidated financial statements. All significant inter-company balances and transactions
have been eliminated in the consolidated financial statements. Entities in which the Company owns,
directly or indirectly, a 50% or less interest and does not control are reflected in the
consolidated financial statements as investments accounted for under the equity method. Under this
method the investment is carried at cost plus or minus equity in undistributed earnings or losses
since the date of acquisition. For those entities in which we own less than 100% of the equity
interest, we consolidate the property if we have the direct or indirect ability to make major
decisions about the entities activities based on the terms of the respective joint venture
agreements which specify the sharing of participating and protective rights such as decisions
regarding major leases, encumbering the entities with debt and whether to dispose of entities. We
would also consolidate certain partially-owned entities and other subsidiaries if we own less than
100% equity interest and are deemed to be the primary beneficiary as defined by FASB Interpretation
46 Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, as revised (FIN
46(R)). Revenue Recognition We, as a lessor, have retained substantially all of the risks and benefits of ownership of our
properties and account for our leases as operating leases. Rental income attributable to leases is
recognized on a straight-line basis over the terms of the related lease. Certain leases contain
provisions for additional rent based on a percentage of tenant sales. Percentage rents are
recognized in the period in which sales thresholds are met. Recoveries from tenants for taxes,
insurance, and other property operating expenses are recognized in the period the applicable costs
are incurred in accordance with the terms of the respective leases. Other income received from long-term contracts signed in the normal course of business is
recognized in accordance with the terms of the specific contract. Property management and
development fee income is recognized when earned for services provided to third parties. Valuation of Receivables We are subject to tenant defaults and bankruptcies at our office and retail properties that
could affect the collection of outstanding receivables. In order to mitigate these risks, we
perform credit review and analysis on all commercial tenants and significant leases before they are
executed. We evaluate the collectibility of outstanding receivables and record allowances as
appropriate. Our policy is to record allowances for all outstanding receivables greater than 60
days past due for our office and retail properties. Due to the short-term nature of the leases at our multifamily properties, generally six months
to one year, our exposure to tenant defaults and bankruptcies is minimized. Our policy is to
record allowances for all outstanding receivables greater than 30 days past due at our multifamily
properties. Derivative Instruments We enter into derivative financial instruments from time to time, but do not use them for
trading or speculative purposes. Interest rate cap agreements and interest rate swap agreements
are used to reduce the potential impact of increases in interest rates on variable-rate debt. We
adjust our balance sheets on an ongoing quarterly basis to reflect current fair market value of our
derivatives. Changes in the fair value of derivatives are recorded each period in earnings or
comprehensive 48




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income, as appropriate. The ineffective portion of the hedge is immediately
recognized into earnings to the extent that the change in value of a derivative does not perfectly
offset the change in value of the instrument being hedged. The unrealized
gains and losses held in accumulated other comprehensive income (loss) will be reclassified to
earnings over time and occur when the hedged items are also recognized in earnings. We formally document all relationships between hedging instruments and hedged items, as well
as our risk management objective and strategy for undertaking the hedge. This process includes
specific identification of the hedging instrument and the hedge transaction, the nature of the risk
being hedged and how the hedging instruments effectiveness in hedging the exposure to the hedged
transactions variability in cash flows attributable to the hedged risk will be assessed. Both at
the inception of the hedge and on an ongoing basis, we assess whether the derivatives that are used
in hedging transactions are highly effective in offsetting changes in cash flows or fair values of
hedged items. We discontinue hedge accounting if a derivative is not determined to be highly
effective as a hedge or has ceased to be a highly effective hedge. Liquidity and Capital Resources Short-Term Liquidity Needs Our short-term liquidity requirements consist primarily of funds necessary to pay for
operating expenses directly associated with our portfolio of properties (including regular
maintenance items), capital expenditures incurred to lease our space (e.g., tenant improvements
and leasing commissions), interest expense and scheduled principal payments on our outstanding
debt, and quarterly dividends and distributions that we pay to our common and preferred
shareholders and holders of partnership units in our operating partnership. In the past, we have
primarily satisfied these requirements through cash generated from operations. We believe that
cash generated from operations and borrowings under our unsecured line of credit will be sufficient
to meet our short-term liquidity requirements. However, factors described below and elsewhere
herein may have a material adverse effect on our cash flow. The majority of our revenue is derived from tenants under existing leases at our properties.
Therefore, our operating cash flow is dependent upon the rents that we are able to charge to our
tenants, and the ability of these tenants to make their rental payments. We believe that the
diversified nature of the properties in which we typically invest  multifamily, office and retail
 provides a more stable revenue flow in uncertain economic times, in that our diversified property
types generally do not have the same economic cycles and while one property type may be
experiencing difficulty, the other property types may be maintaining their strength. We have made an election to be taxed as a REIT under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the Code), commencing with its taxable year ending December 31,
1993. If we qualify for taxation as a REIT, we generally will not be subject to Federal income tax
to the extent we distribute at least 90% of our REIT taxable income to our shareholders. Even if
we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income
and property and to federal income and excise taxes on our undistributed income. Long-Term Liquidity Needs Our long-term liquidity requirements consist primarily of funds necessary to pay for the
principal amount of our long-term debt as it matures, significant non-recurring capital
expenditures that need to be made periodically at our properties, development projects that we
undertake and costs associated with acquisitions of properties that we pursue. Historically, we
have satisfied these requirements principally through the most advantageous source of capital at
that time, which has included the incurrence of new debt through borrowings (through public
offerings of unsecured debt and private incurrence of secured and unsecured debt), sales of common
and preferred stock, capital raised through the disposition of assets, and joint venture capital
transactions. We believe these sources of capital will continue to be available in the future to
fund our long-term capital needs. However, factors described below and elsewhere herein may have a
material adverse effect on our access to these capital sources. Our ability to incur additional debt is dependent upon a number of factors, including our
credit ratings, the value of our unencumbered assets, our degree of leverage and borrowing
restrictions imposed by our current lenders. We currently have investment grade ratings for
prospective unsecured debt offerings from three major rating agencies. If we experienced a credit
downgrade, we may be limited in our access to capital in the unsecured debt market, which we have
historically utilized to fund investment activities, and the interest rate we are paying under our
existing credit facility would increase. Our ability to raise funds through sales of common stock and preferred stock is dependent on,
among other things, general market conditions for REITs, market perceptions about our company and
the current trading price of our stock. We 49




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will continue to analyze which source of capital is
most advantageous to us at any particular point in time, but the equity markets may not be
consistently available on terms that are attractive. Over the last few years, we have maintained our asset recycling program, which allows us to
maximize our investment returns through the sale of assets that have reached their maximum
investment potential and reinvest the proceeds into opportunities with more growth potential.
During 2004, we disposed of two multifamily properties including one property representing 178
units and our 15% interest in a second property representing 240 units, one office property
representing 25,500 square feet, and four retail properties including three wholly owned properties
representing 290,933 square feet and our 50% interest in a fourth property representing 1.1 million
square feet. The multifamily, office and retail properties were sold for a total sales price of
$105.1 million, which was used to repay a portion of the borrowings under our unsecured line of
credit. Our ability to generate cash from asset sales is limited by market conditions and
certain rules applicable to REITs. Our ability to sell properties in the future to raise cash will
be limited if market conditions make such sales unattractive. As of December 31, 2004, we have an unsecured bank line of credit providing for total
borrowings of up to $320 million. This line of credit agreement bears interest at LIBOR plus a
spread calculated based on our unsecured debt ratings from time to time. Based on our current debt
ratings, the spread is 105 basis points. The line of credit is renewable in November 2005 and
provides for a one-year extension. The line of credit agreement includes a competitive bid feature
that will allow us to convert up to $160 million under the line of credit to a fixed rate, for a
fixed term not to exceed 90 days. The credit facility had an outstanding balance of $240.0 million
at December 31, 2004. The floating weighted average interest rate of this short-term borrowing
facility, including the competitive bid balance, was 3.14% at December 31, 2004. As of December 31, 2004, we have a $200.0 million bridge facility with certain participants of
our current $320.0 million unsecured bank line of credit. Base rate loans and euro-dollar loans
are available under the bridge facility. Generally, base rate loans bear interest at Wachovias
designated base rate, plus a base rate margin ranging from 0.00% to 1.00% based on our unsecured
debt ratings from time to time. Euro-dollar loans bear interest at LIBOR plus a margin ranging
from 0.70% to 1.35% based on our unsecured debt ratings from time to time. The bridge facility had
an outstanding balance of $119.0 million at December 31, 2004, with an average interest rate of
3.45%. This facility matures in November of 2005. We are currently in the process of negotiating a new unsecured credit facility that will
replace the existing unsecured bank line of credit and bridge facility. We expect to complete this
transaction in the first quarter of 2005. However, we are not able to predict the terms of this
new unsecured credit facility or whether we will be successful in completing this transaction. At December 31, 2004, our total outstanding debt balance was $1.9 billion. The outstanding
balance includes fixed-rate debt of $1.3 billion, or 68.2% of the total debt balance, and
floating-rate debt of $590.0 million, or 31.8% of the total debt balance. Our total market
capitalization as of December 31, 2004 was $3.7 billion and our ratio of debt to market
capitalization was 49.7%. We have certain loan agreements that contain restrictive covenants,
which among other things require maintenance of various financial ratios. At December 31, 2004, we
were in compliance with these covenants. Effect of Cornerstone Merger on Liquidity and Capital Resources In the event we complete our merger with Cornerstone, we will assume the debt of Cornerstone,
which was $807.0 million as of December 31, 2004. We currently expect to repay a portion of
Cornerstones outstanding debt with proceeds from previously issued unsecured debt financing and
additional unsecured debt financings which we are currently negotiating with prospective lenders. We currently expect to obtain the additional unsecured debt financings on favorable terms.
However we cannot give assurance that the debt financings will be obtained. As a result of the
increased debt levels associated with the Cornerstone merger, additional cash flow from operations
will be used to make interest and principal payments on debt rather than for other purposes such as
working capital, capital expenditures, acquisitions, development or other general corporate
purposes. However, we currently expect that additional cash flows from operations as a result of
the merger will fund such activities. Investing Activities During 2004, we acquired 11 multifamily properties containing 2,947 units, two office
properties containing 392,100 square feet and six retail properties, including one retail property
that is 90% owned, containing 1,291,972 square feet for an aggregate cost of $508.0 million. We
completed the construction of Colonial Promenade Trussville II, a 59,000 square foot addition to
Colonial Promenade Trussville, a community shopping center located in Birmingham, Alabama for a
total cost of 50




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$8.3 million. Additionally, we completed the redevelopment of Colonial Shoppes Clay, a 66,000
square foot community shopping center located in Birmingham, Alabama. Project redevelopment costs
totaled $4.3 million. During 2004 we began the development of one new apartment community and continued with the
development of two other apartment communities. These communities, if developed as expected, will
contain 950 units, and the total investment, including land acquisition costs, is projected to be
approximately $74.9 million. We began the development of three retail properties and the
redevelopment of one and continued with the development of one retail property and the
redevelopment of two others, all three of which began prior to 2004. Upon completion of the retail
developments and redevelopments, we expect to invest approximately $194.2 million, including land
acquisition costs. Additionally, we have one ongoing mixed use project that integrates
multifamily, office and/or retail products. During 2004, we invested an aggregate of $159.0
million in the development of these aforementioned development projects and certain parcels of land
that were acquired for future development. We regularly incur significant expenditures in connection with the re-leasing of our office
and retail space, principally in the form of tenant improvements and leasing commissions. The
amounts of these expenditures can vary significantly, depending on negotiations with tenants and
the willingness of tenants. We also incur expenditures for certain recurring capital expenses.
During 2004, we incurred approximately $25.7 million related to tenant improvements and leasing
commissions, and approximately $17.7 million of recurring capital expenditures. We expect to pay
for future re-leasing and recurring capital expenditures out of cash from operations. Dividend The dividend on our common stock was $0.67 per share per quarter or $2.68 per share annually
in 2004. We also pay regular quarterly dividends on our preferred stock and units. The
maintenance of these dividends is subject to various factors, including the discretion of our Board
of Trustees, our ability to pay dividends under Alabama law, the availability of cash to make the
necessary dividend payments and the effect of REIT distribution requirements, which require at
least 90% of our taxable income to be distributed to shareholders. We also make regular quarterly
distributions on units in our operating partnership. Financing Transactions On February 18, 2004, CRLP modified the terms of the $100.0 million 8.875% Series B Preferred
Units (the Preferred Units), which were originally issued in a private placement. Under the
modified terms, the Preferred Units bear a distribution rate of 7.25% and are redeemable at the
option of CRLP, in whole or in part, after February 24, 2009, at the cost of the original capital
contribution plus the cumulative priority return, whether or not
declared. The terms of the Preferred Units were further modified on
March 14, 2005 to extend the redemption date from
February 24, 2009 to August 24, 2009. The Preferred Units are
exchangeable for 7.25% Series B Preferred Shares of the Company, in whole or in part at anytime on
or after January 1, 2014, at the option of the holders. On April 2, 2004, we completed a $100.0 million public debt offering of unsecured senior notes
by CRLP. The notes, which mature in April 2011 bear a coupon rate of 4.80%, and were priced to
yield an effective rate of 4.82% over the seven-year term. We used the net proceeds of the
offering to repay a portion of the outstanding balance on its unsecured line of credit. On June
21, 2004, we entered into a reverse swap agreement on the $100.0 million senior notes, maturing in
April 2011, to a floating rate equal to the 6-month LIBOR rate, which was 2.17% as of December 31,
2004. On June 17, 2004, we completed a $300.0 million public debt offering of unsecured senior notes
by CRLP. The notes, which mature in June 2014 bear a coupon rate of 6.25%, and were priced to
yield an effective rate of 6.35% over the ten-year term. We used the net proceeds of the offering
to repay the outstanding balance on its unsecured line of credit, and the remaining amount was used
for general corporate purposes and investment activities. In anticipation of closing the above
mentioned public debt offering, we entered into a $232.0 million treasury lock on June 14, 2004
with a fixed 10-year treasury rate of 4.84%. On June 17, 2004, we settled the treasury lock
agreement with a payment of approximately $2.1 million, which will be amortized over the life of
the associated debt. On October 28, 2004, we entered into an additional $200.0 million bridge facility with certain
participants of its current $320.0 million unsecured bank line of credit. Base rate loans and
euro-dollar loans are available under the bridge facility. Generally, base rate loans bear
interest at Wachovias designated base rate, plus a base rate margin ranging from 0.00% to 1.00%
based on our unsecured debt ratings from time to time. Euro-dollar loans bear interest at LIBOR
plus a margin ranging from 0.70% to 1.35% based on our unsecured debt ratings from time to time.
The bridge facility matures in November of 2005. 51




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On January 31, 2005, CRLP completed a $275 million offering of 4.750% senior unsecured notes
due February 1, 2010. Interest on the notes is payable semi-annually on the 1st of every February
and August beginning August 1, 2005. The
net proceeds of approximately $273.3 million were used to pay down our bridge facility and a
portion of our unsecured line of credit. Credit Ratings Our current credit ratings are as follows: Rating Agency
    
    Rating (1)
    
    Last updateStandard & Poors
    
    BBB-
    
    December 27, 2004Moodys
    
    Baa3
    
    January 12, 2005Fitch
    
    BBB-
    
    October 26, 2004
   (1)
    
    Ratings outlook is stable. Our credit ratings are investment grade. If we experience a credit downgrade, we may
be limited in our access to capital in the unsecured debt market, which we have historically
utilized to fund its investment activities. In addition, our spread on our $320 million
unsecured line of credit would increase as previously discussed. Market Risk In the normal course of business, we are exposed to the effect of interest rate changes that
could affect our results of operations and financial condition or cash flow. We limit these risks
by following established risk management policies and procedures, including the use of derivative
instruments to manage or hedge interest rate risk. The table below presents the principal amounts,
weighted average interest rates, fair values and other terms required by year of expected maturity
to evaluate the expected cash flows and sensitivity to interest rate changes at December 31, 2004. Estimated(amounts
in thousands)
    
    
    Fair2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    Thereafter
    
    
    Total
    
    
    ValueFixed Rate Debt
    
    $
    79,374
    
    
    $
    109,367
    
    
    $
    179,979
    
    
    $
    52,201
    
    
    $
    39,032
    
    
    $
    805,792
    
    
    $
    1,265,745
    
    
    $
    1,292,371Average interest rate
at December 31, 2004
    
    
    7.6
    %
    
    
    7.8
    %
    
    
    7.0
    %
    
    
    7.5
    %
    
    
    7.3
    %
    
    
    6.6
    %
    
    
    6.9
    %
    
    
    Variable Debt
    
    $
    361,082
    
    
    $
    2,530
    
    
    $
    2,112
    
    
    $
    2,111
    
    
    $
    2,112
    
    
    $
    220,095
    
    
    $
    590,042
    
    
    $
    590,042Average interest rate
at December 31, 2004
    
    
    3.2
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    2.7
    %
    
    
    3.0
    %
    
    
    
 The table incorporates only those exposures that exist as of December 31, 2004. It does not
consider those exposures or positions, which could arise after that date. Moreover, because firm
commitments are not presented in the table above, the information presented therein has limited
predictive value. As a result, our ultimate realized gain or loss with respect to interest rate
fluctuations will depend on the exposures that arise during the period, our hedging strategies at
that time, and interest rates. Our objective in using derivatives is to add stability to interest expense and to manage our
exposure to interest rate movements or other identified risks. To accomplish this objective, we
primarily use interest rate swaps, caps and treasury locks as part of our cash flow hedging
strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate
amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the
underlying principal amount. During 2004, such derivatives were used to hedge the variable cash
flows associated with existing variable-rate debt, existing lines of credit, and forecasted
issuances of debt. Two of our outstanding interest rate swaps at December 31, 2004, hedge the
interest rate risk associated with forecasted debt issuances that are expected to occur in 2005.
Accordingly, the maximum period of time over which we are hedging our exposure to variability in
future cash flows for forecasted transactions other than those related to the payment of variable
interest on existing debt is approximately eight months. We primarily use interest rate swaps as
part of our fair value hedging strategy. These swaps involve the receipt of fixed rate amounts in
exchange for variable rate amounts over the life of the agreements without exchange of the
underlying principal amount. During 2004, such swaps were used to hedge the change in fair value
of fixed rate debt. 52




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We have entered into several different hedging transactions in an effort to manage our
exposure to changes in interest rates. The following table summarizes the notional values, fair
values and other characteristics of our derivative financial instruments at December 31, 2004. The
notional value at December 31, 2004 provides an indication of the extent of our involvement in
these instruments at that time, but does not represent exposure to credit, interest rate, or market
risk. Fair ValueAt December 31, 2004Asset (Liability)Product Type
    
    Notional Value
    
    Rate
    
    
    Maturity
    
    
    (in thousands)Interest Rate SWAP, Cash Flow
    
    $30.2 - $27.7 million
    
    
    5.932
    %
    
    
    1/1/06
    
    
    $
    (809
    )Interest Rate SWAP, Cash Flow
    
    $17.0 million
    
    
    7.380
    %
    
    
    5/5/06
    
    
    
    (610
    )Interest Rate SWAP, Fair Value
    
    $100.0 million
    
    
    4.803
    %
    
    
    4/1/11
    
    
    
    3,269Interest Rate SWAP, Cash Flow
    
    $72.9 million
    
    
    3.928
    %
    
    
    1/15/10
    
    
    
    284Interest Rate SWAP, Cash Flow
    
    $170.0 million
    
    
    4.250
    %
    
    
    8/15/10
    
    
    
    136Interest Rate CAP, Cash Flow
    
    $25.9 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    4Interest Rate CAP, Cash Flow
    
    $16.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    3Interest Rate CAP, Cash Flow
    
    $8.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    1Interest Rate CAP, Cash Flow
    
    $19.7 million
    
    
    6.850
    %
    
    
    6/29/07
    
    
    
    6Interest Rate CAP, Cash Flow
    
    $16.7 million
    
    
    6.850
    %
    
    
    7/3/07
    
    
    
    5
 We do not use derivatives for trading or speculative purposes. Further, we have a policy of
only entering into contracts with major financial institutions based upon their credit ratings and
other factors. When viewed in conjunction with the underlying and offsetting exposure that the
derivatives are designed to hedge, we have not sustained a material loss from those instruments nor
do we anticipate any material adverse effect on our net income or financial position in the future
from the use of derivatives. At December 31, 2004 and 2003, derivatives with a fair value of $3.7 million and $6,195,
respectively, were included in other assets and derivatives with a fair value of $1.4 million and
$2.1 million, respectively, were included in other liabilities. The change in net unrealized
gains/losses of $0.2 million in 2004, $1.9 million in 2003 and $3.6 million in 2002 for derivatives
designated as cash flow hedges is separately disclosed in the statement of changes in shareholders
equity and comprehensive income. The change in fair value of derivatives not designated as hedges
of $0.4 million is included in other losses in 2004. There were not any derivatives not designated
as hedges in 2003 and 2002. No hedge ineffectiveness on fair value hedges was recognized during
2004, 2003 and 2002. Hedge ineffectiveness of $3,661, $0.4 million and $23,000 on cash flow hedges
due to index mismatches was recognized in other income during 2004, 2003 and 2002, respectively. Amounts reported in accumulated other comprehensive income related to derivatives will be
reclassified to interest expense as interest payments are made on the Companys hedged debt. The
change in net unrealized gains/losses on cash flow hedges reflects a reclassification of $1.4
million, $1.9 million and $2.2 million of net unrealized gains/losses from accumulated other
comprehensive income to interest expense during 2004, 2003 and 2002, respectively. During the next
12 months, the Company estimates that an additional $2.1 million will be reclassified. Contractual Obligations and Other Commercial Commitments The following tables summarize the material aspects of our future contractual obligations
and commercial commitments as of December 31, 2004: Contractual Obligations Contractual Obligations
    
    Payments Due in Fiscal(in thousands)
    
    Total
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    ThereafterLong-Term Debt:Consolidated
    
    $
    1,855,787
    
    
    $
    440,456
    
    
    $
    111,897
    
    
    $
    182,091
    
    
    $
    54,313
    
    
    $
    41,144
    
    
    $
    1,025,886Partially Owned Entities (1)
    
    
    111,638
    
    
    
    29,213
    
    
    
    459
    
    
    
    494
    
    
    
    4,758
    
    
    
    13,256
    
    
    
    63,458Total Long-Term Debt
    
    
    1,967,425
    
    
    
    469,669
    
    
    
    112,356
    
    
    
    182,585
    
    
    
    59,071
    
    
    
    54,400
    
    
    
    1,089,344Ground lease commitments
    
    
    4,050
    
    
    
    54
    
    
    
    54
    
    
    
    54
    
    
    
    54
    
    
    
    54
    
    
    
    3,780Total
    
    $
    1,971,475
    
    
    $
    469,723
    
    
    $
    112,410
    
    
    $
    182,639
    
    
    $
    59,125
    
    
    $
    54,454
    
    
    $
    1,093,124
   (1)
    
    Represents the Companys pro rata share of principal maturities and excludes net premiums and discounts. 53




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##### Table of Contents



Other Commercial Commitments Total Amounts(in thousands)
    
    Committed
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    ThereafterStandby Letters of Credit
    
    $
    2,196
    
    
    $
    2,196
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Guarantees
    
    
    4,832
    
    
    
    3,832
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000Total Commercial Commitments
    
    $
    7,028
    
    
    $
    6,028
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,000
 Guarantees and Other Arrangements During January 2000, we initiated and completed an Executive Unit Purchase Program (Unit
Purchase Program), in which the Board of Trustees and certain members of our management were able
to purchase 425,925 units of CRLP. The value of the units purchased under the Unit Purchase
Program was approximately $10.0 million. Under the Unit Purchase Program, the Board of Trustees
and the members of management obtained full-recourse personal loans from an unrelated financial
institution, in order to purchase the units. As of December 31, 2004, the outstanding balance on
these loans was $3.8 million as some participants had exited the program and repaid their principal
balance. The units, which have a market value of approximately $6.5 million at December 31, 2004,
are pledged as collateral against the loans. We have provided a guarantee to the unrelated
financial institution for the personal loans, which matured in January 2005. At December 31, 2004,
no liability was recorded on our books for the guarantee. In connection with the maturity of the
remaining outstanding loans in January 2005, our guarantees for such loans were terminated. During August 2002, in connection with the purchase of Heathrow International Business Center,
we entered into an agreement to acquire one new office building that contains 192,000 square feet.
The closing for this acquisition is anticipated to occur upon the earlier of August 2005 or at such
time that the seller achieves certain leasing targets for the property. The purchase price will be
determined based upon the percentage of gross leasable area actually leased and the net operating
income generated by the leases at the time of acquisition. During December 2002, we sold 90% of our interest in Colonial Promenade Hoover for a total
sales price of $20.5 million, and formed Highway 150 LLC, in which we maintain 10% ownership and
manage the property. In connection with the formation of Highway 150 LLC, we executed a guaranty,
pursuant to which we would serve as a guarantor of $1.0 million of the debt related to the joint
venture, which is collateralized by the Colonial Promenade Hoover retail property. Our maximum
guarantee of $1.0 million may be requested by the lender, only after all of the rights and remedies
available under the associated note and security agreements have been exercised and exhausted. At
December 31, 2004, the total amount of debt of the joint venture was approximately $17.4 million
and matures in December 2012. At December 31, 2004, no liability was recorded on our books for the
guarantee. In connection with the contribution of certain assets to CRLP, certain partners of CRLP have
guaranteed indebtedness of the Company totaling $26.9 million at December 31, 2004. The guarantees
are held in order for the contributing partners to maintain their tax deferred status on the
contributed assets. These individuals have not been indemnified by the Company. Additionally,
certain unitholders of CRLP and trustees of the Company have guaranteed indebtedness of the Company
totaling $0.4 million at December 31, 2004. The Company has indemnified these individuals from
their guarantees of this indebtedness. Outlook Management intends to maintain our strength through continued diversification, while pursuing
acquisitions and developments that meet our criteria for property quality, market strength, and
investment return. Management will continue to use our unsecured line of credit to provide
short-term financing for acquisition, development, and re-development activities and plans to
continue to replace significant borrowings under the bank line of credit with funds generated from
the sale of additional debt and equity securities and permanent financing, as market conditions
permit. Management believes that these potential sources of funds, along with the possibility of
issuing limited partnership units of CRLP in exchange for properties, will provide us with the
means to finance additional acquisitions, developments, and expansions. 54




