##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549




---

Form 10-K

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

SECURITIES EXCHANGE ACT OF 1934


For fiscal year ended December 31, 2002


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




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POST PROPERTIES, INC.

POST APARTMENT HOMES, L.P.


(Exact name of registrants as specified in their
charters)


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

4401 Northside Parkway, Suite 800,
Atlanta, Georgia 30327

(Address of principal executive
office  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
    Redeemable Preferred Shares,
    $.01 par value |  | New York Stock Exchange 
|7  5/8% Series B Cumulative
    Redeemable Preferred Shares,
    $.01 par value |  | New York Stock Exchange 
|7  5/8% Series C Cumulative
    Redeemable Preferred Shares,
    $.01 par value |  | New York Stock Exchange 

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 June 28, 2002 was
approximately $1,054,937,898. As of March 14, 2003 there
were 37,265,182 shares of common stock, $.01 par value,
outstanding.

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act Rule 12b-2)

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



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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrants Proxy Statement
in connection with its Annual Meeting of Shareholders to be held
May 22, 2003 are incorporated by reference in Part III.







POST PROPERTIES, INC.


POST APARTMENT HOMES, L.P.




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TABLE OF CONTENTS



|                                                   |                                                                                                         |  |  |  |  |  |  | 
|-------------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                            
|                                                   | ITEM 2. PROPERTIES                                                                                     
|                                                   | ITEM 3. LEGAL PROCEEDINGS                                                                              
|                                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            
|                                                   | ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT                                                           
|PART II                                           
|                                                   | ITEM 5. MARKET PRICE OF THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS                  
|                                                   | ITEM 6. SELECTED FINANCIAL DATA                                                                        
|                                                   | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
|                                                   | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                    
|                                                   | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    
|                                                   | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           
|PART III                                          
|                                                   | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                            
|                                                   | ITEM 11. EXECUTIVE COMPENSATION                                                                        
|                                                   | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|                                                   | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                
|                                                   | ITEM 14. CONTROLS AND PROCEDURES                                                                       
|PART IV                                           
|                                                   | ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K                             
|EX-3.2 ARTICLES OF AMENDMENT                      
|EX-3.3 ARTICLES OF AMENDMENT                      
|EX-3.4 ARTICLES OF AMENDMENT                      
|EX-3.6 BYLAWS OF THE COMPANY                      
|EX-10.1 SECOND AMENDED AND RESTATED AGREEMENT     
|EX-10.2 FIRST AMENDMENT TO SECOND AMENDED         
|EX-10.3 SECOND AMENDMENT TO SECOND AMENDED        
|EX-10.9 AMENDMENT TO EMPLOYEE STOCK PLAN          
|EX-10.10 AMENDMENT NO. 2 TO EMPLOYEE STOCK PLAN   
|EX-10.11 AMENDMENT NO. 3 TO EMPLOYEE STOCK PLAN   
|EX-10.12 AMENDMENT NO. 4 TO EMPLOYEE STOCK PLAN   
|EX-10.19 FORM OF INDEMNIFICATION AGREEMENT        
|EX-10.21 AMENDMENT NUMBER ONE TO PROFIT SHARING   
|EX-10.22 AMENDMENT NUMBER TWO TO PROFIT SHARING   
|EX-10.23 AMENDMENT NUMBER THREE TO PROFIT SHARING 
|EX-10.24 AMENDMENT NUMBER FOUR TO PROFIT SHARING  
|EX-10.27 AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
|EX-21 SUBSIDIARIES OF POST PROPERTIES, INC.       
|EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.2 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.3 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.4 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.5 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.6 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.7 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.8 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.9 CONSENT OF PRICEWATERHOUSECOOPERS LLP     
|EX-23.10 CONSENT OF PRICEWATERHOUSECOOPERS LLP    
|EX-23.11 CONSENT OF PRICEWATERHOUSECOOPERS LLP    
|EX-23.12 CONSENT OF PRICEWATERHOUSECOOPERS LLP    
|EX-23.13 CONSENT OF PRICEWATERHOUSECOOPERS LLP    
|EX-99.1 CERTIFICATION OF THE PRESIDENT AND C.E.O. 
|EX-99.2 CERTIFICATION OF THE EXECUTIVE VP AND CFO 



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##### Table of Contents



TABLE OF CONTENTS

FINANCIAL INFORMATION

|         |  |                                                                                                    |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|Item     |  |                                                                                                    |  | Page
|No.      |  |                                                                                                    |  | No. 
|         |  |                                                                                                    |  |     
|PART I  
|1.       |  | Business                                                                                           |  |      | 1  | 
|2.       |  | Properties                                                                                         |  |      | 13 | 
|3.       |  | Legal Proceedings                                                                                  |  |      | 17 | 
|4.       |  | Submission of Matters to a Vote of Security
    Holders                                            |  |      | 17 | 
|X        |  | Executive Officers of the Registrant                                                               |  |      | 17 | 
|PART II 
|5.       |  | Market Price of the Registrants Common
    Stock and Related Stockholder Matters                  |  |      | 19 | 
|6.       |  | Selected Financial Data                                                                            |  |      | 20 | 
|7.       |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations          |  |      | 24 | 
|7A.      |  | Quantitative and Qualitative Disclosures about
    Market Risk                                     |  |      | 44 | 
|8.       |  | Financial Statements and Supplementary Data                                                        |  |      | 45 | 
|9.       |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure           |  |      | 45 | 
|PART III
|10.      |  | Directors and Executive Officers of the Registrant                                                 |  |      | 46 | 
|11.      |  | Executive Compensation                                                                             |  |      | 46 | 
|12.      |  | Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters |  |      | 46 | 
|13.      |  | Certain Relationships and Related Transactions                                                     |  |      | 46 | 
|14.      |  | Controls and Procedures                                                                            |  |      | 46 | 
|PART IV 
|15.      |  | Exhibits, Financial Statements, Schedules and
    Reports on Form 8-K                              |  |      | 47 | 



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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 United States. As of
February 15, 2003, the Company owns 80 stabilized
communities (the Communities) containing 29,320
apartment units located primarily in metropolitan Atlanta,
Georgia; Dallas, Texas and Tampa Florida. In addition, the
Company currently has under construction or in initial lease-up
four new communities and an addition to one existing community
in the Tampa, Florida; New York City, New York; Pasadena,
California and Washington D.C. metropolitan areas that will
contain an aggregate of 1,256 apartment units upon completion.
An apartment community is generally considered by the Company to
have achieved stabilized occupancy on the earlier to occur of
(1) attainment of 95% physical occupancy on the first day
of any month or (2) one year after completion of
construction. For the year ended December 31, 2002, 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 73 Communities stabilized for the
entire year was 90.7%. The average monthly rental rate per
apartment unit at these Communities for December 2002 was
$1,003. The Company is a fully integrated organization with
multifamily development, operation and asset management
expertise. The Company has approximately 1,050 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. From time to time, the
Company sells its apartment communities in order to generate
liquidity for funding new development activity and to repay
outstanding debt.


Promotion of the
Post®Brand Name

The Post® 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® 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
landscaped courtyards with water features 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 by implementing these
strategies, multifamily properties in its primary markets have
the potential over the long term to provide investment returns
that exceed national averages.


The Company is a self-administrated 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® multifamily apartment communities, all of which were
developed by the




Post Properties, Inc.


1


Post Apartment Homes, L.P.




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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 officers 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 business of the
Company and the Post® 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, 2002, the Company, through
wholly-owned subsidiaries, controlled the Operating Partnership
as the sole general partner and as the holder of 88.5% of the
common units in the Operating Partnership (Common
Units) and 63.6% of the preferred Units (the
Perpetual Preferred Units). The other limited
partners of the Operating Partnership who hold Common Units, are
those persons (including certain officers and directors of the
Company) who, at the time of the Companys initial public
offering, elected to hold all or a portion of their interest in
the form of Common Units rather than receiving shares of Common
Stock. Each Common 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 (as has
been done in all redemptions to date) rather than paying cash.
With each redemption of outstanding Common 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 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 a majority
of the outstanding Common 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. In general, the Operating Partnership cannot be
terminated, except in connection with a sale of all or
substantially all of the assets of the Company, until January
2044 without the approval of each limited partner who received
Common Units of the Operating Partnership in connection with the
Companys initial public offering. 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 loss 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 Operating Partnership.

As part of the formation of the Operating
Partnership, a holding company, Post Services, Inc. (Post
Services) was organized as a separate corporate subsidiary
of the Operating Partnership. Through Post Services and its
subsidiaries, the Operating Partnership provides leasing,
landscaping and property management services to third parties.
Certain officers and directors of the Company own 99%,
collectively, of the voting common stock of Post Services, and
the Operating Partnership owns 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




Post Properties, Inc.


2


Post Apartment Homes, L.P.




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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 2003.


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® 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

In periods prior to December 31, 2001, the
Operating Partnership provided third party asset management and
leasing services for multifamily properties not operated under
the Post® name through RAM Partners, Inc.
(RAM). Additionally in prior periods, the Operating
Partnership provided landscape installation and maintenance
services to third parties through Post Landscape Services, Inc.
(Post Landscape). In the fourth quarter of 2001, the
net assets and operating businesses of RAM and Post Landscape
were sold to their respective management teams. The Company and
the Operating Partnership no longer provide these services to
unaffiliated third parties. Instead, the Operating Partnership
will focus its continuing efforts on its core business of
owning, developing and managing Post® brand multifamily
real estate assets.

History of Post Properties, Inc.

During the five-year period from January 1,
1998 through December 31, 2002, the Company and affiliates
have developed and completed 11,557 apartment units in 34
apartment communities, and sold 23 apartment communities
containing an aggregate of 7,646 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
did not acquire any apartment communities during the five-year
period from January 1, 1998 through December 31, 2002.
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 a summary of the Companys development and
sales activity during these periods.

|                                                                      |  |      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         | 
|--------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | 
|                                                                      |  | 2002 |         | 2001 |  | 2000 |         | 1999 |  | 1998
|                                                                      |  |      |         |      |  |      |         |      |  |     
|Units completed                                                       |  |      | 2,140   |      |  |      | 2,651   |      |  |      | 2,786   |   |  |   | 1,955   |   |  |   | 2,025   | 
|Units sold                                                            |  |      | (2,665  | )    |  |      | (2,799  | )    |  |      | (1,984  | ) |  |   | (198    | ) |  |   |        | 
|Total units completed and owned by the Company
    and its affiliates |  |      | 29,849  |      |  |      | 30,374  |      |  |      | 30,522  |   |  |   | 29,720  |   |  |   | 27,963  | 
|Total rental income (in thousands)                                    |  | $    | 316,484 |      |  | $    | 336,206 |      |  | $    | 335,482 |   |  | $ | 291,283 |   |  | $ | 248,377 | 




Post Properties, Inc.


3


Post Apartment Homes, L.P.




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Current Development

At December 31, 2002, the Company has under
construction or in initial lease-up five new communities and
additions to one existing community that will contain an
aggregate of 1,377 units upon completion. The Companys
communities under development or in initial lease-up are
summarized in the following table:

|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|------------------------------------------------------------- |  | ------ | ----- | --------------- |  | ---------- | ---- | ------------ |  | ----------- | ---- | ------------- |  | --------- | ------ | --------- |  |  | ------ |  |  |  | ------ |  |  |  | ----- |  |  |  | ----- | 
|                                                              |  |        |       | Estimated       |  | Amount     |      |              |  |             |      | Estimated     |  |           |        |          
|                                                              |  | Number |       | Construction    |  | Spent      |      | Quarter of   |  | Quarter of  |      | Quarter of    |  | %         |        | %        
|                                                              |  | of     |       | Cost            |  | As of      |      | Construction |  | First Units |      | Stabilized    |  | Leased    |        | Occupied 
|Metropolitan Area                                             |  | Units  |       | ($ in millions) |  | 12/31/2002 |      | Start        |  | Available   |      | Occupancy (1) |  | 2/15/2003 |        | 2/15/2003
|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |          
|Wholly-Owned Construction/ Lease-up
    Communities           |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Tampa, FL                                                     |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Post Harbour Place III                                        |  |        | 259   |                 |  | $          | 35   |              |  | $           | 33   |               |  |           | 2Q 01 |           |  |  | 2Q 02 |  |  |  | 2Q 03 |  |  |  | 79.5% |  |  |  | 77.6% | 
|New York City, NY                                             |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Post Toscana                                                 |  |        | 199   |                 |  |            | 95   |              |  |             | 75   |               |  |           | 1Q 02 |           |  |  | 1Q 03 |  |  |  | 2Q 04 |  |  |  | 1.5%  |  |  |  | 0.0%  | 
|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Subtotal Wholly-Owned Construction/ Lease-up
    Communities  |  |        | 458   |                 |  | $          | 130  |              |  | $           | 108  |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Co-Investment Construction/ Lease-up
    Communities          |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Atlanta, GA                                                   |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Post Peachtree(2)                                            |  |        | 121   |                 |  | $          | 31   |              |  | $           | 31   |               |  |           | 2Q 00 |           |  |  | 3Q 01 |  |  |  | 1Q 03 |  |  |  | 87.6% |  |  |  | 86.0% | 
|New York City, NY                                             |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Post Luminaria(3)                                            |  |        | 138   |                 |  |            | 51   |              |  |             | 50   |               |  |           | 3Q 01 |           |  |  | 2Q 02 |  |  |  | 2Q 03 |  |  |  | 84.8% |  |  |  | 81.9% | 
|Pasadena, CA                                                  |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Post Paseo Colorado(2)                                        |  |        | 391   |                 |  |            | 76   |              |  |             | 75   |               |  |           | 2Q 00 |           |  |  | 1Q 02 |  |  |  | 2Q 03 |  |  |  | 84.1% |  |  |  | 80.1% | 
|Washington D.C.                                               |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Post Massachusetts Avenue(2)                                 |  |        | 269   |                 |  |            | 74   |              |  |             | 68   |               |  |           | 2Q 01 |           |  |  | 4Q 02 |  |  |  | 4Q 03 |  |  |  | 24.5% |  |  |  | 21.9% | 
|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Subtotal Co-Investment Construction/ Lease-up
    Communities |  |        | 919   |                 |  | $          | 232  |              |  | $           | 224  |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Construction Totals                                           |  |        | 1,377 |                 |  | $          | 362  |              |  | $           | 332  |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Less Partners Portion                                        |  |        |       |                 |  | $          | (133 | )            |  | $           | (128 | )             |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|Post Properties Funding
    Commitment                       |  |        |       |                 |  | $          | 229  |              |  | $           | 204  |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 
|                                                              |  |        |       |                 |  |            |      |              |  |             |      |               |  |           |        |           |  |  |        |  |  |  |        |  |  |  |       |  |  |  |       | 






|    |                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company defines stabilized occupancy as the
    earlier to occur of (i) the attainment of 95% physical occupancy
    on the first day of any month or (ii) one year after
    completion of construction.
|(2) | These communities are being developed as a joint
    venture (Company equity ownership is 35%).                                                                                                              

|    |                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | This development is structured as a joint
    venture, with the Company owning approximately 70% of the equity
    and the landowner owning the balance.

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.




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Americans with Disabilities Act

The Companys apartment 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 laws, ordinances, and regulations that apply
to the development of real property, including construction
activities, the ownership of real property, and the operation of
multifamily apartment communities.

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. The environmental investigation report
is reviewed by the Company and counsel prior to purchase and/or
development of any property. If the environmental investigation
identifies evidence of potentially significant environmental
contamination that merits additional investigation, sampling of
the property is performed by the environmental consultant.

If necessary, remediation of contamination,
including removal of underground storage tanks, is undertaken
either prior to development or at another appropriate time. When
performing remediation activities, the Company is subject to a
variety of environmental requirements. In some cases, the
Company obtains state approval of the selected remediation
measures by entering into voluntary environmental cleanup
programs administered by state agencies.

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 work 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. If wetlands or other environmentally sensitive
area are identified, the Company plans its development and
construction activities and obtains the necessary permits and
authorizations in compliance with applicable legal standards. In
some cases, however, the presence of wetlands and/or other
environmentally sensitive areas could preclude, severely limit,
or otherwise alter the proposed site development and
construction activities.

Storm water discharge from a construction site is
subject to the storm water permit requirements mandated under
the Clean Water Act. In most jurisdictions, the state
administers the permit programs. The Company currently
anticipates that it will be able to obtain and materially comply
with any storm water permits required for new development. The
Company has obtained and is in material compliance with the
storm water permits required for its existing development
activities.

The Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. sec. 9601
et seq. (CERCLA), and comparable state laws subject
the owner or operator of real property or a facility to claims
or liability for the costs of removal or remediation of
hazardous substances that are released at, in, on, under, or
from real property or a facility. In addition to claims for
cleanup costs, the presence of hazardous substances on or the
release of hazardous substances from a property or a facility
could result in a claim by a private party for personal injury
or property damage or could result in a claim from a
governmental agency for other damages. Liability under CERCLA
and comparable state laws can be imposed on the owner or the
operator of real property or a facility without regard to fault
or even knowledge of the release of hazardous substances on, at,
in, under, or from the property or facility. Environmental
liabilities associated with hazardous substances also could be
imposed on the Company under other applicable environmental
laws, such as the Resource Conservation and Recovery Act (and
comparable state laws), or common-law principles. The presence
of hazardous substances in amounts requiring response action or
the failure to undertake necessary remediation may adversely
affect the owners ability to use or sell real estate or
borrow money using such real estate as collateral.




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##### Table of Contents



Various environmental laws govern certain aspects
of the Companys ongoing operation of the Communities. Such
environmental laws include those regulating the existence of
asbestos-containing materials in buildings, management of
surfaces with lead-based paint (and notices to residents about
the lead-based paint), use of active underground petroleum
storage tanks, and waste-management activities. The failure to
comply with such requirements could subject the Company to a
government enforcement action and/or claims for damages by a
private party.

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

It is possible, however, that the environmental
investigations of our properties might not have revealed all
potential environmental liabilities associated with the
Companys real property and Communities or might have
underestimated any potential environmental issues identified in
the investigations. It is also possible that future
environmental laws, ordinances, or regulations or new
interpretations of existing environmental laws, ordinances, or
regulations will impose material environmental liabilities on
the Company; the current environmental conditions of properties
that the Company owns or operates will be affected adversely by
hazardous substances associated with other nearby properties or
the actions of third parties unrelated to the Company; or our
residents and/or commercial tenants may engage in activities
prohibited by their leases or otherwise expose the Company to
liability under applicable environmental laws, ordinances, or
regulations. The costs of defending any future environmental
claims, performing any future environmental remediation,
satisfying any such environmental liabilities, or responding to
any changed environmental conditions could materially adversely
affect the Companys financial conditions and results of
operations.

Where You Can Find More Information

The Company makes its annual report on Form l0-K,
quarterly reports on Form 10-Q, current reports on
Form 8-K, and all amendments to such reports filed pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended, available (free of charge) on or through its
Internet website, located at http://postproperties.com, as soon
as reasonably practicable after they are filed with or furnished
to the SEC.




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##### Table of Contents



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;                                                                                               
| 
| | continued or worsened weak economic and market
    conditions that simultaneously affect one or more of the
    Companys geographic markets;                                      
| 
| | declines in household formation;                                                                                                                                                   
| 
| | favorable residential mortgage rates;                                                                                                                                              
| 
| | rent control or stabilization laws, or other laws
    regulating rental housing, which could prevent the Company from
    raising rents to offset increases in operating costs; and
| 
| | competition from other available apartments and
    other housing alternatives and changes in market rental rates.                                                                 

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;                                                                                                                                                                                  
| 
| | 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.




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##### Table of Contents



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.                           

Members of the Companys Board of
Directors may have Conflicts of Interest because there could be
Adverse Tax Consequences Upon the Sale or Refinancing of some of
the Operating Partnerships Apartment
Communities.

Limited partners of the Operating Partnership may
suffer different and more adverse tax consequences than the
Company upon the sale or refinancing of some of the Operating
Partnerships apartment communities. These limited
partners, including three of our directors, may have different
objectives regarding the appropriate pricing and timing of any
sale or refinancing of certain apartment communities. While the
Company, through wholly-owned subsidiaries, has the exclusive
authority as to whether and on what terms to sell or refinance
any individual apartment community, these directors may
influence the Company not to sell or refinance these apartment
communities, even though a sale might otherwise be financially
advantageous to the Company. In addition, these directors could
influence the Company to refinance an apartment community with a
high level of debt.

Possible Difficulty of Selling Apartment
Communities Could Limit the Companys Operational and
Financial Flexibility.

Purchasers may not be willing to pay acceptable
prices for apartment communities that the Company wishes to
sell. 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
have to take on additional leverage in order to provide adequate
capital to execute its development and construction strategy.
Furthermore, a portion of the proceeds from the Companys
overall property sales in the future 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.                                                                                                             




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##### Table of Contents



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, 2002, the Company had outstanding mortgage
indebtedness of approximately $510,186, senior unsecured debt of
approximately $708,000 and outstanding indebtedness under its
lines of credit aggregating $196,369.

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 may 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.

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.




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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.

Terrorist Attacks and the Possibility of Wider
Armed Conflict May Have an Adverse Effect on the Companys
Business and Operating Results and Could Decrease the Value of
the Companys Assets.

Terrorist attacks and other acts of violence or
war, such as those that took place on September 11, 2001,
could have a material adverse effect on the Companys
business and operating results. There can be no assurance that
there will not be further terrorist attacks against the United
States or its businesses or interests. Attacks or armed
conflicts that directly impact one or more of the Companys
apartment communities could significantly affect the
Companys ability to operate those communities and thereby
impair its ability to achieve the Companys expected
results. Further, the Companys insurance coverage may not
cover any losses caused by a terrorist attack. In addition, the
adverse effects that such violent acts and threats of future
attacks could have on the U.S. economy could similarly have a
material adverse effect on the Companys business and
results of operations. Finally, if the United States enters into
a wider armed conflict, such as war with Iraq, the
Companys business and operating results could be adversely
effected.

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.




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Potential Liability for Environmental
Contamination Could Result in Substantial Costs.

The Company is in the business of owning,
operating, developing, acquiring 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 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.




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The Companys Shareholders May Not be
Able to Effect a Change in 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 in 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
former Chairman and former 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 provide 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 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 size of the board of
directors is currently set at eleven. 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.The Companys articles of incorporation provide that the
Company has the authority to issue up to 20,000,000 shares of
preferred stock, of which 4,9000,000 were outstanding as of
December 31, 2002. The board of directors has the
authority, without the approval of the shareholders, to issue
additional shares of preferred stock and to establish the
preferences and rights of such shares. The issuance of preferred
stock could have the effect of delaying or preventing a change
of the Company, even if a change of control were in the
shareholders interest.

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 Operating 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 provide 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 provide 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.




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ITEM 2.     PROPERTIES

At February 15, 2003, the Communities
consisted of 80 stabilized Post® multifamily apartment
communities located in the following metropolitan areas:

|                  |  |             |    |            |  |            |        |  |  |  |        | 
|----------------- |  | ----------- | -- | ---------- |  | ---------- | ------ |  |  |  | ------ | 
|Metropolitan Area |  | Communities |    | # of Units |  | % of Total
|                  |  |             |    |            |  |           
|Atlanta, GA       |  |             | 41 |            |  |            | 15,781 |  |  |  | 53.8%  | 
|Dallas, TX        |  |             | 21 |            |  |            | 5,657  |  |  |  | 19.3%  | 
|Tampa, FL         |  |             | 4  |            |  |            | 2,223  |  |  |  | 7.6%   | 
|Charlotte, NC     |  |             | 3  |            |  |            | 1,065  |  |  |  | 3.6%   | 
|Orlando, FL       |  |             | 2  |            |  |            | 985    |  |  |  | 3.4%   | 
|Houston, TX       |  |             | 2  |            |  |            | 981    |  |  |  | 3.3%   | 
|Fairfax, VA       |  |             | 2  |            |  |            | 700    |  |  |  | 2.4%   | 
|Denver, CO        |  |             | 1  |            |  |            | 696    |  |  |  | 2.4%   | 
|Washington, D.C.  |  |             | 1  |            |  |            | 504    |  |  |  | 1.7%   | 
|Phoenix, AZ       |  |             | 1  |            |  |            | 403    |  |  |  | 1.4%   | 
|Austin, TX        |  |             | 1  |            |  |            | 239    |  |  |  | 0.8%   | 
|Nashville, TN     |  |             | 1  |            |  |            | 86     |  |  |  | 0.3%   | 
|                  |  |             |    |            |  |            |        |  |  |  |        | 
|                  |  |             | 80 |            |  |            | 29,320 |  |  |  | 100.0% | 
|                  |  |             |    |            |  |            |        |  |  |  |        | 

The Company or its predecessors developed all but
12 of the Post® Communities and currently manages all of
the Communities. Fifty-one of the Communities have in excess of
300 apartment units, with the largest Community having a total
of 916 apartment units. Seventy six of the eighty Communities,
comprising approximately 95% of the Communities apartment
units, were completed after January 1, 1986. The average
age of the Communities is approximately eight years. The average
economic occupancy rate was 90.9% and 94.4%, respectively, and
the average monthly rental rate per apartment unit was $992 and
$1,016, respectively, for communities stabilized for each of the
entire years ended December 31, 2002 and 2001. See
Selected Financial Information.




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COMMUNITY INFORMATION

|                      |                            |             |         |           |  |               |      |        |       |               |  |              |     |        |  |  |       |     |  |  |      |      |  
|--------------------- | -------------------------- | ----------- | ------- | --------- |  | ------------- | ---- | ------ | ----- | ------------- |  | ------------ | --- | ------ |  |  | ----- | --- |  |  | ---- | ---- | -
|                      |                            |             |         |           |  |               |      |        |       | December 2002 |  | 2002        
|                      |                            |             |         |           |  | Average       |      |        |       | Average       |  | Average     
|                      |                            |             |         | Year      |  | Unit Size     |      | No. of |       | Rental Rates  |  | Economic    
|Communities           |                            | Location(1) |         | Completed |  | (Square Feet) |      | Units  |       | Per Unit      |  | Occupancy(2)
|                      |                            |             |         |           |  |               |      |        |       |               |  |             
|Georgia               |                            |             |         |           |  |               |      |        |       |               |  |              |     |        |  |  |       |     |  |  |      |     
|Post Ashford®         |                            |             | Atlanta |           |  | 1987          |      |        | 872   |               |  |              | 222 |        |  |  | 831   |     |  |  | 90.6 | %   
|Post Biltmore(3)     |                            |             | Atlanta |           |  | 2001          |      |        | 777   |               |  |              | 276 |        |  |  | 1,105 |     |  |  | N/A  | (4) 
|Post Briarcliff      |                            |             | Atlanta |           |  | 1999          |      |        | 1,034 |               |  |              | 688 |        |  |  | 1,089 |     |  |  | 90.9 | %   
|Post Bridge®          |                            |             | Atlanta |           |  | 1986          |      |        | 847   |               |  |              | 354 |        |  |  | 698   |     |  |  | 91.3 | %   
|Post Brookhaven®      |                            |             | Atlanta |           |  | 1990-1992(5)  |      |        | 990   |               |  |              | 735 |        |  |  | 954   |     |  |  | 90.3 | %   
|Post Canyon®          |                            |             | Atlanta |           |  | 1986          |      |        | 899   |               |  |              | 494 |        |  |  | 729   |     |  |  | 90.3 | %   
|Post Chase®           |                            |             | Atlanta |           |  | 1987          |      |        | 938   |               |  |              | 410 |        |  |  | 693   |     |  |  | 85.8 | %   
|Post Chastain®        |                            |             | Atlanta |           |  | 1990          |      |        | 965   |               |  |              | 558 |        |  |  | 970   |     |  |  | 90.2 | %   
|Post Collier Hills®   |                            |             | Atlanta |           |  | 1997          |      |        | 984   |               |  |              | 396 |        |  |  | 1,047 |     |  |  | 92.5 | %   
|Post Corners®         |                            |             | Atlanta |           |  | 1986          |      |        | 860   |               |  |              | 460 |        |  |  | 694   |     |  |  | 88.2 | %   
|Post Court®           |                            |             | Atlanta |           |  | 1988          |      |        | 838   |               |  |              | 446 |        |  |  | 668   |     |  |  | 87.3 | %   
|Post Crest®           |                            |             | Atlanta |           |  | 1996          |      |        | 1,069 |               |  |              | 410 |        |  |  | 1,009 |     |  |  | 91.0 | %   
|Post Crossing®        |                            |             | Atlanta |           |  | 1995          |      |        | 1,027 |               |  |              | 354 |        |  |  | 1,057 |     |  |  | 92.1 | %   
|Post Dunwoody®        |                            |             | Atlanta |           |  | 1989-1996(5)  |      |        | 1,010 |               |  |              | 530 |        |  |  | 966   |     |  |  | 91.7 | %   
|Post Gardens®         |                            |             | Atlanta |           |  | 1998          |      |        | 1,068 |               |  |              | 397 |        |  |  | 1,144 |     |  |  | 88.6 | %   
|Post Glen®            |                            |             | Atlanta |           |  | 1997          |      |        | 1,117 |               |  |              | 314 |        |  |  | 1,171 |     |  |  | 91.7 | %   
|Post Lane®            |                            |             | Atlanta |           |  | 1988          |      |        | 840   |               |  |              | 166 |        |  |  | 766   |     |  |  | 89.7 | %   
|Post Lenox Park®      |                            |             | Atlanta |           |  | 1995          |      |        | 1,030 |               |  |              | 206 |        |  |  | 1,088 |     |  |  | 90.8 | %   
|Post Lindbergh®       |                            |             | Atlanta |           |  | 1998          |      |        | 956   |               |  |              | 396 |        |  |  | 1,029 |     |  |  | 91.2 | %   
|Post Mill®            |                            |             | Atlanta |           |  | 1985          |      |        | 952   |               |  |              | 398 |        |  |  | 746   |     |  |  | 91.8 | %   
|Post Oak             |                            |             | Atlanta |           |  | 1993          |      |        | 1,003 |               |  |              | 182 |        |  |  | 1,058 |     |  |  | 91.4 | %   
|Post Oglethorpe®      |                            |             | Atlanta |           |  | 1994          |      |        | 1,218 |               |  |              | 250 |        |  |  | 1,287 |     |  |  | 89.3 | %   
|Post Park®            |                            |             | Atlanta |           |  | 1988-1990(5)  |      |        | 912   |               |  |              | 770 |        |  |  | 813   |     |  |  | 89.8 | %   
|Post Parkside        |                            |             | Atlanta |           |  | 2000          |      |        | 903   |               |  |              | 188 |        |  |  | 1,343 |     |  |  | 93.5 | %   
|Post Peachtree(3)    |                            |             | Atlanta |           |  | 2001          |      |        | 1,332 |               |  |              | 121 |        |  |  | 2,431 |     |  |  | N/A  | (4) 
|Post Peachtree Hills® |                            |             | Atlanta |           |  | 1992-1994(5)  |      |        | 971   |               |  |              | 300 |        |  |  | 1,066 |     |  |  | 93.0 | %   
|Post Renaissance®(6)  |                            |             | Atlanta |           |  | 1992-1994(5)  |      |        | 903   |               |  |              | 342 |        |  |  | 1,034 |     |  |  | 93.2 | %   
|Post Ridge®           |                            |             | Atlanta |           |  | 1998          |      |        | 1,061 |               |  |              | 434 |        |  |  | 1,018 |     |  |  | 93.2 | %   
|Post Riverside®       |                            |             | Atlanta |           |  | 1998          |      |        | 1,049 |               |  |              | 527 |        |  |  | 1,383 |     |  |  | 90.6 | %   
|Post Spring          |                            |             | Atlanta |           |  | 2000          |      |        | 977   |               |  |              | 452 |        |  |  | 987   |     |  |  | 91.6 | %   
|Post Stratford(6)    |                            |             | Atlanta |           |  | 2000          |      |        | 1,007 |               |  |              | 250 |        |  |  | 1,196 |     |  |  | 92.2 | %   
|Post Summit®          |                            |             | Atlanta |           |  | 1990          |      |        | 957   |               |  |              | 148 |        |  |  | 970   |     |  |  | 93.0 | %   
|Post Valley®          |                            |             | Atlanta |           |  | 1988          |      |        | 854   |               |  |              | 496 |        |  |  | 708   |     |  |  | 89.3 | %   
|Post Village®         |                            |             | Atlanta |           |  |               |      |        |       |               |  |              |     |        |  |  | 751   |     |  |  | 90.7 | %   
|                      | 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®         |                            |             | Atlanta |           |  | 1989-1991(5)  |      |        | 972   |               |  |              | 403 |        |  |  | 841   |     |  |  | 91.3 | %   
|Post Walk®            |                            |             | Atlanta |           |  | 1984-1987(5)  |      |        | 927   |               |  |              | 476 |        |  |  | 850   |     |  |  | 90.7 | %   
|Post Woods®           |                            |             | Atlanta |           |  | 1977-1983(5)  |      |        | 1,057 |               |  |              | 494 |        |  |  | 929   |     |  |  | 91.1 | %   
|                      |                            |             |         |           |  |               |      |        |       |               |  |              |     |        |  |  |       |     |  |  |      |     
|                      | Subtotal/Average  Georgia |             |         |           |  |               |      |        |       | 970           |  |              |     | 15,781 |  |  |       | 942 |  |  |      | 90.8 | %
|                      |                            |             |         |           |  |               |      |        |       |               |  |              |     |        |  |  |       |     |  |  |      |     




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##### Table of Contents



COMMUNITY INFORMATION

|                                    |  |           |         |           |  |               |  |        |       |               |  |              |       |  |  |  |       |  |  |  |      |    
|----------------------------------- |  | --------- | ------- | --------- |  | ------------- |  | ------ | ----- | ------------- |  | ------------ | ----- |  |  |  | ----- |  |  |  | ---- | ---
|                                    |  |           |         |           |  |               |  |        |       | December 2002 |  | 2002        
|                                    |  |           |         |           |  | Average       |  |        |       | Average       |  | Average     
|                                    |  |           |         | Year      |  | Unit Size     |  | No. of |       | Rental Rates  |  | Economic    
|Communities                         |  | Locations |         | Completed |  | (Square Feet) |  | Units  |       | Per Unit      |  | Occupancy(2)
|                                    |  |           |         |           |  |               |  |        |       |               |  |             
|Texas                               |  |           |         |           |  |               |  |        |       |               |  |              |       |  |  |  |       |  |  |  |      |    
|Post Abbey                         |  |           | Dallas  |           |  | 1996          |  |        | 1,275 |               |  |              | 34    |  |  |  | 1,930 |  |  |  | 90.4 | %  
|Post Addison Circle  Phase I      |  |           | Dallas  |           |  | 1998          |  |        | 895   |               |  |              | 460   |  |  |  | 964   |  |  |  | 89.0 | %  
|Post Addison Circle  Phase II     |  |           | Dallas  |           |  | 2000          |  |        | 898   |               |  |              | 610   |  |  |  | 1,004 |  |  |  | 87.7 | %  
|Post Addison Circle  Phase III    |  |           | Dallas  |           |  | 2000          |  |        | 806   |               |  |              | 264   |  |  |  | 869   |  |  |  | 86.3 | %  
|Post American Beauty Mill          |  |           | Dallas  |           |  | 1998          |  |        | 993   |               |  |              | 80    |  |  |  | 1,026 |  |  |  | 88.3 | %  
|Post Block 588                     |  |           | Dallas  |           |  | 2000          |  |        | 1,570 |               |  |              | 127   |  |  |  | 1,721 |  |  |  | 82.2 | %  
|Post Coles Corners                |  |           | Dallas  |           |  | 1998          |  |        | 819   |               |  |              | 186   |  |  |  | 986   |  |  |  | 92.6 | %  
|Post Columbus Square               |  |           | Dallas  |           |  | 1996          |  |        | 863   |               |  |              | 218   |  |  |  | 1,138 |  |  |  | 93.0 | %  
|Post Gallery                       |  |           | Dallas  |           |  | 1999          |  |        | 2,307 |               |  |              | 34    |  |  |  | 2,873 |  |  |  | 78.4 | %  
|Post Hackberry Creek®               |  |           | Dallas  |           |  | 1988-1996(5)  |  |        | 865   |               |  |              | 432   |  |  |  | 814   |  |  |  | 90.3 | %  
|Post Heights                       |  |           | Dallas  |           |  | 1998-1099(5)  |  |        | 1,267 |               |  |              | 368   |  |  |  | 1,040 |  |  |  | 92.2 | %  
|Post Legacy                         |  |           | Dallas  |           |  | 2000          |  |        | 843   |               |  |              | 384   |  |  |  | 873   |  |  |  | 87.3 | %  
|Post Meridian                      |  |           | Dallas  |           |  | 1991          |  |        | 835   |               |  |              | 133   |  |  |  | 1,065 |  |  |  | 91.4 | %  
|Post Midtown Square                |  |           | Houston |           |  | 1999-2000(5)  |  |        | 937   |               |  |              | 672   |  |  |  | 1,205 |  |  |  | 88.0 | %  
|Post Rice Lofts(6)                 |  |           | Houston |           |  | 1998          |  |        | 964   |               |  |              | 309   |  |  |  | 1,378 |  |  |  | 84.0 | %  
|Post Town Lake®                     |  |           | Dallas  |           |  | 1986-1987(5)  |  |        | 880   |               |  |              | 398   |  |  |  | 791   |  |  |  | 90.9 | %  
|Post Uptown Village                |  |           | Dallas  |           |  | 1995-2000(5)  |  |        | 752   |               |  |              | 496   |  |  |  | 889   |  |  |  | 92.3 | %  
|Post Vineyard                      |  |           | Dallas  |           |  | 1996          |  |        | 733   |               |  |              | 116   |  |  |  | 955   |  |  |  | 92.0 | %  
|Post Vintage                       |  |           | Dallas  |           |  | 1993          |  |        | 783   |               |  |              | 161   |  |  |  | 941   |  |  |  | 93.5 | %  
|Post West Avenue Lofts(6)          |  |           | Austin  |           |  | 2000          |  |        | 858   |               |  |              | 239   |  |  |  | 1,294 |  |  |  | 93.6 | %  
|Post White Rock®                    |  |           | Dallas  |           |  | 1988          |  |        | 660   |               |  |              | 207   |  |  |  | 806   |  |  |  | 93.7 | %  
|Post Wilson Building(5)(6)         |  |           | Dallas  |           |  | 1999          |  |        | 1,016 |               |  |              | 143   |  |  |  | 1,228 |  |  |  | 89.4 | %  
|Post Windhaven(8)                  |  |           | Dallas  |           |  | 1991          |  |        | 885   |               |  |              | 474   |  |  |  | 734   |  |  |  | N/A  | (4)
|Post Worthington                   |  |           | Dallas  |           |  | 1993          |  |        | 846   |               |  |              | 332   |  |  |  | 1,134 |  |  |  | 90.4 | %  
|                                    |  |           |         |           |  |               |  |        |       |               |  |              |       |  |  |  |       |  |  |  |      |    
|Subtotal/Average  Texas            |  |           |         |           |  |               |  |        | 981   |               |  |              | 6,877 |  |  |  | 1,021 |  |  |  | 89.3 | %  
|                                    |  |           |         |           |  |               |  |        |       |               |  |              |       |  |  |  |       |  |  |  |      |    
|Florida                             |  |           |         |           |  |               |  |        |       |               |  |              |       |  |  |  |       |  |  |  |      |    
|Post Harbour Place(7)              |  |           | Tampa   |           |  | 1999-2001(5)  |  |        | 942   |               |  |              | 784   |  |  |  | 1,181 |  |  |  | N/A  | (4)
|Post Hyde Park®                     |  |           | Tampa   |           |  | 1996          |  |        | 970   |               |  |              | 389   |  |  |  | 1,083 |  |  |  | 93.5 | %  
|Post Lake®                          |  |           | Orlando |           |  | 1988          |  |        | 850   |               |  |              | 740   |  |  |  | 669   |  |  |  | 93.8 | %  
|Post Parkside                      |  |           | Orlando |           |  | 1999          |  |        | 873   |               |  |              | 245   |  |  |  | 1,124 |  |  |  | 94.1 | %  
|Post Rocky Point®                   |  |           | Tampa   |           |  | 1996-1998(5)  |  |        | 1,070 |               |  |              | 916   |  |  |  | 1,021 |  |  |  | 93.7 | %  
|Post Walk at Old Hyde Park Village |  |           | Tampa   |           |  | 1997          |  |        | 889   |               |  |              | 134   |  |  |  | 1,303 |  |  |  | 93.9 | %  
|                                    |  |           |         |           |  |               |  |        |       |               |  |              |       |  |  |  |       |  |  |  |      |    
|Subtotal/Average  Florida          |  |           |         |           |  |               |  |        | 932   |               |  |              | 3,208 |  |  |  | 1,006 |  |  |  | 93.7 | %  
|                                    |  |           |         |           |  |               |  |        |       |               |  |              |       |  |  |  |       |  |  |  |      |    




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COMMUNITY INFORMATION

|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |      |  
|------------------------------ | ------------------------------------- | --------- |  | --------- | ------------ | ------------- |  | ------ | ----- | ------------- |  | ------------ | --- | ------ |  |  | ----- | ----- |  |  | ---- | ---- | -
|                               |                                       |           |  |           |              |               |  |        |       | December 2002 |  | 2002        
|                               |                                       |           |  |           |              | Average       |  |        |       | Average       |  | Average     
|                               |                                       |           |  | Year      |              | Unit Size     |  | No. of |       | Rental Rates  |  | Economic    
|Communities                    |                                       | Locations |  | Completed |              | (Square Feet) |  | Units  |       | Per Unit      |  | Occupancy(2)
|                               |                                       |           |  |           |              |               |  |        |       |               |  |             
|Arizona                        |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Post Roosevelt Square(6)       |                                       | Phoenix   |  |           | 2000         |               |  |        | 836   |               |  |              | 403 |        |  |  | 819   |       |  |  | 85.6 | %   
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Virginia                       |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Post Corners at Trinity Centre |                                       | Fairfax   |  |           | 1996         |               |  |        | 1,027 |               |  |              | 336 |        |  |  | 1,231 |       |  |  | 92.8 | %   
|Post Forest®                   |                                       | Fairfax   |  |           | 1990         |               |  |        | 888   |               |  |              | 364 |        |  |  | 1,165 |       |  |  | 93.2 | %   
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|                               | Subtotal/Average 
    Virginia       |           |  |           |              |               |  |        |       | 958           |  |              |     | 700    |  |  |       | 1,197 |  |  |      | 93.0 | %
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|North Carolina                 |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Post Gateway Place(7)         |                                       | Charlotte |  |           | 2000         |               |  |        | 698   |               |  |              | 436 |        |  |  | 912   |       |  |  | N/A  | (4) 
|Post Park at Phillips Place®   |                                       | Charlotte |  |           | 1998         |               |  |        | 1,136 |               |  |              | 402 |        |  |  | 1,181 |       |  |  | 90.4 | %   
|Post Uptown Place             |                                       | Charlotte |  |           | 2000         |               |  |        | 800   |               |  |              | 227 |        |  |  | 970   |       |  |  | 91.7 | %   
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|                               | Subtotal/Average  North
    Carolina |           |  |           |              |               |  |        |       | 878           |  |              |     | 1,065  |  |  |       | 1,026 |  |  |      | 90.8 | %
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Colorado                       |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Post Uptown Square            |                                       | Denver    |  |           | 1999-2001(4) |               |  |        | 847   |               |  |              | 696 |        |  |  | 1,066 |       |  |  | N/A  | (4) 
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Tennessee                      |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Post Bennie Dillion           |                                       | Nashville |  |           | 1999         |               |  |        | 714   |               |  |              | 86  |        |  |  | 992   |       |  |  | 98.4 | %   
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Washington, D.C.               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|Post Pentagon Row(6)          |                                       | D.C.      |  |           | 2001         |               |  |        | 855   |               |  |              | 504 |        |  |  | 1,804 |       |  |  | N/A  | (4) 
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     
|                               | Total                                 |           |  |           |              |               |  |        |       | 886           |  |              |     | 29,320 |  |  |       | 993   |  |  |      | 90.7 | %
|                               |                                       |           |  |           |              |               |  |        |       |               |  |              |     |        |  |  |       |       |  |  |      |     



|    |                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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) | These communities are owned in joint ventures
    (Company equity ownership is 35%).                                                                                                                 
|(4) | During 2002, this community or a phase in this
    community was in lease-up and, therefore, the average economic
    occupancy information for these communities is not included
    above.         
|(5) | These dates represent the respective completion
    dates for multiple phases of a community.                                                                                                        
|(6) | The Company has a leasehold interest in the land
    underlying these communities.                                                                                                                   
|(7) | These communities are comprised of multiple
    phases. Not all phases of these communities were stabilized as
    of February 15, 2003.                                                             
|(8) | Post Windhaven was under rehab in 2001 and
    in lease-up into 2002.                                                                                                                               




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ITEM 3.     LEGAL
PROCEEDINGS

A Temporary Restraining Order was issued by the
Superior Court of Cobb County, Georgia on March 21, 2003
enjoining certain activities by the Company and its Board of
Directors for a period of 30 days. The Order was issued as a
result of a Complaint for Injunctive Relief and Damages filed by
John A. Williams, Chairman Emeritus of the Board. The Board of
Directors was to have voted on a number of resolutions that
would have restricted Mr. Williams with respect to certain
company matters, including restrictions on access to employees
and information. The Order enjoins the Board from voting on any
such resolutions during the 30-day period. The Company intends
to vigorously defend itself in this matter.

The Company is involved in various other legal
proceedings incidental to its business from time to time, most
of which are expected to be covered by liability insurance.
Management of the Company believes that any resolution of
pending proceedings or liability to the Company which may arise
as a result of these proceedings, including the Complaint for
Injunctive Relief and Damages discussed above, will not have a
material adverse effect on the Companys results of
operations or financial position.




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 as of
March 1, 2003 are as follows:

|                  |  |                                                                                   
|----------------- |  | ----------------------------------------------------------------------------------
|NAME              |  | POSITIONS AND OFFICES HELD                                                        
|David P. Stockert |  | President and Chief Executive Officer                                             
|Thomas L. Wilkes  |  | President  Post Apartment Management 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   |  | Executive Vice President  Post Corporate
    Services                            
|John Mears        |  | Executive Vice President  Development                                            
|Arthur J. Quirk   |  | Senior Vice President  Post Corporate
    Services and Chief Accounting Officer  

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

David P. Stockert.Mr. Stockert is the President and Chief Executive Officer
of the Company. Mr. Stockert has been the Chief Executive
Officer since July 2002. From January 2001 to June 2002,
Mr. Stockert was President and Chief Operating Officer.
From July 1999 to October 2000, Mr. Stockert was Executive
Vice President of Duke 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 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). Mr. Stockert is
40 years old.

Thomas L. Wilkes.Mr. Wilkes has been the President of Post Apartment
Management and the Companys Chief Management Officer since
January 2001. From October 1997 through December 2000, he was an
Executive Vice President and Director of Operations for Post
Apartment Management responsible for the operations of Post
communities in the Western United States. Mr. Wilkes was a
Senior Vice President of Columbus Realty Trust from December
1993 through October 1997. Mr. Wilkes served as President
of CRH Management Company, 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
43 years old.




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R. Gregory Fox.
Mr. Fox has been with the Company since February 1996 and,
since October 2000 has served as the Companys Executive
Vice President and 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 PriceWaterhouse 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 43 years old.

Sherry W. Cohen.Ms. Cohen has been with the Company for eighteen 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 48 years old.

Douglas S. Gray.Mr. Gray joined the Company in December 1997 and, since
January 2003, has been an Executive Vice President of Post
Corporate Services responsible for dispositions and asset
management. He was a Senior Vice President of Post Corporate
Services from January 1999 through December 2002 and 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 43 years old.

John B. Mears.Mr. Mears has been with the Company since November 1993.
Since March 2002, he has been an Executive Vice President of
Development responsible for the oversight of all the
Companys new development and construction activities. From
October 1997 to February 2002, he was an Executive Vice
President of Post East Development, responsible for sourcing and
executing new development opportunities in the Companys
primary markets outside of Atlanta, Georgia in the Eastern
United States. From November 1993 through September 1997, he was
a Senior Vice President of Post Apartment Development. Prior to
joining the Company, Mr. Mears was an associate in the Real
Estate Investment Banking Group at Merrill Lynch and Company.
Mr. Mears is 39 years old.

Arthur J. Quirk.Mr. Quirk has been the Senior Vice President and Chief
Accounting Officer of the Company since January 2003.
Mr. Quirk served as the Companys Vice President and
Chief Accounting Officer from March 2001 to December 2002. From
July 1999 to March 2001, Mr. Quirk was Vice President and
Controller of Duke Realty Corporation, a publicly traded real
estate company. From December 1994 to July 1999, Mr. Quirk
was the Vice President and Controller of Weeks Corporation, also
a publicly traded real estate company that was a predecessor by
merger to Duke Realty Corporation. Mr. Quirk was Vice
President-Controller and Chief Accounting Officer for Allegiant
Physician Services, Inc., a physician management services
company, from August 1993 to November 1994. From November 1991
to July 1993, Mr. Quirk was Chief Financial Officer and
Controller for TransTel Group Inc., a start-up
telecommunications company. Mr. Quirk is 45 years old.




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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 prices
per share reported on the NYSE, as well as the quarterly
dividends declared per share:

|               |  |      |         |     |  |           |         |  |  |   |       | 
|-------------- |  | ---- | ------- | --- |  | --------- | ------- |  |  | - | ----- | 
|               |  |      |         |     |  | Dividends
|Quarter End    |  | High |         | Low |  | Declared 
|               |  |      |         |     |  |          
|2001           |  |      |         |     |  |           |         |  |  |   |       | 
|First Quarter  |  | $    | 39.2500 |     |  | $         | 35.0000 |  |  | $ | 0.780 | 
|Second Quarter |  |      | 39.3400 |     |  |           | 35.2000 |  |  |   | 0.780 | 
|Third Quarter  |  |      | 38.9500 |     |  |           | 35.7600 |  |  |   | 0.780 | 
|Fourth Quarter |  |      | 37.0800 |     |  |           | 32.5000 |  |  |   | 0.780 | 
|2002           |  |      |         |     |  |           |         |  |  |   |       | 
|First Quarter  |  | $    | 35.9100 |     |  | $         | 32.2000 |  |  | $ | 0.780 | 
|Second Quarter |  |      | 35.4000 |     |  |           | 30.0200 |  |  |   | 0.780 | 
|Third Quarter  |  |      | 30.8500 |     |  |           | 25.4100 |  |  |   | 0.780 | 
|Fourth Quarter |  |      | 26.0500 |     |  |           | 22.4000 |  |  |   | 0.780 | 

On March 14, 2003, the Company had 1,910
common shareholders of record.

The Company pays regular quarterly dividends to
holders of shares of its common stock. Future dividend payments
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. Beginning with the first quarter of
2003, the Companys dividend will be reduced to $0.45 per
share. 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 2002, the Company did not sell any
unregistered securities.

There is no established public trading market for
the Common Units. As of March 14, 2003, the Operating
Partnership had 99 holders of record of Common Units of the
Operating Partnership.

For each quarter during 2002 and 2001, the
Operating Partnership paid a cash distribution to holders of
Common Units equal in amount to the dividends paid on the
Companys common stock for such quarter.

