<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                          ----------------------------
                                    FORM 10-K

[X]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

            FOR THE TRANSMISSION PERIOD FROM            TO
                                             ----------    ----------
                         COMMISSION FILE NUMBER 1-12080
                         COMMISSION FILE NUMBER 0-28226

                              POST PROPERTIES, INC.
                           POST APARTMENT HOMES, L.P.
           (Exact name of registrants as specified in their charters)

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


            4401 NORTHSIDE PARKWAY, SUITE 800, ATLANTA, GEORGIA 30327
               (Address of principal executive offices -- zip code)
                                 (404) 846-5000
              (Registrant's telephone number, including area code)
                          ----------------------------
           Securities registered pursuant to section 12(b) of the Act:


                                                      NAME OF EACH EXCHANGE ON
               TITLE OF EACH CLASS                         WHICH REGISTERED
           ----------------------------               ------------------------
           Common Stock, $.01 par value                New York Stock Exchange
            8 1/2% Series A Cumulative                 New York Stock Exchange
           Redeemable Preferred Shares,
                  $.01 par value
            7 5/8% Series B Cumulative                 New York Stock Exchange
           Redeemable Preferred Shares,
                  $.01 par value
            7 5/8% Series C Cumulative                 New York Stock Exchange
           Redeemable Preferred Shares,
                  $.01 par value

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

                                                      NAME OF EACH EXCHANGE ON
              TITLE OF EACH CLASS                          WHICH REGISTERED
           ----------------------------               ------------------------
          Units of Limited Partnership                            None

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

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

              Post Properties, Inc.:      YES [x]   NO [ ]
              Post Apartment Homes, L.P.: YES [x]   NO [ ]

         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. [ ]

         The aggregate market value of the shares of common stock held by
non-affiliates (based upon the closing sale price on the New York Stock
Exchange) on March 13, 2001 was approximately $1,437,365,412. As of March 13,
2001, there were 38,763,900 shares of common stock, $.01 par value, outstanding.

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

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement in connection with its Annual
Meeting of Shareholders to be held May 22, 2001 are incorporated by reference in
Part III.
================================================================================
                              POST PROPERTIES, INC.
                           POST APARTMENT HOMES, L.P.

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

ITEM                                        FINANCIAL INFORMATION                                     PAGE
 NO.                                                                                                   NO.
----                                                                                                  ----
<S>      <C>                                                                                          <C>
         PART I

1.         Business.............................................................................         1

2.         Properties...........................................................................         7

3.         Legal Proceedings....................................................................        10

4.         Submission of Matters to a Vote of Security Holders..................................        10

X.         Executive Officers of the Registrant.................................................        10


         PART II

5.         Market Price of the Registrant's Common Stock and Related Stockholder Matters........        12

6.         Selected Financial Data..............................................................        13

7.         Management's Discussion and Analysis of Financial Condition
                   and Results of Operations....................................................        17

7A.        Quantitative and Qualitative Disclosures about Market Risk...........................        36

8.         Financial Statements and Supplementary Data..........................................        38

9.         Changes in and Disagreements with Accountants on Accounting
                   and Financial Disclosure.....................................................        38


         PART III

10.        Directors and Executive Officers of the Registrant...................................        39

11.        Executive Compensation...............................................................        39

12.        Security Ownership of Certain Beneficial Owners and Management.......................        39

13.        Certain Relationships and Related Transactions.......................................        39


         PART IV

14.        Exhibits, Financial Statements, Schedules and Reports on Form 8-K....................        40
</TABLE>


<PAGE>   3


                                     PART I

ITEM 1.  BUSINESS
                                   THE COMPANY

Post Properties, Inc. (the "Company") is one of the largest developers and
operators of upscale multifamily apartment communities in the Southeastern and
Southwestern United States. The Company currently owns 87 stabilized communities
(the "Communities") containing 30,522 apartment units located primarily in
metropolitan Atlanta, Georgia; Dallas, Texas and Tampa and Orlando, Florida. In
addition, the Company currently has under construction or in initial lease-up 12
new communities and additions to three existing communities in the Atlanta,
Georgia; Dallas, Houston and Austin, Texas; Tampa, Florida; Denver, Colorado;
Charlotte, North Carolina; Phoenix, Arizona; Pasadena, California and Washington
D. C. metropolitan areas that will contain an aggregate of 4,661 apartment units
upon completion. For the year ended December 31, 2000, the average economic
occupancy rate (defined as gross potential rent less vacancy losses, model
expenses and bad debt divided by gross potential rent) of the 75 Communities
stabilized for the entire year was 96.7%. The average monthly rental rate per
apartment unit at these Communities for December 2000 was $933. The Company also
manages through affiliates 15,651 additional apartment units owned by third
parties. The Company is a fully integrated organization with multifamily
development, acquisition, operation and asset management expertise. The Company
has approximately 2,036 employees, none of whom is a party to a collective
bargaining agreement.

Since its founding in 1971, the Company has pursued three distinctive core
business strategies that have remained substantially unchanged:

Investment Building

Investment building means taking a long-term view of the assets the Company
creates. The Company develops communities with the intention of operating them
for periods that are relatively long by the standards of the apartment industry.
Key elements of the Company's investment building strategy include instilling a
disciplined team approach to development decisions, selecting sites in urban
infill locations in strong primary markets, consistently constructing new
apartment communities with a uniformly high quality, and conducting ongoing
property improvements.

Promotion of the Post(R) Brand Name

The Post(R) brand name strategy has been integral to the success of the Company
and, to the knowledge of the Company, has not been successfully duplicated
within the multifamily real estate industry in any major U.S. market. For such a
strategy to work, a company must develop and implement systems to achieve
uniformly high quality and value throughout its operations. As a result of the
Company's efforts in developing and maintaining its communities, the Company
believes that the Post(R) brand name is synonymous with quality upscale
apartment communities that are situated in desirable locations and provide
superior resident service. Key elements in implementing the Company's brand name
strategy include extensively utilizing the trademarked brand name, adhering to
quality in all aspects of the Company's operations, developing and implementing
leading edge training programs, and coordinating the Company's advertising
programs to increase brand name recognition.

Service Orientation

The Company's mission statement is: "To provide the superior apartment living
experience for our residents." By striving to provide a superior product and
superior service, the Company believes that it will be able to achieve its
long-term goals. The Company believes that it provides its residents with
superior product and superior service through its uniformly high quality
construction, selective urban infill locations, award winning landscaping and
numerous amenities, including on site business centers, on site courtesy
officers, urban vegetable gardens and state of the art fitness centers.

The Company believes that with the implementation of these strategies,
multifamily properties in its primary markets have the potential over the long
term to provide investment returns that exceed national averages. According to
recent market surveys, employment growth, population growth and household
formation growth in the Company's primary markets have exceeded, and are
forecasted to continue to exceed, national averages.


                                       1
<PAGE>   4

The Company is a self-administered and self-managed equity real estate
investment trust (a "REIT"). In 1993, the Company completed an initial public
offering of its Common Stock (the "Initial Offering") and a business combination
involving entities under varying common ownership. Proceeds from the Initial
Offering were used by the Company, in part, to acquire a controlling interest in
Post Apartment Homes, L.P. (the "Operating Partnership"), the Company's
principal operating subsidiary, which was formed to succeed to substantially all
of the ownership interest in a portfolio of 40 Post(R) multifamily apartment
communities, all of which were developed by the Company and owned by affiliates
of the Company, and to the development, leasing, landscaping and management
business of the Company and certain other affiliates.

The Company, through wholly owned subsidiaries, is the sole general partner of,
and controls a majority of the limited partnership interests in, the Operating
Partnership. The Company conducts all of its business through the Operating
Partnership and its subsidiaries.

The Company's and the Operating Partnership's executive offices are located at
4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327 and their telephone
number is (404) 846-5000. Post Properties, Inc., a Georgia corporation, was
incorporated on January 25, 1984, and is the successor by merger to the original
Post Properties, Inc., a Georgia corporation, which was formed in 1971. The
Operating Partnership is a Georgia limited partnership that was formed in July
1993 for the purpose of consolidating the operating and development businesses
of the Company and the Post(R) apartment portfolio described herein.

THE OPERATING PARTNERSHIP

The Operating Partnership, through the operating divisions and subsidiaries
described below, is the entity through which all of the Company's operations are
conducted. At December 31, 2000, the Company, through wholly owned subsidiaries,
controlled the Operating Partnership as the sole general partner and as the
holder of 88.2% of the common units in the Operating Partnership ("Units") and
64.1% of the preferred Units (the "Perpetual Preferred Units"). The other
limited partners of the Operating Partnership, who hold units, are those persons
(including certain officers and directors of the Company) who, at the time of
the Initial Offering, elected to hold all or a portion of their interest in the
form of Units rather than receiving shares of Common Stock. Each Unit may be
redeemed by the holder thereof for either one share of Common Stock or cash
equal to the fair market value thereof at the time of such redemption, at the
option of the Operating Partnership. The Operating Partnership presently
anticipates that it will cause shares of Common Stock to be issued in connection
with each such redemption rather than paying cash (as has been done in all
redemptions to date). With each redemption of outstanding Units for Common
Stock, the Company's percentage ownership interest in the Operating Partnership
will increase. In addition, whenever the Company issues shares of stock, the
Company will contribute any net proceeds therefrom to the Operating Partnership
and the Operating Partnership will issue an equivalent number of Units or
Perpetual Preferred Units, as appropriate, to the Company.

As the sole shareholder of the Operating Partnership's sole general partner, the
Company has the exclusive power under the agreement of limited partnership of
the Operating Partnership to manage and conduct the business of the Operating
Partnership, subject to the consent of the holders of the Units in connection
with the sale of all or substantially all of the assets of the Operating
Partnership or in connection with a dissolution of the Operating Partnership.
The board of directors of the Company manages the affairs of the Operating
Partnership by directing the affairs of the Company. The Operating Partnership
cannot be terminated, except in connection with a sale of all or substantially
all of the assets of the Company, for a period of 50 years without a vote of
limited partners of the Operating Partnership. The Company's indirect limited
and general partner interests in the Operating Partnership entitle it to share
in cash distributions from, and in the profits and losses of, the Operating
Partnership in proportion to the Company's percentage interest therein and
indirectly entitle the Company to vote on all matters requiring a vote of the
limited partners.

As part of the formation of the Operating Partnership, a new holding company,
Post Services, Inc. ("Post Services") was organized as a separate corporate
subsidiary of the Operating Partnership. Post Services, in turn, owns all the
outstanding stock of its principal two operating subsidiaries, RAM Partners,
Inc. ("RAM") and Post Landscape Services, Inc. ("Post Landscape"). Certain
officers and directors of the Company received 99%, collectively, of the voting
common stock of Post Services, and the Operating Partnership


                                       2
<PAGE>   5

received 1% of the voting common stock and 100% of the nonvoting common stock of
Post Services. The voting and nonvoting common stock of Post Services held by
the Operating Partnership represents 99% of the equity interests therein. The
voting common stock held by officers and directors in Post Services is subject
to an agreement that is designed to ensure that the stock will be held by one or
more officers of Post Services. The by-laws of Post Services provide that a
majority of the board of directors of Post Services must be persons who are not
employees, members of management or affiliates of the Company or its
subsidiaries. This by-law provision cannot be amended without the vote of 100%
of the outstanding voting common stock of Post Services. Post Services currently
has the same board of directors as the Company.

For taxable years ending on or before December 31, 2000, the Operating
Partnership could not own more than 10% of the voting stock of Post Services
without causing the Company to fail to qualify as a REIT for federal income tax
purposes. This restriction no longer applies to the voting stock of a "taxable
REIT subsidiary" as defined in the Internal Revenue Code. The Company and Post
Services have filed a joint election to have Post Services treated as a taxable
REIT subsidiary of the Company. This will enable the Operating Partnership to
acquire all of the voting stock of Post Services without jeopardizing the
company's status as a REIT. Management believes the Operating Partnership will
acquire the remaining interest of Post Services in 2001.

OPERATING DIVISIONS

The major operating divisions of the Operating Partnership include:

Post Apartment Management

Post Apartment Management is responsible for the day-to-day operations of all
the Post(R) communities including community leasing, property management and
personnel recruiting, training and development, maintenance and security. Post
Apartment Management also conducts short-term corporate apartment leasing
activities and is the largest division in the Company.

Post Apartment Development

Post Apartment Development conducts the development and construction activities
of the Company. These activities include site selection, zoning and regulatory
approvals, project design, and the full range of construction management
services.

Post Corporate Services

Post Corporate Services provides executive direction and control to the
Company's other divisions and subsidiaries and has responsibility for the
creation and implementation of all Company financing and capital strategies. All
accounting, management reporting, information systems, human resources, legal
and insurance services required by the Company and all of its affiliates are
centralized in Post Corporate Services.

OPERATING SUBSIDIARIES

The operating subsidiaries of the Operating Partnership, each of which is wholly
owned by Post Services, include:

RAM

RAM provides third party asset management and leasing services for multifamily
properties that do not operate under the Post(R) name. RAM's clients include
pension funds, independent private investors, financial institutions and
insurance companies. RAM's asset management contracts generally are subject to
annual renewal or are terminable upon specified notice. As of December 31, 2000,
RAM managed 72 properties (located in Georgia, Florida, Tennessee, Kansas, South
Carolina, North Carolina, Texas, Maryland, Missouri, Alabama and Virginia) with
15,651 units under management.

Post Landscape Group

As a result of the reputation the Company developed in connection with the
landscaping of Post(R) communities, in 1990, the Company began providing third
party design landscape services for clients other than Post(R) communities.
Projects with third parties include the design, installation and maintenance of
the landscape for golf courses, office


                                       3
<PAGE>   6

parks, commercial buildings and other commercial enterprises, and private
residences. Post Landscape Group provides such third party landscape services.

See Note 14 to the Company's Consolidated Financial Statements for information
regarding the industry segments into which the Company organizes its operations.

HISTORY OF POST PROPERTIES, INC.

During the five-year period from January 1, 1996 through December 31, 2000, the
Company and affiliates have developed and completed 11,152 apartment units in 27
apartment communities, acquired 7,186 units in 28 apartment communities (26
communities containing 6,296 apartment units were as a result of the merger with
Columbus Realty Trust (the "Merger")) and sold 11 apartment communities
containing an aggregate of 2,778 apartment units. Historically, the Company has
primarily developed its apartment communities to the Company's specifications as
opposed to buying or refurbishing existing properties built by others. The
Company and its affiliates have sold apartment communities after holding them
for investment periods that typically have been seven to twelve years after
development. The following table shows the results of the Company's developments
during this period:

<TABLE>
<CAPTION>
                                           2000           1999           1998           1997           1996
                                        ---------      ----------      --------      ----------      ---------
<S>                                     <C>            <C>             <C>           <C>             <C>
Units completed                            2,786           1,955          2,025          2,128           2,258
Units acquired(1)                             --              --             --          6,296             890
Units sold                                (1,984)           (198)            --           (416)           (180)

Total units owned by Company
   affiliates                             30,522          29,720         27,963         25,938          17,930
Total apartment rental income (in
   thousands)                          $ 365,895       $ 318,697       $275,755      $ 185,732       $ 158,618
</TABLE>

(1)  As part of the Merger, the Company acquired 26 communities containing
     6,296 units. Of the communities acquired in the Merger, 14 communities
     containing 3,916 units were built by Columbus and 12 communities
     containing 2,380 units were acquired by Columbus.


                                       4
<PAGE>   7

CURRENT DEVELOPMENT ACTIVITY

The Company currently has under construction or in initial lease-up 12 new
communities and additions to three existing communities that will contain an
aggregate of 4,661 units upon completion. The Company's communities under
development or in initial lease-up are summarized in the following table:

<TABLE>
<CAPTION>
                                                 ESTIMATED      ESTIMATED     ESTIMATED
                                                 QUARTER OF    QUARTER OF     QUARTER OF
                                     # OF       CONSTRUCTION   FIRST UNITS    STABILIZED
METROPOLITAN AREA                    UNITS         START        AVAILABLE     OCCUPANCY
-----------------                    -----      ------------   -----------    ---------

<S>                                    <C>         <C>           <C>            <C>
ATLANTA, GA
Post Spring(TM)                        452         3Q'99         2Q'00          3Q'01
Post Peachtree(TM)                     121         2Q'00         4Q'01          2Q'02
Post Biltmore(TM)                      276         3Q'00         4Q'01          3Q'02
                                     -----
                                       849
                                     -----
CHARLOTTE, NC
Post Uptown Place(TM)                  226         3Q'98         1Q'00          2Q'01
Post Gateway Place(TM)                 232         3Q'99         3Q'00          3Q'01
Post Gateway Place II(TM)              204         3Q'00         3Q'01          1Q'02
                                     -----
                                       662
                                     -----
TAMPA, FL
Post Harbour Place(TM)Phase II         319         4Q'98         2Q'00          1Q'01
                                     -----

DALLAS, TX
Post Legacy                            384         3Q'99         3Q'00          4Q'01
Post Addison Circle(TM)III             264         3Q'99         3Q'00          2Q'01
                                     -----
                                       648
                                     -----
HOUSTON, TX
Post Midtown Square(TM)Phase II        193         1Q'00         4Q'00          4Q'01
                                     -----

DENVER, CO
Post Uptown Square(TM)I                449         1Q'98         3Q'99          3Q'01
Post Uptown Square(TM)Phase II         247         1Q'00         4Q'01          3Q'02
                                     -----
                                       696
                                     -----
PHOENIX, AZ
Post Roosevelt Square(TM)              403         4Q'98         1Q'00          4Q'01
                                     -----

GREATER WASHINGTON AREA
Post Pentagon Row(TM)                  504         2Q'99         2Q'01          2Q'02
                                     -----

PASADENA, CA
Post Paseo Colorado(TM)                387         2Q'00         2Q'02          2Q'03
                                     -----

TOTAL                                4,661
                                     =====
</TABLE>

The Company is also currently conducting feasibility and other pre-development
studies for possible new Post(R) communities in selected market areas.


                                       5
<PAGE>   8

COMPETITION

All of the Communities are located in developed areas that include other upscale
apartments. The number of competitive upscale apartment properties in a
particular area could have a material effect on the Company's ability to lease
apartment units at the Communities or at any newly developed or acquired
communities and on the rents charged. The Company may be competing with others
that have greater resources than the Company. In addition, other forms of
residential properties, including single family housing, provide housing
alternatives to potential residents of upscale apartment communities.

AMERICANS WITH DISABILITIES ACT

The Communities and any newly acquired apartment communities must comply with
Title III of the Americans with Disabilities Act (the "ADA") to the extent that
such properties are "public accommodations" and/or "commercial facilities" as
defined by the ADA. Compliance with the ADA requirements could require removal
of structural barriers to handicapped access in certain public areas of the
Company's Communities where such removal is readily achievable. The ADA does
not, however, consider residential properties, such as apartment communities, to
be public accommodations or commercial facilities, except to the extent portions
of such facilities, such as the leasing office, are open to the public. The
Company believes that its properties comply with all present requirements under
the ADA and applicable state laws. Noncompliance could result in imposition of
fines or an award of damages to private litigants. If required to make material
additional changes, the Company's results of operations could be adversely
affected.

ENVIRONMENTAL REGULATIONS

The Company is subject to Federal, state and local environmental regulations
that apply to the development of real property, including construction
activities, the ownership of real property, and the operation of multifamily
apartment communities.

In developing properties and constructing apartments, the Company utilizes
environmental consultants to determine whether there are any flood plains,
wetlands or environmentally sensitive areas that are part of the property to be
developed. If flood plains are identified, development and construction is
planned so that flood plain areas are preserved or alternative flood plain
capacity is created in conformance with Federal and local flood plain management
requirements.

Storm water discharge from a construction facility is evaluated in connection
with the requirements for storm water permits under the Clean Water Act. This is
an evolving program in most states. The Company currently anticipates it will be
able to obtain storm water permits for existing or new development.

The Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. sec. 9601 et seq. ("CERCLA"), and applicable state superfund laws subject
the owner of real property to claims or liability for the costs of removal or
remediation of hazardous substances that are disposed of on real property in
amounts that require removal or remediation. Liability under CERCLA and
applicable state superfund laws can be imposed on the owner of real property or
the operator of a facility without regard to fault or even knowledge of the
disposal of hazardous substances on the property or at the facility. The
presence of hazardous substances in amounts requiring response action or the
failure to undertake remediation where it is necessary may adversely affect the
owner's ability to sell real estate or borrow money using such real estate as
collateral. In addition to claims for cleanup costs, the presence of hazardous
substances on a property could result in a claim by a private party for personal
injury or a claim by an adjacent property owner for property damage.

The Company has instituted a policy that requires an environmental investigation
of each property that it considers for purchase or that it owns and plans to
develop. The environmental investigation is conducted by a qualified
environmental consultant. If there is any indication of contamination, sampling
of the property is performed by the environmental consultant. The environmental
investigation report is reviewed by the Company and counsel prior to purchase of
any property. If necessary, remediation of contamination, including underground
storage tanks, is undertaken prior to development.


                                       6
<PAGE>   9

The Company has not been notified by any governmental authority of any
noncompliance, claim, or liability in connection with any of the Communities.
The Company has not been notified of a claim for personal injury or property
damage by a private party in connection with any of the Communities in
connection with environmental conditions. The Company is not aware of any other
environmental condition with respect to any of the Communities that could be
considered to be material.

ITEM 2.  PROPERTIES

At February 3, 2001, the Communities consisted of 87 stabilized Post(R)
multifamily apartment communities located in the following metropolitan areas:

<TABLE>
              METROPOLITAN AREA                      COMMUNITIES    # OF UNITS     % OF TOTAL
              -----------------                      -----------    ----------     ----------
              <S>                                    <C>            <C>            <C>
              Atlanta, GA ....................            40          16,102          52.8%
              Dallas, TX .....................            29           7,846          25.7%
              Houston, TX ....................             1             309           1.0%
              Tampa, FL ......................             9           3,504          11.5%
              Orlando, FL ....................             3           1,493           4.9%
              Fairfax, VA ....................             2             700           2.3%
              Nashville, TN ..................             2             166           0.5%
              Charlotte, NC ..................             1             402           1.3%
                                                      ------          ------         -----
                                                          87          30,522         100.0%
                                                      ======          ======         =====
</TABLE>

The Company or its predecessors developed all but 14 of the Post(R) Communities
and currently manages all of the Communities. Fifty-two of the Communities have
in excess of 300 apartment units, with the largest Community having a total of
916 apartment units. Eighty of the eighty-seven Communities, comprising
approximately 92% of the Communities' apartment units, were completed after
January 1, 1986. The average age of the Communities is approximately nine years.
The average economic occupancy rate was 96.8% and 96.4%, respectively, and the
average monthly rental rate per apartment unit was $897 and $862, respectively,
for communities stabilized for each of the entire years ended December 31, 2000
and 1999. See "Selected Financial Information."


                                       7
<PAGE>   10

                              COMMUNITY INFORMATION

<TABLE>
<CAPTION>
                                                                                                DECEMBER 2000       2000
                                                                           AVERAGE     NUMBER       AVERAGE        AVERAGE
                                                             YEAR         UNIT SIZE      OF     RENTAL RATES       ECONOMIC
COMMUNITIES                                 LOCATION(1)    COMPLETED    (SQUARE FEET)   UNITS     PER UNIT       OCCUPANCY(2)
-----------                                 -----------    ---------    -------------  ------   -------------    ------------
<S>                                         <C>            <C>          <C>            <C>      <C>              <C>
GEORGIA
Post Ashford(R) .........................     Atlanta         1987           872          222       $   873          97.3%
Post Briarcliff(TM) .....................     Atlanta         1999         1,062          688         1,137           N/A  (3)
Post Bridge(R) ..........................     Atlanta         1986           847          354           747          96.8%
Post Brookhaven(R) ......................     Atlanta       1990-92 (4)      991          735         1,037          96.6%
Post Canyon(R) ..........................     Atlanta         1986           899          494           775          97.5%
Post Chase(R) ...........................     Atlanta         1987           938          410           759          96.7%
Post Chastain(R) ........................     Atlanta         1990           965          558         1,066          96.2%
Post Collier Hills(R) ...................     Atlanta         1997           967          396         1,085          97.4%
Post Corners(R) .........................     Atlanta         1986           860          460           765          96.8%
Post Court(R) ...........................     Atlanta         1988           838          446           723          97.4%
Post Creek(R) ...........................     Atlanta         1983  (5)    1,180          810           972          97.1%
Post Crest(R) ...........................     Atlanta         1996         1,073          410         1,076          97.2%
Post Crossing(R) ........................     Atlanta         1995         1,067          354         1,121          96.5%
Post Dunwoody(R) ........................     Atlanta       1989-96 (4)      941          530         1,005          95.7%
Post Gardens(R) .........................     Atlanta         1998         1,066          397         1,290          95.7%
Post Glen(R) ............................     Atlanta         1997         1,113          314         1,262          96.8%
Post Lane(R) ............................     Atlanta         1988           840          166           792          97.6%
Post Lenox Park(R) ......................     Atlanta         1995         1,030          206         1,153          95.3%
Post Lindbergh(R) .......................     Atlanta         1998           960          396         1,107          95.2%
Post Mill(R) ............................     Atlanta         1985           952          398           800          97.9%
Post Oak(TM) ............................     Atlanta         1993         1,003          182         1,107          97.1%
Post Oglethorpe(R) ......................     Atlanta         1994         1,205          250         1,355          96.0%
Post Park(R) ............................     Atlanta       1988-90 (4)      904          770           848          96.7%
Post Parkside(TM) .......................     Atlanta         2000           903          188         1,355           N/A  (3)
Post Peachtree Hills(R) .................     Atlanta       1992-94 (4)      982          300         1,108          96.2%
Post Pointe(R) ..........................     Atlanta         1988           835          360           740          95.4%
Post Renaissance(R)(6) ..................     Atlanta       1992-94 (4)      890          342         1,051          95.5%
Post Ridge(R) ...........................     Atlanta         1998         1,045          434         1,092          96.2%
Post Stratford(TM) ......................     Atlanta         2000         1,013          250         1,365           N/A  (3)
Post Summit(R) ..........................     Atlanta         1990           957          148           960          96.8%
Post Valley(R) ..........................     Atlanta         1988           854          496           756          96.8%
Post Village(R) .........................     Atlanta                                                   798          98.0%
 The Arbors .............................                     1983         1,063          301
 The Fountains ..........................                     1987           850          352
 The Gardens ............................                     1986           891          494
 The Hills ..............................                     1984           953          241
 The Meadows ............................                     1988           817          350
Post Vinings(R) .........................     Atlanta       1989-91 (4)      964          403           882          96.5%
Post Walk(R) ............................     Atlanta       1984-87 (4)      932          476           888          96.4%
Post Woods(R) ...........................     Atlanta       1977-83 (4)    1,057          494           972          96.4%
Post Riverside(TM) ......................     Atlanta         1998           989          527         1,532           N/A  (3)
                                                                           -----       ------       -------         -------
 Subtotal/Average-- Georgia .............                                    964       16,102           980          96.7%
                                                                           -----       ------       -------         -------
TEXAS
Addison Circle Apartment Homes
  by Post(R)- Phase I ...................     Dallas          1998           896          460           968          95.4%
Addison Circle Apartment Homes
  by Post(R)- Phase II ..................     Dallas          2000           898          610         1,058           N/A  (3)
Post American Beauty Mill(TM) ...........     Dallas          1998           980           80         1,016          96.1%
Post Block 588(TM) ......................     Dallas          2000         1,570          127         1,874           N/A
Post Cole's Corner(TM) ..................     Dallas          1998           796          186           983          96.1%
Post Columbus Square by Post(TM) ........     Dallas          1996           861          218         1,129          97.3%
Post Gallery(TM) ........................     Dallas          1999         2,307           34         3,735           N/A  (3)
Post Midtown Square(R)(7) ...............     Dallas          2000           940          672         1,230           N/A  (3)
Post Parkwood(R) ........................     Dallas        1962-70 (4)    1,042           96           983          97.7%
Post Ascension(R) .......................     Dallas        1985-95 (4)      929          167           847          96.5%
Post Hackberry Creek(R) .................     Dallas        1988-96 (4)      865          432           820          96.7%
Post Lakeside(TM) .......................     Dallas          1986           791          327           845          97.0%
Post Townlake(R)/Parks ..................     Dallas        1986-87 (4)      869          398           775          96.6%
Post White Rock(R) ......................     Dallas          1988           659          207           770          97.2%
Post Winsted(R) .........................     Dallas          1996           728          314           802          96.3%
Post Shores(TM) .........................     Dallas        1988-97 (4)      874          908           943          96.7%
The Abbey of State-Thomas by Post(TM) ...     Dallas          1996         1,276           34         1,951          97.2%
The Commons at Turtle Creek by Post(TM)..     Dallas          1985           645          158           776          96.9%
The Heights of State-Thomas by Post(TM)..     Dallas          1998           813          198         1,024          95.5%
</TABLE>


                                       8
<PAGE>   11

<TABLE>
<CAPTION>
                                                                                                       DECEMBER 2000       2000
                                                                             AVERAGE        NUMBER        AVERAGE         AVERAGE
                                                                 YEAR        UNIT SIZE        OF       RENTAL RATES      ECONOMIC
COMMUNITIES                                      LOCATION(1)   COMPLETED   (SQUARE FEET)     UNITS       PER UNIT       OCCUPANCY(2)
-----------                                      -----------   ---------   -------------    ------     -------------   ------------
<S>                                              <C>           <C>         <C>              <C>        <C>             <C>
TEXAS CONTINUED
The Heights of State-Thomas II by .............     Dallas       1999          894            170        1,061             93.7%
Post(TM)
The Meridian of State-Thomas by Post(TM).......     Dallas       1991          798            132        1,073             96.1%
The Residences on McKinney by Post(TM) ........     Dallas       1986          749            196        1,026             95.0%
The Rice by Post ..............................     Houston      1998          977            309        1,436             97.4%
The Vineyard by Post(TM) ......................     Dallas       1996          728            116          949             96.8%
The Vintage by Post(TM) .......................     Dallas       1993          781            161          934             96.9%
Post Wilson Building(TM) ......................     Dallas       1999        1,015            143        1,352              N/A  (3)
Post Worthington(TM) ..........................     Dallas       1993          818            332        1,147             96.0%
Post Uptown Village(TM) .......................     Dallas       1995          767            300          929             96.2%
Post Uptown Village II(TM) ....................     Dallas       2000          730            196          834              N/A  (3)
Post Windhaven(TM)(8) .........................     Dallas       1991          825            474          615            100.0%
                                                                             -----         ------       ------            -----
 Subtotal/Average-- Texas .....................                                927          8,155        1,001             91.5%
                                                                             -----         ------       ------            -----
FLORIDA
Post Bay(R) ...................................     Tampa        1988          782            312          727             97.5%
Post Court(R) .................................     Tampa        1991        1,018            228          822             96.2%
Post Fountains at Lee Vista(R) ................     Orlando      1988          835            508          680             96.4%
Post Harbour Place(TM)(7) .....................     Tampa        1999        1,037            525        1,166              N/A  (3)
Post Hyde Park(R) .............................     Tampa        1996        1,009            389        1,064             97.2%
Post Lake(R) ..................................     Orlando      1988          850            740          687             97.6%
Post Parkside(TM) .............................     Orlando      1999          891            245        1,103              N/A  (3)
Post Rocky Point(R) ...........................     Tampa      1996-98 (4)   1,018            916        1,019             96.2%
Post Village(R) ...............................     Tampa                                                  764             95.8%
 The Arbors ...................................                  1991          967            304
 The Lakes ....................................                  1989          895            360
 The Oaks .....................................                  1991          968            336
Post Walk(TM) at
 Old Hyde Park Village ........................     Tampa        1997          984            134        1,260             96.6%
                                                                             -----         ------     --------            -----
 Subtotal/Average-- Florida ...................                                938          4,997          887             96.5%
                                                                             -----         ------     --------            -----
VIRGINIA
Post Corners at Trinity Centre ................     Fairfax      1996        1,030            336        1,154             99.6%
Post Forest(R) ................................     Fairfax      1990          889            364        1,109             99.2%
                                                                             -----         ------     --------            -----
 Subtotal/Average-- Virginia ..................                                960            700        1,131             99.4%
                                                                             -----         ------     --------            -----
NORTH CAROLINA
Post Park at Phillips Place(R) ................     Charlotte    1998          912            402        1,272             95.0%
                                                                             -----         ------     --------            -----
TENNESSEE
Post Bennie Dillon(TM) ........................     Nashville    1999          719             86          944             96.6%
The Lee Apartments ............................     Nashville    1924  (9)     808             80          731             98.5%
                                                                             -----         ------     --------            -----
 Subtotal/Average-- Tennessee .................                                764            166          842             97.3%
                                                                             -----         ------     --------            -----

   TOTAL ......................................                                911         30,522     $    977             96.7%
                                                                             =====         ======     ========            =====
</TABLE>

(1)      Refers to greater metropolitan areas of cities indicated.

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

(3)      During 2000, this community or a phase in this community was in
         lease-up and, therefore, is not included.

(4)      These dates represent the respective completion dates for multiple
         phases of a community.

(5)      This community was completed by the Company in 1983, sold during 1986,
         managed by the Company through 1993 and reacquired by the Company in
         1996.

(6)      The Company has a leasehold interest in the land underlying Post
         Renaissance pursuant to a ground lease that expires on January 1, 2040.

(7)      These communities are comprised of two phases. Only the first phase of
         each of these communities is stabilized as of February 3, 2001.

(8)      Post Windhaven(TM) is subject to a master lease with Electronic Data
         Systems.

(9)      The Company acquired this community in 1996.


                                       9
<PAGE>   12

ITEM 3.  LEGAL PROCEEDINGS

None.

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

None.

ITEM X.  EXECUTIVE OFFICERS OF THE REGISTRANT

The persons who are executive officers of the Company and its affiliates and
their positions are as follows:

<TABLE>
<CAPTION>
             NAME                                              POSITIONS AND OFFICES HELD
             ----                                              --------------------------
<S>                                          <C>
John A. Williams........................     Chairman of the Board, Chief Executive Officer and Director
John T. Glover..........................     Vice Chairman and Director
David P. Stockert.......................     President and Chief Operating Officer
W. Daniel Faulk, Jr.....................     President-- Post Apartment Development and Chief Development
                                             Officer
Thomas L. Wilkes........................     President-- Post Management Services and Chief Management Officer
R. Gregory Fox..........................     Executive Vice President-- Post Corporate Services and Chief
                                             Financial Officer
Sherry W. Cohen.........................     Executive Vice President and Secretary-- Post Corporate Services
Douglas S. Gray.........................     Senior Vice President-- Post Corporate Services

</TABLE>

The following is a biographical summary of the experience of the executive
officers of the Company:

John A. Williams. Mr. Williams is the Chairman of the Board and Chief Executive
Officer of the Company and is a Director. Mr. Williams founded the business of
the Company in 1971 and since that time has acted as Chairman and Chief
Executive Officer. Mr. Williams is currently serving on the board of directors
of Crawford & Co. and the Atlanta Regional Commission and was formerly Chairman
of the Metro Atlanta Chamber of Commerce. Mr. Williams is 58 years old.

John T. Glover. Mr. Glover has been the Vice Chairman of the Company since
February 29, 2000 and a Director since 1984. From 1984 through February 29,
2000, Mr. Glover was President, Chief Operating Officer, and Treasurer of the
Company. Mr. Glover is a Director of SunTrust Bank, Haverty's Furniture
Companies, Inc. and Emory Healthcare, Inc. Mr. Glover is 54 years old.

David P. Stockert. Mr. Stockert joined the Company January 1, 2001 as President
and Chief Operating Officer. From July 1999 to October 2000, Mr. Stockert was
Executive Vice President of Duke-Weeks Realty Corporation, a publicly traded
real estate company. From June 1995 to July 1999, Mr. Stockert was Senior Vice
President and Chief Financial Officer of Weeks Corporation, also a publicly
traded real estate company that was a predecessor by merger to Duke-Weeks Realty
Corporation. From August 1990 to May 1995, Mr. Stockert was an investment banker
in the Real Estate Group at Dean Witter Reynolds Inc. (now Morgan Stanley Dean
Witter). Mr. Stockert is 38 years old.


                                       10
<PAGE>   13

W. Daniel Faulk, Jr. Mr. Faulk has been with the Company for fourteen years and
is currently President of Post Apartment Development and Chief Development
Officer. From April 1993 to December 1999, he was President of Post Apartment
Development, which is responsible for the development and construction of all
Post(R)apartment communities. Prior thereto, Mr. Faulk was President of Post
Atlanta since February 1987. Mr. Faulk is currently on the board of directors of
Mountain National Bank. Mr. Faulk is 58 years old.