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In addition to the issuance of equity and debt, management is investigating alternate
financing methods and sources to raise future capital. Private placements, joint ventures, and
non-traditional equity and debt offerings are some of the alternatives we are contemplating. Management anticipates that our net cash provided by operations and our existing cash
balances will provide the necessary funds on a short- and long- term basis to cover our
operating expenses, interest expense on outstanding indebtedness, recurring capital
expenditures, and dividends to shareholders in accordance with Internal Revenue Code
requirements applicable to real estate investment trusts. As previously disclosed, our pending merger with Cornerstone is expected to close in April
2005. In the event we complete the merger, we will be more subject to the economic trends
specific to the multifamily sector, such as:  
    changes in job growth, household formation and population growth in our markets;
    changes in interest rates;
    supply and demand for apartment properties in our current markets; and
    competition, which could limit our ability to secure attractive investment
opportunities, lease apartment properties, or increase or maintain rents. Inflation Leases at the multifamily properties generally provide for an initial term of six months to
one year and allow for rent adjustments at the time of renewal. Leases at the office properties
typically provide for rent adjustments and the pass-through of certain operating expenses during
the term of the lease. Substantially all of the leases at the retail properties provide for the
pass-through to tenants of certain operating costs, including real estate taxes, common area
maintenance expenses, and insurance. All of these provisions permit us to increase rental rates
or other charges to tenants in response to rising prices and, therefore, serve to minimize our
exposure to the adverse effects of inflation. An increase in general price levels may immediately precede, or accompany, an increase in
interest rates. At December 31, 2004, our exposure to rising interest rates was mitigated by
the existing debt level of 52.7% of our total market capitalization, the high percentage of
fixed rate debt (68.2%) and the use of interest rate swaps to effectively fix the interest rate
on approximately $45.0 million through May 2006. As it relates to the short-term, increases in
interest expense resulting from increasing inflation is anticipated to be less than future
increases in income before interest. Funds from Operations Funds From Operations (FFO) is useful to investors as a measure of performance for an equity
REIT that provides a relevant basis for comparison among REITs. FFO, as defined by the National
Association of Real Estate Investment Trusts (NAREIT), means income (loss) before minority interest
(determined in accordance with GAAP), excluding gains (losses) from debt restructuring and sales of
depreciated property, plus real estate depreciation and after adjustments for unconsolidated
partnerships and joint ventures. FFO is presented to assist investors in analyzing our
performance. Prior to January 1, 2003, we had also included marketing fees on sales transactions
within FFO, in which we used internal employees to complete the asset sales. Effective January 1,
2003 we conformed our FFO definition to adhere to the NAREIT white paper definition. As a result,
we are no longer including marketing fees on sales transactions and we are no longer excluding
straight-line rents to arrive at FFO. We believe that FFO is useful to investors because it
provides an additional indicator of our financial and operating performance. This is because, by
excluding the effect of real estate depreciation and gains (or losses) from sales of properties
(all of which are based on historical costs which may be of limited relevance in evaluating current
performance), FFO can facilitate comparison of operating performance among equity REITs. Our
method of calculating FFO may be different from methods used by other REITs and, accordingly, may
not be comparable to such other REITs. FFO (i) does not represent cash flows from operations as
defined by GAAP, (ii) is not indicative of cash available to fund all cash flow needs
and liquidity, including our ability to make distributions, and (iii) should not be considered as
an alternative to net income (as determined in accordance with GAAP) for purposes of evaluating our
operating performance. The following information is provided to reconcile net income available to common
shareholders, the most comparable GAAP financial measure, to FFO, and to show the items included in
our FFO for the years ended December 31, 2004, 2003, 2002, 2001 and 2000. 55




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##### Table of Contents



(in thousands, except per share and
unit data)
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Net income available to common shareholders
    
    $
    39,837
    
    
    $
    32,530
    
    
    $
    57,812
    
    
    $
    42,202
    
    
    $
    38,650Adjustments (consolidated):Minority interest in CRLP
    
    
    15,202
    
    
    
    13,644
    
    
    
    28,656
    
    
    
    22,764
    
    
    
    20,512Real estate depreciation
    
    
    90,659
    
    
    
    79,006
    
    
    
    72,451
    
    
    
    64,300
    
    
    
    59,411Real estate amortization
    
    
    9,482
    
    
    
    4,367
    
    
    
    4,957
    
    
    
    4,451
    
    
    
    1,887Consolidated gains from sales of property
    
    
    (19,517
    )
    
    
    (18,463
    )
    
    
    (41,552
    )
    
    
    (15,674
    )
    
    
    (8,165
    )Gains from sale of undepreciated property
    
    
    4,357
    
    
    
    8,040
    
    
    
    3,596
    
    
    
    
    
    
    
    Extraordinary loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    418Marketing fees (prior to 2003)
    
    
    
    
    
    
    
    
    
    
    1,658
    
    
    
    2,562
    
    
    
    1,329Straight-line rents (prior to 2003)
    
    
    
    
    
    
    
    
    
    
    (2,079
    )
    
    
    (1,406
    )
    
    
    (1,627
    )Adjustments (unconsolidated subsidiaries):Real estate depreciation
    
    
    4,562
    
    
    
    3,844
    
    
    
    2,703
    
    
    
    2,308
    
    
    
    2,088Real estate amortization
    
    
    89
    
    
    
    82
    
    
    
    67
    
    
    
    31
    
    
    
    17(Gains) loss from sales of property
    
    
    (7,061
    )
    
    
    
    
    
    
    (580
    )
    
    
    3
    
    
    
    Extraordinary loss
    
    
    
    
    
    
    
    
    
    
    
    

    
    
    17
    
    
    
    Straight-line rents (prior to 2003)
    
    
    
    
    
    
    
    
    
    
    (35
    )
    
    
    (50
    )
    
    
    (42
    )Funds from operations  as previously reported
    
    $
    137,610
    
    
    $
    123,050
    
    
    $
    127,654
    
    
    $
    121,508
    
    
    $
    114,478Prior period revisions to conform to NAREIT FFO definitionConsolidated adjustmentsMarketing fees (prior to 2003)
    
    $
    
    
    
    $
    
    
    
    $
    (1,658
    )
    
    $
    (2,562
    )
    
    $
    (1,329
    )Straight-line rents (prior to 2003)
    
    
    
    
    
    
    
    
    
    
    2,079
    
    
    
    1,406
    
    
    
    1,627Unconsolidated subsidiary adjustmentsStraight-line rents (prior to 2003)
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    50
    
    
    
    42Funds from operations  as revised
    
    $
    137,610
    
    
    $
    123,050
    
    
    $
    128,110
    
    
    $
    120,402
    
    
    $
    114,818As previously reportedFunds from operations per share and unit  basic
    
    $
    3.67
    
    
    $
    3.47
    
    
    $
    3.85
    
    
    $
    3.80
    
    
    $
    3.51Funds from operations per share and unit  diluted
    
    $
    3.64
    
    
    $
    3.45
    
    
    $
    3.82
    
    
    $
    3.78
    
    
    $
    3.51As revisedFunds from operations per share and unit  basic
    
    $
    3.67
    
    
    $
    3.47
    
    
    $
    3.86
    
    
    $
    3.76
    
    
    $
    3.52Funds from operations per share and unit  diluted
    
    $
    3.64
    
    
    $
    3.45
    
    
    $
    3.83
    
    
    $
    3.75
    
    
    $
    3.52Weighted average common shares outstanding  basic
    
    
    27,121
    
    
    
    24,965
    
    
    
    22,154
    
    
    
    20,792
    
    
    
    21,249Weighted average partnership units outstanding  basic (1)
    
    
    10,347
    
    
    
    10,451
    
    
    
    11,016
    
    
    
    11,211
    
    
    
    11,362Weighted average shares and units outstanding  basic
    
    
    37,468
    
    
    
    35,416
    
    
    
    33,170
    
    
    
    32,003
    
    
    
    32,611Effect of diluted securities
    
    
    341
    
    
    
    267
    
    
    
    254
    
    
    
    111
    
    
    
    28Weighted average shares and units outstanding  diluted
    
    
    37,809
    
    
    
    35,683
    
    
    
    33,424
    
    
    
    32,114
    
    
    
    32,639
   (1)
    
    Represents the weighted average of outstanding units of minority interest in CRLP. 
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk The information required by this item is incorporated by reference from Managements
Discussion and Analysis of Financial Condition and Results of Operations  Market Risk. 
 Item 8. Financial Statements and Supplementary Data The following are filed as a part of this report: Financial Statements: Consolidated Balance Sheets as of December 31, 2004 and 2003Consolidated Statements of Income and Comprehensive Income for the years ended
December 31, 2004, 2003, and 2002Consolidated Statements of Shareholders Equity for the years ended December 31, 2004, 2003, and 2002Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003, and 2002Notes to Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm 56




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##### Table of Contents



COLONIAL PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS(in thousands, except share data) December 31,
    
    
    December 31,2004
    
    
    2003ASSETSLand, buildings, & equipment
    
    $
    2,696,304
    
    
    $
    2,378,835Undeveloped land and construction in progress
    
    
    158,954
    
    
    
    114,262Less: Accumulated depreciation
    
    
    (437,635
    )
    
    
    (419,827
    )Real estate assets held for sale, net
    
    
    167,712
    
    
    
    11,691Net real estate assets
    
    
    2,585,335
    
    
    
    2,084,961Cash and equivalents
    
    
    10,725
    
    
    
    8,070Restricted cash
    
    
    2,333
    
    
    
    1,879Accounts receivable, net
    
    
    20,642
    
    
    
    10,262Notes receivable
    
    
    906
    
    
    
    2,504Prepaid expenses
    
    
    11,238
    
    
    
    6,587Deferred debt and lease costs
    
    
    36,750
    
    
    
    25,832Investment in partially owned entities
    
    
    65,472
    
    
    
    37,496Other assets
    
    
    67,942
    
    
    
    17,336Total assets
    
    $
    2,801,343
    
    
    $
    2,194,927LIABILITIES AND SHAREHOLDERS EQUITYNotes and mortgages payable
    
    $
    1,615,817
    
    
    $
    1,050,145Unsecured credit facility
    
    
    239,970
    
    
    
    205,935Mortgages payable related to real estate held for sale
    
    
    
    
    
    
    11,785Total long-term liabilities
    
    
    1,855,787
    
    
    
    1,267,865Accounts payable
    
    
    30,665
    
    
    
    19,537Accrued interest
    
    
    17,722
    
    
    
    14,916Accrued expenses
    
    
    10,635
    
    
    
    6,990Tenant deposits
    
    
    4,455
    
    
    
    3,239Unearned rent
    
    
    9,334
    
    
    
    6,878Other liabilities
    
    
    1,737
    
    
    
    3,715Total liabilities
    
    
    1,930,335
    
    
    
    1,323,140Minority interest:Preferred units
    
    
    100,000
    
    
    
    100,000Common units
    
    
    164,593
    
    
    
    170,054Limited partners interest in consolidated partnership
    
    
    1,389
    
    
    
    Total minority interest
    
    
    265,982
    
    
    
    270,054Preferred shares of beneficial interest, $.01 par value, 10,000,000 shares authorized:8 3/4% Series A Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25 per share,
0 shares issued and outstanding at December 31, 2004 and 2003
    
    
    
    
    
    
    9 1/4% Series C Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25 per share,
2,000,000 shares issued and outstanding
    
    
    20
    
    
    
    208 1/8% Series D Cumulative Redeemable Preferred Shares of
Beneficial Interest, liquidation preference $25 per depositary share,
5,000,000 depositary shares issued and outstanding at
December 31, 2004 and 2003
    
    
    5
    
    
    
    5Common shares of beneficial interest, $.01 par value, 65,000,000 shares
authorized; 33,222,559 and 32,017,347 shares issued at
December 31, 2004 and 2003, respectively
    
    
    332
    
    
    
    320Additional paid-in capital
    
    
    909,269
    
    
    
    873,342Cumulative earnings
    
    
    520,295
    
    
    
    458,184Cumulative distributions
    
    
    (670,894
    )
    
    
    (576,095
    )Treasury shares, at cost; 5,623,150 shares at December 31, 2004 and 2003
    
    
    (150,163
    )
    
    
    (150,163
    )Accumulated other comprehensive loss
    
    
    (1,966
    )
    
    
    (1,721
    )Deferred compensation on restricted shares
    
    
    (1,872
    )
    
    
    (2,159
    )Total shareholders equity
    
    
    605,026
    
    
    
    601,733$
    2,801,343
    
    
    $
    2,194,927
 The accompanying notes are an integral part of these consolidated financial statements. 57




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COLONIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME(in thousands, except share and per share data) For the year endedDecember 31,
    
    
    December 31,
    
    
    December 31,2004
    
    
    2003
    
    
    2002Revenue:Base rent
    
    $
    274,609
    
    
    $
    234,736
    
    
    $
    224,119Base rent from affiliates
    
    
    1,675
    
    
    
    1,079
    
    
    
    969Percentage rent
    
    
    2,735
    
    
    
    2,494
    
    
    
    2,326Tenant recoveries
    
    
    30,132
    
    
    
    28,777
    
    
    
    29,361Other property related revenue
    
    
    19,977
    
    
    
    18,190
    
    
    
    16,372Other non-property related revenue
    
    
    8,282
    
    
    
    4,728
    
    
    
    7,449Total revenue
    
    
    337,410
    
    
    
    290,004
    
    
    
    280,596Property operating expenses:General operating expenses
    
    
    25,135
    
    
    
    21,807
    
    
    
    20,713Salaries and benefits
    
    
    17,212
    
    
    
    14,233
    
    
    
    12,809Repairs and maintenance
    
    
    30,896
    
    
    
    26,790
    
    
    
    25,015Taxes, licenses, and insurance
    
    
    31,786
    
    
    
    27,034
    
    
    
    24,264General and administrative
    
    
    27,208
    
    
    
    19,481
    
    
    
    15,496Depreciation
    
    
    84,475
    
    
    
    72,093
    
    
    
    64,396Amortization
    
    
    13,411
    
    
    
    7,762
    
    
    
    8,951Total operating expenses
    
    
    230,123
    
    
    
    189,200
    
    
    
    171,644Income from operations
    
    
    107,287
    
    
    
    100,804
    
    
    
    108,952Other income (expense):Interest expense
    
    
    (78,933
    )
    
    
    (66,613
    )
    
    
    (63,760
    )Income from partially owned entities
    
    
    990
    
    
    
    130
    
    
    
    990Ineffectiveness of hedging activities
    
    
    387
    
    
    
    (361
    )
    
    
    (23
    )Gains from sales of property
    
    
    4,608
    
    
    
    7,704
    
    
    
    35,506Other
    
    
    (691
    )
    
    
    (121
    )
    
    
    (618
    )Total other expense
    
    
    (73,639
    )
    
    
    (59,261
    )
    
    
    (27,905
    )Income before extraordinary items, minority interest
and discontinued operations
    
    
    33,648
    
    
    
    41,543
    
    
    
    81,047Minority interest in CRLP  common unitholders
    
    
    (3,064
    )
    
    
    (3,822
    )
    
    
    (18,761
    )Minority interest in CRLP  preferred unitholders
    
    
    (7,493
    )
    
    
    (8,873
    )
    
    
    (8,873
    )Minority interest of limited partners
    
    
    (281
    )
    
    
    
    
    
    
    Income from continuing operations
    
    
    22,810
    
    
    
    28,848
    
    
    
    53,413Income from discontinued operations
    
    
    22,114
    
    
    
    22,477
    
    
    
    23,813Gain on disposal of discontinued operations
    
    
    21,832
    
    
    
    10,762
    
    
    
    6,046Minority interest in CRLP from discontinued operations
    
    
    (12,138
    )
    
    
    (9,822
    )
    
    
    (9,895
    )Income from discontinued operations
    
    
    31,808
    
    
    
    23,417
    
    
    
    19,964Net income
    
    
    54,618
    
    
    
    52,265
    
    
    
    73,377Dividends to preferred shareholders
    
    
    (14,781
    )
    
    
    (15,284
    )
    
    
    (15,565
    )Preferred share issuance costs
    
    
    
    
    
    
    (4,451
    )
    
    
    Net income available to common shareholders
    
    $
    39,837
    
    
    $
    32,530
    
    
    $
    57,812Net income per common share  basic:Income from continuing operations
    
    $
    0.30
    
    
    $
    0.36
    
    
    $
    1.71Income from discontinued operations
    
    
    1.17
    
    
    
    0.94
    
    
    
    0.90Net income per common share  basic
    
    $
    1.47
    
    
    $
    1.30
    
    
    $
    2.61Net income per common share  diluted:Income from continuing operations
    
    $
    0.29
    
    
    $
    0.36
    
    
    $
    1.69Income from discontinued operations
    
    
    1.16
    
    
    
    0.93
    
    
    
    0.89Net income per common share  diluted
    
    $
    1.45
    
    
    $
    1.29
    
    
    $
    2.58Weighted average common shares outstanding  basic
    
    
    27,121
    
    
    
    24,965
    
    
    
    22,154Weighted average common shares outstanding  diluted
    
    
    27,462
    
    
    
    25,232
    
    
    
    22,408Net income
    
    $
    54,618
    
    
    $
    52,265
    
    
    $
    73,377Other comprehensive income (loss)Unrealized income (loss) on cash flow hedging activities
    
    
    (245
    )
    
    
    1,866
    
    
    
    (2,184
    )Comprehensive income
    
    $
    54,373
    
    
    $
    54,131
    
    
    $
    71,193
 The accompanying notes are an integral part of these consolidated financial statements. 58




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##### Table of Contents



COLONIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY(in thousands, except per share data) For the Years Ended December 31, 2004, 2003, 2002 Preferred Shares of
    
    
    Common Shares of
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    Accumulated Other
    
    
    TotalBeneficial Interest
    
    
    Beneficial Interest
    
    
    Paid-In
    
    
    Cumulative
    
    
    Cumulative
    
    
    Treasury
    
    
    Compensation on
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Par Value
    
    
    Shares
    
    
    Par Value
    
    
    Capital
    
    
    Earnings
    
    
    Distributions
    
    
    Shares
    
    
    Restricted Shares
    
    
    Loss
    
    
    EquityBalance December 31, 2001
    
    
    7,000
    
    
    $
    70
    
    
    
    26,600
    
    
    $
    266
    
    
    $
    743,753
    
    
    $
    319,247
    
    
    $
    (403,610
    )
    
    $
    (150,163
    )
    
    $
    (725
    )
    
    $
    (1,403
    )
    
    $
    507,435Distributions on common shares ($2.64 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58,161
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58,161
    )Distributions on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,565
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,565
    )Distributions on preferred units of Colonial
Realty Limited Partnership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,873
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,873
    )Income before preferred unit distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,250Issuance of Restricted Common Shares of
Beneficial Interest
    
    
    
    
    
    
    
    
    
    
    86
    
    
    
    
    
    
    
    2,575
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,575
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,147
    
    
    
    
    
    
    
    1,147Public
offering of common shares of beneficial interest, net of offering costs of $950
    
    
    
    
    
    
    
    
    
    
    560
    
    
    
    6
    
    
    
    17,545
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,551Issuance of
common shares of beneficial interest through the Companys dividend
reinvestment plan and Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    661
    
    
    
    7
    
    
    
    21,059
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,066Issuance of common shares of beneficial
interest through options exercised
    
    
    
    
    
    
    

    
    
    
    203
    
    
    
    2
    
    
    
    6,245
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,247Issuance of common shares of beneficial
interest through conversion of units from
Colonial Realty Limited Partnership
    
    
    
    
    
    
    
    
    
    
    363
    
    
    
    4
    
    
    
    6,518
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,522Loss on derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,184
    )
    
    
    (2,184
    )Adjustments to minority interest in Colonial
Realty Limited Partnership at dates
of capital transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,634
    )
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    
    
    
    
    
    
    (19,634
    )Balance December 31, 2002
    
    
    7,000
    
    
    
    70
    
    
    
    28,474
    
    
    
    285
    
    
    
    778,062
    
    
    
    401,497
    
    
    
    (486,208
    )
    
    
    (150,163
    )
    
    
    (2,153
    )
    
    
    (3,587
    )
    
    
    537,803Distributions on common shares ($2.66 per share)
    
    
    
    
    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,730
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,730
    )Distributions on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,284
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,284
    )Distributions on preferred units of Colonial
Realty Limited Partnership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,873
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,873
    )Income before preferred unit distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,687Issuance of Restricted Common Shares of
Beneficial Interest
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    1,335
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,336
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,330
    
    
    
    
    
    
    
    1,330Public offering of common shares of beneficial
interest, net of offering costs of $2,738
    
    
    
    
    
    
    
    
    
    
    2,110
    
    
    
    21
    
    
    
    72,420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,441Public offering of preferred shares of beneficial
interest, net of offering costs of $4,422
    
    
    500
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    120,573
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,578Redemption of Series A preferred shares of
beneficial Interest
    
    
    (5,000
    )
    
    
    (50
    )
    
    
    
    
    
    
    
    
    
    
    (120,499
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (120,549
    )Issuance of common shares of beneficial
interest through the Companys dividend
reinvestment plan and Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    842
    
    
    
    8
    
    
    
    27,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,985Issuance of common shares of beneficial
interest through options exercised
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    1
    
    
    
    3,467
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,468Issuance of common shares of beneficial
interest through conversion of units from
Colonial Realty Limited Partnership
    
    
    
    
    
    
    
    
    
    
    423
    
    
    
    4
    
    
    
    7,333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,337Gain on derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,866
    
    
    
    1,866Adjustments to minority interest in Colonial
Realty Limited Partnership at dates
of capital transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,325
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,325
    )Balance December 31, 2003
    
    
    2,500
    
    
    
    25
    
    
    
    32,017
    
    
    
    320
    
    
    
    873,342
    
    
    
    458,184
    
    
    
    (576,095
    )
    
    
    (150,163
    )
    
    
    (2,159
    )
    
    
    (1,721
    )
    
    
    601,733Distributions on common shares ($2.68 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (72,524
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (72,524
    )Distributions on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,781
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,781
    )Distributions on preferred units of Colonial
Realty Limited Partnership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,493
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,493
    )Income before preferred unit distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,111Issuance of Restricted Common Shares of
Beneficial Interest
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    1,061
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,061
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,348
    
    
    
    
    
    
    
    1,348Issuance of common shares of beneficial
interest through the Companys dividend
reinvestment plan and Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    789
    
    
    
    8
    
    
    
    29,383
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,391Issuance of common shares of beneficial
interest through options exercised
    
    
    
    
    
    
    
    
    
    
    344
    
    
    
    3
    
    
    
    10,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,353Issuance of common shares of beneficial
interest through conversion of units from
Colonial Realty Limited Partnership
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    1
    
    
    
    995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    997Loss on derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (245
    )
    
    
    (245
    )Adjustments to minority interest in Colonial
Realty Limited Partnership at dates
of capital transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,863
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,863
    )Balance December 31, 2004
    
    
    2,500
    
    
    $
    25
    
    
    
    33,223
    
    
    $
    332
    
    
    $
    909,269
    
    
    $
    520,295
    
    
    $
    (670,894
    )
    
    $
    (150,163
    )
    
    $
    (1,872
    )
    
    $
    (1,966
    )
    
    $
    605,026
 The accompanying notes are an integral part of these consolidated financial statements. 59




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##### Table of Contents



COLONIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) For the Years Ended December 31, 2004, 2003, 20022004
    
    
    2003
    
    
    2002Cash flows from operating activities:Net income
    
    $
    54,618
    
    
    $
    52,265
    
    
    $
    73,377Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    105,333
    
    
    
    88,814
    
    
    
    82,835Income from partially owned entities
    
    
    (7,898
    )
    
    
    (608
    )
    
    
    (1,968
    )Minority interest in CRLP
    
    
    15,202
    
    
    
    13,644
    
    
    
    28,656Gains from sales of property
    
    
    (20,308
    )
    
    
    (18,463
    )
    
    
    (41,552
    )Distributions on preferred units of CRLP
    
    
    7,493
    
    
    
    8,873
    
    
    
    8,873Other, net
    
    
    1,193
    
    
    
    
    
    
    
    83Decrease (increase) in:Restricted cash
    
    
    (454
    )
    
    
    (398
    )
    
    
    774Accounts receivable
    
    
    (9,027
    )
    
    
    126
    
    
    
    2,073Prepaid expenses
    
    
    1,940
    
    
    
    994
    
    
    
    (132
    )Other assets
    
    
    (23,275
    )
    
    
    (7,920
    )
    
    
    (7,518
    )Increase (decrease) in:Accounts payable
    
    
    8,358
    
    
    
    212
    
    
    
    (5,016
    )Accrued interest
    
    
    2,889
    
    
    
    942
    
    
    
    2,489Accrued expenses and other
    
    
    (535
    )
    
    
    (678
    )
    
    
    (981
    )Net cash provided by operating activities
    
    
    135,529
    
    
    
    137,803
    
    
    
    141,993Cash flows from investing activities:Acquisition of properties
    
    
    (325,748
    )
    
    
    (77,472
    )
    
    
    (150,808
    )Development expenditures paid to non-affiliates
    
    
    (89,847
    )
    
    
    (42,275
    )
    
    
    (13,088
    )Development expenditures paid to affiliates
    
    
    (23,331
    )
    
    
    (30,242
    )
    
    
    (36,908
    )Tenant improvements
    
    
    (19,279
    )
    
    
    (14,002
    )
    
    
    (25,556
    )Capital expenditures
    
    
    (17,656
    )
    
    
    (12,445
    )
    
    
    (13,985
    )Proceeds from (issuance of) notes receivable
    
    
    1,598
    
    
    
    (1,197
    )
    
    
    10,946Proceeds from sales of property, net of selling costs
    
    
    59,702
    
    
    
    55,701
    
    
    
    132,241Distributions from partially owned entities
    
    
    35,026
    
    
    
    3,743
    
    
    
    5,420Capital contributions to partially owned entities
    
    
    (62,788
    )
    
    
    (4,366
    )
    
    
    (8,123
    )Net cash used in investing activities
    
    
    (442,323
    )
    
    
    (122,555
    )
    
    
    (99,861
    )Cash flows from financing activities:Proceeds from common shares issuances, net of expenses paid
    
    
    
    
    
    
    72,441
    
    
    
    17,551Proceeds from Series D preferred shares, net of expenses paid
    
    
    
    
    
    
    120,578
    
    
    
    Redemption of Series A preferred shares
    
    
    
    
    
    
    (125,000
    )
    
    
    Principal reductions of debt
    
    
    (151,151
    )
    
    
    (175,964
    )
    
    
    (73,248
    )Proceeds from additional borrowings
    
    
    516,794
    
    
    
    186,470
    
    
    
    151,285Net change in revolving credit balances
    
    
    34,035
    
    
    
    (2,279
    )
    