During 2002, the Operating Partnership did not
sell any unregistered securities.




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

Post Properties, Inc.

(Dollars in thousands, except per share and
apartment unit data)


|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |         |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ----------------------------------- | ------ | ------- | ------- | ---- | ------ | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                                                                                                     |                                                                                             |                                    
|                                                                                                                                                     |                                                                                             | Year Ended December 31,            
|                                                                                                                                                     |                                                                                             |                                    
|                                                                                                                                                     |                                                                                             | 2002                                |        | 2001    |         | 2000 |        | 1999    |         | 1998
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |     
|OPERATING DATA                                                                                                                                       |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|Revenues                                                                                                                                             |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|                                                                                                                                                     | Rental                                                                                      |                                     | $      | 316,484 |         |      | $      | 336,206 |         |      | $       | 335,482 |         |   | $       | 291,283 |         |   | $      | 248,377 |        
|                                                                                                                                                     | Other                                                                                       |                                     |        | 13,513  |         |      |        | 15,024  |         |      |         | 17,509  |         |   |         | 13,761  |         |   |        | 11,876  |        
|                                                                                                                                                     | Third-party services (1)                                                                    |                                     |        |        |         |      |        | 14,088  |         |      |         | 15,249  |         |   |         | 12,486  |         |   |        | 10,416  |        
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|                                                                                                                                                     |                                                                                             | Total revenues                      |        |         | 329,997 |      |        |         | 365,318 |      |         |         | 368,240 |   |         |         | 317,530 |   |        |         | 270,669 | 
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|Expenses                                                                                                                                             |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|                                                                                                                                                     | Property operating and maintenance expense
    (exclusive of depreciation and amortization) |                                     |        | 131,369 |         |      |        | 129,201 |         |      |         | 120,842 |         |   |         | 103,471 |         |   |        | 90,164  |        
|                                                                                                                                                     | Depreciation                                                                                |                                     |        | 85,681  |         |      |        | 69,680  |         |      |         | 65,732  |         |   |         | 52,988  |         |   |        | 41,976  |        
|                                                                                                                                                     | Interest expense                                                                            |                                     |        | 58,436  |         |      |        | 51,960  |         |      |         | 45,332  |         |   |         | 29,382  |         |   |        | 27,571  |        
|                                                                                                                                                     | Amortization of deferred loan costs                                                         |                                     |        | 2,327   |         |      |        | 1,978   |         |      |         | 1,636   |         |   |         | 1,496   |         |   |        | 1,185   |        
|                                                                                                                                                     | General and administrative                                                                  |                                     |        | 14,431  |         |      |        | 13,256  |         |      |         | 10,066  |         |   |         | 7,788   |         |   |        | 8,495   |        
|                                                                                                                                                     | Other                                                                                       |                                     |        | 694     |         |      |        |        |         |      |         |        |         |   |         |        |         |   |        |        |        
|                                                                                                                                                     | Project abandonment, employee severance and
    impairment charges                          |                                     |        |        |         |      |        | 17,450  |         |      |         | 9,365   |         |   |         |        |         |   |        |        |        
|                                                                                                                                                     | Loss on unused treasury locks                                                               |                                     |        |        |         |      |        |        |         |      |         |        |         |   |         |        |         |   |        | 1,944   |        
|                                                                                                                                                     | Minority interest in consolidated property
    partnerships                                 |                                     |        | (2,055  | )       |      |        | (2,098  | )       |      |         | (1,695  | )       |   |         | 511     |         |   |        | 397     |        
|                                                                                                                                                     | Third-party services(1)                                                                     |                                     |        |        |         |      |        | 13,023  |         |      |         | 13,092  |         |   |         | 10,829  |         |   |        | 8,763   |        
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|                                                                                                                                                     |                                                                                             | Total expenses                      |        |         | 290,883 |      |        |         | 294,450 |      |         |         | 264,370 |   |         |         | 206,465 |   |        |         | 180,495 | 
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|Income from continuing operations before equity
    in losses of unconsolidated entities, gains (losses) on
    property sales and minority interest |                                                                                             |                                     | 39,114 |         |         |      | 70,868 |         |         |      | 103,870 |         |         |   | 111,065 |         |         |   | 90,174 |        
|                                                                                                                                                     | Equity in losses of unconsolidated real estate
    entities                                 |                                     |        | (1,590  | )       |      |        | (186    | )       |      |         |        |         |   |         |        |         |   |        |        |        
|                                                                                                                                                     | Gains (losses) on property sales                                                            |                                     |        | 13,275  |         |      |        | 23,942  |         |      |         | 3,208   |         |   |         | (1,522  | )       |   |        |        |        
|                                                                                                                                                     | Minority interest of preferred unitholders in
    Operating Partnership                     |                                     |        | (5,600  | )       |      |        | (5,600  | )       |      |         | (5,600  | )       |   |         | (1,851  | )       |   |        |        |        
|                                                                                                                                                     | Minority interest of common unitholders in
    Operating Partnership                        |                                     |        | (4,073  | )       |      |        | (9,153  | )       |      |         | (10,441 | )       |   |         | (11,420 | )       |   |        | (10,178 | )      
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|                                                                                                                                                     |                                                                                             | Income from continuing operations   |        |         | 41,126  |      |        |         | 79,871  |      |         |         | 91,037  |   |         |         | 96,272  |   |        |         | 79,996  | 
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|Discontinued operations(2)                                                                                                                           |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|                                                                                                                                                     | Income from discontinued operations, net of
    minority interest                           |                                     |        | 5,173   |         |      |        | 7,746   |         |      |         | 9,483   |         |   |         | 8,703   |         |   |        | 8,954   |        
|                                                                                                                                                     | Gains on property sales, net of minority interest                                           |                                     |        | 14,567  |         |      |        |        |         |      |         |        |         |   |         |        |         |   |        |        |        
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|                                                                                                                                                     |                                                                                             | Income from discontinued operations |        |         | 19,740  |      |        |         | 7,746   |      |         |         | 9,483   |   |         |         | 8,703   |   |        |         | 8,954   | 
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|Income before cumulative effect of accounting
    change and extraordinary items                                                                     |                                                                                             |                                     | 60,866 |         |         |      | 87,617 |         |         |      | 100,520 |         |         |   | 104,975 |         |         |   | 88,950 |        
|                                                                                                                                                     | Cumulative effect of accounting change, net of
    minority interest(3)                     |                                     |        |        |         |      |        | (613    | )       |      |         |        |         |   |         |        |         |   |        |        |        
|                                                                                                                                                     | Extraordinary items, net of minority interest(4)                                            |                                     |        | (120    | )       |      |        | (77     | )       |      |         |        |         |   |         | (458    | )       |   |        |        |        
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|Net income                                                                                                                                           |                                                                                             |                                     | 60,746 |         |         |      | 86,927 |         |         |      | 100,520 |         |         |   | 104,517 |         |         |   | 88,950 |        
|                                                                                                                                                     | Dividends to preferred shareholders                                                         |                                     |        | (11,449 | )       |      |        | (11,768 | )       |      |         | (11,875 | )       |   |         | (11,875 | )       |   |        | (11,473 | )      
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|Net income available to common shareholders                                                                                                          |                                                                                             | $                                   | 49,297 |         |         | $    | 75,159 |         |         | $    | 88,645  |         |         | $ | 92,642  |         |         | $ | 77,477 |        
|                                                                                                                                                     |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|PER COMMON SHARE DATA                                                                                                                                |                                                                                             |                                     |        |         |         |      |        |         |         |      |         |         |         |   |         |         |         |   |        |        
|Income from continuing operations (net of
    preferred dividends)  basic                                                                           |                                                                                             | $                                   | 0.80   |         |         | $    | 1.80   |         |         | $    | 2.01    |         |         | $ | 2.19    |         |         | $ | 1.96   |        
|Income from discontinued
    operations  basic                                                                                                      |                                                                                             |                                     | 0.53   |         |         |      | 0.20   |         |         |      | 0.24    |         |         |   | 0.23    |         |         |   | 0.25   |        
|Income before cumulative effect of accounting
    change and extraordinary items (net of preferred
    dividends)  basic                            |                                                                                             |                                     | 1.33   |         |         |      | 2.00   |         |         |      | 2.25    |         |         |   | 2.42    |         |         |   | 2.21   |        
|Net income available to common
    shareholders  basic                                                                                              |                                                                                             |                                     | 1.33   |         |         |      | 1.98   |         |         |      | 2.25    |         |         |   | 2.41    |         |         |   | 2.21   |        




Post Properties, Inc.


20


Post Apartment Homes, L.P.




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##### Table of Contents



|                                                                                                                            |                      |                         |            |         |   |      |            |          |   |      |            |          |   |   |            |          |   |   |            |          |  
|--------------------------------------------------------------------------------------------------------------------------- | -------------------- | ----------------------- | ---------- | ------- | - | ---- | ---------- | -------- | - | ---- | ---------- | -------- | - | - | ---------- | -------- | - | - | ---------- | -------- | -
|                                                                                                                            |                      |                        
|                                                                                                                            |                      | Year Ended December 31,
|                                                                                                                            |                      |                        
|                                                                                                                            |                      | 2002                    |            | 2001    |   | 2000 |            | 1999     |   | 1998
|                                                                                                                            |                      |                         |            |         |   |      |            |          |   |     
|Income from continuing operations (net of
    preferred dividends)  diluted                                                |                      | $                       | 0.80       |         |   | $    | 1.78       |          |   | $    | 1.99       |          |   | $ | 2.17       |          |   | $ | 1.93       |         
|Income from discontinued operations 
    diluted                                                                           |                      |                         | 0.53       |         |   |      | 0.20       |          |   |      | 0.23       |          |   |   | 0.22       |          |   |   | 0.25       |         
|Income before cumulative effect of accounting
    change and extraordinary items (net of preferred
    dividends)  diluted |                      |                         | 1.33       |         |   |      | 1.98       |          |   |      | 2.22       |          |   |   | 2.39       |          |   |   | 2.18       |         
|Net income available to common
    shareholders  diluted                                                                   |                      |                         | 1.33       |         |   |      | 1.96       |          |   |      | 2.22       |          |   |   | 2.38       |          |   |   | 2.18       |         
|Dividends declared                                                                                                          |                      |                         | 3.12       |         |   |      | 3.12       |          |   |      | 3.04       |          |   |   | 2.80       |          |   |   | 2.60       |         
|BALANCE SHEET DATA                                                                                                          |                      |                         |            |         |   |      |            |          |   |      |            |          |   |   |            |          |   |   |            |         
|Real estate, before accumulated depreciation                                                                                |                      | $                       | 2,887,500  |         |   | $    | 2,867,672  |          |   | $    | 2,827,094  |          |   | $ | 2,582,785  |          |   | $ | 2,255,074  |         
|Real estate, net of accumulated depreciation                                                                                |                      |                         | 2,443,535  |         |   |      | 2,463,398  |          |   |      | 2,469,914  |          |   |   | 2,279,769  |          |   |   | 2,007,926  |         
|Total assets                                                                                                                |                      |                         | 2,508,151  |         |   |      | 2,538,351  |          |   |      | 2,551,237  |          |   |   | 2,350,173  |          |   |   | 2,066,713  |         
|Total debt                                                                                                                  |                      |                         | 1,414,555  |         |   |      | 1,336,520  |          |   |      | 1,213,309  |          |   |   | 989,583    |          |   |   | 800,008    |         
|Shareholders equity                                                                                                        |                      |                         | 833,699    |         |   |      | 901,517    |          |   |      | 1,028,610  |          |   |   | 1,058,862  |          |   |   | 1,051,686  |         
|OTHER DATA                                                                                                                  |                      |                         |            |         |   |      |            |          |   |      |            |          |   |   |            |          |   |   |            |         
|Cash flow provided by (used in):                                                                                            |                      |                         |            |         |   |      |            |          |   |      |            |          |   |   |            |          |   |   |            |         
|                                                                                                                            | Operating activities |                         | $          | 119,763 |   |      | $          | 161,564  |   |      | $          | 185,073  |   |   | $          | 153,038  |   |   | $          | 148,618  |  
|                                                                                                                            | Investing activities |                         | $          | (48,821 | ) |      | $          | (51,213  | ) |      | $          | (255,986 | ) |   | $          | (317,960 | ) |   | $          | (328,216 | )
|                                                                                                                            | Financing activities |                         | $          | (69,355 | ) |      | $          | (113,007 | ) |      | $          | 72,502   |   |   | $          | 149,638  |   |   | $          | 189,873  |  
|Funds from operations (5)                                                                                                   |                      | $                       | 110,381    |         |   | $    | 133,133    |          |   | $    | 163,411    |          |   | $ | 162,581    |          |   | $ | 134,202    |         
|Weighted average common shares
    outstanding  basic                                                                      |                      |                         | 36,939,144 |         |   |      | 38,052,673 |          |   |      | 39,317,725 |          |   |   | 38,460,689 |          |   |   | 35,028,596 |         
|Weighted average common shares and units
    outstanding  basic                                                            |                      |                         | 42,020,759 |         |   |      | 43,211,834 |          |   |      | 44,503,290 |          |   |   | 43,663,373 |          |   |   | 40,244,351 |         
|Weighted average common shares
    outstanding  diluted                                                                    |                      |                         | 36,953,962 |         |   |      | 38,267,939 |          |   |      | 39,852,514 |          |   |   | 38,916,987 |          |   |   | 35,473,587 |         
|Weighted average common shares and units
    outstanding  diluted                                                          |                      |                         | 42,035,577 |         |   |      | 43,427,100 |          |   |      | 45,038,079 |          |   |   | 44,119,671 |          |   |   | 40,689,342 |         
|Total stabilized communities (at end of period)                                                                             |                      |                         | 79         |         |   |      | 82         |          |   |      | 82         |          |   |   | 85         |          |   |   | 83         |         
|Total stabilized apartment units (at end of
    period)                                                                     |                      |                         | 29,199     |         |   |      | 27,710     |          |   |      | 28,736     |          |   |   | 29,032     |          |   |   | 27,568     |         
|Average economic occupancy (fully stabilized
    communities) (6)                                                           |                      |                         | 90.9       | %       |   |      | 94.9       | %        |   |      | 96.8       | %        |   |   | 96.4       | %        |   |   | 96.5       | %       



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consists of revenues and expenses from property
    management and landscape services provided to properties owned
    by third parties. These businesses were sold in the fourth
    quarter of 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | Upon the implementation of SFAS No. 144,
    Accounting for the Impairment or Disposal of Long-Lived
    Assets, on January 1, 2002, the operating results of
    real estate held for sale and sold are reported as discontinued
    operations for all periods presented. Additionally, all gains
    and losses on the sale of assets classified as held for sale
    subsequent to January 1, 2002 are included in discontinued
    operations. As the operating results and gains or losses from
    the sale of real estate assets prior to January 1, 2002 are
    included in continuing operations, the presentation of results
    are not comparable between periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(3) | The cumulative effect of accounting change
    results from the Companys adoption of SFAS No. 133,
    effective January 1, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(4) | The extraordinary items resulted from costs
    associated with the early extinguishment of indebtedness.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(5) | The Company uses the National Association of Real
    Estate Investment Trusts (NAREIT) definition of
    funds from operations (FFO). FFO is a non-GAAP
    financial measure. 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 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 or
    ability to service indebtedness or make distributions. FFO for
    1998 has been restated to reflect the requirements of the new
    NAREIT definition. A reconciliation to net income available to
    common shareholders is included in Item 7,
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations.
|(6) | Amounts represent average economic occupancy for
    communities stabilized for both the current and prior respective
    periods. Amounts for prior years exclude the impact of SFAS
    No. 144. 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 89.1%, 93.8% ,94.9%, 95.0% and 94.9% for the
    years ended December 31, 2002, 2001, 2000, 1999 and 1998,
    respectively). Concessions were $4,215, $1,860, $3,250, $2,847
    and $2,953 for the years ended December 31, 2002, 2001,
    2000, 1999 and 1998, respectively. Employee discounts were $660,
    $895, $1,143, $583 and $465 for the years ended
    December 31, 2002, 2001, 2000, 1999 and 1998, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         




Post Properties, Inc.


21


Post Apartment Homes, L.P.




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##### Table of Contents



Post Apartment Homes, L.P.

(Dollars in thousands, except per unit and
apartment unit data)


|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |         |         | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ----------------------------------- | ------ | ------- | ------- | ---- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                                                                  |                                                                                             |                                    
|                                                                                                                                  |                                                                                             | Year Ended December 31,            
|                                                                                                                                  |                                                                                             |                                    
|                                                                                                                                  |                                                                                             | 2002                                |        | 2001    |         | 2000 |         | 1999    |         | 1998
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |     
|OPERATING DATA                                                                                                                    |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|Revenues                                                                                                                          |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|                                                                                                                                  | Rental                                                                                      |                                     | $      | 316,484 |         |      | $       | 336,206 |         |      | $       | 335,482 |         |   | $       | 291,283 |         |   | $       | 248,377 |        
|                                                                                                                                  | Other                                                                                       |                                     |        | 13,513  |         |      |         | 15,024  |         |      |         | 17,509  |         |   |         | 13,761  |         |   |         | 11,876  |        
|                                                                                                                                  | Third-party services (1)                                                                    |                                     |        |        |         |      |         | 14,088  |         |      |         | 15,249  |         |   |         | 12,486  |         |   |         | 10,416  |        
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|                                                                                                                                  |                                                                                             | Total revenues                      |        |         | 329,997 |      |         |         | 365,318 |      |         |         | 368,240 |   |         |         | 317,530 |   |         |         | 270,669 | 
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|Expenses                                                                                                                          |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|                                                                                                                                  | Property operating and maintenance expense
    (exclusive of depreciation and amortization) |                                     |        | 131,369 |         |      |         | 129,201 |         |      |         | 120,842 |         |   |         | 103,471 |         |   |         | 90,164  |        
|                                                                                                                                  | Depreciation                                                                                |                                     |        | 85,681  |         |      |         | 69,680  |         |      |         | 65,732  |         |   |         | 52,988  |         |   |         | 41,976  |        
|                                                                                                                                  | Interest expense                                                                            |                                     |        | 58,436  |         |      |         | 51,960  |         |      |         | 45,332  |         |   |         | 29,382  |         |   |         | 27,571  |        
|                                                                                                                                  | Amortization of deferred loan costs                                                         |                                     |        | 2,327   |         |      |         | 1,978   |         |      |         | 1,636   |         |   |         | 1,496   |         |   |         | 1,185   |        
|                                                                                                                                  | General and administrative                                                                  |                                     |        | 14,431  |         |      |         | 13,256  |         |      |         | 10,066  |         |   |         | 7,788   |         |   |         | 8,495   |        
|                                                                                                                                  | Other                                                                                       |                                     |        | 694     |         |      |         |        |         |      |         |        |         |   |         |        |         |   |         |        |        
|                                                                                                                                  | Project abandonment, employee severance and
    impairment charges                          |                                     |        |        |         |      |         | 17,450  |         |      |         | 9,365   |         |   |         |        |         |   |         |        |        
|                                                                                                                                  | Loss on unused treasury locks                                                               |                                     |        |        |         |      |         |        |         |      |         |        |         |   |         |        |         |   |         | 1,944   |        
|                                                                                                                                  | Minority interest in consolidated property
    partnerships                                 |                                     |        | (2,055  | )       |      |         | (2,098  | )       |      |         | (1,695  | )       |   |         | 511     |         |   |         | 397     |        
|                                                                                                                                  | Third-party services (1)                                                                    |                                     |        |        |         |      |         | 13,023  |         |      |         | 13,092  |         |   |         | 10,829  |         |   |         | 8,763   |        
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|                                                                                                                                  |                                                                                             | Total expenses                      |        |         | 290,883 |      |         |         | 294,450 |      |         |         | 264,370 |   |         |         | 206,465 |   |         |         | 180,495 | 
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|Income from continuing operations before equity
    in losses of unconsolidated entities and gains (losses) on
    property sales |                                                                                             |                                     | 39,114 |         |         |      | 70,868  |         |         |      | 103,870 |         |         |   | 111,065 |         |         |   | 90,174  |        
|                                                                                                                                  | Equity in losses of unconsolidated real estate
    entities                                 |                                     |        | (1,590  | )       |      |         | (186    | )       |      |         |        |         |   |         |        |         |   |         |        |        
|                                                                                                                                  | Gains (losses) on property sales                                                            |                                     |        | 13,275  |         |      |         | 23,942  |         |      |         | 3,208   |         |   |         | (1,522  | )       |   |         |        |        
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|                                                                                                                                  |                                                                                             | Income from continuing operations   |        |         | 50,799  |      |         |         | 94,624  |      |         |         | 107,078 |   |         |         | 109,543 |   |         |         | 90,174  | 
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|Discontinued operations (2)                                                                                                       |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|                                                                                                                                  | Income from discontinued operations                                                         |                                     |        | 5,885   |         |      |         | 8,796   |         |      |         | 10,733  |         |   |         | 9,881   |         |   |         | 10,287  |        
|                                                                                                                                  | Gains on property sales                                                                     |                                     |        | 16,570  |         |      |         |        |         |      |         |        |         |   |         |        |         |   |         |        |        
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|                                                                                                                                  |                                                                                             | Income from discontinued operations |        |         | 22,455  |      |         |         | 8,796   |      |         |         | 10,733  |   |         |         | 9,881   |   |         |         | 10,287  | 
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|Income before cumulative effect of accounting
    change and extraordinary items                                                  |                                                                                             |                                     | 73,254 |         |         |      | 103,420 |         |         |      | 117,811 |         |         |   | 119,424 |         |         |   | 100,461 |        
|                                                                                                                                  | Cumulative effect of accounting change (3)                                                  |                                     |        |        |         |      |         | (695    | )       |      |         |        |         |   |         |        |         |   |         |        |        
|                                                                                                                                  | Extraordinary items (4)                                                                     |                                     |        | (136    | )       |      |         | (88     | )       |      |         |        |         |   |         | (521    | )       |   |         |        |        
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|Net income                                                                                                                        |                                                                                             |                                     | 73,118 |         |         |      | 102,637 |         |         |      | 117,811 |         |         |   | 118,903 |         |         |   | 100,461 |        
|                                                                                                                                  | Dividends to preferred unitholders                                                          |                                     |        | (17,049 | )       |      |         | (17,368 | )       |      |         | (17,475 | )       |   |         | (13,726 | )       |   |         | (11,473 | )      
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|Net income available to common unitholders                                                                                        |                                                                                             | $                                   | 56,069 |         |         | $    | 85,269  |         |         | $    | 100,336 |         |         | $ | 105,177 |         |         | $ | 88,988  |        
|                                                                                                                                  |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|PER COMMON UNIT DATA                                                                                                              |                                                                                             |                                     |        |         |         |      |         |         |         |      |         |         |         |   |         |         |         |   |         |        
|Income from continuing operations (net of
    preferred distributions)  basic                                                    |                                                                                             | $                                   | 0.80   |         |         | $    | 1.80    |         |         | $    | 2.01    |         |         | $ | 2.19    |         |         | $ | 1.96    |        
|Income from discontinued operations 
    basic                                                                                   |                                                                                             |                                     | 0.53   |         |         |      | 0.20    |         |         |      | 0.24    |         |         |   | 0.23    |         |         |   | 0.25    |        
|Income before cumulative effect of accounting
    change and extraordinary items (net of preferred
    distributions)  basic     |                                                                                             |                                     | 1.33   |         |         |      | 2.00    |         |         |      | 2.25    |         |         |   | 2.42    |         |         |   | 2.21    |        
|Net income available to common
    unitholders  basic                                                                            |                                                                                             |                                     | 1.33   |         |         |      | 1.98    |         |         |      | 2.25    |         |         |   | 2.41    |         |         |   | 2.21    |        
|Income from continuing operations (net of
    preferred distributions)  diluted                                                  |                                                                                             | $                                   | 0.80   |         |         | $    | 1.78    |         |         | $    | 1.99    |         |         | $ | 2.17    |         |         | $ | 1.93    |        
|Income from discontinued operations 
    diluted                                                                                 |                                                                                             |                                     | 0.53   |         |         |      | 0.20    |         |         |      | 0.23    |         |         |   | 0.22    |         |         |   | 0.25    |        
|Income before cumulative effect of accounting
    change and extraordinary items (net of preferred
    distributions)  diluted   |                                                                                             |                                     | 1.33   |         |         |      | 1.98    |         |         |      | 2.22    |         |         |   | 2.39    |         |         |   | 2.18    |        




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|                                                                  |                      |                         |            |         |   |      |            |          |   |      |            |          |   |   |            |          |   |   |            |          |  
|----------------------------------------------------------------- | -------------------- | ----------------------- | ---------- | ------- | - | ---- | ---------- | -------- | - | ---- | ---------- | -------- | - | - | ---------- | -------- | - | - | ---------- | -------- | -
|                                                                  |                      |                        
|                                                                  |                      | Year Ended December 31,
|                                                                  |                      |                        
|                                                                  |                      | 2002                    |            | 2001    |   | 2000 |            | 1999     |   | 1998
|                                                                  |                      |                         |            |         |   |      |            |          |   |     
|Net income available to common
    unitholders  diluted          |                      |                         | 1.33       |         |   |      | 1.96       |          |   |      | 2.22       |          |   |   | 2.38       |          |   |   | 2.18       |         
|Dividends declared                                                |                      |                         | 3.12       |         |   |      | 3.12       |          |   |      | 3.04       |          |   |   | 2.80       |          |   |   | 2.60       |         
|BALANCE SHEET DATA                                                |                      |                         |            |         |   |      |            |          |   |      |            |          |   |   |            |          |   |   |            |         
|Real estate, before accumulated depreciation                      |                      | $                       | 2,887,500  |         |   | $    | 2,867,672  |          |   | $    | 2,827,094  |          |   | $ | 2,582,785  |          |   | $ | 2,255,074  |         
|Real estate, net of accumulated depreciation                      |                      |                         | 2,443,535  |         |   |      | 2,463,398  |          |   |      | 2,469,914  |          |   |   | 2,279,769  |          |   |   | 2,007,926  |         
|Total assets                                                      |                      |                         | 2,508,151  |         |   |      | 2,538,351  |          |   |      | 2,551,237  |          |   |   | 2,350,173  |          |   |   | 2,066,713  |         
|Total debt                                                        |                      |                         | 1,414,555  |         |   |      | 1,336,520  |          |   |      | 1,213,309  |          |   |   | 989,583    |          |   |   | 800,008    |         
|Partners equity                                                  |                      |                         | 993,976    |         |   |      | 1,077,670  |          |   |      | 1,216,701  |          |   |   | 1,251,342  |          |   |   | 1,177,051  |         
|OTHER DATA                                                        |                      |                         |            |         |   |      |            |          |   |      |            |          |   |   |            |          |   |   |            |         
|Cash flow provided by (used in):                                  |                      |                         |            |         |   |      |            |          |   |      |            |          |   |   |            |          |   |   |            |         
|                                                                  | Operating activities |                         | $          | 119,763 |   |      | $          | 161,564  |   |      | $          | 185,073  |   |   | $          | 153,038  |   |   | $          | 148,618  |  
|                                                                  | Investing activities |                         | $          | (48,821 | ) |      | $          | (51,213  | ) |      | $          | (255,986 | ) |   | $          | (317,960 | ) |   | $          | (328,216 | )
|                                                                  | Financing activities |                         | $          | (69,355 | ) |      | $          | (113,007 | ) |      | $          | 72,502   |   |   | $          | 149,638  |   |   | $          | 189,873  |  
|Funds from operations (5)                                         |                      | $                       | 110,381    |         |   | $    | 133,133    |          |   | $    | 163,411    |          |   | $ | 162,581    |          |   | $ | 134,202    |         
|Weighted average common units
    outstanding  basic             |                      |                         | 42,020,759 |         |   |      | 43,211,834 |          |   |      | 44,503,290 |          |   |   | 43,663,373 |          |   |   | 40,244,351 |         
|Weighted average common units
    outstanding  diluted           |                      |                         | 42,035,577 |         |   |      | 43,427,100 |          |   |      | 45,038,079 |          |   |   | 44,119,671 |          |   |   | 40,689,342 |         
|Total stabilized communities (at end of period)                   |                      |                         | 79         |         |   |      | 82         |          |   |      | 82         |          |   |   | 85         |          |   |   | 83         |         
|Total stabilized apartment units (at end of
    period)           |                      |                         | 29,199     |         |   |      | 27,710     |          |   |      | 28,736     |          |   |   | 29,032     |          |   |   | 27,568     |         
|Average economic occupancy (fully stabilized
    communities) (6) |                      |                         | 90.9%      |         |   |      | 94.9%      |          |   |      | 96.8%      |          |   |   | 96.4%      |          |   |   | 96.5%      |         



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consists of revenues and expenses from property
    management and landscape services provided to properties owned
    by third parties. These businesses were sold in the fourth
    quarter of 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(2) | Upon the implementation of SFAS No. 144,
    Accounting for the Impairment or Disposal of Long-Lived
    Assets, on January 1, 2002, the operating results of
    real estate held for sale and sold are reported as discontinued
    operations for all periods presented. Additionally, all gains
    and losses on the sale of assets classified as held for sale
    subsequent to January 1, 2002 are included in discontinued
    operations. As the operating results and gains or losses from
    the sale of real estate assets prior to January 1, 2002 are
    included in continuing operations, the presentation of results
    are not comparable between periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | The cumulative effect of accounting change
    results from the Companys adoption of SFAS No. 133,
    effective January 1, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(4) | The extraordinary items resulted from costs
    associated with the early extinguishment of indebtedness.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(5) | The Operating Partnership uses the National
    Association of Real Estate Investment Trusts
    (NAREIT) definition of funds from operations
    (FFO). FFO is a non-GAAP financial measure.
    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 Operating
    Partnership adopted this new definition effective
    January 1, 2000. FFO for any period means the Consolidated
    Net Income of the Operating Partnership 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 Operating
    Partnership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 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 or ability to service
    indebtedness or make distributions. FFO for 1998 has been
    restated to reflect the requirements of the new NAREIT
    definition. A reconciliation to net income available to common
    shareholders is included in Item 7, Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.
|(6) | Amounts represent average economic occupancy for
    communities stabilized for both the current and prior respective
    periods. Amounts for prior years exclude the impact of SFAS
    No. 144. 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 89.1%, 93.8% ,94.9%, 95.0% and 94.9% for the
    years ended December 31, 2002, 2001, 2000, 1999 and 1998,
    respectively). Concessions were $4,215, $1,860, $3,250, $2,847
    and $2,953 for the years ended December 31, 2002, 2001,
    2000, 1999 and 1998, respectively. Employee discounts were $660,
    $895, $1,143, $583 and $465 for the years ended
    December 31, 2002, 2001, 2000, 1999 and 1998, respectively.
    A community is considered by the Company to have achieved
    stabilized occupancy on the earlier to occur of
    (i) attainment of 95% physical occupancy on the first day
    of any month, or (ii) one year after completion of
    construction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   




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

(Dollars in thousands, except apartment unit data)

General

Post Properties, Inc. and its subsidiaries
develop, own and manage upscale multifamily apartment
communities in selected markets in the United States. As used in
this report, the term Company includes Post
Properties, Inc. and its subsidiaries, including Post Apartment
Homes, L.P. (the Operating Partnership), unless the
context indicates otherwise. The Company, through its wholly
owned subsidiaries is the general partner and owns a majority
interest in the Operating Partnership which, through its
subsidiaries, conducts substantially all of the on-going
operations of the Company. At December 31, 2002, the
Company owned 30,317 apartment units in 84 apartment
communities, including 1,377 apartment units current under
development and lease up in five apartment communities and a
phase of an existing community. At December 31, 2002,
approximately 52.1%, 18.7% and 7.3% (on a unit basis) of the
Companys communities are located in the Atlanta, Dallas
and Tampa metropolitan area, respectively.

The Company has elected to qualify and operate as
a self-administrated and self-managed real estate investment
trust (REIT) for federal income tax purposes. A REIT
is a legal entity which holds real estate interests and, through
payments of dividends to shareholders, in practical effect is
not subject to federal income taxes at the corporate level.

At December 31, 2002, the Company owned
approximately 88.5% of the common limited partnership interests
(Common Units) in the Operating Partnership. Common
Units held by persons (including certain officers and directors)
other than the Company represented a 11.5% common minority
interest in the Operating Partnership.

The following discussion should be read in
conjunction with the selected financial data and with all of the
accompanying consolidated financial statements appearing
elsewhere in this report. This discussion is combined for the
Company and the Operating Partnership as their results of
operations and the financial condition are substantially the
same except for the effect of the 11.5% common minority interest
in the Operating Partnership. See the summary financial
information in the section below titled, Results of
Operations.

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.
Forward-looking statements include statements preceded by,
followed by or that include the words believes,
expects, anticipates, plans,
estimates, or similar expressions. Examples of such
statements in this report include our expectations with regard
to: net operating income for 2003, occupancy levels and rental
rates, operating expenses, stabilized community revenues in
excess of specified expenses, accounting recognition and
measurement of guarantees, employee severance charges and other
accrued liabilities, debt maturities and financing needs,
dividend payments, our ability to meet new construction,
development and other long-term liquidity requirements, and our
ability to execute asset sales. 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:



|  |                                                                                                                                                         
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | future local and national economic conditions,
    including changes in job growth, interest rates, the
    availability of financing and other factors;
| | demand for apartments in the Companys
    markets and the effect on occupancy and rental rates;                                                        
| | the impact of competition on the Companys
    business, including competition for tenants and development
    locations;                               
| | the Companys ability to obtain financing or
    self-fund the development of additional apartment communities;                                         




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|  |                                                                                                                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the uncertainties associated with the
    Companys current real estate development, including actual
    costs exceeding the Companys budgets or development
    periods exceeding expectations;       
| | conditions affecting ownership of residential
    real estate and general conditions in the multi-family
    residential real estate market;                                                             
| | the effects of changes in accounting policies and
    other regulatory matters detailed in the Companys filings
    with the Securities and Exchange Commission and uncertainties of
    litigation; and
| | the Companys ability to continue to qualify
    as a real estate investment trust under the Code.                                                                                                       

Critical Accounting Policies and New
Accounting Pronouncements

In the preparation of financial statements and in
the determination of Company operating performance, the Company
utilizes certain significant accounting polices and these
accounting policies are discussed in Note 1 to the
Companys consolidated financial statements. Also discussed
in Note 1 to the consolidated financial statements are several
new accounting pronouncements issued in 2002 and 2003. The
impact of the new pronouncements is discussed below and in the
consolidated financial statements. As the Company is in the
business of developing, owning and managing apartment
communities, its critical accounting policies relate to cost
capitalization, asset impairment evaluation and the asset
classification and accounting for real estate assets held for
sale.

The Company capitalizes those expenditures
relating to acquiring new assets, developing new apartment
communities and enhancing of the value of existing assets and
that substantially extend the life of existing assets. All other
expenditures necessary to maintain a community in ordinary
operating condition are expensed as incurred. Additionally, for
new development communities, carpet, vinyl and blind
replacements are expensed as incurred during the first five
years (which corresponds to their estimated depreciable lives).
Thereafter, these replacements are capitalized. Further, the
Company expenses as incurred all interior and exterior painting
of communities.

For communities under development, the Company
capitalizes interest, real estate taxes, and certain internal
personnel and associated costs directly related to apartment
communities under development and construction. Interest is
capitalized to projects under development based upon the
weighted average cumulative project costs for each period
multiplied by the Companys weighted average borrowing
costs, expressed as a percentage. Weighted average borrowing
costs include the costs of the Companys fixed rate secured
and unsecured borrowings and the variable rate unsecured
borrowings under its line of credit facilities. The weighted
average borrowing costs, expressed as a percentage, for the
years ended December, 31, 2002, 2001 and 2000 were 7.55%, 7.41%
and 6.80%, respectively. The weighted average borrowing costs
used by the Company for interest capitalization generally
increases as the Companys variable rate unsecured debt
decreases and decreases as the Companys variable rate
unsecured debt increases. The internal personnel and associated
costs are capitalized to the projects under development based
upon the effort identifiable with such projects. Should the
Company reduce its development activities below a range of $50
million to $60 million annually, the Company would need to
either reduce its internal personnel and associated costs
related to development and construction activities or reflect
such costs as current period expenses. 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. The Company ceases the
capitalization of such costs as the residential units in a
community become substantially complete and available for
occupancy. This results in a proration of these costs between
amounts that are capitalized and expensed as the residential
units in a development community become available for occupancy.
In addition, prior to the completion of units, the Company
expenses as incurred substantially all operating expenses
(including pre-opening marketing as well as property management
and leasing personnel expenses) of such communities.




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The Company continually evaluates the
recoverability of the carrying value of its real estate assets
using the methodology prescribed in Statement of Financial
Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. Factors considered by management in evaluating
impairment of its existing real estate assets held for
investment include significant declines in property operating
profits, recurring property operating losses and other
significant adverse changes in general market conditions that
are considered permanent in nature. If any real estate asset
held for investment is considered impaired, a loss is provided
to reduce the carrying value of the asset to its fair value. The
Company periodically classifies real estate assets as held for
sale. An asset is classified as held for sale after the approval
of the Companys internal investment committee and after an
actual program to sell the asset has commenced. Upon the
classification of a real estate asset as held for sale, the
carrying value of the asset is reduced to the lower of its net
book value or its fair value, less costs to sell the asset.
Subsequent to the classification of assets as held for sale, no
further depreciation expense is recorded. Real estate assets
held for sale are stated separately on the accompanying
consolidated balance sheets. Effective January 1, 2002
(through the implementation of SFAS No. 144), the operating
results of real estate assets held for sale and sold are
reported as discontinued operations in the accompanying
statements of operations. The income from discontinued
operations includes the revenues and expenses including
depreciation and allocated interest expense, associated with the
assets. Interest expense is allocated to assets held for sale
based on actual interest costs for assets with secured mortgage
debt. Interest expense is allocated to unencumbered assets based
on the ratio of unencumbered assets to unsecured debt multiplied
by the weighted average interest rate on the Companys
unsecured debt for the period and further multiplied by the
average book value of the assets sold. This classification of
operating results as discontinued operations applies
retroactively for all periods presented for assets designated as
held for sale in 2002.

Additionally, gains and losses on assets
designated as held for sale in 2002 are classified as part of
discontinued operations.


In years prior to 2002, real estate assets held
for sale were stated separately on the consolidated balance
sheet in a manner consistent with approach discussed above.
However, the operating results and gains or losses on the sale
of such assets were included in continuing operations. As a
result of this presentation, income from continuing operations
and gains on property sales are not comparable between years.

In 2002 and 2003, the Financial Accounting
Standards Board issued several new accounting pronouncements and
the pronouncements with a potential impact on the Company are
discussed in the following paragraphs.

SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections was issued in May
2002. SFAS No. 145 rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishments of
Debt, which provided that gains and losses from early debt
retirements be treated as extraordinary items. Under SFAS
No. 145, gains and losses from early debt retirements will
only be treated as extraordinary items if they meet the criteria
for extraordinary items under APB No. 30. Since the
definition of an extraordinary item is more restrictive under
APB No. 30, SFAS No. 145 will generally cause the
Company to treat gains or losses from early debt retirements as
part of income before extraordinary items. This part of SFAS
No. 145 is effective for fiscal years beginning after
May 15, 2002 and requires the reclassification of prior
period extraordinary items not meeting the APB No. 30
criteria. The Company expects to implement this requirement of
SFAS No. 145 on January 1, 2003. Upon implementation,
the Company will reclassify $120, net of minority interest, in
2002 and $77, net of minority interest, in 2001 from
extraordinary items to expenses used in the determination of
income from continuing operations. The Company believes this
change is not significant to the Companys results of
operations or its financial position. The remaining provisions
of SFAS No. 145 are generally not applicable to the Company.

SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities was issued in
July 2002. This Statement addresses financial accounting and
reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring).
SFAS 146 is effective for exit or disposal activities
initiated after December 31, 2002. The Company believes the
provisions of this Statement will not have a significant effect
on the Companys results of operations or its financial
position.




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SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and
Disclosure, was issued in December 2002. SFAS No. 148
amends SFAS No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition
for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition,
SFAS No. 148 amends the disclosure requirements in both
annual and interim financial statements about the method of
accounting for stock-based compensation and the effect of the
method on reported results. The Company intends to voluntarily
change to the fair value method of accounting under SFAS
No. 123 using the prospective method prescribed in SFAS
No. 148, effective January 1, 2003. The Company
estimates the impact of this change on its projected 2003
results of operations to be a reduction of earnings per common
share of approximately $0.01.

FASB Interpretation No. 45 (FIN
No. 45), Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Guarantees of
Indebtedness of Others was issued in November 2002. FIN
No. 45 clarifies disclosure requirements to be made by a
guarantor in its interim and annual financial statements
regarding its obligations under certain guarantees that it has
issued. Additionally, it clarifies that a guarantor is required
to recognize, at the inception of a guarantee, a liability for
the fair value of the obligation undertaken in issuing the
guarantee. The disclosure requirements of FIN No. 45 are
effective for interim and annual financial statements issued
after December 15, 2002. The initial recognition and
measurement provisions of FIN No. 45 are applicable for
guarantees issued or modified after December 31, 2002. The
Company has implemented the disclosure requirements of FIN
No. 45 effective with these December 31, 2002
financial statements and the Company will implement the
recognition and measurement provisions effective January 1,
2003. The Company does not expect the recognition and
measurement provisions of FIN No. 45 to have a significant
impact on the Companys financial position or results of
operations.

FASB Interpretation No. 46 (FIN
No. 46), Consolidation of Variable Interest
Entities, an interpretation of ARB No. 51 was issued
in January 2003. FIN No. 46 requires consolidation of all
legal entities in which the enterprise holds contractual,
ownership or other monetary interests that change with changes
in the entitys net asset value (such entities being
designated as variable interest entities) where the enterprise
is deemed the primary beneficiary. The consolidation provisions
of FIN No. 46 are applicable immediately to all variable
interest entities created after January 31, 2003. For
variable interest entities created prior to February 1,
2003 where the Company is deemed to be the primary beneficiary,
consolidation of such entities will be required for the interim
period ending September 30, 2003. Information required to
be disclosed in 2003 pursuant to FIN No. 46 includes the
nature, purpose, size and activities of all variable interest
entities where it is reasonably possible that such entities will
be required to be consolidated by the Company and the
Companys maximum exposure to loss from these entities. The
Company currently does not have any interests in variable
interest entities and believes that FIN No. 46 will not
have a significant effect on its results of operations or
financial position.

Results of Operations

The following discussion of results of operations
should be read in conjunction with the consolidated statements
of operations, the accompanying selected financial data and the
community operations/segment performance information included
below.

The Companys revenues and earnings are
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
(1) attainment of 95% physical occupancy on the first day
of any month or (2) one year after completion of
construction.

At December 31, 2002, the Companys
portfolio of apartment communities consisted of the following:
(1) 65 communities that were completed and stabilized for
all of the current and prior year, (2) five communities
that achieved full stabilization during 2001, and (3) 12
communities and additions to existing communities currently in
the development or lease-up stage. Sold communities include
communities sold in 2002, 2001 and 2000 that were not reflected
in discontinued operations under SFAS No. 144 (see above).

The Company has adopted an accounting policy
related to communities in the lease-up stage whereby
substantially all operating expenses (including pre-opening
marketing and management and leasing personnel expenses) 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 and management and leasing
personnel 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, 2002, 2001 and
2000 were $1,533, $3,173 and $2,665, respectively. In order to
evaluate the operating performance of its communities for the
comparative years




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listed below, the Company has presented financial
information which summarizes the revenues in excess of specified
expenses on a comparative basis for all of its operating
communities.


Comparison of Year Ended December 31,
2002 to Year Ended December 31, 2001

The operating performance from continuing
operations for all of the Companys apartment communities
summarized by segment for the years ended December 31, 2002
and 2001 is summarized as follows:

|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|-------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | -------- | ------- |  |  |  | ----- | --
|                                                                                             |  | 2002 |         | 2001 |  | % Change
|                                                                                             |  |      |         |      |  |         
|Rental and other revenues:                                                                   |  |      |         |      |  |          |         |  |  |  |       |   
|Fully stabilized communities (1)                                                             |  | $    | 256,477 |      |  | $        | 275,297 |  |  |  | (6.8  | )%
|Communities stabilized during 2001.                                                          |  |      | 17,535  |      |  |          | 14,946  |  |  |  | 17.3  | % 
|Lease-up communities (2)                                                                     |  |      | 39,571  |      |  |          | 25,741  |  |  |  | (53.7 | )%
|Sold communities (3)                                                                         |  |      | 745     |      |  |          | 19,659  |  |  |  | (96.2 | )%
|Other revenue (4)                                                                            |  |      | 14,381  |      |  |          | 13,816  |  |  |  | 4.1   | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|                                                                                             |  |      | 328,709 |      |  |          | 349,459 |  |  |  | (5.9  | )%
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Property operating and maintenance expense
    (exclusive of depreciation and amortization): |  |      |         |      |  |          |         |  |  |  |       |   
|Fully stabilized communities (1)                                                             |  |      | 89,252  |      |  |          | 89,210  |  |  |  | 0.0   | % 
|Communities stabilized during 2001.                                                          |  |      | 5,907   |      |  |          | 6,003   |  |  |  | (1.6  | )%
|Lease-up communities (2)                                                                     |  |      | 16,379  |      |  |          | 10,429  |  |  |  | 57.1  | % 
|Sold communities (3)                                                                         |  |      | 376     |      |  |          | 7,329   |  |  |  | (94.9 | )%
|Other expense (5)                                                                            |  |      | 19,455  |      |  |          | 16,230  |  |  |  | 19.9  | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|                                                                                             |  |      | 131,369 |      |  |          | 129,201 |  |  |  | 1.7   | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Revenue in excess of specified expenses                                                      |  | $    | 197,340 |      |  | $        | 220,258 |  |  |  | (10.4 | )%
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Recurring capital expenditures: (6)                                                          |  |      |         |      |  |          |         |  |  |  |       |   
|Carpet                                                                                       |  | $    | 2,433   |      |  | $        | 2,400   |  |  |  | 1.4   | % 
|Other                                                                                        |  |      | 6,095   |      |  |          | 6,100   |  |  |  | 0.0   | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Total                                                                                        |  | $    | 8,528   |      |  | $        | 8,500   |  |  |  | 0.3   | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Non recurring capital expenditures                                                           |  | $    | 3,374   |      |  | $        | 2,124   |  |  |  | 58.9  | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Average apartment units in service                                                           |  |      | 28,034  |      |  |          | 28,351  |  |  |  | (1.1  | )%
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Communities which reached stabilization prior to
    January 1, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Communities in the construction,
    development or lease-up stage during
    2002 and, therefore, not considered fully stabilized for all of
    the periods presented.                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | Includes results from two communities containing
    540 units and one commercial property in 2002 and six
    communities containing 2,799 units and one commercial property
    sold in 2001.                                                                                                                                                                                                                                                                                                                                                                                       
|(4) | Other revenue includes revenue from commercial
    properties, from furnished apartment rentals above the
    unfurnished rental rates and any revenue not directly related to
    property operations. Other revenue excludes interest income and
    third-party services revenues included in total revenues in the
    consolidated statements of operations.                                                                                                                                                                                                                     
|(5) | Other expenses includes certain indirect central
    office operating expenses related to management, grounds
    maintenance, and costs associated with commercial properties and
    furnished apartment rentals.                                                                                                                                                                                                                                                                                                                                                                   
|(6) | In addition to those expenses which relate to
    property operations, the Company incurs recurring and
    non-recurring expenditures relating to acquiring and developing
    new assets, materially enhancing the value of an existing asset,
    or substantially extending the useful life of an existing asset,
    all of which are capitalized. Recurring capital expenditures are
    those that are generally expected to be incurred on an annual
    basis. Non-recurring capital expenditures are those that
    generally occur less frequently than on an annual basis.

The Operating Partnership reported net income
available to common unitholders of $56,069 and $85,269 for the
years ended December 31, 2002 and 2001, respectively, and
the Company reported net income available to common shareholders
of $49,297 and $75,159 for the years ended December 31,
2002 and 2001, respectively. The decline in Company operating
performance in 2002 compared to 2001 reflects a decrease in
fully stabilized community operating performance (see discussion
below), reduced earnings resulting from the Companys asset
sale and capital reinvestment program, increased depreciation
and interest expense relating to new communities completed in
2001 and 2002 and increased general and administrative expenses.
The weaker operating performance in 2002 was somewhat offset by
increased gains on asset sales between years and by the negative
impact of severance and impairment charges in 2001. The impact
of these items is discussed below.




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Rental and other revenue decreased $20,750 or
5.9% from 2001 to 2002 primarily due to the $18,820 or 6.8%
decline in revenues from fully stabilized communities discussed
further below. The rental and other revenue increases from the
Companys newly stabilized and lease-up properties of
$16,419 were offset by the revenue reduction of $18,914, from
assets sold between years (see discussion under
Discontinued Operations  comparisons of
the impact of assets sold between 2002 and prior years is not
comparable due to the implementation of SFAS No. 144).
Property operating and maintenance expenses (exclusive of
depreciation and amortization) increased $2,168 or 1.7%
primarily due to increased central office management expenses as
well as increased costs associated with a higher volume of
corporate apartment rentals.

As discussed above and in Note 7 to the
consolidated financial statements, the Company exited the third
party property management and landscape service business in the
fourth quarter of 2001 through the sale of the businesses to
their respective management teams. These sales allowed the
Company to simplify its operations through a reduced work force
(from approximately 2,100 employees prior to the sale to
approximately 1,050 employees as of December 31, 2002) and
focus on its core business of owning, developing and managing
multifamily real estate assets.

The net gain on property sales included in
continuing operations of $23,942 for 2001 resulted from the sale
of six communities containing 2,799 units, one commercial
property and five land parcels. The net gain on property sales
included in continuing operations of $13,275 for 2002 resulted
from the sale of two communities containing 540 units and
one commercial property. This gain excluded losses of $4,861
related to these assets that were written down to their
estimated fair value at December 31, 2001. These assets
were all classified as assets held for sale at December 31,
2001. The net gain on property sales of $20,068 ($17,818 net of
minority interest) included in discontinued operations in 2002,
under SFAS No. 144, resulted from the sale of six
communities containing 2,125 units and one commercial
property, less reserves of $3,698 ($3,251 net of minority
interest) to write down to fair value certain land parcels
designated as held for sale as of December 31, 2002. See
the section titled Discontinued Operations below for
further discussion.

Depreciation expense increased $16,001, or $23.0%
from 2001 to 2002 primarily due to increased depreciation on
newly stabilized and lease-up properties, partially offset by
the cessation of depreciation on properties sold and currently
held for sale.

Interest expense increased $6,476 or 12.5% from
2001 to 2002 primarily due to a $8,901 reduction in capitalized
interest to development properties between years as the
Companys development pipeline transitioned to operating
properties. Exclusive of the reduction in capitalized interest,
the decrease in interest expense was a result of lower interest
costs on the Companys variable rate borrowings in 2002.

General and administrative expenses increased
$1,175, or 8.9%, from 2001 to 2002 primarily due to reduced
capitalization of certain costs associated with the
Companys development and construction efforts resulting
from the reduced volume of development and construction activity
between periods.

Other expenses of $694 in 2002 relates to the
write down of a technology investment to its estimated fair
value.