Thomas L. Wilkes. Mr. Wilkes joined the Company in October 1997 and, since
January 2001, has been the President of Post Apartment Management and the
Company's Chief Management Officer. From December 1998 through December 2000, he
was an Executive Vice President and Director of Operations for Post Apartment
Management responsible for the operations of Post(R)communities in the Western
United States. From October 1997 to December 1998 he was an Executive Vice
President and Director of Operations of Post West. Mr. Wilkes was a Senior Vice
President of Columbus from October 1993 through October 1997. Mr. Wilkes served
as President of CRH Management Company, a multifamily property management firm
and a member of the Columbus Group, since its formation in October 1990 to
December 1993. Mr. Wilkes is a Certified Property Manager. Mr. Wilkes is 41
years old.

R. Gregory Fox. Mr. Fox has been with the Company since February 1996 and, since
October 2000 has served as the Company's Chief Financial Officer. From December
1998 through September 2000, he served as Executive Vice President of Post
Corporate Services and the Company's Chief Accounting Officer responsible for
financial reporting and planning, accounting, management information systems and
human resources. From February 1996 to December 1998, Mr. Fox was a Senior Vice
President. Prior to joining the Company, he was a senior manager in the audit
division of Price Waterhouse LLP where he was employed for ten years. Mr. Fox is
a Certified Public Accountant and is currently on the board of directors of
Realeum, Inc. Mr. Fox is 41 years old.

Sherry W. Cohen. Ms. Cohen has been with the Company for sixteen years. Since
October 1997, she has been an Executive Vice President of Post Corporate
Services responsible for supervising and coordinating legal affairs and
insurance. Since April 1990, Ms. Cohen had also been Corporate Secretary. She
was a Senior Vice President with Post Corporate Services from July 1993 to
October 1997. Prior thereto, Ms. Cohen was a Vice President of Post Properties,
Inc. since April 1990. Ms. Cohen is 46 years old.

Douglas S. Gray. Mr. Gray joined the Company in December 1997 and, since January
1999, has been a Senior Vice President of Post Corporate Services responsible
for dispositions and asset management. He was a Vice President of Post Corporate
Services from December 1997 to December 1998. Prior to joining Post, Mr. Gray
was Vice President of Dutch Institutional Holding Co. from July 1994 to
November 1997. Prior thereto, he was Director of Property Services for The
Landmarks Group from June 1988 to June 1994. Mr. Gray is a Certified Public
Accountant and holds the CCIM designation. Mr. Gray is 41 years old.



                                       11
<PAGE>   14

                                     PART II

ITEM 5.  MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
         MATTERS

The Common Stock is traded on the New York Stock Exchange ("NYSE") under the
symbol "PPS." The following table sets forth the quarterly high and low closing
sales prices per share reported on the NYSE, as well as the quarterly dividends
declared per share:

<TABLE>
<CAPTION>
                                                                                          DIVIDENDS
                         QUARTER ENDED                   HIGH              LOW            DECLARED
                         -------------                ---------         ---------         ---------
                         <S>                          <C>               <C>                <C>
                         1999
                         First Quarter                $ 38.8125         $ 35.2500          $ 0.700
                         Second Quarter                 42.0625           35.3750            0.700
                         Third Quarter                  41.0000           38.8750            0.700
                         Fourth Quarter                 39.7500           36.7500            0.700

                         2000
                         First Quarter                $ 40.3125         $ 36.5000          $ 0.760
                         Second Quarter                 46.0938           39.9375            0.760
                         Third Quarter                  46.7500           42.0312            0.760
                         Fourth Quarter                 38.2500           33.9375            0.760
</TABLE>

On February 12, 2001, the Company had 1,735 common shareholders of record.

The Company pays regular quarterly dividends to holders of shares of Common
Stock. Future distributions by the Company will be at the discretion of the
board of directors and will depend on the actual funds from operations of the
Company, the Company's financial condition and capital requirements, the annual
distribution requirements under the REIT provisions of the Internal Revenue Code
of 1986, as amended (the "Code") and such other factors as the board of
directors deems relevant. For a discussion of the Company's credit agreements
and their restrictions on dividend payments, see Liquidity and Capital Resources
at Management's Discussion and Analysis of Financial Condition and Results of
Operations.

During 2000, the Company did not sell any unregistered securities.

There is no established public trading market for the Units. As of February 12,
2001, the Operating Partnership had 109 holders of record of Units of the
Operating Partnership.

For each quarter during 1999 and 2000, the Operating Partnership paid a cash
distribution to holders of Units equal in amount to the dividend paid on the
Company's common stock for such quarter.

During 2000, the Operating Partnership did not sell any unregistered securities.


                                       12
<PAGE>   15

ITEM 6.  SELECTED FINANCIAL DATA

                              POST PROPERTIES, INC.
        (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND APARTMENT UNIT DATA)

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31,
                                                        -------------------------------------------------------------------------
                                                           2000            1999            1998            1997            1996
                                                        ---------       ---------       ---------       ---------       ---------
<S>                                                     <C>             <C>             <C>             <C>             <C>
OPERATING DATA:
Revenue:
  Rental .........................................      $ 365,895       $ 318,697       $ 275,755       $ 185,732       $ 158,618
  Property management - third-party (1) ..........          3,826           3,368           3,164           2,421           2,828
  Landscape services - third-party (1) ...........         11,423           9,118           7,252           5,148           4,882
  Other ..........................................         18,688          14,744          12,734           6,815           5,247
                                                        ---------       ---------       ---------       ---------       ---------
      Total revenue ..............................        399,832         345,927         298,905         200,116         171,575
                                                        ---------       ---------       ---------       ---------       ---------
  Property operating and maintenance
    expense (exclusive of depreciation
    and amortization) ............................        131,349         113,152          99,717          67,515          58,202
  Depreciation ...................................         71,113          58,013          46,646          29,048          23,603
  Property management expenses - third-party (1)            3,099           2,925           2,499           1,959           2,055
  Landscape services expenses - third-party (1) ..          9,993           7,904           6,264           4,284           3,917
  Interest expense ...............................         50,303          33,192          31,297          24,658          22,131
  Amortization of deferred loan costs ............          1,636           1,496           1,185             980           1,352
  General and administrative .....................         10,066           7,788           8,495           7,364           7,716
  Minority interest in consolidated property
    partnerships .................................         (1,695)            511             397              --              --
                                                        ---------       ---------       ---------       ---------       ---------
       Total expense .............................        275,864         224,981         196,500         135,808         118,976
                                                        ---------       ---------       ---------       ---------       ---------

  Income before net gain (loss) on sale of assets,
    loss on  unused treasury locks, loss on
    relocation of corporate office, other charges,
    minority interest of unitholders, and
    extraordinary item ...........................        123,968         120,946         102,405          64,308          52,599
Net gain (loss) on sale of assets ................          3,208          (1,522)             --           3,270             854
Loss on unused treasury locks ....................             --              --          (1,944)             --              --
Loss on relocation of corporate office ...........             --              --              --          (1,500)             --
Project abandonment, employee severance and
impairment charges (2) ...........................         (9,365)             --              --              --              --
Minority interest of preferred unitholders in
    Operating Partnership ........................         (5,600)         (1,851)             --              --              --
Minority interest of common unitholders in
    Operating Partnership ........................        (11,691)        (12,598)        (11,511)        (11,131)         (9,984)
                                                        ---------       ---------       ---------       ---------       ---------
Income before extraordinary item .................        100,520         104,975          88,950          54,947          43,469
Extraordinary item, net of minority
    interest (3) .................................             --            (458)             --             (75)             --
                                                        ---------       ---------       ---------       ---------       ---------
Net income .......................................        100,520         104,517          88,950          54,872          43,469
Dividends to preferred shareholders ..............        (11,875)        (11,875)        (11,473)         (4,907)         (1,063)
                                                        ---------       ---------       ---------       ---------       ---------
NET INCOME AVAILABLE TO
  COMMON SHAREHOLDERS ............................      $  88,645       $  92,642       $  77,477       $  49,965       $  42,406
                                                        =========       =========       =========       =========       =========

PER COMMON SHARE DATA:
Income before extraordinary item
  (net of preferred dividends) - basic ...........      $    2.25       $    2.42       $    2.21       $    2.11       $    1.95
Net income available to common
  shareholders - basic ...........................           2.25            2.41            2.21            2.11            1.95
Income before extraordinary item
  (net of preferred dividends) - diluted .........           2.22            2.39            2.18            2.09            1.94
Net income available to common
  shareholders - diluted .........................           2.22            2.38            2.18            2.09            1.94
Dividends declared ...............................           3.04            2.80            2.60            2.38            2.16
</TABLE>


                                       13
<PAGE>   16

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                      ------------------------------------------------------------
                                                          2000         1999          1998        1997         1996
                                                      ----------   ----------   -----------    ----------  -------
<S>                                                   <C>          <C>          <C>           <C>           <C>
BALANCE SHEET DATA:
Real estate, before accumulated
  depreciation...................................     $2,827,094   $2,582,785   $2,255,074    $ 1,936,011   $ 1,109,342
Real estate, net of accumulated
  depreciation...................................      2,469,914    2,279,769    2,007,926      1,734,916       931,670
Total assets.....................................      2,551,237    2,350,173    2,066,713      1,780,563       958,675
Total debt.......................................      1,213,309      989,583      800,008        821,209       434,319
Shareholders' equity.............................      1,028,610    1,058,862    1,051,686        756,920       398,993
</TABLE>

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                         ------------------------------------------------------------------------------------
                                             2000               1999             1998              1997              1996
                                         ------------      -------------     ------------      ------------      ------------
<S>                                      <C>               <C>               <C>               <C>               <C>
 OTHER DATA:
 Cash flow provided from (used in):
   Operating activities .............    $    185,073      $    153,038      $    148,618      $    109,554      $     78,966
   Investing activities .............    $   (255,986)     $   (317,960)     $   (328,216)     $   (208,377)     $   (166,762)
   Financing activities .............    $     72,502      $    149,638      $    189,873      $    109,469      $     79,021
Funds from operations (4) ...........    $    163,411      $    162,581      $    134,202      $     85,892      $     74,212
Weighted average common shares
   outstanding - basic ..............      39,317,725        38,460,689        35,028,596        23,664,044        21,787,648
Weighted average common shares and
   units outstanding - basic ........      44,503,290        43,663,373        40,244,351        28,880,928        26,917,723
Weighted average common shares
   outstanding - diluted ............      39,852,514        38,916,987        35,473,587        23,887,906        21,879,248
Weighted average common shares and
   units outstanding - diluted ......      45,038,079        44,119,671        40,689,342        29,104,790        27,009,323
 Total stabilized communities
   (at end of period) ...............              82                85                83                78                49
 Total stabilized apartment units
   (at end of period) ...............          28,736            29,032            27,568            25,938            17,930
 Average economic occupancy
   (fully stabilized communities)(5).            96.8%             96.4%             96.5%             94.8%             95.3%
</TABLE>

(1)      Consists of revenues and expenses from property management and
         landscape services provided to properties owned by third parties.

(2)      Project abandonment, employee severance and impairment charges
         consisted of the following: Write-off of pursuit costs on abandoned
         development projects - $4,389 Severance cost related to management
         changes - $3,066 Impairment reserves on for-sale housing - $407
         Write-off of investment in Darwin Networks - $1,503.

(3)      The extraordinary item resulted from costs associated with the early
         extinguishment of indebtedness. The extraordinary item has been reduced
         by the portion related to the minority interest of the unitholders
         calculated on the basis of weighted average Units outstanding for the
         year.

(4)      The Company uses the National Association of Real Estate Investment
         Trusts ("NAREIT") definition of FFO. Effective January 1, 2000, NAREIT
         amended its definition of FFO to include in FFO all non-recurring
         transactions, except those that are defined as extraordinary under
         generally accepted accounting principles. ("GAAP"). The Company adopted
         this new definition effective January 1, 2000. FFO for any period means
         the Consolidated Net Income of the Company and its subsidiaries for
         such period excluding gains or losses from debt restructuring and sales
         of property plus depreciation of real estate assets, and after
         adjustment for unconsolidated partnerships and joint ventures, all
         determined on a consistent basis in accordance with GAAP. FFO presented
         herein is not necessarily comparable to FFO presented by other real
         estate companies because not all real estate companies use the same
         definition. The Company's FFO is comparable to the FFO of real estate
         companies that use the current NAREIT definition. FFO should not be
         considered as an alternative to net income (determined in accordance
         with GAAP) as a measure of the Company's liquidity, nor is it
         necessarily indicative of sufficient cash flow to fund all of the
         Company's needs or ability to service indebtedness or make
         distributions. FFO for 1998 and 1997 has been restated to reflect the
         requirements of the new NAREIT definition.

(5)      Amount represents average economic occupancy for communities stabilized
         for both the current and prior respective periods. Average economic
         occupancy is defined as gross potential rent less vacancy losses, model
         expenses and bad debt divided by gross potential rent for the period,
         expressed as a percentage. The calculation of average economic
         occupancy does not include a deduction for concessions and employee
         discounts (average economic occupancy, taking account of these amounts,
         would have been 94.9% for both years ended December 31, 2000 and 1999).
         Concessions were $3,250 and $2,745 and employee discounts were $1,143
         and $599 for the years ended December 31, 2000 and 1999, respectively.
         A community is considered by the Company to have achieved stabilized
         occupancy on the earlier to occur of (i) attainment of 95% physical
         occupancy on the first day of any month, or (ii) one year after
         completion of construction.


                                       14
<PAGE>   17


                           POST APARTMENT HOMES, L.P.
         (DOLLARS IN THOUSANDS, EXCEPT PER UNIT AND APARTMENT UNIT DATA)


<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31,
                                                               -----------------------------------------------------------------
                                                                  2000          1999          1998          1997         1996
                                                               ---------     ---------     ---------     ---------     ---------
<S>                                                            <C>           <C>           <C>           <C>           <C>
OPERATING DATA:
Revenue:
  Rental ..................................................... $ 365,895     $ 318,697     $ 275,755     $ 185,732     $ 158,618
  Property management - third-party (1) ......................     3,826         3,368         3,164         2,421         2,828
  Landscape services - third-party (1) .......................    11,423         9,118         7,252         5,148         4,882
  Other ......................................................    18,688        14,744        12,734         6,815         5,247
                                                               ---------     ---------     ---------     ---------     ---------
    Total revenue ............................................   399,832       345,927       298,905       200,116       171,575
                                                               ---------     ---------     ---------     ---------     ---------
Property operating and maintenance
  expense (exclusive of depreciation
  and amortization) ..........................................   131,349       113,152        99,717        67,515        58,202
Depreciation (real estate and non-real estate assets).........    71,113        58,013        46,646        29,048        23,603
Property management expenses - third-party (1) ...............     3,099         2,925         2,499         1,959         2,055
Landscape services expenses - third-party (1) ................     9,993         7,904         6,264         4,284         3,917
Interest expense .............................................    50,303        33,192        31,297        24,658        22,131
Amortization of deferred loan costs ..........................     1,636         1,496         1,185           980         1,352
General and administrative ...................................    10,066         7,788         8,495         7,364         7,716
Minority interest in consolidated ............................
  property partnerships ......................................   (1,695)           511           397            --            --
                                                               ---------     ---------     ---------     ---------     ---------
    Total expenses ...........................................   275,864       224,981       196,500       135,808       118,976
                                                               ---------     ---------     ---------     ---------     ---------
Income before net gain (loss) on sale of assets, loss on
  unused treasury locks, loss on relocation of corporate
  office, other charges and extraordinary item ...............   123,968       120,946       102,405        64,308        52,599
Net gain (loss) on sale of assets ............................     3,208        (1,522)          --          3,270           854
Loss on unused treasury locks ................................        --            --        (1,944)           --            --
Loss on relocation of corporate office .......................        --            --            --        (1,500)           --
Project abandonment, employee severance and
impairment charges (2) .......................................    (9,365)           --            --            --            --
                                                               ---------     ---------     ---------     ---------     ---------
Income before extraordinary item .............................   117,811       119,424       100,461        66,078        53,453
Extraordinary item (3) .......................................        --          (521)           --           (93)           --
                                                               ---------     ---------     ---------     ---------     ---------
Net income ...................................................   117,811       118,903       100,461        65,985        53,453
Distributions to preferred unitholders .......................   (17,475)      (13,726)      (11,473)       (4,907)       (1,063)
                                                               ---------     ---------     ---------     ---------     ---------
NET INCOME AVAILABLE TO
  COMMON UNITHOLDERS ......................................... $ 100,336     $ 105,177     $  88,988     $  61,078     $  52,390
                                                               =========     =========     =========     =========     =========
PER COMMON UNIT DATA:
Income before extraordinary item
  (net of preferred distributions) - basic ................... $    2.25     $    2.42     $    2.21     $    2.11     $    1.95
Net income available to common
  unitholders - basic ........................................      2.25          2.41          2.21          2.11          1.95
Income before extraordinary item
  (net of preferred distributions) - diluted .................      2.22          2.39          2.18          2.09          1.94
Net income available to common
  unitholders - diluted ......................................      2.22          2.38          2.18          2.09          1.94
Distributions declared .......................................      3.04          2.80          2.60          2.38          2.16
</TABLE>


                                       15
<PAGE>   18

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                     --------------------------------------------------------------------------
                                        2000            1999            1998            1997           1996
                                     ----------      ----------      ----------      ----------     -----------
<S>                                  <C>             <C>             <C>             <C>             <C>
BALANCE SHEET DATA:
Real estate, before accumulated
 depreciation ..................     $2,827,094      $2,582,785      $2,255,074      $1,936,011      $1,109,342
Real estate, net of accumulated
 depreciation...................      2,469,914       2,279,769       2,007,926       1,734,916         931,670
Total assets ...................      2,551,237       2,350,173       2,066,713       1,780,563         958,675
Total debt .....................      1,213,309         989,583         800,008         821,209         434,319
Partners' equity ...............      1,216,701       1,251,342       1,177,051         869,304         482,434
</TABLE>


<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                           ------------------------------------------------------------------------------------
                                               2000              1999              1998              1997              1996
                                           ------------      ------------       -----------      ------------      ------------
 <S>                                       <C>               <C>               <C>               <C>               <C>
 OTHER DATA:
 Cash flow provided from (used in):
     Operating activities ..............   $    185,073      $    153,038      $    148,618      $    109,554      $     78,966
     Investing activities ..............   $   (255,986)     $   (317,960)     $   (328,216)     $   (208,377)     $   (166,762)
     Financing activities ..............   $     72,502      $    149,638      $    189,873      $    109,469      $     79,021
 Funds from operations (4) .............   $    163,411      $    162,581      $    134,202      $     85,892      $     74,212
 Weighted average common Units
     outstanding - basic ...............     44,503,290        43,663,373        40,244,351        28,880,928        26,917,723
 Weighted average common Units
     outstanding - diluted .............     45,038,079        44,119,671        40,689,342        29,104,790        27,009,323
 Total stabilized communities
     (at end of period) ................             82                85                83                78                49
 Total stabilized apartment units
     (at end of period) ................         28,736            29,032            27,568            25,938            17,930
 Average economic occupancy
     (fully stabilized communities)(5)..           96.8%             96.4%             96.5%             94.8%             95.3%
</TABLE>

(1)      Consists of revenues and expenses from property management and
         landscape services provided to properties owned by third parties.

(2)      Project abandonment, employee severance and impairment charges
         consisted of the following: Write-off of pursuit costs on abandoned
         development projects - $4,389 Severance cost related to management
         changes - $3,066 Impairment reserves on for-sale housing - $407
         Write-off of investment in Darwin Networks - $1,503.

(3)      The extraordinary item resulted from costs associated with the early
         extinguishment of indebtedness. The extraordinary item has been reduced
         by the portion related to the minority interest of the unitholders
         calculated on the basis of weighted average Units outstanding for the
         year.

(4)      The Company uses the National Association of Real Estate Investment
         Trusts ("NAREIT") definition of FFO. Effective January 1, 2000, NAREIT
         amended its definition of FFO to include in FFO all non-recurring
         transactions, except those that are defined as extraordinary under
         generally accepted accounting principles. ("GAAP"). The Company adopted
         this new definition effective January 1, 2000. FFO for any period means
         the Consolidated Net Income of the Company and its subsidiaries for
         such period excluding gains or losses from debt restructuring and sales
         of property plus depreciation of real estate assets, and after
         adjustment for unconsolidated partnerships and joint ventures, all
         determined on a consistent basis in accordance with GAAP. FFO presented
         herein is not necessarily comparable to FFO presented by other real
         estate companies because not all real estate companies use the same
         definition. The Company's FFO is comparable to the FFO of real estate
         companies that use the current NAREIT definition. FFO should not be
         considered as an alternative to net income (determined in accordance
         with GAAP) as a measure of the Company's liquidity, nor is it
         necessarily indicative of sufficient cash flow to fund all of the
         Company's needs or ability to service indebtedness or make
         distributions. FFO for 1998 and 1997 has been restated to reflect the
         requirements of the new NAREIT definition.

(5)      Amount represents average economic occupancy for communities stabilized
         for both the current and prior respective periods. Average economic
         occupancy is defined as gross potential rent less vacancy losses, model
         expenses and bad debt divided by gross potential rent for the period,
         expressed as a percentage. The calculation of average economic
         occupancy does not include a deduction for concessions and employee
         discounts (average economic occupancy, taking account of these amounts,
         would have been 94.9% for each of the years ended December 31, 2000 and
         1999). Concessions were $3,250 and $2,745 and employee discounts were
         $1,143 and $599 for the years ended December 31, 2000 and 1999,
         respectively. A community is considered by the Company to have achieved
         stabilized occupancy on the earlier to occur of (i) attainment of 95%
         physical occupancy on the first day of any month, or (ii) one-year
         after completion of construction.


                                       16


<PAGE>   19

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
         (DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)

OVERVIEW

The following discussion should be read in conjunction with all of the financial
statements appearing elsewhere in this report. The following discussion is based
primarily on the Consolidated Financial Statements of Post Properties, Inc. (the
"Company") and Post Apartment Homes, L.P. (the "Operating Partnership"). Except
for the effect of minority interest in the Operating Partnership, the following
discussion with respect to the Company is the same for the Operating
Partnership.

As of December 31, 2000, there were 44,035,007 Units outstanding, of which
38,853,596 or 88.2%, were owned by the Company and 5,181,411, or 11.8% were
owned by other limited partners (including certain officers and directors of the
Company). As of December 31, 2000, there were 7,800,000 preferred units
outstanding, of which 5,000,000 were owned by the Company.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

The Operating Partnership recorded net income available to common unitholders of
$100,336, $105,177, and $88,988 for the years ended December 31, 2000, 1999 and
1998, respectively. The Company recorded net income available to common
shareholders of $88,645, $92,642 and $77,477 for the years ended December 31,
2000, 1999 and 1998, respectively. The Company's decrease in net income
available to common shareholders of $3,997 from 1999 to 2000 was primarily
related to project abandonment, employee severance and impairment charges,
increased interest expense resulting from higher interest rates, and increased
general and administrative expenses, partially offset by a gain on the sale of
assets, increased rental rates for fully stabilized communities and an increase
in units placed in service. The Company's increase in net income available to
common shareholders of $15,165 from 1998 to 1999 is primarily related to
increased rental rates for fully stabilized communities and an increase in units
placed in service.

COMMUNITY OPERATIONS

The Company's net income is generated primarily from the operation of its
apartment communities. For purposes of evaluating comparative operating
performance, the Company categorizes its operating communities based on the
period each community reaches stabilized occupancy. A community is generally
considered by the Company to have achieved stabilized occupancy on the earlier
to occur of (i) attainment of 95% physical occupancy on the first day of any
month or (ii) one year after completion of construction.

At December 31, 2000, the Company's portfolio of apartment communities consisted
of the following: (i) 63 communities that were completed and stabilized for all
of the current and prior year, (ii) eight communities that achieved full
stabilization during the prior year, (iii) nine communities which reached
stabilization during 2000, (iv) 16 communities and additions to three existing
communities currently in the development or lease-up stage, and (v) four
stabilized communities that are currently held for sale.

For communities with respect to which construction is completed and the
community has become fully operational, all property operating and maintenance
expenses are expensed as incurred and those recurring and non-recurring
expenditures relating to acquiring new assets, materially enhancing the value of
an existing asset, or substantially extending the useful life of an existing
asset are capitalized. (See "Capitalization of Fixed Assets and Community
Improvements").

The Company has adopted an accounting policy related to communities in the
development and lease-up stage whereby substantially all operating expenses
(including pre-opening marketing expenses) are expensed as incurred. The Company
treats each unit in an apartment community separately for cost accumulation,
capitalization and expense recognition purposes. Prior to the commencement of
leasing activities, interest and other construction costs are capitalized and
reflected on the balance sheet as construction in progress. Once a unit is
placed in service, all


                                       17
<PAGE>   20


operating expenses allocated to that unit, including interest, are expensed as
incurred. During the lease-up phase, the sum of interest expense on completed
units and other operating expenses (including pre-opening marketing expenses)
will initially exceed rental revenues, resulting in a "lease-up deficit," which
continues until such time as rental revenues exceed such expenses. Lease up
deficits for the years ended December 31, 2000, 1999, and 1998 were $2,665,
$2,798 and $2,063, respectively.

In order to evaluate the operating performance of its communities, the Company
has presented financial information which summarizes the revenue in excess of
specified expense on a comparative basis for all of its operating communities
combined and for fully stabilized communities.

ALL OPERATING COMMUNITIES

The operating performance for all of the Company's apartment communities
combined for the years ended December 31, 2000, 1999 and 1998 is summarized as
follows:

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31                     YEAR ENDED DECEMBER 31
                                                -----------------------------------       -----------------------------------
                                                                               %                                          %
                                                  2000          1999        CHANGE          1999          1998        CHANGE
                                                --------      --------      -------       --------      --------      -------
<S>                                             <C>           <C>              <C>        <C>           <C>              <C>
Rental and other revenue:
  Fully stabilized communities (1) .........    $232,435      $221,901         4.7%       $221,901      $213,043         4.2%
  Communities stabilized during 1999 .......      42,710        38,097        12.1%         38,097        20,845        82.8%
  Development and lease-up communities (2)..      54,486        17,408       213.0%         17,408         2,106       726.6%
  Communities held for sale (3) ............      19,706        18,552         6.2%         18,552        18,359         1.1%
  Sold communities (4) .....................      15,928        24,285       (34.4)%        24,285        24,004         1.2%
  Other revenue (5) ........................      17,396        12,434        39.9%         12,434         9,660        28.7%
                                                --------      --------                    --------      --------
                                                 382,661       332,677        15.0%        332,677       288,017        15.5%
                                                --------      --------                    --------      --------
Property operating and maintenance expense
  (exclusive of depreciation and
  amortization):
  Fully stabilized communities (1) .........      70,238        67,841         3.5%         67,841        66,612         1.8%
  Communities stabilized during 1999 .......      13,957        11,898        17.3%         11,898         8,176        45.5%
  Development and lease-up communities (2)..      20,802         7,729       169.1%          7,729         2,290       237.5%
  Communities held for sale (3) ............       7,314         6,748         8.4%          6,748         6,463         4.4%
  Sold communities (4) .....................       4,471         6,118       (26.9)%         6,118         6,790        (9.9)%
  Other expense (6) ........................      14,568        12,818        13.7%         12,818         9,386        36.6%
                                                --------      --------                    --------      --------
                                                 131,350       113,152        16.1%        113,152        99,717        13.5%
                                                --------      --------                    --------      --------
Revenue in excess of specified expense .....    $251,311      $219,525        14.5%       $219,525      $188,300        16.6%
                                                ========      ========                    ========      ========

Recurring capital expenditures: (7)
  Carpet ...................................    $  2,890      $  2,864         0.9%       $  2,864      $  2,550        12.3%
  Other ....................................       6,267         5,777         8.5%          5,777         4,929        17.2%
                                                --------      --------                    --------      --------
     Total .................................    $  9,157      $  8,641         6.0%       $  8,641      $  7,479        15.5%
                                                ========      ========                    ========      ========
Average apartment units in service .........      31,722        29,304         8.3%         29,304        27,416         6.9%
                                                ========      ========                    ========      ========
</TABLE>

(1)      Communities which reached stabilization prior to January 1, 1999.
         Includes fully stabilized communities acquired as a result of the
         Merger.

(2)      Communities in the "construction", "development" or "lease-up" stage
         during 2000 and, therefore, not considered fully stabilized for all of
         the periods presented.

(3)      Includes one community in Tennessee and three communities and two
         commercial properties in Texas.

(4)      Includes one community containing 213 units, which was sold on February
         4, 2000, three communities containing 983 units which were sold
         September 6, 2000, two communities containing 367 units which were sold
         on November 9, 2000, one community containing 296 units which was sold
         on December 21, 2000 and one community containing 125 units which was
         sold on December 28, 2000.

(5)      Other revenue includes revenue on furnished apartment rentals above the
         unfurnished rental rates and any revenue not directly related to
         property operations.

(6)      Other expenses includes certain indirect central office operating
         expenses related to management, grounds maintenance, and costs
         associated with furnished apartment rentals.

(7)      In addition to those expenses which relate to property operations, the
         Company incurs recurring and non- recurring expenditures relating to
         acquiring new assets, materially enhancing the value of an existing
         asset, or substantially extending the useful life of an existing asset,
         all of which are capitalized.

For the year ended December 31, 2000, rental and other revenue increased $49,984
or 15.0% compared to 1999, primarily as a result of the completion of new
communities and increased rental rates for existing communities.


                                       18
<PAGE>   21

For the year ended December 31, 1999, rental and other revenue increased $44,660
or 15.5% compared to 1998, primarily as a result of the completion of new
communities and increased rental rates for existing communities.

Property operating and maintenance expenses (exclusive of depreciation and
amortization) increased from 1999 to 2000 and from 1998 to 1999 primarily due to
an increase in the number of units placed in service through the development of
communities.

For the years ended December 31, 2000 and 1999, recurring capital expenditures
increased $516 or 6.0% and $1,162 or 15.5%, respectively, compared to the prior
years, primarily due to additional units placed in service and the timing and
extent of scheduled capital improvements.

FULLY STABILIZED COMMUNITIES

The Company defines fully stabilized communities as those which have reached
stabilization prior to the beginning of the previous calendar year.

The operating performance of the 63 communities containing an aggregate of
21,591 units which were stabilized as of January 1, 1999, are summarized as
follows:

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,                    YEAR ENDED DECEMBER 31,
                                               ------------------------------------       -----------------------------------
                                                                              %                                         %
                                                 2000           1999        CHANGE          1999           1998       CHANGE
                                               --------       --------      -------       --------       --------     -------
<S>                                            <C>            <C>           <C>           <C>            <C>          <C>
Rental and other revenue (1) ............      $232,435       $221,901        4.7%        $221,901       $213,043       4.2%
Property operating and maintenance
  expense (exclusive of depreciation
  and amortization) (2) .................        70,238         67,841        3.5%          67,841         66,612       1.8%
                                               --------       --------                    --------       --------
Revenue in excess of specified expense ..      $162,197       $154,060        5.3%        $154,060       $146,431       5.2%
                                               ========       ========                    ========       ========

Average economic occupancy (3) ..........          96.8%          96.4%       0.4%            96.4%          96.5%     (0.1)%

Average monthly rental rate per apartment
  unit (4) ..............................      $    897       $    862        4.1%        $    862       $    836       3.1%
                                               ========       ========                    ========       ========
Apartment units in service ..............      $ 21,591         21,591                      21,591         21,591
                                               ========       ========                    ========       ========
</TABLE>

(1)      Communities which reached stabilization prior to January 1, 1999.

(2)      In addition to those expenses which relate to property operations, the
         Company incurs recurring and non-recurring expenditures relating to
         acquiring new assets, materially enhancing the value of an existing
         asset, or substantially extending the useful life of an existing asset,
         all of which are capitalized. For the years ended December 31, 2000 and
         1999, recurring expenditures were $7,573 and $7,768, or $351 and $360
         on a per unit basis, respectively.

(3)      Average economic occupancy is defined as gross potential rent less
         vacancy losses, model expenses and bad debt divided by gross potential
         rent for the period, expressed as a percentage. The calculation of
         average economic occupancy does not include a deduction for concessions
         and employee discounts. (Average economic occupancy, taking account of
         these amounts would have been 94.9% for both years ended December 31,
         2000 and 1999.) Concessions were $3,250 and $2,745 and employee
         discounts were $1,143 and $599 for the years ended December 31, 2000
         and 1999, respectively.

(4)      Average monthly rental rate is defined as the average of the gross
         actual rental rates for leased units and the average of the anticipated
         rental rates for unoccupied units.

Rental and other revenue increased from 1999 to 2000 primarily due to increased
rental rates. The increase in property and maintenance expense (exclusive of
depreciation and amortization) from 1999 to 2000 was primarily due to increased
personnel and property tax expenses.

Rental and other revenue increased from 1998 to 1999 due to increased rental
rates. The increase in property and maintenance expenses (exclusive of
depreciation and amortization) from 1998 to 1999 was primarily due to an
increase in personnel and property tax expenses, partially offset by a decline
in utilities expense as a result of water sub-metering and lower repairs and
maintenance expense.


                                       19
<PAGE>   22

THIRD PARTY SERVICES

THIRD PARTY MANAGEMENT SERVICES

The Company provides asset management, leasing and other consulting services to
non-related owners of apartment communities through its subsidiary, RAM. The
operating performance of RAM for the years ended December 31, 2000, 1999 and
1998 is summarized as follows:

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,              YEAR ENDED DECEMBER 31,
                                       --------------------------------     --------------------------------
                                                                   %                                     %
                                         2000         1999      CHANGE        1999         1998       CHANGE
                                       -------      -------     -------     -------      -------      ------
  <S>                                  <C>          <C>         <C>         <C>          <C>          <C>
  Property management and
   other revenue ..................    $ 3,826      $ 3,368      13.6%      $ 3,368      $ 3,164        6.4%
  Property management expense .....      3,099        2,925       5.9%        2,925        2,499       17.0%
  Depreciation expense ............         27           27       0.0%           27           34      (20.6)%
                                       -------      -------                 -------      -------
  Revenue in excess of specified
   expense ........................        700      $   416      68.3%      $   416      $   631      (34.1)%
                                       =======      =======                 =======      =======

  Average apartment units managed...    14,422       12,572      14.7%       12,572       11,046       13.8%
                                       =======      =======                 =======      =======
</TABLE>

The increase in revenue in excess of specified expense from 1999 to 2000 is
primarily attributable to an increase in the average number of units managed.
The change from 1998 to 1999 is primarily attributable to management of more
communities in lease-up phases as a result of turnover in management contracts.

THIRD PARTY LANDSCAPE SERVICES

The Company provides landscape maintenance, design and installation services to
non-related parties through a subsidiary, Post Landscape Group, Inc., formerly
Post Landscape Services, Inc. ("Post Landscape Group").

The operating performance of Post Landscape Group for the years ended December
31, 2000, 1999 and 1998 are summarized as follows:

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,             YEAR ENDED DECEMBER 31,
                                       -------------------------------     ------------------------------
                                                                  %                                   %
                                         2000         1999     CHANGE        1999       1998       CHANGE
                                       -------      -------    -------     -------     -------     ------
<S>                                    <C>          <C>        <C>         <C>         <C>          <C>

Landscape services and
  other revenue ..............         $11,423      $9,118      25.3%      $9,118      $7,252      25.7%
Landscape services expense ...           9,993       7,904      26.4%       7,904       6,264      26.2%
Depreciation expense .........             374         293      27.6%         293         173      69.4%
                                       -------      ------                 ------      ------
Revenue in excess of specified
  expense ....................         $ 1,056      $  921      14.7%      $  921      $  815      13.0%
                                       =======      ======                 ======      ======
</TABLE>

The change in landscape services revenue and landscape services expense from
1999 to 2000 and 1998 to 1999 is primarily due to an increase in landscape
contracts.


                                       20
<PAGE>   23

OTHER INCOME AND EXPENSES

Depreciation expense increased from 1999 to 2000 and from 1998 to 1999 primarily
as a result of an increase in units in service, additional leasehold
improvements and technology expenditures.

Interest expense increased from 1999 to 2000 and from 1998 to 1999 primarily due
to an increase in debt used to fund the development of new communities and
increased interest rates (1999 to 2000 only).

Amortization of deferred loan costs increased from 1999 to 2000 due primarily to
three unsecured debt issues and two secured debt issues completed by the Company
in 2000. Amortization of deferred loan costs increased from 1998 to 1999 due
primarily to two secured debt issues completed by the Company in 1999. See
"Liquidity and Capital Resources" below.

General and administrative expenses increased from 1999 to 2000 primarily due to
increased personnel costs and a reduction in development support. General and
administrative expenses decreased from 1998 to 1999 as a result of a reduction
in personnel related expenditures and an increase in development support.

The net gain on sale of assets in 2000 resulted from the sale of eight
communities, reduced by management's best estimate of the effect of the
anticipated sale of communities currently held for sale. The net loss on sale of
assets in 1999 resulted from the net loss on the sale of one community and two
tracts of land.

In the fourth quarter of 2000, management decided to restrict its development
activities to fewer markets, refine its development investment strategy, exit
the for-sale housing business and make changes in its executive management team.
As a result of this decision, the Company wrote off $4,389 of costs it had
incurred in markets it will no longer pursue for development opportunities and
on individual development deals that are no longer consistent with management's
revised strategy.