    
    (52,989
    )Dividends paid to common and preferred shareholders,
and distributions to preferred unitholders
    
    
    (94,799
    )
    
    
    (89,887
    )
    
    
    (82,599
    )Distributions to common unitholders
    
    
    (27,950
    )
    
    
    (27,873
    )
    
    
    (29,124
    )Payment of mortgage financing cost
    
    
    (7,225
    )
    
    
    (3,353
    )
    
    
    (4,214
    )Proceeds from dividend reinvestments, including
stock options exercised
    
    
    39,745
    
    
    
    31,453
    
    
    
    27,313Net cash provided by (used in) financing activities
    
    
    309,449
    
    
    
    (13,414
    )
    
    
    (46,025
    )Increase (decrease) in cash and equivalents
    
    
    2,655
    
    
    
    1,834
    
    
    
    (3,893
    )Cash and equivalents, beginning of period
    
    
    8,070
    
    
    
    6,236
    
    
    
    10,129Cash and equivalents, end of period
    
    $
    10,725
    
    
    $
    8,070
    
    
    $
    6,236Supplemental disclosures of cash flow information:Cash paid during the year for interest, net of amounts capitalized
    
    $
    83,237
    
    
    $
    66,614
    
    
    $
    62,776
 The accompanying notes are an integral part of these consolidated financial statements. 60




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##### Table of Contents



1. Organization and Basis of Presentation Organization Colonial Properties Trust (the Company), a real estate investment trust
(REIT), was originally formed as a Maryland REIT on July 9, 1993 and reorganized as an Alabama REIT
under a new Alabama REIT statute on
August 21, 1995. The Company is a fully integrated, self-administered and self-managed REIT,
which means that it is engaged in the acquisition, development, ownership, management and leasing
of commercial real estate property. The Companys activities include ownership or partial ownership
and operation of a diversified portfolio of properties located primarily in the Sunbelt region of
the United States, consisting of 78 multifamily apartment communities (including 45 wholly-owned
consolidated properties and 33 properties partially-owned through unconsolidated joint venture
entities), 27 office properties (including 26 wholly-owned consolidated properties and 1 property
partially-owned through an unconsolidated joint venture entity) and 48 retail properties (including
45 consolidated properties and three properties partially-owned through unconsolidated joint
venture entities), as of December 31, 2004. Federal Income Tax Status The Company, which is considered a corporation for federal income
tax purposes, qualifies as a REIT and generally will not be subject to federal income tax to the
extent it distributes its REIT taxable income to its shareholders. REITs are subject to a number
of organizational and operational requirements. If the Company fails to qualify as a REIT in any
taxable year, the Company will be subject to federal income tax on its taxable income at regular
corporate rates. The Company may also be subject to certain state and local taxes on its income
and property. Distributions to shareholders are partially taxable as ordinary income, long-term
capital gains, unrecaptured section 1250 gains, and partially non-taxable as return of capital.
During 2004, 2003 and 2002 the Companys distributions had the following characteristics: PercentageDistribution
    
    Ordinary
    
    Return of
    
    Long-Term
    
    Unrecaptured Sec.Per Share
    
    Income
    
    Capital
    
    Capital Gain
    
    1250 Gains2004
    
    $2.68
    
    53.09%
    
    45.26%
    
    1.51%
    
    0.14%2003
    
    $2.66
    
    58.34%
    
    33.85%
    
    5.42%
    
    2.39%2002
    
    $2.64
    
    77.79%
    
    22.21%
    
    0.00%
    
    0.00%
 In addition, the Companys financial statements include the operations of a taxable REIT
subsidiary, Colonial Properties Services, Inc. (CPSI), that is not entitled to a dividends paid
deduction and is subject to federal, state and local income taxes. CPSI provides property
development, leasing and management services for third-party owned properties and administrative
services to the Company. The Company generally reimburses CPSI for payroll and other costs
incurred in providing services to the Company. All inter-company transactions are eliminated in
the accompanying consolidated financial statements. The Company recognized tax expense of $0.7
million, $0.1 million and $0.6 million in 2004, 2003 and 2002, respectively, related to the taxable
income of CPSI. Principles Of Consolidation The Companys consolidated financial statements include the
Company, Colonial Realty Limited Partnership (CRLP), the Companys operating partnership, in which
the Company held 72.70%, 71.81%, and 67.93% general partner interest, certain partially owned
entities required to be consolidated and limited partner interests at December 31, 2004, 2003, and
2002, respectively, CPSI and Colonial Properties Services Limited Partnership (in which CRLP holds
99% general and limited partner interests). The minority limited partner interests in CRLP are
included as minority interest in the Companys consolidated financial statements. All significant
inter-company balances and transactions have been eliminated in the consolidated financial
statements. Investments In Partially Owned Entities  Entities in which the Company owns, directly or
indirectly, a 50% or less interest and does not control are reflected in the consolidated financial
statements as investments accounted for under the equity method. Under this method the investment
is carried at cost plus or minus equity in undistributed earnings or losses since the date of
acquisition. For those entities in which the Company owns less than 100% of the equity interest,
the Company consolidates the property if the Company has the direct or indirect ability to make
major decisions about the entities activities based on the terms of the respective joint venture
agreements which specify the sharing of participating and protective rights such as decisions
regarding major leases, encumbering the entities with debt and whether to dispose of entities. The
Company would also consolidate certain partially-owned entities and other subsidiaries if the
Company owns less than 100% equity interest and is deemed to be the primary beneficiary as defined
by FASB Interpretation 46 Consolidation of Variable Interest Entities, an Interpretation of ARB No.
51, as revised (FIN 46(R)). 61




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2.
    Summary of Significant Accounting Policies Land, Buildings, and Equipment Land, buildings, and equipment is stated at the lower of
cost, less accumulated depreciation, or fair value. The Company reviews its long-lived assets and
certain intangible assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of the asset to future net cash flows
expected to be generated by the asset. If an asset is considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of the asset exceeds the
assets fair value. Assets to be disposed of are reported at the lower of their carrying amount or
fair value less cost to sell. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, as follows: Useful LivesBuildings
    
    40 yearsFurniture and fixtures
    
    5 or 7 yearsEquipment
    
    3 or 5 yearsLand improvements
    
    10 or 15 yearsTenant improvements
    
    Life of lease
 Repairs and maintenance are charged to expense as incurred. Replacements and improvements are
capitalized and depreciated over the estimated remaining useful lives of the assets. When items of
land, buildings, or equipment are sold or retired, the related cost and accumulated depreciation
are removed from the accounts and any gain or loss is recorded in accordance with Statement of
Financial Accounting Standard (SFAS) No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. The Company recognizes sales of real estate properties only upon the closing of
a transaction. Payments received from purchasers prior to closing are recorded as deposits.
Profit on real estate sold is recognized using the full accrual method upon closing when the
collectibility of the sales price is reasonably assured and the Company is not obligated to perform
significant activities after the sale. Profit may be deferred in whole or part until the sale
meets the requirements of profit recognition on sales of real estate under SFAS No. 66, Accounting
for Sales of Real Estate. For properties sold to a joint venture in which the Company retains an
ownership percentage, the Company limits the profit recognized from the sale to the portion sold to
the outside party. Further, the profit is limited by the amount of cash received for which the
Company has no commitment to reinvest pursuant to the partial sale provisions found in paragraph 30
of Statement of Position (SOP) 78-9. As of December 31, 2004, in accordance with SFAS No. 66, all
sales of real estate properties have been recorded as sales transactions, as the risk and rewards
of ownership have been transferred to the purchaser. Acquisition of Real Estate Assets  The Company accounts for its acquisitions of investments
in real estate in accordance with SFAS No. 141, Business Combinations, which requires the fair
value of the real estate acquired to be allocated to the acquired tangible assets, consisting of
land, building and tenant improvements, and identified intangible assets and liabilities,
consisting of the value of above-market and below-market leases, other value of in-place leases and
value of other tenant relationships, based in each case on their fair values. The Company
considers acquisitions of operating real estate assets to be businesses as that term is
contemplated in Emerging Issues Task Force Issue No. 98-3, Determining Whether a Non-monetary
Transaction Involves Receipt of Productive Assets or of a Business. The Company allocates purchase price to the fair value of the tangible assets of an acquired
property (which includes the land and building) determined by valuing the property as if it were
vacant. The as-if-vacant value is allocated to land and buildings based on managements
determination of the relative fair values of these assets. The Company also allocates value to
tenant improvements based on the estimated costs of similar tenants with similar terms. Above-market and below-market in-place lease values for acquired properties are recorded based
on the present value (using an interest rate which reflects the risks associated with the leases
acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place
leases and (ii) managements estimate of fair market lease rates for the corresponding in-place
leases, measured over a period equal to the remaining non-cancelable term of the lease. The
capitalized above-market lease values are amortized as a reduction of rental income over the
remaining non-cancelable terms of the respective leases. The capitalized below-market lease values
are amortized as an increase to rental income over the initial term and any fixed-rate renewal
periods in the respective leases. The aggregate value of other intangible assets acquired are measured based on the difference
between (i) the property valued with existing in-place leases adjusted to market rental rates and
(ii) the property valued as if vacant. Management may engage independent third-party appraisers to
perform these valuations and those appraisals use commonly employed valuation techniques, such as
discounted cash flow analyses. Factors considered in these analyses include an estimate of carrying
costs during hypothetical expected lease-up periods considering current market conditions, and costs
to execute similar leases. The Company also considers information obtained about each property as a
result of its pre-acquisition due diligence, marketing and leasing activities in estimating the
fair value of the tangible and intangible assets acquired. In estimating carrying costs, 62




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management also includes real estate taxes, insurance and other operating expenses and estimates of lost
rentals at market rates during the expected lease-up periods depending on specific local market
conditions and depending on the type of property acquired. Management also estimates costs to
execute similar leases including leasing commissions, legal and other related expenses to the
extent that such costs are not already incurred in connection with a new lease origination as part
of the transaction. The total amount of other intangible assets acquired is further allocated to in-place leases,
which includes other tenant relationship intangible values based on managements evaluation of the
specific characteristics of each tenants lease and the Companys overall relationship with that
respective tenant. Characteristics considered by management in allocating these values include the
nature and extent of the Companys existing business relationships with the tenant, growth
prospects for developing new business with the tenant, the tenants credit quality and expectations
of lease renewals (including those existing under the terms of the lease agreement or managements
expectation for renewal), among other factors. The value of in-place leases and tenant relationships are amortized as a leasing cost expense
over the initial term of the respective leases and any renewal periods, which are primarily
expected to range from 11 to 28 years and which have a current weighted-average composite life of
19 years. In no event does the amortization period for intangible assets exceed the remaining
depreciable life of the building. Should a tenant terminate its lease, the unamortized portion of
the in-place lease value and customer relationship intangibles would be charged to expense. As of December 31, 2004 and 2003, the Company had $38.8 million and $3.7 million,
respectively, of gross in-place lease intangible assets. Accumulated amortization for these
in-place lease intangible assets was $4.4 million and $0 as of December 31, 2004 and 2003,
respectively. The aggregate amortization expense for these in-place lease intangible assets was
$4.4 million for 2004 and $0 for 2003, and is expected to be $4.9 million, $2.6 million, $2.6
million, $2.6 million and $2.6 million, for each of the next five years, respectively. The Company is actively pursuing acquisition opportunities and will not be successful in all
cases. Costs incurred related to these acquisition opportunities are expensed when it becomes
probable that we will not be successful in the acquisition. Undeveloped Land and Construction in Progress Undeveloped land and construction in progress
is stated at the lower of cost or fair value. Costs incurred during predevelopment are capitalized after the Company has identified a
development site, determined that a project is feasible, and concluded that it is probable that the
project will proceed. While the Company believes it will recover this capital through the
successful development of such projects, it is possible that a write-off of unrecoverable amounts
could occur. Once it becomes probable that a development will not be successful, the
predevelopment costs that have been previously capitalized are expensed. The capitalization of costs during the development of assets (including interest, property
taxes and other direct costs) begins when an active development commences and ends when the asset,
or a portion of an asset, is delivered and is ready for its intended use. Cost capitalization
during redevelopment of assets (including interest and other direct costs) begins when the asset is
taken out-of-service for redevelopment and ends when the asset redevelopment is completed and the
asset is placed in-service. Cash and Equivalents The Company includes highly liquid marketable securities and debt
instruments purchased with a maturity of three months or less in cash equivalents. The majority of
the Companys cash and equivalents are held at major commercial banks. Restricted Cash Restricted cash is comprised of cash balances which are legally restricted
as to use consists primarily of tenant deposits. Valuation of Receivables The Company is subject to tenant defaults and bankruptcies at its
office and retail properties that could affect the collection of outstanding receivables. In order
to mitigate these risks, the Company performs credit review and analysis on all commercial tenants
and significant leases before they are executed. The Company evaluates the collectibility of
outstanding receivables and records allowances as appropriate. The Companys policy is to record
allowances for all outstanding invoices greater than 60 days past due at its office and retail
properties. The Company had $1.1 million and $1.2 million in an allowance for doubtful accounts as
of December 31, 2004 and 2003, respectively. 63




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Due to the short-term nature of the leases at its multifamily properties, generally six months
to one year, the Companys exposure to tenant defaults and bankruptcies is minimized. The
Companys policy is to record allowances for all outstanding receivables greater than 30 days past
due at its multifamily properties. Deferred Debt and Lease Costs Deferred debt costs consist of loan fees and related expenses
which are amortized on a straight-line basis, which approximates the effective interest method,
over the terms of the related debt. Deferred lease costs include leasing charges, direct salaries
and other costs incurred by the Company to originate a lease, which are amortized on a
straight-line basis over the terms of the related leases. Derivative Instruments All derivative instruments are recognized on the balance sheet and
measured at fair value. Derivatives that do not qualify for hedge treatment under SFAS No. 133
(subsequently amended by SFAS Nos. 137 and 138), Accounting for Derivative Instruments and Hedging
Activities, must be recorded at fair value with gains or losses recognized in earnings in the
period of change. The Company enters into derivative financial instruments from time to time, but
does not use them for trading or speculative purposes. Interest rate cap agreements and interest
rate swap agreements are used to reduce the potential impact of increases in interest rates on
variable-rate debt. The Company formally documents all relationships between hedging instruments and hedged items,
as well as its risk management objective and strategy for undertaking the hedge. This process
includes specific identification of the hedging instrument and the hedge transaction, the nature of
the risk being hedged and how the hedging instruments effectiveness in hedging the exposure to the
hedged transactions variability in cash flows attributable to the hedged risk will be assessed.
Both at the inception of the hedge and on an ongoing basis, the Company assesses whether the
derivatives that are used in hedging transactions are highly effective in offsetting changes in
cash flows or fair values of hedged items. The Company discontinues hedge accounting if a
derivative is not determined to be highly effective as a hedge or has ceased to be a highly
effective hedge. Stock-Based Compensation The Company currently sponsors stock option plans and restricted
stock award plans. Refer to Note 12. Prior to 2003, the Company accounted for those plans under
the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to
Employees (APB No. 25) and related interpretations. No stock-based employee compensation expense
for stock options was reflected in net income for the years ended December 31, 2002 and 2001.
Effective January 1, 2003, the Company adopted the preferable fair value recognition provisions of
SFAS No. 123, Accounting for Stock-Based Compensation. The Company selected the prospective
method of adoption described in SFAS No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure. The prospective method allows the Company to apply the recognition
provisions of SFAS No. 123 to all employee awards granted, modified, or settled after the beginning
of the fiscal year in which the recognition provisions are first applied. In accordance with the
prospective method of adoption, results for prior years have not been restated. Deferred Compensation on Restricted Shares Deferred compensation on restricted shares
relates to the issuance of restricted shares to employees and trustees of the Company. Deferred
compensation is amortized to compensation expense based on the passage of time and certain
performance criteria. Revenue Recognition The Company, as lessor, has retained substantially all the risks and
benefits of property ownership and accounts for its leases as operating leases. Rental income
attributable to leases is recognized on a straight-line basis over the terms of the leases.
Certain leases contain provisions for additional rent based on a percentage of tenant sales.
Percentage rents are recognized in the period in which sales thresholds are met. Recoveries from
tenants for taxes, insurance, and other property operating expenses are recognized in the period
the applicable costs are incurred in accordance with the terms of the related lease. Other income received from long-term contracts signed in the normal course of business is
recognized in accordance with the terms of the specific contract. Property management and
development fee income is recognized when earned for services provided to third parties. Net Income Per Share Basic net income per share is computed by dividing the net income
available to common shareholders by the weighted average number of common shares outstanding during
the period. Diluted net income per share is computed by dividing the net income available to
common shareholders by the weighted average number of common shares outstanding during the period,
the dilutive effect of restricted shares issued, and the assumed conversion of all potentially
dilutive outstanding share options. 64




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Self Insurance Accruals  The Company is self insured up to certain limits for general
liability claims, workers compensation claims, property claims and health insurance claims.
Amounts are accrued currently for the estimated cost of claims incurred, both reported and
unreported. Use of Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates. Segment Reporting The Company has adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS No. 131 defines an operating segment as a component of an
enterprise that engages in business activities that generate revenues and incur expenses, which
operating results are reviewed by the chief operating decision maker in the determination of
resource allocation and performance, and for which discrete financial information is available.
The Company is organized into, and manages its business based on the performance of three separate
and distinct operating divisions: multifamily, office and retail. Recent Pronouncements of the Financial Accounting Standards Board (FASB)  On January 15,
2003, FASB completed its redeliberations of the project related to the consolidation of variable
interest entities which culminated with the issuance of FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities. FIN 46 states that if a business enterprise has a
controlling financial interest in a variable interest entity, the assets, liabilities and results
of the activities of the variable interest entity should be included in the consolidated financial
statements of the business enterprise. This Interpretation explains how to identify variable
interest entities and how an enterprise assesses its interests in a variable interest entity to
decide whether to consolidate that entity. FIN 46 also requires existing unconsolidated variable
interest entities to be consolidated by their primary beneficiaries if the entities do not
effectively disperse risks among parties involved. Variable interest entities that effectively
disperse risks will not be consolidated unless a single party holds an interest or combination of
interests that effectively recombines risks that were previously dispersed. This Interpretation
applied immediately to variable interest entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest after that date. In December 2003, the
FASB revised FIN 46 through the release of FIN 46R, which clarified certain aspects of FIN 46 and
contained certain provisions that deferred the effective date of FIN 46 to periods ending after
March 15, 2004 for variable interest entities in which an enterprise holds a variable interest that
it acquired before February 1, 2003. The Company has identified certain relationships that it deems to be variable interest
entities in which it holds a significant variable interest. As disclosed in Note 6, relative to
these entities, the Companys maximum exposure to loss is limited to the carrying value of the
Companys investments in those entities, which is $65.5 million as of December 31, 2004. In
addition to these variable interest entities, the Company considers its relationship with another
entity to also be a variable interest entity. The maximum exposure related to this entity is
limited to the amount of a guarantee and is $1.0 million as of December 31, 2004, which results in
a total maximum exposure to the Company attributable to all variable interest entities in the
aggregate amount of $66.5 million. The adoption of FIN 46 and FIN 46R did not have a material
effect on the Companys consolidated financial statements. In December 2004, the FASB issued SFAS No. 123 (Revised), Share Based Payment, that will
require compensation costs related to share-based payment transactions to be recognized in
financial statements. With limited exceptions, the amount of compensation cost will be measured
based on the grant date fair value of the equity or liability instruments issued. Compensation
cost will be recognized over the period that an employee provides service in exchange for the
award. SFAS No. 123 (R) replaces SFAS No. 123, Accounting for Stock Based Compensation, and
supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees. SFAS No. 123 (R) is
effective for the Company as of the beginning of the first interim reporting period that begins
after June 15, 2005. The Company does not expect the adoption of
SFAS No. 123 (R) to have a
material impact on its consolidated financial statements. 3. Property Acquisitions and Dispositions Property Acquisitions The Company acquired 11 multifamily properties, two office properties and six retail
properties, including a 90% interest in one retail property that is consolidated, in 2004 at an
aggregate cost of $508.0 million, two multifamily properties and one office property during 2003 at
an aggregate cost of $77.5 million, and three office properties during 2002 at an aggregate cost of
$150.8 million. The Company funded these acquisitions with cash proceeds from its dispositions of
assets, public offerings of equity and debt (see Notes 8 and 11), advances on bank lines of credit, and
cash from operations. The consolidated properties acquired during 2004, 2003 and 2002 are listed below: 65




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EffectiveLocation
    
    Acquisition Date

    
    Units/Square FeetMultifamily Properties:Colonial Grand at Arringdon
    
    Raleigh, NC
    
    April 2, 2004
    
    
    320Colonial Grand at Berkeley Lake
    
    Atlanta, GA
    
    June 1, 2004
    
    
    180Colonial Grand at Mt. Vernon
    
    Atlanta, GA
    
    June 1, 2004
    
    
    213Colonial Grand at River Oaks
    
    Atlanta, GA
    
    June 1, 2004
    
    
    216Colonial Grand at River Plantation
    
    Atlanta, GA
    
    June 1, 2004
    
    
    232Colonial Grand at Sugarloaf
    
    Atlanta, GA
    
    June 1, 2004
    
    
    250Colonial Village at Sierra Vista
    
    Austin, TX
    
    September 10, 2004
    
    
    232Colonial Grand at Seven Oaks
    
    Tampa, FL
    
    September 30, 2004
    
    
    318Colonial Grand at Beverly Crest
    
    Charlotte, NC
    
    October 29, 2004
    
    
    300Colonial Grand at Patterson Place
    
    Durham, NC
    
    October 29, 2004
    
    
    252Colonial Grand at McGinnis Ferry
    
    Atlanta, GA
    
    December 7, 2004
    
    
    434Colonial Grand at Metrowest
    
    Orlando, FL
    
    December 30, 2003
    
    
    311Colonial Village at Quarry Oaks
    
    Austin, Tx
    
    December 30, 2003
    
    
    533Office Properties:DRS Building
    
    Huntsville, AL
    
    February 12, 2004
    
    
    215,500Research Park Office Center
    
    Huntsville, AL
    
    October 22, 2004
    
    
    176,600Colonial Center Research Place
    
    Huntsville, AL
    
    December 15, 2003
    
    
    272,558901 Maitland Center
    
    Orlando, FL
    
    March 1, 2002
    
    
    155,583Colonial Center at Colonnade
    
    Birmingham, AL
    
    May 1, 2002
    
    
    531,563Colonial Center at Heathrow
    
    Orlando, FL
    
    August 1, 2002
    
    
    804,350Retail Properties:Colonial Pinnacle Kingwood Commons
    
    Houston, TX
    
    April 8, 2004
    
    
    164,356Village on the Parkway (1)
    
    Dallas, TX
    
    June 18, 2004
    
    
    381,166Colonial Shoppes College Parkway
    
    Ft. Myers, FL
    
    August 2, 2004
    
    
    78,879Colonial
Promenade Deerfield Mall
    
    Deerfield Beach, FL
    
    August 2, 2004
    
    
    378,745Colonial
Shoppes Pines Plaza
    
    Pembroke Pines, FL
    
    August 2, 2004
    
    
    68,170Colonial
Promenade Boulevard Square
    
    Pembroke Pines, FL
    
    September 10, 2004
    
    
    220,656
   (1)
    
    All acquisitions are 100% owned by the Company, with the exception of Village on the
Parkway, which is 90% by the Company. See Note 6. Results of operations of these properties, subsequent to their respective acquisition
dates, are included in the consolidated financial statements of the Company. The cash paid to
acquire these properties is included in the consolidated statements of cash flows. The Company has
accounted for its acquisitions in 2004 and 2003 accordance with SFAS 141. The value of the
acquired tenant improvements and leasing commissions for the office and retail assets acquired are
amortized over the remaining terms of the in-place leases, which ranges from one to ten years for
office properties and one to twenty-four years for retail properties. The value of the in-place
leases is being amortized over the remaining useful life of the intangible asset, which is
approximately one year for our multifamily acquisitions, fifteen years for our office acquisitions
and 30 years for our retail division. The acquisitions during 2004, 2003 and 2002 are comprised of
the following: (in thousands)2004
    
    
    2003
    
    
    2002Assets purchased:Land, buildings, and equipment
    
    $
    481,890
    
    
    $
    74,399
    
    
    $
    196,009Other assets
    
    
    38,818
    
    
    
    4,080
    
    
    
    465520,708
    
    
    
    78,479
    
    
    
    196,474Notes and mortgages assumed
    
    
    (186,265
    )
    
    
    
    
    
    
    (43,993
    )Other liabilities assumed or recorded
    
    
    (8,695
    )
    
    
    (1,007
    )
    
    
    (1,673
    )Cash paid
    
    $
    325,748
    
    
    $
    77,472
    
    
    $
    150,808
 In addition to the acquisition of the operating properties mentioned above, the Company
acquired certain parcels of land to be utilized for future development opportunities.
Additionally, see Note 6 - Investment in Partially Owned Entities and Other Arrangements for
discussion of the Companys joint venture activity entered into in 2004. Property
Dispositions - Continuing Operations During 2004 and 2003, the Company sold various parcels of land located adjacent to our existing
properties for an aggregate sales price of $16.7 million and $24.0 million, respectively, which
were used to repay a portion of the borrowings under the Companys unsecured line of credit and to
support our investment activities. During 2002, the Company sold interests in two retail
properties to joint ventures formed by the Company and unrelated parties. The Company continues to
manage the properties and accounts for its interest in these joint ventures as equity investments
(see Note 6). Additionally in 2002, the Company disposed of eight multifamily properties
representing 1,988 units and two retail properties representing 265,924 66




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square feet. The multifamily and retail properties were sold for a total sales price of $118.2 million, which was
used to repay a portion of the borrowings under the Companys unsecured line of credit and to
support the Companys investment activities. Property
Dispositions - Discontinued Operations During 2004, the Company disposed of two multifamily properties including one property
representing 178 units and our 15% interest in a second property representing 240 units, one office
property representing 25,500 square feet, and four retail properties including three wholly-owned
properties representing 290,933 square feet and our 50% interest in a fourth property representing
1.1 million square feet. The multifamily, office and retail properties were sold for a total sales
price of $105.1 million, which was used to repay a portion of the borrowings under our unsecured
line of credit and fund future investments. During 2003, the Company disposed of one multifamily property representing 176 units, one
office property representing 29,000 square feet, and one retail property representing 152,667
square feet. The multifamily, office and retail properties were sold for a total sales price of
$33.9 million, which was used to repay a portion of the borrowings under the Companys unsecured
line of credit and to support the Companys investment activities. During 2002, the Company disposed of two office properties representing 104,496 square feet
and one retail property representing 183,519 square feet. The office and retail properties were
sold for an aggregate sales price of $20.4 million, which was used to repay a portion of the
borrowings under the Companys unsecured line of credit and to support our investment activities. In accordance with SFAS No. 144, net income (loss) and gain (loss) on disposition of real
estate for properties sold through December 31, 2004, in which the Company does not maintain
continuing involvement, are reflected in our consolidated statements of income on a comparative
basis as discontinued operations for the years ended December 31, 2004, 2003 and 2002. Following
is a listing of the properties we disposed of in 2004, 2003 and 2002 that are classified as
discontinued operations: Units/SquareProperty
    