Equity in losses of unconsolidated real estate
entities increased from $186 in 2001 to $1,590 in 2002. These
losses reflect the Companys share of earnings and losses
from four single community limited liability companies (see
note 4 to the consolidated financial statements). The
losses increased in 2002 as the majority of the properties
entered the lease-up phase in 2002. These lease-up phase
communities are incurring lease-up deficits, as
defined earlier in this section.




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##### Table of Contents



Stabilized Communities

The Company defines fully stabilized communities
as those which have reached stabilization prior to the beginning
of the previous year. For the 2002 to 2001 comparison, fully
stabilized communities are defined as those communities which
reach stabilization prior to January 1, 2001. This
portfolio consisted of 65 communities with 22,618 units,
including 37 communities with 14,162 units (62.6%) located in
Atlanta, Georgia, 18 communities with 4,535 units (20.0%)
located in Dallas, Texas, three communities with 1,439 units
(6.4%) located in Tampa, Florida and seven communities with
2,482 units (11.0%) located in other markets. The operating
performance of these communities is summarized as follows:

|                                                                                                |  |                         |         |      |  |          |         |  |  |  |       |   
|----------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | -------- | ------- |  |  |  | ----- | --
|                                                                                                |  |                        
|                                                                                                |  | Year Ended December 31,
|                                                                                                |  |                        
|                                                                                                |  | 2002                    |         | 2001 |  | % Change
|                                                                                                |  |                         |         |      |  |         
|Rental and other revenue (1)                                                                    |  | $                       | 256,477 |      |  | $        | 275,297 |  |  |  | (6.8  | )%
|Property operating and maintenance expense
    (exclusive of depreciation and amortization) (2) |  |                         | 89,252  |      |  |          | 89,210  |  |  |  | 0.0   | % 
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |       |   
|Revenue in excess of specified expense                                                          |  | $                       | 167,225 |      |  | $        | 186,087 |  |  |  | (10.1 | )%
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |       |   
|Average economic occupancy (3)                                                                  |  |                         | 90.9%   |      |  |          | 94.4%   |  |  |  | (3.5  | )%
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |       |   
|Average monthly rental rate per apartment unit (4)                                              |  | $                       | 992     |      |  | $        | 1,016   |  |  |  | (2.4  | )%
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |       |   
|Apartment units in service                                                                      |  |                         | 22,618  |      |  |          | 22,618  |  |  |  |       |   
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |       |   






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Communities which reached stabilization prior to
    January 1, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(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, 2002 and 2001, recurring and non-recurring
    expenditures were $10,637 and $9,407, or $470 and $416 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 89.1% and 93.2% for the years ended
    December 31, 2002 and 2001, respectively). Concessions were
    $4,215 and $2,302 and employee discounts were $660 and $917 for
    the years ended December 31, 2002 and 2001, 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
    divided by total units.                                                                                                                                                                                                                                                                                                                                                                                                                                       

Rental and other revenue decreased $18,820 or
6.8% from 2001 to 2002. This decrease resulted from a decline in
the average economic occupancy of the portfolio from 94.4% in
2001 to 90.9% in 2002 and a 2.4% decline in the average monthly
rental rate per apartment unit. The decline in average rental
rate resulted in a revenue decrease of approximately $6,678
between years. The aggregate decline in revenues related to
vacancy loss, up-front concessions and other property fees
totaling approximately $8,871, $1,911 and $1,248, respectively.
These declines in 2002 reflect the affect of the national
recession on the Companys primary markets coupled with a
continuing supply of new apartment units. This was especially
true for the Companys largest market, Atlanta, Georgia,
which experienced job losses in 2001 and 2002 as many major
employers downsized their workforce in response to slow economic
activity.

Property operating and maintenance expenses
(exclusive of depreciation and amortization) were essentially
flat between years. Increased insurance expenses of $1,588 or
55.4% were largely offset by decreased personnel expenses of
$394 or 1.7%, decreased property tax expenses of $603 or 2.0%
and decreased repairs and maintenance expenses of $694 or 4.2%.
Insurance costs increased primarily due to the volatility in
insurance markets caused by, among other things, increased
terrorism risks. Property and liability coverage were both
significantly higher for the 2002 renewal period. Personnel
costs decreased due to both staff reductions and tighter control
of wage levels between years. Property tax expenses decreased
due to approximately $500 of tax reductions for 2001 property
taxes received and recognized in 2002 and a focused effort to
control 2002 property taxes resulting in effectively no increase
between years. Repairs and maintenance expenses decreased due to
reduced grounds and overall expenses resulting from intensive
cost control efforts in 2002.

For 2003, management expects modest declines in
rental and other revenues driven primarily by declining rental
rates. Similar to 2002 results, management intends to continue
its cost control efforts with an expectation of only modest
increases in operating expenses in 2003 primarily due to
projected increases in property taxes and insurance expenses
offset by reductions in personnel and maintenance expenses. In
light of an expectation of decreased revenues and slightly
increased expenses in 2003, stabilized community revenues in
excess of specified expenses could decline when compared to 2002.




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Comparison of Year Ended December 31,
2001 to Year Ended December 31, 2000

For the purposes of comparative operating
performance, the Company categorizes its operating communities
based on the period each community reaches stabilized occupancy,
as defined above. For the 2001 to 2000 comparison, the operating
community categories were based on the status of each community
as of December 31, 2001. As a result, these categories are
different from the operating community categories used in the
2002 to 2001 comparison discussed earlier in this section.
Further, the amounts reported in the table below have been
adjusted from the amounts reported in the Companys
December 31, 2001 financial statements due to the
restatement impact of reclassifying the operating results of
assets sold or held for sale in 2002 to discontinued operations
under SFAS No. 144 (see the related discussion under the
caption, Discontinued Operations). The operating
performance from continuing operations for all of the
Companys apartment communities combined for the years
ended December 31, 2001 and 2000 is summarized as follows:

|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|-------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | -------- | ------- |  |  |  | ----- | --
|                                                                                             |  | 2001 |         | 2000 |  | % Change
|                                                                                             |  |      |         |      |  |         
|Rental and other revenues:                                                                   |  |      |         |      |  |          |         |  |  |  |       |   
|Fully stabilized communities (1)                                                             |  | $    | 229,060 |      |  | $        | 226,909 |  |  |  | 0.9   | % 
|Communities stabilized during 2000.                                                          |  |      | 46,237  |      |  |          | 39,556  |  |  |  | 16.9  | % 
|Lease-up communities (2)                                                                     |  |      | 40,688  |      |  |          | 17,794  |  |  |  | 128.7 | % 
|Sold communities (3)                                                                         |  |      | 19,659  |      |  |          | 52,883  |  |  |  | (62.8 | )%
|Other revenue (4)                                                                            |  |      | 13,815  |      |  |          | 13,927  |  |  |  | (0.8  | )%
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|                                                                                             |  |      | 349,459 |      |  |          | 351,069 |  |  |  | (0.5  | )%
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Property operating and maintenance expense
    (exclusive of depreciation and amortization): |  |      |         |      |  |          |         |  |  |  |       |   
|Fully stabilized communities (1)                                                             |  |      | 72,962  |      |  |          | 68,277  |  |  |  | 6.9   | % 
|Communities stabilized during 2000.                                                          |  |      | 16,108  |      |  |          | 12,908  |  |  |  | 24.8  | % 
|Lease-up communities (2)                                                                     |  |      | 16,406  |      |  |          | 8,252   |  |  |  | 98.8  | % 
|Sold communities (3)                                                                         |  |      | 7,330   |      |  |          | 17,237  |  |  |  | (57.5 | )%
|Other expense (5)                                                                            |  |      | 16,395  |      |  |          | 14,168  |  |  |  | 15.7  | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|                                                                                             |  |      | 129,201 |      |  |          | 120,842 |  |  |  | 6.9   | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Revenue in excess of specified expenses                                                      |  | $    | 220,258 |      |  | $        | 230,227 |  |  |  | (4.3  | )%
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Recurring capital expenditures: (6)                                                          |  |      |         |      |  |          |         |  |  |  |       |   
|Carpet                                                                                       |  | $    | 2,400   |      |  | $        | 2,248   |  |  |  | 6.8   | % 
|Other                                                                                        |  |      | 6,100   |      |  |          | 5,319   |  |  |  | 14.7  | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Total                                                                                        |  | $    | 8,500   |      |  | $        | 7,567   |  |  |  | 12.3  | % 
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Non recurring capital expenditures                                                           |  | $    | 2,124   |      |  | $        | 3,940   |  |  |  | (46.1 | )%
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   
|Average apartment units in service                                                           |  |      | 28,351  |      |  |          | 28,588  |  |  |  | (0.8  | )%
|                                                                                             |  |      |         |      |  |          |         |  |  |  |       |   



---



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Communities which reached stabilization prior to
    January 1, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (2) | Communities in the construction,
    development or lease-up stage during
    2002 and, therefore, not considered fully stabilized for all of
    the periods presented.                                                                                                                                                                                                                                                                                                                                                                                                        
| | (3) | Includes results from six communities containing
    2,799 units and one commercial property sold in 2001 and eight
    communities containing 1,984 units sold in 2000 for the
    applicable periods presented.                                                                                                                                                                                                                                                                                                                                                                     
| | (4) | Other revenue includes revenue from commercial
    properties, from furnished apartment rentals above the
    unfurnished rental rates and other revenue not directly related
    to property operations. Other revenue excludes interest income
    and third-party services revenues included in the total revenues
    in the consolidated statements of operations.                                                                                                                                                                                                               
| | (5) | Other expenses includes certain indirect central
    office operating expenses related to management, grounds
    maintenance, and costs associated with commercial properties and
    furnished apartment rentals.                                                                                                                                                                                                                                                                                                                                                                   
| | (6) | In addition to those expenses which relate to
    property operations, the Company incurs recurring and
    non-recurring expenditures relating to acquiring and developing
    new assets, materially enhancing the value of an existing asset,
    or substantially extending the useful life of an existing asset,
    all of which are capitalized. Recurring capital expenditures are
    those that are generally expected to be incurred on an annual
    basis. Non-recurring capital expenditures are those that
    generally occur less frequently than on an annual basis.

The Operating Partnership reported net income
available to common unitholders of $85,269 and $100,336 for the
years ended December 31, 2001 and 2000, respectively, and
the Company reported net income available to common shareholders
of $75,159 and $88,645 for the years ended December 31,
2001 and 2000, respectively. The decrease in net income in 2001
as compared to 2000 reflects the weaker operating performance of
fully stabilized communities (see discussion below), slower
lease-up of new development communities, the dilutive impact of
the Companys fully implemented asset sales program,
increased project abandonment, employee severance and impairment




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charges and increased general and administrative
expenses. This weaker operating performance in 2001 was offset
by increased gains on asset sales between years. The impact of
these items is discussed below.


Rental and other revenue decreased $1,610 or 0.5%
from 2000 to 2001. The decrease was a result of the reduction in
rental and other revenue of $33,224 from assets sold between
years being in excess of the rental and other revenue increases
from the Companys newly stabilized and lease-up properties
of $29,575 and from fully stabilized properties of $2,151.
Property operating and maintenance expenses (exclusive of
depreciation and amortization) increased $8,359 or 6.9%
primarily due to the $7,885 or 9.7% increase at fully stabilized
and newly stabilized properties.

Revenues in excess of specified expenses from
third party services, principally landscape and property
management, decreased $1,092 or 50.6% from 2000 to 2001
primarily due to a decrease in earnings from landscape services.
This decrease was due to a reduction in new installation volume
resulting from a slow down in commercial construction activity
and due to the sale of the landscape operation to its management
team effective October 31, 2001.

In addition to the sale of third party landscape
business, the Company also sold its third party property
management business to its respective management team on
December 31, 2001. These sales were part of the
Companys strategy to focus on its core business of owning,
developing and managing multifamily communities. As the sales
were financed 100% by the Company, they were not recorded as
sales under generally accepted accounting principles. The
Company financed these transactions over five years with two
one-year renewal options. The purchase money notes bear interest
at 9% per annum. As more fully discussed in Note 8 to the
consolidated financial statements, full sales recognition will
not occur until the Company receives an adequate down payment on
the notes. The estimated loss of $452 on the landscape business
sale was included in the asset impairment charge in 2001. The
gain of $510 was deferred on the sale of the property management
business at December 31, 2001. Through the receipt of
adequate initial payments on the notes receivable in 2002, the
Company recognized the sales of both businesses. The impact of
the sale recognitions was to record the notes receivable from
the sales, to record a net gain of $510 and to remove the net
assets and liabilities of these businesses from the
Companys financial statements. All payments of principal
and interest due under the notes are current as of
December 31, 2002.

Depreciation expense increased $3,948 or 6.0%
from 2000 to 2001 primarily as a result of the increase in
operating depreciable assets from the completion of development
properties in 2001.

Interest expense increased $6,628 or 14.6% from
2000 to 2001 primarily due to increased borrowing levels in 2001
and a decrease of $3,302 in the amount of interest capitalized
to a reduced amount of communities under construction between
years.

General and administrative expenses increased
$3,190 or 31.7% from 2000 to 2001 primarily due to reduced
capitalization of certain costs associated with the
Companys development and construction efforts on a reduced
amount of communities under construction, increased insurance
costs and increased technology connectivity costs.

The net gain on sale of assets of $23,942 in 2001
resulted from the sale of six communities containing 2,799
units, one commercial property and six tracts of land, adjusted
by the impact of write-downs to fair value less costs to sell of
assets held for sale at December 31, 2001.




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Fully Stabilized Communities

The Company defines fully stabilized communities
as those which have reached stabilization prior to the beginning
of the previous calendar year. For the 2001 to 2000 comparison,
fully stabilized communities are defined as those communities
which reached stabilization prior to January 1, 2000
(adjusted to reduce the portfolio for communities classified as
discontinued operations under SFAS No. 144). This portfolio
consisted of 56 communities with 19,610 units includes
33 communities with 12,509 units (63.8%) located in
Atlanta, Georgia, 14 communities with 3,425 units
(17.5%) in Dallas, Texas, three communities with 1,439 units
(7.3%) located in Tampa, Florida and six communities with
2,237 units (11.4%) located in other markets. The operating
performance of these communities is summarized as follows:

|                                                                                                |  |                         |         |      |  |          |         |  |  |  |      | 
|----------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | -------- | ------- |  |  |  | ---- | 
|                                                                                                |  |                        
|                                                                                                |  | Year Ended December 31,
|                                                                                                |  |                        
|                                                                                                |  | 2001                    |         | 2000 |  | % Change
|                                                                                                |  |                         |         |      |  |         
|Rental and other revenue                                                                        |  | $                       | 229,060 |      |  | $        | 226,909 |  |  |  | 0.9% | 
|Property operating and maintenance expense
    (exclusive of depreciation and amortization) (1) |  |                         | 72,962  |      |  |          | 68,277  |  |  |  | 6.9% | 
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |      | 
|Revenue in excess of specified expense                                                          |  | $                       | 156,098 |      |  | $        | 158,632 |  |  |  | 1.6% | 
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |      | 
|Average economic occupancy (2)                                                                  |  |                         | 94.8%   |      |  |          | 96.7%   |  |  |  | 1.9% | 
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |      | 
|Average monthly rental rate per apartment unit (3)                                              |  | $                       | 979     |      |  | $        | 957     |  |  |  | 2.3% | 
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |      | 
|Apartment units in service                                                                      |  |                         | 19,610  |      |  |          | 19,610  |  |  |  |      | 
|                                                                                                |  |                         |         |      |  |          |         |  |  |  |      | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | 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, 2001 and 2000, recurring and non-recurring
    expenditures were $8,936 and $8,694 or $456 and $443 on a per
    unit basis, respectively.                                                                                                                               
|(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. 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 93.7% and 95.0% for the years ended
    December 31, 2001 and 2000, respectively). Concessions were
    $1,708 and $2,992 and employee discounts were $805 and $776 for
    the years ended December 31, 2001 and 2000, respectively.
|(3) | Average monthly rental rate is defined as the
    average of the gross actual rental rates for leased units and
    the average of the anticipated rental rates for unoccupied units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Rental and other revenue increased $2,151 or 0.9%
from 2000 to 2001. Gross revenue less concessions increased by
approximately $6,441 or 2.9% between years primarily due to a
2.3% increase in the average monthly rental rate per apartment
unit. This increase was partially offset by an increased vacancy
loss of $4,412 primarily resulting from the decrease in average
economic occupancy from 96.7% in 2000 to 94.8% in 2001. The
Companys rental and other revenue growth between years
began to slow in the third quarter of 2001 and declined in the
fourth quarter as average occupancies declined and rental rate
growth slowed. The decline in the second half of 2001 reflected
the sharp decline in economic and market activity across most of
the Companys markets. This was especially true for the
Companys largest market, Atlanta, Georgia, which
experienced job losses for the first time in many years as many
major employers began downsizing their workforces as a result of
a national recession.

Property operating maintenance expense (exclusive
of depreciation and amortization) increased $4,685 or 6.9% from
2000 to 2001 primarily due to increased personnel costs of
$1,362 or 7.3%, increased repairs and maintenance expenses of
$1,184 or 9.3% and increased property insurance premiums of
$1,387 or 143.5%. Insurance costs increased due to across the
board increases in property and liability premiums primarily due
to the favorably low rate structure the Company enjoyed in prior
years and to a lesser extent unfavorable claims experience.
Personnel costs increased due to annual salary increases and
additional maintenance personnel based on an expectation of
higher average occupancies and increased rental rates as the
Company entered into 2001. Property repairs and maintenance
reflects increased unit turnkey expenses as unit vacancies
increased between years and an increase in expensed exterior
painting between years.




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Discontinued Operations

In accordance with the implementation provisions
of SFAS No. 144, the operating results and gains and losses
on property sales of real estate assets designated as held for
sale subsequent to January 1, 2002 are included in
discontinued operations in the consolidated statement of
operations.

For the years presented, income from discontinued
operations includes the results of operations through the
earlier of the community sale date (if the community was sold
between January 1, 2002 and December 31, 2002) or
December 31, 2002, of eight apartment communities containing
3,134 units and one commercial property that were designated as
held for sale in 2002. The revenues and expenses of these
properties for the years ended December 31, 2002, 2001 and
2000 were as follows:

|                                                                   |                                                                                    |                |       |        |        |      |       |        |        |   |        |        |        | 
|------------------------------------------------------------------ | ---------------------------------------------------------------------------------- | -------------- | ----- | ------ | ------ | ---- | ----- | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                   |                                                                                    | 2002           |       | 2001   |        | 2000
|                                                                   |                                                                                    |                |       |        |        |     
|Revenues                                                           |                                                                                    |                |       |        |        |      |       |        |        |   |        |       
|                                                                   | Rental                                                                             |                | $     | 18,706 |        |      | $     | 31,836 |        |   | $      | 30,413 |       
|                                                                   | Other                                                                              |                |       | 719    |        |      |       | 1,279  |        |   |        | 1,179  |       
|                                                                   |                                                                                    |                |       |        |        |      |       |        |        |   |        |       
|                                                                   |                                                                                    | Total revenues |       |        | 19,425 |      |       |        | 33,115 |   |        |        | 31,592 | 
|                                                                   |                                                                                    |                |       |        |        |      |       |        |        |   |        |       
|Expenses                                                           |                                                                                    |                |       |        |        |      |       |        |        |   |        |       
|                                                                   | Property operating and maintenance (exclusive of
    items shown separately below) |                |       | 7,919  |        |      |       | 11,918 |        |   |        | 10,507 |       
|                                                                   | Depreciation                                                                       |                |       | 2,246  |        |      |       | 6,431  |        |   |        | 5,381  |       
|                                                                   | Interest                                                                           |                |       | 3,375  |        |      |       | 5,970  |        |   |        | 4,971  |       
|                                                                   |                                                                                    |                |       |        |        |      |       |        |        |   |        |       
|                                                                   |                                                                                    | Total expenses |       |        | 13,540 |      |       |        | 24,319 |   |        |        | 20,859 | 
|                                                                   |                                                                                    |                |       |        |        |      |       |        |        |   |        |       
|Income from discontinued operations (before
    minority interest) |                                                                                    | $              | 5,885 |        |        | $    | 8,796 |        |        | $ | 10,733 |       
|                                                                   |                                                                                    |                |       |        |        |      |       |        |        |   |        |       

The decrease in revenues and expenses for the
year ended December 31, 2002, results from 2002 including
the results of operations of six communities and one commercial
property through their actual sale dates (generally in the
second and third quarters) and two communities for the full
periods presented. The revenues and expenses for 2001 and 2000
include full year operating results for all eight of the
communities and the commercial property.

For the year ended December 31, 2002, the
Company recognized net gains of $20,268 ($17,818 net of minority
interest) on the sale of real estate assets designated for sale
subsequent to December 31, 2001, offset by reserves of
$3,698 ($3,251 net of minority interest) to write down to fair
market value of certain land parcels designated as held for sale
as of December 31, 2002.

Project Abandonment, Employee Severance and
Impairment Charges

The Company recorded project impairment and
abandonment, employee severance and asset impairment charges for
the years ended December 31, 2001 and 2000. No similar
charges were recorded in 2002. The charges are summarized as
follows:

|                                   |  |      |        |      |  |   |       | 
|---------------------------------- |  | ---- | ------ | ---- |  | - | ----- | 
|                                   |  | 2001 |        | 2000
|                                   |  |      |        |     
|Project impairment and abandonment |  | $    | 8,122  |      |  | $ | 4,389 | 
|Employee severance                 |  |      | 3,560  |      |  |   | 3,066 | 
|Asset impairment                   |  |      | 5,768  |      |  |   | 1,910 | 
|                                   |  |      |        |      |  |   |       | 
|                                   |  | $    | 17,450 |      |  | $ | 9,365 | 
|                                   |  |      |        |      |  |   |       | 

In the fourth quarter of 2001, the Company
recorded charges totaling $17,450. These charges, precipitated
by the sharp decline in economic and market conditions, reflect
managements decision to focus its business and new
development strategy on fewer markets, to focus on its core
business of owning, developing and managing multifamily real
estate assets and to do so with a smaller workforce and lower
overhead expenses. The project impairment charge of $8,122
represents reserves on certain predevelopment and transaction
pursuit costs in markets the Company will no longer pursue for
development opportunities and for certain projects that will no
longer be pursued due to economic and market conditions. The
employee severance charge of $3,560 is primarily for severance
costs related to approximately a 100 person senior management
and staff workforce reduction plan initiated and completed in
the fourth quarter of 2001. The asset impairment and disposition
charge includes a loss of $2,831 related to the disposition of
the Companys corporate aircraft, a loss of $452 on the
sale of the Companys




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##### Table of Contents



third party landscape business discussed more
fully below, impairment charges of $1,000 related to the
Companys exit from the for-sale housing business in all
markets, and the write-down to estimated market value of certain
internet and technology investments of $1,485. At
December 31, 2002, approximately $688 of these charges,
primarily employee severance costs, remained as an accrued
liability on the consolidated balance sheet. These remaining
amounts are expected to be paid in 2003.


In the fourth quarter of 2001, the Company sold
substantially all of the net assets of Post Landscape Group,
Inc., a subsidiary entity that provided landscape maintenance,
design and installation services to third parties, and RAM
Partners, Inc., a separate subsidiary entity that managed
apartment communities for third parties. These businesses were
sold to members of the respective former management teams of the
subsidiaries. The Company financed 100% of the sales price of
$5,767 (adjusted for working capital transfers at closing)
through purchase money notes with a fixed interest rate of 9%.
The notes require periodic interest, annual principal and final
balloon principal payments in 2006. The notes can be extended
for two one-year periods. Under generally accepted accounting
principles, the transactions were not recorded as sales at
December 31, 2001, as the conditions for sale recognition,
primarily the receipt of an adequate down payment on the notes,
were not met. The sale of the Post Landscape Group resulted in a
loss of $452. Under generally accepted accounting principles,
this loss was recognized in 2001 and included in the project
abandonment, employee severance and impairment charges discussed
above. In 2002, the Company recognized the sales of both
businesses. The impact of the sales recognition was to record a
net gain of $510 on the sale of RAM Partners, Inc. See
note 7 to the consolidated financial statements for an
additional discussion of these transactions.

During the first quarter of 2002, the Company
transferred certain construction contracts of Post Construction
Services Inc., its third party construction business, to Oxford
Properties, LLC in exchange for Oxford Properties
assumption of substantially all of Post Construction
Services liabilities related to the transferred assets. In
approving the transaction, the Companys board of directors
ascribed nominal value to the assets being transferred. The
assets consisted principally of third party construction
contracts for the construction of four garden style apartment,
condominium and townhouse communities as well as related
subcontracts, indemnities and guarantees. In connection with the
transfer of Post Construction Services construction
contracts, Oxford Properties had the right to receive a deferred
fee upon completion of one of the construction projects in the
amount of $500. Oxford Properties also agreed to employ 28
former Company and Post Construction Services employees. As a
result, the Company was not responsible for costs that would
have otherwise resulted from winding up the third party
construction business. The Company recorded a charge of $500 in
the fourth quarter of 2001 relating to its exit from the third
party construction business. Oxford Properties, LLC is an entity
owned by former officers of the Company and by the son of the
Companys former chairman and chief executive officer. The
Companys former chairman and chief executive officer does
not own any of the outstanding equity interests in Oxford
Properties and does not have any management role in Oxford
Properties, LLC.

In the fourth quarter of 2000, the Company
recorded charges of $9,365. These charges reflect
managements decision to restrict its development
activities to fewer markets, refine its development investment
and for-sale housing strategies and make changes in its
executive management team. Project abandonment charges totaling
$4,389 related to the write off of predevelopment and pursuit
costs in markets in which the Company will no longer pursue
development opportunities and on certain proposed development
deals not consistent with managements revised development
strategy. Employee severance charges related to the termination
costs of four executive positions and five staff personnel in
the Companys Dallas, Texas regional office. The asset
impairment charge of $1,910 includes a charge of $1,503 related
to the write off of the Companys investment in a high
speed internet provider that filed for bankruptcy protection and
a charge of $407 related to the exit from the for-sale housing
business in certain markets. As of December 31, 2001, all
of the 2000 charges had been paid.

Subsequent Event

Subsequent to December 31, 2002, the
Companys board of directors elected a new chairman. The
Companys former chairman was elected chairmen emeritus and
the Companys vice-chairman relinquished his vice-chairman
status. Both the former chairman and former vice-chairman will
remain on the Companys board of directors. Their change in
roles from executive to non-executive status will result in the
Company recording a non-cash charge in the first quarter of 2003
relating to payments provided to these individuals pursuant to
their existing contractual arrangements with the Company. The
Company estimates the charge will be approximately $12,000 to
$14,000, plus an additional amount of up $8,000 that may be
incurred as a result of the settlement of split-dollar life
insurance obligations to the individuals under their contractual
arrangements. These amounts represent the present value of the
estimated payments and other costs to be incurred over the term
of the contractual arrangements.




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Liquidity and Capital Resources

The discussion in this Liquidity and Capital
Resources section is the same for the Company and the Operating
Partnership, except that all indebtedness described herein has
been incurred by the Operating Partnership.

The Companys net cash provided by operating
activities decreased from $161,564 in 2001 to $119,763 in 2002
primarily due to lower net income (before depreciation and gain
on sale of assets) resulting from the weaker operating
performance of the Companys fully stabilized properties
and reduced earnings from the impact of the Companys asset
sale and capital recycling program. Net cash provided by
operating activities decreased from $185,073 in 2000 to $161,564
in 2001 primarily due to lower net income (before depreciation
and gain on sale of assets), resulting from the larger project
abandonment, employee severance and impairment charges, weaker
operating performance of the Companys fully stabilized
properties and the dilutive impact of the Companys asset
sale and capital recycling program.

Net cash used in investing activities decreased
from $51,213 in 2001 to $48,821 in 2002 primarily due to reduced
spending on the construction and acquisition of real estate
assets offset by lower proceeds from asset sales. Net cash used
in investing activities decreased from $255,986 in 2000 to
$51,213 in 2001 primarily due to greater proceeds from the sale
of apartment communities and other property and reduced spending
on construction and acquisition of real estate assets.

Net cash used in financing activities decreased
from $113,007 in 2001 to $69,355 in 2002 primarily due to the
Company not acquiring any treasury stock in 2002, partially
offset by reduced net borrowings between periods. Net cash
provided by (used in) financing activities decreased from
$72,502 in 2000 to $(113,007) in 2001 due to increased treasury
stock purchases and reduced net borrowings between periods.

Since 1993, the Company has elected to be taxed
as a real estate investment trust (REIT) under the
Internal Revenue Code of 1986, as amended (the
Code). Management currently intends to continue
operating the Company as a REIT in 2003. As a REIT, the Company
is subject to a number of organizational and operating
requirements, including a requirement to distribute 90% of its
taxable income to its shareholders. As a REIT, the Company
generally will not be subject to federal income taxes on its
taxable income.

In years prior to 2001, the Company met its
short-term liquidity requirement of funding the payment of its
current level of quarterly dividends to shareholders from its
net cash flow provided by operating activities, less its annual
recurring and nonrecurring property and corporate capital
expenditures. Beginning in the fourth quarter of 2001 and for
all of 2002, the Companys net cash flow from operations,
reduced by annual capital expenditures, was not sufficient to
fully fund the Companys current dividend payments to
common shareholders. Throughout 2002, the additional funding
required to pay the quarterly dividends was obtained through a
combination of line of credit borrowings and proceeds from asset
sales. In the fourth quarter of 2002, management announced that
the Company intended to reduce its quarterly dividend payment
rate to common shareholders from the current rate of $0.78 per
share to $0.45 per share beginning in the first quarter of 2003,
based on managements expectation that the Companys
net cash flow provided by operating activities, reduced by
annual capital expenditures, will be lower in 2003. The factors
that led to the dividend reduction were the decline in economic
and market conditions in the Companys major markets
resulting in lower cash flow from its operating property
portfolio, the slower lease-up of its existing development
community portfolio and the short-term negative cash flow impact
of funding its current development portfolio through the sale of
operating real estate assets. The Companys net cash flow
from operations continues to be sufficient to meet the dividend
requirements necessary to maintain its REIT status under the
Code.

Management expects the Company to meet its new
construction and development and certain of its other long-term
liquidity requirements, including the contractual obligations
detailed below, and possible land and property acquisitions
through the sale of operating properties and through long-term
secured and unsecured borrowings. Management believes the
Company has adequate borrowing capacity and accessibility to
real estate sales markets to fund these requirements.
Additionally, the Company has utilized equity joint ventures as
a means of raising capital and reducing the size and exposure of
its development property pipeline. During 2002 and 2001, the
Company received equity capital through the joint ventures
totaling $9,213 and $18,082, respectively. The Company may
continue to use joint venture arrangements in future years as a
source of capital and to reduce the exposure of its future
development pipeline.




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A summary of the Companys future
contractual obligations related to long-term debt,
non-cancelable operating leases and other obligations at
December 31, 2002, were as follows:

|                                                               |  |                     |           |                |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 
|-------------------------------------------------------------- |  | ------------------- | --------- | -------------- |  | --------- | ------- | --------- |  | ------------- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                               |  |                    
|                                                               |  | Obligation Due Date
|                                                               |  |                    
|Contractual Obligations                                        |  | Total               |           | 1 Year or Less |  | 2-3 Years |         | 4-5 Years |  | After 5 Years
|                                                               |  |                     |           |                |  |           |         |           |  |              
|Long-term debt                                                 |  | $                   | 1,218,186 |                |  | $         | 103,809 |           |  | $             | 231,496 |  |  | $ | 191,910 |  |  | $ | 690,971 | 
|Lines of credit (1)                                            |  |                     | 196,369   |                |  |           | 11,369  |           |  |               | 185,000 |  |  |   |        |  |  |   |        | 
|Operating leases (2)                                           |  |                     | 163,040   |                |  |           | 1,363   |           |  |               | 2,573   |  |  |   | 2,634   |  |  |   | 156,470 | 
|Debt and equity commitments to unconsolidated
    entities (3) |  |                     | 23,310    |                |  |           | 23,310  |           |  |               |        |  |  |   |        |  |  |   |        | 
|                                                               |  |                     |           |                |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 
|                                                               |  | $                   | 1,600,905 |                |  | $         | 139,851 |           |  | $             | 419,069 |  |  | $ | 194,544 |  |  | $ | 847,441 | 
|                                                               |  |                     |           |                |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | At December 31, 2002, the Company has issued
    letters of credit to third parties totaling $1,323 under its
    credit facility arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Includes eight ground leases relating to
    apartment communities owned by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | At December 31, 2002, the Company is
    obligated to fund approximately $8,179 of construction financing
    and $15,131 of equity contributions to unconsolidated entities.
    In addition, the Company has guaranteed the timely construction
    completion and the final cost of certain construction cost
    categories of the underlying real estate projects. As a result
    of the completion of three of four real estate projects as of
    December 31, 2002, the maximum exposure under the cost
    guarantee provisions of these arrangements is approximately
    $5,200. At December 31, 2002, the Company estimates that it
    will have no additional funding obligations under these cost
    guarantee provisions. Further, the Company believes the final
    project will be completed on a timely basis, thus fully
    mitigating its cost exposure under the completion guarantee.

In addition to these contractual obligations, the
Company has development projects in progress that will be
completed over the next twelve months. At December 31,
2002, the Companys share of the estimated future cash
expenditures to complete these projects will approximate
$25,000. Further at December 31, 2002, the Company had
outstanding interest rate swap derivative financial instruments
with a notional value of $129,000 with maturity dates ranging
from 2005 to 2009. The contractual payment terms of these
arrangements are summarized in Item 7A, Quantitative
and Qualitative Disclosures About Market Risk in this
Form 10-K. Additional information regarding the accounting
and disclosure of these arrangements is included in note 13
to the Companys consolidates financial statements.

As previously discussed, the Company intends to
use the proceeds from the sale of operating properties as the
primary source of capital to fund these future development
expenditures. The Company began an active asset sale and capital
recycling program in 2000 as the primary means to fund its
on-going development community program. Total funds raised in
2002 and 2001 were $182,216 and $220,122, respectively.

In 2002, the Company sold eight apartment
communities containing 2,665 units for net proceeds of
approximately $165,425. The communities sold were located in
Dallas, Texas, Tampa Florida and Orlando, Florida. Additionally,
the Company sold land in Phoenix, Arizona and two commercial
properties located in Texas for aggregate net proceeds of
$16,791. These sales resulted in net gains of $13,275 from
continuing operations and $16,570 (14,567 net of minority
interest) from discontinued operations. These net gains were net
of reserves of $3,698 ($3,251 net of minority interest) to write
down to fair value certain land parcels designated as held for
sale in 2002 and excluded losses totaling $4,861 related to
assets written down to their estimated fair value at
December 31, 2001.

In 2001, the Company sold six apartment
communities containing 2,799 units for net proceeds of
approximately $210,443. The communities sold were located in
Atlanta, Georgia, Dallas Texas and Nashville, Tennessee.
Additionally, the Company sold land parcels in Dallas, Texas,
Denver, Colorado and Charlotte, North Carolina and a commercial
property in Dallas, Texas for aggregate net proceeds of $9,679.
These sales resulted in net gains of approximately $16,365. For
the year ended December 31, 2001, the aggregate net gain on
the sale of assets of $23,942 included the impact of the
estimated net losses totaling $11,490 on the write down to fair
value of assets designated as held for sale at December 31,
2001 and excluded realized losses totaling $19,067 related to
assets written down to their estimated fair value at
December 31, 2000.

In 2000, the Company sold eight apartment
communities containing 1,984 units for net proceeds of
approximately $157,265, resulting in net gains of approximately
$24,266. The communities sold were located in Atlanta, Georgia,
Jackson, Mississippi and Nashville, Tennessee. For the year
ended December 31, 2000, the aggregate net gain on the sale of
assets of $3,208 included the estimated net losses totaling
$21,058 on the write down to fair value of assets designated as
held for sale at December 31, 2000.




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At December 31, 2002, the Company had
available credit facility borrowing capacity of approximately
$269,000 under its existing credit facilities. The
Companys primary credit facility with total capacity of
$320,000 matures in 2004 while a second incremental credit
facility of $125,000 matures in April 2003. As a result of the
decline in the Companys development activities, management
currently anticipates the renewal of the primary credit facility
with a capacity of approximately $300,000. Management believes
it will have adequate capacity under its facilities to execute
its 2003 business plan without regard to a significant level of
asset sales or other secured and unsecured debt financings.

In the first quarter of 2002, the Companys
unsecured public debt was downgraded from Baa1 to Baa2 by
Moodys Investor Services and from BBB+ to BBB by Standard
& Poors. This change in the investment credit rating of the
Companys debt increased the pricing of its syndicated
lines of credit by 10 to 12.5 basis points and may increase the
pricing of new issuances of unsecured debt. In addition, certain
of the financial covenants under the Companys syndicated
line of credit are tied to maintaining an investment grade
credit rating. After the recent downgrade, the Company remains
an investment grade rated company by both Moodys Investors
Services and Standard & Poors. Management does not
anticipate this downgrade to affect the Companys ability
to obtain the anticipated level of debt financing. Should the
Company not maintain its investment credit rating, its total
dividend payout, exclusive of the portion of the dividend
attributable to capital gains from asset sales up to $30,000,
would be limited to 95% versus 100% of Consolidated Income
Available for Distribution, as defined. Management believes the
Companys current business plan and financing strategy are
consistent with the fundamentals of maintaining its investment
grade ratings.

Unsecured Lines of Credit

The Company utilizes a $320,000 three-year
syndicated revolving line of credit (the Revolver),
for its short-term financing. At December 31, 2002, the
stated interest rate for the Revolver was LIBOR plus 0.85% or
prime minus 0.25%. 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, at the
Companys current dividend level. The Revolver matures in
April 2004, however, management expects to renew this facility
in 2003.

The Company also has in place an additional
$125,000 line of credit facility for general corporate purposes.
This line matures in April 2003 and carries terms substantially
equal to the Revolver. There were no outstanding borrowings
under this facility at December 31, 2002. Management does
not expect to renew this facility in April 2003 as the
Companys financing needs have reduced consistent with the
Companys reduced development spending.

Additionally, the Company has 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 0.75% or prime minus .25% and
matures in February, 2003. Subsequent to year end, the Cash
Management Line was renewed through June 2003 with similar terms
to its existing facility. At December 31, 2002, the Company
has issued letters of credit to third parties totaling $1,323
under this facility.

Long-term Debt Issuances

In June 2002, the Company issued $25,000 of
unsecured notes at par. These notes bear interest at 6.11% and
mature June 18, 2007. Also in June 2002, the Company closed
a $13,500 secured mortgage loan. The loan bears interest at
6.29% and monthly principal and interest payments are based on a
25-year amortization schedule. The loan matures on
October 1, 2007.

In December 2002, the Company closed a $57,000
mortgage loan with a life insurance company. This loan is
secured by an apartment community. This loan carries an interest
rate of 5.5% and requires payments of interest only for five
years. Thereafter, payments of principal and interest are
required based upon a 30-year amortization schedule until the
loans maturity in January 2013.




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The net proceeds from these borrowings were used
to repay amounts outstanding under the Companys credit
facility.

In February 2003, one of the Companys
unconsolidated equity joint ventures closed a $17,000 loan with
a life insurance company. This loan is secured by the apartment
community owned by the joint venture in which the Company has a
35% ownership interest. The Company received 100% of the
proceeds from this loan in repayment of its outstanding
construction loan to the joint venture. Payments of principal
and interest will be based upon an interest rate of 4.28% per
annum and a 30-year amortization schedule, with a balance due at
maturity on March 10, 2008.

Stock Repurchase Program

The Companys Board of Directors has
approved the purchase of up to $200,000 of the Companys
common stock. Through December 31, 2001, the Company had
acquired 3,127,600 shares of its common stock at an aggregate
cost of $114,126 and had acquired 100,000 shares of preferred
stock at an aggregate cost of $5,100. The Company acquired no
common or preferred stock in 2002. Management has indicated it
will be opportunistic with respect to additional share
repurchases and intends to finance additional repurchases with
asset sale proceeds rather than additional borrowings.

Schedule of Indebtedness

The following table reflects a summary of the
Companys indebtedness at December 31, 2002 and 2001:

|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|-------------------------------------------- |  | ------------- | -------------- | -------- |  | -------- | ------------- | ------------ |  | ---- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                             |  |               |                |          |  |          |               |             
|                                             |  |               |                |          |  |          |               | December 31,
|                                             |  |               |                | Interest |  | Maturity |               |             
|Description                                  |  | Payment Terms |                | Rate     |  | Date(1)  |               | 2002         |  | 2001
|                                             |  |               |                |          |  |          |               |              |  |     
|Unsecured Notes                              |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|Senior Notes                                 |  |               | Int.           |          |  |          | 6.11%  7.70% |              |  |      | 2003-2010 |  |  | $ | 385,000   |  |  | $ | 360,000   | 
|Medium Term Notes                            |  |               | Int.           |          |  |          | 6.69%  8.12% | (2)          |  |      | 2004-2015 |  |  |   | 323,000   |  |  |   | 323,000   | 
|Northwestern Mutual Life                     |  |               | Int.           |          |  |          | 8.37%         |              |  |      | 2002      |  |  |   |          |  |  |   | 20,000    | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   | 708,000   |  |  |   | 703,000   | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|Unsecured Lines of Credit &
    Other        |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|Revolver                                     |  |               | N/A            |          |  |          | LIBOR + 0.85% | (3)          |  |      | 2004      |  |  |   | 185,000   |  |  |   | 155,000   | 
|Cash Management Line                         |  |               | N/A            |          |  |          | LIBOR + 0.75% |              |  |      | 2003      |  |  |   | 11,369    |  |  |   | 11,202    | 
|Other                                        |  |               | N/A            |          |  |          | 5.00%         |              |  |      | 2021      |  |  |   |          |  |  |   | 2,000     | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   | 196,369   |  |  |   | 168,202   | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|Conventional Fixed Rate (Secured)            |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|FNMA                                         |  |               | Prin. and Int. |          |  |          | 6.975%        | (4)          |  |      | 2029      |  |  |   | 101,100   |  |  |   | 102,200   | 
|Other                                        |  |               | Prin. and Int. |          |  |          | 5.5%  7.69%  |              |  |      | 2007-2013 |  |  |   | 194,706   |  |  |   | 127,238   | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   | 295,806   |  |  |   | 229,438   | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|Tax Exempt Floating Rate Bonds
    (Secured) |  |               | Int.           |          |  |          | 1.55%         | (5)          |  |      | 2025      |  |  |   | 214,380   |  |  |   | 235,880   | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 
|Total                                        |  |               |                |          |  |          |               |              |  |      |           |  |  | $ | 1,414,555 |  |  | $ | 1,336,520 | 
|                                             |  |               |                |          |  |          |               |              |  |      |           |  |  |   |           |  |  |   |           | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All outstanding indebtedness can be prepaid at
    any time, subject to certain prepayment penalties.                                                                                                                                                                                                                                                                                                         
|(2) | Contains $100,000 of Mandatory Par Put Remarketed
    Securities. The annual interest rate on these securities to 2005
    (the Remarketing Date) is 6.85%. On the Remarketing
    Date, they are subject to mandatory tender for remarketing.                                                                                                                                                              
|(3) | Represents stated rate. At December 31,
    2002, the weighted average interest rate was 2.23%.                                                                                                                                                                                                                                                                                                               
|(4) | Interest rate is fixed at 6.975%, inclusive of
    credit enhancement and other fees, to 2009 through an interest
    rate swap arrangement.                                                                                                                                                                                                                                                                  
|(5) | FNMA credit enhanced bond indebtedness. Interest
    based on FNMA AAA tax exempt rate plus credit
    enhancement and other fees of 0.639%. Interest rate represents
    rate at December 31, 2002 before credit enhancements. At
    December 31, 2002, the Company has outstanding interest
    rate cap arrangements that limit the Companys exposure to
    increases in the base interest rate to 5%.




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Capitalization of Fixed Assets and Community
Improvements

The Company has a policy of capitalizing those
expenditures relating to the acquisition of new assets and the
development and construction of new apartment communities. In
addition, the Company capitalizes expenditures that enhance the
value of existing assets and expenditures that substantially
extend the life of existing assets. All other expenditures
necessary to maintain a community in ordinary operating
condition are expensed as incurred. Additionally, for new
development communities, carpet, vinyl and blind replacements
are expensed as incurred during the first five years (which
corresponds to the estimated depreciable life of these assets)
after construction completion. Thereafter, these replacements
are capitalized. Further, the Company expenses as incurred all
interior and exterior painting of communities.

The Company capitalizes interest, real estate
taxes, and certain internal personnel and associated costs
related to apartment communities under development and
construction. The incremental personnel and associated costs are
capitalized to the projects under development based upon the
effort identifiable with such projects. 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 included in construction
in progress. The Company ceases the capitalization of such costs
as the residential units in a community become substantially
complete and available for occupancy. This practice results in a
proration of these costs between amounts that are capitalized
and expensed as the residential units in a development community
become available for occupancy. In addition, prior to the
completion of units, the Company expenses as incurred
substantially all operating expenses (including pre-opening
marketing expenses) of such communities.

Acquisition of assets and community improvement
and other capitalized expenditures for the years ended
December 31, 2002 and 2001 are summarized as follows:

|                                                           |                                            |      |         |       |  |   |         |       | 
|---------------------------------------------------------- | ------------------------------------------ | ---- | ------- | ----- |  | - | ------- | ----- | 
|                                                           |                                            | 2002 |         | 2001 
|                                                           |                                            |      |         |      
|New community development activity                         |                                            | $    | 152,163 |       |  | $ | 232,569 |      
|Revenue generating additions and improvements(1)           |                                            |      |         |       |  |   |         |      
|                                                           | Property renovations                       |      |         | 1,025 |  |   |         | 4,019 | 
|                                                           | Sub-metering of water service              |      |         | 1,010 |  |   |         | 207   | 
|Nonrecurring capital expenditures(2)                       |                                            |      |         |       |  |   |         |      
|                                                           | Vehicle access control gates               |      |         | 431   |  |   |         | 749   | 
|                                                           | Other community additions and improvements |      |         | 3,010 |  |   |         | 1,786 | 
|Recurring capital expenditures(3)                          |                                            |      |         |       |  |   |         |      
|                                                           | Carpet replacements                        |      |         | 2,755 |  |   |         | 2,935 | 
|                                                           | Other community additions and improvements |      |         | 6,626 |  |   |         | 7,506 | 
|                                                           | Corporate additions and improvements       |      |         | 1,100 |  |   |         | 3,021 | 
|                                                           |                                            |      |         |       |  |   |         |      
|                                                           |                                            | $    | 168,120 |       |  | $ | 252,792 |      
|                                                           |                                            |      |         |       |  |   |         |      
|Other Data                                                 |                                            |      |         |       |  |   |         |      
|Capitalized interest                                       |                                            | $    | 13,223  |       |  | $ | 22,124  |      
|                                                           |                                            |      |         |       |  |   |         |      
|Capitalized internal personnel and associated
    costs(4) |                                            | $    | 5,196   |       |  | $ | 13,833  |      
|                                                           |                                            |      |         |       |  |   |         |      






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




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Current Development Activity

At December 31, 2002, the Company has under
construction or in initial lease-up five new communities and an
addition to one existing community that will contain an
aggregate of 1,377 units upon completion. The Companys
communities under development or in initial lease-up are
summarized in the following table:

|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |   | 
|--------------------------------------------------- | --------------------------------- | --------- | ----- | ------------ |  | ---------- | ---- | ------------ |  | ----------- | ---- | ------------ |  | --------- | ------ | --------- |  |  | ------ |  |  |  | ------ |  |  |  | ---- | - |  |  | ---- | - | 
|                                                    |                                   |           |       | Estimated    |  |            |      |              |  |             |      |              |  |           |        |          
|                                                    |                                   |           |       | Construction |  | Amount     |      |              |  |             |      | Estimated    |  |           |        |          
|                                                    |                                   |           |       | Cost         |  | Spent      |      | Quarter of   |  | Quarter of  |      | Quarter of   |  | %         |        | %        
|                                                    |                                   | Number of |       | ($ in        |  | As of      |      | Construction |  | First Units |      | Stabilized   |  | Leased    |        | Occupied 
|Metropolitan Area                                   |                                   | Units     |       | millions)    |  | 12/31/2002 |      | Start        |  | Available   |      | Occupancy(1) |  | 2/15/2003 |        | 2/15/2003
|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |          
|Wholly Owned Construction/Lease-up
    Communities  |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Tampa, FL                                           |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Harbour Place III                              |                                   |           | 259   |              |  | $          | 35   |              |  | $           | 33   |              |  |           | 2Q 01 |           |  |  | 2Q 02 |  |  |  | 2Q 03 |  |  |  | 79.5 | % |  |  | 77.6 | %
|New York City, NY                                   |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Toscana                                       |                                   |           | 199   |              |  |            | 95   |              |  |             | 75   |              |  |           | 1Q 02 |           |  |  | 1Q 03 |  |  |  | 2Q 04 |  |  |  | 1.5  | % |  |  | 0.0  | %
|Subtotal Wholly-Owned                               |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                    | Construction/Lease-up Communities |           |       | 458          |  |            | $    | 130          |  |             | $    | 108          |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |   | 
|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Co-Investment Construction/Lease-up
    Communities |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Atlanta, GA                                         |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Peachtree(2)                                  |                                   |           | 121   |              |  | $          | 31   |              |  | $           | 31   |              |  |           | 2Q 00 |           |  |  | 3Q 01 |  |  |  | 1Q 03 |  |  |  | 87.6 | % |  |  | 86.0 | %
|New York City, NY                                   |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Luminaria(3)                                  |                                   |           | 138   |              |  |            | 51   |              |  |             | 50   |              |  |           | 3Q 01 |           |  |  | 2Q 02 |  |  |  | 2Q 03 |  |  |  | 84.8 | % |  |  | 81.9 | %
|Pasadena, CA                                        |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Paseo Colorado(2)                              |                                   |           | 391   |              |  |            | 76   |              |  |             | 75   |              |  |           | 2Q 00 |           |  |  | 1Q 02 |  |  |  | 2Q 03 |  |  |  | 84.1 | % |  |  | 80.1 | %
|Washington D.C.                                     |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Massachusetts Avenue(2)                       |                                   |           | 269   |              |  |            | 74   |              |  |             | 68   |              |  |           | 2Q 01 |           |  |  | 4Q 02 |  |  |  | 4Q 03 |  |  |  | 24.5 | % |  |  | 21.9 | %
|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Subtotal Co-Investment                              |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                    | Construction/Lease-up Communities |           |       | 919          |  |            | $    | 232          |  |             | $    | 224          |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |   | 
|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Construction Totals                                 |                                   |           | 1,377 |              |  | $          | 362  |              |  | $           | 332  |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Less Partners Portion                              |                                   |           |       |              |  | $          | (133 | )            |  | $           | (128 | )            |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Properties Funding
    Commitment             |                                   |           |       |              |  | $          | 229  |              |  | $           | 204  |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                    |                                   |           |       |              |  |            |      |              |  |             |      |              |  |           |        |           |  |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  



|    |                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | The Company defines stabilized occupancy as the
    earlier to occur of (i) the attainment of 95% physical
    occupancy on the first day of any month or (ii) one year
    after completion of construction.                                                                                                                                                              
|(5) | These communities are being developed as a joint
    venture (Post equity ownership is 35%).                                                                                                                                                                                                                                                                               
|(6) | This development is structured as a joint
    venture, with Post owning approximately 70% of the equity and
    the landowner owning the balance.                                                                                                                                                                                                                          
|(7) | The calculation represents the aggregate
    projected unlevered funds from operations to be earned by each
    community in its first year of stabilized operations divided by
    aggregate estimated construction costs of the communities. The
    Company uses funds from operations as a management tool to
    measure the operating performance of its communities.