At December 31, 2000, all employees included in the severance charge of $3,066
had been notified of their termination and severance agreement. As of February
15, 2001, these employees were no longer providing any service to the Company.
The employees included in the accrual at December 31, 2000, were primarily four
executives and five accounting department employees in the Dallas regional
office. At December 31, 2000, the accrual for unpaid severance charges was
$2,250.

In addition to these charges, the Company also recorded an impairment charge of
$407 to adjust the cost of for-sale housing in Atlanta and Dallas to its
estimated net sales proceeds. Additionally, the Company recorded a charge of
$1,503 to write off its investment in Darwin Networks, a high-speed Internet
provider that filed for Chapter 11 bankruptcy in January 2001.

The loss on unused treasury locks in 1998 resulted from the termination of
treasury locks intended for debt securities that were not issued by the
Operating Partnership.

The extraordinary item in 1999, net of the minority interest portion,
resulted from the costs associated with the early retirement of debt.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The Company's net cash provided by operating activities increased from $148,618
in 1998 to $153,038 in 1999, primarily due to increased net income partially
offset by a net decrease in cash from changes in current assets. The change in
current assets is primarily attributable to $7,750 of employee loans, $9,500 in
tax increment financing receivables with public/private development projects and
additional expenditures for pre-development activities.


                                       21
<PAGE>   24

Net cash provided by operating activities increased from $153,038 in 1999 to
$185,073 in 2000 primarily due to changes in working capital and an increase in
net income before depreciation.

Net cash used in investing activities decreased from $328,216 in 1998 to
$317,960 in 1999 primarily due to proceeds from the sale of one community in
March 1999 and reduced capital expenditures. Net cash used in investing
activities decreased from $317,960 in 1999 to $255,986 in 2000 primarily due to
proceeds from the sale of eight communities partially offset by increased
spending on construction and acquisition of real estate assets.

Net cash provided by financing activities decreased from $189,873 in 1998 to
$149,638 in 1999 primarily due to reduced proceeds from debt and equity
offerings partially offset by reduced debt payments. Net cash provided by
financing activities decreased from $149,638 in 1999 to $72,502 in 2000
primarily due to increased debt payments and treasury stock purchases partially
offset by increased debt proceeds.

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under Sections 856 through 860 of the Code commencing with its taxable year
ended December 31, 1993. REITs are subject to a number of organizational and
operational requirements, including a requirement that they currently distribute
95% of their ordinary taxable income (90% beginning in 2001). As a REIT, the
Company generally will not be subject to Federal income tax on net income.

The discussion in this Liquidity section is the same for the Company and the
Operating Partnership, except that all indebtedness described herein has been
incurred by the Operating Partnership. At December 31, 2000, the Company had
total indebtedness of $1,213,309 and cash and cash equivalents of $7,459. The
Company's indebtedness includes approximately $232,504 in conventional mortgages
payable and $235,880 in tax-exempt bond indebtedness secured by communities,
senior unsecured notes of $720,000, and other unsecured debt and borrowings
under unsecured lines of credit totaling approximately $24,925. A schedule of
indebtedness is included in Item 7.

The Company expects to meet its short-term liquidity requirements generally
through its net cash provided by operations and borrowings under credit
arrangements and expects to meet certain of its long-term liquidity
requirements, such as scheduled debt maturities, repayment of financing of
construction and development activities and possible property acquisitions,
through long-term secured and unsecured borrowings, possible sale of properties
and the issuance of debt securities or additional equity securities of the
Company or Units of the Operating Partnership in connection with acquisitions of
land or improved properties. The Company believes that its net cash provided by
operations will continue to be adequate to meet both operating requirements and
payment of dividends by the Company in accordance with REIT requirements in both
the short and the long term. The budgeted expenditures for improvements and
renovations to certain of the communities are expected to be funded from
property operations.

Lines of Credit

On January 12, 2001, the Company closed a $320,000 three-year syndicated
revolving line of credit (the "Revolver") which matures in April 2004. This line
of credit bears interest of LIBOR plus .75% or prime minus .25% and replaces the
Company's previous line. The Revolver provides for the rate to be adjusted up or
down based on changes in the credit ratings on the Company's senior unsecured
debt. The Revolver also includes a money market competitive bid option for
short-term funds up to $160,000 at rates below the stated line rate. The credit
agreement for the Revolver contains customary representations, covenants and
events of default, including covenants which restrict the ability of the
Operating Partnership to make distributions, in excess of stated amounts, which
in turn restricts the discretion of the Company to declare and pay dividends. In
general, during any fiscal year the Operating Partnership may only distribute up
to 100% of the Operating Partnership's consolidated income available for
distribution (as defined in the credit agreement) exclusive of distributions of
up to $30,000 of capital gains for such year. The credit agreement contains
exceptions to these limitations to allow the Operating Partnership to make
distributions necessary to allow the Company to maintain its status as a REIT.
The Company does not anticipate that this covenant will adversely affect the
ability of the Operating Partnership to make distributions, or the Company to
declare dividends, under the Company's current dividend policy.

Also in January 2001, the Company reached an agreement with a syndicated group
of banks for an incremental $185,000, 364 day facility at terms substantially
equal to the Revolver.


                                       22
<PAGE>   25
On July 26, 1996, the Company closed a $20,000 unsecured line of credit with
Wachovia Bank of Georgia, N.A. (The "Cash Management Line"). The Cash Management
Line bears interest at LIBOR plus .675% or prime minus .25% and matures on March
31, 2002. The Revolver requires three days advance notice to repay borrowings
whereas the Cash Management Line provides the Company with an automatic daily
sweep which applies all available cash to reduce the outstanding balance. In
addition, the Company has a $3,000 facility to provide letters of credit for
general business purposes.

Other Unsecured Debt

On March 1, 1998, the Company entered into a Disposition and Development
Agreement with the City of Phoenix, Arizona. Pursuant to this agreement, the
City of Phoenix loaned the Company $2,000. This loan is interest-free for the
first three years, with a 5.00% interest rate thereafter. Repayment of the loan
commences on March 1, 2001 with equal semi-annual payments due on March 1 and
September 1 of each year through March 1, 2021.

Tax Exempt Bonds

On June 29, 1995, the Company replaced the bank letters of credit providing
credit enhancement for its outstanding tax-exempt bonds. Under an agreement with
the Federal National Mortgage Association ("FNMA"), FNMA now provides, directly
or indirectly through other bank letters of credit, credit enhancement with
respect to such bonds. Under the terms of such agreement, FNMA has provided
replacement credit enhancement through 2025 for the bond issues, aggregating
$235,880, which were reissued. The agreement with FNMA contains representations,
covenants, and events of default customary to such secured loans.

Secured Debt

On March 30, 1999, the Company issued $50,000 of secured notes to The
Northwestern Mutual Life Insurance Company. These notes bear interest at 6.5%
with an effective rate of 7.3% after consideration of a terminated swap
agreement, mature on March 1, 2009 and are secured by two apartment communities.
Net proceeds of $49,933 were used to repay outstanding indebtedness.

On July 23, 1999, the Company issued $104,000 of secured notes to FNMA. Net
proceeds of $101,988 were used to repay outstanding indebtedness. These notes
bear interest at 30-day LIBOR plus credit enhancement, liquidity and service
fees of .935%, mature on July 23, 2029 and are secured by five apartment
communities. The notes include a prepayment penalty that is an amount equal to a
percentage of the principal amount remaining under the notes at the time of
prepayment. The penalty ranges from 4.8% in the first year to .65% in the tenth
year. The Company has an option to call these notes after ten years from the
issuance date. In December 2000, the Company entered into a swap transaction
that fixed the rate of interest on this note at 6.975%, inclusive of credit
enhancement and other fees, from January 1, 2001 through July 31, 2009.

On October 3, 2000, the Company issued two secured notes totaling $80,000 to The
Northwestern Mutual Life Insurance Company. The notes bear interest at 7.69% and
mature on October 1, 2007. Each note is secured by an apartment community. Net
proceeds of $79,334 were used to repay outstanding indebtedness.

Senior Unsecured Debt Offerings

On June 7, 1995, the Company issued $50,000 of unsecured senior notes with The
Northwestern Mutual Life Insurance Company. The notes were in two tranches; the
first, totaling $30,000, carries an interest rate of 8.21% per annum (1.25% over
the corresponding treasury rate on the date such rate was set) and matures on
June 7, 2001; and the second, totaling $20,000 carries an interest rate of 8.37%
per annum (1.35% over the corresponding treasury rate on the date such rate was
set) and matures on June 7, 2002. Proceeds from the notes were used to repay
outstanding indebtedness. The note agreements pursuant to which the notes were
purchased contain customary representations, covenants and events of default
similar to those contained in the note agreement for the Revolver.

On September 30, 1996, the Company completed a public offering of $125,000
senior unsecured debt comprised of two tranches. The first tranche, $100,000 of
7.25% Notes due on October 1, 2003 (the "2003 Notes"), was priced at 99.642% to
yield 7.316%, or 71 basis points over the rate on U.S. Treasury securities with
a comparable maturity. The second tranche, $25,000 of 7.50% Notes due on October
1, 2006 (the "2006 Notes", and together with the 2003


                                       23
<PAGE>   26

Notes, the "Notes"), was priced at 99.694% to yield 7.544%, or 83 basis points
over the rate on U.S. Treasury securities with a comparable maturity. Proceeds
from the Notes were used to repay outstanding indebtedness.

On December 20, 2000, the Company issued $185,000 of unsecured senior notes. The
notes bear interest at 7.70% and mature on December 20, 2010. Net proceeds of
approximately $183,798 were used to repay outstanding indebtedness.

Medium Term Notes and Mandatory Par Put Remarketed Securities

On January 29, 1997, the Company established a program for the sale of
Medium-Term Notes due three months or more from the date of issue (the "MTNs").
As of December 31, 2000, the Company had $360,000 aggregate principal amount of
notes outstanding under the MTN Program. Proceeds from the MTNs were used to (i)
prepay certain outstanding notes and (ii) repay outstanding indebtedness.

On March 12, 1998, the Company issued $100,000 of 6.85% Mandatory Par Put
Remarketed Securities(SM) ("MOPPRS(SM)") under the MTN Program. The net proceeds
of $99,087 from the sale of the MOPPRS(SM) were used to repay outstanding
indebtedness. In connection with the MOPPRS(SM) transaction, Merrill Lynch & Co.
purchased an option to remarket the securities as of March 16, 2005 (the
"Remarketing Date") reducing the effective borrowing rate through the
Remarketing Date to 6.59%. In anticipation of the offering, the Company entered
into forward-treasury-lock agreements in the fall of 1997. As a result of the
termination of these agreements, the effective borrowing rate was increased to
approximately 6.85%, the coupon rate on the MOPPRS(SM).

On May 9, 2000, the Company sold $25,000 aggregate principal amount of notes
under the MTN Program. These notes bear interest at the London Interbank Offer
Rate ("LIBOR") plus .75% and mature on February 1, 2005. Net proceeds of $24,875
were used to repay outstanding indebtedness. In October 2000, the Company
entered into a swap transaction that fixed the rate on the notes at 7.28%,
inclusive of credit enhancement and other fees, through maturity.

On June 16, 2000, the Company sold $150,000 aggregate principal amount of notes
under the MTN Program. These notes bear interest at 8.12% and mature on June 15,
2005. Net proceeds of $148,865 were used to repay outstanding indebtedness.

Preferred Unit Offerings

On September 3, 1999, the Operating Partnership issued $70,000 of Series D
Cumulative Redeemable Preferred Units of limited partnership interest (the
"Series D Preferred Units") to an institutional investor in a private placement
meeting the requirements of Regulation D promulgated under the Securities Act of
1933, as amended. Net proceeds to the Operating Partnership of approximately
$68,000 were used to repay outstanding indebtedness.

Perpetual Preferred Stock Offerings

On February 9, 1998, the Company sold two million non-convertible 7 5/8% Series
C Cumulative Redeemable Shares (the "Series C Perpetual Preferred Shares") with
a liquidation preference of $25 per share. Net proceeds of $48,284 from the sale
of Series C Perpetual Shares were contributed to the Operating Partnership in
exchange for two million Perpetual Preferred Units and used by the Operating
Partnership to repay outstanding indebtedness.

Common Stock Offerings

On December 8, 1998, the Company issued 730,000 shares of common stock at a
price of $37 per share. The net proceeds of approximately $27,000 were
contributed to the Operating Partnership and used to repay outstanding
indebtedness.

On November 4, 1998, the Company issued 1.15 million shares of common stock at a
price of $38.6875 per share. The net proceeds of approximately $42,200 were
contributed to the Operating Partnership and used to repay outstanding
indebtedness.


                                       24
<PAGE>   27

On May 28, 1998, the Company issued 373,250 shares of its common stock at a
price of $40.1875 per share. The shares were deposited into a registered unit
investment trust, the Paine Webber Equity Trust Reit Series 1. Net proceeds of
$13,662 were contributed to the Operating Partnership and were used to fund
development and other operating cash flow needs.

On April 29, 1998, the Company issued approximately 1.1 million shares of its
common stock at a price of $40.5625 per share. The shares were deposited into a
registered unit investment trust, the Equity Investor Fund Cohen & Steers Realty
Majors Portfolio. Net proceeds of $44,059 were used to repay outstanding
indebtedness.

On March 4, 1998, the Company issued 3.5 million shares of common stock at a
price of $39 per share. Net proceeds of $129,179 were used to repay outstanding
indebtedness.

Stock Repurchase Program

The Company's Board of Directors has approved the purchase of up to $100,000 of
the Company's common stock. In the fourth quarter of 2000, the Company began
repurchasing shares of its common stock in accordance with the announced stock
repurchase program using funds from operating cash flow and the sale of
properties. Purchases will be made from time to time in the open market and it
is expected that funding of the program will come from operating cash flow,
existing bank facilities, and proceeds from asset sales. Through December 31,
2000, the Company had repurchased 757,500 shares of its common stock at a total
cost of $26,620. From January 1, 2001 through February 10, 2001, the Company has
repurchased an additional 255,000 shares of its common stock at a total cost of
$9,451. Treasury stock activity for the year ended December 31, 2000 was as
follows:

<TABLE>
<CAPTION>
                                                           TREASURY STOCK

                                                       SHARES           AMOUNT
                                                      --------         --------
      <S>                                             <C>              <C>
      Balance at December 31, 1999 ............             --         $     --
         Acquisitions of common stock .........        757,500           26,620
         Other additions ......................         54,497            2,435
         Distribution under Employee Stock Plan         (3,401)            (152)
                                                      --------         --------
      Balance at December 31, 2000 ............        808,596         $ 28,903
                                                      ========         ========
</TABLE>

      Amounts in thousands, except share data

      There were 100,000,000 shares of common stock authorized and 38,853,596
      and 38,834,323 shares of common stock outstanding at December 31, 2000 and
      1999, respectively.

Sale of Properties

In February 2000, the Company sold a 213-unit property located in Atlanta,
Georgia for $32,350. Net proceeds of approximately $31,500 were used to repay
outstanding indebtedness.

In September 2000, the Company sold three communities in Jackson, Mississippi
containing a total of 983 units, for $44,600. Net proceeds of approximately
$42,903 were used to repay outstanding indebtedness.

In November 2000, the Company sold two properties located in Nashville,
Tennessee, containing a total of 367 units, for $36,885. Net proceeds of
approximately $36,290 were used to repay outstanding indebtedness.

In December 2000, the Company sold two properties located in Atlanta, Georgia,
containing a total of 421 units, for $47,250. Net proceeds of approximately
$46,651 were used to repay outstanding indebtedness and to repurchase the
Company's common stock.


                                       25
<PAGE>   28


Schedule of Indebtedness

The following table reflects the Company's indebtedness at December 31, 2000:

<TABLE>
<CAPTION>

                                                                                                   MATURITY      PRINCIPAL
             DESCRIPTION                      LOCATION                INTEREST RATE                DATE (1)       BALANCE
             -----------                     ----------               -------------                --------      ----------
<S>                                          <C>           <C>                                     <C>           <C>
CONVENTIONAL FIXED RATE (SECURED)

Parkwood Townhomes(TM) ................      Dallas, TX                7.375%                      04/01/14      $      799

Northwestern Mutual Life ..............         N/A                     6.50% (2)                  03/01/09          48,601

Northwestern Mutual Life ..............      Dallas, TX                 7.69%                      10/01/07          28,666

Northwestern Mutual Life ..............      Dallas, TX                 7.69%                      10/01/07          51,238

FNMA ..................................      Atlanta, GA               6.975% (3)                  07/23/29         103,200
                                                                                                                 ----------
                                                                                                                    232,504
                                                                                                                 ----------

TAX EXEMPT FLOATING RATE (SECURED)

Post Ashford(R) Series 1995.............     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25           9,895

Post Valley(R) Series 1995..............     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          18,600

Post Brook(R) Series 1995...............     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25           4,300

Post Village(R) (Atlanta) Hills
  Series 1995...........................     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25           7,000

Post Mill(R) Series 1995................     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          12,880

Post Canyon(R) Series 1996..............     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          16,845

Post Corners(R) Series 1996.............     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          14,760

Post Bridge(R)..........................     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          12,450

Post Village(R) (Atlanta) Gardens.......     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          14,500

Post Chase(R)...........................     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          15,000

Post Walk(R)............................     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          15,000

Post Lake(R)............................     Orlando, FL      "AAA" NON-AMT + .515% (4)(5)         06/01/25          28,500

Post Fountains at Lee Vista(R)..........     Orlando, FL      "AAA" NON-AMT + .515% (4)(5)         06/01/25          21,500

Post Village(R) (Atlanta) Fountains
   and Meadows..........................     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          26,000

Post Court(R)...........................     Atlanta, GA      "AAA" NON-AMT + .515% (4)(5)         06/01/25          18,650
                                                                                                                 ----------
                                                                                                                    235,880
                                                                                                                 ----------
SENIOR NOTES (UNSECURED)

Northwestern Mutual Life................        N/A                     8.21%                      06/07/01          30,000

Medium Term Notes.......................        N/A                     7.02%                      04/02/01          37,000

Northwestern Mutual Life................        N/A                     8.37%                      06/07/02          20,000

Senior Notes............................        N/A                     7.25%                      10/01/03         100,000

Medium Term Notes.......................        N/A                     7.30%                      04/01/04          13,000

Medium Term Notes.......................        N/A                     6.69%                      09/22/04          10,000

Medium Term Notes.......................        N/A                     6.78%                      09/22/05          25,000

Senior Notes............................        N/A                     7.50%                      10/01/06          25,000

Mandatory Par Put Remarketed
 Securities.............................        N/A                     6.85% (6)                  03/16/15         100,000

Medium Term Notes.......................        N/A                     7.28% (7)                  02/01/05          25,000

Medium Term Notes.......................        N/A                     8.12%                      06/15/05         150,000

Senior Notes............................        N/A                     7.70%                      12/20/10         185,000
                                                                                                                 ----------
                                                                                                                    720,000
                                                                                                                 ----------
LINES OF CREDIT & OTHER UNSECURED DEBT

City of Phoenix.........................        N/A                     5.00% (8)                  03/01/21           2,000

Revolver ...............................        N/A        LIBOR + .825% or prime minus .25% (9)   04/30/03          18,000

Cash Management Line....................        N/A        LIBOR + .675% or prime minus .25%       03/31/01           4,925
                                                                                                                 ----------
                                                                                                                     24,925
                                                                                                                 ----------
TOTAL...................................                                                                         $1,213,309
                                                                                                                 ==========
</TABLE>

(1)      All of the mortgages can be prepaid at any time, subject to certain
         prepayment penalties.


                                       26
<PAGE>   29
(2)      This note bears interest at 6.50% with an effective rate of 7.30% after
         consideration of a terminated swap agreement.

(3)      In December 2000, the Company entered into a swap transaction that
         fixed the rate of interest on this note at 6.975%, inclusive of credit
         enhancement and other fees, from January 1, 2001 through July 31, 2009.

(4)      Bond financed (interest rate on bonds + credit enhancement fees
         effective October 1, 1998). The Company pays credit enhancement fees of
         .515% of the amount of such bonds or the amount of the letters of
         credit, as the case may be.

(5)      These bonds are cross-collateralized. The Company has purchased an
         interest rate cap that limits the Company's exposure to increases in
         the base rate to 5%.

(6)      The annual interest rate on these securities to March 16, 2005 (the
         "Remarketing Date") is 6.85%. On the Remarketing Date, they are subject
         to mandatory tender for remarketing.

(7)      In October 2000, the Company entered into a swap transaction that fixed
         the rate on the note at 7.28%, inclusive of credit enhancement and
         other fees, through maturity.

(8)      This loan is interest free for the first three years, with interest at
         5.00% thereafter. Repayment is to commence on March 1, 2001 subject to
         the conditions set forth in the Agreement.

(9)      Represents stated rate. The Company may also make "money market" loans
         of up to $175,000 at rates below the stated rate. At December 31, 2000,
         the outstanding balance of the Revolver consisted of "money market"
         loans with an average interest rate of 7.49%. Effective January 12,
         2001, the interest rate is LIBOR plus .75% or prime minus .25% and the
         debt matures April 30, 2004. Also effective January 12, 2001, the
         Company may make "money market" loans of up to $160,000 at rates below
         the stated rate.

Capitalization of Fixed Assets and Community Improvements

The Company has established a policy of capitalizing those expenditures relating
to acquiring new assets, materially enhancing the value of an existing asset, or
substantially extending the useful life of an existing asset. All expenditures
necessary to maintain a community in ordinary operating condition are expensed
as incurred. During the first five years of a community (which corresponds to
the estimated depreciable life), carpet replacements are expensed as incurred.
Thereafter, carpet replacements are capitalized.

Acquisition of assets and community improvement expenditures for the years ended
December 31, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                                       ---------------------------------
                                                                          2000                    1999
                                                                       ---------               ---------
<S>                                                                    <C>                     <C>
New community development and acquisition activity.....                $387,649                $320,081
Revenue generating additions and improvements:
   Property renovations ...............................                   6,638                   7,826
   Submetering of water service .......................                      32                     185
Nonrecurring capital expenditures:
   Vehicle access control gates .......................                     403                     794
   Other community additions and improvements .........                   5,173                   2,177
Recurring capital expenditures:
   Carpet replacements ................................                   2,890                   2,864
   Other community additions and improvements .........                   6,267                   5,777
   Corporate additions and improvements ...............                   3,441                   6,811
                                                                       --------                --------
                                                                       $412,493                $346,515
                                                                       ========                ========
</TABLE>

INFLATION

Substantially all of the leases at the Communities allow, at the time of
renewal, for adjustments in the rent payable thereunder, and thus may enable the
Company to seek increases in rents. The substantial majority of these leases are
for one year or less and the remaining leases are for up to two years. At the
expiration of a lease term, the Company's lease agreements provide that the term
will be extended unless either the Company or the lessee gives at least sixty
(60) days written notice of termination; in addition, the Company's policy
permits the earlier termination of a lease by a lessee upon thirty (30) days
written notice to the Company and the payment of one month's additional rent as
compensation for early termination. The short-term nature of these leases
generally serves to reduce the risk to the Company of the adverse effect of
inflation.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1 to Consolidated Financial Statements of the Company.

FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION

Historical Funds from Operations

The Company considers funds from operations ("FFO") a useful measure of
performance of an equity REIT. FFO is defined to mean net income available to
common shareholders determined in accordance with GAAP, excluding


                                       27
<PAGE>   30

gains (or losses) from debt restructuring and sales of property, plus
depreciation of real estate assets, and after adjustment for unconsolidated
partnerships and joint ventures. FFO should not be considered as an alternative
to net income (determined in accordance with GAAP) as an indicator of the
Company's financial performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the Company's liquidity,
nor is it necessarily indicative of sufficient cash flow to fund all of the
Company's needs. Cash available for distribution ("CAD") is defined as FFO less
capital expenditures funded by operations and loan amortization payments. The
Company believes that in order to facilitate a clear understanding of the
consolidated historical operating results of the Company, FFO and CAD should be
examined in conjunction with net income as presented in the consolidated
financial statements and data included elsewhere in this report.

FFO and CAD for the years ended December 31, 2000, 1999 and 1998 presented on a
historical basis are summarized in the following table:

Calculations of Funds from Operations and Cash Available for Distribution

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                      ------------------------------------------------------
                                                                          2000                 1999                 1998
                                                                      ------------         ------------         ------------
<S>                                                                   <C>                  <C>                  <C>
Net income available to common shareholders ......................... $     88,645         $     92,642         $     77,477
Extraordinary item, net of minority interest ........................           --                  458                   --
Minority interest ...................................................       11,691               12,598               11,511
Net (gain) loss on sale of assets ...................................       (3,208)               1,522                   --
                                                                      ------------         ------------         ------------
Adjusted net income .................................................       97,128              107,220               88,988
Depreciation of real estate assets ..................................       66,283               55,361               45,214
                                                                      ------------         ------------         ------------
Funds from Operations (1) ...........................................      163,411              162,581              134,202
Recurring capital expenditures (2) ..................................       (9,157)              (8,641)              (7,479)
Non-recurring capital expenditures (3) ..............................       (5,576)              (2,971)              (1,423)
Loan amortization payments ..........................................       (1,869)                 (81)                 (75)
                                                                      ------------         ------------         ------------
Cash Available for Distribution ..................................... $    146,809         $    150,888         $    125,225
                                                                      ============         ============         ============
Revenue generating capital expenditures (4) ......................... $      6,670         $      8,011         $     13,614
                                                                      ============         ============         ============
Cash Flow Provided From (Used In):
  Operating activities .............................................. $    185,073         $    153,038         $    148,618
  Investing activities .............................................. $   (255,986)        $   (317,960)        $   (328,216)
  Financing activities .............................................. $     72,502         $    149,638         $    189,873

Weighted average common shares outstanding - basic ..................   39,317,725           38,460,689           35,028,596
                                                                      ============         ============         ============
Weighted average common shares outstanding - diluted ................   39,852,514           38,916,987           35,473,587
                                                                      ============         ============         ============
Weighted average common shares and units outstanding - basic ........   44,503,290           43,663,373           40,244,351
                                                                      ============         ============         ============
Weighted average common shares and units outstanding - diluted ......   45,038,079           44,119,671           40,689,342
                                                                      ============         ============         ============
</TABLE>

(1)      The Company uses the National Association of Real Estate Investment
         Trusts ("NAREIT") definition of FFO. Effective January 1, 2000, NAREIT
         amended its definition of FFO to include in FFO all non-recurring
         transactions, except those that are defined as extraordinary under
         generally accepted accounting principles ("GAAP"). The Company adopted
         this new definition effective January 1, 2000. FFO for any period means
         the Consolidated Net Income of the Company and its subsidiaries for
         such period excluding gains or losses from debt restructuring and sales
         of property plus depreciation of real estate assets, and after
         adjustment for unconsolidated partnerships and joint ventures, all
         determined on a consistent basis in accordance with GAAP. FFO
         presented herein is not necessarily comparable to FFO presented by
         other real estate companies because not all real estate companies use
         the same definition. The Company's FFO is comparable to the FFO of real
         estate companies that use the current NAREIT definition. FFO should not
         be considered as an alternative to net income (determined in
         accordance with GAAP) as a measure of the Company's liquidity, nor is
         it necessarily indicative of sufficient cash flow to fund all of the
         Company's needs or ability to service indebtedness or make
         distributions. FFO for 1998 has been restated to reflect the
         requirements of the new NAREIT definition.

(2)      Recurring capital expenditures consisted primarily of $2,890, $2,864
         and $2,550 of carpet replacement and $6,267, $5,777 and $4,929 of other
         community additions and improvements to existing communities for the
         years ended December 31, 2000, 1999 and 1998, respectively. Since the
         Company does not add back the depreciation of non-real estate assets in
         its calculation of FFO, capital expenditures of $3,441, $6,811, and
         $8,576 are excluded from the calculation of CAD for the years ended
         December 31, 2000, 1999 and 1998, respectively.

(3)      Non-recurring capital expenditures consisted of the additions of
         vehicle access control gates to communities of $403, $794, and $377 and
         other community additions and improvements of $5,173, $2,177 and $1,046
         for the years ended December 31, 2000, 1999 and 1998, respectively.

(4)      Revenue generating capital expenditures included major renovations of
         communities in the amount of $6,638, $7,826, and $12,896 for the years
         ended December 31, 2000, 1999 and 1998, respectively, and sub-metering
         of water service to communities in the amounts of $32, $185, and $718
         for the years ended December 31, 2000, 1999 and 1998, respectively.


                                       28
<PAGE>   31

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made in this report, and other written or oral statements
made by or on behalf of the Company, may constitute "forward-looking statements"
within the meaning of the federal securities laws. Statements regarding future
events and developments and the Company's future performance, as well as
management's expectations, beliefs, plans, estimates or projections relating to
the future, are forward-looking statements within the meaning of these laws.
Examples of such statements in this report include descriptions of our plans
with respect to the development of new apartment communities, our plans to enter
new markets and our expectations relating to our continuing growth. All
forward-looking statements are subject to certain risks and uncertainties that
could cause actual events to differ materially from those projected. Management
believes that these forward-looking statements are reasonable; however, you
should not place undue reliance on such statements. These statements are based
on current expectations and speak only as of the date of such statements. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of future events, new information
or otherwise. Additional information concerning the risk and uncertainties
listed above, and other factors that you may wish to consider, is contained
elsewhere in the Company's filings with the Securities and Exchange Commission.

The following are some of the factors that could cause the Company's actual
results to differ materially from the expected results described in the
Company's forward-looking statements:

-        conditions affecting the acquisition, development and ownership of
         residential real estate, including local zoning and land use issues,
         environmental regulations, the Americans with Disabilities Act, the
         Fair Housing Amendments Act of 1988 and general conditions in the
         multi-family residential real estate market.

-        adverse or unanticipated weather conditions, which may affect the
         Company's overall level of development.

-        the Company's ability to obtain financing for the development of
         additional apartment communities.

-        the impact of competition, including competition for tenants and
         locations and in other important aspects of the Company's business. The
         Company's primary competitors include other regional or national
         apartment communities. The multifamily apartment community business is
         highly competitive.

-        general economic conditions which affected consumer confidence and
         purchases of new homes, including interest rates, the overall level of
         economic activity, the availability of consumer credit and mortgage
         financing, unemployment rates, and other factors.

-        the Company's ability to continue to qualify as a real estate
         investment trust under the Code.

-        changes in laws and regulations, including changes in accounting
         standards, tax statutes or regulations, and environmental and land use
         regulations, and uncertainties of litigation.


                                       29
<PAGE>   32



                                  RISK FACTORS

THE FOLLOWING RISK FACTORS APPLY TO THE COMPANY AND THE OPERATING PARTNERSHIP.
ALL INDEBTEDNESS DESCRIBED IN THE RISK FACTORS HAS BEEN INCURRED BY THE
OPERATING PARTNERSHIP.

UNFAVORABLE CHANGES IN APARTMENT MARKETS AND ECONOMIC CONDITIONS COULD ADVERSELY
AFFECT OCCUPANCY LEVELS AND RENTAL RATES.

         Market and economic conditions in the various metropolitan areas of the
United States where the Company operates may significantly affect occupancy
levels and rental rates and therefore profitability. Factors that may adversely
affect these conditions include the following:

         -        the economic climate, which may be adversely impacted by a
                  reduction in jobs, industry slowdowns and other factors;

         -        local conditions, such as oversupply of, or reduced demand
                  for, apartment homes;

         -        a future economic downturn that simultaneously affects one or
                  more of the Company's geographic markets;

         -        declines in household formation;

         -        rent control or stabilization laws, or other laws regulating
                  rental housing, which could prevent the Company from raising
                  rents to offset increases in operating costs; and

         -        competition from other available apartments and changes in
                  market rental rates.

Any of these factors could adversely affect the Company's ability to achieve
desired operating results from its communities.

DEVELOPMENT AND CONSTRUCTION RISKS COULD IMPACT THE COMPANY'S PROFITABILITY.

         The Company intends to continue to develop and construct apartment
communities. Development activities may be conducted through wholly-owned
affiliated companies or through joint ventures with unaffiliated parties. The
Company's development and construction activities may be exposed to the
following risks:

         -        the Company may be unable to obtain, or face delays in
                  obtaining, necessary zoning, land-use, building, occupancy,
                  and other required governmental permits and authorizations,
                  which could result in increased development costs;

         -        the Company may incur construction costs for a property that
                  exceed original estimates due to increased materials, labor or
                  other costs, which could make completion of the property
                  uneconomical, and the Company may not be able to increase
                  rents to compensate for the increase in construction costs;

         -        the Company intends to concentrate its attention on fewer
                  markets and reduce annual development expenditures, and it may
                  abandon development opportunities that it has already begun to
                  explore, and it may fail to recover expenses already incurred
                  in connection with exploring those opportunities;

         -        the Company has been and may continue to be unable to complete
                  construction and lease-up of a community on schedule and meet
                  financial goals for development projects;

                                       30
<PAGE>   33
         -        because occupancy rates and rents at a newly developed
                  community may fluctuate depending on a number of factors,
                  including market and economic conditions, the Company may be
                  unable to meet its profitability goals for that community; and

         -        construction costs have been increasing in the Company's
                  existing markets, and may continue to increase in the future
                  and, in some cases, the costs of upgrading acquired
                  communities have, and may continue to, exceed original
                  estimates and the Company may be unable to charge rents that
                  would compensate for these increases in costs.

FAILURE TO SUCCEED IN NEW MARKETS MAY LIMIT THE COMPANY'S GROWTH.

         The Company may from time to time commence development activity or make
acquisitions outside of its existing market areas if appropriate opportunities
arise. The Company's historical experience in its existing markets does not
ensure that it will be able to operate successfully in new markets. The Company
may be exposed to a variety of risks if it chooses to enter new markets. These
risks include, among others:

         -        an inability to evaluate accurately local apartment market
                  conditions and local economies;

         -        an inability to obtain land for development or to identify
                  appropriate acquisition opportunities;

         -        an inability to hire and retain key personnel; and

         -        lack of familiarity with local governmental and permitting
                  procedures.

POSSIBLE DIFFICULTY OF SELLING APARTMENT COMMUNITIES COULD LIMIT THE COMPANY'S
OPERATIONAL AND FINANCIAL FLEXIBILITY.

         Although the Company has experienced success in disposing of apartment
communities that no longer meet its strategic objectives, market conditions
could change and purchasers may not be willing to pay acceptable prices. A weak
market may limit the Company's ability to change its portfolio promptly in
response to changing economic conditions. Also, if the Company is unable to sell
apartment communities or if it can only sell apartment communities at prices
lower than are generally acceptable, then the Company may not have adequate
capital to execute its development and construction strategy. Furthermore, a
significant portion of the proceeds from the Company's overall property sales
may be held in escrow accounts in order for some sales to qualify as like-kind
exchanges under Section 1031 of the Internal Revenue Code so that any related
capital gain can be deferred for federal income tax purposes. As a result, the
Company may not have immediate access to all of the cash flow generated from
property sales.

CHANGING INTEREST RATES COULD INCREASE INTEREST COSTS AND COULD AFFECT THE
MARKET PRICE OF THE COMPANY'S SECURITIES.

         The Company has incurred, and expects to continue to incur, debt
bearing interest at rates that vary with market interest rates. Therefore, if
interest rates increase, the Company's interest costs will rise to the extent
its variable rate debt is not hedged effectively. In addition, an increase in
market interest rates may lead purchasers of the Company's securities to demand
a higher annual yield, which could adversely affect the market price of the
Company's common and preferred stock and debt securities.

FAILURE TO GENERATE SUFFICIENT CASH FLOWS COULD AFFECT THE COMPANY'S DEBT
FINANCING AND CREATE REFINANCING RISK.

         The Company is subject to the risks normally associated with debt
financing, including the risk that its cash flow will be insufficient to make
required payments of principal and interest. Although the Company may be able to
use cash flow to make future principal payments, it cannot assure investors that
sufficient cash flow will be available to make all required principal payments
and still satisfy the distribution requirements that the Company must satisfy in
order to maintain its status as a real estate investment trust or "REIT" for
federal income tax purposes. The following factors, among others, may affect the
cash flows generated by the Company's apartment communities:

         -        the national and local economies;

         -        local real estate market conditions, such as an oversupply of
                  apartment homes;

         -        the perceptions by prospective residents of the safety,
                  convenience and attractiveness of the Company's communities
                  and the neighborhoods in which they are located;

         -        the Company's ability to provide adequate management,
                  maintenance and insurance; and

         -        rental expenses, including real estate taxes and utilities.


                                       31
<PAGE>   34
         Expenses associated with the Company's investment in a community, such
as debt service, real estate taxes, insurance and maintenance costs, are
generally not reduced when circumstances cause a reduction in cash flows from
operations from that community. If a community is mortgaged to secure payment of
debt and the Company is unable to make the mortgage payments, the Company could
sustain a loss as a result of foreclosure on the community or the exercise of
other remedies by the mortgagee. The Company is likely to need to refinance at
least a portion of its outstanding debt as it matures. There is a risk that the
Company may not be able to refinance existing debt or that the terms of any
refinancing will not be as favorable as the terms of the existing debt. As of
December 31, 2000, the Company had outstanding mortgage indebtedness of
approximately $468 million and senior unsecured debt of approximately $720
million and outstanding indebtedness under its lines of credit aggregating $25
million.