    
    
    Location
    
    Date

    
    FeetMultifamilyColonial Village at Vernon Marsh
    
    
    
    Savannah, GA
    
    October 2004
    
    
    178Colonial Grand at Ponte Vedra
    
    (1)
    
    Jacksonville, FL
    
    May 2004
    
    
    240Colonial Grand at Citrus Park
    
    
    
    Tampa, FL
    
    March 2003
    
    
    176OfficeVillage at Roswell Summit
    
    
    
    Atlanta, GA
    
    July 2004
    
    
    25,5002100 International Park
    
    
    
    Birmingham, AL
    
    September 2003
    
    
    29,000Colonnade Building 4100 & 4200
    
    
    
    Birmingham, AL
    
    September 2002
    
    
    32,000University Park Plaza
    
    
    
    Orlando, FL
    
    July 2002
    
    
    72,500RetailColonial Promenade University Park I
    
    
    
    Orlando, FL
    
    March 2004
    
    
    215,590Colonial Shoppes at Stanley
    
    
    
    Locust, NC
    
    July 2004
    
    
    47,100Colonial Shoppes at Inverness
    
    
    
    Birmingham, AL
    
    September 2004
    
    
    28,243Orlando Fashion Square
    
    (1)
    
    Orlando, FL
    
    December 2004
    
    
    1,083,049Colonial Promenade Bardmoor
    
    
    
    St. Petersburg, FL
    
    March 2003
    
    
    152,667Colonial Promenade University Park II
    
    
    
    Orlando, FL
    
    July 2002
    
    
    183,519
   (1)
    
    Properties were partially owned entities accounted for on the equity basis of accounting. Additionally, the Company classifies real estate assets as held for sale, only after the
Company has received approval by its internal investment committee, has commenced an active program
to sell the assets, and in the opinion of the Companys management it is probable the asset will
sell within the next 12 months. At December 31, 2004, the Company had classified seven retail
assets, six malls and one strip center, containing 3.7 million square feet, as held for sale. At
December 31, 2003, the Company had classified one retail asset, containing 215,590 square feet, as
held for sale. These real estate assets are reflected in the accompanying consolidated balance
sheets at $167.7 million and $11.7 million at December 31, 2004 and 2003, respectively, which
represents the lower of depreciated cost or fair value less costs to sell. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, we record individual property sales as discontinued operations, unless we maintain a
continuing involvement with the properties that have been sold. During 2004, all of the operating
properties sold were classified as discontinued operations and the sales of the parcels of land
were classified within continuing operations. 67




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##### Table of Contents



In accordance with SFAS No. 144, the operating results of real estate assets designated as
held for sale subsequent to January 1, 2002 are included in discontinued operations in the
consolidated statement of operations for all periods presented. Also under the provisions of SFAS
No. 144, the reserves, if any, to write down the carrying value of the real estate assets
designated and classified as held for sale are also included in discontinued operations. All
subsequent gains and or additional losses on the sale of these assets are also included in
discontinued operations. Additionally, under SFAS No. 144, any impairment losses on assets held
for continuing use are included in continuing operations. Below is a summary of the operations of the properties held for sale and sold during 2004,
2003, and 2002 that are classified as discontinued operations: (amounts in
thousands)Year Ended December 31,2004
    
    
    2003
    
    
    2002Property revenues:Base rent
    
    $
    29,586
    
    
    $
    31,076
    
    
    $
    34,701Percentage rent
    
    
    1,260
    
    
    
    1,290
    
    
    
    1,216Tenant recoveries
    
    
    11,099
    
    
    
    11,840
    
    
    
    12,305Other property revenue
    
    
    2,040
    
    
    
    3,388
    
    
    
    2,310Total property revenues
    
    
    43,985
    
    
    
    47,594
    
    
    
    50,532Property operating and maintenance expense
    
    
    14,996
    
    
    
    15,689
    
    
    
    16,704Depreciation
    
    
    7,145
    
    
    
    8,668
    
    
    
    9,207Amortization
    
    
    303
    
    
    
    292
    
    
    
    281Total operating expenses
    
    
    22,444
    
    
    
    24,649
    
    
    
    26,192Interest expense
    
    
    (203
    )
    
    
    (943
    )
    
    
    (1,505
    )Income from investments
    
    
    776
    
    
    
    475
    
    
    
    978Income from discontinued operations before net gain
on disposition of discontinued operations
    
    
    22,114
    
    
    
    22,477
    
    
    
    23,813Net gain on disposition of discontinued operations
    
    
    21,832
    
    
    
    10,762
    
    
    
    6,046Minority interest in CRLP from discontinued operations
    
    
    (12,138
    )
    
    
    (9,822
    )
    
    
    (9,895
    )Income from discontinued operations
    
    $
    31,808
    
    
    $
    23,417
    
    
    $
    19,964
 4. Land, Buildings, and Equipment Land, buildings, and equipment consist of the following at December 31, 2004 and 2003: (in thousands)Useful Lives

    
    2004
    
    
    2003Buildings
    
    40 years
    
    $
    2,031,570
    
    
    $
    1,835,528Furniture and fixtures
    
    5 or 7 years
    
    
    73,508
    
    
    
    58,634Equipment
    
    3 or 5 years
    
    
    27,945
    
    
    
    34,775Land improvements
    
    10 or 15 years
    
    
    83,184
    
    
    
    57,598Tenant improvements
    
    Life of lease
    
    
    156,929
    
    
    
    140,3762,373,136
    
    
    
    2,126,911Accumulated depreciation
    
    
    
    
    
    
    (437,635
    )
    
    
    (419,827
    )1,935,501
    
    
    
    1,707,084Real estate assets held for sale, net
    
    
    
    
    
    
    167,712
    
    
    
    11,691Land
    
    
    
    
    
    
    323,168
    
    
    
    251,924$
    2,426,381
    
    
    $
    1,970,699
 5. Undeveloped Land and Construction in Progress During 2004, the Company completed the construction of the 59,000 square foot addition to
Colonial Promenade Trussville II, a community shopping center located in Birmingham, Alabama for a
total cost of $8.3 million. Additionally, the Company completed the redevelopment of the 66,000
square foot retail shopping center of Colonial Shoppes Clay, located in Birmingham, Alabama for a
total cost of $4.3 million. The Company currently has seven active development projects, one mixed-use project, and two
redevelopment projects in progress, and various parcels of land available for expansion and
construction. Undeveloped land and construction in progress is comprised of the following at
December 31, 2004: 68




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Continuing Development Schedule Total
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    CostsUnits/
    
    
    
    
    
    
    Estimated
    
    

    
    
    
    
    CapitalizedSquare
    
    
    Estimated
    
    
    Total Costs
    
    

    
    
    
    
    to DateFeet
    
    
    Completion
    
    
    (in thousands)
    
    

    
    
    
    
    (in thousands)Multifamily Projects:Colonial Grand at Mallard Creek
    
    
    252
    
    
    
    2005
    
    
    $
    20,000
    
    
    
    
    
    
    $
    11,203Colonial Village Twin Lakes
    
    
    460
    
    
    
    2005
    
    
    
    35,000
    
    
    
    
    
    
    
    31,006Colonial Grand at Silverado
    
    
    238
    
    
    
    2005
    
    
    
    19,900
    
    
    
    
    
    
    
    14,654Retail Projects:Colonial Mall Myrtle Beach (redevelopment)
    
    
    530,000
    
    
    
    2005
    
    
    
    27,500
    
    
    
    
    
    
    
    19,498Colonial Pinnacle Craft Farms
    
    
    440,000
    
    
    
    2006
    
    
    
    39,000
    
    
    
    
    
    
    
    7,074Colonial Pinnacle Turkey Creek
    
    
    520,000
    
    
    
    2006
    
    
    
    37,000
    (1)
    
    
    
    
    
    
    13,360
    (1)Colonial Pinnacle Tutwiler Farms
    
    
    450,000
    
    
    
    2006
    
    
    
    35,500
    
    
    
    
    
    
    
    2,915Colonial Promenade Alabaster
    
    
    650,000
    
    
    
    2005
    
    
    
    30,000
    
    
    
    
    
    
    
    15,029Colonial Shops Colonnade (redevelopment)
    
    
    122,000
    
    
    
    2005
    
    
    
    6,500
    
    
    
    
    
    
    
    3,242Colonial University Village (redevelopment)
    
    
    555,000
    
    
    
    2006
    
    
    
    18,700
    
    
    
    
    
    
    
    10,522Mixed Use Projects, Land and Infrastructures:Colonial
TownPark - Lake Mary
    
    
    
    
    
    
    
    
    
    
    16,075
    
    
    
    
    
    
    
    14,289Other Projects and Undeveloped Land
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,162$
    158,954
   (1)
    
    Represents 50% of the costs. The Company is a 50% equity partner in
this development. Interest capitalized on construction in progress during 2004, 2003, and 2002 was $6.9
million, $5.6 million and $8.1 million, respectively. 6. Investment in Partially Owned Entities and Other Arrangements Investments in Consolidated Partially Owned Entities During June 2004, the Company acquired a 90% partnership interest in The Village on the
Parkway, a 381,166 square foot retail lifestyle center located in Dallas, Texas. The Companys 90%
investment in the partnership was $56.4 million, which consisted of $14.1 million of equity
investment and $42.3 million of newly issued mortgage debt, representing the Companys allocated
portion of mortgage debt for the property. As the Company maintains controlling financial interest
of this property, the assets, liabilities and results of operations of the property are
consolidated within its financial statements. The third partys partnership interest is reflected
in the financial statements as a minority interest in the consolidated partnership. Under the
partnership agreement, the Company will receive a 9% preferred return on its equity investment and
65% of any remaining available cash. The 10% third-party equity partner will receive the remaining
35% of available cash after payment of the 9% return on the Companys equity investment. The
Companys equity investment was funded through borrowings under its unsecured line of credit. During September 2004, the Company made a $9.0 million investment, consisting of a $2.0
million equity investment and $7.0 million in debt, in the acquisition of a majority interest in
Colonnade Properties LLC, a New York based real estate investment company that focuses on the
acquisition, management, redevelopment and stabilization of office assets. At the date of the
acquisition, Colonnade Properties LLC had contracts to manage approximately 11 million square feet
of office space. In addition to the management contracts, Colonnade Properties LLC also holds a
25% interest in the Douglas HCI, a five building complex located in Coral Gables, Florida. The
Companys investment was funded through borrowings under its unsecured line of credit. 69




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Investments in Unconsolidated Partially Owned Entities Investments in unconsolidated partially owned entities at December 31, 2004 and 2003 consisted
of the following: Percent
    
    
    (in thousands)Owned
    
    
    2004
    
    
    2003Multifamily:CMS / Colonial Joint Venture I
    
    
    15.00
    %
    
    
    1,435
    
    
    $
    1,923CMS / Colonial Joint Venture II
    
    
    15.00
    %
    
    
    670
    
    
    
    689CMS Florida
    
    
    25.00
    %
    
    
    2,925
    
    
    
    CMS Tennessee
    
    
    25.00
    %
    
    
    2,727
    
    
    
    DRA Alabama
    
    
    10.00
    %
    
    
    2,500
    
    
    
    2,284DRA Cunningham, Austin, TX
    
    
    20.00
    %
    
    
    1,266
    
    
    
    DRA Southwest Partnership
    
    
    20.00
    %
    
    
    19,022
    
    
    
    30,545
    
    
    
    4,896Office:600 Building Partnership, Birmingham, AL
    
    
    33.33
    %
    
    
    (16
    )
    
    
    (8
    )Douglas HCI, Coral Gables, FL
    
    
    25.00
    %
    
    
    6,457
    
    
    
    6,441
    
    
    
    (8
    )Retail:Colonial Promenade Madison, Huntsville, AL
    
    
    25.00
    %
    
    
    2,298
    
    
    
    2,341Highway 150, LLC, Birmingham, AL
    
    
    10.00
    %
    
    
    94
    
    
    
    56Orlando Fashion Square Joint Venture, Orlando, FL
    
    
    50.00
    %
    
    
    6
    
    
    
    19,698Parkway Place Limited Partnership, Huntsville, AL
    
    
    45.00
    %
    
    
    12,554
    
    
    
    10,493Turkey Creek, Parkside Drive LLC Partnership, Knoxville, TN
    
    
    50.00
    %
    
    
    13,502
    
    
    
    28,454
    
    
    
    32,588Other:Colonial / Polar-BEK Management Company,
    
    
    50.00
    %
    
    
    32
    
    
    
    36Birmingham, ALNRH Enterprises, LLC, Birmingham, AL
    
    
    20.00
    %
    
    
    
    
    
    
    (16
    )32
    
    
    
    20$
    65,472
    
    
    $
    37,496
 During May 2004, the Company disposed of its 15% interest in Colonial Grand at Ponte
Vedra, a 240-unit multifamily asset located in Jacksonville, Florida, which was one of the
multifamily apartment communities in the CMS / Colonial Joint Venture I. The Companys interest
was sold for $2.4 million, which was used to repay the Companys allocated portion of outstanding
mortgage debt of $1.3 million and the remaining proceeds were used to repay a portion of the
borrowings under the Companys unsecured line of credit. During June 2004, the Company entered into a partnership agreement with Dreyfuss Real Estate
Advisors (DRA), in which it maintains a 20% interest and management of The Cunningham Apartments, a
280-unit multifamily asset located in Austin, Texas. The Companys total investment in The
Cunningham Apartments was $3.9 million, which consisted of $2.8 million of newly issued mortgage
debt and $1.1 million of cash, which was funded through borrowings under the Companys unsecured
line of credit. During June 2004, the Company acquired a 25% partnership interest in CMS Florida, including
Colonial Grand at Bayshore, a 376-unit multifamily asset, and Colonial Grand at Palma Sola, a
340-unit multifamily asset, both located in Bradenton, Florida. The Company acquired the
partnership interest from CMS Entrepreneurial III and IV Partners, a Delaware general partnership.
The Companys 25% investment in the partnership was $11.9 million, which consisted of $3.0 million
of equity investment and $8.9 million of mortgage debt, representing our allocated portion of
mortgage debt for the property. The equity investment was funded through available cash. During August 2004, the Company acquired a 25% partnership interest in CMS Tennessee and the
management of 618 multifamily units in two communities in Nashville, Tennessee. Colonial Grand at
Brentwood, which is located in the Brentwood submarket, consists of 254 units. The 364-unit
Colonial Village at Hendersonville is located in the Hendersonville submarket. The assets were
acquired for a total purchase price of $10.3 million, which consisted of approximately $2.8 million 70




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of cash and the assumption of approximately $7.4 million of existing mortgage debt. The cash
portion of the acquisition was funded through borrowings under the Companys unsecured line of
credit. During the fourth quarter of 2004, the Company withdrew from its joint operations agreement
with NRH Enterprises, LLC, as described in Note 16. During October 2004, the Company entered into a partnership agreement with DRA, in which the
Company acquired a 20% interest and management of 16 multifamily properties located in Arizona, New
Mexico and Nevada containing a combined 4,223 units. The Companys total investment in the DRA
Southwest Partnership was $64.5 million, which consisted of $45.4 million of newly issued mortgage
debt and $19.1 million of cash, which was funded through borrowings under the Companys unsecured
line of credit. During December 2004, the Company sold its 50% interest in Orlando Fashion Square, a 1.1
million square foot retail asset located in Orlando, Florida. The total sales price was $123.2
million, $61.6 million of which is the Companys 50% interest and portion of the proceeds. The
proceeds were used to repay a secured loan of $31.4 million and Colonials portion of the remaining
proceeds was used to support its investment activities. During December 2003, the Company and DRA entered into a partnership agreement, in which the
Company maintains a 10% interest and manages three multifamily assets located in Birmingham,
Alabama. The three assets include Colony Woods, The Meadows of Brook Highland and Madison at Shoal
Run, which contain a total of 1,090 units. The Company purchased their 10% interest for a purchase
price of $2.3 million, which was funded through borrowings under the Companys unsecured line of
credit. During December 2002, the Company sold 90% of its interest in Colonial Promenade Hoover for a
total sales price of $20.5 million, and formed Highway 150, LLC, in which the Company maintains 10%
ownership and manages the property under contract with Highway 150 LLC. Additionally during
December 2002, the Company sold 25% of its interest in the Colonial Promenade Madison Joint Venture
for $3.2 million. Prior to the sale of this interest, the Company held a 50% interest in the joint
venture. Therefore, the Company now maintains 25% ownership of the property and continues to
manage the property. The proceeds from both of the joint venture transactions were used to repay a
portion of the amount outstanding under the Companys unsecured line of credit. Combined financial information for the Companys investments in unconsolidated partially owned
entities for 2004 and 2003 follows: December 31,(in
thousands)
    
    2004
    
    
    2003Balance SheetAssetsLand, building, & equipment, net
    
    $
    723,370
    
    
    $
    345,003Construction in progress
    
    
    17,728
    
    
    
    81Other assets
    
    
    78,722
    
    
    
    12,839Total assets
    
    $
    819,820
    
    
    $
    357,923Liabilities and Partners EquityNotes payable(1)
    
    $
    613,062
    
    
    $
    251,396Other liabilities
    
    
    24,766
    
    
    
    3,875Partners Equity
    
    
    181,992
    
    
    
    102,652Total liabilities and partners capital
    
    $
    819,820
    
    
    $
    357,923
 Statement of Operations(for
the year ended)
    
    2004
    
    
    2003
    
    
    2002Revenues
    
    $
    72,187
    
    
    $
    51,571
    
    
    $
    42,943Operating expenses
    
    
    (30,055
    )
    
    
    (21,742
    )
    
    
    (17,960
    )Interest expense
    
    
    (20,323
    )
    
    
    (15,938
    )
    
    
    (13,011
    )Depreciation, amortization and other
    
    
    (3,319
    )
    
    
    (12,472
    )
    
    
    (7,689
    )Net income
    
    $
    18,490
    
    
    $
    1,419
    
    
    $
    4,283
   (1)
    
    The Companys portion of indebtedness, as calculated based on ownership percentage,
at December 31, 2004 and 2003 is $111.6 million and $78.6 million, respectively. 71




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7. Segment Information The Company is organized into, and manages its business based on the performance of three
separate and distinct operating divisions: multifamily, office, and retail. Each division has a
separate management team that is responsible for acquiring, developing, managing, and leasing
properties within such division. The applicable accounting policies of the segments are the same as
those described in the Summary of Significant Accounting Policies. The pro rata portion of the
revenues, net operating income (NOI), and assets of the partially-owned entities and joint
ventures that the Company has entered into are included in the applicable segment information.
Additionally, the revenues and NOI of properties sold that are classified as discontinued
operations are also included in the applicable segment information. In reconciling the segment
information presented below to total revenues, income from continuing operations, and total assets,
investments in partially-owned entities and joint ventures are eliminated as equity investments and
their related activity are reflected in the consolidated financial statements as investments
accounted for under the equity method and discontinued operations are reported separately.
Management evaluates the performance of its segments and allocates resources to them based on
divisional NOI. Divisional NOI is defined as total property revenues, including unconsolidated
partnerships and joint ventures, less total property operating expenses (such items as repairs and
maintenance, payroll, utilities, property taxes, insurance, advertising). Property operating
expenses for fully owned retail properties do not include
approximately $650,000 of annual landlord
contributions to marketing funds. Divisional information and the reconciliation of total
divisional revenues to total revenues, total divisional NOI to income from continuing operations
and minority interest, and total divisional assets to total assets, for the years ended December
31, 2004, 2003, and 2002, is presented below: For the Year Ended(in
thousands)

    
    2004
    
    
    2003
    
    
    2002Revenues:Divisional RevenuesMultifamily
    
    $
    123,413
    
    
    $
    98,949
    
    
    $
    104,160Office
    
    
    98,690
    
    
    
    93,508
    
    
    
    77,111Retail
    
    
    169,217
    
    
    
    156,805
    
    
    
    156,355Total Divisional Revenues:
    
    
    391,320
    
    
    
    349,262
    
    
    
    337,626Partially-owned subsidiaries
    
    
    (18,299
    )
    
    
    (16,242
    )
    
    
    (13,743
    )Unallocated corporate revenues
    
    
    8,374
    
    
    
    4,578
    
    
    
    7,245Discontinued operations revenues
    
    
    (43,985
    )
    
    
    (47,594
    )
    
    
    (50,532
    )Total Consolidated Revenues:
    
    $
    337,410
    
    
    $
    290,004
    
    
    $
    280,596NOI:Divisional NOIMultifamily
    
    $
    75,297
    
    
    $
    61,890
    
    
    $
    68,145Office
    
    
    69,956
    
    
    
    65,826
    
    
    
    54,930Retail
    
    
    118,457
    
    
    
    109,164
    
    
    
    109,322Total Divisional NOI:
    
    
    263,710
    
    
    
    236,880
    
    
    
    232,397Partially-owned subsidiaries
    
    
    (10,626
    )
    
    
    (9,356
    )
    
    
    (7,956
    )Unallocated corporate revenues
    
    
    8,374
    
    
    
    4,578
    
    
    
    7,245Discontinued operations NOI
    
    
    (28,989
    )
    
    
    (31,906
    )
    
    
    (33,828
    )General and administrative expenses
    
    
    (27,208
    )
    
    
    (19,481
    )
    
    
    (15,496
    )Depreciation
    
    
    (84,475
    )
    
    
    (72,093
    )
    
    
    (64,396
    )Amortization
    
    
    (13,411
    )
    
    
    (7,762
    )
    
    
    (8,951
    )Other
    
    
    (88
    )
    
    
    (56
    )
    
    
    (63
    )Income from operations
    
    
    107,287
    
    
    
    100,804
    
    
    
    108,952Total other expense
    
    
    (73,639
    )
    
    
    (59,261
    )
    
    
    (27,905
    )Income before extraordinary items, minority
interest and discontinued operations
    
    $
    33,648
    
    
    $
    41,543
    
    
    $
    81,047(in
thousands)Assets:Divisional AssetsMultifamily
    
    $
    974,731
    
    
    $
    677,469
    
    
    $
    645,840Office
    
    
    635,278
    
    
    
    607,154
    
    
    
    594,795Retail
    
    
    1,142,766
    
    
    
    931,894
    
    
    
    906,555Total Divisional Assets:
    
    
    2,752,775
    
    
    
    2,216,517
    
    
    
    2,147,190Partially-owned subsidiaries
    
    
    (73,166
    )
    
    
    (117,271
    )
    
    
    (116,375
    )Unallocated corporate assets (1)
    
    
    121,734
    
    
    
    95,681
    
    
    
    99,041$
    2,801,343
    
    
    $
    2,194,927
    
    
    $
    2,129,856
   (1)
    
    Includes the Companys investment in joint ventures of $65,472, $37,496 and $36,265 as of
December 31, 2004, 2003, and 2002, respectively (see Note 6). 72




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8. Notes and Mortgages Payable Notes and mortgages payable at December 31, 2004 and 2003 consist of the following: (in thousands)2004
    
    
    2003Revolving credit agreement
    
    $
    239,970
    
    
    $
    205,935Bridge credit facility
    
    
    119,000
    
    
    
    Mortgages and other notes:2.00% to 6.00%
    
    
    329,835
    
    
    
    136,6706.01% to 7.50%
    
    
    957,520
    
    
    
    679,0887.51% to 9.00%
    
    
    209,462
    
    
    
    246,172$
    1,855,787
    
    
    $
    1,267,865
 As of December 31, 2004, the Company has an unsecured bank line of credit providing for total
borrowings of up to $320 million. This line of credit agreement bears interest at LIBOR plus a
spread calculated based on the Companys unsecured debt ratings from time to time. Based on the
Companys debt ratings at December 31, 2004, the spread was 105 basis points. The line of credit
is renewable in November 2005 and provides for a one-year extension. The line of credit agreement
includes a competitive bid feature that will allow the Company to convert up to $160 million under
the line of credit to a fixed rate, for a fixed term not to exceed 90 days. The credit facility is
primarily used by the Company to finance property acquisitions and developments and has an
outstanding balance at December 31, 2004, of $240.0 million. The interest rate of this short-term
borrowing facility, including the competitive bid balance, is 3.14% and 2.16% at December 31, 2004
and 2003, respectively. As of December 31, 2004, the Company has a $200.0 million bridge credit facility with certain
participants of the current $320.0 million unsecured bank line of credit. Base rate loans and
euro-dollar loans are available under the Bridge Facility. Generally, base rate loans bear
interest at Wachovias designated base rate, plus a base rate margin ranging from
0.00% to 1.00% based on our unsecured debt ratings from time to time. Euro-dollar loans bear
interest at LIBOR plus a margin ranging from 0.70% to 1.35% based on our unsecured debt ratings
from time to time. The bridge facility had an outstanding balance of $119.0 million at December
31, 2004, with an average interest rate of 3.45%. This facility matures in November of 2005. During 2004 and 2003, the Company, through CRLP, completed three public offerings of senior
notes collectively totaling $525.0 million. The proceeds of the offerings were used to fund
acquisitions, development expenditures, repay balances outstanding on the Companys revolving
credit facility, repay certain notes and mortgages payable, and for general corporate purposes.
Details relating to these debt offerings are as follows: GrossType of
    
    
    
    
    
    
    
    
    
    
    ProceedsIssue Date
    
    Note
    
    
    Maturity
    
    
    Rate
    
    
    (in thousands)April 2004
    
    Senior
    
    April 2011
    
    
    4.80
    %
    
    $
    100,000June 2004
    
    Senior
    
    June 2014
    
    
    6.25
    %
    
    
    300,000April 2003
    
    Senior
    
    April 2013
    
    
    6.15
    %
    
    
    125,000$
    525,000
 At December 31, 2004, the Company had $1.4 billion in unsecured indebtedness including
balances outstanding on its bank line of credit and certain other notes payable. The remainder of
the Companys notes and mortgages payable are collateralized by the assignment of rents and leases
of certain properties and assets with an aggregate net book value of $622.8 million at December 31,
2004. The aggregate maturities of notes and mortgages payable, including the Companys line of
credit and bridge credit facility at December 31, 2004, are as follows: (in thousands)2005
    