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 generally 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 generally permits the
earlier termination of a lease by a lessee upon thirty
(30) days written notice to the Company and the payment of
an amount equal to two months 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.




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##### Table of Contents



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 a non-GAAP financial measure. FFO is defined to
mean net income available to common shareholders determined in
accordance with 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 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. CAD is a
non-GAAP financial measure. 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.





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##### Table of Contents



FFO and CAD for the years ended December 31,
2002, 2001 and 2000 presented on a historical basis are
summarized in the following table:

|                                                                                                   |  |      |            |      |  |      |            |   |  |   |            |  
|-------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                                                                                   |  | 2002 |            | 2001 |  | 2000
|                                                                                                   |  |      |            |      |  |     
|Net income available to common
    shareholders                                                    |  | $    | 49,297     |      |  | $    | 75,159     |   |  | $ | 88,645     |  
|Cumulative effect of accounting change, net of
    minority interest                               |  |      |           |      |  |      | 613        |   |  |   |           |  
|Extraordinary items, net of minority interest                                                      |  |      | 120        |      |  |      | 77         |   |  |   |           |  
|Minority interest of common
    unitholders  continuing operations                                |  |      | 4,073      |      |  |      | 9,153      |   |  |   | 10,441     |  
|Gains on property sales  continuing
    operations                                                |  |      | (13,275    | )    |  |      | (23,942    | ) |  |   | (3,208     | )
|Gains on properties held for sale and sold, net
    of minority interest  discontinued operations |  |      | (14,567    | )    |  |      |           |   |  |   |           |  
|Minority interest in discontinued operations                                                       |  |      | 712        |      |  |      | 1,050      |   |  |   | 1,250      |  
|                                                                                                   |  |      |            |      |  |      |            |   |  |   |            |  
|Adjusted net income                                                                                |  |      | 26,360     |      |  |      | 62,110     |   |  |   | 97,128     |  
|Depreciation on wholly-owned real estate assets,
    net                                           |  |      | 82,918     |      |  |      | 70,956     |   |  |   | 66,283     |  
|Depreciation on real estate assets held in
    unconsolidated entities                             |  |      | 1,103      |      |  |      | 67         |   |  |   |           |  
|                                                                                                   |  |      |            |      |  |      |            |   |  |   |            |  
|Funds from Operations(1)                                                                           |  |      | 110,381    |      |  |      | 133,133    |   |  |   | 163,411    |  
|Recurring capital expenditures (2)                                                                 |  |      | (9,381     | )    |  |      | (10,441    | ) |  |   | (5,576     | )
|Non-recurring capital expenditures (3)                                                             |  |      | (3,441     | )    |  |      | (2,535     | ) |  |   | (9,157     | )
|                                                                                                   |  |      |            |      |  |      |            |   |  |   |            |  
|Cash available for distribution                                                                    |  | $    | 97,559     |      |  | $    | 120,157    |   |  | $ | 148,678    |  
|                                                                                                   |  |      |            |      |  |      |            |   |  |   |            |  
|Revenue generating capital expenditures (4)                                                        |  | $    | 2,035      |      |  | $    | 4,226      |   |  | $ | 6,670      |  
|                                                                                                   |  |      |            |      |  |      |            |   |  |   |            |  
|Cash flow provided by (used in):                                                                   |  |      |            |      |  |      |            |   |  |   |            |  
|Operating activities                                                                               |  | $    | 119,763    |      |  | $    | 161,564    |   |  | $ | 185,073    |  
|Investing activities                                                                               |  | $    | (48,821    | )    |  | $    | (51,213    | ) |  | $ | (255,986   | )
|Financing activities                                                                               |  | $    | (69,355    | )    |  | $    | (113,007   | ) |  | $ | 72,502     |  
|Weighted average shares outstanding 
    basic                                                    |  |      | 36,939,144 |      |  |      | 38,052,673 |   |  |   | 39,317,225 |  
|Weighted average shares and units
    outstanding  basic                                          |  |      | 42,020,759 |      |  |      | 43,211,834 |   |  |   | 44,503,290 |  
|Weighted average shares outstanding 
    diluted                                                  |  |      | 36,953,962 |      |  |      | 38,267,939 |   |  |   | 39,852,514 |  
|Weighted average shares and units
    outstanding  diluted                                        |  |      | 42,035,577 |      |  |      | 43,427,100 |   |  |   | 45,038,079 |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 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 or ability to service indebtedness or make
    distributions.
|(2) | Recurring capital expenditures consisted
    primarily of $2,755, $2,935 and $2,890 of carpet replacement and
    $6,626, $7,506 and $6,267 of other community additions and
    improvements to existing communities for the years ended
    December 31, 2002, 2001 and 2000, respectively. Since the
    Company does not add back the depreciation of non-real estate
    assets in its calculation of FFO, capital expenditures of
    $1,100, $3,021 and $3,441 are excluded from the calculation of
    CAD for the years ended December 31, 2002, 2001 and 2000,
    respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | Non-recurring capital expenditures consisted of
    the additions of vehicle access control gates to communities of
    $431, $749 and $403 and other community additions and
    improvements of $3,010, $1,786 and $5,173 for the years ended
    December 31, 2002, 2001 and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(4) | Revenue generating capital expenditures included
    major renovations of communities in the amount of $1,025, $4,019
    and $6,638 for the years ended December 31, 2002, 2001 and
    2000, respectively, and sub-metering of water service to
    communities in the amounts of $1,010, $207 and $32 for the years
    ended December 31, 2002, 2001 and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           




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|         |                                                               
|-------- | --------------------------------------------------------------
|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, 2002, the Company had
$322,469 of variable rate debt tied to LIBOR. In addition, the
Company had $214,380 in variable tax-exempt debt with interest
based on the FNMA AAA tax exempt rate. 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                                                          
| 
| | 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 tables below provide information about the
Companys fixed and floating rate debt and derivative
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 swap and cap arrangements, 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.

|                         |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           |  |         |         | 
|------------------------ | --------------------- | ------------------------ | ----------------- | ------ | ------ | ------ | ------- | ----- | ------- | ------- | ------- | ----- | ------ | ------ | ------ | ---------- | ----- | ----- | ------- | ----- | ----- | ----- | ------- | ----- | ------- | ------ | --------- | ----- | ------- | ------- | --------- |  | ------- | ------- | 
|                         |                       |                         
|                         |                       | Expected Maturity Date  
|                         |                       |                         
|                         |                       |                          |                   | There- |        |       
|                         |                       | 2003                     |                   | 2004   |        | 2005   |         | 2006  |         | 2007    |         | after |        | Total  |        | Fair Value
|                         |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |           
|                         |                       |                         
|                         |                       | (in thousands)          
|Long-term Debt:          |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           | 
|Fixed Rate               |                       | $                        | 102,574           |        |        | $      | 25,759  |       |         | $       | 177,967 |       |        | $      | 78,181 |            |       | $     | 110,508 |       |       | $     | 382,717 |       |         | $      | 877,706   |       |         | $       | 928,313   | 
|                         |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           | 
|                         | Average interest rate |                          |                   | 7.24%  |        |        |         | 7.25% |         |         |         | 7.04% |        |        |        | 7.05%      |       |       |         | 7.02% |       |       |         | 6.66% |         |        |           | 7.24% |         |         |           |  |        
|Floating Rate (1)        |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           | 
|                         | LIBOR-based:          |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           |  |        
|                         |                       | Cash Management Line (2) |                   |        | 11,369 |        |         |       |        |         |         |       |       |        |        |            |      |       |         |       |      |       |         |       |        |        |           |       | 11,369  |         |           |  | 11,369  |        
|                         |                       | MTN (3)                  |                   |        |       |        |         |       |        |         |         |       | 25,000 |        |        |            |      |       |         |       |      |       |         |       |        |        |           |       | 25,000  |         |           |  | 25,000  |        
|                         |                       | Revolver (2)             |                   |        |       |        |         |       | 185,000 |         |         |       |       |        |        |            |      |       |         |       |      |       |         |       |        |        |           |       | 185,000 |         |           |  | 185,000 |        
|                         |                       | FNMA (4)                 |                   |        | 1,235  |        |         |       | 1,335   |         |         |       | 1,435  |        |        |            | 1,550 |       |         |       | 1,670 |       |         |       | 93,875  |        |           |       | 101,100 |         |           |  | 101,100 |        
|                         |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           | 
|                         |                       |                          | Total LIBOR-based |        |        | 12,604 |         |       |         | 186,335 |         |       |        | 26,435 |        |            |       | 1,550 |         |       |       | 1,670 |         |       |         | 93,875 |           |       |         | 322,469 |           |  |         | 322,469 | 
|                         |                       | Tax-exempt (5)           |                   |        |       |        |         |       |        |         |         |       |       |        |        |            |      |       |         |       |      |       |         |       | 214,380 |        |           |       | 214,380 |         |           |  | 214,380 |        
|                         |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           | 
|Total floating rate Debt |                       |                          | 12,604            |        |        |        | 186,335 |       |         |         | 26,435  |       |        |        | 1,550  |            |       |       | 1,670   |       |       |       | 308,255 |       |         |        | 536,849   |       |         |         | 536,849   | 
|                         |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           | 
|Total debt               |                       | $                        | 115,178           |        |        | $      | 212,094 |       |         | $       | 204,402 |       |        | $      | 79,731 |            |       | $     | 112,178 |       |       | $     | 690,972 |       |         | $      | 1,414,555 |       |         | $       | 1,465,162 | 
|                         |                       |                          |                   |        |        |        |         |       |         |         |         |       |        |        |        |            |       |       |         |       |       |       |         |       |         |        |           |       |         |         |           | 






|    |                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Interest on these debt instruments is based on
    LIBOR ranging from LIBOR plus 0.75% to LIBOR plus 0.85%. At
    December 31, 2002, the one-month LIBOR rate was 1.44%. 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.                                                                                                                                                         
|(3) | Through an interest rate swap transaction, the
    interest rate on this note is fixed at 7.28%.                                                                                                                                                                                                                                             
|(4) | 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.                                                                                                                             
|(5) | At December 31, 2001, the FNMA
    AAA tax exempt rate was 1.55%. Interest on these
    debt instruments is equal to the FNMA AAA tax exempt
    rate plus credit enhancement and other fees of 0.639%. The
    Company has purchased an interest rate cap that limits the
    Companys exposure to increases in the base rate to 5.00%.




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|                          |                   |                 |          |                        |  |              |      |            |   |               |               |  |         |         |  |   |         |        |  
|------------------------- | ----------------- | --------------- | -------- | ---------------------- |  | ------------ | ---- | ---------- | - | ------------- | ------------- |  | ------- | ------- |  | - | ------- | ------ | -
|                          |                   |                 |          |                        |  |              |      | Expected   |   |              
|                          |                   |                 |          | Average                |  | Average      |      | Settlement |   |              
|Interest Rate Derivatives |                   | Notional Amount |          | Pay Rate/Cap Rate      |  | Receive Rate |      | Date       |   | Fair Value   
|                          |                   |                 |          |                        |  |              |      |            |   |              
|Interest Rate Swaps       |                   |                 |          |                        |  |              |      |            |   |               |               |  |         |         |  |   |         |       
|                          | Variable to fixed |                 |          | $104,000 amortizing to |  |              |      |            |   |               |               |  |         |         |  |   |         |        |  
|                          |                   |                 | $ 90,270 |                        |  |              | 6.04 | %          |   | 1 month LIBOR |               |  | 7/31/09 |         |  | $ | (14,444 | )     
|                          | Variable to fixed |                 |          | $ 25,000               |  |              |      | 6.53       | % |               | 3 month LIBOR |  |         | 2/01/05 |  |   |         | (2,405 | )
|Interest rate cap         |                   |                 | $ 76,000 |                        |  |              | 5.00 | %          |   |              |               |  | 2/01/03 |         |  |   |        |       
|Interest rate cap         |                   |                 | $141,230 |                        |  |              | 5.00 | %          |   |              |               |  | 2/01/03 |         |  |   |        |       
|Interest rate cap         |                   |                 | $ 18,650 |                        |  |              | 5.00 | %          |   |              |               |  | 2/01/03 |         |  |   |        |       
|                          |                   |                 |          |                        |  |              |      |            |   |               |               |  |         |         |  |   |         |       
|                          |                   |                 |          |                        |  |              |      |            |   |               |               |  |         |         |  | $ | (16,849 | )     
|                          |                   |                 |          |                        |  |              |      |            |   |               |               |  |         |         |  |   |         |       

As more fully described in note 1 to the
consolidated financial statements, the interest rate swap and
cap arrangements are carried on the consolidated sheet at the
fair value shown above in accordance with SFAS No. 133, as
amended. If interest rates under the Companys floating
rate LIBOR-based and tax-exempt borrowings, in excess of the
$101,100 FNMA borrowings and $25,000 medium-term notes
effectively converted to fixed rates discussed above, fluctuated
by 1.0%, interest costs to the Company, based on outstanding
borrowings at December 31, 2002, would increase or decrease
by approximately $4,100 on an annualized basis.

Subsequent to December 31, 2002, the Company
entered into two interest rate cap arrangements with two
financial institutions. The new interest rate cap arrangements
replaced three expiring interest rate cap arrangements and were
structured as cash flow hedges to provide a fixed ceiling at 5%
for the Companys variable rate, tax-exempt borrowings. The
Company is required to maintain this interest rate exposure
protection under the terms of the financing arrangements. The
$2,720 cost of the arrangement will be amortized as additional
expense over their five year term in accordance with SFAS No.
133.




ITEM 8.     FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

The financial statements are listed under
Item 15(a) and are filed as part of this report on the
pages indicated. The supplementary data are included in note 17
of the Notes to Consolidated Financial Statements.






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

None.




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##### Table of Contents






PART III




ITEM
10.     DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT

The sections under the headings Election of
Directors entitled Nominees for Election 
Term Expiring 2006, Nominees for
Election  Term Expiring 2005, Incumbent
Directors  Term Expiring 2004, and
Incumbent Directors  Term Expiring 2005
of the Proxy Statement for Annual Meeting of Shareholders to be
held May 22, 2003 (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, Long Term
Incentive Plan Table, Noncompetition Agreements,
Employee Agreements and Change of Control Agreements, 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 AND RELATED STOCKHOLDER MATTERS

The sections under the heading Common Stock
Ownership by Management and Principal Shareholders and
Equity Compensation Plan Information of the Proxy
Statement are incorporated herein by reference.




ITEM 13.     CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

The section under the heading Certain
Relationships and Related Party Transactions of the Proxy
Statement is incorporated herein by reference.




ITEM 14.     CONTROLS
AND PROCEDURES

As required by Securities and Exchange Commission
rules, the Company has evaluated the effectiveness of the design
and operation of its disclosure controls and procedures within
90 days of the filing date of this annual report. This
evaluation was carried out under the supervision and with the
participation of the Companys management, including its
principal executive officer and principal financial officer.
Based on this evaluation, these officers have concluded that the
design and operation of the Companys disclosure controls
and procedures are effective. There were no significant changes
to the Companys internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of their evaluation.

Disclosure controls and procedures are the
Companys controls and other procedures that are designed
to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Securities and Exchange
Commissions rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by
the Company in the reports that it files under the Exchange Act
is accumulated and communicated to the Companys
management, including its principal executive officer and
principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.




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##### Table of Contents






PART IV




ITEM
15.     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

|                                                                                           |                                                                                                                                       |      |  |     | 
|------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | --- | 
|                                                                                           |                                                                                                                                       | Page
|                                                                                           |                                                                                                                                       |     
|POST PROPERTIES, INC.                                                                      |                                                                                                                                       |      |  |    
|Consolidated Financial Statements:                                                         |                                                                                                                                       |      |  |    
|                                                                                           | Report of Independent Accountants                                                                                                     |      |  | 48  | 
|                                                                                           | Consolidated Balance Sheets as of
    December 31, 2002 and 2001                                                                      |      |  | 49  | 
|                                                                                           | Consolidated Statements of Operations for the
    Years Ended December 31, 2002, 2001 and 2000                                        |      |  | 50  | 
|                                                                                           | Consolidated Statements of Shareholders
    Equity and Accumulated Earnings for the Years Ended
    December 31, 2002, 2001 and 2000 |      |  | 51  | 
|                                                                                           | Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2002, 2001 and 2000                                        |      |  | 52  | 
|                                                                                           | Notes to the Consolidated Financial Statements                                                                                        |      |  | 53  | 
|POST APARTMENT HOMES, L.P.                                                                 |                                                                                                                                       |      |  |    
|Consolidated Financial Statements:                                                         |                                                                                                                                       |      |  |    
|                                                                                           | Report of Independent Accountants                                                                                                     |      |  | 75  | 
|                                                                                           | Consolidated Balance Sheets as of
    December 31, 2002 and 2001                                                                      |      |  | 76  | 
|                                                                                           | Consolidated Statements of Operations for the
    Years Ended December 31, 2002, 2001 and 2000                                        |      |  | 77  | 
|                                                                                           | Consolidated Statements of Partners Equity
    for the Years Ended December 31, 2002, 2001 and 2000                                  |      |  | 78  | 
|                                                                                           | Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2002, 2001 and 2000                                        |      |  | 79  | 
|                                                                                           | Notes to the Consolidated Financial Statements                                                                                        |      |  | 80  | 
|Schedule III:                                                                              |                                                                                                                                       |      |  |    
|                                                                                           | Real Estate and Accumulated Depreciation                                                                                              |      |  | 101 | 
|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                                                                                                     |      |  | 106 | 
|                                                                                           | Statement of Net Assets Available for Plan
    Benefits as of December 31, 2002 and 2001                                              |      |  | 107 | 
|                                                                                           | Statement of Changes in Net Assets Available for
    Plan Benefits for the Years Ended December 31, 2002 and 2001                     |      |  | 108 | 
|                                                                                           | Notes to Financial Statements                                                                                                         |      |  | 109 | 




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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. and
subsidiaries at December 31, 2002 and 2001, and the results
of their operations and their cash flows for each of the three
years then ended December 31, 2002 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.

As discussed in Note 1, Post Properties, Inc.
adopted Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended by Statement of Financial
Accounting Standards No. 138, on January 1, 2001.

PricewaterhouseCoopers LLP (signed)

Atlanta, Georgia

February 28, 2003





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POST PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS


(Dollars in thousands, except per share
data)


|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |           |           |           | 
|----------------------------------------------------------------------- | ------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------ | --------- | --------- | --------- | --------- | --------- | --------- | 
|                                                                        |                                       | December 31,                                                                                                                              |                                            | December 31,
|                                                                        |                                       | 2002                                                                                                                                      |                                            | 2001        
|                                                                        |                                       |                                                                                                                                           |                                            |             
|Assets                                                                  |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        | Real estate assets                    |                                                                                                                                           |                                            |              |           |           |           |           |          
|                                                                        |                                       | Land                                                                                                                                      |                                            | $            | 273,058   |           |           | $         | 277,146   |          
|                                                                        |                                       | Building and improvements                                                                                                                 |                                            |              | 1,976,809 |           |           |           | 1,794,658 |          
|                                                                        |                                       | Furniture, fixtures and equipment                                                                                                         |                                            |              | 246,634   |           |           |           | 212,390   |          
|                                                                        |                                       | Construction in progress                                                                                                                  |                                            |              | 92,945    |           |           |           | 419,449   |          
|                                                                        |                                       | Investments in and advances to unconsolidated
    real estate entities                                                                    |                                            |              | 182,285   |           |           |           | 89,692    |          
|                                                                        |                                       | Land held for future development                                                                                                          |                                            |              | 24,879    |           |           |           | 23,658    |          
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        |                                       |                                                                                                                                           | 2,796,610                                  |              |           |           | 2,816,993 |          
|                                                                        |                                       | Less: accumulated depreciation                                                                                                            |                                            |              | (426,136  | )         |           |           | (393,014  | )        
|                                                                        |                                       | Assets held for sale                                                                                                                      |                                            |              | 73,061    |           |           |           | 39,419    |          
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        |                                       |                                                                                                                                           | Total real estate assets                   |              |           | 2,443,535 |           |           |           | 2,463,398 | 
|                                                                        |                                       | Cash and cash equivalents                                                                                                                 |                                            |              | 6,390     |           |           |           | 4,803     |          
|                                                                        |                                       | Restricted cash                                                                                                                           |                                            |              | 1,369     |           |           |           | 1,315     |          
|                                                                        |                                       | Deferred charges, net                                                                                                                     |                                            |              | 15,584    |           |           |           | 18,203    |          
|                                                                        |                                       | Other assets                                                                                                                              |                                            |              | 41,273    |           |           |           | 50,632    |          
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        |                                       |                                                                                                                                           | Total assets                               |              | $         | 2,508,151 |           |           | $         | 2,538,351 | 
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|Liabilities and shareholders
    equity                                |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        | Notes payable                         |                                                                                                                                           | $                                          | 1,414,555    |           |           | $         | 1,336,520 |          
|                                                                        | Accounts payable and accrued expenses |                                                                                                                                           |                                            | 49,124       |           |           |           | 72,277    |          
|                                                                        | Dividend and distribution payable     |                                                                                                                                           |                                            | 33,252       |           |           |           | 33,208    |          
|                                                                        | Accrued interest payable              |                                                                                                                                           |                                            | 8,994        |           |           |           | 9,660     |          
|                                                                        | Security deposits and prepaid rents   |                                                                                                                                           |                                            | 8,250        |           |           |           | 9,016     |          
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        |                                       |                                                                                                                                           | Total liabilities                          |              |           | 1,514,175 |           |           |           | 1,460,681 | 
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|Minority interest of preferred unitholders in
    Operating Partnership |                                       |                                                                                                                                           | 70,000                                     |              |           |           | 70,000    |          
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|Minority interest of common unitholders in
    Operating Partnership    |                                       |                                                                                                                                           | 90,277                                     |              |           |           | 106,153   |          
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|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, 900,000 shares
    issued and outstanding         |                                            |              | 9         |           |           |           | 9         |          
|                                                                        |                                       | 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:                                                                                 |                                            |              |           |           |           |           |           |          
|                                                                        |                                       | 39,676,204 and 39,676,204 shares issued,
    37,202,290 and 36,856,559 shares outstanding at
    December 31, 2002 and 2001, respectively |                                            |              | 396       |           |           |           | 396       |          
|                                                                        |                                       | Additional paid-in capital                                                                                                                |                                            |              | 940,122   |           |           |           | 1,010,954 |          
|                                                                        |                                       | Accumulated earnings                                                                                                                      |                                            |              |          |           |           |           |          |          
|                                                                        |                                       | Accumulated other comprehensive income                                                                                                    |                                            |              | (14,822   | )         |           |           | (5,864    | )        
|                                                                        |                                       | Deferred compensation                                                                                                                     |                                            |              | (639      | )         |           |           | (445      | )        
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        |                                       |                                                                                                                                           | 925,106                                    |              |           |           | 1,005,090 |          
|                                                                        |                                       | Less common stock in treasury, at cost, 2,473,914
    shares and 2,819,645 shares at December 31, 2002 and 2001,
    respectively         |                                            |              | (91,407   | )         |           |           | (103,573  | )        
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        |                                       |                                                                                                                                           | Total shareholders equity                 |              |           | 833,699   |           |           |           | 901,517   | 
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          
|                                                                        |                                       |                                                                                                                                           | Total liabilities and shareholders equity |              | $         | 2,508,151 |           |           | $         | 2,538,351 | 
|                                                                        |                                       |                                                                                                                                           |                                            |              |           |           |           |          

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




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POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS


(Dollars in thousands, except per share
data)


|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |            |         | 
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ----------------------------------- | ------ | ---------- | ------- | ---- | ------ | ---------- | ------- | - | ------- | ---------- | ------- | 
|                                                                                                                                            |                                                                                                               |                                    
|                                                                                                                                            |                                                                                                               | Year ended December 31,            
|                                                                                                                                            |                                                                                                               |                                    
|                                                                                                                                            |                                                                                                               | 2002                                |        | 2001       |         | 2000
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |     
|Revenues                                                                                                                                    |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Rental                                                                                                        |                                     | $      | 316,484    |         |      | $      | 336,206    |         |   | $       | 335,482    |        
|                                                                                                                                            | Other                                                                                                         |                                     |        | 12,225     |         |      |        | 13,253     |         |   |         | 15,587     |        
|                                                                                                                                            | Interest                                                                                                      |                                     |        | 1,288      |         |      |        | 1,771      |         |   |         | 1,922      |        
|                                                                                                                                            | Third party services                                                                                          |                                     |        |           |         |      |        | 14,088     |         |   |         | 15,249     |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            |                                                                                                               | Total revenues                      |        |            | 329,997 |      |        |            | 365,318 |   |         |            | 368,240 | 
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|Expenses                                                                                                                                    |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Property operating and maintenance (exclusive of
    items shown separately below)                            |                                     |        | 131,369    |         |      |        | 129,201    |         |   |         | 120,842    |        
|                                                                                                                                            | Depreciation                                                                                                  |                                     |        | 85,681     |         |      |        | 69,680     |         |   |         | 65,732     |        
|                                                                                                                                            | Interest                                                                                                      |                                     |        | 58,436     |         |      |        | 51,960     |         |   |         | 45,332     |        
|                                                                                                                                            | Amortization of deferred loan costs                                                                           |                                     |        | 2,327      |         |      |        | 1,978      |         |   |         | 1,636      |        
|                                                                                                                                            | General and administrative                                                                                    |                                     |        | 14,431     |         |      |        | 13,256     |         |   |         | 10,066     |        
|                                                                                                                                            | Other                                                                                                         |                                     |        | 694        |         |      |        |           |         |   |         |           |        
|                                                                                                                                            | Project abandonment, employee severance and
    impairment charges                                            |                                     |        |           |         |      |        | 17,450     |         |   |         | 9,365      |        
|                                                                                                                                            | Minority interest in consolidated property
    partnerships                                                   |                                     |        | (2,055     | )       |      |        | (2,098     | )       |   |         | (1,695     | )      
|                                                                                                                                            | Third party services                                                                                          |                                     |        |           |         |      |        | 13,023     |         |   |         | 13,092     |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            |                                                                                                               | Total expenses                      |        |            | 290,883 |      |        |            | 294,450 |   |         |            | 264,370 | 
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|Income from continuing operations before
    equity in losses of unconsolidated entities, gains on property
    sales and minority interest |                                                                                                               |                                     | 39,114 |            |         |      | 70,868 |            |         |   | 103,870 |           
|                                                                                                                                            | Equity in losses of unconsolidated real estate
    entities                                                   |                                     |        | (1,590     | )       |      |        | (186       | )       |   |         |           |        
|                                                                                                                                            | Gains on property sales                                                                                       |                                     |        | 13,275     |         |      |        | 23,942     |         |   |         | 3,208      |        
|                                                                                                                                            | Minority interest of preferred unitholders in
    Operating Partnership                                       |                                     |        | (5,600     | )       |      |        | (5,600     | )       |   |         | (5,600     | )      
|                                                                                                                                            | Minority interest of common unitholders in
    Operating Partnership                                          |                                     |        | (4,073     | )       |      |        | (9,153     | )       |   |         | (10,441    | )      
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            |                                                                                                               | Income from continuing operations   |        |            | 41,126  |      |        |            | 79,871  |   |         |            | 91,037  | 
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|Discontinued operations                                                                                                                     |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Income from discontinued operations, net of
    minority interest                                             |                                     |        | 5,173      |         |      |        | 7,746      |         |   |         | 9,483      |        
|                                                                                                                                            | Gains on property sales, net of minority interest                                                             |                                     |        | 14,567     |         |      |        |           |         |   |         |           |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            |                                                                                                               | Income from discontinued operations |        |            | 19,740  |      |        |            | 7,746   |   |         |            | 9,483   | 
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|Income before cumulative effect of accounting
    change and extraordinary items                                                            |                                                                                                               |                                     | 60,866 |            |         |      | 87,617 |            |         |   | 100,520 |           
|                                                                                                                                            | Cumulative effect of accounting change, net of
    minority interest                                          |                                     |        |           |         |      |        | (613       | )       |   |         |           |        
|                                                                                                                                            | Extraordinary items, net of minority interest                                                                 |                                     |        | (120       | )       |      |        | (77        | )       |   |         |           |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|Net income                                                                                                                                  |                                                                                                               |                                     | 60,746 |            |         |      | 86,927 |            |         |   | 100,520 |           
|                                                                                                                                            | Dividends to preferred shareholders                                                                           |                                     |        | (11,449    | )       |      |        | (11,768    | )       |   |         | (11,875    | )      
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|Net income available to common
    shareholders                                                                                             |                                                                                                               | $                                   | 49,297 |            |         | $    | 75,159 |            |         | $ | 88,645  |           
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|Per common share data 
    basic                                                                                                           |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Income from continuing operations (net of
    preferred dividends)                                            |                                     | $      | 0.80       |         |      | $      | 1.80       |         |   | $       | 2.01       |        
|                                                                                                                                            | Income from discontinued operations                                                                           |                                     |        | 0.53       |         |      |        | 0.20       |         |   |         | 0.24       |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Income before cumulative effect of accounting
    change and extraordinary items (net of preferred dividends) |                                     |        | 1.33       |         |      |        | 2.00       |         |   |         | 2.25       |        
|                                                                                                                                            | Cumulative effect of accounting change, net of
    minority interest                                          |                                     |        |           |         |      |        | (0.02      | )       |   |         |           |        
|                                                                                                                                            | Extraordinary items, net of minority interest                                                                 |                                     |        |           |         |      |        |           |         |   |         |           |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Net income available to common shareholders                                                                   |                                     | $      | 1.33       |         |      | $      | 1.98       |         |   | $       | 2.25       |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Weighted average common shares
    outstanding  basic                                                        |                                     |        | 36,939,144 |         |      |        | 38,052,673 |         |   |         | 39,317,725 |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|Per common share data 
    diluted                                                                                                         |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Income from continuing operations (net of
    preferred dividends)                                            |                                     | $      | 0.80       |         |      | $      | 1.78       |         |   | $       | 1.99       |        
|                                                                                                                                            | Income from discontinued operations                                                                           |                                     |        | 0.53       |         |      |        | 0.20       |         |   |         | 0.23       |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Income before cumulative effect of accounting
    change and extraordinary items (net of preferred dividends) |                                     |        | 1.33       |         |      |        | 1.98       |         |   |         | 2.22       |        
|                                                                                                                                            | Cumulative effect of accounting change, net of
    minority interest                                          |                                     |        |           |         |      |        | (0.02      | )       |   |         |           |        
|                                                                                                                                            | Extraordinary items, net of minority interest                                                                 |                                     |        |           |         |      |        |           |         |   |         |           |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Net income available to common shareholders                                                                   |                                     | $      | 1.33       |         |      | $      | 1.96       |         |   | $       | 2.22       |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Weighted average common shares
    outstanding  diluted                                                      |                                     |        | 36,953,962 |         |      |        | 38,267,939 |         |   |         | 39,852,514 |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           
|                                                                                                                                            | Dividends declared                                                                                            |                                     | $      | 3.12       |         |      | $      | 3.12       |         |   | $       | 3.04       |        
|                                                                                                                                            |                                                                                                               |                                     |        |            |         |      |        |            |         |   |         |           

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




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##### Table of Contents



POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY AND


ACCUMULATED EARNINGS


FOR THE YEARS ENDED DECEMBER 31, 2002, 2001
AND 2000


(Dollars in thousands, except per share
data)


|                                                                     |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |           |          |        |        |  
|-------------------------------------------------------------------- | --------------------------- | ------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | -------------------------- | - | ---------- | --- | ----------- | - | ------------- | --------- | ------------ | ------- | -------- | ------ | ----- | ------- | ------ | ------ | ------- | - | ------ | ---- | ---- | ---- | - | -------- | ------- | ------- | - | ------- | --------- | -------- | ------ | ------ | -
|                                                                     |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   | Accumulated   |           |              |         |          |        |      
|                                                                     |                             |                                                                                                               |                                                                         |                            |   | Additional |     |             |   | Other         |           |              |         |          |        |      
|                                                                     |                             | Preferred                                                                                                     |                                                                         | Common                     |   | Paid-in    |     | Accumulated |   | Comprehensive |           | Deferred     |         | Treasury |        |      
|                                                                     |                             | Stock                                                                                                         |                                                                         | Stock                      |   | Capital    |     | Earnings    |   | Income        |           | Compensation |         | Stock    |        | Total
|                                                                     |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |      
|Shareholders Equity and
    Accumulated                             |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |          
|                                                                     | Earnings, December 31, 1999 |                                                                                                               | $                                                                       | 50                         |   |            | $   | 388         |   |               | $         | 1,058,424    |         |          | $      |      |         |        | $      |        |   |        | $    |     |      |   | $        |        |         |   | $       | 1,058,862 |         
|                                                                     |                             | Net income                                                                                                    |                                                                         |                            |  |            |     |             |  |               |           |              |        |          |        |       | 100,520 |        |        |         |  |        |      |      |     |   |          |         |        |   |         |           | 100,520  |       
|                                                                     |                             | Proceeds from dividend reinvestment and employee
    stock purchase plan                                      |                                                                         |                            |  |            |     |             | 8 |               |           |              | 29,029  |          |        |       |        |        |        |         |  |        |      |      |     |   |          |         | 152     |   |         |           | 29,189   |       
|                                                                     |                             | Adjustment for minority interest of unitholders
    in Operating Partnership at dates of capital transactions |                                                                         |                            |  |            |     |             |  |               |           |              | 320     |          |        |       |        |        |        |         |  |        |      |      |     |   |          |         |        |   |         |           | 320      |       
|                                                                     |                             | Treasury stock acquisitions                                                                                   |                                                                         |                            |  |            |     |             |  |               |           |              |        |          |        |       |        |        |        |         |  |        |      |      |     |   |          |         | (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 |         
|                                                                     |                             | Comprehensive income                                                                                          |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |           |          |       
|                                                                     |                             |                                                                                                               | Net income                                                              |                            |   |           |     |             |   |              |           |              |         |         |        |       |         | 86,927 |        |         |   |       |      |      |      |  |          |         |         |  |         |           |          | 86,927 |       
|                                                                     |                             |                                                                                                               | Cumulative effect of adoption of SFAS 133, net of
    minority interest |                            |   |           |     |             |   |              |           |              |         |         |        |       |         |       |        |         |   | (1,299 | )    |      |      |  |          |         |         |  |         |           |          | (1,299 | )     
|                                                                     |                             |                                                                                                               | Net change in derivative value, net of minority
    interest            |                            |   |           |     |             |   |              |           |              |         |         |        |       |         |       |        |         |   | (4,565 | )    |      |      |  |          |         |         |  |         |           |          | (4,565 | )     
|                                                                     |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |          
|                                                                     |                             |                                                                                                               | Total comprehensive income                                              |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |           |          | 81,063 |       
|                                                                     |                             | Proceeds from dividend reinvestment and employee
    stock purchase plans                                     |                                                                         |                            |  |            |     |             |  |               |           |              | (3,541  | )        |        |       |        |        |        |         |  |        |      |      |     |   |          |         | 12,307  |   |         |           | 8,766    |       
|                                                                     |                             |                                                                                                               |                                                                         | Preferred Stock repurchase |   |            | (1  | )           |   |               |          |              |         |          | (5,099 | )     |         |        |       |         |   |        |     |      |      |   |         |         |         |   |        |           |          |        | (5,100 | )
|                                                                     |                             | Adjustment for minority interest of unitholders
    in Operating Partnership at dates of capital transactions |                                                                         |                            |  |            |     |             |  |               |           |              | 5,194   |          |        |       |        |        |        |         |  |        |      |      |     |   |          |         |        |   |         |           | 5,194    |       
|                                                                     |                             | Restricted stock issuances, net of forfeitures                                                                |                                                                         |                            |  |            |     |             |  |               |           |              | 46      |          |        |       |        |        |        |         |  |        |      |      | (616 | ) |          |         | 570     |   |         |           |         |       
|                                                                     |                             | Amortization of deferred compensation                                                                         |                                                                         |                            |  |            |     |             |  |               |           |              |        |          |        |       |        |        |        |         |  |        |      |      | 171  |   |          |         |        |   |         |           | 171      |       
|                                                                     |                             | Treasury stock acquisitions                                                                                   |                                                                         |                            |  |            |     |             |  |               |           |              |        |          |        |       |        |        |        |         |  |        |      |      |     |   |          |         | (87,547 | ) |         |           | (87,547  | )     
|                                                                     |                             | Dividends to preferred shareholders                                                                           |                                                                         |                            |  |            |     |             |  |               |           |              |        |          |        |       | (11,768 | )      |        |         |  |        |      |      |     |   |          |         |        |   |         |           | (11,768  | )     
|                                                                     |                             | Dividends to common shareholders                                                                              |                                                                         |                            |  |            |     |             |  |               |           |              | (42,713 | )        |        |       | (75,159 | )      |        |         |  |        |      |      |     |   |          |         |        |   |         |           | (117,872 | )     
|                                                                     |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |          
|Shareholders Equity and Accumulated
    Earnings, December 31, 2001 |                             | $                                                                                                             | 49                                                                      |                            |   | $          | 396 |             |   | $             | 1,010,954 |              |         | $        |       |       |         | $      | (5,864 | )       |   | $      | (445 | )    |      | $ | (103,573 | )       |         | $ | 901,517 |          
|                                                                     |                             | Comprehensive income                                                                                          |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |           |          |       
|                                                                     |                             |                                                                                                               | Net income                                                              |                            |   |           |     |             |   |              |           |              |         |         |        |       |         | 60,746 |        |         |   |       |      |      |      |  |          |         |         |  |         |           |          | 60,746 |       
|                                                                     |                             |                                                                                                               | Net change in derivative value, net of minority
    interest            |                            |   |           |     |             |   |              |           |              |         |         |        |       |         |       |        |         |   | (8,958 | )    |      |      |  |          |         |         |  |         |           |          | (8,958 | )     
|                                                                     |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |          
|                                                                     |                             |                                                                                                               | Total comprehensive income                                              |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |           |          | 51,788 |       
|                                                                     |                             | Proceeds from dividend reinvestment and employee
    stock purchase plans                                     |                                                                         |                            |  |            |     |             |  |               |           |              | (10,435 | )        |        |       |        |        |        |         |  |        |      |      |     |   |          |         | 11,689  |   |         |           | 1,254    |       
|                                                                     |                             | Adjustment for minority interest of unitholders
    in Operating Partnership at dates of capital transactions |                                                                         |                            |  |            |     |             |  |               |           |              | 5,656   |          |        |       |        |        |        |         |  |        |      |      |     |   |          |         |        |   |         |           | 5,656    |       
|                                                                     |                             | Restricted stock issuances, net of forfeitures                                                                |                                                                         |                            |  |            |     |             |  |               |           |              | (18     | )        |        |       |        |        |        |         |  |        |      |      | (459 | ) |          |         | 477     |   |         |           |         |       
|                                                                     |                             | Amortization of deferred compensation                                                                         |                                                                         |                            |  |            |     |             |  |               |           |              |        |          |        |       |        |        |        |         |  |        |      |      | 265  |   |          |         |        |   |         |           | 265      |       
|                                                                     |                             | Dividends to preferred shareholders                                                                           |                                                                         |                            |  |            |     |             |  |               |           |              |        |          |        |       | (11,449 | )      |        |         |  |        |      |      |     |   |          |         |        |   |         |           | (11,449  | )     
|                                                                     |                             | Dividends to common shareholders                                                                              |                                                                         |                            |  |            |     |             |  |               |           |              | (66,035 | )        |        |       | (49,297 | )      |        |         |  |        |      |      |     |   |          |         |        |   |         |           | (115,332 | )     
|                                                                     |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |          
|Shareholders Equity and
    Accumulated                             |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |          
|                                                                     | Earnings, December 31, 2002 |                                                                                                               | $                                                                       | 49                         |   |            | $   | 396         |   |               | $         | 940,122      |         |          | $      |      |         |        | $      | (14,822 | ) |        | $    | (639 | )    |   | $        | (91,407 | )       |   | $       | 833,699   |         
|                                                                     |                             |                                                                                                               |                                                                         |                            |   |            |     |             |   |               |           |              |         |          |        |       |         |        |        |         |   |        |      |      |      |   |          |         |         |   |         |          

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




Post Properties, Inc.


51


Post Apartment Homes, L.P.




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##### Table of Contents



POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Dollars in thousands, except per share
data)


|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |          |        |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ----- | -------- | ------- | ---- | ------ | -------- | ------- | - | ----- | -------- | ------ | -
|                                                         |                                                                                       |                                                                                
|                                                         |                                                                                       | Year ended December 31,                                                        
|                                                         |                                                                                       |                                                                                
|                                                         |                                                                                       | 2002                                                                            |       | 2001     |         | 2000
|                                                         |                                                                                       |                                                                                 |       |          |         |     
|Cash Flows From Operating Activities                     |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|                                                         | Net income                                                                            |                                                                                 | $     | 60,746   |         |      | $      | 86,927   |         |   | $     | 100,520  |       
|                                                         | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                                 |       |          |         |      |        |          |         |   |       |          |       
|                                                         |                                                                                       | Gains on property sales  continuing
    operations                             |       |          | (13,275 | )    |        |          | (23,942 | ) |       |          | (3,208 | )
|                                                         |                                                                                       | Gains on property sales  discontinued
    operations, net of minority interest |       |          | (14,567 | )    |        |          |        |   |       |          |       |  
|                                                         |                                                                                       | Minority interest of preferred unitholders in
    Operating Partnership         |       |          | 5,600   |      |        |          | 5,600   |   |       |          | 5,600  |  
|                                                         |                                                                                       | Minority interest of common unitholders in
    Operating Partnership            |       |          | 4,073   |      |        |          | 9,153   |   |       |          | 10,441 |  
|                                                         |                                                                                       | Minority interest in discontinued operations                                    |       |          | 712     |      |        |          | 1,050   |   |       |          | 1,250  |  
|                                                         |                                                                                       | Equity in losses of unconsolidated real estate
    entities                     |       |          | 1,590   |      |        |          | 186     |   |       |          |       |  
|                                                         |                                                                                       | Cumulative effect of accounting change, net of
    minority interest            |       |          |        |      |        |          | 613     |   |       |          |       |  
|                                                         |                                                                                       | Extraordinary items, net of minority interest                                   |       |          | 120     |      |        |          | 77      |   |       |          |       |  
|                                                         |                                                                                       | Depreciation                                                                    |       |          | 87,927  |      |        |          | 76,178  |   |       |          | 71,113 |  
|                                                         |                                                                                       | Amortization of deferred loan costs                                             |       |          | 2,327   |      |        |          | 1,978   |   |       |          | 1,636  |  
|                                                         | Changes in assets, (increase) decrease in:                                            |                                                                                 |       |          |         |      |        |          |         |   |       |          |       
|                                                         |                                                                                       | Restricted cash                                                                 |       |          | (54     | )    |        |          | (43     | ) |       |          | 108    |  
|                                                         |                                                                                       | Other assets                                                                    |       |          | 8,098   |      |        |          | (1,626  | ) |       |          | (8,904 | )
|                                                         |                                                                                       | Deferred charges                                                                |       |          | (1,362  | )    |        |          | (929    | ) |       |          | (1,591 | )
|                                                         | Changes in liabilities, increase
    (decrease) in:                                   |                                                                                 |       |          |         |      |        |          |         |   |       |          |       
|                                                         |                                                                                       | Accrued interest payable                                                        |       |          | (666    | )    |        |          | (1,091  | ) |       |          | 1,591  |  
|                                                         |                                                                                       | Accounts payable and accrued expenses                                           |       |          | (20,740 | )    |        |          | 7,824   |   |       |          | 6,133  |  
|                                                         |                                                                                       | Security deposits and prepaid rents                                             |       |          | (766    | )    |        |          | (391    | ) |       |          | 384    |  
|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|                                                         | Net cash provided by operating activities                                             |                                                                                 |       | 119,763  |         |      |        | 161,564  |         |   |       | 185,073  |       
|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|Cash Flows From Investing Activities                     |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|                                                         | Construction and acquisition of real estate
    assets, net of payables               |                                                                                 |       | (150,792 | )       |      |        | (220,297 | )       |   |       | (362,981 | )     
|                                                         | Net proceeds from property sales                                                      |                                                                                 |       | 182,216  |         |      |        | 220,122  |         |   |       | 157,265  |       
|                                                         | Capitalized interest                                                                  |                                                                                 |       | (13,223  | )       |      |        | (22,124  | )       |   |       | (25,426  | )     
|                                                         | Recurring capital expenditures                                                        |                                                                                 |       | (9,381   | )       |      |        | (10,441  | )       |   |       | (9,157   | )     
|                                                         | Corporate additions and improvements                                                  |                                                                                 |       | (1,100   | )       |      |        | (3,021   | )       |   |       | (3,441   | )     
|                                                         | Non-recurring capital expenditures                                                    |                                                                                 |       | (3,441   | )       |      |        | (2,535   | )       |   |       | (5,576   | )     
|                                                         | Revenue generating capital expenditures                                               |                                                                                 |       | (2,035   | )       |      |        | (4,226   | )       |   |       | (6,670   | )     
|                                                         | Investments in and advances to unconsolidated
    entities                            |                                                                                 |       | (51,065  | )       |      |        | (8,691   | )       |   |       |         |       
|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|                                                         | Net cash used in investing activities                                                 |                                                                                 |       | (48,821  | )       |      |        | (51,213  | )       |   |       | (255,986 | )     
|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|Cash Flows From Financing Activities                     |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|                                                         | Proceeds from notes payable                                                           |                                                                                 |       | 95,500   |         |      |        | 50,000   |         |   |       | 440,001  |       
|                                                         | Payments on notes payable                                                             |                                                                                 |       | (47,632  | )       |      |        | (70,066  | )       |   |       | (56,774  | )     
|                                                         | Lines of credit proceeds (repayments), net                                            |                                                                                 |       | 30,167   |         |      |        | 143,277  |         |   |       | (159,501 | )     
|                                                         | Payment of financing costs                                                            |                                                                                 |       | (561     | )       |      |        | (300     | )       |   |       | (3,128   | )     
|                                                         | Treasury stock acquisitions                                                           |                                                                                 |       |         |         |      |        | (87,547  | )       |   |       | (24,912  | )     
|                                                         | Preferred stock repurchases                                                           |                                                                                 |       |         |         |      |        | (5,100   | )       |   |       |         |       
|                                                         | Proceeds from dividend reinvestment and employee
    stock purchase plan              |                                                                                 |       | 1,254    |         |      |        | 8,766    |         |   |       | 26,754   |       
|                                                         | Distributions to preferred unitholders                                                |                                                                                 |       | (5,600   | )       |      |        | (5,600   | )       |   |       | (5,600   | )     
|                                                         | Distributions to common unitholders                                                   |                                                                                 |       | (15,972  | )       |      |        | (16,018  | )       |   |       | (15,458  | )     
|                                                         | Dividends paid to preferred shareholders                                              |                                                                                 |       | (11,449  | )       |      |        | (11,768  | )       |   |       | (11,875  | )     
|                                                         | Dividends paid to common shareholders                                                 |                                                                                 |       | (115,062 | )       |      |        | (118,651 | )       |   |       | (117,005 | )     
|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|                                                         | Net cash provided by (used in) financing
    activities                               |                                                                                 |       | (69,355  | )       |      |        | (113,007 | )       |   |       | 72,502   |       
|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|Net increase (decrease) in cash and cash
    equivalents |                                                                                       |                                                                                 | 1,587 |          |         |      | (2,656 | )        |         |   | 1,589 |         
|Cash and cash equivalents, beginning of period           |                                                                                       |                                                                                 | 4,803 |          |         |      | 7,459  |          |         |   | 5,870 |         
|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         
|Cash and cash equivalents, end of period                 |                                                                                       | $                                                                               | 6,390 |          |         | $    | 4,803  |          |         | $ | 7,459 |         
|                                                         |                                                                                       |                                                                                 |       |          |         |      |        |          |         |   |       |         

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




Post Properties, Inc.


52


Post Apartment Homes, L.P.




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##### Table of Contents



POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per share
data)





1. ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICES

Organization

Post Properties, Inc. and its subsidiaries
develop, own and manage upscale multifamily apartment
communities in selected markets in the United States. As used
herein, the term Company includes Post Properties,
Inc. and its subsidiaries, including Post Apartment Homes, L.P.
(the Operating Partnership), unless the context indicates
otherwise. The Company, through its wholly owned subsidiaries is
the general partner and owns a majority interest in the
Operating Partnership which, through its subsidiaries, conducts
substantially all of the on-going operations of the Company. At
December 31, 2002, the Company owns 30,317 apartment units
in 84 apartment communities, including 1,377 apartment units
currently under development and lease up in five apartment
communities and an addition to an existing community. At
December 31, 2002, approximately 52.1%, 18.7% and 7.3% (on
a unit basis) of the Companys communities are located in
the Atlanta, Dallas and Tampa metropolitan areas, respectively.

The Company has elected to qualify and operate as
a self-administrated and self-managed real estate investment
trust (REIT) for federal income tax purposes. A REIT
is a legal entity which holds real estate interests and, through
payments of dividends to shareholders, in practical effect is
not subject to federal income taxes at the corporate level.

As of December 31, 2002, the Company had
outstanding 37,202,290 shares of common stock and owned the same
number of units of common limited partnership interests
(Common Units) in the Operating Partnership,
representing an 88.5% ownership interest in the Operating
Partnership. Common Units held by persons (including certain
Company directors) other than the Company totaled 4,829,425 as
of December 31, 2002 and represented a 11.5% common
minority interest in the Operating Partnership. Each Common Unit
may be redeemed by the holder thereof for either one share of
Company common stock or cash equal to the fair market value
thereof at the time of redemption, at the option of the Company.
The Companys weighted average common ownership interest in
the Operating Partnership was 87.9%, 88.1% and 88.3% for the
years ended December 31, 2002, 2001 and 2000, respectively.

Basis of presentation

The accompanying consolidated financial
statements include the consolidated accounts of the Company and
the Operating Partnership. The Companys investments in
non-majority owned entities in which it does not exercise
unilateral control, but has the ability to exercise significant
influence over operating and financial policies, are accounted
for on the equity method of accounting. Accordingly, the
Companys share of the net earnings or losses of these
entities is included in consolidated net income. All significant
intercompany accounts and transactions have been eliminated in
consolidation. The minority interest of unitholders in the
operations of the Operating Partnership is calculated based on
the weighted average unit ownership during the period.

Certain items in the 2001 and 2000 consolidated
financial statements were reclassified for comparative purposes
with the 2002 consolidated financial statements.

Cost capitalization

The Company capitalizes those expenditures
relating to the acquisition of new assets, the development and
construction of new apartment communities, the enhancement of
the value of existing assets and expenditures that substantially
extend the life of existing assets. All other expenditures
necessary to maintain a community in ordinary operating
condition are expensed as incurred. Additionally, for new
development communities, carpet, vinyl, and blind replacements
are expensed as incurred during the first five years (which
corresponds to their estimated depreciable life). Thereafter,
these replacements are capitalized. The Company expenses as
incurred all interior and exterior painting of communities.