THE COMPANY COULD BECOME MORE HIGHLY LEVERAGED WHICH COULD RESULT IN AN
INCREASED RISK OF DEFAULT AND IN AN INCREASE IN ITS DEBT SERVICE REQUIREMENTS.

         The Company's board of directors has adopted a policy of limiting
indebtedness to approximately 60% of the undepreciated book value of its assets,
but the Company's organizational documents do not contain any limitation on the
amount or percentage of indebtedness, funded or otherwise, that it might incur.
If this policy were changed, the Company could become more highly leveraged,
resulting in an increase in debt service that could adversely affect funds from
operations and the Company's ability to make expected distributions to its
shareholders and the Operating Partnership's ability to make expected
distributions to its limited partners and in an increased risk of default on the
obligations of the Company and the Operating Partnership. In addition, the
Company's and the Operating Partnership's ability to incur debt is limited by
covenants in bank and other credit agreements. The Company manages its debt to
be in compliance with its stated policy and with these debt covenants, but
subject to compliance with these covenants, the Company may increase the amount
of outstanding debt at any time without a concurrent improvement in the
Company's ability to service the additional debt. Accordingly, the Company could
become more leveraged, resulting in an increased risk of default on its
obligations and in an increase in debt service requirements, both of which could
adversely affect the Company's financial condition and ability to access debt
and equity capital markets in the future.

DEBT FINANCING MAY NOT BE AVAILABLE AND EQUITY ISSUANCES COULD BE DILUTIVE TO
THE COMPANY'S SHAREHOLDERS.

         The Company's ability to execute its business strategy depends on its
access to an appropriate blend of debt financing, including unsecured lines of
credit and other forms of secured and unsecured debt, and equity financing,
including common and preferred equity. Debt financing may not be available in
sufficient amounts, or on favorable terms or at all. If the Company issues
additional equity securities to finance developments and acquisitions instead of
incurring debt, the interests of existing shareholders could be diluted.

ACQUIRED COMMUNITIES MAY NOT ACHIEVE ANTICIPATED RESULTS.

         The Company intends to continue to selectively acquire apartment
communities that meet its investment criteria. The Company's acquisition
activities and their success may be exposed to the following risks:

         -        an acquired community may fail to achieve expected occupancy
                  and rental rates and may fail to perform as expected;

         -        the Company may not be able to successfully integrate acquired
                  properties and operations; and

         -        the Company's estimates of the costs of repositioning or
                  redeveloping the acquired property may prove inaccurate,
                  causing the Company to fail to meet its profitability goals.


                                       32
<PAGE>   35



INCREASED COMPETITION COULD LIMIT THE COMPANY'S ABILITY TO LEASE APARTMENT HOMES
OR INCREASE OR MAINTAIN RENTS.

         The Company's apartment communities compete with numerous housing
alternatives in attracting residents, including other apartment communities and
single-family rental homes, as well as owner occupied single- and multi-family
homes. Competitive housing in a particular area could adversely affect the
Company's ability to lease apartment homes and increase or maintain rents.

LIMITED INVESTMENT OPPORTUNITIES COULD ADVERSELY AFFECT THE COMPANY'S GROWTH.

         The Company expects that other real estate investors will compete to
acquire existing properties and to develop new properties. These competitors
include insurance companies, pension and investment funds, developer
partnerships, investment companies and other apartment REITs. This competition
could increase prices for properties of the type that the Company would likely
pursue, and competitors may have greater resources than the Company. As a
result, the Company may not be able to make attractive investments on favorable
terms, which could adversely affect its growth.

INTEREST RATE HEDGING CONTRACTS MAY BE INEFFECTIVE AND MAY RESULT IN MATERIAL
CHARGES.

         From time to time when the Company anticipates issuing debt securities,
it may seek to limit exposure to fluctuations in interest rates during the
period prior to the pricing of the securities by entering into interest rate
hedging contracts. The Company may do this to increase the predictability of its
financing costs. Also, from time to time the Company may rely on interest rate
hedging contracts to limit its exposure under variable rate debt to unfavorable
changes in market interest rates. If the pricing of new debt securities is not
within the parameters of, or market interest rates produce a lower interest cost
than the Company incurs under, a particular interest rate hedging contract, the
contract is ineffective. Furthermore, the settlement of interest rate hedging
contracts has involved and may in the future involve material charges. These
charges are typically related to the extent and timing of fluctuations in
interest rates. Despite the Company's efforts to minimize its exposure to
interest rate fluctuations, the Company cannot guarantee that it will maintain
coverage for all of its outstanding indebtedness at any particular time. If the
Company does not effectively protect itself from this risk, it may be subject to
increased interest costs resulting from interest rate fluctuations.


                                       33
<PAGE>   36

LOSSES FROM NATURAL CATASTROPHES MAY EXCEED INSURANCE COVERAGE.

         The Company carries comprehensive liability, fire, flood, extended
coverage and rental loss insurance on its properties, which are believed to be
of the type and amount customarily obtained on real property assets. The Company
intends to obtain similar coverage for properties acquired in the future.
However, some losses, generally of a catastrophic nature, such as losses from
floods or earthquakes, may be subject to limitations. The Company exercises
discretion in determining amounts, coverage limits and deductibility provisions
of insurance, with a view to maintaining appropriate insurance on its
investments at a reasonable cost and on suitable terms. If the Company suffers a
substantial loss, its insurance coverage may not be sufficient to pay the full
current market value or current replacement value of the lost investment.
Inflation, changes in building codes and ordinances, environmental
considerations and other factors also might make it infeasible to use insurance
proceeds to replace a property after it has been damaged or destroyed.

POTENTIAL LIABILITY FOR ENVIRONMENTAL CONTAMINATION COULD RESULT IN SUBSTANTIAL
COSTS.

         The Company is in the business of acquiring, developing, owning,
operating and from time to time selling real estate. Under various federal,
state and local environmental laws, as a current or former owner or operator,
the Company could be required to investigate and remediate the effects of
contamination of currently or formerly owned real estate by hazardous or toxic
substances, often regardless of its knowledge of or responsibility for the
contamination and solely by virtue of its current or former ownership or
operation of the real estate. In addition, the Company could be held liable to a
governmental authority or to third parties for property damage and for
investigation and clean-up costs incurred in connection with the contamination.
These costs could be substantial, and in many cases environmental laws create
liens in favor of governmental authorities to secure their payment. The presence
of such substances or a failure to properly remediate any resulting
contamination could materially and adversely affect the Company's ability to
borrow against, sell or rent an affected property.

COMPLIANCE OR FAILURE TO COMPLY WITH LAWS REQUIRING ACCESS TO THE COMPANY'S
PROPERTIES BY DISABLED PERSONS COULD RESULT IN SUBSTANTIAL COST.

         The Americans with Disabilities Act, the Fair Housing Act of 1988 and
other federal, state and local laws generally require that public accommodations
be made accessible to disabled persons. Noncompliance could result in the
imposition of fines by the government or the award of damages to private
litigants. These laws may require the Company to modify its existing properties.
These laws may also restrict renovations by requiring improved access to such
buildings by disabled persons or may require the Company to add other structural
features that increase construction costs. Legislation or regulations adopted in
the future may impose further burdens or restrictions on the Company with
respect to improved access by disabled persons. The Company cannot ascertain the
costs of compliance with these laws, which may be substantial.

THE COMPANY MAY FAIL TO QUALIFY AS A REIT FOR FEDERAL INCOME TAX PURPOSES.

         The Company's qualification as a REIT for federal income tax purposes
depends upon its ability to meet on a continuing basis, through actual annual
operating results, distribution levels and diversity of stock ownership, the
various qualification tests and organizational requirements imposed upon REITs
under the Internal Revenue Code. The Company believes that it has qualified for
taxation as a REIT for federal income tax purposes commencing with its taxable
year ended December 31, 1993, and plans to continue to meet the requirements to
qualify as a REIT in the future. Many of these requirements, however, are highly
technical and complex. The Company cannot guarantee, therefore, that it has
qualified or will continue to qualify in the future as a REIT. The determination
that the Company qualifies as a REIT for federal income tax purposes requires an
analysis of various factual matters that may not be totally within the Company's
control. Even a technical or inadvertent mistake could jeopardize the Company's
REIT status. Furthermore, Congress and the IRS


                                       34
<PAGE>   37
might make changes to the tax laws and regulations, and the courts might issue
new decisions that make it more difficult, or impossible, for the Company to
remain qualified as a REIT. The Company does not believe, however, that any
pending or proposed tax law changes would jeopardize its REIT status.

         If the Company were to fail to qualify for taxation as a REIT in any
taxable year, and certain relief provisions of the Internal Revenue Code did not
apply, the Company would be subject to tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates, leaving less
money available for distributions to its shareholders. In addition,
distributions to shareholders in any year in which the Company failed to qualify
would not be deductible by the Company for federal income tax purposes nor would
they be required to be made. Unless entitled to relief under specific statutory
provisions, the Company also would be disqualified from taxation as a REIT for
the four taxable years following the year during which it ceased to qualify as a
REIT. It is not possible to predict whether in all circumstances the Company
would be entitled to such statutory relief. The Company's failure to qualify as
a REIT likely would have a significant adverse effect on the value of its
securities.

THE OPERATING PARTNERSHIP MAY FAIL TO BE TREATED AS A PARTNERSHIP FOR FEDERAL
INCOME TAX PURPOSES.

         Management believes that the Operating Partnership qualifies, and has
so qualified since its formation, as a partnership for federal income tax
purposes and not as a publicly traded partnership taxable as a corporation. No
assurance can be provided, however, that the IRS will not challenge the
treatment of the Operating Partnership as a partnership for federal income tax
purposes or that a court would not sustain such a challenge. If the IRS were
successful in treating the Operating Partnership as a corporation for federal
income tax purposes, then the taxable income of the Operating Partnership would
be taxable at regular corporate income tax rates. In addition, the treatment of
the Operating Partnership as a corporation would cause the Company to fail to
qualify as a REIT. See "--The Company may fail to qualify as a REIT for federal
income tax purposes" above.

THE COMPANY'S SHAREHOLDERS MAY NOT BE ABLE TO EFFECT A CHANGE OF CONTROL.

         The articles of incorporation and bylaws of the Company, the
partnership agreement of the Operating Partnership, and the Georgia Business
Corporation Code contain a number of provisions that could delay, defer or
prevent a transaction or a change of control that might involve a premium price
for the Company's shareholders or otherwise be in their best interests,
including the following:

         Ownership limit. One of the requirements for maintenance of the
Company's qualification as a REIT for federal income tax purposes is that no
more than 50% in value of its outstanding capital stock may be owned by five or
fewer individuals, including entities specified in the Internal Revenue Code,
during the last half of any taxable year. Primarily to facilitate maintenance of
its qualification as a REIT for federal income tax purposes, the ownership limit
under the Company's articles of incorporation prohibits ownership, directly or
by virtue of the attribution provisions of the Internal Revenue Code, by any
person or persons acting as a group of more than 6.0% of the issued and
outstanding shares of the Company's common stock, subject to an exception for
shares of common stock held by Mr. Williams and Mr. Glover, the Company's
Chairman and Vice Chairman. Together, these limitations are referred to as the
"ownership limit." Further, the Company's articles of incorporation include
provisions allowing it to stop transfers of and redeem its shares that are
intended to assist the Company in complying with these requirements. These
provisions may have the effect of delaying, deferring or preventing someone from
taking control, even though a change of control might involve a premium price
for the Company's shareholders or might otherwise be in the shareholders' best
interests.

         Staggered board. The Company's articles of incorporation provides that
the board of directors will consist of eight members and can be increased or
decreased after that according to its bylaws, provided that the


                                       35
<PAGE>   38
total number of directors is not less than three nor more than 15. Pursuant to
the Company's bylaws, the number of directors will be fixed by the board of
directors within the limits in its articles of incorporation. The board of
directors is divided into three classes of directors. Directors for each class
are chosen for a three-year term. The staggered terms for directors may affect
the Company's shareholders' ability to effect a change of control, even if a
change of control would be in the interest of the shareholders.

         Preferred shares; classification or reclassification of unissued shares
of capital stock without shareholder approval. The Company's articles of
incorporation provide that the total number of shares of stock of all classes
which it has authority to issue is 120,000,000, consisting of 100,000,000 shares
of common stock and 20,000,000 shares of preferred stock, of which 5,000,000 had
been issued as of December 31, 2000. The board of directors has the authority,
without a vote of shareholders, to classify or reclassify any unissued shares of
stock, including common stock into preferred stock or vice versa, and to
establish the preferences and rights of any preferred or other class or series
of shares to be issued. The issuance of preferred stock or other shares having
special preferences or rights could delay or prevent a change of control even if
a change of control would be in the interests of the shareholders. Because the
board of directors has the power to establish the preferences and rights of
additional classes or series of shares without a shareholder vote, the board of
directors may give the holders of any class or series preferences, powers and
rights, including voting rights, senior to the rights of holders of the
Company's common stock.

         Consent rights of the Unitholders. Under the partnership agreement of
the Operating Partnership, the Company may not merge or consolidate with another
entity unless the merger includes the merger of the Operating Partnership, which
requires the approval of the holders of a majority of the outstanding units of
limited partnership. If the Company were to ever hold less than a majority of
the units, this voting requirement might limit the possibility for an
acquisition or a change of control.

         Georgia Anti-Takeover Statutes. The Georgia Business Corporation Code
generally restricts a company from entering into certain business combinations
with an interested shareholder for a period of five years after the date on
which the shareholder becomes an interested shareholder unless (1) the
transaction is approved by the board of directors of the company prior to the
date the person becomes an interested shareholder, (2) the interested
shareholder acquires 90% of the company's voting stock in the same transaction
in which it exceeds 10% or (3) subsequent to becoming an interested shareholder,
the shareholder acquires 90% of the company's voting stock and the business
combination is approved by the holders of a majority of the voting stock
entitled to vote on the business combination. An interested shareholder is
defined as any person or entity that is the beneficial owner of at least 10% of
the company's voting stock. This business combination statute will not apply
unless the bylaws of the corporation specifically provides that the statute is
applicable to the corporation. The Company has not elected to be covered by this
statute, but it could so by action of the board of directors at any time.

         Georgia Fair Price Statute. The Georgia Fair Price Statute imposes fair
price and procedural requirements applicable to business combinations with any
person who owns 10% or more of the common stock. These statutory requirements
restrict business combinations with, and accumulations of shares of voting stock
of, certain Georgia corporations. This fair price statute will not apply unless
the bylaws of the corporation specifically provides that the statute is
applicable to the corporation. The Company has not elected to be covered by this
statute, but it could do so by action of the board of directors at any time.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE SENSITIVITY

The Company's primary market risk exposure is interest rate risk. At December
31, 2000, the Company had $151,125 of variable rate debt tied to LIBOR. In
addition, the Company had $235,880 in variable tax-exempt debt tied to "AAA"
NON-AMT. In addition, the Company has interest rate risk associated with fixed
rate debt at maturity. The discussion in this Interest Rate Sensitivity section
is the same for the Company and the Operating Partnership, except that all
indebtedness described herein has been incurred by the Operating Partnership.

Management has and will continue to manage interest rate risk as follows:

-        maintain a conservative ratio of fixed rate, long-term debt to total
         debt such that variable rate exposure is kept at an acceptable level;

-        fix certain long-term variable rate debt through the use of interest
         rate swaps or interest rate caps with appropriately matching
         maturities;

-        use treasury locks where appropriate to fix rates on anticipated debt
         transactions, and

                                       36










<PAGE>   39

-        take advantage of favorable market conditions for long-term debt and/or
         equity.

Management uses various financial models and advisors to achieve these
objectives.

The table below provides information about the Company's derivative financial
instruments and other financial instruments that are sensitive to changes in
interest rates. For debt obligations, the table presents principal cash flows
and related weighted average interest rates by expected maturity dates. For
interest rate swaps, the table presents notional amounts and weighted average
interest rates by (expected) contractual maturity dates. Notional amounts are
used to calculate the contractual payments to be exchanged under the contract.
Weighted average variable rates are based upon implied forward rates in the
yield curve at the reporting date. The information is presented in U.S. dollar
equivalents, which is the Company's reporting currency.

<TABLE>
<CAPTION>
                                                            EXPECTED MATURITY DATE
                              -----------------------------------------------------------------------------------------------------
                                                                                               THERE-                    FAIR
                                2001         2002        2003         2004         2005        AFTER        TOTAL        VALUE
                              ---------    --------    ---------    ---------    ---------    ---------   ----------   ----------
                                                                                                                       (IN MILLIONS)
                              -----------------------------------------------------------------------------------------------------
<S>                           <C>          <C>         <C>          <C>          <C>          <C>         <C>          <C>
Long-term Debt:
  Fixed Rate ...............  $  69,066    $ 22,316    $ 102,480    $  25,654    $ 177,848    $ 428,940   $  826,304   $  822,043
                              ---------    --------    ---------    ---------    ---------    ---------   ----------   ----------
   Average interest rate....       7.49%       7.47%        7.50%        7.52%        7.36%        6.83%        7.49%
                                                                                                to 7.39%
  Floating Rate (1)
  LIBOR-based:
   Cash Management
    Line (2)................                  4,925                                                            4,925        4,925
   MTN......................                                                        25,000                    25,000       25,000
   Revolver (2).............                                           18,000                                 18,000       18,000
   FNMA (3).................                                                                    103,200      103,200      103,200
                              ---------    --------    ---------    ---------    ---------    ---------   ----------   ----------
    Total LIBOR-based.......                  4,925           --       18,000       25,000      103,200      151,125      151,125
Tax-exempt (4)..............                                                                    235,880      235,880      235,880
                              ---------    --------    ---------    ---------    ---------    ---------   ----------   ----------
Total floating rate
     Debt...................         --       4,925           --       18,000       25,000      339,080      387,005      387,005
                              ---------    --------    ---------    ---------    ---------    ---------   ----------   ----------
Total debt..................  $  69,066    $ 27,241    $ 102,480     $ 43,654    $ 202,848    $ 768,020   $1,213,309   $1,209,048
                              =========    ========    =========    =========    =========    =========   ==========   ==========
</TABLE>

(1)  Interest on these debt instruments is based on LIBOR ranging from LIBOR
     plus .675% to .750% above LIBOR. At December 31, 2000, the LIBOR rate was
     6.561%. See Schedule of Indebtedness in Management's Discussion and
     Analysis for rates on individual debt instruments.

(2)  Assumes the Company's Revolver and Cash Management Line are repaid at the
     maturity date. Management believes these lines will be renewed at maturity
     with similar terms. Maturity dates reflect new terms which are effective
     January 12, 2001.

(3)  In December 2000, the Company entered into a swap transaction that fixed
     the rate on the note at 6.975%, inclusive of credit enhancement and other
     fees, from January 1, 2001 through July 31, 2009.

(4)  At December 31, 2000, the "AAA" NON-AMT rate was 5.00%. Interest on these
     debt instruments is equal to the "AAA" NON-AMT rate plus .515%. The Company
     has purchased an interest rate cap that limits the Company's exposure to
     increases in the base rate to 5.00%.

<TABLE>
<CAPTION>
                                                                 AVERAGE                       EXPECTED
                                                                PAY RATE/      AVERAGE        SETTLEMENT       FAIR
   INTEREST RATE DERIVATIVES            NOTIONAL AMOUNT          CAPRATE     RECEIVE RATE        DATE          VALUE
-------------------------------       -------------------      ----------   -------------     ----------     ---------
<S>                                   <C>                      <C>          <C>               <C>            <C>
Interest Rate Swaps
                                      $104,000 amortizing                      1 month
   Variable to fixed...........            to $90,270           6.04%           LIBOR           7/31/09      $   (793)
                                                                               3 month
   Variable to fixed...........               25,000            6.53%           LIBOR           2/01/05          (679)
Interest rate cap..............               76,000            5.00%            --             2/01/03            11
Interest rate cap..............              141,230            5.00%            --             2/01/03            20
Interest rate cap..............             $ 18,650            5.00%            --             2/01/03             3
                                                                                                             --------
                                                                                                             $ (1,438)
                                                                                                             ========
</TABLE>


                                       37

<PAGE>   40


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements are listed under Item 14(a) and are filed as part of
this report on the pages indicated. The supplementary data are included in Note
13 of the Notes to Consolidated Financial Statements.

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

None.



                                     38


<PAGE>   41
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The sections under the headings "Election of Directors" entitled "Nominees for
Election," "Incumbent Directors -- Term Expiring 2002," and "Incumbent Directors
-- Term Expiring 2003" of the Proxy Statement for Annual Meeting of Shareholders
to be held May 22, 2001 (the "Proxy Statement") are incorporated herein by
reference for information on Directors of the Registrant. See Item X in Part I
hereof for information regarding executive officers of the Registrant. The
section under the heading "Other Matters" entitled "Section 16(a) Beneficial
Ownership Reporting Compliance" of the Proxy Statement is incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION

The section under the heading "Election of Directors" entitled "Compensation of
Directors" of the Proxy Statement and the sections under the heading titled
"Executive Compensation" entitled "Summary Compensation Table," "Option Grants
Table," "Fiscal Year-End Option Value Table," "Profit Sharing Plan,"
"Noncompetition and Employment Contract," and "Compensation Committee Interlocks
and Insider Participation" of the Proxy Statement are incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The section under the heading "Common Stock Ownership by Management and
Principal Shareholders" of the Proxy Statement is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The section under the heading "Certain Transactions" of the Proxy Statement is
incorporated herein by reference.


                                     39
<PAGE>   42
                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(A) 1. AND 2. FINANCIAL STATEMENTS AND SCHEDULES

The financial statements and schedules listed below are filed as part of this
annual report on the pages indicated.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                            <C>
 POST PROPERTIES, INC.
 Consolidated Financial Statements:
   Report of Independent Accountants......................................................................      41
   Consolidated Balance Sheets as of December 31, 2000 and 1999...........................................      42
   Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998.............      43
   Consolidated Statements of Shareholders' Equity and Accumulated Earnings for the
     Years Ended December 31, 2000, 1999 and 1998.........................................................      44
   Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998.............      45
   Notes to Consolidated Financial Statements.............................................................      46

 POST APARTMENT HOMES, L.P.
 Consolidated Financial Statements:
   Report of Independent Accountants......................................................................      62
   Consolidated Balance Sheets as of December 31, 2000 and 1999...........................................      63
   Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998.............      64
   Consolidated Statements of Partners' Equity for the Years Ended December 31, 2000, 1999 and 1998.......      65
   Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998.............      66
   Notes to Consolidated Financial Statements.............................................................      67

 Schedule III:
   Real Estate and Accumulated Depreciation...............................................................      83

All other schedules are omitted because they are either not applicable or not required.

 POST PROPERTIES, INC. -- 1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
 Financial Statements:
   Report of Independent Accountants......................................................................      86
   Statement of Net Assets Available for Plan Benefits as of December 31, 2000 and 1999...................      87
   Statement of Changes in Net Assets Available for Plan Benefits for the Years Ended
     December 31, 2000 and 1999...........................................................................      88
   Notes to Financial Statements..........................................................................      89
</TABLE>

                                     40
<PAGE>   43

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Post Properties, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of shareholders' equity and accumulated
earnings, and of cash flows, present fairly, in all material respects, the
financial position of Post Properties, Inc. at December 31, 2000 and December
31, 1999, and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, 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.

PricewaterhouseCoopers LLP (signed)


Atlanta, Georgia
February 16, 2001


                                     41
<PAGE>   44

                              POST PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,
                                                                                   -----------------------------
                                                                                      2000              1999
                                                                                   -----------       -----------
<S>                                                                                <C>               <C>
ASSETS
 Real estate assets
   Land .........................................................................  $   281,525       $   277,784
   Building and improvements ....................................................    1,681,798         1,574,158
   Furniture, fixtures and equipment ............................................      190,968           137,602
   Construction in progress .....................................................      509,702           576,361
   Land held for future development .............................................       28,995            16,880
                                                                                   -----------       -----------
                                                                                     2,692,988         2,582,785
   Less: accumulated depreciation ...............................................     (345,121)         (303,016)
     Assets held for sale .......................................................      122,047                --
                                                                                   -----------       -----------
     Real estate assets .........................................................    2,469,914         2,279,769
 Cash and cash equivalents ......................................................        7,459             5,870
 Restricted cash ................................................................        1,272             1,380
 Deferred charges, net ..........................................................       21,700            20,820
 Other assets ...................................................................       50,892            42,334
                                                                                   -----------       -----------
        Total assets ............................................................  $ 2,551,237       $ 2,350,173
                                                                                   ===========       ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
 Notes payable ..................................................................  $ 1,213,309       $   989,583
 Accrued interest payable .......................................................       10,751             9,160
 Dividend and distribution payable ..............................................       33,933            31,285
 Accounts payable and accrued expenses ..........................................       67,136            59,780
 Security deposits and prepaid rents ............................................        9,407             9,023
                                                                                   -----------       -----------
        Total liabilities .......................................................    1,334,536         1,098,831
                                                                                   -----------       -----------
 Minority interest of preferred unitholders in Operating Partnership ............       70,000            70,000
                                                                                   -----------       -----------
 Minority interest of common unitholders in Operating Partnership ...............      118,091           122,480
                                                                                   -----------       -----------
 Commitments and contingencies ..................................................           --                --
 Shareholders' equity
    Preferred stock, $.01 par value, 20,000,000 authorized:
    8 1/2% Series A Cumulative Redeemable Shares, liquidation
    preference $50 per share, 1,000,000 shares issued and outstanding ...........           10                10
    7 5/8% Series B Cumulative Redeemable Shares, liquidation
    preference $25 per share, 2,000,000 shares issued and
    outstanding .................................................................           20                20
    7 5/8% Series C Cumulative Redeemable Shares, liquidation
    preference $25 per share, 2,000,000 shares issued and
    outstanding .................................................................           20                20
   Common stock, $.01 par value, 100,000,000
    authorized, 39,662,192 and 38,834,323 shares issued, 38,853,596 and
    38,834,323 shares outstanding at December 31, 2000 and 1999, respectively ...          396               388
   Additional paid-in capital ...................................................    1,057,067         1,058,424
   Accumulated earnings .........................................................           --                --
                                                                                   -----------       -----------
                                                                                     1,057,513         1,058,862
        Less common stock in treasury at cost, 808,596 shares ...................      (28,903)               --
                                                                                   -----------       -----------
        Total shareholders' equity ..............................................    1,028,610         1,058,862
                                                                                   -----------       -----------
        Total liabilities and shareholders' equity ..............................  $ 2,551,237       $ 2,350,173
                                                                                   ===========       ===========
</TABLE>

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


                                     42
<PAGE>   45

                              POST PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                            YEAR ENDED DECEMBER 31,
                                                                              --------------------------------------------------
                                                                                  2000                1999              1998
                                                                              ------------        ------------      ------------
<S>                                                                           <C>                 <C>               <C>
REVENUES
  Rental .................................................................... $    365,895        $    318,697      $    275,755
  Property management - third party .........................................        3,826               3,368             3,164
  Landscape services - third party ..........................................       11,423               9,118             7,252
  Interest ..................................................................        1,922                 764               472
  Other .....................................................................       16,766              13,980            12,262
                                                                              ------------        ------------      ------------
      Total revenue .........................................................      399,832             345,927           298,905
                                                                              ------------        ------------      ------------
EXPENSES
  Property operating and maintenance (exclusive of items
    shown separately below) .................................................      131,349             113,152            99,717
  Depreciation ..............................................................       71,113              58,013            46,646
  Property management - third party .........................................        3,099               2,925             2,499
  Landscape services - third party ..........................................        9,993               7,904             6,264
  Interest ..................................................................       50,303              33,192            31,297
  Amortization of deferred loan costs .......................................        1,636               1,496             1,185
  General and administrative ................................................       10,066               7,788             8,495
  Minority interest in consolidated property partnerships ...................       (1,695)                511               397
                                                                              ------------        ------------      ------------
      Total expenses ........................................................      275,864             224,981           196,500
                                                                              ------------        ------------      ------------
  Income before net gain (loss) on sale of assets, loss on unused treasury
    locks, other charges, minority interest of unitholders in Operating
    Partnership and extraordinary item ......................................      123,968             120,946           102,405
  Net gain (loss) on sale of assets .........................................        3,208              (1,522)               --
  Loss on unused treasury locks .............................................           --                  --            (1,944)
  Project abandonment, employee severance and impairment charges ............       (9,365)                 --                --
  Minority interest of preferred unitholders in Operating Partnership .......       (5,600)             (1,851)               --
  Minority interest of common unitholders in Operating Partnership ..........      (11,691)            (12,598)          (11,511)
                                                                              ------------        ------------      ------------
  Income before extraordinary item ..........................................      100,520             104,975            88,950
  Extraordinary item, net of minority interest of unitholders
    in Operating Partnership ................................................           --                (458)               --
                                                                              ------------        ------------      ------------
  Net income ................................................................      100,520             104,517            88,950
  Dividends to preferred shareholders .......................................      (11,875)            (11,875)          (11,473)
                                                                              ------------        ------------      ------------
  Net income available to common shareholders ............................... $     88,645        $     92,642      $     77,477
                                                                              ============        ============      ============
EARNINGS PER COMMON SHARE - BASIC
  Income before extraordinary item (net of preferred dividends) ............. $       2.25        $       2.42      $       2.21
  Extraordinary item ........................................................           --               (0.01)               --
                                                                              ------------        ------------      ------------
  Net income available to common shareholders ............................... $       2.25        $       2.41      $       2.21
                                                                              ============        ============      ============
  Weighted average common shares outstanding ................................   39,317,725          38,460,689        35,028,596
                                                                              ============        ============      ============
  Dividends declared ........................................................ $       3.04        $       2.80      $       2.60
                                                                              ============        ============      ============
EARNINGS PER COMMON SHARE - DILUTED
  Income before extraordinary item (net of preferred dividends) ............. $       2.22        $       2.39      $       2.18
  Extraordinary item ........................................................           --               (0.01)               --
                                                                              ------------        ------------      ------------
  Net income available to common shareholders ............................... $       2.22        $       2.38      $       2.18
                                                                              ============        ============      ============
  Weighted average common shares outstanding ................................   39,852,514          38,916,987        35,473,587
                                                                              ============        ============      ============
</TABLE>

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


                                     43

<PAGE>   46


                              POST PROPERTIES, INC.
               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
                              ACCUMULATED EARNINGS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                 ADDITIONAL
                                                       PREFERRED      COMMON      PAID-IN      TREASURY     ACCUMULATED
                                                        SHARES        SHARES      CAPITAL        STOCK        EARNINGS      TOTAL
                                                      ----------    ----------   ----------   ----------    -----------  ----------
<S>                                                   <C>           <C>          <C>          <C>           <C>          <C>
SHAREHOLDERS' EQUITY AND
  ACCUMULATED EARNINGS,
  DECEMBER 31, 1997 .............................     $       30    $      306   $  756,584   $       --    $       --   $  756,920
  Proceeds from Preferred Shares, net of
   underwriting discount and offering
   costs of $1,716 ..............................             20            --       48,264           --            --       48,284
  Proceeds from Common Shares, net of
    Underwriting discount and offering
     Costs of $13,592 ...........................             --            69      255,838           --            --      255,907
  Proceeds from Dividend Reinvestment and
    Employee Stock Purchase Plans ...............             --             5       18,855           --            --       18,860
   Adjustment for minority interest of
    unitholders in Operating Partnership
    at dates of capital transactions ............             --            --      (15,031)          --            --      (15,031)
  Net income ....................................             --            --           --           --        88,950       88,950
  Dividends to preferred shareholders ...........             --            --           --           --       (11,473)     (11,473)
  Dividends declared and paid to common
    Shareholders ................................             --            --      (13,254)          --       (55,752)     (69,006)
  Dividends declared to common shareholders .....             --            --           --           --       (21,725)     (21,725)
                                                      ----------    ----------   ----------   ----------    ----------   ----------
SHAREHOLDERS' EQUITY AND
  ACCUMULATED EARNINGS,
  DECEMBER 31, 1998 .............................     $       50    $      380   $1,051,256   $       --    $       --   $1,051,686
  Offering cost of redeemable preferred units ...             --            --       (1,810)          --            --       (1,810)
  Proceeds from Dividend Reinvestment and
    Employee Stock Purchase Plans ...............             --             8       23,304           --            --       23,312
  Adjustment for minority interest of
    unitholders in Operating Partnership
    at dates of capital transactions ............             --            --          857           --            --          857
  Net income ....................................             --            --           --           --       104,517      104,517
  Dividends to preferred shareholders ...........             --            --           --           --       (11,875)     (11,875)
  Dividends declared and paid to common
   Shareholders .................................             --            --      (15,183)          --       (65,458)     (80,641)

  Dividends declared to common shareholders .....             --            --           --           --       (27,184)     (27,184)
                                                      ----------    ----------   ----------   ----------    ----------   ----------
SHAREHOLDERS' EQUITY AND
  ACCUMULATED EARNINGS,
  DECEMBER 31, 1999 .............................     $       50    $      388   $1,058,424   $       --    $       --   $1,058,862
  Proceeds from Dividend Reinvestment and
    Employee Stock Purchase Plans and Employee
    Stock Plan ..................................             --             8       29,029          152            --       29,189
  Adjustment for minority interest of
    unitholders in Operating Partnership
    at dates of capital transactions ............             --            --          320           --            --          320
  Net income ....................................             --            --           --           --       100,520      100,520
  Acquisition of treasury stock .................             --            --           --      (29,055)           --      (29,055)
  Dividends to preferred shareholders ...........             --            --           --           --       (11,875)     (11,875)
  Dividends to common shareholders ..............             --            --      (30,706)          --       (88,645)    (119,351)
                                                      ----------    ----------   ----------   ----------    ----------   ----------
SHAREHOLDERS' EQUITY AND
  ACCUMULATED EARNINGS,
  DECEMBER 31, 2000 .............................     $       50    $      396   $1,057,067   $  (28,903)   $       --   $1,028,610
                                                      ==========    ==========   ==========   ==========    ==========   ==========
</TABLE>

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


                                     44
<PAGE>   47

                              POST PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                               -----------------------------------------
                                                                                  2000            1999            1998
                                                                               ---------       ---------       ---------
<S>                                                                            <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income .............................................................     $ 100,520       $ 104,517       $  88,950
  Adjustments to reconcile net income to net cash provided
   by operating activities:
  Minority interest of preferred unitholders in Operating Partnership ....         5,600           1,851              --
  Minority interest of common unitholders in Operating Partnership .......        11,691          12,598          11,511
  Net (gain) loss on sale of assets ......................................        (3,208)          1,522              --
  Loss on unused treasury locks ..........................................            --              --           1,944
  Extraordinary item, net of minority interest of unitholders in
   Operating Partnership .................................................            --             458              --
  Depreciation ...........................................................        71,113          58,013          46,623
  Amortization of deferred loan costs ....................................         1,636           1,496           1,209
  Other ..................................................................            --              --             168
  Changes in assets, (increase) decrease in:
   Restricted cash .......................................................           108             (32)            194
   Deferred charges ......................................................        (1,591)         (4,106)         (7,115)
   Other assets ..........................................................        (8,904)        (24,735)          2,998
  Changes in liabilities, increase (decrease) in:
   Accrued interest payable ..............................................         1,591           1,551             104
   Accounts payable and accrued expenses .................................         6,133            (402)          1,433
   Security deposits and prepaid rents ...................................           384             307             599
                                                                               ---------       ---------       ---------
  Net cash provided by operating activities ..............................       185,073         153,038         148,618
                                                                               ---------       ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Construction and acquisition of real estate assets,
   net of payables .......................................................      (362,981)       (286,696)       (279,473)
  Net proceeds from sale of assets .......................................       157,265          16,587              --
  Payment for unused treasury locks ......................................            --              --          (1,944)
  Capitalized interest ...................................................       (25,426)        (21,417)        (15,707)
  Recurring capital expenditures .........................................        (9,157)         (8,641)         (7,479)
  Corporate capital expenditures .........................................        (3,441)         (6,811)         (8,576)
  Non-recurring capital expenditures .....................................        (5,576)         (2,971)         (1,423)
  Revenue generating capital expenditures ................................        (6,670)         (8,011)        (13,614)
                                                                               ---------       ---------       ---------
  Net cash used in investing activities ..................................      (255,986)       (317,960)       (328,216)
                                                                               ---------       ---------       ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Payment of financing costs .............................................        (3,128)         (1,495)             --
  Debt proceeds ..........................................................       440,001         279,000         253,930
  Debt payments ..........................................................      (216,275)        (89,425)       (275,131)
  Proceeds from preferred units, net of offering costs ...................            --          68,190              --
  Offering proceeds, net of underwriters discount
   and offering costs ....................................................            --              --         255,907
  Proceeds from Preferred Shares .........................................            --              --          48,284
  Purchase of treasury stock .............................................       (24,912)             --              --
  Proceeds from Dividend Reinvestment Plan ...............................        26,754          23,312          18,860
  Capital distributions to common unitholders ............................       (15,458)        (14,318)        (13,277)
  Distributions paid to preferred unitholders ............................        (5,600)         (1,384)             --
  Dividends paid to preferred shareholders ...............................       (11,875)        (11,875)        (11,473)
  Dividends paid to common shareholders ..................................      (117,005)       (102,367)        (87,227)
                                                                               ---------       ---------       ---------
  Net cash provided by financing activities ..............................        72,502         149,638         189,873
                                                                               ---------       ---------       ---------
  Net increase (decrease) in cash and cash equivalents ...................         1,589         (15,284)         10,275
  Cash and cash equivalents, beginning of period .........................         5,870          21,154          10,879
                                                                               ---------       ---------       ---------
  Cash and cash equivalents, end of period ...............................     $   7,459       $   5,870       $  21,154
                                                                               =========       =========       =========
</TABLE>


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


                                     45
<PAGE>   48

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1.  ORGANIZATION AND FORMATION OF THE COMPANY

ORGANIZATION AND FORMATION OF THE COMPANY

Post Properties, Inc. (the "Company" or "PPI") through its majority owned
subsidiary, Post Apartment Homes, L.P. (the "Operating Partnership") currently
owns and manages or is in the process of developing apartment communities
located in the Atlanta, Dallas, Tampa, Orlando, Washington, D.C., Nashville,
Houston, Austin, Phoenix, Denver, Pasadena and Charlotte metropolitan areas. At
December 31, 2000, approximately 52.8%, 25.7% and 11.5% (on a unit basis) of the
Company's communities are located in the Atlanta, Dallas and Tampa metropolitan
areas, respectively.