    $
    440,4562006
    
    
    111,8972007
    
    
    182,0912008
    
    
    54,3132009
    
    
    41,144Thereafter
    
    
    1,025,886$
    1,855,787
 73




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Based on borrowing rates available to the Company for notes and mortgages payable with similar
terms, the estimated fair value of the Companys notes and mortgages payable at December 31, 2004
and 2003 was approximately $1.88 billion and $1.31 billion, respectively. Certain loan agreements of the Company contain restrictive covenants, which, among other
things, require maintenance of various financial ratios. At December 31, 2004, the Company was in
compliance with those covenants. 9. Derivative Instruments Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities(SFAS 133), as amended and interpreted, establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. As required by SFAS 133, the Company records all
derivatives on the balance sheet at fair value. The accounting for changes in the fair value of
derivatives depends on the intended use of the derivative and the resulting designation.
Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm
commitment attributable to a particular risk, such as interest rate risk, are considered fair value
hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or
other types of forecasted transactions, are considered cash flow hedges. For derivatives designated as fair value hedges, changes in the fair value of the derivative
and the hedged item related to the hedged risk are recognized in earnings. For derivatives
designated as cash flow hedges, the effective portion of changes in the fair value of the
derivative is initially reported in other comprehensive income (outside of earnings) and
subsequently reclassified to earnings when the hedged transaction affects earnings, and the
ineffective portion of changes in the fair value of the derivative is recognized directly in
earnings. The Company assesses the effectiveness of each hedging relationship by comparing the
changes in fair value or cash flows of the derivative hedging instrument with the changes in fair
value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges,
changes in fair value are recognized in earnings. The Companys objective in using derivatives is to add stability to interest expense and to
manage its exposure to interest rate movements or other identified risks. To accomplish this
objective, the Company primarily uses interest rate swaps, caps and treasury locks as part of its
cash flow hedging strategy. Interest rate swaps designated as cash flow hedges involve the receipt
of variable-rate amounts in exchange for fixed-rate payments over the life of the agreements
without exchange of the underlying principal amount. During 2004, such derivatives were used to
hedge the variable cash flows associated with existing variable-rate debt, existing lines of
credit, and forecasted issuances of debt. Two of the Companys outstanding interest rate swaps
hedge the interest rate risk associated with forecasted debt issuances that are expected to occur
in 2005. Accordingly, the maximum period of time over which the Company is hedging its exposure to
variability in future cash flows for forecasted transactions, other than those related to the
payment of variable interest on existing debt, is approximately eight months. The Company
primarily uses interest rate swaps as part of its fair value hedging strategy. These swaps involve
the receipt of fixed rate amounts in exchange for variable rate amounts over the life of the
agreements without exchange of the underlying principal amount. During 2004, such swaps were used
to hedge the change in fair value of fixed rate debt. We have entered into several different hedging transactions in an effort to manage our
exposure to changes in interest rates. The following table summarizes the notional values, fair
values and other characteristics of our derivative financial instruments at December 31, 2004. The
notional value at December 31, 2004 provides an indication of the extent of our involvement in
these instruments at that time, but does not represent exposure to credit, interest rate, or market
risk. Fair ValueAt December 31, 2004Interest
    
    
    
    
    
    
    Asset (Liability)Product Type
    
    Notional Value
    
    
    Rate
    
    
    Maturity
    
    
    (in thousands)Interest Rate SWAP, Cash Flow
    
    $30.2-$27.7 million
    
    
    5.932
    %
    
    
    1/1/06
    
    
    $
    (809
    )Interest Rate SWAP, Cash Flow
    
    $17.0 million
    
    
    7.380
    %
    
    
    5/5/06
    
    
    
    (610
    )Interest Rate SWAP, Fair Value
    
    $100.0 million
    
    
    4.803
    %
    
    
    4/1/11
    
    
    
    3,269Interest Rate SWAP, Cash Flow
    
    $72.9 million
    
    
    3.928
    %
    
    
    1/15/10
    
    
    
    284Interest Rate SWAP, Cash Flow
    
    $170.0 million
    
    
    4.250
    %
    
    
    8/15/10
    
    
    
    136Interest Rate CAP, Cash Flow
    
    $25.9 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    4Interest Rate CAP, Cash Flow
    
    $16.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    3Interest Rate CAP, Cash Flow
    
    $8.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    1Interest Rate CAP, Cash Flow
    
    $19.7 million
    
    
    6.850
    %
    
    
    6/29/07
    
    
    
    6Interest Rate CAP, Cash Flow
    
    $16.7 million
    
    
    6.850
    %
    
    
    7/3/07
    
    
    
    5
 74




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As of December 31, 2004, no derivatives were designated as hedges of net investments in
foreign operations. Additionally, the Company does not use derivatives for trading or speculative
purposes. Derivatives not designated as hedges are not speculative and are used to manage the
Companys exposure to interest rate movements and other identified risks, but do not meet the
strict hedge accounting requirements of SFAS No. 133. The only swap that the Company has that is
not designated as a hedge for SFAS No. 133 was acquired through the purchase of a property and its
corresponding debt. At December 31, 2004 and 2003, derivatives with a fair value of $3.7 million and $6,195,
respectively, were included in other assets and derivatives with a fair value of $1.4 million and
$2.1 million, respectively, were included in other liabilities. The change in net unrealized
gains/losses of $0.2 million in 2004, $1.9 million in 2003 and $3.6 million in 2002 for derivatives
designated as cash flow hedges is separately disclosed in the statement of changes in shareholders
equity and comprehensive income. The change in fair value of derivatives not designated as hedges
of $0.4 million is included in other losses in 2004. There were not any derivatives not designated
as hedges in 2003 and 2002. No hedge ineffectiveness on fair value hedges was recognized during
2004, 2003 and 2002. Hedge ineffectiveness of $3,661, $0.4 million and $23,000 on cash flow hedges
due to index mismatches was recognized in other income during 2004, 2003 and 2002, respectively. Amounts reported in accumulated other comprehensive income related to derivatives will be
reclassified to interest expense as interest payments are made on the Companys hedged debt. The
change in net unrealized gains/losses on cash flow hedges reflects a reclassification of $1.4
million, $1.9 million and $2.2 million of net unrealized gains/losses from accumulated other
comprehensive loss to interest expense during 2004, 2003 and 2002, respectively. During the next 12
months, the Company estimates that an additional $2.1 million will be reclassified to interest
expense. 10. Capital Structure Company ownership is maintained through common shares of beneficial interest (common shares),
preferred shares of beneficial interest (preferred shares) and minority interest in CRLP (units).
Common shareholders represent public equity owners and common unitholders represent minority
interest owners. Each unit may be redeemed for either one common share or, at the option of the
Company, cash equal to the fair market value of a common share at the time of redemption. When a
common unitholder redeems a unit for a common share or cash, minority interest is reduced. In
addition, the Company has acquired properties since its formation by issuing distribution paying
and non-distribution paying units. The non-distribution paying units convert to distribution
paying units at various dates subsequent to their original issuance. At December 31, 2004 and 2003,
10,372,650 and 10,361,034 units were outstanding, respectively, all of which were distribution
paying units. In February 1999, through CRLP, the Company issued 2.0 million units of $50 par value 8.875%
Series B Cumulative Redeemable Perpetual Preferred Units (Preferred Units), valued at $100 million
in a private placement, net of offering costs of $2.6 million. On February 18, 2004, CRLP modified
the terms of the $100.0 million 8.875% Preferred Units. Under the modified terms, the Preferred
Units bear a distribution rate of 7.25% and are redeemable at the option of CRLP, in whole or in
part, after February 24, 2009, at the cost of the original capital contribution plus the cumulative
priority return, whether or not declared. The terms of the Preferred
Units were further modified on March 14, 2005 to extend the
redemption date from February 24, 2009 to August 24, 2009. The Preferred Units are exchangeable for 7.25% Series B
Preferred Shares of the Company, in whole or in part at anytime on or after January 1, 2014, at the
option of the holders. In 1998, the Companys Board of Trustees approved a Shareholder Rights Plan (the Rights
Plan). Under this plan, the Board declared a dividend of one Right for each common share
outstanding on the record date. The Rights become exercisable only if an individual or group
acquires a 15% or more beneficial ownership in the Company. Ten days after a public announcement
that an individual or group has become the beneficial owner of 15% or more of the common shares,
each holder of a Right, other than the acquiring individual or group, would be entitled to purchase
one common share for each Right outstanding at one-half of the Companys current market price.
Also, if the Company is acquired in a merger, or if 50% or more of the Companys assets are sold in
one or more related transactions, each Right would entitle the holder thereof to purchase common
stock of the acquiring company at one-half of the then-current market price of the acquiring
companys common stock. 11. Equity Offerings On April 30, 2003, the Company issued $125.0 million or 5,000,000 depositary shares, each
representing 1/10 of a share of 8.125% Series D Cumulative Redeemable Preferred Shares of
Beneficial Interest. The depositary shares may be called by the Company on or after April 30, 2008
and have a liquidation preference of $25.00 per depositary share. The depositary shares have no
stated maturity, sinking fund or mandatory redemption and are not convertible into any other
securities of the Company. The net proceeds of the offering were approximately $120.7 million and
were used to redeem the Companys $125.0 million 8.75% Series A Cumulative Redeemable Preferred
Shares of Beneficial Interest (Series A 75




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##### Table of Contents



preferred shares) on May 7, 2003. Upon redemption of the
Series A preferred shares, the Company deducted the original issuance costs of Series A preferred
shares of $4.5 million from net income available to common shareholders, in accordance with the
SECs clarification of EITF Abstracts, Topic No. D-42 The Effect on the Calculation of Earnings
per Share for the Redemption or Induced Conversion of Preferred
Stock. On June 2, 2003, the Company issued $75.2 million or 2,110,000 of its common shares at $35.65
per share in a public offering. The net proceeds from the offering to the Company, after deducting
offering expenses, were $72.5 million. The Company used the net proceeds to repay a portion of the
outstanding balance on its unsecured line of credit. On February 28, 2002, the Company entered into a transaction in which 560,380 shares of the
Companys common shares were issued at $33.37 per share, resulting in net proceeds of $17.6 million
to the Company, which were used to repay outstanding balances under the Companys unsecured line of
credit. Related to this offering, Salomon Smith Barney deposited 260,710 shares into The Equity
Focus Trust REIT Portfolio Series, 2002-A, a newly formed unit investment trust, and 299,670 shares
were deposited into Cohen & Steers Quality Income Realty Fund, Inc. 12. Share Option and Restricted Share Plans The Company has in place an Employee Share Option and Restricted Share Plan (the Employee
Plan) designed to attract, retain, and motivate executive officers of the Company and other key
employees. The Employee Plan, as amended in April 1998, authorizes the issuance of up to
3,200,000 common shares (as increased from time to time to equal 10% of the number of common shares
and Operating Partnership units outstanding) pursuant to options or restricted shares granted or
issued under this plan, provided that no more than 750,000 restricted shares may be issued.
In connection with the grant of options under the Employee Plan, the Executive Compensation
Committee of the Board of Trustees determines the option exercise period and any vesting
requirements. The Company issued 28,432, 40,284, and 62,595 restricted shares under the Employee
Plan during 2004, 2003, and 2002, respectively. The value of outstanding restricted shares is
being charged to compensation expense based upon the earlier of satisfying the vesting period (2-8
years) or satisfying certain performance targets. Also, the Company had a Trustee Share Option Plan (the Trustee Plan). The Trustee Plan, as
amended in April 1997, authorized the issuance of up to 500,000 options to purchase common shares
of beneficial interest. The Trustee Plan expired on September 28, 2003, and is succeeded by the
Employee Plan. In April 1997, the Company also adopted a Non-Employee Trustee Share Plan (the
Share Plan). The Share Plan permits non-employee trustees of the Company to elect to receive
common shares in lieu of all or a portion of their annual trustee fees, board fees and committee
fees. The Share Plan authorizes the issuance of 50,000 common shares under the Plan. The Company
issued 5,692 and 5,862 common shares pursuant to the Share Plan during 2004 and 2003, respectively. In October 1997, the Company adopted an Employee Share Purchase Plan (the Purchase Plan).
The Purchase Plan permits eligible employees of the Company, through payroll deductions, to
purchase common shares at a 5% discount to the market price. The Purchase Plan has no limit on the
number of common shares that may be issued under the plan. The Company issued 938 and 1,713 common
shares pursuant to the Purchase Plan during 2004 and 2003, respectively. In January 2004, the
Purchase Plan was amended to eliminate the 5% discount available under the plan. For all employee stock options granted on or after January 1, 2003, in accordance with SFAS
No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure  an amendment of SFAS
No. 123, the Company has elected to adopt the accounting provisions of SFAS No. 123 under the
prospective method. The prospective method allows the Company to apply the recognition provisions
of SFAS No. 123 to all employee awards granted, modified, or settled after the beginning of the
fiscal year in which the recognition provisions are first applied. During 2004 and 2003, the
Company recognized compensation expense of $0.2 and $0.2 million, respectively, related to the
stock options granted during 2004 and 2003. The following assumptions were used to derive the fair
values: a 10-year option term; an annualized volatility rate of 21.29% and 16.36% for 2004 and
2003, respectively; a risk-free rate of return of 4.25% and 4.01% for 2004 and 2003, respectively;
and a dividend yield of 6.86% and 7.55% for 2004 and 2003, respectively. Prior to January 1, 2003, the Company applied Accounting Principles Board Opinion No. 25 (APB
No. 25) and related Interpretations in accounting for its plans. In accordance with APB 25, no
compensation expense has been recognized for its stock option plans during the periods prior to
January 1, 2003. Had compensation expense for the Companys stock option plans been determined
based on the fair value at the grant dates for awards under those plans consistent with the methods
prescribed in SFAS No. 123, Accounting for Stock-Based Compensation, the Companys net income and
earnings per share would have been reduced to the pro forma amounts indicated below: 76




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(in thousands, except per share data)For the Year Ending December 31,2004
    
    
    2003
    
    
    2002Net income available to common shareholders:As reported
    
    $
    39,837
    
    
    $
    32,530
    
    
    $
    57,812Pro forma
    
    $
    39,482
    
    
    $
    32,104
    
    
    $
    57,352Net income per share  basic:As reported
    
    $
    1.47
    
    
    $
    1.30
    
    
    $
    2.61Pro forma
    
    $
    1.46
    
    
    $
    1.29
    
    
    $
    2.59Net income per share  diluted:As reported
    
    $
    1.45
    
    
    $
    1.29
    
    
    $
    2.58Pro forma
    
    $
    1.44
    
    
    $
    1.27
    
    
    $
    2.56
 The Company uses the Black-Scholes pricing model to calculate the fair values of the
options awarded, which are included in the pro forma results above. The following assumptions
were used to derive the fair values for option grants during 2002: a 10-year option term, an
annualized volatility rate of 19.59%, a risk-free rate of return of 4.33%, and a dividend yield
of 7.63%. Option activity under the Employee Plan, the Share Plan, and the Trustee Plan, combined is
presented in the table below: Options OutstandingShares Available
    
    
    
    
    
    
    Weighted-averagefor future
    
    
    
    
    
    
    Price perOption Grant
    
    
    Shares
    
    
    ShareBalance, December 31, 2001
    
    
    2,390,088
    
    
    
    1,218,964
    
    
    $
    26.60Options granted
    
    
    (585,620
    )
    
    
    585,620
    
    
    $
    32.62Options terminated
    
    
    32,076
    
    
    
    (32,076
    )
    
    $
    29.12Options exercised
    
    
    
    
    
    
    (231,238
    )
    
    $
    26.28Balance, December 31, 2002
    
    
    1,836,544
    
    
    
    1,541,270
    
    
    $
    28.88Options granted
    
    
    (514,592
    )
    
    
    514,592
    
    
    $
    33.46Options terminated
    
    
    80,043
    
    
    
    (80,043
    )
    
    $
    29.65Options exercised
    
    
    
    
    
    
    (83,861
    )
    
    $
    27.84Balance, December 31, 2003
    
    
    1,401,995
    
    
    
    1,891,958
    
    
    $
    27.86Options granted
    
    
    (99,960
    )
    
    
    99,960
    
    
    $
    36.24Options terminated
    
    
    72,770
    
    
    
    (72,770
    )
    
    $
    32.09Options exercised
    
    
    
    
    
    
    (344,377
    )
    
    $
    29.38Balance, December 31, 2004
    
    
    1,374,805
    
    
    
    1,574,771
    
    
    $
    30.66
 All options granted to date have a term of ten years and may be exercised in equal
installments, based on a 3-5 year vesting schedule, of the total number of options issued to any
individual on each of the applicable 3-5 year anniversary dates of the grant of the option. The
balance of options that are exercisable total 693,921, 622,229, and 396,052 at
December 31, 2004, 2003, and 2002, respectively. 13. Employee Benefits Noncontributory Defined Benefit Pension Plan Employees of the Company hired prior to January 1, 2002 participate in a noncontributory
defined benefit pension plan designed to cover substantially all employees. Pension expense
includes service and interest costs adjusted by actual earnings on plan assets and amortization
of prior service cost and the transition amount. The benefits provided by this plan are based
on years of service and the employees final average compensation. The Companys policy is to
fund the 77




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##### Table of Contents



minimum required contribution under ERISA and the Internal Revenue Code. The Company
uses a December 31 measurement date for its plan. The table below presents a summary of pension plan status as of December 31, 2004 and 2003,
as it relates to the employees of the Company. Obligations and Funded Status at December 31
    
    2004
    
    
    2003Change in benefit obligationBenefit obligation at beginning of year
    
    $
    9,280,600
    
    
    $
    7,605,199Service cost
    
    
    887,521
    
    
    
    809,598Interest cost
    
    
    590,066
    
    
    
    492,128Plan amendments
    
    
    
    
    
    
    Benefits paid
    
    
    (77,776
    )
    
    
    (67,991
    )Actuarial (gain) loss
    
    
    756,114
    
    
    
    441,666Benefit obligation at end of year
    
    $
    11,436,525
    
    
    $
    9,280,600Change in plan assetsFair value of plan assets at beginning of year
    
    $
    5,053,759
    
    
    $
    3,970,489Actual return on plan assets
    
    
    567,982
    
    
    
    199,304Employer contributions
    
    
    1,981,110
    
    
    
    951,957Benefits paid
    
    
    (77,776
    )
    
    
    (67,991
    )Fair value of plan assets at end of year
    
    $
    7,525,075
    
    
    $
    5,053,759Fair value of plan assets
    
    $
    7,525,075
    
    
    $
    5,053,759Benefit obligation
    
    
    11,436,525
    
    
    
    9,280,600Funded status
    
    
    (3,911,450
    )
    
    
    (4,226,841
    )Unrecognized net (gain) loss
    
    
    2,028,776
    
    
    
    1,726,711Unrecognized prior service cost
    
    
    50,175
    
    
    
    58,172Net amount recognized
    
    $
    (1,832,499
    )
    
    $
    (2,441,958
    )
 Amounts recognized in the consolidated balance sheets consist of: 2004
    
    
    2003Prepaid benefit cost
    
    $
    
    
    
    $
    Accrued benefit cost
    
    
    (1,832,499
    )
    
    
    (2,441,958
    )Accumulated other comprehensive income
    
    
    
    
    
    
    -Net amount recognized
    
    $
    (1,832,499
    )
    
    $
    (2,441,958
    )
 Components of Net Periodic Benefit Cost
    
    2004
    
    
    2003Service cost
    
    $
    887,521
    
    
    $
    809,598Interest cost
    
    
    590,066
    
    
    
    492,128Expected return on plan assets
    
    
    (475,074
    )
    
    
    (337,132
    )Amortization of prior service cost
    
    
    7,997
    
    
    
    7,997Amortization of net (gain) loss
    
    
    62,717
    
    
    
    36,140Net periodic benefit cost
    
    $
    1,073,227
    
    
    $
    1,008,731Additional InformationAccumulated benefit obligation
    
    $
    8,748,637
    
    
    $
    6,924,791
 78




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##### Table of Contents



Assumptions:
    
    2004
    
    
    2003Weighted-average assumptions used to determine
benefit obligations at December 31Discount rate
    
    
    6.00
    %
    
    
    6.25
    %Rate of compensation increase
    
    
    3.00
    %
    
    
    4.00
    %Weighted-average assumptions used to determine
net cost for years ended December 31Discount rate
    
    
    6.25
    %
    
    
    6.50
    %Expected long-term rate of return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %Rate of compensation increase
    
    
    3.00
    %
    
    
    4.00
    %
 The Companys pension plan weighted-average asset allocations at December 31, 2004 and 2003,
by asset category are as follows: Percentage of Plan Assets atDecember 31Asset Category
    
    2004
    
    
    2003Equity Securities
    
    
    51
    %
    
    
    61
    %Debt Securities
    
    
    47
    %
    
    
    39
    %Real estate
    
    
    0
    %
    
    
    0
    %Other
    
    
    2
    %
    
    
    0
    %Total
    
    
    100
    %
    
    
    100
    %
 The Companys investment policy targets to achieve a long-term return on plan assets of at
least 8.0%. In order to achieve these targets, the Company primarily utilizes a diversified
grouping of growth and value funds with moderate risk exposure. The Company reviews the pension
plans investment policy on a periodic basis and may adjust the investment strategy, as needed, in
order to achieve the long-term objectives of the plan. The following table presents the cash flow activity of the pension plan during the years
ending December 31, 2004 and 2003: Contributions
    
    Employer
    
    
    Employee2003
    
    $
    951,957
    
    
    $
    2004
    
    $
    1,981,110
    
    
    $
    Benefit payments2003
    
    $
    67,9912004
    
    $
    77,776
 401k Plan The Company maintains a 401k plan covering substantially all employees. This plan provides,
with certain restrictions, that employees may contribute a portion of their earnings with the
Company matching one-half of such contributions, solely at the Companys discretion. Contributions
by the Company were approximately $465,786, $469,800, and $415,000 for the years ended December 31,
2004, 2003 and 2002, respectively. 14. Leasing Operations The Company is in the business of leasing and managing multifamily, office, and retail
property. For properties owned by the Company, minimum rentals due in future periods under
noncancelable operating leases extending beyond one year at December 31, 2004, are as follows: 79




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##### Table of Contents



(in thousands)2005
    
    $
    213,0562006
    
    
    191,5742007
    
    
    161,9462008
    
    
    135,4402009
    
    
    115,077Thereafter
    
    
    369,533$
    1,186,626
 The noncancelable leases are with tenants engaged in retail and office operations in Alabama,
Georgia, Florida, North Carolina, South Carolina, Tennessee, Texas, and Virginia. Performance in
accordance with the lease terms is in part dependent upon the economic conditions of the respective
areas. No additional credit risk exposure relating to the leasing arrangements exists beyond the
accounts receivable amounts shown in the December 31, 2004 balance sheet. Leases with tenants in
multifamily properties are generally for one year or less and are thus excluded from the above
table. Substantially all of the Companys land, buildings, and equipment represent property leased
under the above and other short-term leasing arrangements. Rental income from continuing operations for 2004, 2003, and 2002 includes percentage rent of
$2.7 million, $2.5 million and $2.3 million, respectively. This rental income was earned when
certain retail tenants attained sales volumes specified in their respective lease agreements. 15. Commitments, Contingencies, Guarantees and Other Arrangements Commitments and Contingencies The following tables summarize the Companys future minimum lease payments under operating
lease agreements as of December 31, 2004: (in thousands)
    
    Total
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    ThereafterGround lease commitments
    
    $
    3,784
    
    
    $
    54
    
    
    $
    54
    
    
    $
    54
    
    
    $
    54
    
    
    $
    54
    
    
    $
    3,514
 The Company is a party to various legal proceedings incidental to its business. In the opinion
of management, after consultation with legal counsel, the ultimate liability, if any, with respect
to those proceedings is not presently expected to materially affect the financial position or
results of operations or cash flows of the Company. Guarantees and Other Arrangements During January 2000, the Company initiated and completed an Executive Unit Purchase Program
(Unit Purchase Program), in which the Board of Trustees and certain members of the Companys
management were able to purchase 425,925 units of CRLP. The value of the units purchased under the
Unit Purchase Program was approximately $10.0 million. Under the Unit Purchase Program, the Board
of Trustees and the members of management obtained full-recourse personal loans from an unrelated
financial institution, in order to purchase the units. As of December 31, 2004, the outstanding
balance on these loans was $3.8 million as some participants have exited the program and repaid
their principal balance. The units, which have a market value of approximately $6.5 million at
December 31, 2004, are pledged as collateral against the loans. The Company provided a guarantee
to the unrelated financial institution for the personal loans, which matured in January 2005. At
December 31, 2004, no liability was recorded on our books for the guarantee. In connection with
the maturity of the remaining outstanding loans in January 2005, the Companys guarantees for such
loans were terminated. During August 2002, in connection with the purchase of Heathrow International Business Center,
the Company entered into an agreement to acquire one new office building that contains 192,000
square feet. The closing for this acquisition is anticipated to occur upon the earlier of August
2005 or at such time that the seller achieves certain leasing targets for the property. The
purchase price will be determined based upon the percentage of gross leasable area actually leased
and the net operating income generated by the leases at the time of acquisition. 80