For communities under development, the Company
capitalizes interest, real estate taxes, and certain internal
personnel and associated costs directly related to apartment
communities under development and construction. Interest is
capitalized to projects under development based upon the
weighted average cumulative project costs for each month
multiplied by the Companys weighted average borrowing
costs, expressed as a percentage. Weighted average borrowing
costs include the costs of the Companys fixed rate secured
and unsecured borrowings and the




Post Properties, Inc.


53


Post Apartment Homes, L.P.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





variable rate unsecured borrowings under its line
of credit facilities. The weighted average borrowing costs,
expressed as a percentage, for the years ended December, 31,
2002, 2001 and 2000 were 7.55%, 7.41% and 6.80%, respectively.
Internal personnel and associated costs are capitalized to
projects under development based upon the effort identifiable
with such projects. 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. The Company ceases the capitalization of such costs
as the residential units in a community become substantially
complete and available for occupancy. This results in a
proration of these costs between amounts that are capitalized
and expensed as the residential units in a development community
become available for occupancy. In addition, prior to the
completion of units, the Company expenses as incurred
substantially all operating expenses (including pre-opening
marketing as well as property management and leasing personnel
expenses) of such communities.

Real estate assets, depreciation and
impairment

Real estate assets are stated at the lower of
depreciated cost or fair value, if deemed impaired. 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).

The Company continually evaluates the
recoverability of the carrying value of its real estate assets
using the methodology prescribed in Statement of Financial
Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. Factors considered by management in evaluating
impairment of its existing real estate assets held for
investment include significant declines in property operating
profits, recurring property operating losses and other
significant adverse changes in general market conditions that
are considered permanent in nature. If any real estate asset
held for investment is considered impaired, a loss is provided
to reduce the carrying value of the asset to its fair value. The
Company periodically classifies real estate assets as held for
sale. An asset is classified as held for sale after the approval
of the Companys internal investment committee and after an
actual program to sell the asset has commenced. Upon the
classification of a real estate asset as held for sale, the
carrying value of the asset is reduced to the lower of its net
book value or its fair value, less costs to sell the asset.
Subsequent to the classification of assets as held for sale, no
further depreciation expense is recorded.

Real estate assets held for sale are stated
separately on the accompanying consolidated balance sheets.
Effective January 1, 2002 (through the implementation of
SFAS No. 144), the operating results of real estate assets
held for sale and sold are reported as discontinued operations
in the accompanying statements of operations. The income
(loss) from discontinued operations includes the revenues
and expenses including depreciation and allocated interest
expense, associated with the assets. Interest expense is
allocated to assets held for sale based on actual interest costs
for assets with secured mortgage debt. Interest expense is
allocated to unencumbered assets based on the ratio of
unencumbered assets to unsecured debt multiplied by the weighted
average interest rate on the Companys unsecured debt for
the period and further multiplied by the average book value of
the assets sold. This classification of operating results as
discontinued operations applies retroactively for all periods
presented for assets designated as held for sale in 2002.
Additionally, gains and losses on assets designated as held for
sale in 2002 are classified as part of discontinued operations.

In years prior to 2002, real estate assets held
for sale were stated separately on the consolidated balance
sheet in a manner consistent with approach discussed above.
However, the operating results and gains or losses on the sale
of such assets were included in continuing operations. As a
result of this presentation, income from continuing operations
and gains on property sales are not comparable between years.

Revenue recognition

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.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





Stock-based compensation

Through December 31, 2002, the Company
accounted for stock-based compensation under the intrinsic value
method prescribed by Accounting Principles Board
(APB) Opinion 25, Accounting for Stock Issued
to Employees. Under APB Opinion 25, compensation expense
was generally not recognized for stock options granted at the
Companys current stock price on the grant date. In
addition to the information summarized below, the Company
provides the additional disclosures relating to stock options
prescribed by SFAS No. 123, Accounting for
Stock-based Compensation, as amended, in note 9 to these
consolidated financial statements.

In December 2002, SFAS No. 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure, was issued. SFAS No. 148
amends SFAS No. 123 to provide alternative methods of
transition for a voluntary change to the fair value based method
of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements
in both annual and interim financial statements about the method
of accounting for stock-based compensation and the effect of the
method on reported results. Effective January 1, 2003, the
Company intends to voluntarily change to the fair value method
of accounting under SFAS No. 123 using the prospective
method prescribed in SFAS No. 148. The Company estimates
the impact of this change on its projected 2003 results of
operations to be a reduction of earnings per common share of
approximately $0.01.

The following table reflects the Companys
net income and earnings per common share had the fair value
method of accounting under SFAS No. 123 been applied for each
year.

|                                            |                                                                     |      |   |        |   |      |   |        |   |  |   |        |  
|------------------------------------------- | ------------------------------------------------------------------- | ---- | - | ------ | - | ---- | - | ------ | - |  | - | ------ | -
|                                            |                                                                     | 2002 |   | 2001   |   | 2000
|                                            |                                                                     |      |   |        |   |     
|Net income available to common shareholders |                                                                     |      |   |        |   |      |   |        |   |  |   |       
|                                            | As reported                                                         |      | $ | 49,297 |   |      | $ | 75,159 |   |  | $ | 88,645 |  
|                                            | Stock based compensation determined under the
    fair value method |      |   | (499   | ) |      |   | (1,148 | ) |  |   | (1,952 | )
|                                            |                                                                     |      |   |        |   |      |   |        |   |  |   |       
|                                            | Pro forma                                                           |      | $ | 48,798 |   |      | $ | 74,011 |   |  | $ | 86,693 |  
|                                            |                                                                     |      |   |        |   |      |   |        |   |  |   |       
|Net income per common share  basic         |                                                                     |      |   |        |   |      |   |        |   |  |   |       
|                                            | As reported                                                         |      | $ | 1.33   |   |      | $ | 1.98   |   |  | $ | 2.25   |  
|                                            | Pro forma                                                           |      | $ | 1.32   |   |      | $ | 1.94   |   |  | $ | 2.20   |  
|Net income per common share  diluted       |                                                                     |      |   |        |   |      |   |        |   |  |   |       
|                                            | As reported                                                         |      | $ | 1.33   |   |      | $ | 1.96   |   |  | $ | 2.22   |  
|                                            | Pro forma                                                           |      | $ | 1.32   |   |      | $ | 1.93   |   |  | $ | 2.18   |  

Accounting for derivative financial
instruments

Effective January 1, 2001, the Company
accounts for derivative financial instruments at fair value
under the provisions of SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended
by SFAS No. 138, Accounting for Certain Derivative
and Hedging Activities.

The Company uses derivative financial
instruments, interest rate swap and interest rate cap
arrangements, to manage or hedge its exposure to interest rate
changes. The Company designates each derivative instrument as a
hedge of specific interest expense cash flow exposure. Under
SFAS 133, as amended, derivative instruments qualifying as
hedges of specific cash flows are generally recorded on the
balance sheet at fair value with an offsetting increase or
decrease to accumulated other comprehensive income, a
shareholders equity account, until the hedged transactions
are recognized in earnings. Any ineffective portion of cash flow
hedges are recognized immediately in earnings.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





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.

Per share data

Basic earnings per common share is computed by
dividing net income by the weighted average number of shares
outstanding during the period. Diluted earnings per common share
is computed by dividing net income by the weighted average
number of shares outstanding during the period, including the
dilutive effect of outstanding stock options.

Use of estimates

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.

New accounting pronouncements

In 2002 and 2003, the Financial Accounting
Standards Board issued several new accounting pronouncements and
the pronouncements with a potential impact on the Company are
discussed herein.

SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections was issued in May
2002. SFAS No. 145 rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishments of
Debt, which provided that gains and losses from early debt
retirements be treated as extraordinary items. Under SFAS
No. 145, gains and losses from early debt retirements will
only be treated as extraordinary items if they meet the criteria
for extraordinary items under APB No. 30. Since the
definition of an extraordinary item is more restrictive under
APB No. 30, SFAS No. 145 will generally cause the
Company to treat gains or losses from early debt retirements as
part of income before extraordinary items. This part of SFAS
No. 145 is effective for fiscal years beginning after
May 15, 2002 and requires the reclassification of prior
period extraordinary items not meeting the APB No. 30
criteria. The Company expects to implement this requirement of
SFAS No. 145 on January 1, 2003. Upon implementation,
the Company will reclassify $120, net of minority interest, in
2002 and $77, net of minority interest in 2001 from
extraordinary items to expenses used to determine income from
continuing operations. The Company believes this change is not
significant to the Operating Companys results of
operations or its financial position. The remaining provisions
of SFAS No. 145 are generally not applicable to the Company.

SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities was issued in
July 2002. This Statement addresses financial accounting and
reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring).
SFAS 146 is effective for exit or disposal activities
initiated after December 31, 2002. The Company believes the
provisions of this Statement will not have a significant effect
on the Companys results of operations or its financial
position.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





FASB Interpretation No. 45 (FIN
No. 45), Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Guarantees of
Indebtedness of Others was issued in November 2002. FIN
No. 45 clarifies disclosure requirements to be made by a
guarantor in its interim and annual financial statements
regarding its obligations under certain guarantees that it has
issued. Additionally, it clarifies that a guarantor is required
to recognize, at the inception of a guarantee, a liability for
the fair value of the obligation undertaken in issuing the
guarantee. The disclosure requirements of FIN No. 45 are
effective for interim and annual financial statements issued
after December 15, 2002. The initial recognition and
measurement provisions of FIN No. 45 are applicable for
guarantees issued or modified after December 31, 2002. The
Company has implemented the disclosure requirements of FIN
No. 45 effective with these December 31, 2002
financial statements and the Company will implement the
recognition and measurement provisions effective January 1,
2003. The Company does not expect the recognition and
measurement provisions of FIN No. 45 to have a significant
impact on the Companys financial position or results of
operations.

FASB Interpretation No. 46 (FIN
No. 46), Consolidation of Variable Interest
Entities, an interpretation of ARB No. 51 was issued
in January 2003. FIN No. 46 requires consolidation of all
legal entities in which the enterprise holds contractual,
ownership or other monetary interests that change with changes
in the entitys net asset value (such entities being
designated as variable interest entities) where the enterprise
is deemed the primary beneficiary. The consolidation provisions
of FIN No. 46 are applicable immediately to all variable
interest entities created after January 31, 2003. For
variable interest entities created prior to February 1,
2003 where the Company is deemed to be the primary beneficiary,
consolidation of such entities will be required for the interim
period ending September 30, 2003. Information required to
be disclosed in 2003 pursuant to FIN No. 46 includes the
nature, purpose, size and activities of all variable interest
entities where it is reasonably possible that such entities will
be required to be consolidated by the Company and the
Companys maximum exposure to loss from these entities. The
Company currently does not have any interests in variable
interest entities and believes that FIN No. 46 will not
have a significant effect on its results of operations or
financial position.

2. DEFERRED CHARGES

Deferred charges consist of the following:

|                               |  |              |         |      |  |   |         |  
|------------------------------ |  | ------------ | ------- | ---- |  | - | ------- | -
|                               |  |             
|                               |  | December 31,
|                               |  |             
|                               |  | 2002         |         | 2001
|                               |  |              |         |     
|Deferred financing costs       |  | $            | 37,037  |      |  | $ | 35,817  |  
|Other                          |  |              | 3,532   |      |  |   | 4,527   |  
|                               |  |              |         |      |  |   |         |  
|                               |  |              | 40,569  |      |  |   | 40,344  |  
|Less: accumulated amortization |  |              | (24,985 | )    |  |   | (22,141 | )
|                               |  |              |         |      |  |   |         |  
|                               |  | $            | 15,584  |      |  | $ | 18,203  |  
|                               |  |              |         |      |  |   |         |  




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





3. NOTES PAYABLE

At December 31, 2002 and 2001, the
Companys indebtedness consisted of the following:

|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|------------------------------------- |  | ------------- | ------------- | -------- |  | -------- | --------------- | ------------ |  | ---- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                      |  |               |               |          |  |          |                 |             
|                                      |  |               |               |          |  |          |                 | December 31,
|                                      |  |               |               | Interest |  | Maturity |                 |             
|Description                           |  | Payment Terms |               | Rate     |  | Date(1)  |                 | 2002         |  | 2001
|                                      |  |               |               |          |  |          |                 |              |  |     
|Unsecured Notes                       |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|Senior Notes                          |  |               | Int           |          |  |          | 6.11% -  7.70%  |              |  |      | 2003-2010 |  |  | $ | 385,000   |  |  | $ | 360,000   | 
|Medium Term Notes                     |  |               | Int           |          |  |          | 6.69% -   8.12% | (2)          |  |      | 2004-2015 |  |  |   | 323,000   |  |  |   | 323,000   | 
|Other                                 |  |               | Int           |          |  |          | 8.37%           |              |  |      | 2002      |  |  |   |          |  |  |   | 20,000    | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   | 708,000   |  |  |   | 703,000   | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|Unsecured Lines of Credit &
    Other |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|Revolver                              |  |               | N/A           |          |  |          | LIBOR +  0.85%  | (3)          |  |      | 2004      |  |  |   | 185,000   |  |  |   | 155,000   | 
|Cash Management Line                  |  |               | N/A           |          |  |          | LIBOR +  0.75%  |              |  |      | 2003      |  |  |   | 11,369    |  |  |   | 11,202    | 
|Other                                 |  |               | N/A           |          |  |          | 5.00%           |              |  |      | 2021      |  |  |   |          |  |  |   | 2,000     | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   | 196,369   |  |  |   | 168,202   | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|Conventional Fixed Rate (Secured)     |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|FNMA                                  |  |               | Prin. and Int |          |  |          | 6.975%          | (4)          |  |      | 2029      |  |  |   | 101,100   |  |  |   | 102,200   | 
|Other                                 |  |               | Prin. and Int |          |  |          | 5.50% -  7.69%  |              |  |      | 2007-2013 |  |  |   | 194,706   |  |  |   | 127,238   | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   | 295,806   |  |  |   | 229,438   | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|Tax Exempt Floating Rate Bonds        |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|(Secured)                             |  |               | Int           |          |  |          | 1.55%           | (5)          |  |      | 2025      |  |  |   | 214,380   |  |  |   | 235,880   | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 
|Total                                 |  |               |               |          |  |          |                 |              |  |      |           |  |  | $ | 1,414,555 |  |  | $ | 1,336,520 | 
|                                      |  |               |               |          |  |          |                 |              |  |      |           |  |  |   |           |  |  |   |           | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All outstanding indebtedness can be prepaid at
    any time, subject to certain prepayment penalties.                                                                                                                                                                                                                                                                                                         
|(2) | Contains $100,000 of Mandatory Par Put Remarketed
    Securities. The annual interest rate on these securities to 2005
    (the Remarketing Date) is 6.85%. On the Remarketing
    Date, they are subject to mandatory tender for remarketing.                                                                                                                                                              
|(3) | Represents stated rate. At December 31,
    2002, the weighted average interest rate was 2.23%.                                                                                                                                                                                                                                                                                                               
|(4) | Interest rate is fixed at 6.975%, inclusive of
    credit enhancement and other fees, to 2009 through an interest
    rate swap arrangement.                                                                                                                                                                                                                                                                  
|(5) | FNMA credit enhanced bond indebtedness. Interest
    based on FNMA AAA tax exempt rate plus credit
    enhancement and other fees of 0.639%. Interest rate represents
    rate at December 31, 2002 before credit enhancements. At
    December 31, 2002, the Company has outstanding interest
    rate cap arrangements that limit the Companys exposure to
    increases in the base interest rate to 5%.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





New debt issuances

In June 2002, the Company issued $25,000 of
unsecured notes at par. These notes bear interest at 6.11% and
mature June 2007. Also in June 2002, the Company closed a
$13,500 secured mortgage loan.. This loan bears interest at
6.29% and requires monthly principal and interest payments on a
25-year amortization schedule. The loan matures on October 2007.

In December 2002, the Company closed a $57,000
mortgage loan with a life insurance company. This loan carries
an interest rate of 5.5% and requires payments of interest only
for the first five years. Thereafter, payments of principal and
interest are required based upon a 30-year amortization schedule
until the loans maturity in January 2013.

Debt maturities

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

|           |  |   |           | 
|---------- |  | - | --------- | 
|2003       |  | $ | 103,809   | 
|2004       |  |   | 27,094    | 
|2005       |  |   | 204,402   | 
|2006       |  |   | 79,732    | 
|2007       |  |   | 112,178   | 
|Thereafter |  |   | 690,971   | 
|           |  |   |           | 
|           |  | $ | 1,218,186 | 
|           |  |   |           | 






|    |                                                                      
|--- | ---------------------------------------------------------------------
|(1) | Excludes outstanding balances on lines of credit
    discussed below.

Unsecured lines of credit

The Company utilizes a $320,000 three-year
syndicated revolving line of credit (the Revolver),
for its short-term financing requirements. At December 31,
2002, the stated interest rate for the Revolver was LIBOR plus
0.85% or prime minus 0.25%. 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, at the
Companys current dividend level. The Revolver matures in
April 2004. Management expects to renew this facility in 2003
with a total capacity of approximately $300,000.

The Company also has in place an additional
$125,000 line of credit facility for general corporate purposes.
This line bears interest at LIBOR plus 0.90% and matures in
April 2003. Management does not expect to renew this facility in
April 2003 as the Companys financing needs have reduced
consistent with the Companys reduced development spending.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





Additionally, the Company has 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 0.75% or prime minus .25% and
matures in February 2003. Subsequent to year end, the Cash
Management Line was renewed through June 2003 with similar terms
to its existing facility. At December 31, 2002, the Company
has issued letters of credit to third parties totaling $1,323
under this facility.

Interest paid

Interest paid (including capitalized amounts of
$13,223, $22,124 and $25,426 for the years ended
December 31, 2002, 2001 and 2000, respectively), aggregated
$79,115, $82,383 and $74,419 for the years ended
December 31, 2002, 2001 and 2000, respectively.

Pledged assets

The aggregate net book value at December 31,
2002 of property pledged as collateral for indebtedness amounted
to approximately $497,473.

Extraordinary items

The extraordinary losses for the years ended
December 31, 2002 and 2001 of $136 ($120, net of minority
interest) and $88 ($77, net of minority interest), respectively,
resulted from costs associated with the early extinguishment of
indebtedness.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





4. INVESTMENTS IN UNCONSOLIDATED REAL
ESTATE ENTITIES

The Company holds investments in four individual
limited liability companies (the Property LLCs) with
an institutional investor. Each Property LLC owns a newly
developed or under development apartment community. At
December 31, 2002, all of the apartment communities had
commenced rental operations. The Company holds a 35% equity
interest in the Property LLCs. The total estimated development
cost of the apartment communities of $219,000 is being funded
through member equity contributions proportionate to the
members ownership interests and through construction
financing provided by the Company. The Company accounts for its
investments in these Property LLCs using the equity method of
accounting. The excess of the Companys investment over its
equity in the underlying net assets of the Property LLCs was
approximately $9,070 at December 31, 2002. This excess
investment is being amortized as a reduction to earnings on a
straight-line basis over the lives of the related assets. The
Company provides real estate services (development, construction
and property management) to the Property LLCs.

The operating results of the Company include its
proportionate share of net income (loss) from the
investments in the Property LLCs. A summary of financial
information for the Property LLCs in the aggregate is as follows:

|                                      |                                       |              |         |         |  |   |         |         | 
|------------------------------------- | ------------------------------------- | ------------ | ------- | ------- |  | - | ------- | ------- | 
|                                      |                                       |             
|                                      |                                       | December 31,
|                                      |                                       |             
|                                      |                                       | 2002         |         | 2001   
|                                      |                                       |              |         |        
|Real estate assets, net               |                                       | $            | 198,854 |         |  | $ | 115,664 |        
|Cash and other                        |                                       |              | 2,330   |         |  |   | 533     |        
|                                      |                                       |              |         |         |  |   |         |        
|                                      | Total assets                          |              |         | 201,184 |  |   | $       | 116,197 | 
|                                      |                                       |              |         |         |  |   |         |        
|Construction notes payable to Company |                                       | $            | 160,294 |         |  | $ | 77,019  |        
|Other liabilities                     |                                       |              | 3,975   |         |  |   | 11,892  |        
|                                      |                                       |              |         |         |  |   |         |        
|                                      | Total liabilities                     |              |         | 164,269 |  |   |         | 88,911  | 
|                                      |                                       |              |         |         |  |   |         |        
|Members equity                       |                                       |              | 36,915  |         |  |   | 27,286  |        
|                                      |                                       |              |         |         |  |   |         |        
|                                      | Total liabilities and members equity |              | $       | 201,184 |  |   | $       | 116,197 | 
|                                      |                                       |              |         |         |  |   |         |        
|Companys equity investment           |                                       | $            | 21,991  |         |  | $ | 12,673  |        
|                                      |                                       |              |         |         |  |   |         |        

|                            |                                    |                |        |       |        |   |      |     |     | 
|--------------------------- | ---------------------------------- | -------------- | ------ | ----- | ------ | - | ---- | --- | --- | 
|                            |                                    |               
|                            |                                    | Year ended    
|                            |                                    | December 31,  
|                            |                                    |               
|                            |                                    | 2002           |        | 2001 
|                            |                                    |                |        |      
|Revenues                    |                                    |                |        |       |        |   |      |    
|                            | Rental                             |                | $      | 5,661 |        |   | $    | 136 |    
|                            | Other                              |                |        | 381   |        |   |      | 50  |    
|                            |                                    |                |        |       |        |   |      |    
|                            |                                    | Total revenues |        |       | 6,042  |   |      |     | 186 | 
|                            |                                    |                |        |       |        |   |      |    
|Expenses                    |                                    |                |        |       |        |   |      |    
|                            | Property operating and maintenance |                |        | 4,655 |        |   |      | 416 |    
|                            | Depreciation                       |                |        | 3,153 |        |   |      | 192 |    
|                            | Interest                           |                |        | 2,778 |        |   |      | 110 |    
|                            |                                    |                |        |       |        |   |      |    
|                            |                                    | Total expenses |        |       | 10,586 |   |      |     | 718 | 
|                            |                                    |                |        |       |        |   |      |    
|Net loss                    |                                    | $              | (4,544 | )     |        | $ | (532 | )  
|                            |                                    |                |        |       |        |   |      |    
|Companys share of net loss |                                    | $              | (1,590 | )     |        | $ | (186 | )  
|                            |                                    |                |        |       |        |   |      |    

The Company has committed construction financing
to the Property LLCs totaling $168,473 ($160,294 funded at
December 31, 2002). These loans earn interest at LIBOR plus
1.75% and are secured by the apartment communities. The loans
mature on dates ranging from February 2003 to November 2004 and
are expected to be repaid from the proceeds of permanent project
financings. As of December 31, 2002, the institutional
investors share of these notes was $104,191. Subsequent to
December 31, 2002, one of the Property LLCs repaid its
outstanding construction note payable to the Company of $24,071.
The note was repaid through the proceeds from a third-party
non-recourse permanent mortgage note totaling $17,000 and from
member equity contributions totaling $7,132. The Company issued
a limited guarantee and indemnity to the lender regarding
certain customary recourse liabilities and environmental matters
up to a maximum potential exposure of $5,000. The other member
of the Property LLC is obligated to reimburse the Company for up
to its 65% share ($3,250) of the maximum potential exposure
under these arrangements.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





As part of the development and construction
services agreements entered into between the Company and the
Property LLCs, the Company guaranteed the maximum total amount
for certain construction cost categories subject to aggregate
limits (approximately $19,000). At December 31, 2002, the
Company had substantially completed three of the communities and
had funded approximately $845 under the guarantee provisions of
the agreements. The amounts funded were accounted for as part of
the Companys investment in the Property LLCs. The
Companys remaining maximum exposure for the fourth
Property LLC totals approximately $5,200. The Company does not
currently expect to be required to fund any guarantees relating
to this Property LLC. Additionally, under these agreements, the
Company is subject to project completion requirements, as
defined. At December 31, 2002, the Company had met and
believes that it will meet the remaining completion date
requirements and not be subject to any additional costs.

5. REAL ESTATE ASSETS HELD FOR
SALE / DISCONTINUED OPERATIONS

The Company classifies real estate assets as held
for sale after the approval of its internal investment committee
and after the Company has commenced an active program to sell
the assets. At December 31 2002, the Company has two
apartment communities and certain tracts of land classified as
held for sale. These real estate assets are classified
separately in the accompanying consolidated balance sheet at
$73,061, which represented the lower of cost or fair value, less
costs to sell. The Company expects the sale of these assets to
occur in the next twelve months.

Under SFAS No. 144, the operating results of
assets designated as held for sale subsequent to January 1,
2002 are included in discontinued operations for all periods
presented. Additionally, all gains and losses on the sale of
these assets are included in discontinued operations. In the
year ended December 31, 2002, the Company designated and
classified eight apartment communities, one commercial property
and six tracts of land as held for sale. Income from
discontinued operations includes the results of operations
through the earlier of the community sale date (if the community
was sold between January 1, 2002 and December 31,
2002) or December 31, 2002 of eight apartment communities
containing 3,134 units and one commercial property designated as
held for sale in 2002. The revenues and expenses of these
communities for the years ended December 31, 2002, 2001 and
2000 were as follows:

|                                                                   |                                                                                   |                |       |        |        |      |       |        |        |   |        |        |        | 
|------------------------------------------------------------------ | --------------------------------------------------------------------------------- | -------------- | ----- | ------ | ------ | ---- | ----- | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                   |                                                                                   | 2002           |       | 2001   |        | 2000
|                                                                   |                                                                                   |                |       |        |        |     
|Revenues                                                           |                                                                                   |                |       |        |        |      |       |        |        |   |        |       
|                                                                   | Rental                                                                            |                | $     | 18,706 |        |      | $     | 31,836 |        |   | $      | 30,413 |       
|                                                                   | Other                                                                             |                |       | 719    |        |      |       | 1,279  |        |   |        | 1,179  |       
|                                                                   |                                                                                   |                |       |        |        |      |       |        |        |   |        |       
|                                                                   |                                                                                   | Total revenues |       |        | 19,425 |      |       |        | 33,115 |   |        |        | 31,592 | 
|                                                                   |                                                                                   |                |       |        |        |      |       |        |        |   |        |       
|Expenses                                                           |                                                                                   |                |       |        |        |      |       |        |        |   |        |       
|                                                                   | Property operating and maintenance (exclusive of
    item shown separately below) |                |       | 7,919  |        |      |       | 11,918 |        |   |        | 10,507 |       
|                                                                   | Depreciation                                                                      |                |       | 2,246  |        |      |       | 6,431  |        |   |        | 5,381  |       
|                                                                   | Interest                                                                          |                |       | 3,375  |        |      |       | 5,970  |        |   |        | 4,971  |       
|                                                                   |                                                                                   |                |       |        |        |      |       |        |        |   |        |       
|                                                                   |                                                                                   | Total expenses |       |        | 13,540 |      |       |        | 24,319 |   |        |        | 20,859 | 
|                                                                   |                                                                                   |                |       |        |        |      |       |        |        |   |        |       
|Income from discontinued operations (before
    minority interest) |                                                                                   | $              | 5,885 |        |        | $    | 8,796 |        |        | $ | 10,733 |       
|                                                                   |                                                                                   |                |       |        |        |      |       |        |        |   |        |       

The Company recognized net gains of $20,268
($17,818 net of minority interest) on the sale of real estate
assets designated for sale in 2002, offset by reserves of $3,698
($3,251 net of minority interest) to write down to fair market
value certain land parcels designated as held for sale in 2002.
These sales generated net proceeds of approximately $140,823.

Under prior accounting pronouncements, operating
results and net gains or losses on the sale of assets classified
as held for sale prior to December 31, 2001 are included in
continuing operations. As a result of this presentation, income
from continuing operations and gains on property sales are not
comparable between periods. The discussion below relates to the
gains on sale of assets reported in continuing operations in the
consolidated statements of operations for the years ended
December 31, 2002, 2001 and 2000.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





For the year ended December 31, 2002, the
Company sold two apartment communities containing 540 units and
one commercial property for net proceeds of $41,393. The
communities were located in Tampa, Florida and Clearwater,
Florida and the commercial property was located in Grand
Prairie, Texas. These sales resulted in net gains of
approximately $13,275. These gains excluded losses of $4,861
related to these assets that were written down to their
estimated fair value at December 31, 2001. For the years
ended December 31, 2002, 2001 and 2000, the consolidated
statement of operations included net income from these
properties of $369, $3,227 and $3,132, respectively. For the
years ended December 31, 2001 and 2000, net income
reflected above includes depreciation expense of $844 and $886,
respectively. No depreciation expense was recorded in 2002.

In 2001, the Company sold six apartment
communities containing 2,799 units for net proceeds of
approximately $210,443. The communities sold were located in
Atlanta, Georgia, Dallas, Texas and Nashville, Tennessee.
Additionally, the Company sold land parcels in Dallas, Texas,
Denver, Colorado and Charlotte, North Carolina and a commercial
property in Dallas, Texas for aggregate net proceeds of $9,679.
These sales resulted in net gains of approximately $16,365. For
the year ended December 31, 2001, the aggregate net gain on
the sale of assets of $23,942 included the impact of estimated
net losses totaling $11,490 on the write down to fair value of
assets designated as held for sale at December 31, 2001 and
excluded realized losses totaling $19,067 related to assets
written down to their estimate fair value at December 31,
2000.

In 2000, the Company sold eight apartment
communities containing 1,984 units for net proceeds of
approximately $157,265, resulting in net gains of approximately
$24,266. The communities sold were located in Atlanta, Georgia,
Jackson, Mississippi and Nashville, Tennessee. For the year
ended December 31, 2000, the aggregate net gain on the sale
of assets of $3,208 included the estimated net losses totaling
$21,058 on the write down to fair value of assets designated as
held for sale at December 31, 2000.

6. SHAREHOLDERS EQUITY /
MINORITY INTEREST

Preferred Stock

At December 31, 2002 and 2001, the Company
had issued three series of preferred stock with the following
characteristics:

|            |  |             |       |            |  |                 |          |          |  |   |       |  |  |  |       |  
|----------- |  | ----------- | ----- | ---------- |  | --------------- | -------- | -------- |  | - | ----- |  |  |  | ----- | -
|            |  | Liquidation |       | Optional   |  | Redemption      |          | Stated  
|            |  | Preference  |       | Redemption |  | Price           |          | Dividend
|Description |  | (per share) |       | Date (1)   |  | (per share) (1) |          | Rate    
|            |  |             |       |            |  |                 |          |         
|Series A    |  | $           | 50.00 |            |  |                 | 10/01/26 |          |  | $ | 50.00 |  |  |  | 8.5   | %
|Series B    |  | $           | 25.00 |            |  |                 | 10/28/07 |          |  | $ | 25.00 |  |  |  | 7.625 | %
|Series C    |  | $           | 25.00 |            |  |                 | 02/09/03 |          |  | $ | 25.00 |  |  |  | 7.625 | %






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




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





Computation of Earnings Per Common
Share

For the years ended December 31, 2002, 2001
and 2000, basic and diluted earnings per common share for income
from continuing operations available to common shareholders,
before cumulative effect of accounting change and extraordinary
items, has been computed as follows:

|                                                                                                                           |  |                              |         |               |  |           |            |  |  |   |      | 
|-------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | ------------- |  | --------- | ---------- |  |  | - | ---- | 
|                                                                                                                           |  |                             
|                                                                                                                           |  | Year ended December 31, 2002
|                                                                                                                           |  |                             
|                                                                                                                           |  | Income                       |         | Shares        |  | Per-Share
|                                                                                                                           |  | (Numerator)                  |         | (Denominator) |  | Amount   
|                                                                                                                           |  |                              |         |               |  |          
|Income from continuing operations                                                                                          |  | $                            | 41,126  |               |  |           |            |  |  |   |      | 
|Less: Preferred stock dividends                                                                                            |  |                              | (11,449 | )             |  |           |            |  |  |   |      | 
|                                                                                                                           |  |                              |         |               |  |           |            |  |  |   |      | 
|Basic EPS                                                                                                                  |  |                              |         |               |  |           |            |  |  |   |      | 
|Income from continuing operations available to
    common shareholders before extraordinary item                           |  |                              | 29,677  |               |  |           | 36,939,144 |  |  | $ | 0.80 | 
|                                                                                                                           |  |                              |         |               |  |           |            |  |  |   |      | 
|Effect of dilutive securities                                                                                              |  |                              |         |               |  |           |            |  |  |   |      | 
|Stock options                                                                                                              |  |                              |        |               |  |           | 14,818     |  |  |   |      | 
|                                                                                                                           |  |                              |         |               |  |           |            |  |  |   |      | 
|Diluted EPS                                                                                                                |  |                              |         |               |  |           |            |  |  |   |      | 
|Income from continuing operations available to
    common shareholders before extraordinary item + assumed
    conversions |  | $                            | 29,677  |               |  |           | 36,953,962 |  |  | $ | 0.80 | 
|                                                                                                                           |  |                              |         |               |  |           |            |  |  |   |      | 

|                                                                                                                                                                      |  |                              |         |               |  |           |            |  |  |   |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | ------------- |  | --------- | ---------- |  |  | - | ---- | 
|                                                                                                                                                                      |  |                             
|                                                                                                                                                                      |  | Year ended December 31, 2001
|                                                                                                                                                                      |  |                             
|                                                                                                                                                                      |  | Income                       |         | Shares        |  | Per-Share
|                                                                                                                                                                      |  | (Numerator)                  |         | (Denominator) |  | Amount   
|                                                                                                                                                                      |  |                              |         |               |  |          
|Income from continuing operations                                                                                                                                     |  | $                            | 79,871  |               |  |           |            |  |  |   |      | 
|Less: Preferred stock dividends                                                                                                                                       |  |                              | (11,768 | )             |  |           |            |  |  |   |      | 
|                                                                                                                                                                      |  |                              |         |               |  |           |            |  |  |   |      | 
|Basic EPS                                                                                                                                                             |  |                              |         |               |  |           |            |  |  |   |      | 
|Income from continuing operations available to
    common shareholders before cumulative effect of accounting
    change and extraordinary item                       |  |                              | 68,103  |               |  |           | 38,052,673 |  |  | $ | 1.80 | 
|                                                                                                                                                                      |  |                              |         |               |  |           |            |  |  |   |      | 
|Effect of dilutive securities                                                                                                                                         |  |                              |         |               |  |           |            |  |  |   |      | 
|Stock options                                                                                                                                                         |  |                              |        |               |  |           | 215,266    |  |  |   |      | 
|                                                                                                                                                                      |  |                              |         |               |  |           |            |  |  |   |      | 
|Diluted EPS                                                                                                                                                           |  |                              |         |               |  |           |            |  |  |   |      | 
|Income from continuing operations available to
    common shareholders before cumulative effect of accounting
    change and extraordinary item + assumed conversions |  | $                            | 68,103  |               |  |           | 38,267,939 |  |  | $ | 1.78 | 
|                                                                                                                                                                      |  |                              |         |               |  |           |            |  |  |   |      | 

|                                                                                             |  |                              |         |               |  |           |            |  |  |   |      | 
|-------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | ------------- |  | --------- | ---------- |  |  | - | ---- | 
|                                                                                             |  |                             
|                                                                                             |  | Year ended December 31, 2000
|                                                                                             |  |                             
|                                                                                             |  | Income                       |         | Shares        |  | Per-Share
|                                                                                             |  | (Numerator)                  |         | (Denominator) |  | Amount   
|                                                                                             |  |                              |         |               |  |          
|Income from continuing operations                                                            |  | $                            | 91,037  |               |  |           |            |  |  |   |      | 
|Less: Preferred stock dividends                                                              |  |                              | (11,875 | )             |  |           |            |  |  |   |      | 
|                                                                                             |  |                              |         |               |  |           |            |  |  |   |      | 
|Basic EPS                                                                                    |  |                              |         |               |  |           |            |  |  |   |      | 
|Income from continuing operations available to
    common shareholders                       |  |                              | 79,162  |               |  |           | 39,317,725 |  |  | $ | 2.01 | 
|                                                                                             |  |                              |         |               |  |           |            |  |  |   |      | 
|Effect of dilutive securities                                                                |  |                              |         |               |  |           |            |  |  |   |      | 
|Stock options                                                                                |  |                              |        |               |  |           | 534,789    |  |  |   |      | 
|                                                                                             |  |                              |         |               |  |           |            |  |  |   |      | 
|Diluted EPS                                                                                  |  |                              |         |               |  |           |            |  |  |   |      | 
|Income from continuing operations available to
    common shareholders + assumed conversions |  | $                            | 79,162  |               |  |           | 39,852,514 |  |  | $ | 1.99 | 
|                                                                                             |  |                              |         |               |  |           |            |  |  |   |      | 




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POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





Preferred Units

The Operating Partnership has outstanding
2,800,000, 8% Series D cumulative redeemable preferred
units (the Series D Preferred Units). The
Series D Preferred Units have a liquidation preference of
$25.00 per unit and are redeemable by the Operating Partnership
on or after September 3, 2004, at a redemption price of
$25.00 per unit. The Series D Preferred Units are
exchangeable into authorized, but unissued Series D
preferred stock of the Company, with identical terms and
preferences, on or after September 2, 2009, at the option
of the holders. Under certain circumstances, as defined in the
agreement, the Series D Preferred Units may be exchanged
prior September 2, 2009, at the option of the holders.
These Series D Preferred Units are reflected in the
accompanying consolidated balance sheets as preferred minority
interests at their liquidation preference of $70,000.

7. PROJECT ABANDONMENT, EMPLOYEE
SEVERANCE AND IMPAIRMENT CHARGES

The Company recorded project impairment and
abandonment, employee severance and asset impairment charges in
the years ended December 31, 2001 and 2000. The charges
were as follows:

|                                   |  |      |        |      |  |   |       | 
|---------------------------------- |  | ---- | ------ | ---- |  | - | ----- | 
|                                   |  | 2001 |        | 2000
|                                   |  |      |        |     
|Project impairment and abandonment |  | $    | 8,122  |      |  | $ | 4,389 | 
|Employee severance                 |  |      | 3,560  |      |  |   | 3,066 | 
|Asset impairment                   |  |      | 5,768  |      |  |   | 1,910 | 
|                                   |  |      |        |      |  |   |       | 
|                                   |  | $    | 17,450 |      |  | $ | 9,365 | 
|                                   |  |      |        |      |  |   |       | 

In the fourth quarter of 2001, the Company
recorded charges totaling $17,450. These charges, precipitated
by the sharp decline in economic and market conditions, reflect
managements decision to focus its business and new
development strategy on fewer markets, to focus on its core
business of owning, developing and managing multifamily real
estate assets and to do so with a smaller workforce and lower
overhead expenses. The project impairment and abandonment charge
of $8,122 represents reserves on certain predevelopment and
transaction pursuit costs in markets the Company will no longer
pursue for development opportunities and for certain projects
that will no longer be pursued due to economic and market
conditions. The employee severance charge of $3,560 is primarily
for severance costs related to approximately a 100 person
senior management and staff workforce reduction plan initiated
and completed in the fourth quarter of 2001. The asset
impairment and disposition charge includes a loss of $2,831
related to the disposition of the Companys corporate
aircraft, a loss of $452 on the sale of the Companys third
party landscape business discussed more fully below, impairment
charges of $1,000 related to the Companys exit from the
for-sale housing business in all markets and the write-down to
estimated market value of certain internet and technology
investments of $1,485. At December 31, 2002, approximately
$688 of these charges, primarily employee severance costs,
remained as an accrued liability on the consolidated balance
sheet. These amounts are expected to be paid in 2003.

In the fourth quarter of 2001, the Company sold
substantially all of the net assets of Post Landscape Group,
Inc. (PLG) a subsidiary entity that provided
landscape maintenance, design and installation services to third
parties. As the business was sold to the former management team
and initially financed 100% by the Company, the transaction was
not reflected as a sale at December 31, 2001. As the
transaction resulted in a net loss, the net loss was recognized
in the fourth quarter of 2001 and included in the asset
impairment charge discussed above. In the first quarter of 2002,
the Company received payments representing approximately 26% of
the outstanding note balance. As these payments constituted
adequate initial principal payments under the notes, the sale
was recognized in the first quarter of 2002. The impact of the
sale recognition was to record the note receivable (outstanding
balance of $2,750 at December 31, 2002) and to remove the
net assets and liabilities of the former PLG from the
Companys financial statements. No further gain or loss was
recognized in 2002.

The Company also sold substantially all of the
net assets of RAM Partners, Inc. (RAM), a separate
subsidiary entity that managed apartment communities for third
parties, in the fourth quarter 2001. This business was sold to
the former management team of RAM and the sale was 100% financed
by the Company. Through the second quarter of 2002, the Company
had received payments under the notes representing approximately
10% of the original outstanding note balance. As these payments
constituted adequate initial principal payments under the notes,
the sale was recognized in the second quarter of 2002. The
impact of the sale recognition was to record the note receivable
(outstanding balance of $1,183 at December 31, 2002),
record a net gain of $510 and to remove the net assets and
liabilities of the former RAM from the Companys financial
statements.




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POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





During the first quarter of 2002, the Company
transferred certain construction contracts of Post Construction
Services Inc., its third party construction business, to Oxford
Properties, LLC in exchange for Oxford Properties
assumption of substantially all of Post Construction
Services liabilities related to the transferred assets. In
approving the transaction, the Companys board of directors
ascribed nominal value to the assets being transferred. The
assets consisted principally of third party construction
contracts for the construction of four garden style apartment,
condominium and townhouse communities as well as related
subcontracts, indemnities and guarantees. In connection with the
transfer of Post Construction Services construction
contracts, Oxford Properties had the right to receive a deferred
fee upon completion of one of the construction projects in the
amount of $500. Oxford Properties had also agreed to employ
28 former Company and Post Construction Services employees.
As a result, the Company was not responsible for costs that
would have otherwise resulted from winding up the third party
construction business. The Company recorded a charge of $500 in
the fourth quarter of 2001 relating to its exit from the third
party construction business. Oxford Properties, LLC is an entity
owned by former officers of the Company and by the son of the
Companys former chairman and chief executive officer. The
Companys former chairman and chief executive officer does
not own any of the outstanding equity interests in Oxford
Properties and does not have any management role in Oxford
Properties, LLC.

In the fourth quarter of 2000, the Company
recorded charges of $9,365. These charges reflect
managements decision to restrict its development
activities to fewer markets, refine its development investment
and for-sale housing strategies and make changes in its
executive management team. Project abandonment charges totaling
$4,389 related to the write off of predevelopment and pursuit
costs in markets in which the Company will no longer pursue
development opportunities and on certain proposed development
deals not meeting managements revised development
strategy. Employee severance charges related to the termination
costs of four executive positions and five staff personnel in
the Companys Dallas, Texas regional office. The asset
impairment charge of $1,910 includes a charge of $1,503 related
to the write off of the Companys investment in a high
speed internet provider that filed for bankruptcy protection and
a charge of $407 related to the exit from the for-sale housing
business in certain markets. As of December 31, 2001, all
of the 2000 charges had been paid.

8. INCOME TAXES

The Company has elected to be taxed as a REIT
under the Internal Revenue Code of 1986, as amended (the
Code). To qualify as a REIT, the Company must
distribute annually at least 90% of its adjusted taxable income,
as defined in the Code, to its shareholders and satisfy certain
other organizational and operating requirements. It is
managements current intention to adhere to these
requirements and maintain the Companys REIT status. As a
REIT, the Company generally will not be subject to federal
income tax at the corporate level on the taxable income it
distributes to its shareholders. If the Company fails to qualify
as a REIT in any taxable year, it will be subject to federal
income taxes at regular corporate rates (including any
applicable alternative minimum tax) and may not be able to
qualify as a REIT for four subsequent taxable years. The Company
may be subject to certain state and local taxes on its income
and property, and to federal income taxes and excise taxes on
its undistributed taxable income.

The Company utilizes taxable REIT subsidiaries to
perform such non-REIT activities as asset management, leasing
and landscaping services for third parties. These taxable REIT
subsidiaries are subject to federal, state and local income
taxes. For the three years in the period ended December 31,
2002, the impact of these taxable REIT subsidiaries income
taxes and their related tax attributes were not material to the
accompanying consolidated financial statements.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





Reconciliation of net income to taxable
income

As discussed in Note 1, the Company conducts
substantially all of its operations through its majority-owned
subsidiary, the Operating Partnership. For income tax reporting
purposes, the Company receives an allocable share of the
Operating Partnerships ordinary income and capital gains
based on its weighted average ownership, adjusted for certain
specially allocated items. All adjustments to net income in the
table below are net of amounts attributable to minority
interests and taxable REIT subsidiaries. A reconciliation of net
income to taxable income for the years ended December 31,
2002, 2001 and 2000 is detailed below.

|                                                              |                                                         |            |         |          |   |          |         |         |   |   |         |         |  
|------------------------------------------------------------- | ------------------------------------------------------- | ---------- | ------- | -------- | - | -------- | ------- | ------- | - | - | ------- | ------- | -
|                                                              |                                                         | 2002       |         | 2001     |   | 2000    
|                                                              |                                                         | (Estimate) |         | (Actual) |   | (Actual)
|                                                              |                                                         |            |         |          |   |         
|Net income                                                    |                                                         | $          | 60,746  |          |   | $        | 86,927  |         |   | $ | 100,520 |        
|Add net loss (income) of taxable REIT
    subsidiaries        |                                                         |            | (759    | )        |   |          | 9,491   |         |   |   | 1,279   |        
|                                                              |                                                         |            |         |          |   |          |         |         |   |   |         |        
|Adjusted net income                                           |                                                         |            | 59,987  |          |   |          | 96,418  |         |   |   | 101,799 |        
|                                                              | Book/tax depreciation difference                        |            |         | (8,372   | ) |          |         | (20,931 | ) |   |         | (19,741 | )
|                                                              | Book/tax difference on gains from real estate
    sales |            |         | 14,545   |   |          |         | 35,763  |   |   |         | 38,015  |  
|                                                              | Other book/tax differences, net                         |            |         | (3,524   | ) |          |         | (8,057  | ) |   |         | (8,497  | )
|                                                              |                                                         |            |         |          |   |          |         |         |   |   |         |        
|Taxable income before allocation of taxable
    capital gains |                                                         |            | 62,636  |          |   |          | 103,193 |         |   |   | 111,576 |        
|Income taxable as capital gains                               |                                                         |            | (34,819 | )        |   |          | (50,364 | )       |   |   | (38,060 | )      
|                                                              |                                                         |            |         |          |   |          |         |         |   |   |         |        
|Taxable ordinary income                                       |                                                         | $          | 27,817  |          |   | $        | 52,829  |         |   | $ | 73,516  |        
|                                                              |                                                         |            |         |          |   |          |         |         |   |   |         |        

Income tax characterization of
dividends

For income tax purposes, dividends to common
shareholders are characterized as ordinary income, capital gains
or as a return of a shareholders invested capital. A
summary of the income tax characterization of the Companys
dividends paid per common share were as follows for the years
ended December 31, 2002, 2001 and 2000:

|                                |  |        |      |      |  |        |        |   |  |        |      |   |  |  |        |  |  |   |      |  |  |  |        | 
|------------------------------- |  | ------ | ---- | ---- |  | ------ | ------ | - |  | ------ | ---- | - |  |  | ------ |  |  | - | ---- |  |  |  | ------ | 
|                                |  |        |      |      |  |       
|                                |  | 2002   |      | 2001 |  | 2000  
|                                |  |        |      |      |  |       
|                                |  | Amount |      | %    |  | Amount |        | % |  | Amount |      | %
|                                |  |        |      |      |  |        |        |   |  |        |      |  
|Ordinary income                 |  | $      | 0.93 |      |  |        | 29.9%  |   |  | $      | 1.58 |   |  |  | 51.1%  |  |  | $ | 2.10 |  |  |  | 70.3%  | 
|Capital gains                   |  |        | 0.41 |      |  |        | 13.1%  |   |  |        | 0.55 |   |  |  | 17.8%  |  |  |   | 0.59 |  |  |  | 20.0%  | 
|Unrecaptured Section 1250 gains |  |        | 0.39 |      |  |        | 12.6%  |   |  |        | 0.64 |   |  |  | 20.5%  |  |  |   | 0.29 |  |  |  | 9.6%   | 
|Return of capital               |  |        | 1.39 |      |  |        | 44.4%  |   |  |        | 0.33 |   |  |  | 10.6%  |  |  |   | 0.00 |  |  |  | 0.1%   | 
|                                |  |        |      |      |  |        |        |   |  |        |      |   |  |  |        |  |  |   |      |  |  |  |        | 
|                                |  | $      | 3.12 |      |  |        | 100.0% |   |  | $      | 3.10 |   |  |  | 100.0% |  |  | $ | 2.98 |  |  |  | 100.0% | 
|                                |  |        |      |      |  |        |        |   |  |        |      |   |  |  |        |  |  |   |      |  |  |  |        | 

The income tax characterization of dividends to
common shareholders is based on the calculation of Taxable
Earnings and Profits, as defined in the Code. Taxable Earnings
and Profits differ from regular taxable income due primarily to
differences in the estimated useful lives and methods used to
compute depreciation and in the recognition of gains and losses
on the sale of real estate assets.

As of December 31, 2002, 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 higher than the net assets as reported
in the Companys consolidated financial statements by
$2,204.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





9. STOCK-BASED COMPENSATION
PLANS

Stock Compensation Plans

At December 31, 2002, the Company had two
stock-based compensation plans, the Employee Stock Plan (the
Stock Plan) and the Employee Stock Purchase Plan
(the ESPP) as described below. As discussed in
note 1, the Company accounts for stock based compensation
under APB Opinion 25. Accordingly, no compensation cost is
required to be recognized for stock options granted at the
current stock price under the Stock Plan and for purchases of
stock under the ESPP. For purposes of the pro forma presentation
of net income and earnings per share under SFAS No. 123, as
summarized in note 1, 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 2002, 2001 and 2000 were as follows:

|                        |  |      |              |      |  |      |              |  |  |  |              | 
|----------------------- |  | ---- | ------------ | ---- |  | ---- | ------------ |  |  |  | ------------ | 
|                        |  | 2002 |              | 2001 |  | 2000
|                        |  |      |              |      |  |     
|Dividend yield          |  |      | 7.2%         |      |  |      | 8.4%         |  |  |  | 8.0%         | 
|Expected volatility     |  |      | 22.7%        |      |  |      | 15.1%        |  |  |  | 24.8%        | 
|Risk-free interest rate |  |      | 2.7% to 5.3% |      |  |      | 3.7% to 5.3% |  |  |  | 6.7% to 6.9% | 
|Expected option life    |  |      | 5 to 7 years |      |  |      | 5 to 7 years |  |  |  | 5 to 7 years | 

Employee Stock Plan

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 stock option activity
under the Stock Plan for the years ended December 31, 2002,
2001 and 2000, is presented below.

|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                  |  |   |    |  |  |   |           |   |  |   |    | 
|------------------------------------------------------------------ |  | ----- | --------- | -------------- |  | ------ | -- | -------------- |  | ----- | --------- | ---------------- |  | - | -- |  |  | - | --------- | - |  | - | -- | 
|                                                                   |  |       |           |                |  |       
|                                                                   |  | 2002  |           | 2001           |  | 2000  
|                                                                   |  |       |           |                |  |       
|                                                                   |  |       |           | Weighted       |  |        |    | Weighted       |  |      
|                                                                   |  |       |           | Average        |  |        |    | Average        |  |       |           | Weighted Average
|                                                                   |  | Share |           | Exercise Price |  | Shares |    | Exercise Price |  | Share |           | Exercise Price  
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                 
|Outstanding at beginning of year                                   |  |       | 4,228,218 |                |  | $      | 36 |                |  |       | 4,271,608 |                  |  | $ | 35 |  |  |   | 4,054,876 |   |  | $ | 34 | 
|Granted                                                            |  |       | 18,323    |                |  |        | 24 |                |  |       | 415,529   |                  |  |   | 37 |  |  |   | 740,538   |   |  |   | 38 | 
|Exercised                                                          |  |       | (15,000   | )              |  |        | 31 |                |  |       | (262,332  | )                |  |   | 30 |  |  |   | (334,194  | ) |  |   | 32 | 
|Forfeited                                                          |  |       | (142,048  | )              |  |        | 38 |                |  |       | (196,587  | )                |  |   | 38 |  |  |   | (189,612  | ) |  |   | 38 | 
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                  |  |   |    |  |  |   |           |   |  |   |    | 
|Outstanding at end of year                                         |  |       | 4,089,493 |                |  |        | 35 |                |  |       | 4,228,218 |                  |  |   | 36 |  |  |   | 4,271,608 |   |  |   | 35 | 
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                  |  |   |    |  |  |   |           |   |  |   |    | 
|Options exercisable at year-end                                    |  |       | 3,464,759 |                |  |        |    |                |  |       | 2,962,245 |                  |  |   |    |  |  |   | 2,413,595 |   |  |   |    | 
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                  |  |   |    |  |  |   |           |   |  |   |    | 
|Weighted-average fair value of options granted
    during the year |  | $     | 2.13      |                |  |        |    |                |  | $     | 1.44      |                  |  |   |    |  |  | $ | 4.76      |   |  |   |    | 
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                  |  |   |    |  |  |   |           |   |  |   |    | 

At December 31, 2002, the range of exercise
prices for options outstanding was $23.90  $44.13 and
the weighted-average remaining contractual life was 5 years.