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the consolidated
accounts of the Company and the Operating Partnership. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Since units can be redeemed for shares of the Company on a one-for-one basis at
the Operating Partnership's option, minority interest of unitholders in the
operations of the Operating Partnership is calculated based on the weighted
average of shares and units outstanding during the period.

Certain items in the 1999 and 1998 consolidated financial statements were
reclassified for comparative purposes with the 2000 consolidated financial
statements.

NEW ACCOUNTING PRONOUNCEMENTS

SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES"

The Company will adopt SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended by Statement No. 137 on January 1, 2001. This
standard establishes accounting and reporting standards for derivatives and
hedging activities and will require the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that do not qualify as hedges must
be adjusted to fair value through earnings. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of the
derivative will either be offset against the change in fair value of the hedged
asset, liability, or firm commitment through earnings or be recognized in other
comprehensive income until the hedged item affects earnings. If the change in
fair value or cash flows of a derivative designated as a hedge is not
effectively offset, as defined, by the change in value or cash flows of the item
it is hedging, this difference will be immediately recognized in earnings. Upon
adoption of SFAS 133 on January 1, 2001, the Company will record a net
transition adjustment loss in the statement of operations of $728 and a net
transition adjustment of $1,472 in other comprehensive income (equity). Adoption
of this standard will also result in the recording of a derivative instrument
liability of $1,472.

The Company only utilizes qualifying cash flow hedges that are designated
specifically to reduce exposure to interest rate risk by locking in the expected
future cash payments on certain designated liabilities. This is typically
accomplished using an interest rate swap or interest rate cap. For financial
reporting purposes, the gain or loss on the effective portion of the cash flow
hedge will be recorded as a component of other comprehensive income. The
ineffective portion of the cash flow hedge will be recorded immediately in
earnings.

On the date the Company enters into a derivative contract, management will
designate the derivative as a hedge of the identified cash flow exposure. The
Company will formally document all relationships between hedging instruments and
hedged items, as well as its risk-management objective and strategy for
undertaking various hedge transactions. In this documentation, the Company will
specifically identify the asset, liability, firm commitment, or forecasted
transaction that has been designated as a hedged item and will state how the
hedging instrument is expected to hedge the risks related to the hedged item.

The Company will formally measure effectiveness of its hedging relationships
both at the hedge inception and on an ongoing basis in accordance with its risk
management policy. The Company may discontinue hedge accounting


                                     46
<PAGE>   49

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

prospectively when it is determined that the derivative is no longer effective
in offsetting changes in the fair value or cash flows of a hedged item; when the
derivative expires or is sold, terminated or exercised; or when the derivative
is re-designated to no longer be a hedge instrument.

STAFF ACCOUNTING BULLETIN NO. 101, "REVENUE RECOGNITION"

The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin
No. 101 (SAB 101), "Revenue Recognition," which provides guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
SAB 101 was implemented in the fourth quarter of 2000 by the Company and the
adoption had no effect on its results of operations or financial position.

REAL ESTATE ASSETS AND DEPRECIATION

Real estate assets are stated at the lower of depreciated cost or fair value, if
deemed impaired. Ordinary repairs and maintenance are expensed as incurred;
major replacements and betterments are capitalized and depreciated over their
estimated useful lives. Depreciation is computed on a straight-line basis over
the useful lives of the properties (buildings and components and related land
improvements -- 20-40 years; furniture, fixtures and equipment -- 5 - 10 years).

REVENUE RECOGNITION

Rental -- Residential properties are leased under operating leases with terms of
generally one year or less. Rental income is recognized when earned, which is
not materially different from revenue recognition on a straight line basis.

Property management and landscaping services -- Income is recognized when earned
for property management and landscaping services provided to third parties.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, all investments purchased with an
original maturity of three months or less are considered to be cash equivalents.

RESTRICTED CASH

Restricted cash generally is comprised of resident security deposits for
communities located in Florida and Tennessee and required maintenance reserves
for communities located in DeKalb County, Georgia.

DEFERRED FINANCING COSTS

Deferred financing costs are amortized using the interest method over the terms
of the related debt.

INTEREST AND REAL ESTATE TAXES

Interest and real estate taxes incurred during the construction period are
capitalized and depreciated over the lives of the constructed assets. Interest
paid (including capitalized amounts of $25,426, $21,417, and $15,707 during
2000, 1999 and 1998, respectively), aggregated $74,419, $51,337 and $46,889 for
the years ended December 31, 2000, 1999 and 1998, respectively.

DERIVATIVES

The Company has entered into various interest rate swap and interest rate cap
agreements. These arrangements are used to manage the Company's exposure to
fluctuations in interest rates. Premiums paid to purchase interest rate
protection agreements (i.e. interest rate caps) have been deferred and are being
amortized over the terms of those agreements using the interest method.
Unamortized premiums are included in deferred charges in the consolidated
balance sheet. Amounts


                                     47
<PAGE>   50

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

receivable under the interest rate protection agreements are accrued as a
reduction of interest expense. Interest rate swaps qualifying for hedge
accounting treatment are recorded on an accrual basis as an adjustment of the
interest rate yield. Interest rate swaps not qualifying for hedge accounting
treatment are recorded at fair value and recognized through the statement of
operations.

PER SHARE DATA

Basic earnings per common share with respect to the Company for the years ended
December 31, 2000, 1999 and 1998 is computed based upon the weighted average
number of shares outstanding during the period. Diluted earnings per common
share is based upon the weighted average number of shares outstanding during the
period and includes the effect of the potential issuance of additional shares if
stock options were exercised or converted into common stock.

USE OF ESTIMATES IN FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

2.  DEFERRED CHARGES

Deferred charges consist of the following:

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                 ----------------------------
                                                   2000                1999
                                                 --------            --------
         <S>                                     <C>                 <C>
         Deferred financing costs ...........    $ 36,068            $ 31,148
         Other ..............................       5,240               5,394
                                                 --------            --------
                                                   41,308              36,542

         Less: accumulated amortization .....     (19,608)            (15,722)
                                                 --------            --------
                                                 $ 21,700            $ 20,820
                                                 ========            ========
</TABLE>


                                     48
<PAGE>   51

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

3.  NOTES PAYABLE

At December 31, 2000 and 1999, the Company's indebtedness consisted of the
following:

<TABLE>
<CAPTION>
                                                                                                           12/31/00     12/31/99
                                             PAYMENT                                      MATURITY         PRINCIPAL    PRINCIPAL
         DESCRIPTION                          TERMS                INTEREST RATE           DATE (1)         BALANCE      BALANCE
----------------------------------     ---------------------- ------------------------ -----------------  -----------  -----------
<S>                                    <C>                    <C>                      <C>                <C>          <C>
CONVENTIONAL FIXED RATE (SECURED)

Parkwood Townhomes(TM) ...........     Principal and Interest          7.375%                    4/01/14    $    799      $   833

Post Hillsboro Village and
  The Lee Apartments ...............   Principal and Interest           9.20%                   10/01/01          --        2,915

Northwestern Mutual Life .........     Principal and Interest         6.50%(2)                   3/01/09      48,601       49,462

Northwestern Mutual Life .........     Principal and Interest           7.69%                   10/01/07      28,666           --

Northwestern Mutual Life .........     Principal and Interest           7.69%                   10/01/07      51,238           --

FNMA .............................     Principal and Interest         6.975%(3)                  7/23/29     103,200           --
                                                                                                            --------      -------
                                                                                                             232,504       53,210
                                                                                                            --------      -------
CONVENTIONAL FLOATING RATE (SECURED)

Addison Circle Apartment
 Homes by Post(R)- Phase I........     Principal and Interest       LIBOR + .75%                 6/15/00          --       22,067

FNMA .............................     Principal and Interest     LIBOR + .935%(3)               7/23/29          --      104,000
                                                                                                            --------      -------
                                                                                                                  --      126,067
                                                                                                            --------      -------
TAX EXEMPT FLOATING RATE (SECURED)                              "AAA" NON-AMT + .515%
                                        Interest only                  (4)(5)                    6/01/25     235,880      235,880
                                                                                                            --------      -------

SENIOR NOTES (UNSECURED)

Northwestern Mutual Life..........      Interest only              8.21% - 8.37%         6/07/01-6/07/02      50,000       50,000

Senior Notes......................      Interest only              7.25% - 7.70%       10/01/03-12/20/10     310,000      125,000

Medium Term Notes.................      Interest only           6.69% - 8.12%(6)(7)      4/02/01-3/16/15     360,000      215,000
                                                                                                            --------      -------
                                                                                                             720,000      390,000
                                                                                                            --------      -------
LINES OF CREDIT & OTHER UNSECURED
 DEBT
                                                              LIBOR + .825% or prime -
Revolver .........................           N/A                      .25% (8)                   4/30/03      18,000      165,000
                                                              LIBOR + .675% or prime -
Cash Management Line..............           N/A                        .25%                     3/31/01       4,925       17,426

City of Phoenix...................           N/A                     5.00% (9)                   3/01/21       2,000        2,000
                                                                                                          ----------   ----------

                                                                                                              24,925      184,426
                                                                                                          ----------   ----------

TOTAL.............................                                                                        $1,213,309   $  989,583
                                                                                                          ==========   ==========
</TABLE>

(1)      All of the mortgages can be prepaid at any time, subject to certain
         prepayment penalties.

(2)      This note bears interest at 6.50% with an effective rate of 7.30% after
         consideration of a terminated swap agreement.

(3)      In December 2000, the Company entered into a swap transaction that
         fixed the rate of interest on this note at 6.975%, inclusive of credit
         enhancement and other fees, from January 1, 2001 through July 31, 2009.

(4)      Bond financed (interest rate on bonds + credit enhancement fees
         effective October 1, 1998). The Company pays credit enhancement fees of
         .515% of the amount of such bonds or the amount of the letters of
         credit, as the case may be. "AAA" NON-AMT rate was 5.00% at December
         31, 2000.

(5)      These bonds are cross-collateralized. The Company has purchased an
         interest rate cap that limits the Company's exposure to increases in
         the base rate to 5%.

(6)      Contains $100,000 of Mandatory Par Put Remarketed Securities. The
         annual interest rate on these securities to March 16, 2005 (the
         "Remarketing Date") is 6.85%. On the Remarketing Date, they are subject
         to mandatory tender for remarketing.

(7)      In October 2000, the Company entered into a swap transaction that fixed
         the rate on a $25,000 MTN at 7.28%, inclusive of credit enhancement and
         other fees.


                                     49
<PAGE>   52

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(8)      Represents stated rate. The Company may also make "money market" loans
         of up to $175,000 at rates below the stated rate. At December 31, 2000,
         the outstanding balance of the Revolver consisted of "money market"
         loans with an average interest rate of 7.49%. Effective January 12,
         2001, the interest rate is LIBOR plus .75% or prime minus .25% and the
         debt matures April 30, 2004. Also effective January 12, 2001, the
         Company may make "money market" loans of up to $160,000 at rates below
         the stated rate.

(9)      This loan is interest free for the first three years, with interest at
         5.00% thereafter. Repayment is to commence on March 1, 2001 subject to
         the conditions set forth in the Agreement.

CONVENTIONAL FIXED RATE MORTGAGES PAYABLE (SECURED)

Conventional mortgages payable were comprised of five loans at December 31, 2000
and 1999, each of which is collateralized by certain apartment communities
located in Atlanta and Dallas which are included in real estate assets.

On July 23, 1999, the Company issued $104,000 of secured notes to FNMA. Net
proceeds of $101,988 were used to repay outstanding indebtedness. These notes
are secured by five apartment communities. The notes include a prepayment
penalty that is an amount equal to a percentage of the principal amount
remaining under the notes at the time of prepayment. The penalty ranges from
4.8% in the first year to .65% in the tenth year. The Company has an option to
call these notes after ten years from the issuance date. In December 2000, the
Company entered into a swap transaction that fixed the rate of interest on this
note at 6.975%, inclusive of credit enhancement and other fees, from January 1,
2001 through July 31, 2009.

TAX-EXEMPT FLOATING RATE BOND INDEBTEDNESS (SECURED)

Tax exempt floating rate bond indebtedness is comprised of AAA Fannie Mae credit
enhanced debt maturing in 2025. The Federal National Mortgage Association
("FNMA") has provided replacement credit enhancement through 2025 for the bond
issues, aggregating $235,880, which were reissued. The agreement with FNMA
contains representations, covenants, and events of default customary to such
secured loans. Certain of the apartment communities are encumbered to secure
tax-exempt housing bonds.

SENIOR NOTES (UNSECURED)

NORTHWESTERN MUTUAL LIFE NOTES

On June 7, 1995, the Company issued $50,000 of unsecured senior notes with the
Northwestern Mutual Life Insurance Company. The notes were in two tranches: the
first, totaling $30,000, carries an interest rate of 8.21% per annum (1.25% over
the corresponding treasury rate on the date such rate was set) and matures on
June 7, 2001; and the second, totaling $20,000 carries an interest rate of 8.37%
per annum (1.35% over the corresponding treasury rate on the date such rate was
set) and matures on June 7, 2002. Proceeds from the notes were used to repay
outstanding indebtedness. The note agreements pursuant to which the notes were
purchased contain customary representations, covenants and events of default
similar to those contained in the note agreement for the Revolver.

SENIOR NOTES

On September 30, 1996, the Company completed a $125,000 senior unsecured debt
offering comprised of two tranches. The first tranche, $100,000 of 7.25% Notes
due on October 1, 2003 (the "2003 Notes"), was priced at 99.642% to yield 7.316%
per annum (.71% over the corresponding treasury rate on the date such rate was
set). The second tranche, $25,000 of 7.50% Notes due on October 1, 2006 (the
"2006 Notes", and together with the 2003 Notes, the "Notes"), was priced at
99.694% to yield 7.544% per annum (.83% over the corresponding treasury rate on
the date such rate was set). Proceeds from the Notes were used to repay
outstanding indebtedness. On December 20, 2000, the Company issued $185,000 of
unsecured senior notes. These notes bear interest at 7.70% and mature on
December 20, 2010. Net proceeds of approximately $183,798 were used to repay
outstanding indebtedness.


                                     50
<PAGE>   53



POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

MEDIUM TERM NOTES

The Company has established a program for the sale of Medium-Term Notes due
three months or more from the date of issue (the "MTNs"). Proceeds from the MTNs
were used to (i) prepay certain outstanding notes and (ii) repay outstanding
indebtedness.

The following table sets forth MTNs issued and outstanding as of December 31,
2000:

<TABLE>
<CAPTION>
                                ISSUE                                       INTEREST            MATURITY
                                DATE                   AMOUNT                 RATE                DATE
                         ------------------           ---------            ----------      ------------------
                         <S>                          <C>                  <C>             <C>
                         March 31, 1997               $  37,000              7.02%              April 2, 2001
                         March 31, 1997                  13,000              7.30%              April 1, 2004
                         September 22, 1997              10,000              6.69%         September 22, 2004
                         September 22, 1997              25,000              6.78%         September 22, 2005
                         March 12, 1998                 100,000              6.85%             March 16, 2015
                         May 9, 2000                     25,000 (1)          7.28%           February 1, 2005
                         June 15, 2000                  150,000              8.12%              June 15, 2005
                                                      ---------
                                                      $ 360,000
                                                      =========
</TABLE>

(1)      In October 2000, the Company entered into a swap transaction that fixed
         the rate on the note at 7.28%, inclusive of credit enhancement and
         other fees, through maturity.

On March 12, 1998, the Company issued $100,000 of 6.85% Mandatory Par Put
Remarketed Securities(SM) ("MOPPRS(SM)") under the MTN Program. The net proceeds
in the amount of $99,087 from the sale of the MOPPRS(SM) were used to repay
outstanding indebtedness. In connection with the MOPPRS(SM) transaction, Merrill
Lynch & Co. purchased an option to remarket the securities as of March 16, 2005
(the "Remarketing Date") reducing the effective borrowing rate through the
Remarketing Date to 6.59%. In anticipation of the offering, the Company entered
into forward-treasury-lock agreements in the fall of 1997. As a result of the
termination of these agreements, the effective borrowing rate was increased to
approximately 6.85%, the coupon rate on the MOPPRS(SM).

On April 8, 1998, the Company sold $50,000 of Remarketed Reset Notes due April
7, 2009 under the MTN program. The notes bear an interest rate of LIBOR plus the
applicable spread with the spread being reset from time to time. The initial
spread is equal to .40% for a period of one year. The Company has entered into
an interest rate swap for the entire term of the notes to fix the interest rate
index. Under the terms of the swap, the Company paid a fixed rate of 6.02% and
received LIBOR. This swap was settled in February 1999 at a loss of $1,495. This
loss was deferred to amortize over the remaining term of the Remarketed Reset
Notes. On April 7, 1999, the Company repaid the Remarketed Reset Notes with the
proceeds of conventional fixed rate secured debt. The remaining unamortized
balance of the deferred swap loss was redesignated to the new debt and will be
amortized over the remaining term of the new debt.

On May 9, 2000, the Company sold $25,000 aggregate principal amount of notes
under the MTN Program. These notes bear interest at the London Interbank Offer
Rate ("LIBOR") plus .75% and mature on February 1, 2005. Net proceeds of $24,875
were used to repay outstanding indebtedness. In October 2000, the Company
entered into a swap transaction that fixed the rate on the notes at 7.28%,
inclusive of credit enhancement and other fees, through maturity.

On June 16, 2000, the Company sold $150,000 aggregate principal amount of notes
under the MTN Program. These notes bear interest at 8.12% and mature on June 15,
2005. Net proceeds of $148,865 were used to repay outstanding indebtedness.


                                     51
<PAGE>   54

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The aggregate maturities of the Company's indebtedness are as follows (1):

<TABLE>
                         <S>                                                         <C>
                         2001...................................................      $   67,000
                         2002...................................................          20,000
                         2003...................................................         100,000
                         2004...................................................          23,000
                         2005...................................................         200,000
                         Thereafter.............................................         778,384
                                                                                      ----------
                                                                                      $1,188,384
                                                                                      ==========
</TABLE>

(1)      Excludes principal amortization payments and payments on lines of
         credit and other unsecured debt.

LINES OF CREDIT AND OTHER (UNSECURED)

On January 12, 2001, the Company closed a $320,000 three-year syndicated
revolving line of credit (the "Revolver"), which matures April 2004. This line
of credit bears interest at LIBOR plus .75% or prime minus .25% and replaces the
Company's previous line. The Revolver provides for the rate to be adjusted up or
down based on changes in the credit ratings on the Company's senior unsecured
debt. The Revolver also includes a money market competitive bid option for
short-term funds up to $160,000 at rates below the stated line rate. The credit
agreement for the Revolver contains customary representations, covenants and
events of default, including covenants which restrict the ability of the
Operating Partnership to make distributions, in excess of stated amounts, which
in turn restrict the discretion of the Company to declare and pay dividends. In
general, during any fiscal year the Operating Partnership may only distribute up
to 100% of the Operating Partnership's consolidated income available for
distribution (as defined in the credit agreement) exclusive of distributions of
up to $30,000 of capital gains for such year. The credit agreement contains
exceptions to these limitations to allow the Operating Partnership to make
distributions necessary to allow the Company to maintain its status as a REIT.
The Company does not anticipate that this covenant will adversely affect the
ability of the Operating Partnership to make distributions, or the Company to
declare dividends, under the Company's current dividend policy.

Also in January 2001, the Company reached an agreement with a syndicated group
of banks for an incremental $185,000, 364 day facility at terms substantially
equal to the Revolver.

On July 26, 1996, the Company closed a $20,000 unsecured line of credit with
Wachovia Bank of Georgia, N.A. (The "Cash Management Line"). The Cash Management
Line bears interest at LIBOR plus .675% or prime minus .25% and matures on March
31, 2002. Management believes the Cash Management Line will be renewed at
maturity with similar terms. The Revolver requires three days advance notice to
repay borrowings whereas the Cash Management Line provides the Company with an
automatic daily sweep which applies all available cash to reduce the outstanding
balance.

In addition, the Company has a $3,000 facility to provide letters of credit for
general business purposes.

At December 31, 2000, the outstanding balances on the Revolver and Cash
Management Line were $18,000 and $4,925, respectively. There were no outstanding
balances on any of the other facilities at December 31, 2000.

On March 1, 1998 the Company entered into a Disposition and Development
Agreement with the City of Phoenix, Arizona. Pursuant to this agreement, the
City of Phoenix loaned the Company $2,000. This loan is interest-free for the
first three years, with a 5.00% interest rate thereafter. Repayment of the loan
commences on March 1, 2001 with equal semi-annual payments due on March 1 and
September 1 of each year through March 1, 2021. All repayment terms are subject
to the conditions set forth in the Agreement.


                                     52
<PAGE>   55

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

PLEDGED ASSETS

The aggregate net book value at December 31, 2000 of property pledged as
collateral for indebtedness amounted to approximately $469,473.

UNUSED TREASURY LOCKS

The loss on unused treasury locks in 1998 resulted from the termination of
treasury locks intended for debt securities that were not issued by the
Operating Partnership.

EXTRAORDINARY ITEM

The extraordinary item for the year ended December 31, 1999 was due to the write
off of loan costs resulting from the early extinguishment of debt. The
extraordinary item is net of $63 in minority interest of the unitholders
calculated on the basis of weighted average units and common shares outstanding
for the year ended December 31, 1999.

All indebtedness described in this Note 3 has been incurred by the Operating
Partnership.

4.  INCOME TAXES

The Company has elected to be taxed as a REIT under the Internal Revenue Code of
1986, as amended (the "Code") commencing with the taxable year ended December
31, 1993. In order for the Company to qualify as a REIT, it must distribute
annually at least 95% (90% beginning in 2001) of its REIT taxable income, as
defined in the Code, to its shareholders and satisfy certain other requirements.
As a result, the Company generally will not be subject to Federal income
taxation at the corporate level on the income it distributes to the
shareholders. Although Post Properties, Inc. has elected to be taxed as a REIT,
Post Services, Inc. ("Post Services") was formed as a subsidiary of the
Operating Partnership to provide through its subsidiaries asset management,
leasing and landscaping services to third parties. The consolidated taxable
income of Post Services, if any, will be subject to tax at regular corporate
rates.

As of December 31, 2000, the net basis for Federal income tax purposes taking
into account the special allocation of gain to the partners contributing
property to the Operating Partnership and including minority interest in the
Operating Partnership was lower than the net assets as reported in the Company's
consolidated financial statements by $29,794.

5.  RELATED PARTY TRANSACTIONS

The Company provides landscaping services for executive officers, employees,
directors and other related parties. For the years ended December 31, 2000, 1999
and 1998, the Company received landscaping fees of $667, $610 and $961 for such
services. These amounts include reimbursements of direct expenses in the amount
of $11, $10 and $295, which are not included in landscape services revenue.
Accordingly, these transactions resulted in the Company recording landscape
services net fees in excess of direct expenses of $656, $600, and $666 in the
accompanying financial statements for the years ended December 31, 2000, 1999
and 1998, respectively.

The Company provides accounting and administrative services to entities
controlled by certain executive officers of the Company. Fees under this
arrangement aggregated $25 for each year ended December 31, 2000, 1999 and 1998,
respectively.

The Company was contracted to assist in the development of apartment complexes
constructed by a former executive and current shareholder. Fees under this
arrangement were $29, $100, and $349 for the years ended December 31, 2000, 1999
and 1998, respectively.

On February 15, 2000 and December 10, 1999, the Company loaned $1,500 and
$7,750, respectively, to certain executives. These loans are payable ten years
from the issue date and bear interest at a rate of 6.32% per annum. Proceeds
from these loans were used by these executives to acquire the Company's common
shares on the open market. As of February 10, 2001, $2,000 of the loans have
been repaid.


                                     53
<PAGE>   56

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

6.       SALE OF ASSETS AND ASSETS HELD FOR SALE

During the first quarter of 2000, the Company authorized the sale of five
communities: one community in Atlanta, Georgia, three communities in Jackson,
Mississippi and one commercial property in Dallas, Texas. During the third
quarter of 2000, the Company authorized the sale of two communities in
Nashville, Tennessee. During the fourth quarter of 2000, the Company authorized
the sale of one tract of land in Dallas, Texas and seven communities: two
communities in Atlanta, Georgia, one community in Nashville, Tennessee and three
communities and one commercial property in Dallas, Texas.

In February 2000, the Company sold the 213 community in Atlanta, Georgia, for
$32,350. Net proceeds of approximately $31,500 were used to pay down outstanding
indebtedness.

In September 2000, the Company sold the three communities in Jackson,
Mississippi, containing a total of 983 units for $44,600. Net proceeds of
approximately $42,903 were used to pay down outstanding indebtedness.

In November 2000, the Company sold two properties located in Nashville,
Tennessee containing a total of 367 units for $36,885. Net proceeds of
approximately $36,290 were used to repay outstanding indebtedness.

In December 2000, the Company sold two properties located in Atlanta, Georgia,
containing a total of 421 units for $47,250. Net proceeds of approximately
$46,651 were used to repay outstanding indebtedness and to repurchase the
Company's common stock.

At December 31, 2000, the remaining tract of land, four communities and two
commercial properties held for sale, consisting of land, building and
improvements and furniture, fixtures and equipment were recorded at $122,047,
which represented the lower of cost or fair value less costs to sell. The
Company has recorded a net gain on the sale of the Atlanta, Jackson and
Nashville assets in the statement of operations, reduced by its best estimate of
the effect of the anticipated sale of the remaining communities and commercial
properties, as a net gain on the sale of assets of $3,208. The Company expects
the sale of the remaining properties to occur in 2001.

For the years ended December 31, 2000 and 1999, the consolidated statements of
operations include net income of $12,392 and $11,804, respectively, from
communities held for sale at December 31, 2000. Through December 31, 2000,
depreciation expense totaling $4,109 was recognized on these assets prior to the
assets being classified as held for sale. Depreciation expense has not been
recognized subsequent to the date of held for sale classification.

7.       PROJECT ABANDONMENT, EMPLOYEE SEVERANCE AND IMPAIRMENT CHARGES

In the fourth quarter of 2000, management decided to restrict its development
activities to fewer markets, refine its development investment strategy, exit
the for-sale housing business and make changes in its executive management team.
As a result of these decisions, the Company wrote off $4,389 of costs it had
incurred in markets it will no longer pursue for development opportunities and
on individual development deals that are no longer consistent with management's
revised strategy.

In connection with the management changes at December 31, 2000, all employees
included in the severance charge of $3,066 had been notified of their
termination and severance agreement. As of February 15, 2001, these employees
were no longer providing any service to the Company. The employees included in
the accrual at December 31, 2000, were primarily four executives and five
accounting department employees in the Dallas regional office. At December 31,
2000, the accrual for unpaid severance charges was $2,250.

In addition to these charges, the Company also recorded an impairment charge of
$407 to adjust the cost of for-sale housing in Atlanta and Dallas to its
estimated net sales proceeds. Additionally, the Company recorded a charge of
$1,503


                                     54
<PAGE>   57

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

to write off its investment in Darwin Networks, a high-speed Internet
provider that filed for Chapter 11 bankruptcy in January 2001.

8.       EMPLOYEE BENEFIT PLANS

The employees of the Company are participants in a defined contribution plan
pursuant to Section 401 of the Internal Revenue Code. Beginning in 1996, Company
contributions, if any, to this plan are based on the performance of the Company
and are allocated to each participant based on the relative contribution of the
participant to the total contributions of all participants. For purposes of
allocating the Company contribution, the maximum employee contribution included
in the calculation is 3% of salary. Company contributions of $514, $346 and $179
were made in 2000, 1999 and 1998, respectively.

The Company maintains an Employee Stock Purchase Plan ("ESPP") to encourage
stock ownership by eligible directors and employees. To participate in the ESPP,
(i) directors must not be employed by the Company or the Operating Partnership
and must have been a member of the Board of Directors for at least one month and
(ii) an employee must have been employed full or part-time by the Company or the
Operating Partnership for at least one month. The purchase price of shares of
Common Stock under the ESPP is equal to 85% of the lesser of the closing price
per share of Common Stock on the first or last day of the trading period, as
defined.

9.  STOCK-BASED COMPENSATION PLANS

STOCK COMPENSATION PLANS

At December 31, 2000, the Company had two stock-based compensation plans, the
Employee Stock Plan (the "Stock Plan"), the Employee Stock Purchase Plan (the
"ESPP") and, under the Stock Plan, a stock grant program (the "Grant Plan") as
described below. The Company applies APB Opinion 25, "Accounting for Stock
Issued to Employees," and related Interpretations in accounting for its plans.
Accordingly, based upon the criteria of APB Opinion 25 no compensation cost is
required to be recognized for the Stock Plan and the ESPP. The compensation cost
which is required to be charged against income for the Grant Plan, was $138,
$205 and $182 for 2000, 1999 and 1998, respectively. Had compensation cost for
the Company's Stock Plan and ESPP been determined based on the fair value at the
grant dates for awards under the Plans consistent with the method of FASB
Statement 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:

<TABLE>
<CAPTION>
                                                                      2000      1999      1998
                                                                    -------   -------   -------
           <S>                                    <C>               <C>       <C>       <C>
           Net income available to common
              shareholders.....................   As reported.....  $88,645   $92,642   $77,477
                                                  Pro forma.......  $86,463   $90,459   $76,589

           Net income per common share -
              basic............................   As reported.....  $  2.25   $  2.41   $  2.21
                                                  Pro forma.......  $  2.20   $  2.35   $  2.19

           Net income per common share -
              diluted..........................   As reported.....  $  2.22   $  2.38   $  2.18
                                                  Pro forma.......  $  2.17   $  2.32   $  2.16
</TABLE>

For purposes of the pro forma presentation, the fair value of each option grant
is estimated as of the date of grant using the Black-Scholes option-pricing
model. The weighted-average of all assumptions used in the calculation for
various grants under all of the Company's plans during 2000, 1999, and 1998, are
as follows:


                                     55
<PAGE>   58

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                               2000             1999            1998
                                                          --------------   --------------  --------------
           <S>                                            <C>              <C>             <C>
           Dividend yield............................              8.0%             7.3%            7.0%

           Expected volatility.......................             24.8%            15.4%           15.3%

           Risk-free interest rate...................      6.7% to 6.9%     4.5% to 6.6%    4.7% to 5.8%

           Expected option life......................     5 to 7 years     5 to 7 years    5 to 7 years
</TABLE>

FIXED STOCK OPTION PLANS

Under the Stock Plan, the Company may grant to its employees and directors
options to purchase up to 6,000,000 shares of common stock. Of this amount,
550,000 shares are available for grants of restricted stock. Options granted to
any key employee or officer cannot exceed 100,000 shares a year (500,000 shares
if such key employee or officer is a member of the Company's Executive
Committee). The exercise price of each option may not be less than the market
price on the date of grant and all options have a maximum term of ten years from
the grant date.

A summary of the status of the Company's Stock Plan as of December 31, 2000,
1999 and 1998, changes during the years then ended, and the weighted-average
fair value of options granted during the years is presented below:

<TABLE>
<CAPTION>
                                                        2000                          1999                          1998
                                             ---------------------------    ----------------------------   -------------------------
                                                            WEIGHTED-                        WEIGHTED-                  WEIGHTED-
                                                            AVERAGE                          AVERAGE                    AVERAGE
                                               SHARES    EXERCISE PRICE       SHARES      EXERCISE PRICE    SHARES   EXERCISE PRICE
                                             ----------  ---------------    ----------    --------------  ---------- --------------
<S>                                          <C>         <C>                <C>           <C>             <C>        <C>
Outstanding at beginning of year ........     4,054,876        $34           3,030,852        $31          2,237,551     $31

Granted .................................       740,538         38           1,288,232         36          1,440,784      39

Exercised ...............................      (334,194)        32            (164,053)        30            (67,326)     31

Forfeited ...............................      (189,612)        38            (100,155)        37           (580,157)     39
                                             ----------                     ----------                    ----------
Outstanding at end of year ..............     4,271,608         35           4,054,876         35          3,030,852      34
                                             ==========                     ==========                    ==========
Options exercisable at year-end .........     2,413,595                      2,290,143                     2,065,438
                                             ==========                     ==========                    ==========
Weighted-average fair value of options
  granted during the year ...............    $     4.76                     $     2.08                    $     2.54
                                             ==========                     ==========                    ==========
</TABLE>

At December 31, 2000, the range of exercise prices for options outstanding was
$27.625 - $44.125 and the weighted-average remaining contractual life was 7
years.

10. COMMITMENTS AND CONTINGENCIES

LAND, OFFICE AND EQUIPMENT LEASES

The Company is party to two ground leases with terms expiring in years 2040 and
2043 relating to a single operating community, one ground lease expiring in 2038
for a second operating community, three ground leases expiring in 2066, 2069 and
2074 for three communities under development and to office, equipment and other
operating leases with terms expiring in years 2001 through 2004. Future minimum
lease payments for non-cancelable land, office, equipment and other leases at
December 31, 2000 are as follows:

<TABLE>
                       <S>                              <C>
                       2001.........................    $  2,122
                       2002.........................       1,392
                       2003.........................       1,300
                       2004.........................       1,274
                       2005.........................       1,279
                       2006 and thereafter..........     159,456
</TABLE>


                                     56
<PAGE>   59

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The Company incurred $5,935, $5,109 and $4,915 of rent expense for the years
ended December 31, 2000, 1999 and 1998, respectively.

CONTINGENCIES

The Company is party to various legal actions which are incidental to its
business. Management believes that these actions will not have a material
adverse affect on the consolidated balance sheets and statements of operations.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize on disposition
of the financial instruments. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.

Cash equivalents, rents and landscape service receivables, accounts payable,
accrued expenses, notes payable and other liabilities are carried at amounts
which reasonably approximate their fair values.

The fair value of fixed rate debt was approximately $822,043 at December 31,
2000.

The fair values of interest rate protection agreements and interest rate swaps
(used for hedging purposes) are estimated by obtaining quotes from an investment
broker. At December 31, 2000, carrying amounts related to these arrangements in
the consolidated balance sheet were approximately $728. As of December 31, 2000,
the net cost to terminate these contracts was approximately $1,438.

Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 2000. Although management
is not aware of any factors that would significantly affect the reasonable fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date and current estimates of fair
value may differ significantly from the amounts presented herein.