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During December 2002, the Company sold 90% of its interest in Colonial Promenade Hoover for a
total sales price of $20.5 million, and formed Highway 150 LLC, in which the Company maintains 10%
ownership and manages the property. In connection with the formation of Highway 150 LLC, the
Company executed a guaranty, pursuant to which the Company would serve as a guarantor of $1.0
million of the debt related to the joint venture, which is collateralized by the Colonial Promenade
Hoover retail property. The Companys maximum guarantee of $1.0 million may be requested by the
lender, only after all of the rights and remedies available under the associated note and security agreements have been
exercised and exhausted. At December 31, 2004, the total amount of debt of the joint venture was
approximately $17.4 million and matures in December 2012. At December 31, 2004, no liability was
recorded on the Companys books for the guarantee. In connection with the contribution of certain assets to CRLP, certain partners of CRLP have
guaranteed indebtedness of the Company totaling $26.9 million at December 31, 2004. The guarantees
are held in order for the contributing partners to maintain their tax deferred status on the
contributed assets. These individuals have not been indemnified by the Company. Additionally,
certain unitholders of CRLP and trustees of the Company have guaranteed indebtedness of the Company
totaling $0.4 million at December 31, 2004. The Company has indemnified these individuals from
their guarantees of this indebtedness. 16. Related Party Transactions The Company has used affiliated construction companies to manage and oversee certain of its
development, re-development and expansion projects. The affiliated construction companies utilized
by the Company are headquartered in Alabama and have completed numerous projects within the Sunbelt
region of the United States. Through the use of market survey data and in-house development
expertise, the Company negotiates the fees and contract prices of each development, re-development
or expansion project with the affiliated construction companies and presents each project to the
Companys Management Committee for review and approval. Upon approval by the Management Committee,
the Management Committee presents each project to the independent members of the Executive
Committee of the Board of Trustees for final approval. In each of the following transactions, the
independent members of the Executive Committee approved such transactions unanimously. The Company paid $1.6 million for property development costs to Lowder Construction Company,
Inc., a construction company owned by The Colonial Company (TCC) in which Mr. Thomas H. Lowder
(the Companys Chairman of the Board and Chief Executive Officer) and Mr. James K. Lowder (our
trustee) each own a 50% interest, during the year ended December 31, 2002. Of this amount, $1.5
million was then paid to unaffiliated subcontractors for the construction of these development and
expansion projects during 2002. The Company paid insignificant amounts to Lowder Construction
Company, Inc. during 2004 and 2003. The Company had no outstanding construction invoices and
retainage payable to Lowder Construction Company, Inc. at December 31, 2004 and 2003. The Company also paid $20.0 million, $30.2 million and $35.3 million for property construction
costs to Brasfield & Gorrie LLC, a construction company partially-owned by Mr. M. Miller Gorrie (a
trustee of the Company) during the years ended December 31, 2004, 2003 and 2002, respectively. Of
these amounts, $17.0 million, $26.9 million and $32.1 million was then paid to unaffiliated
subcontractors for the construction of these development projects during 2004, 2003 and 2002,
respectively. The Company had $3.3 million in outstanding construction invoices or retainage
payable to this construction company at December 31, 2004. In March 2002, CPSI acquired a 20% interest in three aircraft from NRH Enterprises, L.L.C.,
(NRH) an entity in which Mr. Harold Ripps (a trustee of the Company) indirectly has an
approximate 33% interest, for approximately $1.4 million. Additionally, CPSI entered into a joint
ownership agreement with the other owners of the aircraft, including NRH, under which CPSI paid
NRH, as agent for all of the owners of the aircraft, a monthly fee of $10,000, plus $1,400 per hour
of the Companys flight time, to cover the operating expenses of the aircraft. Further, CPSI
entered into an aircraft services agreement with MEDJET Assistance, L.L.C., (MEDJET) an entity in
which Mr. Ripps indirectly has an approximate 40% interest. Under this agreement, CPSI was
obligated to pay a monthly fee of $5,000 to MEDJET for managing the use, maintenance, storage, and
supervision of the aircraft. NRH paid this $5,000 monthly fee to MEDJET, on behalf of CPSI, from
the $10,000 monthly fee referred to above. CPSI paid approximately $279,000 during 2004 and
$319,000 during 2003 to NRH for usage and service of the aircraft under the above agreements.
During 2004, the Company sold its interest in the three aircraft for $0.8 million and terminated
the aircraft services agreement. In July 2002, the Company acquired three single family homes located in Montgomery, Alabama,
from Lowder New Homes, Inc., an entity owned by TCC, for a total purchase price of approximately
$0.5 million, which will be operated as rental property. The homes were purchased as part of a
corporate rental program for an automobile manufacturer that is building a manufacturing plant near
Montgomery, Alabama. Under the corporate rental program, executives of the automobile 81




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manufacturer will rent the homes from the Company for an initial term of three years, with the option to extend
the lease, and have agreed to lease additional multifamily units at Colonial Grand at Promenade
located in Montgomery, Alabama. The homes were funded through the Companys unsecured line of
credit. We leased space to certain entities in which Mr. Thomas H. Lowder, Mr. James K. Lowder, and
Mr. M. Miller Gorrie have an interest and received market rent from these entities of approximately
$1.4 million, $1.1 million and $1.0 million during the years ended December 31, 2004, 2003, and 2002, respectively. Additionally, we
provided management and leasing services to certain related entities and received fees from these
entities of approximately $26,502, $0.2 million and $0.3 million during the years ended December
31, 2004, 2003, and 2002, respectively. Colonial Insurance Agency, a corporation owned by TCC, has provided insurance brokerage
services for the Company. The aggregate amount paid by the Company to Colonial Insurance Agency
for these services during the years ended December 31, 2004, 2003, and 2002 were $4.0 million, $4.4
million and $5.0 million, respectively. Of these amounts, $3.6 million, $4.2 million and $4.7
million was then paid to unaffiliated insurance carriers for insurance premiums during 2004, 2003
and 2002, respectively. 17. Net Income Per Share The following table sets forth the computation of basic and diluted earnings per share: (in thousands, except per share data)2004
    
    
    2003
    
    
    2002Numerator:Net Income
    
    $
    54,618
    
    
    $
    52,265
    
    
    $
    73,377Less: Preferred stock dividends
    
    
    (14,781
    )
    
    
    (15,284
    )
    
    
    (15,565
    )Less: Redemption of preferred share issuance costs
    
    
    
    
    
    
    (4,451
    )
    
    
    Net income available to common shareholders
    
    $
    39,837
    
    
    $
    32,530
    
    
    $
    57,812Denominator:Denominator
for basic net income per share - weighted
average common shares
    
    
    27,121
    
    
    
    24,965
    
    
    
    22,154Effect of dilutive securities:Trustee and employee stock options
    
    
    341
    
    
    
    267
    
    
    
    254Denominator
for diluted net income per share - adjusted
weighted average common shares
    
    
    27,462
    
    
    
    25,232
    
    
    
    22,408Basic net income per share, before extraordinary items
    
    $
    1.47
    
    
    $
    1.30
    
    
    $
    2.61Diluted net income per share, before extraordinary items
    
    $
    1.45
    
    
    $
    1.29
    
    
    $
    2.58
 There were no antidilutive outstanding options as of December 31, 2004. There were 43,333,
and 40,000 outstanding options to purchase common shares excluded from the computation of diluted
net income per share for 2003 and 2002, respectively, because the options exercise price was
greater than the average market price of the common shares and, therefore, the effect would be
antidilutive. The weighted average exercise prices of these outstanding options for 2003 and 2002
were $35.82 and $35.57 per share, respectively. 18. Cornerstone Merger During October 2004, the Company entered into a definitive merger agreement with Cornerstone
Realty Income Trust, Inc. (Cornerstone), a Richmond, Virginia-based REIT focused on multifamily
communities. The transaction, which is expected to close during April of 2005, is valued at
approximately $1.5 billion, including the assumption or repayment of Cornerstone debt. The transaction is structured as a common and preferred share election merger, with
Cornerstone shareholders having the right to elect to receive the merger consideration in
Colonials common or preferred depositary shares. More specifically, in the merger, Cornerstone
shareholders will have the right to elect to receive either:  
    a number of Colonial common shares equal to the common share conversion rate, which is currently expected to
be 0.2581; or
    a number of Colonial 7.62% Series E preferred depositary shares, $25.00 liquidation
preference per depositary share, 82




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equal to the preferred depositary share conversion rate, which is currently expected to be 0.4194; for each outstanding common share of Cornerstone, subject to the restriction that the Colonial
Series E preferred
depositary shares issued will not exceed approximately 25% of the total merger consideration. If
the number of
Colonial Series E preferred depositary shares to be issued in the merger or the number of holders
of Colonial Series E
preferred depositary shares does not satisfy New York Stock Exchange listing conditions specified
in the merger
agreement, then each Cornerstone common share will be converted into a number of Colonial common
shares equal
to the common share conversion rate. In addition, the conversion rates are subject to various
adjustments provided for in the merger agreement, although Colonial and Cornerstone do not
currently expect any further material adjustments to the conversion rates. Depending upon the
shareholder elections, we expect to issue approximately 11 to 14 million new common shares and up
to approximately $150 million of new preferred securities and refinance or assume approximately
$850 million of Cornerstones existing secured debt. The transaction, which remains subject to
approval by the common shareholders of Colonial and Cornerstone, has been unanimously approved by
both boards. Cornerstone will have the right to terminate the transaction if Colonials average share price
for the 20 trading days preceding 10 trading days prior to the close of the transaction is below
$31.00. However, in the event the share price is below such level, the Company has the right to
continue the transaction through the payment, at its sole option, of additional Colonial Properties
common shares or cash to provide Cornerstone shareholders value equivalent to that which they would
have received had Colonials share price been $31.00 for such measurement period. The Company has
the right to terminate if its average share price exceeds $49.00 for 20 consecutive trading days
preceding 10 trading days prior to the close of the transaction. 19. Subsequent Events Distribution On January 21, 2005, the Board of Trustees declared a cash distribution to shareholders of the
Company and partners of CRLP in the amount of $0.675 per share and per partnership unit, totaling
$25.7 million. The distribution was made to shareholders and partners of record as of January 31,
2005, and was paid on February 7, 2005. Acquisitions On January 13, 2005, the Company acquired Portofino Shopping Center, a 373,000 square foot
retail shopping center in Houston, Texas. The center is anchored by Home Depot and Sams Wholesale
Club. Other tenants include Oshmans, Steinmart, Old Navy, Petsmart, Michaels and Conns. The
asset was acquired for a total purchase price of $60.3 million, which was funded through borrowings
under the Companys bridge credit facility. On January 31, 2005, the Company acquired Westshore Place I & II, two ten story Class A office
buildings comprising 370,994 square feet in Tampa, Florida. The assets were acquired for $54.9
million, which was funded through borrowings under the Companys bridge credit facility. Dispositions On February 18, 2005, the Company sold its 15% interest in Colonial Village at Cahaba Heights,
a 125-unit multifamily apartment community located in Birmingham, Alabama. The asset was sold for
a total sales price of $1.2 million and the proceeds were used to repay a portion of the borrowings
under the Companys unsecured line of credit. On February 25, 2005, the Company sold its 15% interest in Colonial Grand at River Hills, a
776-unit multifamily apartment community located in Tampa, Florida. The asset was sold for a total
sales price of $6.9 million and the proceeds were used to repay a portion of the borrowings under
the Companys unsecured line of credit. Financing Activity On January 31, 2005, the Company, through CRLP, completed a $275 million senior notes offering
of 4.750% unsecured notes due February 1, 2010. Interest on the notes is payable semi-annually on the 1st of
every February and August beginning August 1, 2005. The net proceeds of approximately $273.3
million were used to pay down the Companys bridge credit facility and a portion of the Companys
unsecured line of credit. During January 2005, the Company entered into two interest rate swap agreements to hedge the
interest rate risk associated with forecasted debt issuances that are expected to occur during
2005. The following table summarizes the notional values and other characteristics these interest
rate swap agreements: 83




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InterestProduct Type
    
    Notional Value
    
    
    Rate
    
    
    MaturityInterest Rate SWAP, Cash Flow
    
    $250 million
    
    
    4.721
    %
    
    
    8/3/15Interest Rate SWAP, Cash Flow
    
    $200 million
    
    
    4.830
    %
    
    
    2/15/16
 During January 2005, the Company settled one interest rate swap agreement and terminated one
interest rate swap agreement for approximately $0.8 million, both of which were outstanding at
December 31, 2004. This amount will remain in accumulated other comprehensive income and be
reclassified to interest expense over the applicable period of the associated debt. 20. Quarterly Financial Information (Unaudited) The following is a summary of the unaudited quarterly financial information for the years
ended December 31, 2004 and 2003. The information provided herein has been reclassified in
accordance with SFAS No. 144 for all periods presented. 2004(in thousands, except per share data)First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterRevenues
    
    $
    75,253
    
    
    $
    78,907
    
    
    $
    86,712
    
    
    $
    96,538Income from continuing operations
    
    
    6,561
    
    
    
    6,338
    
    
    
    3,930
    
    
    
    5,981Income from discontinuing operations
    
    
    10,523
    
    
    
    3,798
    
    
    
    4,725
    
    
    
    12,762Net income
    
    
    17,084
    
    
    
    10,136
    
    
    
    8,655
    
    
    
    18,743Preferred dividends
    
    
    (3,695
    )
    
    
    (3,695
    )
    
    
    (3,695
    )
    
    
    (3,696
    )Net income available to common shareholders
    
    
    13,389
    
    
    
    6,441
    
    
    
    4,960
    
    
    
    15,047Net income per share:Basic
    
    $
    0.50
    
    
    $
    0.24
    
    
    $
    0.18
    
    
    $
    0.55Diluted
    
    $
    0.50
    
    
    $
    0.24
    
    
    $
    0.18
    
    
    $
    0.54Weighted average common shares outstanding:Basic
    
    
    26,670
    
    
    
    27,089
    
    
    
    27,252
    
    
    
    27,467Diluted
    
    
    27,045
    
    
    
    27,382
    
    
    
    27,615
    
    
    
    27,839
 2003(in thousands, except per share data)First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterRevenues
    
    $
    70,624
    
    
    $
    73,808
    
    
    $
    71,392
    
    
    $
    74,180Income from continuing operations
    
    
    5,443
    
    
    
    8,602
    
    
    
    6,564
    
    
    
    8,239Income from discontinuing operations
    
    
    10,557
    
    
    
    3,629
    
    
    
    3,971
    
    
    
    5,260Net income
    
    
    16,000
    
    
    
    12,231
    
    
    
    10,535
    
    
    
    13,499Preferred dividends
    
    
    (3,891
    )
    
    
    (3,973
    )
    
    
    (3,724
    )
    
    
    (3,696
    )Preferred share issuance costs
    
    
    
    
    
    
    (4,451
    )
    
    
    
    
    
    
    Net income available to common shareholders
    
    
    12,109
    
    
    
    3,807
    
    
    
    6,811
    
    
    
    9,803Net income per share:Basic
    
    $
    0.52
    
    
    $
    0.16
    
    
    $
    0.26
    
    
    $
    0.36Diluted
    
    $
    0.52
    
    
    $
    0.15
    
    
    $
    0.26
    
    
    $
    0.36Weighted average common shares outstanding:Basic
    
    
    23,236
    
    
    
    24,312
    
    
    
    26,002
    
    
    
    26,267Diluted
    
    
    23,405
    
    
    
    24,562
    
    
    
    26,275
    
    
    
    26,666
 84




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Report of Independent Registered Public Accounting Firm To the Board of Trustees and Shareholders   of
Colonial Properties Trust: We have completed an integrated audit of Colonial Properties Trusts 2004 consolidated financial
statements and of its internal control over financial reporting as of December 31, 2004 and audits
of its 2003 and 2002 consolidated financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are
presented below. Consolidated financial statements and financial statement schedule In our opinion, the consolidated financial statements listed in the accompanying index present
fairly, in all material respects, the financial position of Colonial Properties Trust at December
31, 2004 and 2003, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2004 in conformity with
accounting principles generally accepted in the United States of America. In addition, in our
opinion, the financial statement schedule listed in the accompanying index presents fairly, in all
material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and financial statement schedule are
the responsibility of the Companys management. Our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our audits. We conducted our
audits of these statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit of financial statements includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion. Internal control over financial reporting Also, in our opinion, managements assessment, included in Managements Report on Internal Control
over Financial Reporting appearing under Item 9A, that the Company maintained effective internal
control over financial reporting as of December 31, 2004 based on criteria established in Internal
Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), is fairly stated, in all material respects, based on those criteria.
Furthermore, in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2004, based on criteria established in
Internal Control  Integrated Frameworkissued by the COSO. The Companys management is
responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting. Our responsibility
is to express opinions on managements assessment and on the effectiveness of the Companys
internal control over financial reporting based on our audit. We conducted our audit of internal
control over financial reporting in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. An audit of internal control over financial reporting
includes obtaining an understanding of internal control over financial reporting, evaluating
managements assessment, testing and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we consider necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinions. A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements. 85




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Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers LLP
Birmingham, Alabama
March 16, 2005 86




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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 
 Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedure As of the end of the period covered by this report, our management, including the Chief
Executive Officer and the Chief Financial Officer, carried out an evaluation of the design and
operation of our disclosure controls and procedures as defined in Rule 13a-15 of the rules
promulgated under the Securities and Exchange Act of 1934, as amended. Based on this evaluation,
our Chief Executive Officer and the Chief Financial Officer concluded that the design and operation
of these disclosure controls and procedures are effective. There have been no changes in our
internal controls over financial reporting identified in connection with such evaluation that have
materially affected, or are reasonably likely to materially affect, our internal controls over
financial reporting. Managements Report on Internal Control Over Financial Reporting Management of Colonial Properties Trust (the Company) is responsible for establishing and
maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) of the Securities Exchange act of 1934. The Companys internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Because of inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Companys internal control over financial
reporting as of December 31, 2004. The assessment was based upon the framework described in
Integrated Control-Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). Managements assessment included an evaluation of the design of
internal control over financial reporting and testing of the operational effectiveness of internal
control over financial reporting. We have reviewed the results of the assessment with the Audit
Committee of our Board of Trustees. Based on our assessment under the criteria set forth in COSO, management has concluded that,
as of December 31, 2004, Colonial Properties Trust maintained effective internal control over
financial reporting. Our managements assessment of the effectiveness of the Companys internal control over
financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as stated in their report which appears herein. 
 PART III 
 Item 10. Trustees and Executive Officers of the Registrant. The information required by this item with respect to trustees and compliance with the Section
16(a) reporting requirements is hereby incorporated by reference from the material appearing in our
definitive proxy statement for the annual meeting of shareholders to be held in 2005 (the Proxy
Statement) under the captions Election of Trustees and Section 16(a) Beneficial Ownership
Reporting Compliance. Information required by this item with respect to executive officers is
provided in Item 1 of this report. See Executive Officers of the Company. Information required
by this item with respect to the availability of our code of ethics is provided in Item 1 of this
report. See Available Information. 
 Item 11. Executive Compensation. The information required by this item is hereby incorporated by reference from the material
appearing in the Proxy Statement under the caption Executive Compensation. 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information pertaining to security ownership of certain beneficial owners and management
required by this item is hereby incorporated by reference from the material appearing in the Proxy
Statement under the caption Voting Securities Held by Principal Shareholders and Management. The following table summarizes information, as of December 31, 2004, relating to our equity
compensation plans pursuant to which options to purchase our common shares and our restricted
common shares may be granted from time to time. 87




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Number of securities remainingNumber of securities to be
    
    
    Weighted-average
    
    
    available for future issuanceissued upon exercise of
    
    
    exercise price of
    
    
    under equity compensation plansoutstanding options, warrants
    
    
    outstanding options,
    
    
    (excluding securities reflected inPlan Category
    
    and rights (a)
    
    
    warrants and rights (b)
    
    
    column (a))Equity compensation
plans approved by
security holders
(1)
    
    
    1,640,185
    (2)
    
    $
    30.66
    (3)
    
    
    2,157,021Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,640,185
    
    
    $
    30.66
    
    
    
    2,157,021
   (1)
    
    These plans include our Employee Share Option and Restricted Share Plan, as amended in
1998, our Non-Employee Trustee Share Plan, as amended in 1997, and our Trustee Share Option
Plan, as amended in 1997.(2)
    
    Includes 65,414 restricted shares and performance-based restricted shares to be exercised as of
December 31, 2004.(3)
    
    Weighted-average exercise price of outstanding options; excludes value of outstanding
restricted shares. 
 Item 13. Certain Relationships and Related Transactions. The information required by this item is hereby incorporated by reference from the material
appearing in the Proxy Statement under the caption Certain Relationships and Related
Transactions. 
 Item 14. Principal Accountant Fees and Services. The information required by this item is hereby incorporated by reference from the material
appearing in the Proxy Statement under the caption Summary of Audit Fees. 
 Part IV 
 Item 15. Exhibits and Financial Statement Schedules 15(a)(1) and (2)Financial Statements and Schedules Index to Financial Statements and Financial Statement Schedule The following financial statements of the Company are included in Part II, Item 8 of this report: Consolidated Balance Sheets as of December 31, 2004 and 2003 Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2004, 2003, and 2002 Consolidated Statements of Shareholders Equity for the years ended December 31, 2004, 2003 and 2002 Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003, and 2002 Notes to Consolidated Financial Statements Report of
Independent Registered Public Accounting Firm Financial Statement Schedule: Schedule III            Real Estate and Accumulated Depreciation Report of
Independent Registered Public Accounting Firm All other schedules have been omitted because the required information of such other schedules
is not present in amounts sufficient to require submission of the schedule or because the required
information is included in the consolidated financial statements. 88




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15(a)(3)Exhibits Exhibit No.

    Exhibit
    
    Reference2.1
    
    Agreement and Plan of Merger by and among
the Company, CLNL Acquisition Sub LLC and
Cornerstone Realty Income Trust, Inc.
    
    Incorporated by
reference to
Exhibit 2.1 to the
Companys Current
Report on Form 8-K
filed with the SEC
on October 28, 20042.2
    
    Form of Plan of Merger
    
    Incorporated by
reference to
Exhibit B to
Exhibit 2.2 to the
Companys Current
Report on Form 8-K
filed with the SEC
on January 25, 20052.3
    
    Amendment No. 1 to Agreement and Plan of
Merger by and among the Company, CLNL
Acquisition Sub LLC and Cornerstone Realty
Income Trust, Inc.
    
    Incorporated by
reference to
Exhibit 2.2 to the
Companys Current
Report on Form 8-K
filed with the SEC
on January 25, 20053.1
    
    Declaration of Trust of Company
    
    Incorporated by
reference to
Exhibit 3 in the
Companys Form 8-K
dated November 5,
19973.2
    
    Articles Supplementary of 8 3/4% Series A
Cumulative Redeemable Preferred Shares of
Beneficial Interest of the Company
    
    Incorporated by
reference to
Exhibit 3 in the
Companys Form 8-K
dated November 5,
19973.3
    
    Articles Supplementary of Series 1998
Junior Participating Preferred Shares of
Beneficial Interest of the Company
    
    Incorporated by
reference to
Exhibit 4.2 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
19983.4
    
    Articles Supplementary of 8.875% Series B
Cumulative Redeemable Perpetual Preferred
Shares of the Company
    
    Incorporated by
reference to
Exhibit 4.3 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
19983.5
    
    Articles Supplementary of 7.25% Series B
Cumulative Redeemable Perpetual Preferred
Shares of the Company
    
    Incorporated by
reference to
Exhibit 3.5 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
2003.3.6
    
    Articles Supplementary of 9.25% Series C
Cumulative Redeemable Preferred Shares of
Beneficial Interest of the Company
    
    Incorporated by
reference to
Exhibit 3 in the
Companys Form 8-K
dated June 19, 20013.7
    
    Articles Supplementary of 8 1/8% Series D
Cumulative Redeemable Preferred Shares of
Beneficial Interest of the Company
    
    Incorporated by
reference to
Exhibit 3.1 in the
Companys Current
Report on Form 8-K
filed with the SEC
on April 29, 20033.8
    
    Articles of Amendment to Declaration of
Trust of the Company
    
    Filed herewith3.9
    
    Articles Supplementary Reclassifying
Preferred Shares
    
    Filed herewith3.10
    
    Form of Articles Supplementary of 7.62%
Series E Cumulative Preferred Shares of
Beneficial Interest of the Company
    
    Incorporated by
reference to
Exhibit 3.1 in the
Companys
Registration
Statement on Form
8-A filed on
February 7, 20053.11
    
    Bylaws of the Company
    
    Incorporated by
reference to
Exhibit 4.2 in the
Companys
Registration
Statement on Form
S-3, No. 333-55078,
filed February 6,
20014.1
    
    Indenture dated as of July 22, 1996, by and
between CRLP and Deutsche Bank Trust
Company Americas (formerly Bankers Trust
Company)
    
    Incorporated by
reference to
Exhibit 4.1 to the
Form 10-K/A dated
October 10, 2003,
filed by CRLP
 89




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##### Table of Contents



Exhibit No.

    Exhibit
    
    Reference4.2
    
    First Supplemental Indenture dated as of
December 31, 1998, by and between CRLP and
Deutsche Bank Trust Company Americas
(formerly Bankers Trust Company)
    
    Incorporated by
reference to
Exhibit 10.13.1 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 19984.3
    
    Rights Agreement dated as of November 2,
1998 between Colonial Properties Trust and
BankBoston, N.A.
    
    Incorporated by
reference to
Exhibit 10.14 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 19984.4
    
    Deposit Agreement for Series D depository
shares by and among the Company and
Equiserve Trust Company, N.A. and
Equiserve, Inc.
    
    Incorporated by
reference to
Exhibit 4.4 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
20034.5
    
    Form of Deposit Agreement for Series E
depository shares by and among the Company
and Equiserve Trust Company, N.A. and
Equiserve, Inc.
    
    Incorporated by
reference to
Exhibit 4.1 in the
Companys
Registration
Statement on Form
8-A filed on
February 7, 200510.1
    
    Third Amended and Restated Agreement of
Limited Partnership of CRLP, as amended
    
    Incorporated by
reference to
Exhibit 10.1 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
199910.2
    
    Fifth Amendment to Third Amended and
Restated Agreement of Limited Partnership
of CRLP
    
    Incorporated by
reference to
Exhibit 10.2 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
200310.3
    
    Sixth Amendment to Third Amended and
Restated Agreement of Limited Partnership
of CRLP
    
    Incorporated by
reference to
Exhibit 10.3 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
200310.4
    
    Seventh Amendment to Third Amended and
Restated Agreement of Limited Partnership
of CRLP
    
    Incorporated by
reference to
Exhibit 10.4 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
200310.4.1
    
    Eighth Amendment to Third Amended and Restated Agreement of Limited Partnership of
CRLP
    
    Filed
herewith.10.5
    
    Registration Rights and Lock-Up Agreement
dated September 29, 1993, among the Company
and the persons named therein
    
    Incorporated by
reference to
Exhibit 10.2 in the
Companys
Registration
Statement on Form
S-11/A, No.
33-65954, filed
September 21, 199310.6
    
    Registration Rights and Lock-Up Agreement
dated March 25, 1997, among the Company and
the persons named therein
    
    Incorporated by
reference to
Exhibit 10.2.2 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199710.7
    
    Registration Rights and Lock-Up Agreement
dated November 4, 1994, among the Company
and the persons named therein
    
    Incorporated by
reference to
Exhibit 10.2.3 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199710.8
    
    Supplemental Registration Rights and
Lock-Up Agreement dated August 20, 1997,
among the Company and the persons named
therein
    
    Incorporated by
reference to
Exhibit 10.2.4 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199710.9
    
    Supplemental Registration Rights and
Lock-Up Agreement dated November 1, 1997,
among the Company, CRLP and B&G Properties
Company LLP
    
    Incorporated by
reference to
Exhibit 10.2.5 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199710.10
    
    Supplemental Registration Rights and
Lock-Up Agreement dated July 1, 1997, among
the Company, CRLP and Colonial Commercial
Investments, Inc.
    