In 2002 and 2001, the Company granted 15,353 and
17,566 shares of restricted stock, respectively, to company
officers. The restricted shares granted in 2002 vest ratably
over a three year period. The restricted shares granted in 2001
vest ratably over a five year period. For both years, the total
value of the restricted share grants was initially reflected in
shareholders equity as additional paid-in capital and as
deferred compensation, a contra shareholders equity
account. Such deferred compensation is amortized ratably into
compensation expense over the vesting period. Total compensation
expense relating to the restricted stock was $265 and $171 in
2002 and 2001, respectively.




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





10. 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 $452, $638
and $514 were made to this plan in 2002, 2001 and 2000,
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.

11. 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 and six ground leases expiring in 2012,
2038, 2060, 2066, 2069 and 2074 for six separate operating
communities and to office, equipment and other operating leases
with terms expiring in years 2003 through 2006. Future minimum
lease payments for non-cancelable land, office, equipment and
other leases at December 31, 2002, are as follows:

|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2003                |  | $ | 1,363   | 
|2004                |  |   | 1,286   | 
|2005                |  |   | 1,288   | 
|2006                |  |   | 1,306   | 
|2007                |  |   | 1,328   | 
|2008 and thereafter |  |   | 156,470 | 

The Company incurred $5,223, $5,998 and $5,935 of
rent expense for the years ended December 31, 2002, 2001
and 2000, 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 its
financial condition or results or operations.

12. RELATED PARTY TRANSACTIONS

In 2002 and 2001, the Company invested in four
Property LLCs accounted for under the equity method of
accounting (see note 4). In 2002 and 2001, the Company recorded,
before elimination of the Companys equity interests,
development fees, general construction contract billings,
management fees and expense reimbursements (primarily personnel
costs) of approximately $11,916 and $15,202, respectively, from
these related companies. Additionally in 2002 and 2001, the
Company earned interest under the construction loans to the
Project LLCs totaling $4,482 and $1,024, respectively.

The Company provides landscaping services for
executive officers, employees, directors and other related
parties. For the years ended December 31, 2002, 2001 and
2000, the Company received landscaping revenue of $ 775, $705
and $667, respectively, for such services. Such revenue includes
reimbursement of direct and indirect expenses. Additionally, the
Company provides accounting and administrative services to
entities controlled by certain directors of the Company. Fees
under this arrangement aggregated $25 for each of the years
ended December 31, 2002, 2001 and 2000. Also, the Company
was contracted to assist in the development of apartment
complexes constructed by a




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





former executive and current shareholder. Fees
under this arrangement were $0, $7 and $29 for the years ended
December 31, 2002, 2001 and 2000, respectively.

At December 31, 2002 and 2001, the Company
had outstanding loan balances to certain current and former
company executives totaling $7,600 and $9,250, respectively.
These loans mature 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. Additionally, at
December 31, 2002 and 2001, the Company had outstanding
additional loans to certain company executives totaling $1,140
and $1,300, respectively. The loans bear interest at 6.32% per
annum. If the executives continue to be employed by the Company,
the loans will be forgiven annually over five to ten year
periods, as defined in the agreements. The annual loan
forgiveness of $160 is recorded as compensation expense.

13. DERIVATIVE FINANCIAL
INSTRUMENTS

At December 31, 2002, the Company had
outstanding interest rate swap agreements with a notional value
of $129,000 with maturity dates ranging from 2005 to 2009. For
the years ended December 31, 2002 and 2001, the Company
recorded unrealized net losses of $8,958, net of minority
interest, and $4,565, net of minority interest, respectively, on
these cash flow hedges as a decrease in accumulated other
comprehensive income, a shareholders equity account, in
the accompanying consolidated balance sheet. In addition, the
Company recorded the change in fair value of the ineffective
component of its outstanding interest rate cap agreements in the
statement of operations for the years ended December 31, 2002
and 2001. This charge against earnings during these years and
the fair value of the interest rate cap agreements as of
December 31, 2002 were not significant to the
Companys financial position or results of operations.
Within the next twelve months, the Company expects to reclassify
out of accumulated other comprehensive income approximately
$5,879.

Upon the adoption of SFAS No. 133 in 2001,
the Company recorded a net transition loss of $613, net of
minority interest, relating to the write down of the book value
of its interest rate cap agreements to their fair value. This
loss was reflected as a cumulative effect of accounting change
in the consolidated statement of operations for the year ended
December 31, 2001.

Subsequent to December 31, 2002, the Company
entered into two interest rate cap arrangements with two
financial institutions. The new interest rate cap arrangements
replaced three expiring interest rate cap arrangements and were
structured as cash flow hedges to provide a fixed ceiling at 5%
for the Companys variable rate, tax-exempt borrowings. The
Company is required to maintain this interest rate exposure
protection under the terms of the financing arrangements. The
$2,720 cost of the arrangement will be amortized as additional
expense over their five year term in accordance with SFAS
No. 133.

14. 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 accounts receivables,
accounts payable, accrued expenses and other liabilities are
carried at amounts which reasonably approximate their fair
values because of the short-term nature of these instruments.
The fair value of fixed rate debt was approximately $928,313
(carrying value of $877,706) and the fair value of floating rate
debt approximated its carrying value due to the adjustable
nature of the arrangements at December 31, 2002.

In order to manage the impact of interest rate
changes on earnings and cash flow, the Company entered into and
has outstanding interest rate swap and interest rate cap
arrangements. As more fully described in note 1, these interest
rate cap and interest rate swap agreements are carried on the
consolidated balance sheet at fair market value in accordance
with SFAS No. 133. At December 31, 2002, the carrying
amounts related to these arrangements represented net
liabilities totaling approximately $16,849 ($14,822, net of
minority interest).




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##### Table of Contents



POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





Disclosure about fair value of financial
instruments is based on pertinent information available to
management as of December 31, 2002. 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.

15. 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
from property rental operations. Property rental operations are
broken down into four segments based on the various stages in
the property ownership lifecycle. These segments are described
below. All other ancillary service and support operations,
including the third party service businesses (see note 7), are
aggregated in the accompanying segment information. The segment
information presented below reflects the segment categories
based on the lifecycle status of each community as of
December 31, 2002. The segment information for the years
ended December 31, 2001 and 2000 have been adjusted due to
the restatement impact of reclassifying the operating results of
the assets designated as held for sale in 2002 to discontinued
operations under SFAS No. 144 (see note 5).



| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Fully stabilized communities  those
    apartment communities which have been stabilized (the earlier of
    the point at which a property reaches 95% occupancy or one year
    after completion of construction) for both the current and prior
    year.
|
| |  | Communities stabilized during prior
    year  communities which reached stabilized occupancy
    in the prior year.                                                                                                                                        
|
| |  | 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.                                      
|
| |  | Sold communities  communities which
    were sold in the current or prior year and not reflected as
    discontinued operations (see notes 1 and 5).                                                                                                       

Segment Performance Measure

Management uses contribution to funds from
operations (FFO) as the performance measure for its
segments. 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 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.




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POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





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 from continuing operations. 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.

|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|---------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                                       |  | 2002 |         | 2001 |  | 2000
|                                                                       |  |      |         |      |  |     
|Revenues                                                               |  |      |         |      |  |      |         |   |  |   |         |  
|Fully stabilized communities                                           |  | $    | 256,477 |      |  | $    | 275,297 |   |  | $ | 266,465 |  
|Communities stabilized during prior year                               |  |      | 17,535  |      |  |      | 14,946  |   |  |   | 3,538   |  
|Development and lease-up communities                                   |  |      | 39,571  |      |  |      | 25,741  |   |  |   | 14,256  |  
|Sold communities                                                       |  |      | 745     |      |  |      | 19,659  |   |  |   | 52,883  |  
|Other                                                                  |  |      | 15,669  |      |  |      | 29,675  |   |  |   | 31,098  |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Consolidated revenues                                                  |  | $    | 329,997 |      |  | $    | 365,318 |   |  | $ | 368,240 |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Contribution to Funds from
    Operations                              |  |      |         |      |  |      |         |   |  |   |         |  
|Fully stabilized communities                                           |  | $    | 167,225 |      |  | $    | 186,087 |   |  | $ | 185,106 |  
|Communities stabilized during prior year                               |  |      | 11,628  |      |  |      | 8,943   |   |  |   | 932     |  
|Development and lease-up communities                                   |  |      | 23,192  |      |  |      | 15,312  |   |  |   | 8,569   |  
|Sold communities                                                       |  |      | 369     |      |  |      | 12,330  |   |  |   | 35,956  |  
|Other                                                                  |  |      |        |      |  |      | 1,065   |   |  |   | 1,354   |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Contribution to FFO                                                    |  |      | 202,414 |      |  |      | 223,737 |   |  |   | 231,917 |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|FFO  discontinued operations                                          |  |      | 5,885   |      |  |      | 8,796   |   |  |   | 10,733  |  
|Other operating income, net of expense                                 |  |      | (10,651 | )    |  |      | (20,158 | ) |  |   | (7,857  | )
|Depreciation on non-real estate assets                                 |  |      | (1,985  | )    |  |      | (2,378  | ) |  |   | (1,962  | )
|Minority interest in consolidated property
    partnerships            |  |      | 2,055   |      |  |      | 2,098   |   |  |   | (511    | )
|Interest expense                                                       |  |      | (58,436 | )    |  |      | (51,960 | ) |  |   | (45,332 | )
|Amortization of deferred loan costs                                    |  |      | (2,327  | )    |  |      | (1,978  | ) |  |   | (1,636  | )
|General and administrative expense                                     |  |      | (14,431 | )    |  |      | (13,256 | ) |  |   | (10,066 | )
|Other expenses                                                         |  |      | (694    | )    |  |      |        |   |  |   |        |  
|Dividends to preferred shareholders                                    |  |      | (11,449 | )    |  |      | (11,768 | ) |  |   | (11,875 | )
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Total FFO                                                              |  |      | 110,381 |      |  |      | 133,133 |   |  |   | 163,411 |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Depreciation on wholly-owned real estate assets                        |  |      | (82,918 | )    |  |      | (70,956 | ) |  |   | (66,283 | )
|Depreciation on real estate assets held in
    unconsolidated entities |  |      | (1,103  | )    |  |      | (67     | ) |  |   |        |  
|Gains on property sales  continuing
    operations                    |  |      | 13,275  |      |  |      | 23,942  |   |  |   | 3,208   |  
|Minority interest of common unitholders in
    Operating Partnership   |  |      | (4,073  | )    |  |      | (9,153  | ) |  |   | (10,441 | )
|Income from discontinued operations                                    |  |      | (5,885  | )    |  |      | (8,796  | ) |  |   | (10,733 | )
|Dividends to preferred shareholders                                    |  |      | 11,449  |      |  |      | 11,768  |   |  |   | 11,875  |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Income from continuing operations                                      |  | $    | 41,126  |      |  | $    | 79,871  |   |  | $ | 91,037  |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  

16. SUPPLEMENTAL CASH FLOW
INFORMATION

Non-cash investing and financing activities for
the years ended December 31, 2002, 2001 and 2000 were as
follows:



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In 2002, 2001 and 2000, holders of 289,463,
    62,523 and 12,014 Common Units in the Operating Partnership,
    respectively, exercised their option to convert their Common
    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 Common 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 $5,656, $5,194 and $320 for the years ended
    December 31, 2002, 2001 and 2000, respectively.




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POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)







|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | The Operating Partnership committed to distribute
    $32,785, $32,741 and $33,466 for the quarters ended
    December 31, 2002, 2001 and 2000, respectively. As a
    result, the Company declared dividends of $29,018, $28,748 and
    $29,528 for the quarters ended December 31, 2002, 2001 and
    2000, respectively. The remaining distributions from the
    Operating Partnership in the amount of $3,767, $3,993 and $3,938
    for the quarters ended December 31, 2002, 2001 and 2000,
    respectively, are distributed to minority interest unitholders
    in the Operating Partnership.

17. QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)

The operating results of eight apartment
communities and one commercial property classified as held for
sale under SFAS No. 144 in 2002 were included in
discontinued operations in the accompanying statements of
operations for all periods presented, as further discussed in
note 5. To conform with this presentation, the quarterly
financial information presented below reflects the
reclassification of the operating results of these assets to
discontinued operations, which differs from the presentation of
discontinued operations in the Companys previously issued
financial statements included in its quarterly reports on
Form 10-Q. Quarterly financial information for the years
ended December 31, 2002 and 2001, as revised to reflect the
changes discussed above, was as follows:

|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ------ |  | ----- | ------ | ------ |  | - | ------ | - |  | - | ------ | -
|                                                                                |  |                             
|                                                                                |  | Year Ended December 31, 2002
|                                                                                |  |                             
|                                                                                |  | First                        |        | Second |  | Third |        | Fourth
|                                                                                |  |                              |        |        |  |       |        |       
|Revenues                                                                        |  | $                            | 81,981 |        |  | $     | 80,727 |        |  | $ | 83,952 |   |  | $ | 83,337 |  
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Income from continuing operations                                               |  |                              | 21,442 |        |  |       | 7,983  |        |  |   | 7,131  |   |  |   | 4,570  |  
|Income (loss) from discontinued operations                                      |  |                              | (4,422 | )      |  |       | 17,200 |        |  |   | (978   | ) |  |   | 7,940  |  
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Income before cumulative effect of accounting
    change and extraordinary item |  |                              | 17,020 |        |  |       | 25,183 |        |  |   | 6,153  |   |  |   | 12,510 |  
|Cumulative effect of accounting change                                          |  |                              |       |        |  |       |       |        |  |   |       |   |  |   |       |  
|Extraordinary item, net of minority interest                                    |  |                              |       |        |  |       | (120   | )      |  |   |       |   |  |   |       |  
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Net income                                                                      |  |                              | 17,020 |        |  |       | 25,063 |        |  |   | 6,153  |   |  |   | 12,510 |  
|Dividends to preferred shareholders                                             |  |                              | (2,862 | )      |  |       | (2,863 | )      |  |   | (2,862 | ) |  |   | (2,862 | )
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Net income available to common shareholders                                     |  | $                            | 14,158 |        |  | $     | 22,200 |        |  | $ | 3,291  |   |  | $ | 9,648  |  
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Earnings per common share:                                                      |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Income before accounting change and extraordinary
    item  basic              |  | $                            | 0.38   |        |  | $     | 0.60   |        |  | $ | 0.09   |   |  | $ | 0.26   |  
|Income before accounting change and extraordinary
    item  diluted            |  |                              | 0.38   |        |  |       | 0.60   |        |  |   | 0.09   |   |  |   | 0.26   |  
|Net income available to common
    shareholders  basic                         |  |                              | 0.38   |        |  |       | 0.60   |        |  |   | 0.09   |   |  |   | 0.26   |  
|Net income available to common
    shareholders  diluted                       |  |                              | 0.38   |        |  |       | 0.60   |        |  |   | 0.09   |   |  |   | 0.26   |  




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POST PROPERTIES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Dollars in thousands, except per share
data)





|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------- |  | ------------------------------- | ------ | ------ |  | ----- | ------ | --------- |  | - | ------ | - |  | - | ------ | -
|                                                                                |  |                                
|                                                                                |  | Year Ended December 31, 2001(1)
|                                                                                |  |                                
|                                                                                |  | First                           |        | Second |  | Third |        | Fourth(2)
|                                                                                |  |                                 |        |        |  |       |        |          
|Revenues                                                                        |  | $                               | 94,341 |        |  | $     | 93,776 |           |  | $ | 90,729 |   |  | $ | 86,472 |  
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Income (loss) from continuing operations                                        |  |                                 | 21,307 |        |  |       | 33,995 |           |  |   | 25,615 |   |  |   | (1,046 | )
|Income from discontinued operations                                             |  |                                 | 2,141  |        |  |       | 2,196  |           |  |   | 1,774  |   |  |   | 1,635  |  
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Income before cumulative effect of accounting
    change and extraordinary item |  |                                 | 23,448 |        |  |       | 36,191 |           |  |   | 27,389 |   |  |   | 589    |  
|Cumulative effect of accounting change                                          |  |                                 | (613   | )      |  |       |       |           |  |   |       |   |  |   |       |  
|Extraordinary item, net of minority interest                                    |  |                                 |       |        |  |       | (77    | )         |  |   |       |   |  |   |       |  
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Net income                                                                      |  |                                 | 22,835 |        |  |       | 36,114 |           |  |   | 27,389 |   |  |   | 589    |  
|Dividends to preferred shareholders                                             |  |                                 | (2,969 | )      |  |       | (2,969 | )         |  |   | (2,969 | ) |  |   | (2,861 | )
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Net income (loss) available to common
    shareholders                          |  | $                               | 19,866 |        |  | $     | 33,145 |           |  | $ | 24,420 |   |  | $ | (2,272 | )
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Earnings per common share:                                                      |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Income (loss) before accounting change and
    extraordinary item  basic       |  | $                               | 0.53   |        |  | $     | 0.86   |           |  | $ | 0.64   |   |  | $ | (0.06  | )
|Income (loss) before accounting change and
    extraordinary item  diluted     |  |                                 | 0.53   |        |  |       | 0.85   |           |  |   | 0.64   |   |  |   | (0.06  | )
|Net income (loss) available to common
    shareholders  basic                  |  |                                 | 0.51   |        |  |       | 0.86   |           |  |   | 0.64   |   |  |   | (0.06  | )
|Net income (loss) available to common
    shareholders  diluted                |  |                                 | 0.51   |        |  |       | 0.85   |           |  |   | 0.64   |   |  |   | (0.06  | )






|    |                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The total of the four quarterly amounts for net
    income and earnings per share does 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 to compute the number of shares outstanding for
    the purpose of calculating the Companys earnings per share.
|(2) | Reflects the impact of project abandonment,
    employee severance and impairment charges of $17,450.                                                                                                                                                                                                                                                                          

18. SUBSEQUENT EVENT

Subsequent to December 31, 2002, the
Companys board of directors elected a new chairman. The
Companys former chairman was elected chairmen emeritus and
the Companys vice-chairman relinquished his vice-chairman
status. Both the former chairman and former vice-chairman will
remain on the Companys board of directors. Their change in
roles from executive to non-executive status will result in the
Company recording a non-cash charge in the first quarter of 2003
relating to payments provided to these individuals pursuant to
their existing contractual arrangements with the Company. The
Company estimates the charge will be approximately $12,000 to
$14,000, plus an additional amount of up $8,000 that may be
incurred as a result of the settlement of split- dollar life
insurance obligations to the individuals under their contractual
arrangements. These amounts represent the present value of the
estimated payments and other costs to be incurred over the term
of the contractual arrangements.




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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 partners equity and of cash flows, present
fairly, in all material respects, the financial position of Post
Apartment Homes, L.P. and subsidiaries at December 31, 2002
and 2001, and the results of their operations and their cash
flows for each of the three years ended December 31, 2002
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.

As discussed in Note 1, Post Apartment Homes,
L.P. adopted Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended by Statement of Financial
Accounting Standards No. 138, on January 1, 2001.

PricewaterhouseCoopers LLP (signed)

Atlanta, Georgia

February 28, 2003





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POST APARTMENT HOMES, L.P.

CONSOLIDATED BALANCE SHEETS


(Dollars in thousands, except per unit
data)


|                                     |                                       |                                                                        |                  |           |           |         |           |           |           |         | 
|------------------------------------ | ------------------------------------- | ---------------------------------------------------------------------- | ---------------- | --------- | --------- | ------- | --------- | --------- | --------- | ------- | 
|                                     |                                       |                                                                       
|                                     |                                       | December 31,                                                          
|                                     |                                       |                                                                       
|                                     |                                       | 2002                                                                   |                  | 2001     
|                                     |                                       |                                                                        |                  |          
|ASSETS                               |                                       |                                                                        |                  |           |           |         |           |          
|                                     | Real estate assets                    |                                                                        |                  |           |           |         |           |           |          
|                                     |                                       | Land                                                                   |                  | $         | 273,058   |         |           | $         | 277,146   |        
|                                     |                                       | Building and improvements                                              |                  |           | 1,976,809 |         |           |           | 1,794,658 |        
|                                     |                                       | Furniture, fixtures and equipment                                      |                  |           | 246,634   |         |           |           | 212,390   |        
|                                     |                                       | Construction in progress                                               |                  |           | 92,945    |         |           |           | 419,449   |        
|                                     |                                       | Investments in and advances to unconsolidated
    real estate entities |                  |           | 182,285   |         |           |           | 89,692    |        
|                                     |                                       | Land held for future development                                       |                  |           | 24,879    |         |           |           | 23,658    |        
|                                     |                                       |                                                                        |                  |           |           |         |           |          
|                                     |                                       |                                                                        | 2,796,610        |           |           |         | 2,816,993 |          
|                                     |                                       | Less: accumulated depreciation                                         |                  |           | (426,136  | )       |           |           | (393,014  | )      
|                                     |                                       | Assets held for sale                                                   |                  |           | 73,061    |         |           |           | 39,419    |        
|                                     |                                       |                                                                        |                  |           |           |         |           |          
|                                     |                                       | Total real estate assets                                               |                  |           | 2,443,535 |         |           |           | 2,463,398 |        
|                                     | Cash and cash equivalents             |                                                                        |                  | 6,390     |           |         |           | 4,803     |          
|                                     | Restricted cash                       |                                                                        |                  | 1,369     |           |         |           | 1,315     |          
|                                     | Deferred charges, net                 |                                                                        |                  | 15,584    |           |         |           | 18,203    |          
|                                     | Other assets                          |                                                                        |                  | 41,273    |           |         |           | 50,632    |          
|                                     |                                       |                                                                        |                  |           |           |         |           |          
|                                     |                                       | Total assets                                                           |                  | $         | 2,508,151 |         |           | $         | 2,538,351 |        
|                                     |                                       |                                                                        |                  |           |           |         |           |          
|LIABILITIES AND PARTNERS
    EQUITY |                                       |                                                                        |                  |           |           |         |           |          
|                                     | Notes payable                         |                                                                        | $                | 1,414,555 |           |         | $         | 1,336,520 |          
|                                     | Accounts payable and accrued expenses |                                                                        |                  | 49,124    |           |         |           | 72,277    |          
|                                     | Dividend and distribution payable     |                                                                        |                  | 33,252    |           |         |           | 33,208    |          
|                                     | Accrued interest payable              |                                                                        |                  | 8,994     |           |         |           | 9,660     |          
|                                     | Security deposits and prepaid rents   |                                                                        |                  | 8,250     |           |         |           | 9,016     |          
|                                     |                                       |                                                                        |                  |           |           |         |           |          
|                                     |                                       | Total liabilities                                                      |                  |           | 1,514,175 |         |           |           | 1,460,681 |        
|                                     |                                       |                                                                        |                  |           |           |         |           |          
|                                     | Commitments and contingencies         |                                                                        |                  |           |           |         |           |           |          
|                                     | Partners equity                      |                                                                        |                  |           |           |         |           |           |          
|                                     |                                       | Preferred units                                                        |                  |           | 215,000   |         |           |           | 215,000   |        
|                                     |                                       | Common units                                                           |                  |           |           |         |           |           |           |        
|                                     |                                       |                                                                        | General partner  |           |           | 9,143   |           |           |           | 9,877   | 
|                                     |                                       |                                                                        | Limited partners |           |           | 786,682 |           |           |           | 859,438 | 
|                                     |                                       | Accumulated other comprehensive income                                 |                  |           | (16,849   | )       |           |           | (6,645    | )      
|                                     |                                       |                                                                        |                  |           |           |         |           |          
|                                     |                                       | Total partners equity                                                 |                  |           | 993,976   |         |           |           | 1,077,670 |        
|                                     |                                       |                                                                        |                  |           |           |         |           |          
|                                     |                                       | Total liabilities and partners equity                                 |                  | $         | 2,508,151 |         |           | $         | 2,538,351 |        
|                                     |                                       |                                                                        |                  |           |           |         |           |          

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




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POST APARTMENT HOMES, L.P.

CONSOLIDATED STATEMENTS OF
OPERATIONS


(Dollars in thousands, except per unit
data)


|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |            |         | 
|------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------- | ----------------------------------- | ------ | ---------- | ------- | ---- | ------- | ---------- | ------- | - | ------- | ---------- | ------- | 
|                                                                                                                         |                                                                                                                   |                                    
|                                                                                                                         |                                                                                                                   | Year Ended December 31,            
|                                                                                                                         |                                                                                                                   |                                    
|                                                                                                                         |                                                                                                                   | 2002                                |        | 2001       |         | 2000
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |     
|REVENUES                                                                                                                 |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Rental                                                                                                            |                                     | $      | 316,484    |         |      | $       | 336,206    |         |   | $       | 335,482    |        
|                                                                                                                         | Other                                                                                                             |                                     |        | 12,225     |         |      |         | 13,253     |         |   |         | 15,249     |        
|                                                                                                                         | Interest                                                                                                          |                                     |        | 1,288      |         |      |         | 1,771      |         |   |         | 1,922      |        
|                                                                                                                         | Third-party services                                                                                              |                                     |        |           |         |      |         | 14,088     |         |   |         | 15,587     |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         |                                                                                                                   | Total revenues                      |        |            | 329,997 |      |         |            | 365,318 |   |         |            | 368,240 | 
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|EXPENSES                                                                                                                 |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Property operating and maintenance (exclusive of
    items shown separately below)                                |                                     |        | 131,369    |         |      |         | 129,201    |         |   |         | 120,842    |        
|                                                                                                                         | Depreciation                                                                                                      |                                     |        | 85,681     |         |      |         | 69,680     |         |   |         | 65,732     |        
|                                                                                                                         | Interest                                                                                                          |                                     |        | 58,436     |         |      |         | 51,960     |         |   |         | 45,332     |        
|                                                                                                                         | Amortization of deferred loan costs                                                                               |                                     |        | 2,327      |         |      |         | 1,978      |         |   |         | 1,636      |        
|                                                                                                                         | General and administrative                                                                                        |                                     |        | 14,431     |         |      |         | 13,256     |         |   |         | 10,066     |        
|                                                                                                                         | Other                                                                                                             |                                     |        | 694        |         |      |         |           |         |   |         |           |        
|                                                                                                                         | Project abandonment, employee severance and
    impairment charges                                                |                                     |        |           |         |      |         | 17,450     |         |   |         | 9,365      |        
|                                                                                                                         | Minority interest in consolidated property
    partnerships                                                       |                                     |        | (2,055     | )       |      |         | (2,098     | )       |   |         | (1,695     | )      
|                                                                                                                         | Third-party services                                                                                              |                                     |        |           |         |      |         | 13,023     |         |   |         | 13,092     |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         |                                                                                                                   | Total expenses                      |        |            | 290,883 |      |         |            | 294,450 |   |         |            | 264,370 | 
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|Income from continuing operations before
    equity in losses of unconsolidated entities and gains on
    property sales |                                                                                                                   |                                     | 39,114 |            |         |      | 70,868  |            |         |   | 103,870 |           
|                                                                                                                         | Equity in losses of unconsolidated real estate
    entities                                                       |                                     |        | (1,590     | )       |      |         | (186       | )       |   |         |           |        
|                                                                                                                         | Gains on property sales                                                                                           |                                     |        | 13,275     |         |      |         | 23,942     |         |   |         | 3,208      |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         |                                                                                                                   | Income from continuing operations   |        |            | 50,799  |      |         |            | 94,624  |   |         |            | 107,078 | 
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|Discontinued operations                                                                                                  |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Income from discontinued operations                                                                               |                                     |        | 5,885      |         |      |         | 8,796      |         |   |         | 10,733     |        
|                                                                                                                         | Gains on property sales                                                                                           |                                     |        | 16,570     |         |      |         |           |         |   |         |           |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         |                                                                                                                   | Income from discontinued operations |        |            | 22,455  |      |         |            | 8,796   |   |         |            | 10,733  | 
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|Income before cumulative effect of accounting
    change and extraordinary items                                         |                                                                                                                   |                                     | 73,254 |            |         |      | 103,420 |            |         |   | 117,811 |           
|                                                                                                                         | Cumulative effect of accounting change                                                                            |                                     |        |           |         |      |         | (695       | )       |   |         |           |        
|                                                                                                                         | Extraordinary items                                                                                               |                                     |        | (136       | )       |      |         | (88        | )       |   |         |           |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|Net income                                                                                                               |                                                                                                                   |                                     | 73,118 |            |         |      | 102,637 |            |         |   | 117,811 |           
|                                                                                                                         | Distributions to preferred unitholders                                                                            |                                     |        | (17,049    | )       |      |         | (17,368    | )       |   |         | (17,475    | )      
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|Net income available to common
    unitholders                                                                           |                                                                                                                   | $                                   | 56,069 |            |         | $    | 85,269  |            |         | $ | 100,336 |           
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|Per common unit
    data  basic                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Income from continuing operations (net of
    preferred distributions)                                            |                                     | $      | 0.80       |         |      | $       | 1.80       |         |   | $       | 2.01       |        
|                                                                                                                         | Income from discontinued operations                                                                               |                                     |        | 0.53       |         |      |         | 0.20       |         |   |         | 0.24       |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Income before cumulative effect of accounting
    change and extraordinary items (net of preferred distributions) |                                     |        | 1.33       |         |      |         | 2.00       |         |   |         | 2.25       |        
|                                                                                                                         | Cumulative effect of accounting change                                                                            |                                     |        |           |         |      |         | (0.02      | )       |   |         |           |        
|                                                                                                                         | Extraordinary items                                                                                               |                                     |        |           |         |      |         |           |         |   |         |           |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Net income available to common unitholders                                                                        |                                     | $      | 1.33       |         |      | $       | 1.98       |         |   | $       | 2.25       |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Weighted average common units outstanding                                                                         |                                     |        | 42,020,759 |         |      |         | 43,211,834 |         |   |         | 44,503,290 |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|Per common unit
    data  diluted                                                                                       |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Income from continuing operations (net of
    preferred distributions)                                            |                                     | $      | 0.80       |         |      | $       | 1.78       |         |   | $       | 1.99       |        
|                                                                                                                         | Income from discontinued operations                                                                               |                                     |        | 0.53       |         |      |         | 0.20       |         |   |         | 0.23       |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Income before cumulative effect of accounting
    change and extraordinary items (net of preferred distributions) |                                     |        | 1.33       |         |      |         | 1.98       |         |   |         | 2.22       |        
|                                                                                                                         | Cumulative effect of accounting change                                                                            |                                     |        |           |         |      |         | (0.02      | )       |   |         |           |        
|                                                                                                                         | Extraordinary items                                                                                               |                                     |        |           |         |      |         |           |         |   |         |           |        
|                                                                                                                         | Net income available to common unitholders                                                                        |                                     | $      | 1.33       |         |      | $       | 1.96       |         |   | $       | 2.22       |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Weighted average common units outstanding                                                                         |                                     |        | 42,035,577 |         |      |         | 43,427,100 |         |   |         | 45,038,079 |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           
|                                                                                                                         | Distributions declared                                                                                            |                                     | $      | 3.12       |         |      | $       | 3.12       |         |   | $       | 3.04       |        
|                                                                                                                         |                                                                                                                   |                                     |        |            |         |      |         |            |         |   |         |           

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




Post Properties, Inc.


77


Post Apartment Homes, L.P.




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##### Table of Contents



POST APARTMENT HOMES, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS
EQUITY


FOR THE YEARS ENDED DECEMBER 31, 2002, 2001
AND 2000


(Dollars in thousands, except per unit
data)


|                                        |                                                                                                                |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |          |         |  
|--------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ------- | ------------ | ------ | ----------- | ------ | ------------- | --- | ----- | --------- | -------- | ------ | - | ------- | - | ------- | - | --------- | -------- | ------- | -
|                                        |                                                                                                                |                                           |         |              |        |             |        |              
|                                        |                                                                                                                |                                           |         | Common Units |        | Accumulated |        |              
|                                        |                                                                                                                |                                           |         |              |        | Other       |        |              
|                                        |                                                                                                                | Preferred                                 |         | General      |        | Limited     |        | Comprehensive |     |      
|                                        |                                                                                                                | Units                                     |         | Partner      |        | Partners    |        | Income        |     | Total
|                                        |                                                                                                                |                                           |         |              |        |             |        |               |     |      
|Partners Equity, December 31,
    1999 |                                                                                                                | $                                         | 220,000 |              |        | $           | 10,332 |               |     | $     | 1,021,010 |          |        | $ |        |   |         | $ | 1,251,342 |         
|                                        | Net income                                                                                                     |                                           |         | 17,475       |        |             |        | 1,003         |     |       |           | 99,333   |        |   |         |  |         |   |           | 117,811  |        
|                                        | Contributions from the Company related to
    dividend reinvestment and employee stock purchase plans          |                                           |         |             |        |             |        | 290           |     |       |           | 28,747   |        |   |         |  |         |   |           | 29,037   |        
|                                        | Purchase of Common Units                                                                                       |                                           |         |             |        |             |        |              |     |       |           | (28,903  | )      |   |         |  |         |   |           | (28,903  | )      
|                                        | Distributions to preferred Unitholders                                                                         |                                           |         | (17,475      | )      |             |        |              |     |       |           |         |        |   |         |  |         |   |           | (17,475  | )      
|                                        | Distributions to common Unitholders                                                                            |                                           |         |             |        |             |        | (1,351        | )   |       |           | (133,760 | )      |   |         |  |         |   |           | (135,111 | )      
|                                        |                                                                                                                |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |         
|Partners Equity, December 31,
    2000 |                                                                                                                | $                                         | 220,000 |              |        | $           | 10,274 |               |     | $     | 986,427   |          |        | $ |        |   |         | $ | 1,216,701 |         
|                                        | Comprehensive income                                                                                           |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |          |        
|                                        |                                                                                                                | Net income                                |         |              | 17,368 |             |        |               | 853 |       |           |          | 84,416 |   |         |   |        |   |           |          | 102,637 |  
|                                        |                                                                                                                | Cumulative effect of adoption of SFAS 133 |         |              |       |             |        |               |    |       |           |          |       |   |         |   | (1,472  | ) |           |          | (1,472  | )
|                                        |                                                                                                                | Net change in derivative value            |         |              |       |             |        |               |    |       |           |          |       |   |         |   | (5,173  | ) |           |          | (5,173  | )
|                                        |                                                                                                                |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |         
|                                        |                                                                                                                | Total comprehensive income                |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |          | 95,992  |  
|                                        | Contributions from the Company related to
    dividend reinvestment and employee stock purchase plans          |                                           |         |             |        |             |        | 88            |     |       |           | 8,678    |        |   |         |  |         |   |           | 8,766    |        
|                                        | Preferred Unit repurchases                                                                                     |                                           |         | (5,000       | )      |             |        | (1            | )   |       |           | (99      | )      |   |         |  |         |   |           | (5,100   | )      
|                                        | Purchase of Common Units                                                                                       |                                           |         |             |        |             |        |              |     |       |           | (87,547  | )      |   |         |  |         |   |           | (87,547  | )      
|                                        | Distributions to preferred Unitholders                                                                         |                                           |         | (17,368      | )      |             |        |              |     |       |           |         |        |   |         |  |         |   |           | (17,368  | )      
|                                        | Distributions to common Unitholders                                                                            |                                           |         |             |        |             |        | (1,339        | )   |       |           | (132,606 | )      |   |         |  |         |   |           | (133,945 | )      
|                                        | Contributions from the Company related to shares
    issued for restricted stock, net of deferred compensation |                                           |         |             |        |             |        | 2             |     |       |           | 169      |        |   |         |  |         |   |           | 171      |        
|                                        |                                                                                                                |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |         
|Partners Equity, December 31,
    2001 |                                                                                                                | $                                         | 215,000 |              |        | $           | 9,877  |               |     | $     | 859,438   |          |        | $ | (6,645  | ) |         | $ | 1,077,670 |         
|                                        | Comprehensive income                                                                                           |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |          |        
|                                        |                                                                                                                | Net income                                |         |              | 17,049 |             |        |               | 561 |       |           |          | 55,508 |   |         |   |        |   |           |          | 73,118  |  
|                                        |                                                                                                                | Net change in derivative value            |         |              |       |             |        |               |    |       |           |          |       |   |         |   | (10,204 | ) |           |          | (10,204 | )
|                                        |                                                                                                                |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |         
|                                        |                                                                                                                | Total comprehensive income                |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |          | 62,914  |  
|                                        | Contributions from the Company related to
    dividend reinvestment and employee stock purchase plans          |                                           |         |             |        |             |        | 13            |     |       |           | 1,241    |        |   |         |  |         |   |           | 1,254    |        
|                                        | Distributions to preferred Unitholders                                                                         |                                           |         | (17,049      | )      |             |        |              |     |       |           |         |        |   |         |  |         |   |           | (17,049  | )      
|                                        | Distributions to common Unitholders                                                                            |                                           |         |             |        |             |        | (1,311        | )   |       |           | (129,767 | )      |   |         |  |         |   |           | (131,078 | )      
|                                        | Contributions from the Company related to shares
    issued for restricted stock, net of deferred compensation |                                           |         |             |        |             |        | 3             |     |       |           | 262      |        |   |         |  |         |   |           | 265      |        
|                                        |                                                                                                                |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |         
|Partners Equity, December 31,
    2002 |                                                                                                                | $                                         | 215,000 |              |        | $           | 9,143  |               |     | $     | 786,682   |          |        | $ | (16,849 | ) |         | $ | 993,976   |         
|                                        |                                                                                                                |                                           |         |              |        |             |        |               |     |       |           |          |        |   |         |   |         |   |           |         

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




Post Properties, Inc.


78


Post Apartment Homes, L.P.




---



##### Table of Contents



POST APARTMENT HOMES, L.P.

CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Dollars in thousand, except per unit
data)


|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |          |        |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ----- | -------- | ------- | ---- | ------ | -------- | ------- | - | ----- | -------- | ------ | -
|                                                         |                                                                                       |                                                            
|                                                         |                                                                                       | Year Ended December 31,                                    
|                                                         |                                                                                       |                                                            
|                                                         |                                                                                       | 2002                                                        |       | 2001     |         | 2000
|                                                         |                                                                                       |                                                             |       |          |         |     
|Cash Flows From Operating Activities                     |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|                                                         | Net income                                                                            |                                                             | $     | 73,118   |         |      | $      | 102,637  |         |   | $     | 117,811  |       
|                                                         | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                             |       |          |         |      |        |          |         |   |       |          |       
|                                                         |                                                                                       | Gains on property
    sales  continuing operations         |       |          | (13,275 | )    |        |          | (23,942 | ) |       |          | (3,208 | )
|                                                         |                                                                                       | Gains on property
    sales  discontinuing operations      |       |          | (16,570 | )    |        |          |        |   |       |          |       |  
|                                                         |                                                                                       | Equity in losses of unconsolidated real estate
    entities |       |          | 1,590   |      |        |          | 186     |   |       |          |       |  
|                                                         |                                                                                       | Cumulative effect of accounting change                      |       |          |        |      |        |          | 695     |   |       |          |       |  
|                                                         |                                                                                       | Extraordinary items                                         |       |          | 136     |      |        |          | 88      |   |       |          |       |  
|                                                         |                                                                                       | Depreciation                                                |       |          | 87,927  |      |        |          | 76,178  |   |       |          | 71,113 |  
|                                                         |                                                                                       | Amortization of deferred loan costs                         |       |          | 2,327   |      |        |          | 1,978   |   |       |          | 1,636  |  
|                                                         | Changes in assets, (increase) decrease in:                                            |                                                             |       |          |         |      |        |          |         |   |       |          |       
|                                                         |                                                                                       | Restricted cash                                             |       |          | (54     | )    |        |          | (43     | ) |       |          | 108    |  
|                                                         |                                                                                       | Other assets                                                |       |          | 8,098   |      |        |          | (1,626  | ) |       |          | (8,904 | )
|                                                         |                                                                                       | Deferred charges                                            |       |          | (1,362  | )    |        |          | (929    | ) |       |          | (1,591 | )
|                                                         | Changes in liabilities, increase
    (decrease) in:                                   |                                                             |       |          |         |      |        |          |         |   |       |          |       
|                                                         |                                                                                       | Accrued interest payable                                    |       |          | (666    | )    |        |          | (1,091  | ) |       |          | 1,591  |  
|                                                         |                                                                                       | Accounts payable and accrued expenses                       |       |          | (20,740 | )    |        |          | 7,824   |   |       |          | 6,133  |  
|                                                         |                                                                                       | Security deposits and prepaid rents                         |       |          | (766    | )    |        |          | (391    | ) |       |          | 384    |  
|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|                                                         | Net cash provided by operating activities                                             |                                                             |       | 119,763  |         |      |        | 161,564  |         |   |       | 185,073  |       
|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|Cash Flows From Investing Activities                     |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|                                                         | Construction and acquisition of real estate
    assets, net of payables               |                                                             |       | (150,792 | )       |      |        | (220,297 | )       |   |       | (362,981 | )     
|                                                         | Net proceeds from property sales                                                      |                                                             |       | 182,216  |         |      |        | 220,122  |         |   |       | 157,265  |       
|                                                         | Capitalized interest                                                                  |                                                             |       | (13,223  | )       |      |        | (22,124  | )       |   |       | (25,426  | )     
|                                                         | Recurring capital expenditures                                                        |                                                             |       | (9,381   | )       |      |        | (10,441  | )       |   |       | (9,157   | )     
|                                                         | Corporate additions and improvements                                                  |                                                             |       | (1,100   | )       |      |        | (3,021   | )       |   |       | (3,441   | )     
|                                                         | Non-recurring capital expenditures                                                    |                                                             |       | (3,441   | )       |      |        | (2,535   | )       |   |       | (5,576   | )     
|                                                         | Revenue generating capital expenditures                                               |                                                             |       | (2,035   | )       |      |        | (4,226   | )       |   |       | (6,670   | )     
|                                                         | Investments in and advances to unconsolidated
    entities                            |                                                             |       | (51,065  | )       |      |        | (8,691   | )       |   |       |         |       
|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|                                                         | Net cash used in investing activities                                                 |                                                             |       | (48,821  | )       |      |        | (51,213  | )       |   |       | (255,986 | )     
|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|Cash Flows From Financing Activities                     |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|                                                         | Proceeds from notes payable                                                           |                                                             |       | 95,500   |         |      |        | 50,000   |         |   |       | 440,001  |       
|                                                         | Payments on notes payable                                                             |                                                             |       | (47,632  | )       |      |        | (70,066  | )       |   |       | (56,774  | )     
|                                                         | Lines of credit proceeds (repayments), net                                            |                                                             |       | 30,167   |         |      |        | 143,277  |         |   |       | (159,501 | )     
|                                                         | Payment of financing costs                                                            |                                                             |       | (561     | )       |      |        | (300     | )       |   |       | (3,128   | )     
|                                                         | Purchase of Preferred Units                                                           |                                                             |       |         |         |      |        | (5,100   | )       |   |       |         |       
|                                                         | Purchase of Common Units                                                              |                                                             |       |         |         |      |        | (87,547  | )       |   |       | (24,912  | )     
|                                                         | Proceeds from dividend reinvestment and employee
    stock purchase plans             |                                                             |       | 1,254    |         |      |        | 8,766    |         |   |       | 26,754   |       
|                                                         | Distributions to preferred unitholders                                                |                                                             |       | (17,049  | )       |      |        | (17,368  | )       |   |       | (17,475  | )     
|                                                         | Distributions to common unitholders                                                   |                                                             |       | (131,034 | )       |      |        | (134,669 | )       |   |       | (132,463 | )     
|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|                                                         | Net cash provided by (used in) financing
    activities                               |                                                             |       | (69,355  | )       |      |        | (113,007 | )       |   |       | 72,502   |       
|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|Net increase (decrease) in cash and cash
    equivalents |                                                                                       |                                                             | 1,587 |          |         |      | (2,656 | )        |         |   | 1,589 |         
|Cash and cash equivalents, beginning of period           |                                                                                       |                                                             | 4,803 |          |         |      | 7,459  |          |         |   | 5,870 |         
|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         
|Cash and cash equivalents, end of period                 |                                                                                       | $                                                           | 6,390 |          |         | $    | 4,803  |          |         | $ | 7,459 |         
|                                                         |                                                                                       |                                                             |       |          |         |      |        |          |         |   |       |         

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




Post Properties, Inc.


79


Post Apartment Homes, L.P.




---



##### Table of Contents



POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)


________________________________________________________________________________


1. ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICES

Organization

Post Apartment Homes, L.P. (the Operating
Partnership), a Georgia limited partnership, and its
subsidiaries develop, own and manage upscale multi-family
apartment communities in selected markets in the United States.
Post Properties, Inc. (the Company) through its
wholly owned subsidiaries is the sole general partner, a limited
partner and owns a majority interest in the Operating
Partnership. The Operating Partnership, through its operating
divisions and subsidiaries conducts substantially all of the
on-going operations of Post Properties, Inc., a publicly traded
company which operates as a self-administered and self-managed
real estate investment trust.

At December 31, 2002, the Company owned
88.5% of the common limited partnership interests (Common
Units) in the Operating Partnership and 63.6% of the
preferred limited partnership interests (Preferred
Units). The Companys weighted average common
ownership interest in the Operating Partnership was 87.9%, 88.1%
and 88.3% for the years ended December 31, 2002, 2001 and
2000 respectively. Common Units held by persons (including
certain Company directors) other than the Company represented a
11.5% ownership interest in the Operating Partnership. Each
Common Unit may be redeemed by the holder thereof for either one
share of Company common stock or cash equal to the fair market
value thereof at the time of such redemptions, 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 Common Units for Company 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 Common Units to the Company.

At December 31, 2002, the Operating
Partnership owns 30,317 apartment units in 84 apartment
communities, including 1,377 apartment units currently under
development and lease-up in five apartment communities and an
addition to an existing community. At December 31, 2002,
approximately 52.1%, 18.7% and 7.3% (on a unit basis) of the
Companys communities are located in the Atlanta, Dallas
and Tampa metropolitan areas, respectively.

Under the provisions of the limited partnership
agreement, as amended, Operating Partnership net profits, net
losses and cash flow (after allocations to preferred ownership
interests) are allocated to the partners in proportion to their
common ownership interests. Cash distributions from the
Operating Partnership shall be, at a minimum, sufficient to
enable the Company to satisfy its annual dividend requirements
to maintain its REIT status under the Code.

Basis of presentation

The accompanying consolidated financial
statements include the consolidated accounts of the Operating
Partnership. The Operating Partnerships investments in
non-majority owned entities in which it does not exercise
unilateral control, but has the ability to exercise significant
influence over the operating and financial policies, are
accounted for on the equity method of accounting. Accordingly,
the Operating Partnerships share of the net earnings or
losses of these entities is included in consolidated net income.
All significant intercompany accounts and transactions have been
eliminated in consolidation.

Certain items in the 2001 and 2000 consolidated
financial statements were reclassified for comparative purposes
with the 2002 consolidated financial statements.

Cost capitalization

The Operating Partnership capitalizes those
expenditures relating to the acquisition of new assets, the
development and construction of new apartment communities, the
enhancement of the value of existing assets and expenditures
that substantially extend the life of existing assets. All other
expenditures necessary to maintain a community in ordinary
operating condition are expensed as incurred. Additionally, for
new development communities, carpet, vinyl, and blind
replacements are expensed as incurred during the first five
years (which corresponds to their estimated depreciable life).
Thereafter, these replacements are capitalized. The Operating
Partnership expenses as incurred all interior and exterior
painting of communities.




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

For communities under development, the Operating
Partnership capitalizes interest, real estate taxes, and certain
internal personnel and associated costs directly related to
apartment communities under development and construction.
Interest is capitalized to projects under development based upon
the weighted average cumulative project costs for each period
multiplied by the Operating Partnerships weighted average
borrowing costs, expressed as a percentage. Weighted average
borrowing costs include the costs of the Operating
Partnerships fixed rate secured and unsecured borrowings
and the variable rate unsecured borrowings under its line of
credit facilities. The weighted average borrowing costs,
expressed as a percentage, for the years ended December 31,
2002, 2001 and 2000 were 7.55%, 7.41% and 6.80%, respectively.
The weighted average borrowing costs used by the Operating
Partnership for interest capitalization generally increases as
the Operating Partnerships variable rate unsecured debt
decreases and decreases as the Operating Partnerships
variable rate unsecured debt increases. Internal personnel and
associated costs are capitalized to projects under development
based upon the effort identifiable with such projects. The
Operating Partnership 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. The Operating Partnership ceases the capitalization
of such costs as the residential units in a community become
substantially complete and available for occupancy. This results
in a proration of these costs between amounts that are
capitalized and expensed as the residential units in a
development community become available for occupancy. In
addition, prior to the completion of units, the Operating
Partnership expenses as incurred substantially all operating
expenses (including pre-opening marketing as well as property
management and leasing personnel expenses) of such communities.

Real estate assets, depreciation and
impairment

Real estate assets are stated at the lower of
depreciated cost or fair value, if deemed impaired. 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).