                                     57
<PAGE>   60

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

12. EARNINGS PER SHARE

For the years ended December 31, 2000, 1999 and 1998, basic and diluted earnings
per common share for income before extraordinary item, net of preferred
dividends, and net income available to common shareholders before extraordinary
item has been computed as follows:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED 2000
                                                                      -------------------------------------
                                                                        INCOME        SHARES      PER-SHARE
                                                                      (NUMERATOR)  (DENOMINATOR)    AMOUNT
                                                                      -----------  -------------  ---------
<S>                                                                   <C>          <C>            <C>
Income before extraordinary item ..................................    $ 100,520
Less: Preferred stock dividends ...................................      (11,875)
                                                                       ---------
BASIC EPS
Income available to common shareholders before
  extraordinary item ..............................................       88,645     39,317,725   $    2.25
                                                                                                  =========
EFFECT OF DILUTIVE SECURITIES
Options ...........................................................           --        534,789
                                                                       ---------     ----------
DILUTED EPS
Income available to common shareholders + assumed
  conversions before extraordinary item ...........................    $  88,645     39,852,514   $    2.22
                                                                       =========     ==========   =========

<CAPTION>

                                                                                 YEAR ENDED 1999
                                                                      -------------------------------------
                                                                        INCOME        SHARES      PER-SHARE
                                                                      (NUMERATOR)  (DENOMINATOR)    AMOUNT
                                                                      -----------  -------------  ---------
<S>                                                                   <C>          <C>            <C>
Income before extraordinary item ..................................    $ 104,975
Less: Preferred stock dividends ...................................      (11,875)
                                                                       ---------
BASIC EPS
Income available to common shareholders before
  extraordinary item ..............................................       93,100     38,460,689   $    2.42
                                                                                                  =========
EFFECT OF DILUTIVE SECURITIES
Options ...........................................................           --        456,298
                                                                       ---------     ----------
DILUTED EPS
Income available to common shareholders + assumed
  conversions before extraordinary item ...........................    $  93,100     38,916,987   $    2.39
                                                                       =========     ==========   =========

<CAPTION>

                                                                                 YEAR ENDED 1998
                                                                      -------------------------------------
                                                                        INCOME        SHARES      PER-SHARE
                                                                      (NUMERATOR)  (DENOMINATOR)    AMOUNT
                                                                      -----------  -------------  ---------
<S>                                                                   <C>          <C>            <C>
Income before extraordinary item ..................................    $  88,950
Less: Preferred stock dividends ...................................      (11,473)
                                                                       ---------
BASIC EPS
Income available to common shareholders before
  extraordinary item ..............................................       77,477     35,028,596   $    2.21
                                                                                                  =========
EFFECT OF DILUTIVE SECURITIES
Options ...........................................................           --        444,991
                                                                       ---------     ----------
DILUTED EPS
Income available to common shareholders + assumed
  conversions before extraordinary item ...........................    $  77,477     35,473,587   $    2.18
                                                                       =========     ==========   =========
</TABLE>

13. SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities for the years ended December 31,
2000, 1999 and 1998 are as follows:

(a)      On the date of the Second Offering and Third Offering, holders of
         5,401,185 and 5,139,243 Units of the Operating Partnership,
         respectively, were allocated capital on a pro rata basis in proportion
         to their Units over total Units


                                     58
<PAGE>   61

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

         outstanding in the Operating Partnership. During 2000, 1999 and 1998,
         holders of 12,014, 22,299 and 750 Units in the Operating Partnership,
         respectively, exercised their option to convert their Units to shares
         of the Company on a one-for-one basis. The net effect of the capital
         allocated to the unitholders of the Operating Partnership on the dates
         of the offerings, the subsequent conversion of Units of the Operating
         Partnership to shares of the Company, and the adjustments to minority
         interest for the dilutive impact of the Dividend Reinvestment and
         Employee Stock Purchase Plans, decreased minority interest and
         increased shareholders' equity in the amounts of $320 and $857 for the
         years ended December 31, 2000 and 1999, respectively, and increased
         minority interest and decreased shareholders' equity in the amount of
         $15,031 for the year ended December 31, 1998.

(b)      The Operating Partnership committed to distribute $33,466, $30,818, and
         $25,115 for the quarters ended December 31, 2000, 1999 and 1998,
         respectively. As a result, the Company declared dividends of $29,528,
         $27,184, and $21,725 for the quarters ended December 31, 2000, 1999 and
         1998, respectively. The remaining distributions from the Operating
         Partnership in the amount of $3,938, $3,634, and $3,390 for the
         quarters ended December 31, 2000, 1999 and 1998, respectively, are
         distributed to minority interest unitholders in the Operating
         Partnership.

(c)      For cash flow purposes, treasury stock is net of $2,435 of donated
         stock, $1,708 of treasury stock transactions settled in 2001, less $152
         of shares re-issued from treasury stock.

14.      SEGMENT INFORMATION

SEGMENT DESCRIPTION

In accordance with SFAS No. 131, "Disclosure About the Segments of an Enterprise
and Related Information," the Company presents segment information based on the
way that management organizes the segments within the enterprise for making
operating decisions and assessing performance. The segment information is
prepared on substantially the same basis as the internally reported information
used by the Company's chief operating decision makers to manage the business.

The Company's chief operating decision makers focus on the Company's primary
sources of income which are property rental operations and third party services.
Third party services are designated as one segment. Property rental operations
are broken down into five segments based on the various stages in the property
ownership lifecycle. The Company's six segments are further described as
follows:

         Property Rental Operations

         -        Fully stabilized communities - those apartment communities
                  which have been stabilized (the earlier of the point at which
                  a property reaches 95% occupancy or one year after completion
                  of construction) for both the current and prior year.

         -        Communities stabilized during 1999 - communities which reached
                  stabilized occupancy in the prior year.

         -        Development and lease up communities - those communities that
                  are in lease-up but were not stabilized by the beginning of
                  the current year, including communities that stabilized during
                  the current year.

         -        Communities held for sale - those communities that are being
                  marketed for sale.

         -        Sold communities - communities which were sold in the current
                  or prior year.

         Third Party Services - fee income and related expenses from the
         Company's apartment community management, landscaping and corporate
         apartment rental services.

SEGMENT PERFORMANCE MEASURE

Management uses contribution to funds from operations ("FFO") as the performance
measure for its segments. Effective January 1, 2000, FFO is defined by the
National Association of Real Estate Investment Trusts as net income available to
common shareholders determined in accordance with generally accepted accounting
principles ("GAAP"), excluding


                                     59
<PAGE>   62

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

gains (or losses) from debt restructuring and sales of property, plus
depreciation of real estate assets, and after adjustment for unconsolidated
partnerships and joint ventures. FFO should not be considered as an alternative
to net income (determined in accordance with GAAP) as an indicator of the
Company's financial performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the Company's liquidity,
nor is it necessarily indicative of sufficient cash flow to fund all of the
Company's needs. FFO for 1998 has been restated to reflect the requirements of
the new NAREIT definition.

SEGMENT INFORMATION

The following table reflects each segment's contribution to consolidated
revenues and FFO together with a reconciliation of segment contribution to FFO,
total FFO and income before extraordinary item and preferred dividends.
Additionally, substantially all of the Company's assets relate to the Company's
property rental operations. Asset cost, depreciation and amortization by segment
are not presented because such information at the segment level is not reported
internally.

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                                                   ------------------------------------
                                                                      2000          1999         1998
                                                                   ---------     ---------    ---------
<S>                                                                <C>           <C>          <C>
REVENUES
Fully stabilized communities.................................      $ 232,435     $ 221,901    $ 213,043
Communities stabilized during 1999...........................         42,710        38,097       20,845
Development and lease-up communities.........................         54,486        17,408        2,106
Communities held for sale....................................         19,706        18,552       18,359
Sold communities.............................................         15,928        24,285       24,004
Third party services.........................................         15,249        12,486       10,416
Other........................................................         19,318        13,198       10,132
                                                                   ---------     ---------    ---------

Consolidated revenues........................................      $ 399,832     $ 345,927    $ 298,905
                                                                   =========     =========    =========

CONTRIBUTION TO FUNDS FROM OPERATIONS
Fully stabilized communities.................................      $ 162,197     $ 154,060    $ 146,431
Communities stabilized during 1999...........................         28,753        26,199       12,669
Development and lease-up communities.........................         33,684         9,679         (184)
Communities held for sale....................................         12,392        11,804       11,896
Sold communities.............................................         11,457        18,167       17,213
Third party services.........................................          2,157         1,657        1,653
                                                                   ---------     ---------    ---------

Contribution to FFO..........................................        250,640       221,566      189,678
                                                                   ---------     ---------    ---------

Other operating income, net of expense.......................         (3,274)       (2,161)      (1,197)
Depreciation on non-real estate assets.......................         (2,405)       (1,962)      (1,432)
Minority interest in consolidated property Partnerships......          1,695          (511)        (397)
Project abandonment, employee severance and impairment
  charges....................................................         (9,365)           --           --
Interest expense.............................................        (50,303)      (33,192)     (31,297)
Amortization of deferred loan costs..........................         (1,636)       (1,496)      (1,185)
General and administrative...................................        (10,066)       (7,788)      (8,495)
Dividends to preferred shareholders..........................        (11,875)      (11,875)     (11,473)
                                                                   ---------     ---------    ---------

Total FFO....................................................        163,411       162,581      134,202
                                                                   ---------     ---------    ---------

Depreciation on real estate assets...........................        (66,283)      (55,361)     (45,214)
Net gain (loss) on sale of assets............................          3,208        (1,522)          --
Minority interest of common unitholders in
  Operating Partnership......................................        (11,691)      (12,598)     (11,511)
Dividends to preferred shareholders..........................         11,875        11,875       11,473
                                                                   ---------     ---------    ---------

Income before extraordinary item
  and preferred dividends....................................      $ 100,520     $ 104,975    $  88,950
                                                                   =========     =========    =========
</TABLE>


                                     60
<PAGE>   63

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

    Quarterly financial information for the years ended 2000 and 1999 are as
follows:

<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31, 2000*
                                                                              -------------------------------------------------
                                                                                FIRST       SECOND        THIRD        FOURTH
                                                                              ---------    --------     ---------     ---------
<S>                                                                           <C>          <C>          <C>           <C>
Revenues .................................................................    $  95,443    $ 99,482     $ 101,342     $ 103,565
                                                                              ---------    --------     ---------     ---------
Net income before net gain (loss) on sale of assets, other charges and
  minority interest of unitholders in Operating Partnership ..............       31,965      33,734        30,676        27,593
Net gain (loss) on sale of assets ........................................          687         (19)          959         1,581
Project abandonment, employee severance and impairment charges ...........           --          --            --        (9,365)
Minority interest of preferred unitholders in Operating Partnership ......
                                                                                 (1,400)     (1,400)       (1,400)       (1,400)
Minority interest of common unitholders in Operating Partnership .........
                                                                                 (3,321)     (3,421)       (3,156)       (1,793)
                                                                              ---------    --------     ---------     ---------
Net income ...............................................................       27,931      28,894        27,079        16,616
Dividends to preferred shareholders ......................................       (2,968)     (2,969)       (2,969)       (2,969)
                                                                              ---------    --------     ---------     ---------
Net income available to common shareholders ..............................    $  24,963    $ 25,925     $  24,110     $  13,647
                                                                              =========    ========     =========     =========
Earnings per common share:
Net income available to common shareholders - basic ......................    $    0.64    $   0.66     $    0.61     $    0.35
Net income available to common shareholders - diluted ....................    $    0.63    $   0.65     $    0.60     $    0.34

<CAPTION>

                                                                                          YEAR ENDED DECEMBER 31, 1999*
                                                                              -------------------------------------------------
                                                                                FIRST       SECOND        THIRD         FOURTH
                                                                              ---------    --------     ---------     ---------
<S>                                                                           <C>          <C>          <C>           <C>
Revenues .................................................................    $  80,891    $ 85,503     $  88,158     $  91,375
                                                                              ---------    --------     ---------     ---------
Net income before net gain (loss) on sale of assets,
  minority interest of unitholders in Operating
  Partnership and extraordinary items ....................................       29,406      29,624        30,626        31,290
Net gain (loss) on sale of assets ........................................       (1,567)        476          (246)         (185)
Minority interest of preferred unitholders in
  Operating Partnership ..................................................           --          --          (435)       (1,416)
Minority interest of common unitholders in Operating Partnership .........       (2,992)     (3,237)       (3,206)       (3,163)
Extraordinary items ......................................................         (458)         --            --            --
                                                                              ---------    --------     ---------     ---------
Net income ...............................................................       24,389      26,863        26,739        26,526
Dividends to preferred shareholders ......................................       (2,969)     (2,969)       (2,969)       (2,968)
                                                                              ---------    --------     ---------     ---------
Net income available to common shareholders ..............................    $  21,420    $ 23,894     $  23,770     $  23,558
                                                                              =========    ========     =========     =========
Earnings per common share:
Net income available to common shareholders - basic ......................    $    0.56    $   0.62     $    0.62     $    0.61

Net income available to common shareholders - diluted ....................    $    0.56    $   0.61     $    0.61     $    0.60

</TABLE>

* The total of the four quarterly amounts for minority interest of unitholders
in Operating Partnership, extraordinary item, net income and earnings per share
may not equal the total for the year. These differences result from the use of a
weighted average to compute minority interest in the Operating Partnership and
average number of shares outstanding.


                                     61
<PAGE>   64

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of Post Apartment Homes, L.P.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of shareholders' equity and accumulated
earnings, and of cash flows, present fairly, in all material respects, the
financial position of Post Apartment Homes, L.P. at December 31, 2000 and
December 31, 1999, and the results of their operations and their cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
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.

PricewaterhouseCoopers LLP (signed)

Atlanta, Georgia
February 16, 2001


                                     62
<PAGE>   65

                           POST APARTMENT HOMES, L.P.
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                     -----------------------------------
                                                                                         2000                   1999
                                                                                     ------------           ------------
<S>                                                                                  <C>                    <C>
ASSETS
 Real estate assets
   Land ...................................................................          $    281,525           $    277,784
   Building and improvements ..............................................             1,681,798              1,574,158
   Furniture, fixtures and equipment ......................................               190,968                137,602
   Construction in progress ...............................................               509,702                576,361
   Land held for future development .......................................                28,995                 16,880
                                                                                     ------------           ------------
                                                                                        2,692,988              2,582,785
   Less: accumulated depreciation .........................................              (345,121)              (303,016)
     Assets held for sale .................................................               122,047                     --
                                                                                     ------------           ------------
     Real estate assets ...................................................             2,469,914              2,279,769
 Cash and cash equivalents ................................................                 7,459                  5,870
 Restricted cash ..........................................................                 1,272                  1,380
 Deferred charges, net ....................................................                21,700                 20,820
 Other assets .............................................................                50,892                 42,334
                                                                                     ------------           ------------
        Total assets ......................................................          $  2,551,237           $  2,350,173
                                                                                     ============           ============
LIABILITIES AND PARTNERS' EQUITY
 Notes payable ............................................................          $  1,213,309           $    989,583
 Accrued interest payable .................................................                10,751                  9,160
 Distribution payable .....................................................                33,933                 31,285
 Accounts payable and accrued expenses ....................................                67,136                 59,780
 Security deposits and prepaid rents ......................................                 9,407                  9,023
                                                                                     ------------           ------------
        Total liabilities .................................................             1,334,536              1,098,831
                                                                                     ------------           ------------
 Partners' equity .........................................................             1,216,701              1,251,342
                                                                                     ------------           ------------
        Total liabilities and Partners' equity ............................          $  2,551,237           $  2,350,173
                                                                                     ============           ============
</TABLE>

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


                                     63
<PAGE>   66

                           POST APARTMENT HOMES, L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED DECEMBER 31,
                                                                            -----------------------------------------------------
                                                                                2000                 1999                1998
                                                                            -------------       -------------       -------------
<S>                                                                         <C>                 <C>                 <C>
REVENUES
  Rental .............................................................      $     365,895       $     318,697       $     275,755
  Property management - third party ..................................              3,826               3,368               3,164
  Landscape services - third party ...................................             11,423               9,118               7,252
  Interest ...........................................................              1,922                 764                 472
  Other ..............................................................             16,766              13,980              12,262
                                                                            -------------       -------------       -------------
      Total revenue ..................................................            399,832             345,927             298,905
                                                                            -------------       -------------       -------------
EXPENSES
  Property operating and maintenance (exclusive of items
    shown separately below) ..........................................            131,349             113,152              99,717
  Depreciation .......................................................             71,113              58,013              46,646
  Property management - third party ..................................              3,099               2,925               2,499
  Landscape services - third party ...................................              9,993               7,904               6,264
  Interest ...........................................................             50,303              33,192              31,297
  Amortization of deferred loan costs ................................              1,636               1,496               1,185
  General and administrative .........................................             10,066               7,788               8,495
  Minority interest in consolidated property partnerships ............             (1,695)                511                 397
                                                                            -------------       -------------       -------------
      Total expenses .................................................            275,864             224,981             196,500
                                                                            -------------       -------------       -------------
  Income before net gain (loss) on sale of assets, loss on unused
    treasury locks, other charges, and extraordinary item ............            123,968             120,946             102,405
  Net gain (loss) on sale of assets ..................................              3,208              (1,522)                 --
  Loss on unused treasury locks ......................................                 --                  --              (1,944)
  Project abandonment, employee severance and impairment
    charges ..........................................................             (9,365)                 --                  --
                                                                            -------------       -------------       -------------
  Income before extraordinary item ...................................            117,811             119,424             100,461
  Extraordinary item .................................................                 --                (521)                 --
                                                                            -------------       -------------       -------------
  Net income .........................................................            117,811             118,903             100,461
  Distributions to preferred Unitholders .............................            (17,475)            (13,726)            (11,473)
                                                                            -------------       -------------       -------------
  Net income available to common Unitholders .........................      $     100,336       $     105,177       $      88,988
                                                                            =============       =============       =============
EARNINGS PER COMMON UNIT - BASIC
  Income before extraordinary item
    (net of preferred distributions) .................................      $        2.25       $        2.42       $        2.21
  Extraordinary item .................................................                 --                (.01)                 --
                                                                            -------------       -------------       -------------
  Net income available to common Unitholders .........................      $        2.25       $        2.41       $        2.21
                                                                            =============       =============       =============
  Weighted average common Units outstanding ..........................         44,503,290          43,663,373          40,244,351
                                                                            =============       =============       =============
  Distributions declared .............................................      $        3.04       $        2.80       $        2.60
                                                                            =============       =============       =============
EARNINGS PER COMMON UNIT - DILUTED
  Income before extraordinary item
    (net of preferred distributions) .................................      $        2.22       $        2.39       $        2.18
  Extraordinary item .................................................                 --                (.01)                 --
                                                                            -------------       -------------       -------------
  Net income available to common Unitholders .........................      $        2.22       $        2.38       $        2.18
                                                                            =============       =============       =============
  Weighted average common Units outstanding ..........................         45,038,079          44,119,671          40,689,342
                                                                            =============       =============       =============
</TABLE>

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


                                     64
<PAGE>   67

                           POST APARTMENT HOMES, L.P.
                   CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                             GENERAL          LIMITED
                                                                             PARTNER          PARTNERS             TOTAL
                                                                            ---------       ------------       ------------
<S>                                                                         <C>             <C>                <C>
PARTNERS' EQUITY, DECEMBER 31, 1997 ..................................          9,085            860,219            869,304
Contributions from PPI related to Preferred Shares ...................             --             48,284             48,284
Contributions from PPI related to Common Shares ......................          2,559            253,348            255,907
Contributions from PPI related to Dividend Reinvestment
   and Employee Stock Purchase Plans .................................            189             18,671             18,860
Distributions to preferred Unitholders ...............................             --            (11,473)           (11,473)
Distributions to common Unitholders ..................................           (792)           (78,385)           (79,177)
Distributions declared to common Unitholders .........................           (251)           (24,864)           (25,115)
Net income ...........................................................          1,005             99,456            100,461
                                                                            ---------       ------------       ------------
PARTNERS' EQUITY, DECEMBER 31, 1998 ..................................         11,795          1,165,256          1,177,051
Contributions from PPI related to Dividend Reinvestment
   and Employee Stock Purchase Plans .................................            233             23,079             23,312
Proceeds from issuance of preferred units, net of offering costs .....             --             68,190             68,190
Distributions to preferred Unitholders ...............................             --            (13,726)           (13,726)
Distributions to common Unitholders ..................................           (916)           (90,654)           (91,570)
Distributions declared to common Unitholders .........................           (308)           (30,510)           (30,818)
Net income ...........................................................          1,189            117,714            118,903
                                                                            ---------       ------------       ------------
PARTNERS' EQUITY, DECEMBER 31, 1999 ..................................      $  11,993       $  1,239,349       $  1,251,342
Contributions from the Company related to Dividend Reinvestment
   and Employee Stock Purchase Plans .................................            290             28,747             29,037
Purchase of units ....................................................             --            (28,903)           (28,903)
Distributions to preferred Unitholders ...............................             --            (17,475)           (17,475)
Distributions to common Unitholders ..................................         (1,351)          (133,760)          (135,111)
Net income ...........................................................          1,178            116,633            117,811
                                                                            ---------       ------------       ------------
PARTNERS' EQUITY, DECEMBER 31, 2000 ..................................      $  12,110       $  1,204,591       $  1,216,701
                                                                            =========       ============       ============
</TABLE>

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


                                     65
<PAGE>   68

                           POST APARTMENT HOMES, L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                        ------------------------------------------------------
                                                                            2000                 1999                 1998
                                                                        ------------         ------------         ------------
<S>                                                                     <C>                  <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income ...................................................        $    117,811         $    118,903         $    100,461
  Adjustments to reconcile net income to net cash provided
    by operating activities:
  Net (gain) loss on sale of assets ............................              (3,208)               1,522                   --
  Loss on unused treasury locks ................................                  --                   --                1,944
  Extraordinary item ...........................................                  --                  521                   --
  Depreciation .................................................              71,113               58,013               46,623
  Amortization of deferred loan costs ..........................               1,636                1,496                1,209
  Other ........................................................                  --                   --                  168
  Changes in assets, (increase) decrease in:
    Restricted cash ............................................                 108                  (32)                 194
    Deferred charges ...........................................              (1,591)              (4,106)              (7,115)
    Other assets ...............................................              (8,904)             (24,735)               2,998
  Changes in liabilities, increase (decrease) in:
    Accrued interest payable ...................................               1,591                1,551                  104
    Accounts payable and accrued expenses ......................               6,133                 (402)               1,433
    Security deposits and prepaid rents ........................                 384                  307                  599
                                                                        ------------         ------------         ------------
  Net cash provided by operating activities ....................             185,073              153,038              148,618
                                                                        ------------         ------------         ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Construction and acquisition of real estate assets,
    net of payables ............................................            (362,981)            (286,696)            (279,473)
  Proceeds from sale of assets .................................             157,265               16,587                   --
  Payment for unused treasury locks ............................                  --                   --               (1,944)
  Capitalized interest .........................................             (25,426)             (21,417)             (15,707)
  Recurring capital expenditures ...............................              (9,157)              (8,641)              (7,479)
  Corporate capital expenditures ...............................              (3,441)              (6,811)              (8,576)
  Non-recurring capital expenditures ...........................              (5,576)              (2,971)              (1,423)
  Revenue generating capital expenditures ......................              (6,670)              (8,011)             (13,614)
                                                                        ------------         ------------         ------------
  Net cash used in investing activities ........................            (255,986)            (317,960)            (328,216)
                                                                        ------------         ------------         ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Payment of financing costs ...................................              (3,128)              (1,495)                  --
  Debt proceeds ................................................             440,001              279,000              253,930
  Debt payments ................................................            (216,275)             (89,425)            (275,131)
  Offering proceeds, net of underwriters discount
    and offering costs .........................................                  --                   --              255,907
  Proceeds from issuance of preferred units,
    net of offering costs ......................................                  --               68,190                   --
  Proceeds from contributions from PPI related
    to Preferred Shares ........................................                  --                   --               48,284
  Purchase of units ............................................             (24,912)                  --                   --
  Proceeds from contributions from PPI related
    to Dividend Reinvestment Plan ..............................              26,754               23,312               18,860
  Capital distributions to preferred Unitholders ...............             (17,475)             (13,259)             (11,473)
  Capital distributions to common Unitholders ..................            (132,463)            (116,685)            (100,504)
                                                                        ------------         ------------         ------------
  Net cash provided by financing activities ....................              72,502              149,638              189,873
                                                                        ------------         ------------         ------------
  Net increase (decrease) in cash and cash equivalents .........               1,589              (15,284)              10,275
  Cash and cash equivalents, beginning of period ...............               5,870               21,154               10,879
                                                                        ------------         ------------         ------------
  Cash and cash equivalents, end of period .....................        $      7,459         $      5,870         $     21,154
                                                                        ============         ============         ============
</TABLE>

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


                                     66
<PAGE>   69

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

1.       ORGANIZATION AND FORMATION OF THE COMPANY

ORGANIZATION AND FORMATION OF THE COMPANY

Post Apartment Homes, L.P. (the "Operating Partnership"), a Georgia limited
partnership, was formed on January 22, 1993, to conduct the business of
developing, leasing and managing upscale multi-family apartment communities for
its general partner, Post Properties, Inc. (the "Company" or "PPI"). The
Operating Partnership, through its operating divisions and subsidiaries, is the
entity through which all of the Company's operations are conducted. At December
31, 2000, the Company, through wholly owned subsidiaries, controlled the
Operating Partnership as the sole general partner and as the holder of 88.2% of
the common units in the Operating Partnership ("Units") and 64.1% of the
Perpetual Preferred Units. The other limited partners of the Operating
Partnership, who hold Units, are those persons (including certain officers and
directors of the Company) who, at the time of the Initial Offering, elected to
hold all or a portion of their interest in the form of Units rather than
receiving shares of Common Stock. Each Unit may be redeemed by the holder
thereof for either one share of Common Stock or cash equal to the fair market
value thereof at the time of such redemption, at the option of the Operating
Partnership. The Operating Partnership presently anticipates that it will cause
shares of Common Stock to be issued in connection with each such redemption
rather than paying cash (as has been done in all redemptions to date). With each
redemption of outstanding Units for Common Stock, the Company's percentage
ownership interest in the Operating Partnership will increase. In addition,
whenever the Company issues shares of Common Stock, the Company will contribute
any net proceeds therefrom to the Operating Partnership and the Operating
Partnership will issue an equivalent number of Units to the Company.

The Company elected to be taxed as a real estate investment trust ("REIT") for
Federal income tax purposes beginning with the year ended December 31, 1993. A
REIT is a legal entity which holds real estate interest and, through payments of
dividends to shareholders, in practical effect is not subject to Federal income
taxes at the corporate level.

The Operating Partnership currently owns and manages or is in the process of
developing apartment communities located in the Atlanta, Dallas, Tampa, Orlando,
Northern Virginia, Nashville, Houston, Phoenix, Denver and Charlotte
metropolitan areas. At December 31, 2000, approximately 52.8%, 25.7% and 11.5%
(on a unit basis) of the Company's communities are located in the Atlanta,
Dallas and Tampa metropolitan areas, respectively.

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the consolidated
accounts of the Operating Partnership. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Certain items in the 1999 and 1998 consolidated financial statements were
reclassified for comparative purposes with the 2000 consolidated financial
statements.

NEW ACCOUNTING PRONOUNCEMENTS

SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES"
The Operating Partnership will adopt SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by Statement No. 137 on January
1, 2001. This standard establishes accounting and reporting standards for
derivatives and hedging activities and will require the Operating Partnership to
recognize all derivatives on the balance sheet at fair value. Derivatives that
do not qualify as hedges must be adjusted to fair value through earnings. If the
derivative is a hedge, depending on the nature of the hedge, changes in the fair
value of the derivative will either be offset against the change in fair value
of the hedged asset, liability, or firm commitment through earnings or be
recognized in other comprehensive income until the hedged item affects earnings.
If the change in fair value or cash flows of a derivative designated as a hedge
is not effectively offset, as defined, by the change in value or cash flows of
the item it is hedging, this difference will be immediately recognized in
earnings. Upon adoption of SFAS 133 on January 1, 2001, the Operating
Partnership will record a net transition adjustment loss in the statement of
operations of $728 and a net transition adjustment of $1,472 in accumulated
other comprehensive income (equity). Adoption of this standard will also result
in the recording of a derivative instrument liability of $1,472.


                                     67
<PAGE>   70

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

The Operating Partnership only utilizes qualifying cash flow hedges that are
designated specifically to reduce exposure to interest rate risk by locking in
the expected future cash payments on certain designated liabilities. This is
typically accomplished using an interest rate swap or interest rate cap. For
financial reporting purposes, the gain or loss on the effective portion of the
cash flow hedge is recorded as a component of other comprehensive income. The
ineffective portion of the cash flow hedge will be recorded immediately in
earnings.

On the date the Operating Partnership enters into a derivative contract,
management will designate the derivative as a hedge of the identified cash flow
exposure. The Operating Partnership will formally document all relationships
between hedging instruments and hedged items, as well as its risk-management
objective and strategy for undertaking various hedge transactions. In this
documentation, the Operating Partnership will specifically identify the asset,
liability, firm commitment, or forecasted transaction that has been designated
as a hedged item and will state how the hedging instrument is expected to hedge
the risks related to the hedged item.

The Operating Partnership will formally measure effectiveness of its hedging
relationships both at the hedge inception and on an ongoing basis in accordance
with its risk management policy. The Operating Partnership may discontinue hedge
accounting prospectively when it is determined that the derivative is no longer
effective in offsetting changes in the fair value or cash flows of a hedged
item; when the derivative is re-designated to no longer be a hedge instrument.

STAFF ACCOUNTING BULLETIN NO. 101, "REVENUE RECOGNITION"
The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin
No. 101 (SAB 101), "Revenue Recognition," which provides guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
SAB 101 was implemented in the fourth quarter of 2000 by the Operating
Partnership and the adoption had no effect on its results of operations or
financial position.

REAL ESTATE ASSETS AND DEPRECIATION

Real estate assets are stated at the lower of depreciated cost or fair value, if
deemed impaired. Ordinary repairs and maintenance are expensed as incurred;
major replacements and betterments are capitalized and depreciated over their
estimated useful lives. Depreciation is computed on a straight-line basis over
the useful lives of the properties (buildings and components and related land
improvements -- 20-40 years; furniture, fixtures and equipment -- 5 - 10 years).

PREFERRED UNITS

On September 3, 1999, the Operating Partnership issued $70,000 of Series D
Cumulative Redeemable Preferred Units to an institutional investor in a private
placement meeting the requirements of Regulation D promulgated under the
Securities Act of 1933, as amended. The $25 preferred units may be redeemed by
the Company after five years at par, but are otherwise perpetual in term. The
preferred units may also be exchanged, under certain circumstances, for shares
of the Company's 8 percent Series D Cumulative Redeemable Preferred Stock. Net
proceeds to the Operating Partnership of approximately $68,000 were used to
repay outstanding indebtedness.

REVENUE RECOGNITION

Rental -- Residential properties are leased under operating leases with terms of
generally one year or less. Rental income is recognized when earned, which is
not materially different from revenue recognition on a straight line basis.

Property management and landscaping services -- Income is recognized when earned
for property management and landscaping services provided to third parties.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, all investments purchased with an
original maturity of three months or less are considered to be cash equivalents.


                                     68
<PAGE>   71

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

RESTRICTED CASH

Restricted cash generally is comprised of resident security deposits for
communities located in Florida and Tennessee and required maintenance reserves
for communities located in DeKalb County, Georgia.

DEFERRED FINANCING COSTS

Deferred financing costs are amortized using the interest method over the terms
of the related debt.

INTEREST AND REAL ESTATE TAXES

Interest and real estate taxes incurred during the construction period are
capitalized and depreciated over the lives of the constructed assets. Interest
paid (including capitalized amounts of $25,426, $21,417, and $15,707 during
2000, 1999 and 1998, respectively), aggregated $74,419, $51,337, and $46,889 for
the years ended December 31, 2000, 1999 and 1998, respectively.

DERIVATIVES

The Operating Partnership has entered into various interest rate swap and
interest rate cap agreements. These arrangements are used to manage the
Operating Partnership's exposure to fluctuations in interest rates. Premiums
paid to purchase interest rate protection agreements (i.e. interest rate caps)
have been deferred and are being amortized over the terms of those agreements
using the interest method. Unamortized premiums are included in deferred charges
in the consolidated balance sheet. Amounts receivable under the interest rate
protection agreements is accrued as a reduction of interest expense. Interest
rate swaps qualifying for hedge accounting treatment are recorded on an accrual
basis as an adjustment of the interest rate yield. Interest rate swaps not
qualifying for hedge accounting treatment are recorded at fair value and
recognized through the statement of operations.

PER UNIT DATA

Basic earnings per common Unit with respect to the Operating Partnership for the
years ended December 31, 2000, 1999 and 1998 is computed based upon the weighted
average number of units outstanding during the period. Diluted earnings per
common Unit is based upon the weighted average number of Units outstanding
during the period and includes the effect of the potential issuance of
additional Units if stock options were exercised or converted into common stock
of the Company.

USE OF ESTIMATES IN FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

2. DEFERRED CHARGES

Deferred charges consist of the following:

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                           --------------------------
                                                                              2000             1999
                                                                           ---------        ---------
             <S>                                                           <C>              <C>
             Deferred financing costs..............................        $  36,068        $  31,148
             Other.................................................            5,240            5,394
                                                                           ---------        ---------
                                                                              41,308           36,542

             Less: accumulated amortization........................          (19,608)         (15,722)
                                                                           ---------        ---------
                                                                           $  21,700        $  20,820
                                                                           =========        =========
</TABLE>

                                     69
<PAGE>   72

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

3. NOTES PAYABLE

At December 31, 2000 and 1999, the Operating Partnership's indebtedness
consisted of the following:

<TABLE>
<CAPTION>
                                                                                                             12/31/00     12/31/99
                                      PAYMENT                                               MATURITY        PRINCIPAL     PRINCIPAL
         DESCRIPTION                   TERMS                      INTEREST RATE             DATE (1)         BALANCE       BALANCE
         -----------                   -----                      -------------             --------         -------       -------
<S>                              <C>                    <C>                             <C>                 <C>           <C>
CONVENTIONAL FIXED RATE
(SECURED)

Parkwood Townhomes(TM)........  Principal and Interest                7.375%                 4/01/14        $      799    $    833

Post Hillsboro Village and
The Lee Apartments............  Principal and Interest                9.20%                 10/01/01                --       2,915

Northwestern Mutual Life......  Principal and Interest               6.50%(2)                3/01/09            48,601      49,462

Northwestern Mutual Life......  Principal and Interest                7.69%                 10/01/07            28,666          --

Northwestern Mutual Life......  Principal and Interest                7.69%                 10/01/07            51,238          --

FNMA..........................  Principal and Interest              6.975%(3)                7/23/29           103,200          --
                                                                                                            ----------    --------
                                                                                                               232,504      53,210
                                                                                                            ----------    --------

CONVENTIONAL FLOATING RATE
(SECURED)

Addison Circle Apartment
Homes by Post(R)- Phase I ....  Principal and Interest            LIBOR + .75%               6/15/00                --      22,067

FNMA..........................  Principal and Interest          LIBOR + .935% (3)            7/23/29                --     104,000
                                                                                                            ----------    --------
                                                                                                                    --     126,067
                                                                                                            ----------    --------

TAX EXEMPT FLOATING RATE
(SECURED)                           Interest only         "AAA" NON-AMT + .515%(4)(5)       6/01/25            235,880     235,880
                                                                                                            ----------    --------

SENIOR NOTES (UNSECURED)

Northwestern Mutual Life......      Interest only                8.21% - 8.37%           6/07/01-6/07/02        50,000      50,000

Senior Notes..................      Interest only                7.25% - 7.70%          10/01/03-12/20/10      310,000     125,000

Medium Term Notes.............      Interest only             6.69% -8.12% (6) (7)       4/02/01-3/16/15       360,000     215,000
                                                                                                            ----------    --------
                                                                                                               720,000     390,000
                                                                                                            ----------    --------
LINES OF CREDIT & OTHER
UNSECURED DEBT

Revolver .....................           N/A            LIBOR + .825% or prime - .25%(8)    4/30/03             18,000     165,000

Cash Management Line..........           N/A              LIBOR + .675% or prime - .25%     3/31/01              4,925      17,426

City of Phoenix...............           N/A                        5.00% (9)               3/01/21              2,000       2,000
                                                                                                            ----------    --------
                                                                                                                24,925     184,426
                                                                                                            ----------    --------

TOTAL.........................                                                                              $1,213,309    $989,583
                                                                                                            ==========    ========
</TABLE>

(1)      All of the mortgages can be prepaid at any time, subject to certain
         prepayment penalties.
(2)      This note bears interest at 6.50% with an effective rate of 7.30% after
         consideration of a terminated swap agreement.
(3)      In December 2000, the Operating Partnership entered into a swap
         transaction that fixed the rate of interest on this note at 6.975%,
         inclusive of credit enhancement and other fees, from January 1, 2001
         through July 31, 2009.
(4)      Bond financed (interest rate on bonds + credit enhancement fees
         effective October 1, 1998). The Operating Partnership pays credit
         enhancement fees of .515% of the amount of such bonds or the amount of
         the letters of credit, as the case may be. "AAA" NON-AMT rate was 5.00%
         at December 31, 2000.
(5)      These bonds are cross-collateralized. The Operating Partnership has
         purchased an interest rate cap that limits the Operating Partnership's
         exposure to increases in the base rate to 5%.
(6)      Contains $100,000 of Mandatory Par Put Remarketed Securities. The
         annual interest rate on these securities to March 16, 2005 (the
         "Remarketing Date") is 6.85%. On the Remarketing Date, they are subject
         to mandatory tender for remarketing.
(7)      In October 2000, the Operating Partnership entered into a swap
         transaction that fixed the rate on a $25,000 MTN at 7.28%, inclusive of
         credit enhancement and other fees.