    Incorporated by
reference to
Exhibit 10.2.6 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 1997
 90




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##### Table of Contents



Exhibit No.

    Exhibit
    
    Reference10.11
    
    Supplemental Registration Rights and
Lock-Up Agreement dated July 1, 1996, among
the Company and the persons named therein
    
    Incorporated by
reference to
Exhibit 10.2.7 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199710.12
    
    Registration Rights Agreement dated
February 23, 1999, among the Company,
Belcrest Realty Corporation, and Belair
Real Estate Corporation
    
    Incorporated by
reference to
Exhibit 10.2.8 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199810.13
    
    Registration Rights and Lock-Up Agreement
dated July 1, 1998, among the Company and
the persons named therein
    
    Incorporated by
reference to
Exhibit 10.2.9 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199810.14
    
    Registration Rights and Lock-Up Agreement
dated July 31, 1997, among the Company and
the persons named therein
    
    Incorporated by
reference to
Exhibit 10.2.10 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199810.15
    
    Supplemental Registration Rights and
Lock-Up Agreement dated November 18, 1998,
among the Company, CRLP and Colonial
Commercial Investments, Inc.
    
    Incorporated by
reference to
Exhibit 10.2.11 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199810.16
    
    Registration Rights and Lock-Up Agreement
dated December 29, 1994, among the Company
and the persons named therein
    
    Incorporated by
reference to
Exhibit 10.2.12 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199810.17
    
    Registration Rights and Lock-Up Agreement
dated April 30, 1999, among the Company,
CRLP and MJE, L.L.C.
    
    Incorporated by
reference to
Exhibit 10.2.13 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199910.18
    
    Second Amended and Restated Employee Share
Option and Restricted Share Plan 
    
    Incorporated
by reference to
Exhibit 10.18 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 200310.18.1
    
    Form of Employee Share Option and
Restricted Share Plan Agreement  2 Year
Vesting 
    
    Incorporated
by reference to
Exhibit 10.18.1 in
the Companys
Quarterly Report on
Form 10-Q for the
period ending
September 30, 200410.18.2
    
    Form of Employee Share Option and
Restricted Shares Plan Agreement  3 Year
Vesting 
    
    Incorporated
by reference to
Exhibit 10.18.2 in
the Companys
Quarterly Report on
Form 10-Q for the
period ending
September 30, 200410.18.3
    
    Form of Employee Share Option and
Restricted Shares Plan Agreement  5 Year
Vesting 
    
    Incorporated
by reference to
Exhibit 10.18.3 in
the Companys
Quarterly Report on
Form 10-Q for the
period ending
September 30, 200410.18.4
    
    Form of Employee Share Option and
Restricted Shares Plan Agreement  8 Year
Vesting 
    
    Incorporated
by reference to
Exhibit 10.18.4 in
the Companys
Quarterly Report on
Form 10-Q for the
period ending
September 30, 200410.18.5
    
    Amended and Restated Trustee Restricted
Share Agreement  1 Year Vesting 
    
    Incorporated
by reference to
Exhibit 10.18.5 in
the Companys
Quarterly Report on
Form 10-Q for the
period ending
September 30, 2004
 91




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##### Table of Contents



Exhibit No.

    Exhibit
    
    Reference10.18.6
    
    Amended and Restated Trustee Non-Incentive
Share Option Agreement 
    
    Incorporated
by reference to
Exhibit 10.18.6 in
the Companys
Quarterly Report on
Form 10-Q for the
period ending
September 30, 200410.19
    
    Non-employee Trustee Share Option Plan 
    
    Incorporated
by reference to the
Companys
Registration
Statement on Form
S-8, No. 333-27203,
filed May 15, 199710.20
    
    Non-employee Trustee Share Plan 
    
    Incorporated
by reference to the
Companys
Registration
Statement on Form
S-8, No. 333-27205,
filed May 15, 199710.21
    
    Employee Share Purchase Plan 
    
    Incorporated
by reference to
Exhibit 10.21 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 200310.22
    
    Annual Incentive Plan 
    
    Incorporated
by reference to
Exhibit 10.16 in
the Companys
Registration
Statement on Form
S-11/A, No.
33-65954, filed
September 3, 199310.23
    
    Executive Unit Purchase Program  Program
Summary 
    
    Incorporated
by reference to
Exhibit 10.15 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199910.24
    
    Non-employee Trustee Option Agreement 
    
    Incorporated
by reference to
Exhibit 10.5 in the
Companys
Registration
Statement on Form
S-11/A, No.
33-65954, filed
September 3, 199310.25
    
    Employment Agreement between the Company
and Thomas H. Lowder 
    
    Incorporated
by reference to
Exhibit 10.6 in the
Companys
Registration
Statement on Form
S-11/A, No.
33-65954, filed
September 21, 199310.26
    
    Retirement Agreement between the Company
and Howard B. Nelson, Jr. 
    
    Incorporated
by reference to
Exhibit 10.26 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 200310.27
    
    Officers and Trustees Indemnification
Agreement 
    
    Incorporated
by reference to
Exhibit 10.7 in the
Companys
Registration
Statement on Form
S-11/A, No.
33-65954, filed
September 21, 199310.28
    
    Partnership Agreement of CPSLP
    
    Incorporated by
reference to
Exhibit 10.8 in the
Companys
Registration
Statement on Form
S-11/A, No.
33-65954, filed
September 21, 199310.29
    
    Articles of Incorporation of Colonial Real
Estate Services, Inc., predecessor of CPSI,
as amended
    
    Incorporated by
reference to
Exhibit 10.9 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
199410.30
    
    Bylaws of predecessor of Colonial Real
Estate Services, Inc., predecessor of CPSI
    
    Incorporated by
reference to
Exhibit 10.10 in
the Companys
Registration
Statement on Form
S-11/A, No.
33-65954, filed
September 3, 1993
 92




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##### Table of Contents



Exhibit No.

    Exhibit
    
    Reference10.31
    
    Credit Agreement among CRLP and SouthTrust
Bank, Wells Fargo Bank, Wachovia Bank,
National Association, AmSouth Bank,
National Association, PNC Bank, National
Association, Chevy Chase Bank, F.S.B.,
Comerica Bank, U.S. Bank, National
Association, Compass Bank and Branch
Banking & Trust Company dated July 22, 2002
    
    Incorporated by
reference to
Exhibit 10.30 in
CRLPs Current
Report on Form 8-K
filed with the SEC
on March 30, 200410.32
    
    Amendment to Credit Agreement dated
December 16, 2003
    
    Incorporated by
reference to
Exhibit 10.31 in
CRLPs Current
Report on Form 8-K
filed with the SEC
on March 30, 200410.33
    
    Bridge Credit Agreement dated October 28,
2004, by and among CRLP, as Borrower, and
Colonial Properties Trust, as Guarantor,
SouthTrust Bank, as Agent for Lenders, and
the Lenders names therein.
    
    Incorporated by
reference to
Exhibit 10.37 in
the Companys
Current Report on
Form 8-K filed with
the SEC on November
3, 200410.34
    
    Facility and Guaranty Agreement among the
Company, CRLP, Bank One, N.A. and the
Lenders named therein dated as of December
17, 1999
    
    Incorporated by
reference to
Exhibit 10.4 in the
Companys Annual
Report on Form 10-K
for the period
ending December 31,
200310.35
    
    Form of Promissory Note under Facility and
Guarantee Agreement dated as of December
17, 1999 among the Company, CRLP, Bank One,
N.A. and certain lenders
    
    Incorporated by
reference to
Exhibit 10.16 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199910.36
    
    Form of Reimbursement Agreement dated
January 25, 2000 by Employee Unit Purchase
Plan participants in favor of CRLP
    
    Incorporated by
reference to
Exhibit 10.17 in
the Companys
Annual Report on
Form 10-K for the
period ending
December 31, 199912.1
    
    Ratio of Earnings to Fixed Charges and
Ratio of Combined Fixed Charges and
Preferred Share Distributions
    
    Filed herewith21.1
    
    List of Subsidiaries
    
    Filed herewith23.1
    
    Consent of PricewaterhouseCoopers LLP
    
    Filed herewith31.1
    
    CEO Certification pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    CFO Certification pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32.1
    
    CEO Certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32.2
    
    CFO Certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
   
    
    Management contract or compensatory plan 15(b)
    
    ExhibitsThe list of Exhibits filed with this report is set forth in response to Item 15(a)(3).15(c)
    
    Financial StatementsNone.
 93




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 16, 2005. Colonial Properties TrustBy:
    /s/ Thomas H. LowderThomas H. LowderChairman of the Board,
President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report
has been signed below by the following persons on behalf of the Registrant and in the capacities
indicated on March 16, 2005. Signature/s/
Thomas H. Lowder
Thomas H. Lowder
    
    Chairman of the Board, President and Chief Executive Officer/s/ Weston M. Andress
Weston M. Andress
    
    Chief Financial and Investment Officer
(Principal Financial
Officer)/s/
Kenneth E. Howell
Kenneth E. Howell
    
    Senior Vice President-Accounting Operations
(Principal Accounting Officer)/s/ Carl F. Bailey
Carl F. Bailey
    
    Trustee/s/ M. Miller Gorrie
M. Miller Gorrie
    
    Trustee/s/ William M. Johnson
William M. Johnson
    
    Trustee/s/ James K. Lowder
James K. Lowder
    
    Trustee/s/ Herbert A. Meisler
Herbert A. Meisler
    
    Trustee/s/ Claude B. Nielsen
Claude B. Nielsen
    
    Trustee/s/ Harold W. Ripps
Harold W. Ripps
    
    Trustee/s/ Donald T. Senterfitt
Donald T. Senterfitt
    
    Trustee/s/ John W. Spiegel
John W. Spiegel
    
    Trustee
 94




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##### Table of Contents



SCHEDULE III
COLONIAL PROPERTIES TRUST
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2004 Initial Cost to
    
    
    Cost
    
    
    Gross Amount at Which
    
    
    
    
    
    
    
    
    DateCompany
    
    
    Capitalized
    
    
    Carried at Close of Period
    
    
    
    
    
    
    
    
    Acquired/Buildings and
    
    
    Subsequent to
    
    
    
    
    
    
    Buildings and
    
    
    
    
    
    
    Accumulated
    
    
    Date
    
    Placed in
    
    DepreciableDescription
    
    Encumbrances
    
    
    Land
    
    
    Improvements
    
    
    Acquisition
    
    
    Land
    
    
    Improvements
    
    
    Total
    
    
    Depreciation
    
    
    Completed
    
    Service
    
    Lives-YearsMultifamily:CG at Arringdon
    
    
    
    
    
    
    3,016,358
    
    
    
    23,295,172
    
    
    
    215,306
    
    
    
    3,016,358
    
    
    
    23,510,478
    
    
    $
    26,526,836
    
    
    
    608,964
    
    
    2003
    
    2004
    
    3-40 YearsCG at Berkeley Lake
    
    
    8,310,789
    
    
    
    1,800,000
    
    
    
    16,551,734
    
    
    
    132,057
    
    
    
    1,800,000
    
    
    
    16,683,791
    
    
    $
    18,483,791
    
    
    
    321,395
    
    
    1998
    
    2004
    
    3-40 YearsCG at Beverly Crest
    
    
    
    
    
    
    2,400,000
    
    
    
    20,718,143
    
    
    
    35,639
    
    
    
    2,400,000
    
    
    
    20,753,782
    
    
    $
    23,153,782
    
    
    
    134,906
    
    
    1996
    
    2004
    
    3-40 YearsCG at Cypress Crossing
    
    
    
    
    
    
    8,781,859
    
    
    
    
    
    
    
    12,908,284
    
    
    
    2,125,136
    
    
    
    19,565,008
    
    
    $
    21,690,143
    
    
    
    4,981,075
    
    
    1999
    
    1998
    
    3-40 YearsCG at Edgewater
    
    
    20,994,895
    
    
    
    1,540,000
    
    
    
    12,671,606
    
    
    
    13,981,958
    
    
    
    2,602,325
    
    
    
    25,591,239
    
    
    $
    28,193,564
    
    
    
    8,329,702
    
    
    1990
    
    1994
    
    3-40 YearsCG at Galleria
    
    
    22,400,000
    
    
    
    5,358,439
    
    
    
    46,981,307
    
    
    
    6,715,829
    
    
    
    5,358,439
    
    
    
    53,697,136
    
    
    $
    59,055,575
    
    
    
    15,809,321
    
    
    1986
    
    1994/96
    
    3-40 YearsCG at Galleria Woods
    
    
    9,110,878
    
    
    
    1,220,000
    
    
    
    12,480,949
    
    
    
    1,021,365
    
    
    
    1,220,000
    
    
    
    13,502,314
    
    
    $
    14,722,314
    
    
    
    4,153,971
    
    
    1994
    
    1996
    
    3-40 YearsCG at Heather Glen
    
    
    
    
    
    
    3,800,000
    
    
    
    
    
    
    
    31,039,502
    
    
    
    4,134,235
    
    
    
    30,705,267
    
    
    $
    34,839,502
    
    
    
    6,490,128
    
    
    2000
    
    1998
    
    3-40 YearsCG at Heathrow
    
    
    
    
    
    
    2,560,661
    
    
    
    17,612,990
    
    
    
    937,979
    
    
    
    2,560,661
    
    
    
    18,550,969
    
    
    $
    21,111,630
    
    
    
    5,697,431
    
    
    1997
    
    1994/97
    
    3-40 YearsCG at Hunters Creek
    
    
    29,513,755
    
    
    
    33,264,022
    
    
    
    
    
    
    
    1,355,866
    
    
    
    5,308,112
    
    
    
    29,311,776
    
    
    $
    34,619,888
    
    
    
    9,371,771
    
    
    1996
    
    1996
    
    3-40 YearsCG at Lakewood Ranch
    
    
    
    
    
    
    2,320,442
    
    
    
    
    
    
    
    20,087,236
    
    
    
    2,148,814
    
    
    
    20,258,864
    
    
    $
    22,407,678
    
    
    
    4,852,499
    
    
    1999
    
    1997
    
    3-40 YearsCG at Liberty Park
    
    
    
    
    
    
    2,296,019
    
    
    
    
    
    
    
    25,146,504
    
    
    
    2,296,019
    
    
    
    25,146,504
    
    

    $
    27,442,523
    
    
    
    4,951,836
    
    
    2000
    
    1998
    
    3-40 YearsCG at Madison
    
    
    16,506,727
    
    
    
    1,689,400
    
    
    
    
    
    
    
    22,064,371
    
    
    
    2,058,172
    
    
    
    21,695,599
    
    
    $
    23,753,771
    
    
    
    4,523,733
    
    
    2000
    
    1998
    
    3-40 YearsCG at McGinnis Ferry
    
    
    
    
    
    
    5,000,114
    
    
    
    34,600,386
    
    
    

    49,360
    
    
    
    5,000,114
    
    
    
    34,649,746
    
    
    $
    39,649,860
    
    
    
    112,685
    
    
    1997
    
    2004
    
    3-40 YearsCG at Metrowest
    
    
    
    
    
    
    3,421,000
    
    
    
    22,592,957
    
    
    
    334,126
    
    
    
    3,421,000
    
    
    
    22,927,083
    
    
    $
    26,348,083
    
    
    
    895,476
    
    
    1997
    
    2003
    
    3-40 YearsCG at Mount Vernon
    
    
    13,020,145
    
    
    
    2,130,000
    
    
    
    24,943,402
    
    
    
    143,616
    
    
    
    2,130,000
    
    
    
    25,087,018
    
    
    $
    27,217,018
    
    
    
    482,631
    
    
    1997
    
    2004
    
    3-40 YearsCG at Natchez Trace
    
    
    10,547,235
    
    
    
    1,312,000
    
    
    
    16,568,050
    
    
    
    964,888
    
    
    
    1,299,073
    
    
    
    17,545,865
    
    
    $
    18,844,938
    
    
    
    4,653,757
    
    
    1995/97
    
    1997
    
    3-40 YearsCG at Patterson Place
    
    
    
    
    
    
    2,016,000
    
    
    
    19,060,725
    
    
    
    71,634
    
    
    
    2,016,000
    
    
    
    19,132,359
    
    
    $
    21,148,359
    
    
    
    124,363
    
    
    1997
    
    2004
    
    3-40 YearsCG at Promenade
    
    
    21,901,493
    
    
    
    1,479,352
    
    
    
    
    
    
    
    27,188,833
    
    
    
    1,748,879
    
    
    
    26,919,306
    
    
    $
    28,668,185
    
    
    
    5,539,143
    
    
    1992
    
    1992
    
    3-40 YearsCG at Research Park
    
    
    12,775,000
    
    
    
    3,680,000
    
    
    
    29,322,067
    
    
    
    4,490,719
    
    
    
    3,680,000
    
    
    
    33,812,786
    
    
    $
    37,492,786
    
    
    
    10,728,575
    
    
    1987/94
    
    1994
    
    3-40 YearsCG at Reservoir
    
    
    8,173,996
    
    
    
    1,020,000
    
    
    
    
    
    
    
    13,316,591
    
    
    
    1,122,893
    
    
    
    13,213,698
    
    
    $
    14,336,591
    
    
    
    2,689,398
    
    
    2000
    
    1998
    
    3-40 YearsCG at River Oaks
    
    
    10,670,608
    
    
    
    2,160,000
    
    
    
    17,424,336
    
    
    
    148,355
    
    
    
    2,160,000
    
    
    
    17,572,691
    
    
    $
    19,732,691
    
    
    
    343,517
    
    
    1992
    
    2004
    
    3-40 YearsCG at River Plantation
    
    
    11,886,987
    
    
    
    2,320,000
    
    
    
    19,669,298
    
    
    
    314,613
    
    
    
    2,320,000
    
    
    
    19,983,911
    
    
    $
    22,303,911
    
    
    
    385,563
    
    
    1994
    
    2004
    
    3-40 YearsCG at Riverchase
    
    
    19,444,358
    
    
    
    2,340,000
    
    
    
    25,248,548
    
    
    
    4,353,088
    
    
    
    2,340,000
    
    
    
    29,601,636
    
    
    $
    31,941,636
    
    
    
    8,803,660
    
    
    1984/91
    
    2004
    
    3-40 YearsCG at Seven Oaks
    
    
    
    
    
    
    3,439,125
    
    
    
    19,943,544
    
    
    
    209,821
    
    
    
    3,439,125
    
    
    
    20,153,365
    
    
    $
    23,592,490
    
    
    
    253,019
    
    
    2004
    
    2004
    
    3-40 YearsCG at Sugarloaf
    
    
    17,729,019
    
    
    
    2,500,000
    
    
    
    21,811,418
    
    
    
    740,392
    
    
    
    2,500,000
    
    
    
    22,551,811
    
    
    $
    25,051,811
    
    
    
    424,011
    
    
    2002
    
    2004
    
    3-40 YearsCG at TownPark
    
    
    
    
    
    
    1,391,500
    
    
    
    
    
    
    
    35,976,651
    
    
    
    2,647,374
    
    
    
    34,720,777
    
    
    $
    37,368,151
    
    
    
    5,120,497
    
    
    2002
    
    2000
    
    3-40 YearsCG at Wesleyan
    
    
    11,598,394
    
    
    
    720,000
    
    
    
    12,760,587
    
    
    
    7,074,715
    
    
    
    1,404,780
    
    
    
    19,150,523
    
    
    $
    20,555,302
    
    
    
    5,299,958
    
    
    1997
    
    1996/97
    
    3-40 YearsCV at Ashford Place
    
    
    
    
    
    
    537,600
    
    
    
    5,839,838
    
    
    
    640,130
    
    
    
    537,600
    
    
    
    6,479,968
    
    
    $
    7,017,568
    
    
    
    1,603,979
    
    
    1983
    
    1996
    
    3-40 YearsCV at Ashley Plantation
    
    
    23,893,724
    
    
    
    1,160,000
    
    
    
    11,284,785
    
    
    
    15,335,056
    
    
    
    2,215,490
    
    
    
    25,564,351
    
    
    $
    27,779,841
    
    
    
    6,119,577
    
    
    1997
    
    1998
    
    3-40 YearsCV at Caledon Wood
    
    
    
    
    
    
    2,100,000
    
    
    
    19,482,210
    
    
    
    1,003,199
    
    
    
    2,088,949
    
    
    
    20,496,460
    
    
    $
    22,585,409
    
    
    
    5,346,616
    
    
    1995/96
    
    1997
    
    3-40 YearsCV at Gainesville
    
    
    25,344,175
    
    
    
    3,360,000
    
    
    
    24,173,649
    
    
    
    5,791,825
    
    
    
    3,361,850
    
    
    
    29,963,624
    
    
    $
    33,325,474
    
    
    
    10,675,117
    
    
    1989/93/94
    
    1994
    
    3-40 YearsCV at Haverhill
    
    
    
    
    
    
    1,771,000
    
    
    
    17,869,452
    
    
    
    3,053,546
    
    
    
    1,771,000
    
    
    
    20,922,998
    
    
    $
    22,693,998
    
    
    
    4,600,306
    
    
    1998
    
    1998
    
    3-40 YearsCV at Huntleigh Woods
    
    
    
    
    
    
    745,600
    
    
    
    4,908,990
    
    
    
    1,145,170
    
    
    
    745,600
    
    
    
    6,054,160
    
    
    $
    6,799,760
    
    
    
    1,884,484
    
    
    1978
    
    1994
    
    3-40 YearsCV at Inverness
    
    
    9,900,000
    
    
    
    2,349,487
    
    
    
    16,279,416
    
    
    
    10,359,919
    
    
    
    2,936,991
    
    
    
    26,051,831
    
    
    $
    28,988,822
    
    
    
    10,002,717
    
    
    1986/87/90/97
    
    1986/87/90/97
    
    3-40 YearsCV at Lake Mary
    
    
    22,240,281
    
    
    
    2,145,480
    
    
    
    
    
    
    
    20,431,614
    
    
    
    3,634,094
    
    
    
    18,942,999
    
    
    $
    22,577,094
    
    
    
    7,914,012
    
    
    1991/95
    
    1991/95
    
    3-40 YearsCG at Quarry Oaks
    
    
    
    
    
    
    5,063,500
    
    
    
    27,767,505
    
    
    
    733,944
    
    
    
    5,063,500
    
    
    
    28,501,448
    
    
    $
    33,564,948
    
    
    
    785,781
    
    
    1996
    
    2003
    
    3-40 YearsCV at Sierra Vista
    
    
    
    
    
    
    2,320,000
    
    
    
    11,370,600
    
    
    
    466,636
    
    
    
    2,320,000
    
    
    
    11,837,236
    
    
    $
    14,157,236
    
    
    
    151,730
    
    
    1999
    
    2004
    
    3-40 YearsCV at Timothy Woods
    
    
    9,182,097
    
    
    
    1,020,000
    
    
    
    11,910,546
    
    
    
    510,609
    
    
    
    1,024,347
    
    
    
    12,416,808
    
    
    $
    13,441,155
    
    
    
    3,300,458
    
    
    1996
    
    1997
    
    3-40 YearsCV at TownPark (Sarasota)
    
    
    
    
    
    
    1,566,765
    
    
    
    
    
    
    
    20,113,564
    
    
    
    1,674,007
    
    
    
    20,006,322
    
    
    $
    21,680,329
    
    
    
    3,160,466
    
    
    2002
    
    2000
    
    3-40 YearsCV at Trussville
    
    
    16,048,385
    
    
    
    1,504,000
    
    
    
    18,800,253
    
    
    
    1,848,468
    
    
    
    1,510,409
    
    
    
    20,642,312
    
    
    $
    22,152,721
    
    
    
    5,798,530
    
    
    1996/97
    
    1997
    
    3-40 YearsCV at Walton Way
    
    
    
    
    
    
    1,024,000
    
    
    
    7,877,766
    
    
    
    3,767,835
    
    
    
    1,013,760
    
    
    
    11,655,841
    
    
    $
    12,669,601
    
    
    
    2,510,049
    
    
    1970/88
    
    1998
    
    3-40 YearsOffice:250 Commerce Street
    
    
    
    
    
    
    25,000
    
    
    
    200,200
    
    
    
    2,601,700
    
    
    
    25,000
    
    
    
    2,801,900
    
    
    $
    2,826,900
    
    
    
    2,564,542
    
    
    1904/81
    
    1980
    
    3-40 Years901 Maitland Center
    
    
    
    
    
    
    2,335,035
    
    
    
    14,398,193
    
    
    
    773,318
    
    
    
    2,335,035
    
    
    
    15,171,512
    
    
    $
    17,506,547
    
    
    
    1,378,245
    
    
    1985
    
    2002
    
    3-40 YearsAmSouth Center
    
    
    
    
    
    
    764,961
    
    
    
    
    
    
    
    20,439,575
    
    
    
    764,961
    
    
    
    20,439,574
    
    
    $
    21,204,536
    
    
    
    10,241,390
    
    
    1990
    
    1990
    
    3-40 YearsColonial Center at Blue Lake
    
    
    
    
    
    
    1,794,672
    
    
    
    14,615,335
    
    
    
    3,535,508
    
    
    
    1,794,672
    
    
    
    18,150,844
    
    
    $
    19,945,516
    
    
    
    2,764,673
    
    
    1982/95
    
    1999
    
    3-40 YearsColonial Center at Mansell Overlook
    
    
    16,194,048
    
    
    
    4,540,000
    
    
    
    44,012,971
    
    
    
    83,111,961
    
    
    
    9,673,627
    
    
    
    121,991,305
    
    
    $
    131,664,932
    
    
    
    21,743,732
    
    
    1987/96/97/00
    
    1997
    
    3-40 YearsColonial Center at Research Office Center
    
    
    
    
    
    
    1,745,672
    
    
    
    12,909,263
    
    
    
    252,183
    
    
    
    1,745,672
    
    
    
    13,161,446
    
    
    $
    14,907,118
    
    
    
    145,402
    
    
    1984/00
    
    2004
    
    3-40 YearsColonial Center at Research Place
    
    
    
    
    
    
    2,763,900
    
    
    
    12,790,254
    
    
    
    1,903,513
    
    

    
    2,315,566
    
    
    
    15,142,101
    
    
    $
    17,457,667
    
    
    
    632,114
    
    
    1979/84/88
    
    2003
    
    3-40 YearsColonial Center at Town Park
    
    
    
    
    
    
    1,391,500
    
    
    
    
    
    
    
    67,507,455
    
    
    
    4,923,396
    
    
    
    63,975,559
    
    
    $
    68,898,955
    
    
    
    8,748,409
    
    
    2001
    
    2000
    
    3-40 YearsColonial Center Colonnade
    
    
    
    
    