The Operating Partnership continually evaluates
the recoverability of the carrying value of its real estate
assets using the methodology prescribed in Statement of
Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. Factors considered by management in evaluating
impairment of its existing real estate assets held for
investment include significant declines in property operating
profits, recurring property operating losses and other
significant adverse changes in general market conditions that
are considered permanent in nature. If any real estate asset
held for investment is considered impaired, a loss is provided
to reduce the carrying value of the asset to its fair value. The
Operating Partnership periodically classifies real estate assets
as held for sale. An asset is classified as held for sale after
the approval of the Operating Partnerships internal
investment committee and after an actual program to sell the
asset has commenced. Upon the classification of a real estate
asset as held for sale, the carrying value of the asset is
reduced to the lower of its net book value or its fair value,
less costs to sell the asset. Subsequent to the classification
of assets as held for sale, no further depreciation expense is
recorded.

Real estate assets held for sale are stated
separately on the accompanying consolidated balance sheets.
Effective January 1, 2002 (through the implementation of
SFAS No. 144), the operating results of real estate assets
held for sale and sold are reported as discontinued operations
in the accompanying statements of operations. The income
(loss) from discontinued operations includes the revenues
and expenses including depreciation and allocated interest
expense, associated with the assets. Interest expense is
allocated to assets held for sale based on actual interest costs
for assets with secured mortgage debt. Interest expense is
allocated to unencumbered assets based on the ratio of
unencumbered assets to unsecured debt multiplied by the weighted
average interest rate on the Operating Partnerships
unsecured debt for the period and further multiplied by the
average book value of the assets sold. This classification of
operating results as discontinued operations applies
retroactively for all periods presented for assets designated as
held for sale in 2002. Additionally, gains and losses on assets
designated as held for sale in 2002 are classified as part of
discontinued operations.

In years prior to 2002, real estate assets held
for sale were stated separately on the consolidated balance
sheet in a manner consistent with approach discussed above.
However, the operating results and gains or losses on the sale of




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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

such assets were included in continuing
operations. As a result of this presentation, income from
continuing operations and gains on property sales are not
comparable between years.

Revenue recognition

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.

Stock-based compensation

Through December 31, 2002, the Operating
Partnership accounted for stock-based compensation under the
intrinsic value method prescribed by Accounting Principles Board
(APB) Opinion 25, Accounting for Stock
Issued to Employees. Under APB Opinion 25,
compensation expense was generally not recognized for stock
options granted at the Companys current stock price on the
grant date. In addition to the information summarized below, the
Operating Partnership provides the additional disclosures
relating to the impact of Company stock options prescribed by
SFAS No. 123, Accounting for Stock-based
Compensation, as amended, in note 9 to these
consolidated financial statements.

In December 2002, SFAS No. 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure, was issued. SFAS No. 148
amends SFAS No. 123 to provide alternative methods of
transition for a voluntary change to the fair value based method
of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements
in both annual and interim financial statements about the method
of accounting for stock-based compensation and the effect of the
method on reported results. Effective January 1, 2003, the
Operating Partnership intends to voluntarily change to the fair
value method of accounting under SFAS No. 123 using the
prospective method prescribed in SFAS No. 148. The
Operating Partnership estimates the impact of this change on its
projected 2003 results of operations to be a reduction of
earnings per common unit of approximately $0.01.

The following table reflects the effect on the
Operating Partnerships net income and earnings per common
share had the fair value method of accounting under SFAS
No. 123 been applied for each year.

|                                           |                                                                     |      |   |        |   |      |   |        |   |  |   |         |  
|------------------------------------------ | ------------------------------------------------------------------- | ---- | - | ------ | - | ---- | - | ------ | - |  | - | ------- | -
|                                           |                                                                     | 2002 |   | 2001   |   | 2000
|                                           |                                                                     |      |   |        |   |     
|Net income available to common unitholders |                                                                     |      |   |        |   |      |   |        |   |  |   |        
|                                           | As reported                                                         |      | $ | 56,069 |   |      | $ | 85,269 |   |  | $ | 100,336 |  
|                                           | Stock based compensation determined under the
    fair value method |      |   | (568   | ) |      |   | (1,287 | ) |  |   | (2,182  | )
|                                           |                                                                     |      |   |        |   |      |   |        |   |  |   |        
|                                           | Pro forma                                                           |      | $ | 55,501 |   |      | $ | 83,982 |   |  | $ | 98,154  |  
|                                           |                                                                     |      |   |        |   |      |   |        |   |  |   |        
|Net income per common unit  basic         |                                                                     |      |   |        |   |      |   |        |   |  |   |        
|                                           | As reported                                                         |      | $ | 1.33   |   |      | $ | 1.98   |   |  | $ | 2.25    |  
|                                           | Pro forma                                                           |      | $ | 1.32   |   |      | $ | 1.94   |   |  | $ | 2.21    |  
|Net income per common
    unit  diluted   |                                                                     |      |   |        |   |      |   |        |   |  |   |        
|                                           | As reported                                                         |      | $ | 1.33   |   |      | $ | 1.96   |   |  | $ | 2.22    |  
|                                           | Pro forma                                                           |      | $ | 1.32   |   |      | $ | 1.93   |   |  | $ | 2.17    |  

Accounting for derivative financial
instruments

Effective January 1, 2001, the Operating
Partnership accounts for derivative financial instruments at
fair value under the provisions of SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS No. 138,
Accounting for Certain Derivative and Hedging
Activities.

The Operating Partnership uses derivative
financial instruments, interest rate swap and interest rate cap
arrangements, to manage or hedge its exposure to interest rate
changes. The Operating Partnership designates each derivative
instrument as a hedge of specific interest expense cash flow
exposure. Under SFAS 133, as amended, derivative
instruments qualifying as hedges of specific cash flows are
generally recorded on the balance sheet at fair value with an
offsetting increase or decrease to accumulated other
comprehensive income, a shareholders equity account, until
the hedged transactions are recognized in earnings. Any
ineffective portion of cash flow hedges are recognized
immediately in earnings.




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

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.

Per unit data

Basic earnings per Common Unit is computed by
dividing net income by the weighted average number of Common
Units outstanding during the period. Diluted earnings per Common
Unit is computed by dividing net income by the weighted average
number of Common Units outstanding during the period, including
the dilutive effect of the potential issuance of additional
Common Units if outstanding stock options were exercised and
converted into common stock of the Company.

Use of estimates

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.

New accounting pronouncements

In 2002 and 2003, the Financial Accounting
Standards Board issued several new accounting pronouncements and
the pronouncements with a potential impact on the Operating
Partnership are discussed herein.

SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections was issued in May
2002. SFAS No. 145 rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishments of
Debt, which provided that gains and losses from early debt
retirements be treated as extraordinary items. Under SFAS
No. 145, gains and losses from early debt retirements will
only be treated as extraordinary items if they meet the criteria
for extraordinary items under APB No. 30. Since the
definition of an extraordinary item is more restrictive under
APB No. 30, SFAS No. 145 will generally cause the
Operating Partnership to treat gains or losses from early debt
retirements as part of income before extraordinary items. This
part of SFAS No. 145 is effective for fiscal years
beginning after May 15, 2002 and requires the
reclassification of prior period extraordinary items not meeting
the APB No. 30 criteria. The Operating Partnership expects
to implement this requirement of SFAS No. 145 on
January 1, 2003. Upon implementation, the Operating
Partnership will reclassify $136 in 2002 and $88 in 2001 from
extraordinary items to expenses used to determine income from
continuing operations. The Operating Partnership believes this
change is not significant to the Operating Partnerships
results of operations or its financial position. The remaining
provisions of SFAS No. 145 are generally not applicable to
the Operating Partnership.

SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities was issued in
July 2002. This Statement addresses financial accounting and
reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring).
SFAS 146 is effective for exit or disposal activities
initiated after December 31, 2002. The Operating
Partnership believes the provisions of this Statement will not
have a significant effect on the Operating Partnerships
results of operations or its financial position.




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

FASB Interpretation No. 45 (FIN
No. 45), Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Guarantees of
Indebtedness of Others was issued in November 2002. FIN
No. 45 clarifies disclosure requirements to be made by a
guarantor in its interim and annual financial statements
regarding its obligations under certain guarantees that it has
issued. Additionally, it clarifies that a guarantor is required
to recognize, at the inception of a guarantee, a liability for
the fair value of the obligation undertaken in issuing the
guarantee. The disclosure requirements of FIN No. 45 are
effective for interim and annual financial statements issued
after December 15, 2002. The initial recognition and
measurement provisions of FIN No. 45 are applicable for
guarantees issued or modified after December 31, 2002. The
Operating Partnership has implemented the disclosure
requirements of FIN No. 45 effective with these
December 31, 2002 financial statements and the Operating
Partnership will implement the recognition and measurement
provisions effective January 1, 2003. The Operating
Partnership does not expect the recognition and measurement
provisions of FIN No. 45 to have a significant impact on
the Operating Partnerships financial position or results
of operations.

FASB Interpretation No. 46 (FIN
No. 46), Consolidation of Variable Interest
Entities, an interpretation of ARB No. 51 was issued
in January 2003. FIN No. 46 requires consolidation of all
legal entities in which the enterprise holds contractual,
ownership or other monetary interests that change with changes
in the entitys net asset value (such entities being
designated as variable interest entities) where the enterprise
is deemed the primary beneficiary. The consolidation provisions
of FIN No. 46 are applicable immediately to all variable
interest entities created after January 31, 2003. For
variable interest entities created prior to February 1,
2003 where the Operating Partnership is deemed to be the primary
beneficiary, consolidation of such entities will be required for
the interim period ending September 30, 2003. Information
required to be disclosed in 2003 pursuant to FIN No. 46
includes the nature, purpose, size and activities of all
variable interest entities where it is reasonably possible that
such entities will be required to be consolidated by the
Operating Partnership and the Operating Partnerships
maximum exposure to loss from these entities. The Operating
Partnership currently does not have any interests in variable
interest entities and believes that FIN No. 46 will not
have a significant effect on its results of operations or
financial position.

2. DEFERRED CHARGES

Deferred charges consist of the following:

|                               |  |              |         |      |  |   |         |  
|------------------------------ |  | ------------ | ------- | ---- |  | - | ------- | -
|                               |  |             
|                               |  | December 31,
|                               |  |             
|                               |  | 2002         |         | 2001
|                               |  |              |         |     
|Deferred financing costs       |  | $            | 37,037  |      |  | $ | 35,817  |  
|Other                          |  |              | 3,532   |      |  |   | 4,527   |  
|                               |  |              |         |      |  |   |         |  
|                               |  |              | 40,569  |      |  |   | 40,344  |  
|Less: accumulated amortization |  |              | (24,985 | )    |  |   | (22,141 | )
|                               |  |              |         |      |  |   |         |  
|                               |  | $            | 15,584  |      |  | $ | 18,203  |  
|                               |  |              |         |      |  |   |         |  




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

3. NOTES PAYABLE

At December 31, 2002 and 2001, the Operating
Partnerships indebtedness consisted of the following:

|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |           | 
|-------------------------------------------- | ----- | ------------- | ------------- | -------- |  | -------- | --------------- | ------------ |  | ---- | --------- |  |  | - | ------- | --------- |  | - | ------- | --------- | 
|                                             |       |               |               |          |  |          |                 |             
|                                             |       |               |               |          |  |          |                 | December 31,
|                                             |       |               |               | Interest |  | Maturity |                 |             
|Description                                  |       | Payment Terms |               | Rate     |  | Date (1) |                 | 2002         |  | 2001
|                                             |       |               |               |          |  |          |                 |              |  |     
|Unsecured Notes                              |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|Senior Notes                                 |       |               | Int           |          |  |          | 6.11% -  7.70%  |              |  |      | 2003-2010 |  |  | $ | 385,000 |           |  | $ | 360,000 |          
|Medium Term Notes                            |       |               | Int           |          |  |          | 6.69% -   8.12% | (2)          |  |      | 2004-2015 |  |  |   | 323,000 |           |  |   | 323,000 |          
|Other                                        |       |               | Int           |          |  |          | 8.37%           |              |  |      | 2002      |  |  |   |        |           |  |   | 20,000  |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   | 708,000 |           |  |   | 703,000 |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|Unsecured Lines of Credit &
    Other        |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|Revolver                                     |       |               | N/A           |          |  |          | LIBOR + 0.85%   | (3)          |  |      | 2004      |  |  |   | 185,000 |           |  |   | 155,000 |          
|Cash Management Line                         |       |               | N/A           |          |  |          | LIBOR +  0.75%  |              |  |      | 2003      |  |  |   | 11,369  |           |  |   | 11,202  |          
|Other                                        |       |               | N/A           |          |  |          | 5.00%           |              |  |      | 2021      |  |  |   |        |           |  |   | 2,000   |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   | 196,369 |           |  |   | 168,202 |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|Conventional Fixed Rate (Secured)            |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|FNMA                                         |       |               | Prin. and Int |          |  |          | 6.975%          | (4)          |  |      | 2029      |  |  |   | 101,100 |           |  |   | 102,200 |          
|Other                                        |       |               | Prin. and Int |          |  |          | 5.50% - 7.69%   |              |  |      | 2007-2013 |  |  |   | 194,706 |           |  |   | 127,238 |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   | 295,806 |           |  |   | 229,438 |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|Tax Exempt Floating Rate Bonds
    (Secured) |       |               | Int           |          |  |          | 1.55%           | (5)          |  |      | 2025      |  |  |   | 214,380 |           |  |   | 235,880 |          
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          
|                                             | Total |               |               |          |  |          |                 |              |  |      |           |  |  |   | $       | 1,414,555 |  |   | $       | 1,336,520 | 
|                                             |       |               |               |          |  |          |                 |              |  |      |           |  |  |   |         |           |  |   |         |          



|    |                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All outstanding indebtedness can be prepaid at
    any time, subject to certain prepayment penalties.                                                                                                                                                                                                                                                                                                         
|(2) | Contains $100,000 of Mandatory Par Put Remarketed
    Securities. The annual interest rate on these securities to 2005
    (the Remarketing Date) is 6.85%. On the Remarketing
    Date, they are subject to mandatory tender for remarketing.                                                                                                                                                              
|(3) | Represents stated rate. At December 31,
    2002, the weighted average interest rate was 2.23%.                                                                                                                                                                                                                                                                                                               
|(4) | Interest rate is fixed at 6.975%, inclusive of
    credit enhancement and other fees, to 2009 through an interest
    rate swap arrangement.                                                                                                                                                                                                                                                                  
|(5) | FNMA credit enhanced bond indebtedness. Interest
    based on FNMA AAA tax exempt rate plus credit
    enhancement and other fees of 0.639%. Interest rate represents
    rate at December 31, 2002 before credit enhancements. At
    December 31, 2002, the Company has outstanding interest
    rate cap arrangements that limit the Companys exposure to
    increases in the base interest rate to 5%.

New debt issuances

In June 2002, the Operating Partnership
issued $25,000 of unsecured notes at par. These notes bear
interest at 6.11% and mature June 2007. Also in
June 2002, the Operating Partnership closed a $13,500
secured mortgage loan. This loan bears interest at 6.29% and
requires monthly principal and interest payments on a 25-year
amortization schedule. The loan matures on October 2007.

In December 2002, the Operating Partnership
closed a $57,000 mortgage loan with a life insurance company.
This loan carries an interest rate of 5.5% and requires payments
of interest only for the first five years. Thereafter, payments
of principal and interest are required based upon a 30-year
amortization schedule until the loans maturity in
January 2013.




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

Debt maturities

The aggregate maturities of the Operating
Partnerships indebtedness are as follows (1):

|           |  |   |           | 
|---------- |  | - | --------- | 
|2003       |  | $ | 103,809   | 
|2004       |  |   | 27,094    | 
|2005       |  |   | 204,402   | 
|2006       |  |   | 79,732    | 
|2007       |  |   | 112,178   | 
|Thereafter |  |   | 690,971   | 
|           |  |   |           | 
|           |  | $ | 1,218,186 | 
|           |  |   |           | 



|    |                                                                      
|--- | ---------------------------------------------------------------------
|(1) | Excludes outstanding balances on lines of credit
    discussed below.

Unsecured lines of credit

The Operating Partnership utilizes a $320,000
three-year syndicated revolving line of credit (the
Revolver), for its short-term financing
requirements. At December 31, 2002, the stated interest
rate for the Revolver was LIBOR plus 0.85% or prime minus 0.25%.
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
Operating Partnership does not anticipate that this covenant
will adversely affect the ability of the Operating Partnership
to make distributions, or the Company to declare dividends, at
the Companys current dividend level. The Revolver matures
in April 2004. Management expects to renew this facility in
2003 with a total capacity of approximately $300,000.

The Operating Partnership also has in place an
additional $125,000 line of credit facility for general
corporate purposes. This line bears interest at LIBOR plus 0.90%
and matures in April 2003. Management does not expect to
renew this facility in April 2003 as the Operating
Partnerships financing needs have reduced consistent with
the Operating Partnerships reduced development spending.

Additionally, the Operating Partnership has 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 0.75% or prime minus .25% and
matures in February 2003. Subsequent to year end, the Cash
Management Line was renewed through June 2003 with similar
terms to its existing facility. At December 31, 2002, the
Operating Partnership has issued letters of credit to third
parties totaling $1,323 under this facility.




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

Interest paid

Interest paid (including capitalized amounts of
$13,223, $22,124 and $25,426 for the years ended
December 31, 2002, 2001 and 2000, respectively), aggregated
$79,115, $82,383 and $74,419 for the years ended
December 31, 2002, 2001 and 2000, respectively.

Pledged assets

The aggregate net book value at December 31,
2002 of property pledged as collateral for indebtedness amounted
to approximately $497,473.

Extraordinary items

The extraordinary losses for the years ended
December 31, 2002 and 2001 of $136 and $88, respectively,
resulted from costs associated with the early extinguishment of
indebtedness.

4. INVESTMENTS IN UNCONSOLIDATED REAL
ESTATE ENTITIES

The Operating Partnership holds investments in
four individual limited liability companies (the Property
LLCs) with an institutional investor. Each Property LLC
owns a newly developed or under development apartment community.
At December 31, 2002, all of the apartment communities had
commenced rental operations. The Operating Partnership holds a
35% equity interest in the Property LLCs. The total estimated
development cost of the apartment communities of $219,000 is
being funded through member equity contributions proportionate
to the members ownership interests and through
construction financing provided by the Operating Partnership.
The Operating Partnership accounts for its investments in these
Property LLCs using the equity method of accounting. The excess
of the Operating Partnerships investment over its equity
in the underlying net assets of the Property LLCs was
approximately $9,070 at December 31, 2002. This excess
investment is being amortized as a reduction to earnings on a
straight-line basis over the lives of the related assets. The
Operating Partnership provides real estate services
(development, construction and property management) to the
Property LLCs.

The operating results of the Operating
Partnership include its proportionate share of net income
(loss) from the investments in the Property LLCs. A summary
of financial information for the Property LLCs in the aggregate
is as follows:

|                                                        |                                       |              |         |         |  |   |         |         | 
|------------------------------------------------------- | ------------------------------------- | ------------ | ------- | ------- |  | - | ------- | ------- | 
|                                                        |                                       |             
|                                                        |                                       | December 31,
|                                                        |                                       |             
|                                                        |                                       | 2002         |         | 2001   
|                                                        |                                       |              |         |        
|Real estate assets, net                                 |                                       | $            | 198,854 |         |  | $ | 115,664 |        
|Cash and other                                          |                                       |              | 2,330   |         |  |   | 533     |        
|                                                        |                                       |              |         |         |  |   |         |        
|                                                        | Total assets                          |              |         | 201,184 |  |   | $       | 116,197 | 
|                                                        |                                       |              |         |         |  |   |         |        
|Construction notes payable to Operating
    Partnership |                                       | $            | 160,294 |         |  | $ | 77,019  |        
|Other liabilities                                       |                                       |              | 3,975   |         |  |   | 11,892  |        
|                                                        |                                       |              |         |         |  |   |         |        
|                                                        | Total liabilities                     |              |         | 164,269 |  |   |         | 88,911  | 
|                                                        |                                       |              |         |         |  |   |         |        
|Members equity                                         |                                       |              | 36,915  |         |  |   | 27,286  |        
|                                                        |                                       |              |         |         |  |   |         |        
|                                                        | Total liabilities and members equity |              | $       | 201,184 |  |   | $       | 116,197 | 
|                                                        |                                       |              |         |         |  |   |         |        
|Operating Partnerships equity investment               |                                       | $            | 21,991  |         |  | $ | 12,673  |        
|                                                        |                                       |              |         |         |  |   |         |        




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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

|                                          |                                    |                |        |       |        |   |      |     |     | 
|----------------------------------------- | ---------------------------------- | -------------- | ------ | ----- | ------ | - | ---- | --- | --- | 
|                                          |                                    |               
|                                          |                                    | Year ended    
|                                          |                                    | December 31,  
|                                          |                                    |               
|                                          |                                    | 2002           |        | 2001 
|                                          |                                    |                |        |      
|Revenues                                  |                                    |                |        |       |        |   |      |    
|                                          | Rental                             |                | $      | 5,661 |        |   | $    | 136 |    
|                                          | Other                              |                |        | 381   |        |   |      | 50  |    
|                                          |                                    |                |        |       |        |   |      |    
|                                          |                                    | Total revenues |        |       | 6,042  |   |      |     | 186 | 
|                                          |                                    |                |        |       |        |   |      |    
|Expenses                                  |                                    |                |        |       |        |   |      |    
|                                          | Property operating and maintenance |                |        | 4,655 |        |   |      | 416 |    
|                                          | Depreciation                       |                |        | 3,153 |        |   |      | 192 |    
|                                          | Interest                           |                |        | 2,778 |        |   |      | 110 |    
|                                          |                                    |                |        |       |        |   |      |    
|                                          |                                    | Total expenses |        |       | 10,586 |   |      |     | 718 | 
|                                          |                                    |                |        |       |        |   |      |    
|Net loss                                  |                                    | $              | (4,544 | )     |        | $ | (532 | )  
|                                          |                                    |                |        |       |        |   |      |    
|Operating Partnerships share of net loss |                                    | $              | (1,590 | )     |        | $ | (186 | )  
|                                          |                                    |                |        |       |        |   |      |    

The Operating Partnership has committed
construction financing to the Property LLCs totaling $168,473
($160,294 funded at December 31, 2002). These loans earn
interest at LIBOR plus 1.75% and are secured by the apartment
communities. The loans mature on dates ranging from February
2003 to November 2004 and are expected to be repaid from the
proceeds of permanent project financings. As of
December 31, 2002, the institutional investors share
of these notes was $104,191. Subsequent to December 31,
2002, one of the Property LLCs repaid its outstanding
construction note payable to the Operating Partnership of
$24,071. The note was repaid through the proceeds from a
third-party non-recourse permanent mortgage note totaling
$17,000 and from member equity contributions totaling $7,132.
The Operating Partnership issued a limited guarantee and
indemnity to the lender regarding certain customary recourse
liabilities and environmental matters up to a maximum potential
exposure of $5,000. The other member of the Property LLC is
obligated to reimburse the Operating Partnership for up to its
65% share ($3,250) of this maximum potential exposure under
these arrangements.

As part of the development and construction
services agreements entered into between the Operating
Partnership and the Property LLCs, the Operating Partnership
guaranteed the maximum total amount for certain construction
cost categories subject to aggregate limits (approximately
$19,000). At December 31, 2002, the Operating Partnership
had substantially completed three of the communities and had
funded approximately $845 under the guarantee provisions of the
agreements. The amounts funded were accounted for as part of the
Operating Partnerships investment in the Property LLCs.
The Operating Partnerships remaining maximum exposure for
the fourth Property LLC totals approximately $5,200. The
Operating Partnership does not currently expect to be required
to fund any guarantees relating to this Property LLC.
Additionally, under these agreements, the Operating Partnership
is subject to project completion requirements, as defined. At
December 31, 2002, the Operating Partnership had met and
believes that it will meet the remaining completion date
requirements and not be subject to any additional costs.



|   |                                                               
|-- | --------------------------------------------------------------
|5. | REAL ESTATE ASSETS HELD FOR SALE /
    DISCONTINUED OPERATIONS

The Operating Partnership classifies real estate
assets as held for sale after the approval of its internal
investment committee and after the Operating Partnership has
commenced an active program to sell the assets. At
December 31 2002, the Operating Partnership has two
apartment communities and certain tracts of land classified as
held for sale. These real estate assets are classified
separately in the accompanying consolidated balance sheet at
$73,061, which represented the lower of cost or fair value, less
costs to sell. The Operating Partnership expects the sale of
these assets to occur in the next twelve months.

Under SFAS No. 144, the operating results of
assets designated as held for sale subsequent to January 1,
2002, are included in discontinued operations for all periods
presented. Additionally, all gains and losses on the sale of
these assets are included in discontinued operations. In the
year ended December 31, 2002, the Operating Partnership
designated and classified eight apartment communities, one
commercial property and six tracts of land as held for sale.
Income from discontinued operations includes the results of
operations through the earlier of the community




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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

sale date (if the community was sold between
January 1, 2002 and December 31, 2002) or
December 31, 2002 of eight apartment communities containing
3,134 units and one commercial property designated as held for
sale in 2002. The revenues and expenses of these communities for
the years ended December 31, 2002, 2001 and 2000 were as
follows:

|                                    |                                                                                   |                          |       |        |        |      |       |        |        |   |        |        |        | 
|----------------------------------- | --------------------------------------------------------------------------------- | ------------------------ | ----- | ------ | ------ | ---- | ----- | ------ | ------ | - | ------ | ------ | ------ | 
|                                    |                                                                                   |                         
|                                    |                                                                                   | Years ended December 31,
|                                    |                                                                                   |                         
|                                    |                                                                                   | 2002                     |       | 2001   |        | 2000
|                                    |                                                                                   |                          |       |        |        |     
|Revenues                            |                                                                                   |                          |       |        |        |      |       |        |        |   |        |       
|                                    | Rental                                                                            |                          | $     | 18,706 |        |      | $     | 31,836 |        |   | $      | 30,413 |       
|                                    | Other                                                                             |                          |       | 719    |        |      |       | 1,279  |        |   |        | 1,179  |       
|                                    |                                                                                   |                          |       |        |        |      |       |        |        |   |        |       
|                                    |                                                                                   | Total revenues           |       |        | 19,425 |      |       |        | 33,115 |   |        |        | 31,592 | 
|                                    |                                                                                   |                          |       |        |        |      |       |        |        |   |        |       
|Expenses                            |                                                                                   |                          |       |        |        |      |       |        |        |   |        |       
|                                    | Property operating and maintenance (exclusive of
    item shown separately below) |                          |       | 7,919  |        |      |       | 11,918 |        |   |        | 10,507 |       
|                                    | Depreciation                                                                      |                          |       | 2,246  |        |      |       | 6,431  |        |   |        | 5,381  |       
|                                    | Interest                                                                          |                          |       | 3,375  |        |      |       | 5,970  |        |   |        | 4,971  |       
|                                    |                                                                                   |                          |       |        |        |      |       |        |        |   |        |       
|                                    |                                                                                   | Total expenses           |       |        | 13,540 |      |       |        | 24,319 |   |        |        | 20,859 | 
|                                    |                                                                                   |                          |       |        |        |      |       |        |        |   |        |       
|Income from discontinued operations |                                                                                   | $                        | 5,885 |        |        | $    | 8,796 |        |        | $ | 10,733 |       
|                                    |                                                                                   |                          |       |        |        |      |       |        |        |   |        |       

The Operating Partnership recognized net gains of
$20,268 on the sale of real estate assets designated for sale in
2002, offset by reserves of $3,698 to write down to fair market
value certain land parcels designated as held for sale in 2002.
These sales generated net proceeds of approximately $140,823.

Under prior accounting pronouncements, operating
results and net gains or losses on the sale of assets classified
as held for sale prior to December 31, 2001 are included in
continuing operations. As a result of this presentation, income
from continuing operations and gains on property sales are not
comparable between periods. The discussion below relates to the
gains on sale of assets reported in continuing operations in the
consolidated statements of operations for the years ended
December 31, 2002, 2001 and 2000.

For the year ended December 31, 2002, the
Operating Partnership sold two apartment communities containing
540 units and one commercial property for net proceeds of
$41,393. The communities were located in Tampa, Florida and
Clearwater, Florida and the commercial property was located in
Grand Prairie, Texas. These sales resulted in net gains of
approximately $13,275. The gains excluded losses of $4,861
related to these assets that were written down to their
estimated fair value at December 31, 2001. For the years
ended December 31, 2002, 2001 and 2000, the consolidated
statement of operations included net income from these
properties of $369, $3,227 and $3,132, respectively. For the
years ended December 31, 2001 and 2000, net income
reflected above includes depreciation expense of $844 and $886,
respectively. No depreciation expense was recorded in 2002.

In 2001, the Operating Partnership sold six
apartment communities containing 2,799 units for net proceeds of
approximately $210,443. The communities sold were located in
Atlanta, Georgia, Dallas, Texas and Nashville, Tennessee.
Additionally, the Operating Partnership sold land parcels in
Dallas, Texas, Denver, Colorado and Charlotte, North Carolina
and a commercial property in Dallas, Texas for aggregate net
proceeds of $9,679. These sales resulted in net gains of
approximately $16,365. For the year ended December 31,
2001, the aggregate net gain on the sale of assets of $23,942
included the impact of estimated net losses totaling $11,490 on
the write down to fair value of assets designated as held for
sale at December 31, 2001 and excluded realized losses
totaling $19,067 related to assets written down to their
estimate fair value at December 31, 2000.

In 2000, the Operating Partnership sold eight
apartment communities containing 1,984 units for net proceeds of
approximately $157,265, resulting in net gains of approximately
$24,266. The communities sold were located in Atlanta, Georgia,
Jackson, Mississippi and Nashville, Tennessee. For the year
ended December 31, 2000, the aggregate net gain on the sale
of assets of $3,208 included the estimated net losses totaling
$21,058 on the write down to fair value of assets designated as
held for sale at December 31, 2000.




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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

6. PARTNERS EQUITY

Common and Preferred Units

At December 31, 2002 and 2001, the Operating
Partnership had outstanding Common Units totaling 42,031,715 and
41,975,447, respectively.

At December 31, 2002, the Operating
Partnership had outstanding four separate series of cumulative
redeemable preferred partnership units as more fully described
below. The preferred partnership units are reflected in the
accompanying financial statements at their liquidation value.

The Operating Partnership has outstanding 900,000
8.5% Series A cumulative redeemable preferred partnership
units (the Series A Preferred Units). The
Series A Preferred Units have a liquidation preference of
$50.00 per unit and are redeemable at the option of the
Operating Partnership on or after October 1, 2026, at a
redemption price of $50.00 per unit. The Series A Preferred
Units are owned by the Company.

The Operating Partnership has outstanding
2,000,000, 7.625% Series B cumulative redeemable preferred
partnership units (the Series B Preferred
Units). The Series B Preferred Units have a
liquidation preference of $25.00 per unit and are redeemable at
the option of the Operating Partnership on or after October 28,
2007, at a redemption price of $25.00 per unit. The
Series B Preferred Units are owned by the Company.

The Operating Partnership has outstanding
2,000,000, 7.625% Series C cumulative redeemable preferred
partnership units (the Series C Preferred
Units). The Series C Preferred Units have a
liquidation preference of $25.00 per unit and are redeemable at
the option of the Operating Partnership on or after February 9,
2003, at a redemption price of $25.00 per unit. The
Series C Preferred Units are owned by the Company.

The Operating Partnership has outstanding
2,800,000, 8% Series D cumulative redeemable preferred
partnership units (the Series D Preferred
Units). The Series D Preferred Units have a
liquidation preference of $25.00 per unit and are redeemable by
the Operating Partnership on or after September 3, 2004, at
a redemption price of $25.00 per unit. The Series D
Preferred Units are exchangeable into authorized, but unissued
Series D Preferred Stock of the Company, with identical
terms and preferences, on or after September 2, 2009, at
the option of the holders. Under certain circumstances, as
defined in the agreement, the Series D Preferred Units may
be exchanged prior to September 2, 2009, at the option of
the holders.

Computation of Earnings per Common
Unit

For the years ended December 31, 2002, 2001
and 2000, basic and diluted earnings per Common Unit for income
from continuing operations available to common unitholders
before cumulative effect of accounting change and extraordinary
items has been computed as follows:

|                                                                                                                          |  |                              |         |               |  |          |            |  |  |   |      | 
|------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | ------------- |  | -------- | ---------- |  |  | - | ---- | 
|                                                                                                                          |  |                             
|                                                                                                                          |  | Year ended December 31, 2002
|                                                                                                                          |  |                             
|                                                                                                                          |  | Income                       |         | Units         |  | Per-Unit
|                                                                                                                          |  | (Numerator)                  |         | (Denominator) |  | Amount  
|                                                                                                                          |  |                              |         |               |  |         
|Income from continuing operations                                                                                         |  | $                            | 50,799  |               |  |          |            |  |  |   |      | 
|Less: Preferred Unit distributions                                                                                        |  |                              | (17,049 | )             |  |          |            |  |  |   |      | 
|                                                                                                                          |  |                              |         |               |  |          |            |  |  |   |      | 
|Basic EPS                                                                                                                 |  |                              |         |               |  |          |            |  |  |   |      | 
|Income from continuing operations available to
    common unitholders before extraordinary item                           |  |                              | 33,750  |               |  |          | 42,020,759 |  |  | $ | 0.80 | 
|                                                                                                                          |  |                              |         |               |  |          |            |  |  |   |      | 
|Effect of dilutive securities                                                                                             |  |                              |         |               |  |          |            |  |  |   |      | 
|Stock options                                                                                                             |  |                              |        |               |  |          | 14,818     |  |  |   |      | 
|                                                                                                                          |  |                              |         |               |  |          |            |  |  |   |      | 
|Diluted EPS                                                                                                               |  |                              |         |               |  |          |            |  |  |   |      | 
|Income from continuing operations available to
    common unitholders before extraordinary item + assumed
    conversions |  | $                            | 33,750  |               |  |          | 42,035,577 |  |  | $ | 0.80 | 
|                                                                                                                          |  |                              |         |               |  |          |            |  |  |   |      | 




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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

|                                                                                                                                                                      |  |                              |         |               |  |          |            |  |  |   |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | ------------- |  | -------- | ---------- |  |  | - | ---- | 
|                                                                                                                                                                      |  |                             
|                                                                                                                                                                      |  | Year ended December 31, 2001
|                                                                                                                                                                      |  |                             
|                                                                                                                                                                      |  | Income                       |         | Units         |  | Per-Unit
|                                                                                                                                                                      |  | (Numerator)                  |         | (Denominator) |  | Amount  
|                                                                                                                                                                      |  |                              |         |               |  |         
|Income from continuing operations                                                                                                                                     |  | $                            | 94,624  |               |  |          |            |  |  |   |      | 
|Less: Preferred Unit distributions                                                                                                                                    |  |                              | (17,368 | )             |  |          |            |  |  |   |      | 
|                                                                                                                                                                      |  |                              |         |               |  |          |            |  |  |   |      | 
|Basic EPS                                                                                                                                                             |  |                              |         |               |  |          |            |  |  |   |      | 
|Income from continuing operations available to
    common unitholders before cumulative effect of accounting change
    and extraordinary item                        |  |                              | 77,256  |               |  |          | 43,211,834 |  |  | $ | 1.80 | 
|                                                                                                                                                                      |  |                              |         |               |  |          |            |  |  |   |      | 
|Effect of dilutive securities                                                                                                                                         |  |                              |         |               |  |          |            |  |  |   |      | 
|Stock options                                                                                                                                                         |  |                              |        |               |  |          | 215,266    |  |  |   |      | 
|                                                                                                                                                                      |  |                              |         |               |  |          |            |  |  |   |      | 
|Diluted EPS                                                                                                                                                           |  |                              |         |               |  |          |            |  |  |   |      | 
|Income from continuing operations available to
    common unitholders before cumulative effect of accounting change
    and extraordinary items + assumed conversions |  | $                            | 77,256  |               |  |          | 43,427,100 |  |  | $ | 1.78 | 
|                                                                                                                                                                      |  |                              |         |               |  |          |            |  |  |   |      | 

|                                                                                            |  |                              |         |               |  |          |            |  |  |   |      | 
|------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | ------------- |  | -------- | ---------- |  |  | - | ---- | 
|                                                                                            |  |                             
|                                                                                            |  | Year ended December 31, 2000
|                                                                                            |  |                             
|                                                                                            |  | Income                       |         | Units         |  | Per-Unit
|                                                                                            |  | (Numerator)                  |         | (Denominator) |  | Amount  
|                                                                                            |  |                              |         |               |  |         
|Income from continuing operations                                                           |  | $                            | 107,078 |               |  |          |            |  |  |   |      | 
|Less: Preferred Unit distributions                                                          |  |                              | (17,475 | )             |  |          |            |  |  |   |      | 
|                                                                                            |  |                              |         |               |  |          |            |  |  |   |      | 
|Basic EPS                                                                                   |  |                              |         |               |  |          |            |  |  |   |      | 
|Income from continuing operations available to
    common unitholders                       |  |                              | 89,603  |               |  |          | 44,503,290 |  |  | $ | 2.01 | 
|                                                                                            |  |                              |         |               |  |          |            |  |  |   |      | 
|Effect of dilutive securities                                                               |  |                              |         |               |  |          |            |  |  |   |      | 
|Stock options                                                                               |  |                              |        |               |  |          | 534,789    |  |  |   |      | 
|                                                                                            |  |                              |         |               |  |          |            |  |  |   |      | 
|Diluted EPS                                                                                 |  |                              |         |               |  |          |            |  |  |   |      | 
|Income from continuing operations available to
    common unitholders + assumed conversions |  | $                            | 89,603  |               |  |          | 45,038,079 |  |  | $ | 1.99 | 
|                                                                                            |  |                              |         |               |  |          |            |  |  |   |      | 

7. PROJECT ABANDONMENT, EMPLOYEE
SEVERANCE AND IMPAIRMENT CHARGES

The Operating Partnership recorded project
impairment and abandonment, employee severance and asset
impairment charges in the years ended December 31, 2001 and
2000. The charges were as follows:

|                                   |  |      |        |      |  |   |       | 
|---------------------------------- |  | ---- | ------ | ---- |  | - | ----- | 
|                                   |  | 2001 |        | 2000
|                                   |  |      |        |     
|Project impairment and abandonment |  | $    | 8,122  |      |  | $ | 4,389 | 
|Employee severance                 |  |      | 3,560  |      |  |   | 3,066 | 
|Asset impairment                   |  |      | 5,768  |      |  |   | 1,910 | 
|                                   |  |      |        |      |  |   |       | 
|                                   |  | $    | 17,450 |      |  | $ | 9,365 | 
|                                   |  |      |        |      |  |   |       | 

In the fourth quarter of 2001, the Operating
Partnership recorded charges totaling $17,450. These charges,
precipitated by the sharp decline in economic and market
conditions, reflect managements decision to focus its
business and new development strategy on fewer markets, to focus
on its core business of owning, developing and managing
multifamily real estate assets and to do so with a smaller
workforce and lower overhead expenses. The project impairment
and abandonment charge of $8,122 represents reserves on certain
predevelopment and transaction pursuit costs in markets the
Operating Partnership will no longer pursue for development
opportunities and for certain projects that will no longer be
pursued due to economic and market conditions. The employee
severance charge of $3,560 is primarily for severance costs
related to approximately a 100 person senior management and
staff workforce reduction plan initiated and completed in the
fourth quarter of 2001. The asset




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(Dollars in thousands, except per unit
data)




---

impairment and disposition charge includes a loss
of $2,831 related to the disposition of the Operating
Partnerships corporate aircraft, a loss of $452 on the
sale of the Operating Partnerships third party landscape
business discussed more fully below, impairment charges of
$1,000 related to the Operating Partnerships exit from the
for-sale housing business in all markets and the write-down to
estimated market value of certain internet and technology
investments of $1,485. At December 31, 2002, approximately
$688 of these charges, primarily employee severance costs,
remained as an accrued liability on the consolidated balance
sheet. These amounts are expected to be paid in 2003.

In the fourth quarter of 2001, the Operating
Partnership sold substantially all of the net assets of Post
Landscape Group, Inc. (PLG) a subsidiary entity that
provided landscape maintenance, design and installation services
to third parties. As the business was sold to the former
management team and initially financed 100% by the Operating
Partnership, the transaction was not reflected as a sale at
December 31, 2001. As the transaction resulted in a net
loss, the net loss was recognized in the fourth quarter of 2001
and included in the asset impairment charge discussed above. In
the first quarter of 2002, the Operating Partnership received
payments representing approximately 26% of the outstanding note
balance. As these payments constituted adequate initial
principal payments under the notes, the sale was recognized in
the first quarter of 2002. The impact of the sale recognition
was to record the note receivable (outstanding balance of $2,750
at December 31, 2002) and to remove the net assets and
liabilities of the former PLG from the Operating
Partnerships financial statements. No further gain or loss
was recognized in 2002.

The Operating Partnership also sold substantially
all of the net assets of RAM Partners, Inc. (RAM), a
separate subsidiary entity that managed apartment communities
for third parties, in the fourth quarter 2001. This business was
sold to the former management team of RAM and the sale was 100%
financed by the Operating Partnership. Through the second
quarter of 2002, the Operating Partnership had received payments
under the notes representing approximately 10% of the original
outstanding note balance. As these payments constituted adequate
initial principal payments under the notes, the sale was
recognized in the second quarter of 2002. The impact of the sale
recognition was to record the note receivable (outstanding
balance of $1,183 at December 31, 2002), record a net gain
of $510 and to remove the net assets and liabilities of the
former RAM from the Operating Partnerships financial
statements.

During the first quarter of 2002, the Operating
Partnership transferred certain construction contracts of Post
Construction Services Inc., its third party construction
business, to Oxford Properties, LLC in exchange for Oxford
Properties assumption of substantially all of Post
Construction Services liabilities related to the
transferred assets. In approving the transaction, the
Companys board of directors ascribed nominal value to the
assets being transferred. The assets consisted principally of
third party construction contracts for the construction of four
garden style apartment, condominium and townhouse communities as
well as related subcontracts, indemnities and guarantees. In
connection with the transfer of Post Construction Services
construction contracts, Oxford Properties had the right to
receive a deferred fee upon completion of one of the
construction projects in the amount of $500. Oxford Properties
had also agreed to employ 28 former Operating Partnership and
Post Construction Services employees. As a result, the Operating
Partnership was not responsible for costs that would have
otherwise resulted from winding up the third party construction
business. The Operating Partnership recorded a charge of $500 in
the fourth quarter of 2001 relating to its exit from the third
party construction business. Oxford Properties, LLC is an entity
owned by former officers of the Operating Partnership and by the
son of the Companys former chairman and chief executive
officer. The Companys former chairman and chief executive
officer does not own any of the outstanding equity interests in
Oxford Properties and does not have any management role in
Oxford Properties, LLC.

In the fourth quarter of 2000, the Operating
Partnership recorded charges of $9,365. These charges reflect
managements decision to restrict its development
activities to fewer markets, refine its development investment
and for-sale housing strategies and make changes in its
executive management team. Project abandonment charges totaling
$4,389 related to the write off of predevelopment and pursuit
costs in markets in which the Operating Partnership will no
longer pursue development opportunities and on certain proposed
development deals not meeting managements revised
development strategy. Employee severance charges related to the
termination costs of four executive positions and five staff
personnel in the Operating Partnerships Dallas, Texas
regional office. The asset impairment charge of $1,910 includes
a charge of $1,503 related to the write off of the Operating
Partnerships investment in a high speed internet provider
that filed for bankruptcy protection and a charge of $407
related to the




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

exit from the for-sale housing business in
certain markets. As of December 31, 2001, all of the 2000
charges had been paid.

8. 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 provisions or benefit for income taxes has been made in the
accompanying financial statements. The Company 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 90% of its REIT taxable
incomes, as defined in the Code, to its shareholders and satisfy
certain other requirements. The Operating Partnership intends to
make sufficient cash distributions to the Company to enable it
to meet its annual REIT distribution requirements.

The Operating Partners utilizes taxable
subsidiaries to perform such activities as asset management,
leasing and landscape services for third parties. These taxable
subsidiaries are subject to federal, state and local income
taxes. For the three years in the period ended December 31,
2002, the impact of these taxable subsidiaries income
taxes and their related tax attributes were not material to the
accompanying consolidated financial statements

As of December 31, 2002, 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 higher that the net assets as reported
in the Operating Partnerships consolidated financial
statements by $2,204.

9. STOCK-BASED COMPENSATION
PLANS

Stock Compensation Plans

At December 31, 2002, the Company had two
stock-based compensation plans, the Employee Stock Plan (the
Stock Plan) and the Employee Stock Purchase Plan
(the ESPP) as described below. As discussed in note
1, the Operating Partnership accounts for stock based
compensation under APB Opinion 25. Accordingly, no compensation
cost is required to be recognized for the impact of Company
stock options granted at the Companys current stock price
under the Stock Plan and for purchases of stock under the ESPP.
For purposes of the pro forma presentation of net income and
earnings per share under SFAS No. 123, as summarized in
note 1, 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 2002, 2001 and 2000 are as follows:

|                        |  |      |              |      |  |      |              |  |  |  |              | 
|----------------------- |  | ---- | ------------ | ---- |  | ---- | ------------ |  |  |  | ------------ | 
|                        |  | 2002 |              | 2001 |  | 2000
|                        |  |      |              |      |  |     
|Dividend yield          |  |      | 7.2%         |      |  |      | 8.4%         |  |  |  | 8.0%         | 
|Expected volatility     |  |      | 22.7%        |      |  |      | 15.1%        |  |  |  | 24.8%        | 
|Risk-free interest rate |  |      | 2.7% to 5.3% |      |  |      | 3.7% to 5.3% |  |  |  | 6.7% to 6.9% | 
|Expected option life    |  |      | 5 to 7 years |      |  |      | 5 to 7 years |  |  |  | 5 to 7 years | 




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

Employee Stock Plan

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 stock option activity
under the Stock Plan as of December 31, 2002, 2001 and
2000, is presented below.

|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                |  |   |    |  |  |   |           |   |  |   |    | 
|------------------------------------------------------------------ |  | ----- | --------- | -------------- |  | ------ | -- | -------------- |  | ----- | --------- | -------------- |  | - | -- |  |  | - | --------- | - |  | - | -- | 
|                                                                   |  |       |           |                |  |       
|                                                                   |  | 2002  |           | 2001           |  | 2000  
|                                                                   |  |       |           |                |  |       
|                                                                   |  |       |           | Weighted       |  |        |    | Weighted       |  |       |           | Weighted      
|                                                                   |  |       |           | Average        |  |        |    | Average        |  |       |           | Average       
|                                                                   |  | Share |           | Exercise Price |  | Shares |    | Exercise Price |  | Share |           | Exercise Price
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |               
|Outstanding at beginning of year                                   |  |       | 4,228,218 |                |  | $      | 36 |                |  |       | 4,271,608 |                |  | $ | 35 |  |  |   | 4,054,876 |   |  | $ | 34 | 
|Granted                                                            |  |       | 18,323    |                |  |        | 24 |                |  |       | 415,529   |                |  |   | 37 |  |  |   | 740,538   |   |  |   | 38 | 
|Exercised                                                          |  |       | (15,000   | )              |  |        | 31 |                |  |       | (262,332  | )              |  |   | 30 |  |  |   | (334,194  | ) |  |   | 32 | 
|Forfeited                                                          |  |       | (142,048  | )              |  |        | 38 |                |  |       | (196,587  | )              |  |   | 38 |  |  |   | (189,612  | ) |  |   | 38 | 
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                |  |   |    |  |  |   |           |   |  |   |    | 
|Outstanding at end of year                                         |  |       | 4,089,493 |                |  |        | 35 |                |  |       | 4,228,218 |                |  |   | 36 |  |  |   | 4,271,608 |   |  |   | 35 | 
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                |  |   |    |  |  |   |           |   |  |   |    | 
|Options exercisable at year-end                                    |  |       | 3,464,759 |                |  |        |    |                |  |       | 2,962,245 |                |  |   |    |  |  |   | 2,413,595 |   |  |   |    | 
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                |  |   |    |  |  |   |           |   |  |   |    | 
|Weighted-average fair value of options granted
    during the year |  | $     | 2.13      |                |  |        |    |                |  | $     | 1.44      |                |  |   |    |  |  | $ | 4.76      |   |  |   |    | 
|                                                                   |  |       |           |                |  |        |    |                |  |       |           |                |  |   |    |  |  |   |           |   |  |   |    | 

At December 31, 2002, the range of exercise
prices for options outstanding was $23.90  $44.13 and
the weighted-average remaining contractual life was 5 years.

In 2002 and 2001, the Company granted 15,353 and
17,566 shares of restricted stock, respectively, to company
officers. The restricted shares granted in 2002 vest ratably
over a three year period. The restricted shares granted in 2001
vest ratably over a five year period. For both years the total
value of the restricted share grants was initially reflected in
partners equity as additional capital reduced by
non-amortized deferred compensation expense. Such deferred
compensation is amortized ratably into compensation expense over
the vesting period. Total compensation expense relating to the
restricted stock was $265 and $171 in 2002 and 2001,
respectively.

10. 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 the Operating Partnership 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 $452, $638
and $514 were made to this plan in 2002, 2001 and 2000,
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.




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

11. 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 and six ground leases expiring in
2012, 2038, 2060, 2066, 2069 and 2074 for six separate
communities and to office, equipment and other operating leases
with terms expiring in years 2003 through 2006. Future minimum
lease payments for non-cancelable land, office, equipment and
other leases at December 31, 2002, are as follows:

|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2003                |  | $ | 1,363   | 
|2004                |  |   | 1,286   | 
|2005                |  |   | 1,288   | 
|2006                |  |   | 1,306   | 
|2007                |  |   | 1,328   | 
|2008 and thereafter |  |   | 156,470 | 

The Operating Partnership incurred $5,223, $5,998
and $5,935 of rent expense for the years ended December 31,
2002, 2001 and 2000, 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.

12. RELATED PARTY TRANSACTIONS

In 2002 and 2001, the Operating Partnership
invested in four Property LLCs accounted for under the equity
method of accounting (see note 4). In 2002 and 2001, the
Operating Partnership recorded, before elimination of the
Operating Partnerships equity interests, development fees,
general construction contract billings, management fees and
expense reimbursements (primarily personnel costs) of
approximately $11,916 and $15,202, respectively, from these
related companies. Additionally in 2002 and 2001, the Operating
Partnership earned interest under the construction loans to the
Project LLCs totaling $4,482 and $1,024, respectively.

The Operating Partnership provides landscaping
services for executive officers, employees, directors and other
related parties. For the years ended December 31, 2002,
2001 and 2000, the Operating Partnership received landscaping
revenue of $775, $705 and $667, respectively for such services.
Such revenue includes reimbursement of direct and indirect
expenses. Additionally, the Operating Partnership provides
accounting and administrative services to entities controlled by
certain directors of the Company. Fees under this arrangement
aggregated $25 for each of the years ended December 31,
2002, 2001 and 2000. Also, 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 $0, $7 and $29 for the years ended
December 31, 2002, 2001 and 2000, respectively.

At December 31, 2002 and 2001, the Operating
Partnership had outstanding loan balances to certain current and
former Operating Partnership executives totaling $7,600 and
$9,250, respectively. These loans mature 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 Operating Partnerships common shares on the
open market. Additionally, at December 31, 2002 and 2001,
the Operating Partnership had outstanding additional loans to
certain Operating Partnership executives totaling $1,140 and
$1,300, respectively. The loans bear interest at 6.32% per
annum. If the executives continue to be employed by the
Operating Partnership, the loans will be forgiven annually over
five to ten year periods, as defined in the agreements. The
annual loan forgiveness of $160 is recorded as compensation
expense.