                                     70
<PAGE>   73

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

(8)      Represents stated rate. The Operating Partnership may also make "money
         market" loans of up to $175,000 at rates below the stated rate. At
         December 31, 2000, the outstanding balance of the Revolver consisted of
         "money market" loans with an average interest rate of 7.49%. Effective
         January 12, 2001, the interest rate is LIBOR plus .75% or prime minus
         .25% and the debt matures April 30, 2004. Also effective January 12,
         2001, the Operating Partnership may make "money market" loans of up to
         $160,000 at rates below the stated rate.
(9)      This loan is interest free for the first three years, with interest at
         5.00% thereafter. Repayment is to commence on March 1, 2001 subject to
         the conditions set forth in the Agreement.

CONVENTIONAL FIXED RATE MORTGAGES PAYABLE (SECURED)

Conventional mortgages payable were comprised of five loans at December 31, 2000
and 1999, each of which is collateralized by certain apartment communities
located in Atlanta and Dallas which are included in real estate assets.

On July 23, 1999, the Operating Partnership issued $104,000 of secured notes to
FNMA. Net proceeds of $101,988 were used to repay outstanding indebtedness.
These notes are secured by five apartment communities. The notes include a
prepayment penalty that is an amount equal to a percentage of the principal
amount remaining under the notes at the time of prepayment. The penalty ranges
from 4.8% in the first year to .65% in the tenth year. The Operating Partnership
has an option to call these notes after ten years from the issuance date. In
December 2000, the Operating Partnership entered into a swap transaction that
fixed the rate of interest on this note at 6.975%, inclusive of credit
enhancement and other fees, from January 1, 2001 through July 31, 2009.

TAX-EXEMPT FLOATING RATE BOND INDEBTEDNESS (SECURED)

Tax exempt floating rate bond indebtedness is comprised of AAA Fannie Mae credit
enhanced debt maturing in 2025. The Federal National Mortgage Association
("FNMA") has provided replacement credit enhancement through 2025 for the bond
issues, aggregating $235,880, which were reissued. The agreement with FNMA
contains representations, covenants, and events of default customary to such
secured loans. Certain of the apartment communities are encumbered to secure
tax-exempt housing bonds.

SENIOR NOTES (UNSECURED)

NORTHWESTERN MUTUAL LIFE NOTES On June 7, 1995, the Operating Partnership issued
$50,000 of unsecured senior notes with the Northwestern Mutual Life Insurance
Company. The notes were in two tranches: the first, totaling $30,000, carries an
interest rate of 8.21% per annum (1.25% over the corresponding treasury rate on
the date such rate was set) and matures on June 7, 2001; and the second,
totaling $20,000 carries an interest rate of 8.37% per annum (1.35% over the
corresponding treasury rate on the date such rate was set) and matures on June
7, 2002. Proceeds from the notes were used to repay outstanding indebtedness.
The note agreements pursuant to which the notes were purchased contain customary
representations, covenants and events of default similar to those contained in
the note agreement for the Revolver.

SENIOR NOTES On September 30, 1996, the Operating Partnership completed a
$125,000 senior unsecured debt offering comprised of two tranches. The first
tranche, $100,000 of 7.25% Notes due on October 1, 2003 (the "2003 Notes"), was
priced at 99.642% to yield 7.316% per annum (.71% over the corresponding
treasury rate on the date such rate was set). The second tranche, $25,000 of
7.50% Notes due on October 1, 2006 (the "2006 Notes", and together with the 2003
Notes, the "Notes"), was priced at 99.694% to yield 7.544% per annum (.83% over
the corresponding treasury rate on the date such rate was set). Proceeds from
the Notes were used to repay outstanding indebtedness. On December 20, 2000, the
Operating Partnership issued $185,000 of unsecured senior notes. These notes
bear interest at 7.70% and mature on December 20, 2010. Net proceeds of
approximately $183,798 were used to repay outstanding indebtedness.


                                     71
<PAGE>   74

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

MEDIUM TERM NOTES The Operating Partnership has established a program for the
sale of Medium-Term Notes due three months or more from the date of issue (the
"MTNs"). Proceeds from the MTNs were used to (i) prepay certain outstanding
notes and (ii) repay outstanding indebtedness.

The following table sets forth MTNs issued and outstanding as of December 31,
2000:

<TABLE>
<CAPTION>
                                ISSUE                                    INTEREST             MATURITY
                                DATE                  AMOUNT               RATE                 DATE
                                -----              ----------            --------             --------
                         <S>                       <C>                   <C>                  <C>
                         March 31, 1997            $   37,000              7.02%            April 2, 2001
                         March 31, 1997                13,000              7.30%            April 1, 2004
                         September 22, 1997            10,000              6.69%         September 22, 2004
                         September 22, 1997            25,000              6.78%         September 22, 2005
                         March 12, 1998               100,000              6.85%           March 16, 2015
                         May 9, 2000                   25,000  (1)         7.28%          February 1, 2005
                         June 15, 2000                150,000              8.12%            June 15, 2005
                                                   ----------
                                                   $  360,000
                                                   ==========
</TABLE>

                           (1)      In October 2000, the Operating Partnership
                                    entered into a swap transaction that fixed
                                    the rate on the note at 7.28%, inclusive of
                                    credit enhancement and other fees, through
                                    maturity.


On March 12, 1998, the Operating Partnership issued $100,000 of 6.85% Mandatory
Par Put Remarketed Securities(SM) ("MOPPRS(SM)") under the MTN Program. The net
proceeds in the amount of $99,087 from the sale of the MOPPRS(SM) were used to
repay outstanding indebtedness. In connection with the MOPPRS(SM) transaction,
Merrill Lynch & Co. purchased an option to remarket the securities as of March
16, 2005 (the "Remarketing Date") reducing the effective borrowing rate through
the Remarketing Date to 6.59%. In anticipation of the offering, the Operating
Partnership entered into forward-treasury-lock agreements in the fall of 1997.
As a result of the termination of these agreements, the effective borrowing rate
was increased to approximately 6.85%, the coupon rate on the MOPPRS(SM).


On April 8, 1998, the Operating Partnership sold $50,000 of Remarketed Reset
Notes due April 7, 2009 under the MTN program. The notes bear an interest rate
of LIBOR plus the applicable spread with the spread being reset from time to
time. The initial spread is equal to .40% for a period of one year. The
Operating Partnership has entered into an interest rate swap for the entire term
of the notes to fix the interest rate index. Under the terms of the swap, the
Operating Partnership paid a fixed rate of 6.02% and received LIBOR. This swap
was settled in February 1999 at a loss of $1,495. This loss was deferred to
amortize over the remaining term of the Remarketed Reset Notes. On April 7,
1999, the Operating Partnership repaid the Remarketed Reset Notes with the
proceeds of conventional fixed rate secured debt. The remaining unamortized
balance of the deferred swap loss was redesignated to the new debt and will be
amortized over the remaining term of the new debt.

On May 9, 2000, the Operating Partnership sold $25,000 aggregate principal
amount of notes under the MTN Program. These notes bear interest at the London
Interbank Offer Rate ("LIBOR") plus .75% and mature on February 1, 2005. Net
proceeds of $24,875 were used to repay outstanding indebtedness. In October
2000, the Operating Partnership entered into a swap transaction that fixed the
rate on the notes at 7.28%, inclusive of credit enhancement and other fees,
through maturity.

On June 16, 2000, the Operating Partnership sold $150,000 aggregate principal
amount of notes under the MTN Program. These notes bear interest at 8.12% and
mature on June 15, 2005. Net proceeds of $148,865 were used to repay outstanding
indebtedness.


                                     72
<PAGE>   75

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

The aggregate maturities of the Company's indebtedness are as follows (1):

<TABLE>
                         <S>                                                          <C>
                         2001...................................................      $     67,000
                         2002...................................................            20,000
                         2003...................................................           100,000
                         2004...................................................            23,000
                         2005...................................................           200,000
                         Thereafter.............................................           778,384
                                                                                      ------------
                                                                                      $  1,188,384
                                                                                      ============
</TABLE>

                           (1)      Excludes principal amortization payments and
                                    payments on lines of credit and other
                                    unsecured debt.

LINES OF CREDIT AND OTHER (UNSECURED)

On January 12, 2001, the Operating Partnership closed a $320,000 three-year
syndicated revolving line of credit (the "Revolver"), which matures April 2004.
This line of credit bears interest at LIBOR plus .75% or prime minus .25% and
replaces the Operating Partnership's previous line. The Revolver provides for
the rate to be adjusted up or down based on changes in the credit ratings on the
Operating Partnership's senior unsecured debt. The Revolver also includes a
money market competitive bid option for short-term funds up to $160,000 at rates
below the stated line rate. The credit agreement for the Revolver contains
customary representations, covenants and events of default, including covenants
which restrict the ability of the Operating Partnership to make distributions,
in excess of stated amounts, which in turn restrict the discretion of the
Company to declare and pay dividends. In general, during any fiscal year the
Operating Partnership may only distribute up to 100% of the Operating
Partnership's consolidated income available for distribution (as defined in the
credit agreement) exclusive of distributions of up to $30,000 of capital gains
for such year. The credit agreement contains exceptions to these limitations to
allow the Operating Partnership to make distributions necessary to allow the
Company to maintain its status as a REIT. The Company does not anticipate that
this covenant will adversely affect the ability of the Operating Partnership to
make distributions, or the Company to declare dividends, under the Company's
current dividend policy.

Also in January 2001, the Operating Partnership reached an agreement with a
syndicated group of banks for an incremental $185,000, 364 day facility at terms
substantially equal to the Revolver.

On July 26, 1996, the Operating Partnership closed a $20,000 unsecured line of
credit with Wachovia Bank of Georgia, N.A. (The "Cash Management Line"). The
Cash Management Line bears interest at LIBOR plus .675% or prime minus .25% and
matures on March 31, 2002. Management believes the Cash Management Line will be
renewed at maturity with similar terms. The Revolver requires three days advance
notice to repay borrowings whereas the Cash Management Line provides the
Operating Partnership with an automatic daily sweep which applies all available
cash to reduce the outstanding balance.

In addition, the Operating Partnership has a $3,000 facility to provide letters
of credit for general business purposes.

At December 31, 2000, the outstanding balances on the Revolver and Cash
Management Line were $18,000 and $4,925, respectively. There were no outstanding
balances on any of the other facilities at December 31, 2000.

On March 1, 1998 the Operating Partnership entered into a Disposition and
Development Agreement with the City of Phoenix, Arizona. Pursuant to this
agreement, the City of Phoenix loaned the Operating Partnership $2,000. This
loan is interest-free for the first three years, with a 5.00% interest rate
thereafter. Repayment of the loan commences on March 1, 2001 with equal
semi-annual payments due on March 1 and September 1 of each year through March
1, 2021. All repayment terms are subject to the conditions set forth in the
Agreement.


                                     73
<PAGE>   76

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

PLEDGED ASSETS

The aggregate net book value at December 31, 2000 of property pledged as
collateral for indebtedness amounted to approximately $469,473.

UNUSED TREASURY LOCKS

The loss on unused treasury locks in 1998 resulted from the termination of
treasury locks intended for debt securities that were not issued by the
Operating Partnership.

EXTRAORDINARY ITEM

The extraordinary item for the year ended December 31, 1999 was due to the write
off of loan costs resulting from the early extinguishment of debt. The
extraordinary item for the year ended December 31, 1997 resulted from the
write-off of deferred financing costs on the mortgage debt satisfied.

4. INCOME TAXES

Income or losses of the Operating Partnership are allocated to the partners of
the Operating Partnership for inclusion in their respective income tax returns.
Accordingly, no provision or benefit for income taxes has been made in the
accompanying financial statements. The Company has elected to be taxed as a REIT
under the Internal Revenue Code of 1986, as amended (the "Code") commencing with
the taxable year ended December 31, 1993. In order for the Company to qualify as
a REIT, it must distribute annually at least 95% (90% beginning in 2001) of its
REIT taxable income, as defined in the Code, to its shareholders and satisfy
certain other requirements. As a result, the Operating Partnership generally
will not be subject to Federal income taxation at the corporate level on the
income the Company distributes to the shareholders. Although the Company has
elected to be taxed as a REIT, Post Services, Inc. ("Post Services") was formed
as a subsidiary of the Operating Partnership to provide through its subsidiaries
asset management, leasing and landscaping services to third parties. The
consolidated taxable income of Post Services, if any, will be subject to tax at
regular corporate rates.

As of December 31, 2000, the net basis for Federal income tax purposes, taking
into account the special allocation of gain to the partners contributing
property to the Operating Partnership, was lower than the net assets as reported
in the Operating Partnership's consolidated financial statements by $29,794.

5. RELATED PARTY TRANSACTIONS

The Operating Partnership provides landscaping services for executive officers,
employees, directors and other related parties. For the years ended December 31,
2000, 1999 and 1998, the Operating Partnership received landscaping fees of
$667, $610, and $961 for such services. These amounts include reimbursements of
direct expenses in the amount of $11, $10, and $295, which are not included in
landscape services revenue. Accordingly, these transactions resulted in the
Operating Partnership recording landscape services net fees in excess of direct
expenses of $656, $600, and $666 in the Operating Partnership financial
statements for the years ended December 31, 2000, 1999 and 1998, respectively.

The Operating Partnership provides accounting and administrative services to
entities controlled by certain executive officers of the Operating Partnership.
Fees under this arrangement aggregated $25 for each year ended December 31,
2000, 1999 and 1998, respectively.

The Operating Partnership was contracted to assist in the development of
apartment complexes constructed by a former executive and current shareholder.
Fees under this arrangement were $29, $100, and $349 for the years ended
December 31, 2000, 1999 and 1998, respectively.

On February 15, 2000 and December 10, 1999, the Company loaned $1,500 and
$7,750, respectively, to certain executives. These loans are payable ten years
from the issue date, and bear interest at a rate of 6.32% per annum.

                                     74
<PAGE>   77

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

Proceeds from these loans were used by these executives to acquire the Company's
common shares on the open market. As of February 10, 2001, $2,000 of the loans
have been repaid.

6. SALE OF ASSETS AND ASSETS HELD FOR SALE

During the first quarter of 2000, the Operating Partnership authorized the sale
of five communities: one community in Atlanta, Georgia, three communities in
Jackson, Mississippi and one commercial property in Dallas, Texas. During the
third quarter of 2000, the Operating Partnership authorized the sale of two
communities in Nashville, Tennessee. During the fourth quarter of 2000, the
Operating Partnership authorized the sale of one tract of land in Dallas, Texas
and seven communities: two communities in Atlanta, Georgia, one community in
Nashville, Tennessee and three communities and one commercial property in
Dallas, Texas.

In February 2000, the Operating Partnership sold the 213 community in Atlanta,
Georgia, for $32,350. Net proceeds of approximately $31,500 were used to pay
down outstanding indebtedness.

In September 2000, the Operating Partnership sold the three communities in
Jackson, Mississippi, containing a total of 983 units for $44,600. Net proceeds
of approximately $42,903 were used to pay down outstanding indebtedness.

In November 2000, the Operating Partnership sold two properties located in
Nashville, Tennessee containing a total of 367 units for $36,885. Net proceeds
of approximately $36,290 were used to repay outstanding indebtedness.

In December 2000, the Operating Partnership sold two properties located in
Atlanta, Georgia, containing a total of 421 units for $47,250. Net proceeds of
approximately $46,651 were used to repay outstanding indebtedness and to
repurchase the Company's common stock.

At December 31, 2000, the remaining tract of land, four communities and two
commercial properties consisting of land, building and improvements and
furniture, fixtures and equipment were recorded at $122,047, which represented
the lower of cost or fair value less costs to sell. The Operating Partnership
has recorded a net gain on the sale of the Atlanta, Jackson and Nashville assets
in the statement of operations, reduced by its best estimate of the effect of
the anticipated sale of the remaining communities and commercial properties, as
a net gain on the sale of assets of $3,208. The Operating Partnership expects
the sale of the remaining properties to occur in 2001.

For the years ended December 31, 2000 and 1999, the consolidated statements of
operation include net income of $12,392 and $11,804, respectively, from
communities held for sale at December 31, 2000. Through December 31, 2000,
depreciation expense totaling $4,109 was recognized on these assets prior to the
assets being classified as held for sale. Depreciation expense has not been
recognized subsequent to the date of held for sale classification.

7. PROJECT ABANDONMENT, EMPLOYEE SEVERANCE AND IMPAIRMENT CHARGES

In the fourth quarter of 2000, management decided to restrict its development
activities to fewer markets, refine its development investment strategy, exit
the for-sale housing business and make changes in its executive management team.
As a result of this decision, the Operating Partnership wrote off $4,389 of
costs it had incurred in markets it will no longer pursue for development
opportunities and on individual development deals that are no longer consistent
with management's revised strategy.

In connection with the management changes at December 31, 2000, all employees
included in the severance charge of $3,066 had been notified of their
termination and severance agreement. As of February 15, 2001, these employees
were no longer providing any service to the Operating Partnership. The employees
included in the accrual at December 31, 2000, were primarily four executives and
five accounting department employees in the Dallas regional office. At December
31, 2000, the accrual for unpaid severance charges was $2,250.

In addition to these charges, the Operating Partnership also recorded an
impairment charge of $407 to adjust the cost of for-sale housing in Atlanta and
Dallas to its estimated net sales proceeds. Additionally, the Operating
Partnership


                                     75
<PAGE>   78

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

recorded a charge of $1,503 to write off its investment in Darwin Networks, a
high-speed Internet provider that filed for Chapter 11 bankruptcy in January
2001.

8. EMPLOYEE BENEFIT PLANS

Through a plan adopted by the Company, the employees of the Operating
Partnership are participants in a defined contribution plan pursuant to Section
401 of the Internal Revenue Code. Beginning in 1996, Operating Partnership
contributions, if any, to this plan are based on the performance of the Company
and are allocated to each participant based on the relative contribution of the
participant to the total contributions of all participants. For purposes of
allocating the Operating Partnership contribution, the maximum employee
contribution included in the calculation is 3% of salary. Operating Partnership
contributions of $514, $346, and $179 were made in 2000, 1999 and 1998,
respectively.

During 1995, the Company adopted the Employee Stock Purchase Plan ("ESPP") to
encourage stock ownership by eligible directors and employees. To participate in
the ESPP, (i) directors must not be employed by the Company or the Operating
Partnership and must have been a member of the Board of Directors for at least
one month and (ii) an employee must have been employed full-time by the Company
or the Operating Partnership for at least one month. The purchase price of
shares of Common Stock under the ESPP is equal to 85% of the lesser of the
closing price per share of Common Stock on the first or last day of the trading
period, as defined.

9. STOCK-BASED COMPENSATION PLANS

STOCK COMPENSATION PLANS

At December 31, 2000, the Company had two stock-based compensation plans, the
Employee Stock Plan (the "Stock Plan"), the Employee Stock Purchase Plan (the
"ESPP") and, under the Stock Plan, a stock grant program (the "Grant Plan") as
described below. The Operating Partnership applies APB Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, based upon the
criteria of APB Opinion 25 no compensation cost is required to be recognized for
the Stock Plan and the ESPP. The compensation cost which is required to be
charged against income for the Grant Plan was $138, $205, and $182 for 2000,
1999 and 1998, respectively. Had compensation cost for the Company's Stock Plan
and ESPP been determined based on the fair value at the grant dates for awards
under the Plans consistent with the method of FASB Statement 123, the Operating
Partnership's net income and earnings per Unit would have been reduced to the
pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                               2000              1999              1998
                                                                            ----------        ----------        ---------
<S>                                                  <C>                    <C>               <C>               <C>
Net income available to common
   unitholders ..............................        As reported ...        $  100,336        $  105,177        $  88,988
                                                     Pro forma .....        $   98,154        $  102,994        $  88,100

Net income per common Unit -
   basic ....................................        As reported ...        $     2.25        $     2.41        $    2.21
                                                     Pro forma .....        $     2.21        $     2.36        $    2.19

Net income per common Unit -
   diluted ..................................        As reported ...        $     2.22        $     2.39        $    2.18
                                                     Pro forma .....        $     2.18        $     2.33        $    2.16
</TABLE>

For purposes of the pro forma presentation, the fair value of each option grant
is estimated as of the date of grant using the Black-Scholes option-pricing
model. The weighted-average of all assumptions used in the calculation for
various grants under all of the Company's plans during 2000, 1999 and 1998, are
as follows:


                                     76
<PAGE>   79

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

<TABLE>
<CAPTION>
                                                                2000                1999                1998
                                                           ------------         ------------        ------------
           <S>                                             <C>                  <C>                 <C>
           Dividend yield.............................         8.0%                 7.3%                7.0%

           Expected volatility........................         24.8%               15.4%               15.3%

           Risk-free interest rate....................     6.7% to 6.9%         4.5% to 6.6%        4.7% to 5.8%

           Expected option life.......................     5 to 7 years         5 to 7 years        5 to 7 years
</TABLE>

FIXED STOCK OPTION PLANS

Under the Stock Plan, the Company may grant to its employees and directors
options to purchase up to 6,000,000 shares of common stock. Of this amount,
550,000 shares are available for grants of restricted stock. Options granted to
any key employee or officer cannot exceed 100,000 shares a year (500,000 shares
if such key employee or officer is a member of the Company's Executive
Committee). The exercise price of each option may not be less than the market
price on the date of grant and all options have a maximum term of ten years from
the grant date.

A summary of the status of the Company's Stock Plan as of December 31, 2000,
1999 and 1998, changes during the years then ended, and the weighted-average
fair value of options granted during the years is presented below:

<TABLE>
<CAPTION>
                                                      2000                          1999                         1998
                                            ------------------------      ------------------------     -------------------------
                                                            WEIGHTED-                     WEIGHTED-                     WEIGHTED-
                                                             AVERAGE                       AVERAGE                       AVERAGE
                                                            EXERCISE                      EXERCISE                      EXERCISE
                                              SHARES          PRICE         SHARES          PRICE         SHARES          PRICE
                                            -----------     --------      -----------     --------     ------------     --------
<S>                                         <C>             <C>           <C>             <C>          <C>              <C>
Outstanding at beginning of year ....         4,054,876       $  34         3,030,852       $  31      $  2,237,551          31
Granted .............................           740,538          38         1,288,232          36         1,440,784          39
Exercised ...........................          (334,194)         32          (164,053)         30           (67,326)         31
Forfeited ...........................          (189,612)         38          (100,155)         37          (580,157)         39
                                            -----------                   -----------                  ------------

Outstanding at end of year ..........         4,271,608          35         4,054,876          35         3,030,852          34
                                            ===========                   ===========                  ============

Options exercisable at year-end......         2,413,595                     2,290,143                     2,065,438
                                            ===========                   ===========                  ============
Weighted-average fair value of
options granted during the year......       $      4.76                   $      2.08                  $       2.54
                                            ===========                   ===========                  ============
</TABLE>

At December 31, 2000, the range of exercise prices for options outstanding was
$27.625 - $44.125 and the weighted-average remaining contractual life was 7
years.

10. COMMITMENTS AND CONTINGENCIES

LAND, OFFICE AND EQUIPMENT LEASES

The Operating Partnership is party to two ground leases with terms expiring in
years 2040 and 2043 relating to a single operating community, one ground lease
expiring in 2038 for a second operating community, three ground leases expiring
in 2066, 2069 and 2074 for three communities under development and to office,
equipment and other operating leases with terms expiring in years 2001 through
2004. Future minimum lease payments for non-cancelable land, office, equipment
and other leases at December 31, 2000 are as follows:


                                     77
<PAGE>   80

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

<TABLE>
                           <S>                              <C>
                           2001.........................    $  2,122
                           2002.........................       1,392
                           2003.........................       1,300
                           2004.........................       1,274
                           2005.........................       1,279
                           2006 and thereafter..........     159,456
</TABLE>

The Operating Partnership incurred $5,935, $5,109, and $4,915 of rent expense
for the years ended December 31, 2000, 1999 and 1998, respectively.

CONTINGENCIES

The Operating Partnership is party to various legal actions which are incidental
to its business. Management believes that these actions will not have a material
adverse affect on the consolidated balance sheets and statements of operations.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Operating Partnership could realize on
disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.

Cash equivalents, rents and landscape service receivables, accounts payable,
accrued expenses, and other liabilities are carried at amounts which reasonably
approximate their fair values.

The fair value of fixed rate debt was approximately $822,043 at December 31,
2000.

The fair values of interest rate protection agreements and interest rate swaps
(used for hedging purposes) are estimated by obtaining quotes from an investment
broker. At December 31, 2000, carrying amounts related to these arrangements in
the consolidated balance sheet were approximately $728. As of December 31, 2000,
the net cost to terminate these contracts was approximately $1,438.

Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 2000. Although management
is not aware of any factors that would significantly affect the reasonable fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date and current estimates of fair
value may differ significantly from the amounts presented herein.


                                     78
<PAGE>   81

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

12. EARNINGS PER UNIT

For the years ended December 31, 2000, 1999 and 1998, basic and diluted earnings
per common Unit for income before extraordinary item, net of preferred
distributions, and net income available to common Unitholders before
extraordinary item has been computed as follows:

<TABLE>
<CAPTION>
                                                                                                YEAR ENDED 2000
                                                                             --------------------------------------------------
                                                                                INCOME               UNITS             PER-UNIT
                                                                             (NUMERATOR)         (DENOMINATOR)          AMOUNT
                                                                             -----------         -------------         --------
<S>                                                                          <C>                 <C>                   <C>
Income before extraordinary item...............................              $   117,811
Less: Preferred stock distributions............................                  (17,475)
                                                                             -----------
BASIC EPS
Income available to common Unitholders before extraordinary item ...             100,336            44,503,290          $  2.25
                                                                                                                        =======
EFFECT OF DILUTIVE SECURITIES
Options........................................................                       --               534,789
                                                                              ----------          ------------
DILUTED EPS
Income available to common Unitholders + assumed
  conversions before extraordinary item ............................          $  100,336            45,038,079          $  2.22
                                                                              ==========          ============          =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                              YEAR ENDED 1999
                                                                             --------------------------------------------------
                                                                                INCOME               UNITS             PER-UNIT
                                                                             (NUMERATOR)         (DENOMINATOR)          AMOUNT
                                                                             -----------         -------------         --------
<S>                                                                          <C>                 <C>                   <C>
Income before extraordinary item................................              $  119,424
Less: Preferred stock distributions.............................                 (13,726)
                                                                              ----------
BASIC EPS
Income available to common Unitholders before extraordinary item ...             105,698            43,663,373          $  2.42
                                                                                                                        =======
EFFECT OF DILUTIVE SECURITIES
Options.........................................................                      --               456,298
                                                                               ---------          ------------
DILUTED EPS
Income available to common Unitholders + assumed
  conversions before extraordinary item ............................          $  105,698            44,119,671          $  2.39
                                                                              ==========          ============          =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                                YEAR ENDED 1998
                                                                             --------------------------------------------------
                                                                                INCOME               UNITS             PER-UNIT
                                                                             (NUMERATOR)         (DENOMINATOR)          AMOUNT
                                                                             -----------         -------------         --------
<S>                                                                          <C>                 <C>                   <C>
Income before extraordinary item................................              $  100,461
Less: Preferred stock distributions.............................                 (11,473)
                                                                              ----------
BASIC EPS
Income available to common Unitholders before extraordinary item ...              88,988            40,244,351          $  2.21
                                                                                                                        =======
EFFECT OF DILUTIVE SECURITIES
Options.........................................................                      --               444,991
                                                                              ----------          ------------
DILUTED EPS
Income available to common Unitholders + assumed
  conversions before extraordinary item ............................          $   88,988            40,689,342          $  2.18
                                                                              ==========          ============          =======
</TABLE>

13. SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities for the years ended December 31,
2000, 1999 and 1998 are as follows:

(a)      The Operating Partnership committed to distribute $33,466, $30,818, and
         $25,115 for the quarters ended December 31, 2000, 1999 and 1998,
         respectively.
(b)      For cash flow purposes, treasury stock is net of $2,435 of donated
         stock, $1,708 of treasury stock transactions settled in 2001, less $152
         of shares re-issued from treasury stock.


                                     79
<PAGE>   82

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

14. SEGMENT INFORMATION

SEGMENT DESCRIPTION
In accordance with SFAS No. 131, "Disclosure About the Segments of an Enterprise
and Related Information," the Operating Partnership presents segment information
based on the way that management organizes the segments within the enterprise
for making operating decisions and assessing performance. The segment
information is prepared on substantially the same basis as the internally
reported information used by the Operating Partnership's chief operating
decision makers to manage the business.

The Operating Partnership's chief operating decision makers focus on the
Operating Partnership's primary sources of income which are property rental
operations and third party services. Third party services are designated as one
segment. Property rental operations are broken down into five segments based on
the various stages in the property ownership lifecycle. The Operating
Partnership's six segments are further described as follows:

         Property Rental Operations

         -        Fully stabilized communities - those apartment communities
                  which have been stabilized (the earlier of the point at which
                  a property reached 95% occupancy or one year after completion
                  of construction) for both the current and prior year.

         -        Communities stabilized during 1999 - communities which reached
                  stabilized occupancy in the prior year.

         -        Development and Lease up Communities - those communities which
                  are in lease-up but were not stabilized by the beginning of
                  the current year including communities which stabilized during
                  the current year.

         -        Communities held for sale - those communities that are
                  being marketed for sale.

         -        Sold communities - communities which were sold in the current
                  or prior year.

         Third Party Services - fee income and related expenses from the
         Operating Partnership's apartment community management, landscaping and
         corporate apartment rental services.

SEGMENT PERFORMANCE MEASURE
Management uses contribution to funds from operations ("FFO") as the performance
measure for its segments. Effective January 1, 2000, FFO is defined by the
National Association of Real Estate Investment Trusts as net income available to
common shareholders determined in accordance with generally accepted accounting
principles ("GAAP"), excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation of real estate assets, and after adjustment
for unconsolidated partnerships and joint ventures. FFO should not be considered
as an alternative to net income (determined in accordance with GAAP) as an
indicator of the Operating Partnership's financial performance or to cash flow
from operating activities (determined in accordance with GAAP) as a measure of
the Operating Partnership's liquidity, nor is it necessarily indicative of
sufficient cash flow to fund all of the Operating Partnership's needs.

SEGMENT INFORMATION
The following table reflects each segment's contribution to consolidated
revenues and FFO together with a reconciliation of segment contribution to FFO,
total FFO and income before extraordinary item. Additionally, substantially all
of the Operating Partnership's assets relate to the Operating Partnership's
property rental operations. Asset cost, depreciation and amortization by segment
are not presented because such information at the segment level is not reported
internally.


                                     80
<PAGE>   83
POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)


<TABLE>
<CAPTION>
                                                                                            YEAR ENDED DECEMBER 31,
                                                                              ---------------------------------------------------
                                                                                 2000                1999                1998
                                                                              -----------         -----------         -----------
<S>                                                                           <C>                 <C>                 <C>
REVENUES
Fully stabilized communities .........................................        $   232,435         $   221,901         $   213,043
Communities stabilized during 1999 ...................................             42,710              38,097              20,845
Development and lease-up communities .................................             54,486              17,408               2,106
Communities held for sale ............................................             19,706              18,552              18,359
Sold communities .....................................................             15,928              24,285              24,004
Third party services .................................................             15,249              12,486              10,416
Other ................................................................             19,318              13,198              10,132
                                                                              -----------         -----------         -----------

Consolidated revenues ................................................        $   399,832         $   345,927         $   298,905
                                                                              ===========         ===========         ===========

CONTRIBUTION TO FUNDS FROM OPERATIONS
Fully stabilized communities .........................................        $   162,197         $   154,060         $   146,431
Communities stabilized during 1999 ...................................             28,753              26,199              12,669
Development and lease-up communities .................................             33,684               9,679                (184)
Communities held for sale ............................................             12,392              11,804              11,896
Sold communities .....................................................             11,457              18,167              17,213
Third party services .................................................              2,157               1,657               1,653
                                                                              -----------         -----------         -----------

Contribution to FFO ..................................................            250,640             221,566             189,678
                                                                              -----------         -----------         -----------

Other operating income, net of expense ...............................              2,326                (310)             (1,197)
Depreciation on non-real estate assets ...............................             (2,405)             (1,962)             (1,432)
Minority interest in consolidated property
   partnerships ......................................................              1,695                (511)               (397)
Project abandonment, employee severance and impairment charges .......             (9,365)                 --                  --
Interest expense .....................................................            (50,303)            (33,192)            (31,297)
Amortization of deferred loan costs ..................................             (1,636)             (1,496)             (1,185)
General and administrative ...........................................            (10,066)             (7,788)             (8,495)
Distributions to preferred unitholders ...............................            (17,475)            (13,726)            (11,473)
                                                                              -----------         -----------         -----------

Total FFO ............................................................            163,411             162,581             134,202
                                                                              -----------         -----------         -----------

Depreciation on real estate assets ...................................            (66,283)            (55,361)            (45,214)
Net gain (loss) on sale of assets ....................................              3,208              (1,522)                 --
Distributions to preferred unitholders................................             17,475              13,726              11,473
                                                                              -----------         -----------         -----------

Income before extraordinary item and preferred distributions .........        $   117,811         $   119,424         $   100,461
                                                                              ===========         ===========         ===========
</TABLE>


                                     81


<PAGE>   84



POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)



15.      QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

         Quarterly financial information for the years ended 2000 and 1999 are
as follows:

<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31, 2000*
                                                                           --------------------------------------------------------
                                                                             FIRST         SECOND          THIRD           FOURTH
                                                                           ---------      ---------      ----------      ----------

<S>                                                                        <C>            <C>            <C>             <C>
Revenues ............................................................      $  95,443      $  99,482      $  101,342      $  103,565
                                                                           ---------      ---------      ----------      ----------
Net income before net gain (loss) on sale of assets
and other charges ...................................................         31,965         33,734          30,676          27,593
Net gain (loss) on sale of assets ...................................            687            (19)            959           1,581
Project abandonment, employee severance and
impairment charges ..................................................             --             --              --          (9,365)
                                                                           ---------      ---------      ----------      ----------
Net income ..........................................................         32,652         33,715          31,635          19,809
Distributions to preferred Unitholders ..............................         (4,368)        (4,369)         (4,369)         (4,369)
                                                                           ---------      ---------      ----------      ----------
Net income available to common Unitholders ..........................      $  28,284      $  29,346      $   27,266      $   15,440
                                                                           =========      =========      ==========      ==========
Earnings per common Unit:
Net income available to common Unitholders -
  basic .............................................................      $    0.64      $    0.66      $     0.61      $     0.35
Net income available to common Unitholders -
  diluted ...........................................................      $    0.63      $    0.65      $     0.60      $     0.34
</TABLE>


<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31, 1999*
                                                                           --------------------------------------------------------
                                                                             FIRST         SECOND          THIRD           FOURTH
                                                                           ---------      ---------      ----------      ----------

<S>                                                                        <C>            <C>            <C>             <C>
Revenues ............................................................      $  80,891      $  85,503      $   88,158      $   91,375
                                                                           ---------      ---------      ----------      ----------
Net income before gain (loss) on sale of assets and
extraordinary items .................................................         29,406         29,624          30,626          31,290

Net gain (loss) on sale of assets ...................................         (1,567)           476            (246)           (185)
Extraordinary items .................................................           (521)            --              --              --
                                                                           ---------      ---------      ----------      ----------
Net income ..........................................................         27,318         30,100          30,380          31,105
Distributions to preferred Unitholders ..............................         (2,969)        (2,969)         (3,404)         (4,384)
                                                                           ---------      ---------      ----------      ----------
Net income available to common Unitholders ..........................      $  24,349      $  27,131      $   26,976      $   26,721
                                                                           =========      =========      ==========      ==========
Earnings per common Unit:
Net income available to common Unitholders -
  basic .............................................................      $    0.56      $    0.62      $     0.62      $     0.61

Net income available to common Unitholders -
  diluted ...........................................................      $    0.56      $    0.61      $     0.61      $     0.60
</TABLE>

* The total of the four quarterly amounts for earnings per Unit may not equal
the total for the year. These differences result from the use of a weighted
average to compute average number of Units outstanding.