    
    6,299,310
    
    
    
    40,485,721
    
    
    
    1,913,923
    
    
    
    6,299,310
    
    
    
    42,399,644
    
    
    $
    48,698,954
    
    
    
    3,037,676
    
    
    1989/99
    
    2002
    
    3-40 YearsColonial Center Heathrow
    
    
    
    
    
    
    13,548,715
    
    
    
    97,256,123
    
    
    
    1,483,747
    
    
    
    13,548,715
    
    
    
    98,739,871
    
    
    $
    112,288,586
    
    
    
    6,097,768
    
    
    1988/96-00
    
    2002
    
    3-40 YearsColonial Center Lakeside
    
    
    
    
    
    
    423,451
    
    
    
    8,313,291
    
    
    
    2,021,987
    
    
    
    425,255
    
    
    
    10,333,473
    
    
    $
    10,758,729
    
    
    
    2,527,608
    
    
    1989/90
    
    1997
    
    3-40 YearsColonial Center Research Park
    
    
    
    
    
    
    1,745,672
    
    
    
    15,082,614
    
    
    
    (2,742,986
    )
    
    
    1,003,865
    
    
    
    13,081,435
    
    
    $
    14,085,300
    
    
    
    3,274,133
    
    
    1999
    
    1998
    
    3-40 YearsColonial Plaza
    
    
    
    
    
    
    1,001,375
    
    
    
    12,381,023
    
    
    
    6,012,616
    
    
    
    1,005,642
    
    
    
    18,389,372
    
    
    $
    19,395,014
    
    
    
    4,152,045
    
    
    1982
    
    1997
    
    3-40 YearsConcourse Center
    
    
    
    
    
    
    4,875,000
    
    
    
    25,702,552
    
    
    
    3,798,248
    
    
    
    4,875,000
    
    
    
    29,500,800
    
    
    $
    34,375,800
    
    
    
    4,998,035
    
    
    1981/85
    
    1998
    
    3-40 YearsDRS Building
    
    
    
    
    
    
    610,000
    
    
    
    12,089,992
    
    
    
    91,680
    
    
    
    610,000
    
    
    
    12,181,672
    
    
    $
    12,791,672
    
    
    
    339,011
    
    
    1972/86/90/03
    
    
    
    3-40 YearsIndependence Plaza
    
    
    
    
    
    
    1,505,000
    
    
    
    6,018,476
    
    
    
    3,531,646
    
    
    
    1,505,000
    
    
    
    9,550,122
    
    
    $
    11,055,122
    
    
    
    1,865,710
    
    
    1981/92
    
    1998
    
    3-40 YearsInternational Park
    
    
    
    
    
    
    1,279,355
    
    
    
    5,668,186
    
    
    
    17,580,130
    
    
    
    2,740,276
    
    
    
    21,787,395
    
    
    $
    24,527,671
    
    
    
    4,649,879
    
    
    1987/89
    
    1997
    

    3-40 YearsInterstate Park
    
    
    
    
    
    
    1,125,990
    
    
    
    7,113,558
    
    
    
    12,982,307
    
    
    
    1,125,988
    
    
    
    20,095,867
    
    
    $
    21,221,855
    
    
    
    9,360,231
    
    
    1982-85/89
    
    1982-85/89
    
    3-40 YearsPerimeter Corporate Park
    
    
    
    
    
    
    1,422,169
    
    
    
    18,377,648
    
    
    
    4,713,131
    
    
    
    1,422,169
    
    
    
    23,090,779
    
    
    $
    24,512,948
    
    
    
    5,095,577
    
    
    1986/89
    
    1998
    
    3-40 YearsProgress Center
    
    
    
    
    
    
    521,037
    
    
    
    14,710,851
    
    
    
    4,929,420
    
    
    
    523,258
    
    
    
    19,638,051
    
    
    $
    20,161,308
    
    
    
    4,901,639
    
    
    1983-91
    
    1997
    
    3-40 YearsRiverchase Center
    
    
    
    
    
    
    1,916,727
    
    
    
    22,091,651
    
    
    
    6,140,375
    
    
    
    1,924,895
    
    
    
    28,223,858
    
    
    $
    30,148,753
    
    
    
    6,620,776
    
    
    1984-88
    
    1997
    
    3-40 YearsShoppes at Mansell
    
    
    
    
    
    
    600,000
    
    
    
    3,089,565
    
    
    
    136,432
    
    
    
    600,000
    
    
    
    3,225,997
    
    
    $
    3,825,997
    
    
    
    536,662
    
    
    1996/97
    
    1998
    
    3-40 YearsTown Park-Office over Retail
    
    
    
    
    
    
    443,535
    
    
    
    
    
    
    
    6,005,289
    
    
    
    442,772
    
    
    
    6,006,053
    
    
    $
    6,448,825
    
    
    
    224,123
    
    
    2004
    
    2004
    
    3-40 YearsRetail:Britt David Shopping Center
    
    
    
    
    
    
    1,755,000
    
    
    
    4,951,852
    
    
    
    537,199
    
    
    
    1,755,000
    
    
    
    5,489,051
    
    
    $
    7,244,051
    
    
    
    1,448,317
    
    
    1990
    
    1994
    
    3-40 YearsColonial Brookwood Village
    
    
    
    
    
    
    8,136,700
    
    
    
    24,435,002
    
    
    
    67,071,375
    
    
    
    8,171,373
    
    
    
    91,471,704
    
    
    $
    99,643,077
    
    
    
    16,660,693
    
    
    1973/91/00
    
    1997
    
    3-40 YearsColonial Mall Bel Air
    
    
    
    
    
    
    7,517,000
    
    
    
    80,151,190
    
    
    
    9,003,324
    
    
    
    7,425,004
    
    
    
    89,246,510
    
    
    $
    96,671,514
    
    
    
    16,236,426
    
    
    1966/90/97
    
    1998
    
    3-40 YearsColonial Mall Burlington
    
    
    
    
    
    
    4,120,000
    
    
    
    25,632,587
    
    
    
    7,340,526
    
    
    
    4,137,557
    
    
    
    32,955,556
    
    
    $
    37,093,113
    
    
    
    6,207,567
    
    
    1969/86/94
    
    1997
    
    3-40 YearsColonial Mall Decatur
    
    
    
    
    
    
    3,262,800
    
    
    
    23,636,229
    
    
    
    4,759,934
    
    
    
    3,262,800
    
    
    
    28,396,163
    
    
    $
    31,658,963
    
    
    
    8,252,786
    
    
    1979/89
    
    1993
    
    3-40 YearsColonial Mall Gadsden
    
    
    
    
    
    
    639,577
    
    
    
    
    
    
    
    28,213,959
    
    
    
    639,577
    
    
    
    28,213,959
    
    
    $
    28,853,536
    
    
    
    15,662,370
    
    
    1974/91
    
    1974
    
    3-40 YearsColonial Mall Glynn Place
    
    
    
    
    
    
    3,588,178
    
    
    
    22,514,121
    
    
    
    5,949,314
    
    
    
    3,603,469
    
    
    
    28,448,144
    
    
    $
    32,051,613
    
    
    
    5,774,539
    
    
    1986
    
    1997
    
    3-40 YearsColonial Mall Greenville
    
    
    
    
    
    
    4,433,000
    
    
    
    24,812,243
    
    
    
    8,895,832
    
    
    
    4,328,417
    
    
    
    33,812,658
    
    
    $
    38,141,075
    
    
    
    6,844,925
    
    
    1965/89/99
    
    1999
    
    3-40 YearsColonial Mall Lakeshore
    
    
    
    
    
    
    4,646,300
    
    
    
    30,973,239
    
    
    
    3,863,016
    
    
    
    4,666,100
    
    
    
    34,816,455
    
    
    $
    39,482,555
    
    
    
    7,807,634
    
    
    1984-87
    
    1997
    
    3-40 YearsColonial Mall Macon
    
    
    
    
    
    
    1,684,875
    
    
    
    
    
    
    
    99,496,486
    
    
    
    5,508,562
    
    
    
    95,672,799
    
    
    $
    101,181,361
    
    
    
    35,517,741
    
    
    1975/88/97
    
    1975/88
    
    3-40 YearsColonial Mall Staunton
    
    
    
    
    
    
    2,895,000
    
    
    
    15,083,542
    
    
    
    6,851,161
    
    
    
    2,907,337
    
    
    
    21,922,366
    
    
    $
    24,829,703
    
    
    
    4,425,608
    
    
    1969/86/97
    
    1997
    
    3-40 YearsColonial Mall Temple
    
    
    
    
    
    
    2,981,736
    
    
    
    23,503,930
    
    
    
    7,746,314
    
    
    
    2,981,736
    
    
    
    31,250,244
    
    
    $
    34,231,980
    
    
    
    4,845,085
    
    
    1976/91
    
    2000
    
    3-40 Years
 S-1




---



##### Table of Contents



SCHEDULE III
COLONIAL PROPERTIES TRUST
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2004 Initial Cost to
    
    
    Cost
    
    
    Gross Amount at Which
    
    
    
    
    
    
    
    
    DateCompany
    
    
    Capitalized
    
    
    Carried at Close of Period
    
    
    
    
    
    
    
    
    Acquired/Buildings and
    
    
    Subsequent to
    
    
    
    
    
    
    Buildings and
    
    
    
    
    
    
    Accumulated
    
    
    Date
    
    Placed in
    
    DepreciableDescription
    
    Encumbrances
    
    
    Land
    
    
    Improvements
    
    
    Acquisition
    
    
    Land
    
    
    Improvements
    
    
    Total
    
    
    Depreciation
    
    
    Completed
    
    Service
    
    Lives-YearsColonial Mall Valdosta
    
    
    
    
    
    
    5,377,000
    
    
    
    30,239,796
    
    
    
    5,027,655
    
    
    
    6,039,268
    
    
    
    34,605,183
    
    
    $
    40,644,451
    
    
    
    7,797,793
    
    
    1982-85
    
    1997
    
    3-40 YearsColonial Mayberry Mall
    
    
    
    
    
    
    862,500
    
    
    
    3,778,590
    
    
    
    908,596
    
    
    
    866,175
    
    
    
    4,683,510
    
    
    $
    5,549,686
    
    
    
    1,080,276
    
    
    1968/86
    
    1997
    
    3-40 YearsColonial Promenade Beechwood
    
    
    
    
    
    
    2,565,550
    
    
    
    19,647,875
    
    
    
    8,939,004
    
    
    
    2,576,483
    
    
    
    28,575,946
    
    
    $
    31,152,429
    
    
    
    5,746,712
    
    
    1963/92
    
    1997
    
    3-40 YearsColonial Promenade Boulevard Square
    
    
    27,087,264
    
    
    
    13,719,799
    
    
    
    24,723,406
    
    
    
    908,889
    
    
    
    13,719,799
    
    
    
    25,632,295
    
    
    $
    39,352,094
    
    
    
    186,578
    
    
    2001
    
    2004
    
    3-40 YearsColonial Promenade Burnt Store
    
    
    
    
    
    
    3,750,000
    
    
    
    8,198,677
    
    
    
    (3,613,556
    )
    
    
    2,407,798
    
    
    
    5,927,323
    
    
    $
    8,335,121
    
    
    
    1,631,797
    
    
    1990
    
    1994
    
    3-40 YearsColonial Promenade Deerfield
    
    
    31,866,396
    
    
    
    13,000,000
    
    
    
    26,680,451
    
    
    
    3,246,261
    
    
    
    13,000,000
    
    
    
    29,926,712
    
    
    $
    42,926,712
    
    
    
    348,016
    
    
    1988/2003
    
    2004
    
    3-40 YearsColonial Promenade Hunters Creek
    
    
    
    
    
    
    4,181,760
    
    
    
    13,023,401
    
    
    
    523,489
    
    
    
    4,181,760
    
    
    
    13,546,890
    
    
    $
    17,728,650
    
    
    
    3,043,391
    
    
    1993/95
    
    1996
    
    3-40 YearsColonial Pinnacle Kingwood Commons
    
    
    
    
    
    
    6,100,000
    
    
    
    23,223,232
    
    
    
    517,201
    
    
    
    6,100,000
    
    
    
    23,740,433
    
    
    $
    29,840,433
    
    
    
    524,189
    
    
    2003/04
    
    2004
    
    3-40 YearsColonial Promenade Lakewood
    
    
    
    
    
    
    2,984,522
    
    
    
    11,482,512
    
    
    
    3,402,345
    
    
    
    3,018,135
    
    
    
    14,851,245
    
    
    $
    17,869,379
    
    
    
    3,148,051
    
    
    1995
    
    1997
    
    3-40 YearsColonial Promenade Montgomery
    
    
    11,823,529
    
    
    
    3,788,913
    
    
    
    11,346,754
    
    
    
    1,793,795
    
    
    
    4,332,432
    
    
    
    12,597,030
    
    
    $
    16,929,462
    
    
    
    4,728,841
    
    
    1990
    
    1993
    
    3-40 YearsColonial Promenade Montgomery North
    
    
    
    
    
    
    2,400,000
    
    
    
    5,664,858
    
    
    
    630,951
    
    
    
    2,401,182
    
    
    
    6,294,627
    
    
    $
    8,695,809
    
    
    
    1,128,904
    
    
    1997
    
    1995
    
    3-40 YearsColonial Promenade Northdale
    
    
    
    
    
    
    3,059,760
    
    
    
    8,054,090
    
    
    
    6,958,620
    
    
    
    2,835,571
    
    
    
    15,236,899
    
    
    $
    18,072,470
    
    
    
    2,755,195
    
    
    1988/00
    
    1995
    
    3-40 YearsColonial Promenade Town Park
    
    
    
    
    
    
    3,916,001
    
    
    
    
    
    
    
    25,699,868
    
    
    
    3,916,001
    
    
    
    25,699,868
    
    
    $
    29,615,869
    
    
    
    1,129,859
    
    
    2000
    
    1998
    
    3-40 YearsColonial Promenade Trussville
    
    
    
    
    
    
    4,201,186
    
    
    
    
    
    
    
    28,155,339
    
    
    
    3,868,278
    
    
    
    28,488,248
    
    
    $
    32,356,526
    
    
    
    3,340,538
    
    
    2000
    
    1998
    
    3-40 YearsColonial Promenade Trussville II
    
    
    
    
    
    
    1,476,871
    
    
    
    
    
    
    
    6,364,215
    
    
    
    1,829,634
    
    
    
    6,011,452
    
    
    $
    7,841,086
    
    
    
    99,675
    
    
    2004
    
    2003
    
    3-40 YearsColonial Promenade Tutwiler Farm
    
    
    
    
    
    
    10,287,026
    
    
    
    
    
    
    
    17,862,869
    
    
    
    10,288,138
    
    
    
    17,861,757
    
    
    $
    28,149,895
    
    
    
    1,932,155
    
    
    2000
    
    1999
    
    3-40 YearsColonial Promenade Wekiva
    
    
    
    
    
    
    2,817,788
    
    
    
    15,302,375
    
    
    
    572,547
    
    
    
    2,817,788
    
    
    
    15,874,922
    
    
    $
    18,692,710
    
    
    
    3,501,473
    
    
    1990
    
    1996
    
    3-40 YearsColonial Promenade Winter Haven
    
    
    
    
    
    
    1,768,586
    
    
    
    3,928,903
    
    
    
    4,943,550
    
    
    
    4,045,045
    
    
    
    6,595,994
    
    
    $
    10,641,039
    
    
    
    1,811,905
    
    
    1986
    
    1995
    
    3-40 YearsColonial Shoppes Bear Lake
    
    
    
    
    
    
    2,134,440
    
    
    
    6,551,683
    
    
    
    897,840
    
    
    
    2,134,440
    
    
    
    7,449,523
    
    
    $
    9,583,963
    
    
    
    1,943,639
    
    
    1990
    
    1995
    
    3-40 YearsColonial Shoppes Bellwood
    
    
    
    
    
    
    330,000
    
    
    
    
    
    
    
    5,411,228
    
    
    
    330,000
    
    
    
    5,411,228
    
    
    $
    5,741,228
    
    
    
    2,137,265
    
    
    1988
    
    1988
    
    3-40 YearsColonial Shoppes Clay
    
    
    
    
    
    
    272,594
    
    
    
    
    
    
    
    7,600,113
    
    
    
    277,975
    
    
    
    7,594,733
    
    
    $
    7,872,707
    
    
    
    3,108,326
    
    
    1982/2004
    
    1982
    
    3-40 YearsColonial Shoppes College Parkway
    
    
    7,415,492
    
    
    
    2,700,000
    
    
    
    10,792,000
    
    
    
    678,311
    
    
    
    2,700,000
    
    
    
    11,470,311
    
    
    $
    14,170,311
    
    
    
    
    
    
    1970/2000
    
    2004
    
    3-40 YearsColonial Shoppes McGehee
    
    
    
    
    
    
    197,152
    
    
    
    
    
    
    
    6,201,398
    
    
    
    197,152
    
    
    
    6,201,397
    
    
    $
    6,398,550
    
    
    
    2,483,325
    
    
    1986
    
    1986
    
    3-40 YearsColonial Shoppes Pines Plaza
    
    
    9,288,127
    
    
    
    2,000,000
    
    
    
    9,641,999
    
    
    
    453,990
    
    
    
    2,000,000
    
    
    
    10,095,989
    
    
    $
    12,095,989
    
    
    
    
    
    
    2002
    
    2004
    
    3-40 YearsColonial Shoppes Quaker Village
    
    
    
    
    
    
    931,000
    
    
    
    7,901,874

    
    
    
    1,363,712

    
    
    
    934,967
    
    
    
    9,261,618



    
    
    $
    10,196,586

    
    
    
    1,868,988
    
    
    1968/88/97
    
    1997
    
    3-40 YearsColonial Shoppes Yadkinville
    
    
    
    
    
    
    1,080,000
    
    
    
    1,224,136
    
    
    
    3,541,805
    
    
    
    1,084,602
    
    
    
    4,761,339
    
    
    $
    5,845,941
    
    
    
    901,009
    
    
    1971/97
    
    1997
    
    3-40 YearsOlde Town Shopping Center
    
    
    
    
    
    
    343,325
    
    
    
    
    
    
    
    2,875,248
    
    
    
    343,325
    
    
    
    2,875,248
    
    
    $
    3,218,573
    
    
    
    1,321,997
    
    
    1978/90
    
    1978/90
    
    3-40 YearsP&S Building
    
    
    
    
    
    
    104,089
    
    
    
    558,646
    
    
    
    277,323
    
    
    
    104,089
    
    
    
    835,969
    
    
    $
    940,058
    
    
    
    717,561
    
    
    1946/76/91
    
    1974
    
    3-40 YearsRivermont Shopping Center
    
    
    
    
    
    
    515,250
    
    
    
    2,332,486
    
    
    
    369,555
    
    
    
    517,446
    
    
    
    2,699,845
    
    
    $
    3,217,291
    
    
    
    614,683
    
    
    1986/97
    
    1997
    
    3-40 YearsVillage on Parkway

    
    
    47,000,000
    
    
    
    16,940,000
    
    
    
    30,852,577
    
    
    
    2,635,752
    
    
    
    16,940,000
    
    
    
    33,488,329
    
    
    $
    50,428,329
    
    
    
    596,144
    
    
    1980
    
    2004
    
    3-40 YearsActive Redevelopment
Projects:Colonial Mall Myrtle Beach
    
    
    
    
    
    
    9,099,972
    
    
    
    33,663,654
    
    
    
    26,273,632
    
    
    
    9,163,149
    
    
    
    59,874,109
    
    
    $
    69,037,258
    
    
    
    10,492,080
    
    
    1986
    
    1996
    
    3-40 YearsColonial University Village
    
    
    
    
    
    
    103,480
    
    
    
    
    
    
    
    29,197,711
    
    
    
    982,159
    
    
    
    28,319,033
    
    
    $
    29,301,191
    
    
    
    13,435,124
    
    
    1973/84/89
    
    1973/84/89
    
    3-40 YearsColonial Shops Colonnade
    
    
    
    
    
    
    2,468,092
    
    
    
    4,034,205
    
    
    
    3,373,457
    
    
    
    2,468,092
    
    
    
    7,407,662
    
    
    $
    9,875,754
    
    
    
    246,919
    
    
    1989
    
    2002
    
    3-40 YearsActive Development
Projects:CG at Mallard Creek
    
    
    
    
    
    
    2,911,443
    
    
    
    1,277,575
    
    
    
    7,014,098
    
    
    
    2,911,443
    
    
    
    8,291,673
    
    
    $
    11,203,116
    
    
    
    
    
    
    N/A
    
    2003
    
    N/ACG at Silverado
    
    
    
    
    
    
    1,878,740
    
    
    
    
    
    
    
    12,794,230
    
    
    
    1,878,740
    
    
    
    12,794,230
    
    
    $
    14,672,970
    
    
    
    
    
    
    N/A
    
    2003
    
    N/ACG at Silverado
    
    
    
    
    
    
    3,382,090
    
    
    
    
    
    
    
    
    
    
    
    3,382,090
    
    
    
    
    
    
    $
    3,382,090
    
    
    
    126
    
    
    N/A
    
    2003
    
    N/ACG at Twin Lakes
    
    
    
    
    
    
    4,966,922
    
    
    
    
    
    
    
    26,038,729
    
    
    
    4,996,922
    
    
    
    26,008,729
    
    
    $
    31,005,651
    
    
    
    88,959
    
    
    N/A
    
    2001
    
    N/AColonial Promenade Alabaster
    
    
    
    
    
    
    7,540,689
    
    
    
    
    
    
    
    7,503,013
    
    
    
    7,540,689
    
    
    
    7,503,014
    
    
    $
    15,043,703
    
    
    
    
    
    
    N/A
    
    2004
    
    N/AColonial Promenade Craft Farms
    
    
    
    
    
    
    4,859,664
    
    
    
    
    
    
    
    2,199,695
    
    
    
    7,059,359
    
    
    
    
    
    
    $
    7,059,359
    
    
    
    
    
    
    N/A
    
    2004
    
    N/AColonial Promenade Tutwiler Farm
    
    
    
    
    
    
    2,915,467
    
    
    
    
    
    
    
    
    
    
    
    2,915,467
    
    
    
    
    
    
    $
    2,915,467
    
    
    
    
    
    
    N/A
    
    2004
    
    N/AColonial TownPark Mixed Use
    
    
    
    
    
    
    405,889
    
    
    
    
    
    
    
    9,173,048
    
    
    
    405,889
    
    
    
    9,173,048
    
    
    $
    9,578,937
    
    
    
    83,604
    
    
    N/A
    
    1998
    
    N/AOther Miscellaneous Projects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,485,288
    
    
    $
    2,485,288
    
    
    
    
    
    
    N/A
    
    2002
    
    N/AUnimproved
Land:CG at Wesleyan III
    
    
    
    
    
    
    230,643
    
    
    
    
    
    
    
    8,691
    
    
    
    239,334
    
    
    
    
    
    
    $
    239,334
    
    
    
    
    
    
    N/A
    
    1996
    
    N/AColonial Center Heathrow
    
    
    
    
    
    
    12,250,568
    
    
    
    
    
    
    
    1,144,715
    
    
    
    13,395,283
    
    
    
    
    
    
    $
    13,395,283
    
    
    
    
    
    
    N/A
    
    2002
    
    N/AColonial Center Mansell Infrastructure
    
    
    
    
    
    
    2,664,265
    
    
    
    
    
    
    
    8,476,823
    
    
    
    11,141,088
    
    
    
    
    
    
    $
    11,141,088
    
    
    
    
    
    
    N/A
    
    1997
    
    N/AColonial TownPark Infrastructure
    
    
    
    
    
    
    16,123,817
    
    
    
    
    
    
    
    (1,540,345
    )
    
    
    14,583,472
    
    
    
    
    
    
    $
    14,583,472
    
    
    
    
    
    
    N/A
    
    1999
    
    N/ACorporate Assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,533,016
    
    
    
    
    
    
    
    11,533,016
    
    
    $
    11,533,016
    
    
    
    6,493,428
    
    
    N/A
    
    N/A
    
    3-7 YearsLakewood Ranch
    
    
    
    
    
    
    47,990
    
    
    
    
    
    
    
    1,136,824
    
    
    
    1,184,814
    
    
    
    
    
    
    $
    1,184,814
    
    
    
    
    
    
    N/A
    
    1999
    
    N/AOther Land
    
    
    
    
    
    
    1,143,896
    
    
    
    
    
    
    
    (1,039,077
    )
    
    
    104,819
    
    
    
    
    
    
    $
    104,819
    
    
    
    
    
    
    N/A
    
    N/A
    
    N/A$
    501,867,796
    
    
    $
    416,780,704
    
    
    $
    1,568,949,388
    
    
    $
    1,103,108,584
    
    
    $
    415,332,401
    
    
    $
    2,675,991,563
    
    
    $
    3,091,323,963
    
    
    $
    505,988,402
 S-2




---



##### Table of Contents



NOTES TO SCHEDULE III
COLONIAL PROPERTIES TRUST
December 31, 2004  (1)
    The aggregate cost for Federal Income Tax purposes was
approximately $2.7 billion at December 31, 2004.(2)
    See description of mortgage notes payable in Note 8 of Notes to Consolidated Financial Statements.(3)
    The following is a reconciliation of real estate to balances reported at the beginning of the year:(4)
    Amounts include real estate assets classified as held for sale at December 31, 2004. Reconciliation of Real Estate 2004
    
    
    2003
    
    
    2002Real estate investments:Balance at beginning of year
    
    $
    2,510,449,263
    
    
    $
    2,380,762,598
    
    
    $
    2,218,789,132Acquisitions of new property
    
    
    478,208,477
    
    
    
    78,742,469
    
    
    
    196,009,181Improvements and development
    
    
    143,497,725
    
    
    
    87,675,381
    
    
    
    93,664,000Dispositions of property
    
    
    (40,831,502
    )
    
    
    (36,731,185
    )
    
    
    (127,699,715
    )Balance at end of year
    
    $
    3,091,323,963
    
    
    $
    2,510,449,263
    
    
    $
    2,380,762,598
 Reconciliation of Accumulated Depreciation 2004
    
    
    2003
    
    
    2002Accumulated depreciation:Balance at beginning of year
    
    $
    425,487,601
    
    
    $
    351,163,907
    
    
    $
    310,445,402Depreciation
    
    
    104,935,782
    
    
    
    88,562,633
    
    
    
    73,602,948Depreciation of disposition of property
    
    
    (24,434,981
    )
    
    
    (14,238,939
    )
    
    
    (32,884,443
    )Balance at end of year
    
    $
    505,988,402
    
    
    $
    425,487,601
    
    
    $
    351,163,907
 S-3