                                     82

<PAGE>   85


                                                                    SCHEDULE III
                              POST PROPERTIES, INC.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 2000
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>


                                                                                                     GROSS AMOUNTS AT WHICH
                                                               INITIAL COSTS                       CARRIED AT CLOSE OF PERIOD
                                                           ---------------------              -------------------------------------
                                                                                    COST
                                                                                 CAPITALIZED
                                                                                 SUBSEQUENT
                                               RELATED              BUILDING AND     TO                   BUILDING AND
                                DESCRIPTION  ENCUMBRANCES    LAND   IMPROVEMENTS ACQUISITION     LAND     IMPROVEMENTS    TOTAL (1)
                                -----------  ------------  -------- ------------ -----------  ----------  ------------    ---------
            GEORGIA
  <S>                            <C>         <C>           <C>      <C>          <C>          <C>         <C>             <C>
  Post Ashford.................  Apartments  $   9,895 (2) $  1,906  $       --   $   8,578   $    1,906   $    8,578     $  10,484
  Post Biltmore................  Apartments         --        4,470          --       4,831        4,470        4,831         9,301
  Post Briarcliff..............  Apartments         --       18,785          --      40,957       13,310       46,432        59,742
  Post Bridge..................  Apartments     12,450 (2)      868          --      12,273          869       12,272        13,141
  Post Brookhaven..............  Apartments         --        7,921          --      31,317        7,921       31,317        39,238
  Post Canyon..................  Apartments     16,845 (2)      931          --      18,184          931       18,184        19,115
  Post Chase...................  Apartments     15,000 (2)    1,438          --      15,978        1,438       15,978        17,416
  Post Chastain................  Apartments     30,573        6,352          --      40,312        6,779       39,885        46,664
  Post Collier Hills...........  Apartments         --        6,487          --      25,210        7,183       24,514        31,697
  Post Corners.................  Apartments     14,760 (2)    1,473          --      15,216        1,473       15,216        16,689
  Post Court...................  Apartments     18,650 (2)    1,769          --      17,386        1,769       17,386        19,155
  Post Creek...................  Apartments         --       10,406      36,756       6,403       10,442       43,123        53,565
  Post Crest...................  Apartments     24,461        4,733          --      24,725        4,763       24,695        29,458
  Post Crossing................  Apartments         --        3,951          --      19,496        3,951       19,496        23,447
  Post Dunwoody................  Apartments         --        4,917          --      28,590        4,961       28,546        33,507
  Post Gardens.................  Apartments         --        5,859          --      33,809        5,931       33,737        39,668
  Post Glen....................  Apartments     24,140        5,591          --      21,657        5,784       21,464        27,248
  Post Lane....................  Apartments         --        1,512          --       8,302        2,067        7,747         9,814
  Post Lenox Park..............  Apartments     10,908        3,132          --      10,795        3,132       10,795        13,927
  Post Lindbergh...............  Apartments         --        6,268          --      28,013        6,652       27,629        34,281
  Post Mill....................  Apartments     12,880 (2)      915          --      12,938          922       12,931        13,853
  Post Oak.....................  Apartments         --        2,028          --       8,295        2,027        8,296        10,323
  Post Oglethorpe..............  Apartments         --        3,662          --      17,045        3,662       17,045        20,707
  Post Park....................  Apartments         --        6,253          --      40,106        8,830       37,529        46,359
  Post Parkside................  Mixed Use          --        3,402          --      20,030        3,465       19,967        23,432
  Post Peachtree...............  Apartments         --        2,024          --       6,995        2,024        6,995         9,019
  Post Peachtree Hills.........  Apartments         --        4,215          --      13,868        4,857       13,226        18,083
  Post Pointe..................  Apartments         --        2,417          --      15,914        3,027       15,304        18,331
  Post Renaissance.............  Apartments         --           --          --      19,835           --       19,835        19,835
  Post Ridge...................  Apartments         --       11,332          --      25,427        5,150       31,609        36,759
  Post Spring..................  Apartments         --        3,316          --      32,791        3,316       32,791        36,107
  Post Summit..................  Apartments         --        1,575          --       6,376        1,575        6,376         7,951
  Post Valley..................  Apartments     18,600 (2)    1,117          --      18,965        1,117       18,965        20,082
  Post Vinings.................  Apartments         --        4,322          --      21,783        5,668       20,437        26,105
  Post Village
   The Arbors..................  Apartments         --          384          --      16,196          373       16,207        16,580
   The Fountains The Meadows...  Apartments     26,000 (2)      611          --      38,401          878       38,134        39,012
   The Gardens.................  Apartments     14,500 (2)      187          --      28,097          637       27,647        28,284
   The Hills...................  Apartments      7,000 (2)       91          --      13,563          307       13,347        13,654
  Post Walk....................  Apartments     19,300 (2)    2,954          --      17,722        2,954       17,722        20,676
  Post Woods...................  Apartments     16,716        1,378          --      27,416        3,070       25,724        28,794
  3400 Stratford...............  Apartments         --          328          --      24,023          485       23,866        24,351
  Post Riverside...............  Mixed Use          --       11,130          --     108,311       12,434      107,007       119,441

  TEXAS
  Addison Circle Apartment
   Homes by Post - Phase I.....  Mixed Use      28,666        2,885      41,482       5,327        3,243       46,451        49,694
  Addison Circle Apartment
   Homes by Post - Phase II....  Mixed Use      51,238        3,417       1,128      80,662        3,759       81,448        85,207
  Addison Circle Apartment
   Homes by Post - Phase III...  Mixed Use          --          752          --      20,062          532       20,282        20,814
  Post American Beauty Mill....  Apartments         --          234       2,786       3,446          571        5,895         6,466
  Post Block 588...............  Apartments         --        1,278          48      21,047        1,415       20,958        22,373
  Clyde Lane...................  Apartments         --        1,628         895       1,833        1,628        2,728         4,356
  Post Cole's Corner...........  Mixed Use          --        1,886      18,006       1,401        2,086       19,207        21,293
  Post Columbus Square ........  Mixed Use          --        4,565      24,595         525        4,565       25,120        29,685
  Heights of State-Thomas......  Mixed Use          --        5,455      15,559      28,667        5,803       43,878        49,681
  Legacy at Town Center........  Apartments         --          684          --      29,955          684       29,955        30,639
  Post Midtown - Phase I.......  Apartments         --        2,456       1,134      34,926        2,648       35,868        38,516
  Post Midtown - Phase II......  Apartments         --          865         278      20,488          865       20,766        21,631
  Post Midtown - Phase III.....  Apartments         --        1,087          --       1,008        1,087        1,008         2,095
  Post Parkwood................  Apartments        799          306       2,592       4,574          864        6,608         7,472
  Post Ascension...............  Apartments         --        1,230       8,976         488        1,253        9,441        10,694
  Post Hackberry Creek.........  Apartments         --        7,269      23,579         944        7,269       24,523        31,792
  Post Lakeside................  Apartments         --        3,924      20,334       1,394        3,924       17,663 (7)    21,587
  Post Town Lake/Parks.........  Apartments         --        2,985      19,464       1,597        2,985       21,061        24,046
  Post White Rock..............  Apartments         --        1,560       9,969       1,343        1,560       11,312        12,872
  Post Winsted.................  Apartments         --        2,826      18,632         389        2,826       16,590 (7)    19,416
  Post Windhaven...............  Apartments         --        4,029      23,385         553        4,029       23,938        27,967
  Post Shores..................  Apartments         --       11,572      69,794       4,828       11,572       62,445 (7)    74,017
  The Abbey of State-Thomas....  Apartments         --          575       6,276       1,608          575        7,884         8,459
  The Commons at Turtle Creek..  Apartments         --        1,406       7,938         534        1,406        8,472         9,878
  The Meridian at State-Thomas.  Apartments         --        1,535      11,605         597        1,535       12,202        13,737
  The Residences on McKinney...  Mixed Use          --        1,494      18,022       1,568        1,494       19,590        21,084

<CAPTION>
                                                                                                                      DEPRECIABLE
                                                    ACCUMULATED            DATE OF                  DATE                 LIVES
                                                   DEPRECIATION         CONSTRUCTION              ACQUIRED               YEARS
                                                   ------------       ---------------         ---------------       ------------
           GEORGIA
<S>                               <C>              <C>                <C>                     <C>                    <C>
 Post Ashford...................  Apartments        $   3,350          4/86 - 6/87                    6/87           5 - 40 Years
 Post Biltmore..................  Apartments               --                 9/00 (4)               12/99                     --
 Post Briarcliff................  Apartments            1,393                12/96                    9/96           5 - 40 Years
 Post Bridge....................  Apartments            5,210         9/84 - 12/86                    9/84           5 - 40 Years
 Post Brookhaven................  Apartments           11,143         7/89 - 12/92                    3/89           5 - 40 Years
 Post Canyon....................  Apartments            7,703          4/84 - 4/86                   10/81           5 - 40 Years
 Post Chase.....................  Apartments            6,349          6/85 - 4/87                    6/85           5 - 40 Years
 Post Chastain..................  Apartments           13,512         6/88 - 10/90                    6/88           5 - 40 Years
 Post Collier Hills.............  Apartments            3,629                10/95                    6/95           5 - 40 Years
 Post Corners...................  Apartments            6,503          8/84 - 4/86                    8/84           5 - 40 Years
 Post Court.....................  Apartments            6,684          6/86 - 4/88                   12/85           5 - 40 Years
 Post Creek.....................  Apartments            7,122          9/81 - 8/83                    5/96           5 - 40 Years
 Post Crest.....................  Apartments            4,396                 9/95                   10/94           5 - 40 Years
 Post Crossing..................  Apartments            3,576          4/94 - 8/95                   11/93           5 - 40 Years
 Post Dunwoody..................  Apartments            6,686                11/88            12/84 & 8/94 (6)       5 - 40 Years
 Post Gardens...................  Apartments            2,494                 7/96                    5/96           5 - 40 Years
 Post Glen......................  Apartments            2,514                 7/96                    5/96           5 - 40 Years
 Post Lane......................  Apartments            3,150          4/87 - 5/88                    1/87           5 - 40 Years
 Post Lenox Park................  Apartments            2,099          3/94 - 5/95                    3/94           5 - 40 Years
 Post Lindbergh.................  Apartments            1,983                11/96                    8/96           5 - 40 Years
 Post Mill......................  Apartments            5,866          5/83 - 5/85                    5/81           5 - 40 Years
 Post Oak.......................  Apartments            2,413         9/92 - 12/93                    9/92           5 - 40 Years
 Post Oglethorpe................  Apartments            3,395         3/93 - 10/94                    3/93           5 - 40 Years
 Post Park......................  Apartments           14,003          6/87 - 9/90                    6/87           5 - 40 Years
 Post Parkside..................  Mixed Use               318                 2/99                   12/97           5 - 40 Years
 Post Peachtree.................  Apartments               --                 6/00 (4)                5/00                     --
 Post Peachtree Hills...........  Apartments            3,257          2/92 - 9/94               2 & 11/92 (6)       5 - 40 Years
 Post Pointe....................  Apartments            6,363         4/87 - 12/88                   12/86           5 - 40 Years
 Post Renaissance...............  Apartments            5,263         7/91 - 12/94             6/91 & 1/94 (6)       5 - 40 Years
 Post Ridge.....................  Apartments            1,957                10/96                    7/96           5 - 40 Years
 Post Spring....................  Apartments               --                 9/99 (4)                9/99                     --
 Post Summit....................  Apartments            2,406         1/90 - 12/90                    1/90           5 - 40 Years
 Post Valley....................  Apartments            7,322          3/86 - 4/88                   12/85           5 - 40 Years
 Post Vinings...................  Apartments            7,613          5/88 - 9/91                    5/88           5 - 40 Years
 Post Village
   The Arbors...................  Apartments            5,729         4/82 - 10/83                    3/82           5 - 40 Years
   The Fountains The Meadows      Apartments           13,479          8/85 - 5/88                    8/85           5 - 40 Years
   The Gardens..................  Apartments            9,772          6/88 - 7/89                    5/84           5 - 40 Years
   The Hills....................  Apartments            4,718          5/84 - 4/86                    4/83           5 - 40 Years
 Post Walk......................  Apartments            7,450          3/86 - 8/87                    6/85           5 - 40 Years
 Post Woods.....................  Apartments           10,667          3/76 - 9/83                    6/76           5 - 40 Years
 3400 Stratford.................  Apartments               --                 4/99(4)                 1/99                     --
 Post Riverside.................  Mixed Use             2,695                 7/96                    1/96           5 - 40 Years

 TEXAS
 Addison Circle Apartment
  Homes by Post - Phase I.......  Mixed Use             5,517                10/97                   10/97           5 - 40 Years
 Addison Circle Apartment
  Homes by Post - Phase II......  Mixed Use             3,858                10/97(4)                10/97           5 - 40 Years
 Addison Circle Apartment
  Homes by Post - Phase III.....  Mixed Use                14                 7/99(4)                10/97           5 - 40 Years
 Post American Beauty Mill......  Apartments              428                10/97                   10/97           5 - 40 Years
 Block 588......................  Apartments                2                10/97                   10/97           5 - 40 Years
 Clyde Lane.....................  Apartments               --                10/97(4)                10/97                     --
 Cole's Corner..................  Mixed Use             2,443                  n/a                   10/97           5 - 40 Years
 Post Columbus Square...........  Mixed Use             2,099                  n/a                   10/97           5 - 40 Years
 Heights of State-Thomas........  Mixed Use             3,403                10/97                   10/97           5 - 40 Years
 Legacy at Town Center..........  Apartments               --                      (4)                                         --
 Post Midtown - Phase I.........  Apartments              548                10/97                   10/97           5 - 40 Years
 Post Midtown - Phase II........  Apartments               --                10/97 (4)               10/97                     --
 Post Midtown - Phase III.......  Apartments               --                   -- (4)                2/00                     --
 Post Parkwood..................  Apartments              629                  n/a                   10/97           5 - 40 Years
 Post Ascension.................  Apartments              964                  n/a                   10/97           5 - 40 Years
 Post Hackberry Creek...........  Apartments            2,359                  n/a                   10/97           5 - 40 Years
 Post Lakeside..................  Apartments            2,433                  n/a                   10/97           5 - 40 Years
 Post Town Lake/Parks...........  Apartments            2,353                  n/a                   10/97           5 - 40 Years
 Post White Rock................  Apartments            1,171                  n/a                   10/97           5 - 40 Years
 Post Winsted...................  Apartments            1,583                  n/a                   10/97           5 - 40 Years
 Post Windhaven.................  Apartments            2,297                  n/a                   10/97           5 - 40 Years
 Post Shores....................  Apartments            6,870                  n/a                   10/97           5 - 40 Years
 The Abbey of State-Thomas......  Apartments              653                  n/a                   10/97           5 - 40 Years
 The Commons at Turtle Creek....  Apartments            1,017                  n/a                   10/97           5 - 40 Years
 The Meridian at State-Thomas...  Apartments            1,179                  n/a                   10/97           5 - 40 Years
 The Residences on McKinney.....  Mixed Use             2,238                  n/a                   10/97           5 - 40 Years
</TABLE>


                                     83

<PAGE>   86


<TABLE>
<CAPTION>
<S>                              <C>         <C>          <C>        <C>         <C>          <C>          <C>           <C>
 The Rice.....................   Mixed Use          --           --      13,393      24,192           --       37,585        37,585
 The Vineyard of Uptown.......   Apartments         --        1,133       8,560         128        1,133        8,688         9,821
 The Vintage of Uptown........   Apartments         --        2,614      12,188         264        2,614       12,452        15,066
 West Avenue Lofts............   Apartments         --        4,454      16,490          --        4,454       16,490        20,944
 The Worthington of
  State-Thomas................   Mixed Use          --        3,744      34,700         959        3,744       35,659        39,403
 Uptown Village I & II........   Mixed Use      22,608        3,955      22,120      17,694        6,551       37,218        43,769
 Post Wilson Building.........   Mixed Use          --        2,766         689      14,313           --       17,768        17,768
 Campus Circle................     Retail           --        1,045       3,084         734        1,045        3,631 (7)     4,676
 Towne Crossing...............     Retail           --        3,703      10,721         897        3,703       11,618        15,321
 Post & Paddock...............     Retail           --        2,352       7,383         560        2,352        6,820 (7)     9,172

 FLORIDA
 Post Bay.....................   Apartments         --        2,203          --      15,481        2,573       15,111        17,684
 Post Court...................   Apartments         --        2,083          --      10,185        2,083       10,185        12,268
 Post Fountains...............   Apartments     21,500 (2)    3,856          --      24,063        3,856       24,063        27,919
 Post Harbour Place...........   Apartments         --        3,854          --      64,929       16,183       52,600        68,783
 Post Hyde Park...............   Apartments         --        3,498          --      25,891        5,108       24,281        29,389
 Post Lake....................   Apartments     28,500 (2)    6,113          --      32,144        6,724       31,533        38,257
 Post Parkside (Orlando)         Mixed Use          --        8,673          --      23,108        2,493       29,288        31,781
 Post Rocky Point.............   Apartments         --       10,510          --      59,406       10,510       59,406        69,916
 Post Village
  The Arbors..................   Apartments         --        2,063          --      14,668        2,906       13,825        16,731
  The Lakes                      Apartments         --        2,813          --      17,265        3,488       16,590        20,078
  The Oaks....................   Apartments         --        3,229          --      15,733        3,294       15,668        18,962
 Post Walk at Hyde Park.......   Apartments         --        1,943          --      10,841        1,974       10,810        12,784


 VIRGINIA
 Post Corners at Trinity Centre  Apartments     22,395        4,404          --      23,568        4,493       23,479        27,972
 Post Forest..................   Apartments         --        8,590          --      24,663        9,106       24,147 (3)    33,253

 NEW YORK
 1499 Mass. Avenue.....          Apartments         --       19,199          --       1,051       19,199       1,051         20,250

 CALIFORNIA
 Post Paseo............          Apartments         --        8,524          --       4,324        8,524        4,324        12,848

 WASHINGTON, D.C.
 Post Pentagon Row.....          Mixed Use          --           --       7,659      39,457           --       47,116        47,116

 NORTH CAROLINA
 Uptown Place..........          Apartments         --        2,336          --      27,485        2,336       27,485        29,821
 Gateway...............          Apartments         --        2,424          --      28,762        2,424       28,762        31,186
 Post Park at Phillips Place..   Mixed Use          --        4,305          --      36,583        4,307       36,581        40,888

 ARIZONA
 Roosevelt Sq. I.......          Mixed Use          --        1,920          --      42,181        1,680       42,421        44,101
 Roosevelt Sq. II......          Mixed Use          --        1,175          --       2,017        1,800        1,392         3,192

 TENNESSEE
 Bennie Dillon.........          Mixed Use          --          145          --       8,324           --        8,469         8,469
 The Lee Apartments....          Apartments         --          720       2,125         532          761        2,616         3,377

 COLORADO
 Uptown Denver I & II..          Apartments         --        3,257         580      71,399        2,963       72,273        75,236

 MISCELLANEOUS
  INVESTMENTS                                       --       18,129       4,035      38,378       32,848       27,694        60,542
                                             ---------    ---------  ----------  ----------   ---------    ----------    ----------
       TOTAL                                 $ 468,384    $ 382,045  $  526,960  $1,938,072   $  409,917   $2,417,177    $2,827,094
                                             =========    =========  ==========  ==========   ==========   ==========    ==========

<CAPTION>
<S>                              <C>               <C>                <C>                      <C>                   <C>
 The Rice.....................   Mixed Use              1,522                10/97                   10/97           5 - 40 Years
 The Vineyard of Uptown.......   Apartments               724                  n/a                   10/97           5 - 40 Years
 The Vintage of Uptown........   Apartments             1,160                  n/a                   10/97           5 - 40 Years
 West Avenue Lofts............   Apartments                --                 9/99 (4)                8/99                 --
 The Worthington of
  State-Thomas................   Mixed Use              3,324                  n/a                   10/97           5 - 40 Years
 Uptown Village I & II........   Mixed Use              1,996                  n/a                   10/97           5 - 40 Years
 Post Wilson Building.........   Mixed Use                287                10/97                   10/97                 --
 Campus Circle................     Retail                 427                  n/a                   10/97           5 - 40 Years
 Towne Crossing...............     Retail                 922                  n/a                   10/97           5 - 40 Years
 Post & Paddock...............     Retail                 469                  n/a                   10/97           5 - 40 Years

 FLORIDA
 Post Bay.....................   Apartments             5,661         5/87 - 12/88                    5/87           5 - 40 Years
 Post Court...................   Apartments             3,673          4/90 - 5/91                   10/87           5 - 40 Years
 Post Fountains...............   Apartments             8,503         12/85 - 3/88                   12/85           5 - 40 Years
 Post Harbour Place...........   Apartments               826                 3/97 (4)                1/97           5 - 40 Years
 Post Hyde Park...............   Apartments             2,967                 9/94                    7/94           5 - 40 Years
 Post Lake....................   Apartments            12,240         11/85 - 3/88                   10/85           5 - 40 Years
 Post Parkside (Orlando)         Mixed Use                  2                 3/99                    3/99           5 - 40 Years
 Post Rocky Point.............   Apartments             6,580         4/94 - 11/96             2/94 & 9/96 (6)       5 - 40 Years
 Post Village
  The Arbors..................   Apartments             4,814         6/90 - 12/91                   11/90           5 - 40 Years
  The Lakes                      Apartments             5,777         7/88 - 12/89                    5/88           5 - 40 Years
  The Oaks....................   Apartments             5,456         11/89 - 7/91                   12/89           5 - 40 Years
 Post Walk at Hyde Park.......   Apartments             1,943         10/95 - 9/97                    9/95           5 - 40 Years


 VIRGINIA
 Post Corners at Trinity Centre  Apartments             3,688                 6/94                    6/94           5 - 40 Years
 Post Forest..................   Apartments             9,935         1/89 - 12/90                    3/88           5 - 40 Years

 NEW YORK
 1499 Mass. Avenue.....          Apartments                --                   --                    9/00                     --

 CALIFORNIA
 Post Paseo............          Apartments                --                 6/00(4)                 4/00                     --

 WASHINGTON, D.C.
 Post Pentagon Row.....          Mixed Use                 --                 6/99(4)                 2/99                     --

 NORTH CAROLINA
 Uptown Place..........          Apartments                 1                 9/98(4)                 9/98           5 - 40 Years
 Gateway...............          Apartments                --                 9/99(4)                 6/99                     --
 Post Park at Phillips Place..   Mixed Use              4,701                 1/96                   11/95           5 - 40 Years

 ARIZONA
 Roosevelt Sq. I.......          Mixed Use                  1                 2/99(4)                 2/99           5 - 40 Years
 Roosevelt Sq. II......          Mixed Use                 --                 2/99(4)                 2/99                     --

 TENNESSEE
 Bennie Dillon.........          Mixed Use                208                 7/98                    7/98           5 - 40 Years
 The Lee Apartments....          Apartments               277                  n/a(5)                 8/96           5 - 40 Years

 COLORADO
 Uptown Denver I & II..          Apartments                 1                10/97 (4)               10/97           5 - 40 Years

 MISCELLANEOUS
  INVESTMENTS                                          10,855                                                        5 - 40 Years
                                                   ----------
       TOTAL                                       $  357,180
                                                   ==========
</TABLE>


(1)      The aggregate cost for Federal Income Tax purposes to the Company was
         approximately $2,440,712 at December 31, 2000, taking into account the
         special allocation of gain to the partners contributing property to the
         Operating Partnership.
(2)      These properties serve as collateral for the Federal National Mortgage
         Association credit enhancement.
(3)      Balance includes an allowance for possible loss of $3,700, which was
         taken in prior years.
(4)      Construction still in process as of December 31, 2000.
(5)      The Company acquired this community during 1996. The Company is
         operating the community while evaluating whether to hold, renovate or
         sell the community.
(6)      Additional land was acquired for construction of a second phase.
(7)      These properties are currently held for sale. The carrying value of the
         assets has been adjusted based on management's best estimate of the
         expected proceeds from sales.


                                     84


<PAGE>   87


A summary of activity for real estate investments and accumulated depreciation
is as follows:

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                          ---------------------------------------------------
                                                             2000                1999                1998
                                                          -----------         -----------         -----------
<S>                                                       <C>                 <C>                 <C>
Real estate investments:
   Balance at beginning of year ..................        $ 2,582,785         $ 2,255,074         $ 1,936,011
      Improvements ...............................            380,856             345,994             319,408
      Disposition of property ....................           (136,547)            (18,283)               (345)
                                                          -----------         -----------         -----------
   Balance at end of year ........................        $ 2,827,094         $ 2,582,785         $ 2,255,074
                                                          ===========         ===========         ===========
Accumulated depreciation:
   Balance at beginning of year ..................        $   303,016         $   247,148         $   201,095
     Depreciation ................................             71,605 (a)          57,136 (a)          46,288 (a)
     Joint Venture Depreciation ..................             (2,425)               (690)                 --
     Depreciation on disposed property ...........            (15,016)               (578)               (235)
                                                          -----------         -----------         -----------
Balance at end of year ...........................        $   357,180 (b)     $   303,016         $   247,148
                                                          ===========         ===========         ===========
</TABLE>


(a)      Depreciation expense in the Consolidated Statements for the years ended
         December 31, 2000, 1999 and 1998, includes $492, $877 and $335,
         respectively, of depreciation expense on other assets.
(b)      Accumulated depreciation on the balance sheet is net of $12,059 of
         accumulated depreciation on assets held for sale.



                                     85
<PAGE>   88

REPORT OF INDEPENDENT ACCOUNTANTS

To the Participants and Administrator of the Post Properties, Inc. 1995
Non-Qualified Employee Stock Purchase Plan

In our opinion, the accompanying statements of net assets available for plan
benefits and of changes in net assets available for plan benefits present
fairly, in all material respects, the net assets of the Post Properties, Inc.
1995 Non-Qualified Employee Stock Purchase Plan at December 31, 2000 and 1999
and the changes in net assets available for plan benefits for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, 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.

PricewaterhouseCoopers LLP

Atlanta, Georgia
February 16, 2001


                                     86
<PAGE>   89

                              POST PROPERTIES, INC.
                 1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
               STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                     ------------------------------
                                                                                        2000                1999
                                                                                     ----------          ----------
<S>                                                                                  <C>                 <C>
ASSETS
  Receivable from Post Apartment Homes, L.P. ..............................          $  473,017          $  492,698
                                                                                     ==========          ==========

NET ASSETS AVAILABLE FOR PLAN BENEFITS
  Net assets available for plan benefits ..................................          $  473,017          $  492,698
                                                                                     ==========          ==========
</TABLE>


                                     87
<PAGE>   90

                              POST PROPERTIES, INC.
                 1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
         STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS

<TABLE>
<CAPTION>
                                                                                        YEAR  ENDED DECEMBER 31,
                                                                                     ------------------------------
                                                                                        2000                1999
                                                                                     ----------          ----------
<S>                                                                                  <C>                 <C>
NET ASSETS AVAILABLE FOR PLAN BENEFITS, JANUARY 1 .........................          $  492,698          $  563,764

DEDUCTIONS:

  Purchase of participants' shares ........................................            (898,218)           (974,817)
  Payment for payroll taxes on behalf
    of participants .......................................................             (69,322)            (49,104)

ADDITIONS:
  Participant contributions ...............................................             947,859             952,855
                                                                                     ----------          ----------

NET ASSETS AVAILABLE FOR PLAN BENEFITS, DECEMBER 31 .......................          $  473,017          $  492,698
                                                                                     ==========          ==========
</TABLE>


                                     88
<PAGE>   91

POST PROPERTIES, INC.

1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A)      Post Properties, Inc. (the "Company") established the 1995
         Non-Qualified Employee Stock Purchase Plan (the "Plan") to encourage
         stock ownership by eligible directors and employees.

(B)      The financial statements have been prepared on the accrual basis of
         accounting.

(C)      All expenses incurred in the administration of the Plan are paid by the
         Company and are excluded from these financial statements.

NOTE 2 - THE PLAN

The Plan became effective as of January 1, 1995. Under the Plan, eligible
participating employees and directors of the Company can purchase Common Stock
at a discount (up to 15% as set by the Compensation Committee of the Company's
Board of Directors) from the Company through salary withholding or cash
contributions. The Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, nor is it intended to qualify for
special tax treatment under Section 401(a) of the Internal Revenue Code.

Directors who have been a member of the Board of Directors for at least one full
calendar month and full-time employees who have been employed a full calendar
month are eligible to participate in the Plan. Eligible directors and employees
(the "Participants") may contribute in cash or as a specified dollar amount or
percentage of their compensation to the Plan. The minimum payroll deduction for
a Participant for each payroll period for purchases under the Plan is $10.00.
The maximum contribution which a Participant can make for purchases under the
Plan for any calendar year is $100,000. All contributions to the Plan are held
in the general assets of Post Apartment Homes, L.P., the Company's operating
partnership.

Shares of the Company's Common Stock are purchased by an investment firm
semi-annually after the end of each six-month period, as defined, and credited
to each Participant's individual account. The purchase price of the Common Stock
purchased pursuant to the Plan is currently equal to 85% of the closing price on
either the first or last trading day of each purchase period, whichever is
lower.

All Common Stock of the Company purchased by Participants pursuant to the Plan
may be voted by the Participants or as directed by the Participants.

The Plan does not discriminate, in scope, terms, or operation, in favor of
officers or directors of the Company and is available, subject to the
eligibility rules of the Plan, to all employees of the Company on the same
basis.

NOTE 3 - FEDERAL INCOME TAXES

The Plan is not subject to Federal income taxes. The difference between the fair
market value of the shares acquired under the Plan, and the amount contributed
by the Participants is treated as ordinary income to the Participants' for
Federal income tax purposes. Accordingly, the Company withholds all applicable
taxes from the employee contributions. The fair market value of the shares is
determined as of the stock purchase date.


                                     89
<PAGE>   92

3. EXHIBITS

Certain of the exhibits required by Item 601 of Regulation S-K have been filed
with previous reports by the registrant and are herein incorporated by reference
thereto.

The Registrants agree to furnish a copy of all agreements relating to long-term
debt upon request of the Commission.

<TABLE>
<CAPTION>
EXHIBIT
  NO.                                                      DESCRIPTION
<S>       <C>  <C>
3.1(a)    --   Articles of Incorporation of the Company
3.2(b)    --   Articles of Amendment to the Articles of Incorporation of the Company
3.3(c)    --   Articles of Amendment to the Articles of Incorporation of the Company
3.4(d)    --   Articles of Amendment to the Articles of Incorporation of the Company
3.5(e)    --   Articles of Amendment to the Articles of Incorporation of the Company
3.6(a)    --   Bylaws of the Company
4.1(f)    --   Indenture between the Company and SunTrust Bank, as Trustee
4.2(f)    --   First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee
10.1(g)   --   Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership
10.2(g)   --   First Amendment to Second Amended and Restated Partnership Agreement
10.3(g)   --   Second Amendment to Second Amended and Restated Partnership Agreement
10.4(k)   --   Third Amendment to Second Amended and Restated Partnership Agreement
10.5(k)   --   Fourth Amendment to Second Amended and Restated Partnership Agreement
10.6(e)   --   Fifth Amendment to the Second Amended and Restated Partnership Agreement
10.7      --   Sixth Amendment to Amended and Restated Partnership Agreement
10.8(h)   --   Employee Stock Plan
10.9(g)   --   Amendment to Employee Stock Plan
10.10(g)  --   Amendment No. 2 to Employee Stock Plan
10.11(g)  --   Amendment No. 3 to Employee Stock Plan
10.12(g)  --   Amendment No. 4 to Employee Stock Plan
10.13(h)  --   Noncompetition Agreement between the Company, the Operating Partnership and John A. Williams
10.14(h)  --   Noncompetition Agreement between the Company, the Operating Partnership and John T. Glover
10.15(k)  --   Amendment of Noncompetition Agreement between the Company, the Operating Partnership and John A.
               Williams dated as of June 1, 1998
10.16(k)  --   Amendment of Noncompetition Agreement between the Company, the Operating Partnership and John T.
               Glover dated as of June 1, 1998
10.17(k)  --   Master Employment Agreement between the Company, the Operating Partnership, Post Services, Inc. and
               John A. Williams dated June 1, 1998
10.18(k)  --   Master Employment Agreement between the Company, the Operating Partnership, Post Services, Inc. and
               John T. Glover dated as of June 1, 1998
10.19(e)  --   Option and Transfer  Agreement among the Operating Partnership, Post Services, John A. Williams and
               John T. Glover
10.20(h)  --   Promissory Note made by Post Services, Inc. in favor of RAM Partners, Inc.
10.21(g)  --   Form of officers and directors Indemnification Agreement
10.22(a)  --   Form of Option Agreement  to be entered into between the Operating Partnership  and the owners of four
               parcels of undeveloped land
10.23(a)  --   Profit Sharing Plan of the Company
10.24(g)  --   Amendment Number One to Profit Sharing Plan
10.25(g)  --   Amendment Number Two to Profit Sharing Plan
</TABLE>


                                     90
<PAGE>   93

<TABLE>
<S>       <C>  <C>
10.26(g)  --   Amendment Number Three to Profit Sharing Plan
10.27(g)  --   Amendment Number Four to Profit Sharing Plan
10.28(h)  --   Form of General Partner 1% Exchange Agreement
10.29(i)  --   Employee Stock Purchase Plan
10.30(g)  --   Amendment to Employee Stock Purchase Plan
10.31(i)  --   Amended and Restated Dividend Reinvestment and Stock Purchase Plan
10.32     --   Fifth Amended and Restated Credit Agreement dated as of January 1, 2001 among Post Apartment
               Homes, L.P., Wachovia Bank of Georgia, N.A., and the banks listed on the signature pages there to (the
               "Fifth Credit Agreement")
10.33(l)  --   Deferred Compensation Plan for Directors and Executive Committee Members
21.1      --   List of Subsidiaries
23.1      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-8 (No. 333-62243)
23.2      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-8 (No. 333-70689)
23.3      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 33-81772)
23.4      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-36595)
23.5      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-47399)
23.6      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-8 (No. 33-00020)
23.7      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-8 (No. 333-94121)
23.8      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-80427)
23.9      --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-44722)
23.10     --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-42884)
23.11     --   Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-55994)
</TABLE>

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

(a)      Filed as an exhibit to the Registration Statement on Form S-11 (SEC
         File No. 33-61936), as amended, of the Company.
(b)      Filed as an exhibit to the Current Report on Form 8-K, dated as of
         October 1, 1996, of the Company.
(c)      Filed as an exhibit to the Current Report on Form 8-K, dated as of
         October 28, 1997, of the Company.
(d)      Filed as an exhibit to the Current Report on Form 8-K, dated as of
         February 9, 1998, of the Company.
(e)      Filed as an exhibit to the Quarterly Report on Form 10-Q, dated as of
         November 15, 1999, of the Company.
(f)      Filed as an exhibit to the Registration Statement on Form S-3 (SEC File
         No. 333-42884) of the Company.
(g)      Filed as an exhibit to the Annual Report on Form 10-K of the Company
         for the year ended December 31, 1997.
(h)      Filed as an exhibit to the Registration Statement on Form S-11 (SEC
         File No. 33-71650), as amended, of the Company.
(i)      Filed as an exhibit to the Registration Statement on Form S-8 (SEC File
         No. 33-86674) of the Company.
(j)      Filed as part of the Registration Statement on Form S-3 (SEC File No.
         333-39461) of the Company.
(k)      Filed as an exhibit to the Annual Report on Form 10-K of the
         Registrants for the year ended December 31, 1998.
(l)      Filed as an exhibit to the Annual Report on Form 10-K of the
         Registrants for the year ended December 31, 1999.

         (b)      Reports on Form 8-K

                  During the fourth quarter of fiscal 2000 the Company and the
                  Operating Partnership each filed Reports on Form 8-K on
                  October 2, 2000, November 30, 2000 and December 20, 2000.


                                     91
<PAGE>   94

                                   SIGNATURES

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

                                     POST PROPERTIES, INC.

                                     (Registrant)


                                    /s/ John T. Glover
    March 21, 2001                  --------------------------------------------
                                     John T. Glover, Vice Chairman and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
                      SIGNATURE                                TITLE                                           DATE
         <S>                                   <C>                                                       <C>


              /s/ John A. Williams
         ------------------------------        Chairman of the Board, Chief Executive Officer
                 John A. Williams              and Director (Principal Executive Officer)


               /s/ John T. Glover
         ------------------------------        Vice Chairman and Director
                 John T. Glover


              /s/ R. Gregory Fox
         ------------------------------        Executive Vice President, Chief Financial Officer
                R. Gregory Fox


              /s/ Robert Anderson
         ------------------------------        Director
                Robert Anderson


               /s/ Arthur M. Blank
         ------------------------------        Director
                 Arthur M. Blank


             /s/ Herschel M. Bloom
         ------------------------------        Director
               Herschel M. Bloom


              /s/ Russell R. French
         ------------------------------        Director
                Russell R. French


              /s/ Charles E. Rice
         ------------------------------        Director
                Charles E. Rice


               /s/ Ronald de Waal
         ------------------------------        Director
                 Ronald de Waal
</TABLE>


                                     92
<PAGE>   95

                                   SIGNATURES

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

                                     POST APARTMENT HOMES, L.P.
                                     By: Post G.P. Holdings, Inc., as
                                         General Partner



    March 21, 2001                   By: /s/ John T. Glover
                                        ----------------------------------------
                                        John T. Glover, Vice Chairman

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
                   SIGNATURE                             TITLE                                             DATE
         <S>                                   <C>                                                       <C>


          /s/ John A. Williams
         ------------------------------        Chief Executive Officer
               John A. Williams


          /s/ John T. Glover
         ------------------------------        Vice Chairman
                John T. Glover


          /s/ R. Gregory Fox
         ------------------------------        Executive Vice President, Chief Financial Officer
                R. Gregory Fox
</TABLE>


                                       93