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

13. DERIVATIVE FINANCIAL
INSTRUMENTS

At December 31, 2002, the Operating
Partnership had outstanding interest rate swap agreements with a
notional value of $129,000 with maturity dates ranging from 2005
to 2009. For the years ended December 31, 2002 and 2001,
the Operating Partnership recorded unrealized net losses of
$10,204 and $6,645, respectively, on these cash flow hedges as a
decrease in accumulated other comprehensive income, a
shareholders equity account, in the accompanying
consolidated balance sheet. In addition, the Operating
Partnership recorded the change in fair value of the ineffective
component of its outstanding interest rate cap agreements in the
statement of operations for the years ended December 31,
2002 and 2001. This charge against earnings during these years
and the fair value of the interest rate cap agreements as of
December 31, 2002 were not significant to the Operating
Partnerships financial position or results of operations.
Within the next twelve months, the Operating Partnership expects
to reclassify out of accumulated other comprehensive income
approximately $5,879.

Upon the adoption of SFAS No. 133 in 2001,
the Operating Partnership recorded a net transition loss of $695
relating to the write down of the book value of its interest
rate cap agreements to their fair value. This loss was reflected
as a cumulative effect of accounting change in the consolidated
statement of operations for the year ended December 31,
2001.

Subsequent to December 31, 2002, the
Operating Partnership entered into two interest rate cap
arrangements with two financial institutions. The new interest
rate cap arrangements replaced three expiring interest rate cap
arrangements and were structured as cash flow hedges to provide
a fixed ceiling at 5% for the Operating Partnerships
variable rate, tax-exempt borrowings. The Operating Partnership
is required to maintain this interest rate exposure protection
under the terms of the financing arrangements. The $2,720 cost
of the arrangement will be amortized as additional expense over
their five year term in accordance with SFAS No. 133.

14. 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 accounts receivables,
accounts payable, accrued expenses and other liabilities are
carried at amounts which reasonably approximate their fair
values because of the short-term nature of these instruments.
The fair value of fixed rate debt was approximately $928,313
(carrying value of $877,706) and the fair value of floating rate
debt approximated its carrying value due to the adjustable
nature of the arrangements at December 31, 2002.

In order to manage the impact of interest rate
changes on earnings and cash flow, the Operating Partnership
entered into and has outstanding interest rate swap and interest
rate cap arrangements. As more fully described in note 1,
these interest rate cap and interest rate swap agreements are
carried on the consolidated balance sheet at fair market value
in accordance with SFAS No. 133. At December 31, 2002,
the carrying amounts related to these arrangements represented
net liabilities totaling approximately $16,849.

Disclosure about fair value of financial
instruments is based on pertinent information available to
management as of December 31, 2002. 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.




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POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

15. 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 from property rental operations.
Property rental operations are broken down into four segments
based on the various stages in the property ownership lifecycle.
These segments are described below. All other ancillary service
and support operations, including the third party service
businesses (see note 7), are aggregated in the accompanying
segment information. The segment information presented below
reflects the segment categories based on the lifecycle status of
each community as of December 31, 2002. The segment
information for the years ended December 31, 2001 and 2000
have been adjusted due to the restatement impact of
reclassifying the operating results of the assets designated as
held for sale in 2002 to discontinued operations under SFAS
No. 144 (see note 5).



| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Fully stabilized communities  those
    apartment communities which have been stabilized (the earlier of
    the point at which a property reaches 95% occupancy or one year
    after completion of construction) for both the current and prior
    year.
|
| |  | Communities stabilized during prior
    year  communities which reached stabilized occupancy
    in the prior year.                                                                                                                                        
|
| |  | 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.                                      
|
| |  | Sold communities  communities which
    were sold in the current or prior year and not reflected as
    discontinued operations (see notes 1 and 5).                                                                                                       

Segment Performance Measure

Management uses contribution to funds from
operations (FFO) as the performance measure for its
segments. 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 and preferred dividends.
Additionally, substantially all of the Operating
Partnerships assets relate to the Operating
Partnerships




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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

property rental operations. Asset cost,
depreciation and amortization by segment are not presented
because such information at the segment level is not reported
internally.

|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|---------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                                       |  | 2002 |         | 2001 |  | 2000
|                                                                       |  |      |         |      |  |     
|Revenues                                                               |  |      |         |      |  |      |         |   |  |   |         |  
|Fully stabilized communities                                           |  | $    | 256,477 |      |  | $    | 275,297 |   |  | $ | 266,465 |  
|Communities stabilized during prior year                               |  |      | 17,535  |      |  |      | 14,946  |   |  |   | 3,538   |  
|Development and lease-up communities                                   |  |      | 39,571  |      |  |      | 25,741  |   |  |   | 14,256  |  
|Sold communities                                                       |  |      | 745     |      |  |      | 19,659  |   |  |   | 52,883  |  
|Other                                                                  |  |      | 15,669  |      |  |      | 29,675  |   |  |   | 31,098  |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Consolidated revenues                                                  |  | $    | 329,997 |      |  | $    | 365,318 |   |  | $ | 368,240 |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Contribution to Funds from
    Operations                              |  |      |         |      |  |      |         |   |  |   |         |  
|Fully stabilized communities                                           |  | $    | 167,225 |      |  | $    | 186,087 |   |  | $ | 185,106 |  
|Communities stabilized during prior year                               |  |      | 11,628  |      |  |      | 8,943   |   |  |   | 932     |  
|Development and lease-up communities                                   |  |      | 23,192  |      |  |      | 15,312  |   |  |   | 8,569   |  
|Sold communities                                                       |  |      | 369     |      |  |      | 12,330  |   |  |   | 35,956  |  
|Other                                                                  |  |      |        |      |  |      | 1,065   |   |  |   | 1,354   |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Contribution to FFO                                                    |  |      | 202,414 |      |  |      | 223,737 |   |  |   | 231,917 |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|FFO  discontinued operations                                          |  |      | 5,885   |      |  |      | 8,796   |   |  |   | 10,733  |  
|Other operating income, net of expense                                 |  |      | (5,051  | )    |  |      | (14,558 | ) |  |   | (2,257  | )
|Depreciation on non-real estate assets                                 |  |      | (1,985  | )    |  |      | (2,378  | ) |  |   | (1,962  | )
|Minority interest in consolidated property
    partnerships            |  |      | 2,055   |      |  |      | 2,098   |   |  |   | (511    | )
|Interest expense                                                       |  |      | (58,436 | )    |  |      | (51,960 | ) |  |   | (45,332 | )
|Amortization of deferred loan costs                                    |  |      | (2,327  | )    |  |      | (1,978  | ) |  |   | (1,636  | )
|General and administrative expense                                     |  |      | (14,431 | )    |  |      | (13,256 | ) |  |   | (10,066 | )
|Other expense                                                          |  |      | (694    | )    |  |      |        |   |  |   |        |  
|Distributions to preferred unitholders                                 |  |      | (17,049 | )    |  |      | (17,368 | ) |  |   | (17,475 | )
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Total FFO                                                              |  |      | 110,381 |      |  |      | 133,133 |   |  |   | 163,411 |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Depreciation on wholly-owned real estate assets                        |  |      | (82,918 | )    |  |      | (70,956 | ) |  |   | (66,283 | )
|Depreciation on real estate assets held in
    unconsolidated entities |  |      | (1,103  | )    |  |      | (67     | ) |  |   |        |  
|Gains on property
    sales  continuing operations                    |  |      | 13,275  |      |  |      | 23,942  |   |  |   | 3,208   |  
|Income from discontinued operations                                    |  |      | (5,885  | )    |  |      | (8,796  | ) |  |   | (10,733 | )
|Distributions to preferred unitholders                                 |  |      | 17,049  |      |  |      | 17,368  |   |  |   | 17,475  |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Income from continuing operations                                      |  | $    | 50,799  |      |  | $    | 94,624  |   |  | $ | 107,078 |  
|                                                                       |  |      |         |      |  |      |         |   |  |   |         |  

16. SUPPLEMENTAL CASH FLOW
INFORMATION

Non-cash investing and financing activities for
the years ended December 31, 2002, 2001 and 2000 are as
follows:

The Operating Partnership committed to distribute
$32,785, $32,741 and $33,466 for the quarters ended
December 31, 2002, 2001 and 2000, respectively.

17. QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)

The operating results of eight apartment
communities and one commercial property classified as held for
sale under SFAS No. 144 in 2002 were included in
discontinued operations in the accompanying statements of
operations for all periods presented, as further discussed in
note 5. To conform with this presentation, the quarterly
financial information presented below reflects the
reclassification of the operating results of these assets to
discontinued operations, which differs from the presentation of
discontinued operations in the Operating Partnerships
previously issued financial statements included in its quarterly
reports on Form 10-Q.




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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

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

|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ------ |  | ----- | ------ | ------ |  | - | ------ | - |  | - | ------ | -
|                                                                                |  |                             
|                                                                                |  | Year Ended December 31, 2002
|                                                                                |  |                             
|                                                                                |  | First                        |        | Second |  | Third |        | Fourth
|                                                                                |  |                              |        |        |  |       |        |       
|Revenues                                                                        |  | $                            | 81,981 |        |  | $     | 80,727 |        |  | $ | 83,952 |   |  | $ | 83,337 |  
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Income from continuing operations                                               |  |                              | 25,385 |        |  |       | 10,110 |        |  |   | 9,121  |   |  |   | 6,183  |  
|Income (loss) from discontinued operations                                      |  |                              | (5,027 | )      |  |       | 19,586 |        |  |   | (1,114 | ) |  |   | 9,010  |  
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Income before cumulative effect of accounting
    change and extraordinary item |  |                              | 20,358 |        |  |       | 29,696 |        |  |   | 8,007  |   |  |   | 15,193 |  
|Cumulative effect of accounting change                                          |  |                              |       |        |  |       |       |        |  |   |       |   |  |   |       |  
|Extraordinary item                                                              |  |                              |       |        |  |       | (136   | )      |  |   |       |   |  |   |       |  
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Net income                                                                      |  |                              | 20,358 |        |  |       | 29,560 |        |  |   | 8,007  |   |  |   | 15,193 |  
|Distributions to preferred unitholders                                          |  |                              | (4,262 | )      |  |       | (4,263 | )      |  |   | (4,262 | ) |  |   | (4,262 | )
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Net income available to common unitholders                                      |  | $                            | 16,096 |        |  | $     | 25,297 |        |  | $ | 3,745  |   |  | $ | 10,931 |  
|                                                                                |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Earnings per Common Unit:                                                       |  |                              |        |        |  |       |        |        |  |   |        |   |  |   |        |  
|Income before accounting change and extraordinary
    item  basic              |  | $                            | 0.38   |        |  | $     | 0.60   |        |  | $ | 0.09   |   |  | $ | 0.26   |  
|Income before accounting change and extraordinary
    item  diluted            |  |                              | 0.38   |        |  |       | 0.60   |        |  |   | 0.09   |   |  |   | 0.26   |  
|Net income available to common
    unitholders  basic                          |  |                              | 0.38   |        |  |       | 0.60   |        |  |   | 0.09   |   |  |   | 0.26   |  
|Net income available to common
    unitholders  diluted                        |  |                              | 0.38   |        |  |       | 0.60   |        |  |   | 0.09   |   |  |   | 0.26   |  

|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------- |  | ------------------------------- | ------ | ------ |  | ----- | ------ | --------- |  | - | ------ | - |  | - | ------ | -
|                                                                                |  |                                
|                                                                                |  | Year Ended December 31, 2001(1)
|                                                                                |  |                                
|                                                                                |  | First                           |        | Second |  | Third |        | Fourth(2)
|                                                                                |  |                                 |        |        |  |       |        |          
|Revenues                                                                        |  | $                               | 94,341 |        |  | $     | 93,776 |           |  | $ | 90,729 |   |  | $ | 86,472 |  
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Income (loss) from continuing operations                                        |  |                                 | 25,151 |        |  |       | 39,545 |           |  |   | 30,096 |   |  |   | (168   | )
|Income from discontinued operations                                             |  |                                 | 2,426  |        |  |       | 2,489  |           |  |   | 2,015  |   |  |   | 1,866  |  
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Income before cumulative effect of accounting
    change and extraordinary item |  |                                 | 27,577 |        |  |       | 42,034 |           |  |   | 32,111 |   |  |   | 1,698  |  
|Cumulative effect of accounting change                                          |  |                                 | (695   | )      |  |       |       |           |  |   |       |   |  |   |       |  
|Extraordinary item                                                              |  |                                 |       |        |  |       | (88    | )         |  |   |       |   |  |   |       |  
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Net income                                                                      |  |                                 | 26,882 |        |  |       | 41,946 |           |  |   | 32,111 |   |  |   | 1,698  |  
|Distributions to preferred unitholders                                          |  |                                 | (4,369 | )      |  |       | (4,369 | )         |  |   | (4,369 | ) |  |   | (4,261 | )
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Net income (loss) available to common
    unitholders                           |  | $                               | 22,513 |        |  | $     | 37,577 |           |  | $ | 27,742 |   |  | $ | (2,563 | )
|                                                                                |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Earnings per Common Unit:                                                       |  |                                 |        |        |  |       |        |           |  |   |        |   |  |   |        |  
|Income (loss) before accounting change and
    extraordinary item  basic       |  | $                               | 0.53   |        |  | $     | 0.86   |           |  | $ | 0.64   |   |  | $ | (0.06  | )
|Income (loss) before accounting change and
    extraordinary item  diluted     |  |                                 | 0.53   |        |  |       | 0.86   |           |  |   | 0.64   |   |  |   | (0.06  | )
|Net income (loss) available to common
    unitholders  basic                   |  |                                 | 0.51   |        |  |       | 0.86   |           |  |   | 0.64   |   |  |   | (0.06  | )
|Net income (loss) available to common
    unitholders  diluted                 |  |                                 | 0.51   |        |  |       | 0.85   |           |  |   | 0.64   |   |  |   | (0.06  | )



|    |                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The total of the four quarterly amounts for net
    income and earnings per unit does not equal the total for the
    year. These differences result from the use of a weighted
    average to compute the number of units outstanding for the
    purpose of calculating the Operating Partnerships earnings
    per unit.
|(2) | Reflects the impact of project abandonment,
    employee severance and impairment charges of $17,450.                                                                                                                                                                                                                       




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##### Table of Contents



POST APARTMENT HOMES, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in thousands, except per unit
data)




---

18. SUBSEQUENT EVENT

Subsequent to December 31, 2002, the
Companys board of directors elected a new chairman. The
Companys former chairman was elected chairmen emeritus and
the Companys vice-chairman relinquished his vice-chairman
status. Both the former chairman and former vice-chairman will
remain on the Companys board of directors. Their change in
roles from executive to non-executive status will result in the
Company recording a non-cash charge in the first quarter of 2003
relating to payments provided to these individuals pursuant to
their existing contractual arrangements with the Company. The
Company estimates the charge will be approximately $12,000 to
$14,000, plus an additional amount of up $8,000 that may be
incurred as a result of the settlement of split-dollar life
insurance obligations to the individuals under their contractual
arrangements. These amounts represent the present value of the
estimated payments and other costs to be incurred over the term
of the contractual arrangements.




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---



##### Table of Contents



POST PROPERTIES, INC.

REAL ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION


December 31, 2002


(Dollars in thousands)


|                     |                   |             |            |              |  |               |        |              |     |                            |        |      |  |              |   |          |  |              |        |              |  |          |        |             |  |   |        |        |  |   |        |        |  |   |        |        |  |  |               |               |  |  |                  |       |  |  |            |            | 
|-------------------- | ----------------- | ----------- | ---------- | ------------ |  | ------------- | ------ | ------------ | --- | -------------------------- | ------ | ---- |  | ------------ | - | -------- |  | ------------ | ------ | ------------ |  | -------- | ------ | ----------- |  | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ |  |  | ------------- | ------------- |  |  | ---------------- | ----- |  |  | ---------- | ---------- | 
|                     |                   |             |            |              |  |               |        |              |     |                            |        |      |  |              |   |          |  |              |        |             
|                     |                   |             |            |              |  |               |        |              |     | Gross amount at which      |        |      |  |              |   |          |  |             
|                     |                   |             |            |              |  | Initial costs |        | Costs        |     | Carried at close of period |        |      |  |              |   |          |  |             
|                     |                   |             |            |              |  |               |        | Capitalized  |     |                            |        |      |  |              |   |          |  |             
|                     |                   |             |            | Related      |  |               |        | Building and |     | Subsequent                 |        |      |  | Building and |   |          |  | Accumulated  |        | Date of      |  | Date     |        | Depreciable
|                     |                   | Description |            | Encumbrances |  | Land          |        | Improvements |     | to Acquisition             |        | Land |  | Improvements |   | Total(1) |  | Depreciation |        | Construction |  | Acquired |        | Lives Years
|                     |                   |             |            |              |  |               |        |              |     |                            |        |      |  |              |   |          |  |              |        |              |  |          |        |            
|Georgia              |                   |             |            |              |  |               |        |              |     |                            |        |      |  |              |   |          |  |              |        |              |  |          |        |             |  |   |        |        |  |   |        |        |  |   |        |        |  |  |               |               |  |  |                  |       |  |  |            |           
|Post Ashford         |                   |             | Apartments |              |  | $             | 9,895  | (2)          |     | $                          | 1,906  |      |  | $            |  |          |  | $            | 8,659  |              |  | $        | 1,906  |             |  | $ | 8,659  |        |  | $ | 10,565 |        |  | $ | 3,887  |        |  |  | 04/86  06/87 |               |  |  | 06/87            |       |  |  | 5-40 Years |           
|Post Briarcliff      |                   |             | Apartments |              |  |               |       |              |     |                            | 13,344 |      |  |              |  |          |  |              | 46,628 |              |  |          | 13,344 |             |  |   | 46,628 |        |  |   | 59,972 |        |  |   | 6,555  |        |  |  | 12/96         |               |  |  | 09/96            |       |  |  | 5-40 Years |           
|Post Bridge          |                   |             | Apartments |              |  |               | 12,450 | (2)          |     |                            | 868    |      |  |              |  |          |  |              | 12,621 |              |  |          | 869    |             |  |   | 12,620 |        |  |   | 13,489 |        |  |   | 5,984  |        |  |  | 09/84  12/86 |               |  |  | 09/84            |       |  |  | 5-40 Years |           
|Post Brookhaven      |                   |             | Apartments |              |  |               |       |              |     |                            | 7,921  |      |  |              |  |          |  |              | 32,375 |              |  |          | 7,921  |             |  |   | 32,375 |        |  |   | 40,296 |        |  |   | 13,298 |        |  |  | 07/89  12/92 |               |  |  | 03/89            |       |  |  | 5-40 Years |           
|Post Canyon          |                   |             | Apartments |              |  |               | 16,845 | (2)          |     |                            | 931    |      |  |              |  |          |  |              | 18,809 |              |  |          | 931    |             |  |   | 18,809 |        |  |   | 19,740 |        |  |   | 8,840  |        |  |  | 04/84  04/86 |               |  |  | 10/81            |       |  |  | 5-40 Years |           
|Post Chase           |                   |             | Apartments |              |  |               | 15,000 | (2)          |     |                            | 1,438  |      |  |              |  |          |  |              | 16,671 |              |  |          | 1,438  |             |  |   | 16,671 |        |  |   | 18,109 |        |  |   | 7,398  |        |  |  | 06/85  04/87 |               |  |  | 06/85            |       |  |  | 5-40 Years |           
|Post Chastain        |                   |             | Apartments |              |  |               | 29,786 |              |     |                            | 6,352  |      |  |              |  |          |  |              | 40,832 |              |  |          | 6,779  |             |  |   | 40,405 |        |  |   | 47,184 |        |  |   | 16,167 |        |  |  | 06/88  10/90 |               |  |  | 06/88            |       |  |  | 5-40 Years |           
|Post Collier Hills   |                   |             | Apartments |              |  |               |       |              |     |                            | 6,487  |      |  |              |  |          |  |              | 25,416 |              |  |          | 7,183  |             |  |   | 24,720 |        |  |   | 31,903 |        |  |   | 6,081  |        |  |  | 10/95         |               |  |  | 06/95            |       |  |  | 5-40 Years |           
|Post Corners         |                   |             | Apartments |              |  |               | 14,760 | (2)          |     |                            | 1,473  |      |  |              |  |          |  |              | 15,868 |              |  |          | 1,473  |             |  |   | 15,868 |        |  |   | 17,341 |        |  |   | 7,461  |        |  |  | 08/84  04/86 |               |  |  | 08/84            |       |  |  | 5-40 Years |           
|Post Court           |                   |             | Apartments |              |  |               | 18,650 | (2)          |     |                            | 1,769  |      |  |              |  |          |  |              | 18,198 |              |  |          | 1,769  |             |  |   | 18,198 |        |  |   | 19,967 |        |  |   | 7,739  |        |  |  | 06/86  04/88 |               |  |  | 12/85            |       |  |  | 5-40 Years |           
|Post Crest           |                   |             | Apartments |              |  |               | 26,446 |              |     |                            | 4,733  |      |  |              |  |          |  |              | 24,963 |              |  |          | 4,763  |             |  |   | 24,933 |        |  |   | 29,696 |        |  |   | 6,404  |        |  |  | 09/95         |               |  |  | 10/94            |       |  |  | 5-40 Years |           
|Post Crossing        |                   |             | Apartments |              |  |               |       |              |     |                            | 3,951  |      |  |              |  |          |  |              | 19,845 |              |  |          | 3,951  |             |  |   | 19,845 |        |  |   | 23,796 |        |  |   | 4,751  |        |  |  | 04/94  08/95 |               |  |  | 11/93            |       |  |  | 5-40 Years |           
|Post Dunwoody        |                   |             | Apartments |              |  |               |       |              |     |                            | 4,917  |      |  |              |  |          |  |              | 29,052 |              |  |          | 4,961  |             |  |   | 29,008 |        |  |   | 33,969 |        |  |   | 8,552  |        |  |  | 11/88         |               |  |  | 12/84 & 8/94(5)  |       |  |  | 5-40 Years |           
|Post Gardens         |                   |             | Apartments |              |  |               |       |              |     |                            | 5,859  |      |  |              |  |          |  |              | 34,007 |              |  |          | 5,931  |             |  |   | 33,935 |        |  |   | 39,866 |        |  |   | 5,757  |        |  |  | 07/96         |               |  |  | 05/96            |       |  |  | 5-40 Years |           
|Post Glen            |                   |             | Apartments |              |  |               | 20,254 |              |     |                            | 5,591  |      |  |              |  |          |  |              | 21,766 |              |  |          | 5,784  |             |  |   | 21,573 |        |  |   | 27,357 |        |  |   | 4,368  |        |  |  | 07/96         |               |  |  | 05/96            |       |  |  | 5-40 Years |           
|Post Lane            |                   |             | Apartments |              |  |               |       |              |     |                            | 1,512  |      |  |              |  |          |  |              | 8,472  |              |  |          | 2,067  |             |  |   | 7,917  |        |  |   | 9,984  |        |  |   | 3,696  |        |  |  | 04/87  05/88 |               |  |  | 01/87            |       |  |  | 5-40 Years |           
|Post Lenox Park      |                   |             | Apartments |              |  |               | 10,996 |              |     |                            | 3,132  |      |  |              |  |          |  |              | 11,011 |              |  |          | 3,132  |             |  |   | 11,011 |        |  |   | 14,143 |        |  |   | 2,762  |        |  |  | 03/94  05/95 |               |  |  | 03/94            |       |  |  | 5-40 Years |           
|Post Lindbergh       |                   |             | Apartments |              |  |               |       |              |     |                            | 6,268  |      |  |              |  |          |  |              | 27,135 |              |  |          | 6,652  |             |  |   | 26,751 |        |  |   | 33,403 |        |  |   | 4,570  |        |  |  | 11/96         |               |  |  | 08/96            |       |  |  | 5-40 Years |           
|Post Mill            |                   |             | Apartments |              |  |               | 12,880 | (2)          |     |                            | 915    |      |  |              |  |          |  |              | 13,448 |              |  |          | 922    |             |  |   | 13,441 |        |  |   | 14,363 |        |  |   | 6,739  |        |  |  | 05/83  05/85 |               |  |  | 05/81            |       |  |  | 5-40 Years |           
|Post Oak             |                   |             | Apartments |              |  |               |       |              |     |                            | 2,027  |      |  |              |  |          |  |              | 8,527  |              |  |          | 2,027  |             |  |   | 8,527  |        |  |   | 10,554 |        |  |   | 2,937  |        |  |  | 09/92  12/93 |               |  |  | 09/92            |       |  |  | 5-40 Years |           
|Post Oglethorpe      |                   |             | Apartments |              |  |               |       |              |     |                            | 3,662  |      |  |              |  |          |  |              | 17,341 |              |  |          | 3,662  |             |  |   | 17,341 |        |  |   | 21,003 |        |  |   | 4,430  |        |  |  | 03/93  10/94 |               |  |  | 03/93            |       |  |  | 5-40 Years |           
|Post Park(6)         |                   |             | Apartments |              |  |               |       |              |     |                            | 6,253  |      |  |              |  |          |  |              | 40,869 |              |  |          | 8,830  |             |  |   | 38,292 |        |  |   | 47,122 |        |  |   | 16,336 |        |  |  | 06/87  09/90 |               |  |  | 06/87            |       |  |  | 5-40 Years |           
|Post Parkside        |                   |             | Mixed Use  |              |  |               |       |              |     |                            | 3,402  |      |  |              |  |          |  |              | 20,180 |              |  |          | 3,465  |             |  |   | 20,117 |        |  |   | 23,582 |        |  |   | 2,349  |        |  |  | 02/99         |               |  |  | 12/97            |       |  |  | 5-40 Years |           
|Post Peachtree Hills |                   |             | Apartments |              |  |               |       |              |     |                            | 4,215  |      |  |              |  |          |  |              | 14,233 |              |  |          | 4,857  |             |  |   | 13,591 |        |  |   | 18,448 |        |  |   | 4,116  |        |  |  | 02/92  09/94 |               |  |  | 02/92 & 09/92(5) |       |  |  | 5-40 Years |           
|Post Renaissance(10) |                   |             | Apartments |              |  |               |       |              |     |                            |       |      |  |              |  |          |  |              | 20,354 |              |  |          |       |             |  |   | 20,354 |        |  |   | 20,354 |        |  |   | 6,456  |        |  |  | 07/91  12/94 |               |  |  | 06/91 & 01/94(5) |       |  |  | 5-40 Years |           
|Post Ridge           |                   |             | Apartments |              |  |               |       |              |     |                            | 5,150  |      |  |              |  |          |  |              | 31,702 |              |  |          | 5,150  |             |  |   | 31,702 |        |  |   | 36,852 |        |  |   | 4,999  |        |  |  | 10/96         |               |  |  | 07/96            |       |  |  | 5-40 Years |           
|Post Spring          |                   |             | Apartments |              |  |               |       |              |     |                            | 2,105  |      |  |              |  |          |  |              | 38,283 |              |  |          | 2,105  |             |  |   | 38,283 |        |  |   | 40,388 |        |  |   | 2,127  |        |  |  | 09/99         |               |  |  | 09/99            |       |  |  | 5-40 Years |           
|Post Summit          |                   |             | Apartments |              |  |               |       |              |     |                            | 1,575  |      |  |              |  |          |  |              | 6,533  |              |  |          | 1,575  |             |  |   | 6,533  |        |  |   | 8,108  |        |  |   | 2,858  |        |  |  | 01/90  12/90 |               |  |  | 01/90            |       |  |  | 5-40 Years |           
|Post Valley          |                   |             | Apartments |              |  |               | 18,600 | (2)          |     |                            | 1,117  |      |  |              |  |          |  |              | 19,582 |              |  |          | 1,117  |             |  |   | 19,582 |        |  |   | 20,699 |        |  |   | 8,512  |        |  |  | 03/86  04/88 |               |  |  | 12/85            |       |  |  | 5-40 Years |           
|Post Vinings         |                   |             | Apartments |              |  |               |       |              |     |                            | 4,322  |      |  |              |  |          |  |              | 22,238 |              |  |          | 5,668  |             |  |   | 20,892 |        |  |   | 26,560 |        |  |   | 9,049  |        |  |  | 05/88  09/91 |               |  |  | 05/88            |       |  |  | 5-40 Years |           
|Post Village         |                   |             | Apartments |              |  |               |        |              |     |                            |        |      |  |              |   |          |  |              |        |              |  |          |        |             |  |   |        |        |  |   |        |        |  |   |        |        |  |  |               |               |  |  |                  |       |  |  |            |           
|                     | The Arbors        |             |            | Apartments   |  |               |        |             |     |                            |        | 373  |  |              |   |         |  |              |        | 17,533       |  |          |        | 373         |  |   |        | 17,533 |  |   |        | 17,906 |  |   |        | 7,203  |  |  |               | 04/82  10/83 |  |  |                  | 03/82 |  |  |            | 5-40 Years | 
|                     | The Fountains and |             |            |              |  |               |        |              |     |                            |        |      |  |              |   |          |  |              |        |              |  |          |        |             |  |   |        |        |  |   |        |        |  |   |        |        |  |  |               |               |  |  |                  |       |  |  |            |            | 
|                     | The Meadows       |             |            | Apartments   |  |               |        | 26,000       | (2) |                            |        | 611  |  |              |   |         |  |              |        | 39,229       |  |          |        | 878         |  |   |        | 38,962 |  |   |        | 39,840 |  |   |        | 16,006 |  |  |               | 08/85  05/88 |  |  |                  | 08/85 |  |  |            | 5-40 Years | 
|                     | The Gardens       |             |            | Apartments   |  |               |        | 14,500       | (2) |                            |        | 187  |  |              |   |         |  |              |        | 28,697       |  |          |        | 637         |  |   |        | 28,247 |  |   |        | 28,884 |  |   |        | 11,604 |  |  |               | 06/88  07/89 |  |  |                  | 05/84 |  |  |            | 5-40 Years | 
|                     | The Hills         |             |            | Apartments   |  |               |        | 7,000        | (2) |                            |        | 91   |  |              |   |         |  |              |        | 12,879       |  |          |        | 307         |  |   |        | 12,663 |  |   |        | 12,970 |  |   |        | 5,202  |  |  |               | 05/84  04/86 |  |  |                  | 04/83 |  |  |            | 5-40 Years | 




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##### Table of Contents



POST PROPERTIES, INC.

REAL ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION


December 31, 2002


(Dollars in thousands)


|                                                       |                   |             |            |              |  |               |        |              |  |                            |        |       |  |              |        |          |  |              |         |              |  |          |        |             |  |  |         |        |  |  |         |        |  |  |        |       |  |  |               |       |  |  |       |       |  |  |            |            | 
|------------------------------------------------------ | ----------------- | ----------- | ---------- | ------------ |  | ------------- | ------ | ------------ |  | -------------------------- | ------ | ----- |  | ------------ | ------ | -------- |  | ------------ | ------- | ------------ |  | -------- | ------ | ----------- |  |  | ------- | ------ |  |  | ------- | ------ |  |  | ------ | ----- |  |  | ------------- | ----- |  |  | ----- | ----- |  |  | ---------- | ---------- | 
|                                                       |                   |             |            |              |  |               |        |              |  |                            |        |       |  |              |        |          |  |              |         |             
|                                                       |                   |             |            |              |  |               |        |              |  | Gross amount at which      |        |       |  |              |        |          |  |             
|                                                       |                   |             |            |              |  | Initial costs |        | Costs        |  | Carried at close of period |        |       |  |              |        |          |  |             
|                                                       |                   |             |            |              |  |               |        | Capitalized  |  |                            |        |       |  |              |        |          |  |             
|                                                       |                   |             |            | Related      |  |               |        | Building and |  | Subsequent                 |        |       |  | Building and |        |          |  | Accumulated  |         | Date of      |  | Date     |        | Depreciable
|                                                       |                   | Description |            | Encumbrances |  | Land          |        | Improvements |  | to Acquisition             |        | Land  |  | Improvements |        | Total(1) |  | Depreciation |         | Construction |  | Acquired |        | Lives Years
|                                                       |                   |             |            |              |  |               |        |              |  |                            |        |       |  |              |        |          |  |              |         |              |  |          |        |            
|Post Walk                                              |                   |             | Apartments |              |  |               | 19,300 | (2)          |  |                            | 2,954  |       |  |              |       |          |  |              | 18,330  |              |  |          | 2,954  |             |  |  | 18,330  |        |  |  | 21,284  |        |  |  | 8,540  |       |  |  | 03/86  08/87 |       |  |  | 06/85 |       |  |  | 5-40 Years |           
|Post Woods                                             |                   |             | Apartments |              |  |               | 26,369 |              |  |                            | 1,378  |       |  |              |       |          |  |              | 28,207  |              |  |          | 3,070  |             |  |  | 26,515  |        |  |  | 29,585  |        |  |  | 12,472 |       |  |  | 03/76  09/83 |       |  |  | 06/76 |       |  |  | 5-40 Years |           
|Post Stratford(10)                                     |                   |             | Apartments |              |  |               |       |              |  |                            | 328    |       |  |              |       |          |  |              | 24,345  |              |  |          | 620    |             |  |  | 24,053  |        |  |  | 24,673  |        |  |  | 2,354  |       |  |  | 04/99         |       |  |  | 01/99 |       |  |  | 5-40 Years |           
|Post Riverside                                         |                   |             | Mixed Use  |              |  |               |       |              |  |                            | 11,130 |       |  |              |       |          |  |              | 108,177 |              |  |          | 12,457 |             |  |  | 106,850 |        |  |  | 119,307 |        |  |  | 12,674 |       |  |  | 07/96         |       |  |  | 01/96 |       |  |  | 5-40 Years |           
|Texas                                                  |                   |             |            |              |  |               |        |              |  |                            |        |       |  |              |        |          |  |              |         |              |  |          |        |             |  |  |         |        |  |  |         |        |  |  |        |       |  |  |               |       |  |  |       |       |  |  |            |           
|Addison Circle Apartment Homes By Post 
    Phase I   |                   |             | Mixed Use  |              |  |               | 27,839 |              |  |                            | 2,885  |       |  |              | 41,482 |          |  |              | 8,403   |              |  |          | 3,324  |             |  |  | 49,446  |        |  |  | 52,770  |        |  |  | 9,401  |       |  |  | 10/97         |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Addison Circle Apartment Homes By Post 
    Phase II  |                   |             | Mixed Use  |              |  |               | 49,759 |              |  |                            | 3,417  |       |  |              | 1,128  |          |  |              | 84,631  |              |  |          | 4,126  |             |  |  | 85,050  |        |  |  | 89,176  |        |  |  | 11,866 |       |  |  | 10/97         |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Addison Circle Apartment Homes By Post 
    Phase III |                   |             | Mixed Use  |              |  |               | 13,408 |              |  |                            | 752    |       |  |              |       |          |  |              | 21,445  |              |  |          | 931    |             |  |  | 21,266  |        |  |  | 22,197  |        |  |  | 1,694  |       |  |  | 07/99         |       |  |  | 10/99 |       |  |  | 5-40 Years |           
|Post American Beauty Mill                              |                   |             | Apartments |              |  |               |       |              |  |                            | 156    |       |  |              | 2,786  |          |  |              | 3,589   |              |  |          | 156    |             |  |  | 6,375   |        |  |  | 6,531   |        |  |  | 733    |       |  |  | 10/97         |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Post Block 588                                         |                   |             | Apartments |              |  |               |       |              |  |                            | 1,278  |       |  |              | 48     |          |  |              | 21,957  |              |  |          | 1,415  |             |  |  | 21,868  |        |  |  | 23,283  |        |  |  | 1,676  |       |  |  | 10/97         |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Post Coles Corner                                     |                   |             | Mixed Use  |              |  |               |       |              |  |                            | 1,886  |       |  |              | 18,006 |          |  |              | 1,663   |              |  |          | 2,086  |             |  |  | 19,469  |        |  |  | 21,555  |        |  |  | 4,063  |       |  |  | N/A           |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Post Columbus Square                                   |                   |             | Mixed Use  |              |  |               |       |              |  |                            | 4,565  |       |  |              | 24,595 |          |  |              | 767     |              |  |          | 4,565  |             |  |  | 25,362  |        |  |  | 29,927  |        |  |  | 3,460  |       |  |  | N/A           |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Heights of State- Thomas/Gallery                       |                   |             | Mixed Use  |              |  |               |       |              |  |                            | 5,455  |       |  |              | 15,559 |          |  |              | 29,206  |              |  |          | 5,812  |             |  |  | 44,408  |        |  |  | 50,220  |        |  |  | 5,207  |       |  |  | 10/97         |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Legacy at Town Center                                  |                   |             | Apartments |              |  |               |       |              |  |                            | 684    |       |  |              |       |          |  |              | 32,828  |              |  |          | 811    |             |  |  | 32,701  |        |  |  | 33,512  |        |  |  | 1,687  |       |  |  | 03/99         |       |  |  | 03/99 |       |  |  | 5-40 Years |           
|Post Midtown -                                         |                   |             |            |              |  |               |        |              |  |                            |        |       |  |              |        |          |  |              |         |              |  |          |        |             |  |  |         |        |  |  |         |        |  |  |        |       |  |  |               |       |  |  |       |       |  |  |            |           
|                                                       | Phase I, II & III |             |            | Mixed Use    |  |               |        |             |  |                            |        | 4,408 |  |              |        | 1,412    |  |              |         | 74,613       |  |          |        | 4,305       |  |  |         | 76,128 |  |  |         | 80,433 |  |  |        | 5,060 |  |  |               | 10/97 |  |  |       | 10/97 |  |  |            | 5-40 Years | 
|Post Hackberry Creek                                   |                   |             | Apartments |              |  |               |       |              |  |                            | 7,269  |       |  |              | 23,579 |          |  |              | (148    | )            |  |          | 7,269  |             |  |  | 23,431  |        |  |  | 30,700  | (8)    |  |  | 3,895  |       |  |  | N/A           |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Post Town Lake/Parks                                   |                   |             | Apartments |              |  |               |       |              |  |                            | 2,985  |       |  |              | 19,464 |          |  |              | 2,054   |              |  |          | 2,985  |             |  |  | 21,518  |        |  |  | 24,503  |        |  |  | 4,109  |       |  |  | N/A           |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Post White Rock                                        |                   |             | Apartments |              |  |               |       |              |  |                            | 1,560  |       |  |              | 9,969  |          |  |              | 1,570   |              |  |          | 1,560  |             |  |  | 11,539  |        |  |  | 13,099  |        |  |  | 2,084  |       |  |  | N/A           |       |  |  | 10/97 |       |  |  | 5-40 Years |           
|Post Windhaven                                         |                   |             | Apartments |              |  |               |       |              |  |                            | 4,029  |       |  |              | 23,385 |          |  |              | 4,414   |              |  |          | 4,029  |             |  |  | 27,799  |        |  |  | 31,828  |        |  |  | 3,901  |       |  |  | N/A           |       |  |  | 10/97 |       |  |  | 5-40 Years |           




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##### Table of Contents



POST PROPERTIES, INC.

REAL ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION


December 31, 2002


(Dollars in thousands)


|                                |  |             |            |              |  |               |        |              |  |                            |        |      |  |              |        |          |  |              |        |              |  |          |        |             |  |  |        |     |  |  |        |  |  |  |        |  |  |  |               |  |  |  |                  |  |  |  |            | 
|------------------------------- |  | ----------- | ---------- | ------------ |  | ------------- | ------ | ------------ |  | -------------------------- | ------ | ---- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------ |  | -------- | ------ | ----------- |  |  | ------ | --- |  |  | ------ |  |  |  | ------ |  |  |  | ------------- |  |  |  | ---------------- |  |  |  | ---------- | 
|                                |  |             |            |              |  |               |        |              |  |                            |        |      |  |              |        |          |  |              |        |             
|                                |  |             |            |              |  |               |        |              |  | Gross amount at which      |        |      |  |              |        |          |  |             
|                                |  |             |            |              |  | Initial costs |        | Costs        |  | Carried at close of period |        |      |  |              |        |          |  |             
|                                |  |             |            |              |  |               |        | Capitalized  |  |                            |        |      |  |              |        |          |  |             
|                                |  |             |            | Related      |  |               |        | Building and |  | Subsequent                 |        |      |  | Building and |        |          |  | Accumulated  |        | Date of      |  | Date     |        | Depreciable
|                                |  | Description |            | Encumbrances |  | Land          |        | Improvements |  | to Acquisition             |        | Land |  | Improvements |        | Total(1) |  | Depreciation |        | Construction |  | Acquired |        | Lives Years
|                                |  |             |            |              |  |               |        |              |  |                            |        |      |  |              |        |          |  |              |        |              |  |          |        |            
|The Abbey of State-Thomas       |  |             | Apartments |              |  |               |       |              |  |                            | 575    |      |  |              | 6,276  |          |  |              | 1,656  |              |  |          | 575    |             |  |  | 7,932  |     |  |  | 8,507  |  |  |  | 1,084  |  |  |  | N/A           |  |  |  | 10/97            |  |  |  | 5-40 Years | 
|The Meridian at State-Thomas    |  |             | Apartments |              |  |               |       |              |  |                            | 1,535  |      |  |              | 11,605 |          |  |              | 868    |              |  |          | 1,535  |             |  |  | 12,473 |     |  |  | 14,008 |  |  |  | 1,985  |  |  |  | N/A           |  |  |  | 10/97            |  |  |  | 5-40 Years | 
|The Rice(10)                    |  |             | Mixed Use  |              |  |               |       |              |  |                            | 449    |      |  |              | 13,393 |          |  |              | 21,045 |              |  |          | 449    |             |  |  | 34,438 |     |  |  | 34,887 |  |  |  | 3,463  |  |  |  | 10/97         |  |  |  | 10/97            |  |  |  | 5-40 Years | 
|The Vineyard of Uptown          |  |             | Apartments |              |  |               |       |              |  |                            | 1,133  |      |  |              | 8,560  |          |  |              | 240    |              |  |          | 1,113  |             |  |  | 8,800  |     |  |  | 9,933  |  |  |  | 1,179  |  |  |  | N/A           |  |  |  | 10/97            |  |  |  | 5-40 Years | 
|The Vintage of Uptown           |  |             | Apartments |              |  |               |       |              |  |                            | 2,614  |      |  |              | 12,188 |          |  |              | 436    |              |  |          | 2,614  |             |  |  | 12,624 |     |  |  | 15,238 |  |  |  | 1,929  |  |  |  | N/A           |  |  |  | 10/97            |  |  |  | 5-40 Years | 
|West Avenue Lofts(6)(7)(10)     |  |             | Mixed Use  |              |  |               |       |              |  |                            |       |      |  |              | 16,490 |          |  |              | 6,623  |              |  |          |       |             |  |  | 23,113 |     |  |  | 23,113 |  |  |  | 1,493  |  |  |  | 09/99         |  |  |  | 09/99            |  |  |  | 5-40 Years | 
|The Worthington of State-Thomas |  |             | Mixed Use  |              |  |               |       |              |  |                            | 3,744  |      |  |              | 34,700 |          |  |              | 1,429  |              |  |          | 3,744  |             |  |  | 36,129 |     |  |  | 39,873 |  |  |  | 5,544  |  |  |  | N/A           |  |  |  | 10/97            |  |  |  | 5-40 Years | 
|Uptown Village I & II           |  |             | Apartments |              |  |               | 16,014 |              |  |                            | 3,955  |      |  |              | 22,120 |          |  |              | 16,320 |              |  |          | 6,195  |             |  |  | 36,200 |     |  |  | 42,395 |  |  |  | 4,051  |  |  |  | N/A           |  |  |  | 10/97            |  |  |  | 5-40 Years | 
|Post Wilson Building (10)       |  |             | Mixed Use  |              |  |               |       |              |  |                            |       |      |  |              | 689    |          |  |              | 16,396 |              |  |          |       |             |  |  | 17,085 |     |  |  | 17,085 |  |  |  | 1,295  |  |  |  | 10/97         |  |  |  | 10/97            |  |  |  | 5-40 Years | 
|Florida                         |  |             |            |              |  |               |        |              |  |                            |        |      |  |              |        |          |  |              |        |              |  |          |        |             |  |  |        |     |  |  |        |  |  |  |        |  |  |  |               |  |  |  |                  |  |  |  |            | 
|Post Harbour Place I, II & III  |  |             | Mixed Use  |              |  |               |       |              |  |                            | 3,854  |      |  |              |       |          |  |              | 90,511 |              |  |          | 9,278  |             |  |  | 85,087 |     |  |  | 94,365 |  |  |  | 5,692  |  |  |  | 03/97(4)      |  |  |  | 01/97            |  |  |  | 5-40 Years | 
|Post Hyde Park                  |  |             | Apartments |              |  |               |       |              |  |                            | 3,498  |      |  |              |       |          |  |              | 26,179 |              |  |          | 5,108  |             |  |  | 24,569 |     |  |  | 29,677 |  |  |  | 4,820  |  |  |  | 09/94         |  |  |  | 07/94            |  |  |  | 5-40 Years | 
|Post Lake                       |  |             | Apartments |              |  |               | 28,500 | (2)          |  |                            | 6,113  |      |  |              |       |          |  |              | 34,043 |              |  |          | 6,724  |             |  |  | 33,432 |     |  |  | 40,156 |  |  |  | 14,157 |  |  |  | 11/85  03/88 |  |  |  | 10/85            |  |  |  | 5-40 Years | 
|Post Parkside (Orlando)         |  |             | Mixed Use  |              |  |               |       |              |  |                            | 2,493  |      |  |              |       |          |  |              | 29,475 |              |  |          | 2,493  |             |  |  | 29,475 |     |  |  | 31,968 |  |  |  | 2,983  |  |  |  | 03/99         |  |  |  | 03/99            |  |  |  | 5-40 Years | 
|Post Rocky Point                |  |             | Apartments |              |  |               | 57,000 |              |  |                            | 10,510 |      |  |              |       |          |  |              | 59,947 |              |  |          | 10,567 |             |  |  | 59,890 |     |  |  | 70,457 |  |  |  | 11,295 |  |  |  | 04/94  11/96 |  |  |  | 02/94 & 09/96(5) |  |  |  | 5-40 Years | 
|Post Walk at Hyde Park          |  |             | Apartments |              |  |               |       |              |  |                            | 1,943  |      |  |              |       |          |  |              | 10,944 |              |  |          | 1,974  |             |  |  | 10,913 |     |  |  | 12,887 |  |  |  | 3,040  |  |  |  | 10/95  10/97 |  |  |  | 09/95            |  |  |  | 5-40 Years | 
|Virginia                        |  |             |            |              |  |               |        |              |  |                            |        |      |  |              |        |          |  |              |        |              |  |          |        |             |  |  |        |     |  |  |        |  |  |  |        |  |  |  |               |  |  |  |                  |  |  |  |            | 
|Post Corners at Trinity Centre  |  |             | Apartments |              |  |               | 17,935 |              |  |                            | 4,404  |      |  |              |       |          |  |              | 23,737 |              |  |          | 4,493  |             |  |  | 23,648 |     |  |  | 28,141 |  |  |  | 5,061  |  |  |  | 06/94         |  |  |  | 06/94            |  |  |  | 5-40 Years | 
|Post Forest                     |  |             | Apartments |              |  |               |       |              |  |                            | 8,590  |      |  |              |       |          |  |              | 26,105 |              |  |          | 9,106  |             |  |  | 25,589 | (3) |  |  | 34,695 |  |  |  | 11,796 |  |  |  | 01/89  12/90 |  |  |  | 03/88            |  |  |  | 5-40 Years | 
|Washington D.C.                 |  |             |            |              |  |               |        |              |  |                            |        |      |  |              |        |          |  |              |        |              |  |          |        |             |  |  |        |     |  |  |        |  |  |  |        |  |  |  |               |  |  |  |                  |  |  |  |            | 
|Post Pentagon Row(10)           |  |             | Mixed Use  |              |  |               |       |              |  |                            | 2,359  |      |  |              | 7,659  |          |  |              | 82,249 |              |  |          | 9,141  |             |  |  | 83,126 |     |  |  | 92,267 |  |  |  | 1,873  |  |  |  | 06/99         |  |  |  | 02/99            |  |  |  | 5-40 Years | 




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---



##### Table of Contents



POST PROPERTIES, INC.

REAL ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION


December 31, 2002


(Dollars in thousands)


|                             |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |             |  |  |         |           |  |  |         |           |  |  |        |         |  |  |          |  |  |  |       |  |  |  |            |  | 
|---------------------------- | ----- | ----------- | ---------- | ------------ |  | ------------- | - | ------------ |  | -------------------------- | ------ | ------- |  | ------------ | ----- | -------- |  | ------------ | ------- | ------------ |  | -------- | ----- | ----------- |  |  | ------- | --------- |  |  | ------- | --------- |  |  | ------ | ------- |  |  | -------- |  |  |  | ----- |  |  |  | ---------- |  | 
|                             |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |             
|                             |       |             |            |              |  |               |   |              |  | Gross amount at which      |        |         |  |              |       |          |  |             
|                             |       |             |            |              |  | Initial costs |   | Costs        |  | Carried at close of period |        |         |  |              |       |          |  |             
|                             |       |             |            |              |  |               |   | Capitalized  |  |                            |        |         |  |              |       |          |  |             
|                             |       |             |            | Related      |  |               |   | Building and |  | Subsequent                 |        |         |  | Building and |       |          |  | Accumulated  |         | Date of      |  | Date     |       | Depreciable
|                             |       | Description |            | Encumbrances |  | Land          |   | Improvements |  | to Acquisition             |        | Land    |  | Improvements |       | Total(1) |  | Depreciation |         | Construction |  | Acquired |       | Lives Years
|                             |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |            
|New York                     |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |             |  |  |         |           |  |  |         |           |  |  |        |         |  |  |          |  |  |  |       |  |  |  |            | 
|Post Toscana                 |       |             | Apartments |              |  |               |  |              |  |                            | 15,976 |         |  |              |      |          |  |              | 58,525  |              |  |          |      |             |  |  | 74,501  |           |  |  | 74,501  |           |  |  |       |         |  |  | 01/02(4) |  |  |  | 01/02 |  |  |  | 5-40 Years | 
|Post Luminaria               |       |             | Apartments |              |  |               |  |              |  |                            | 4,938  |         |  |              |      |          |  |              | 44,979  |              |  |          | 4,938 |             |  |  | 44,979  |           |  |  | 49,917  |           |  |  | 933    |         |  |  | 03/01(4) |  |  |  | 03/01 |  |  |  | 5-40 Years | 
|North Carolina               |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |             |  |  |         |           |  |  |         |           |  |  |        |         |  |  |          |  |  |  |       |  |  |  |            | 
|Uptown Place                 |       |             | Mixed Use  |              |  |               |  |              |  |                            | 2,336  |         |  |              |      |          |  |              | 28,579  |              |  |          | 2,363 |             |  |  | 28,552  |           |  |  | 30,915  |           |  |  | 1,696  |         |  |  | 09/98    |  |  |  | 09/98 |  |  |  | 5-40 Years | 
|Gateway I & II               |       |             | Apartments |              |  |               |  |              |  |                            | 2,424  |         |  |              |      |          |  |              | 60,531  |              |  |          | 6,207 |             |  |  | 56,748  |           |  |  | 62,955  |           |  |  | 1,725  |         |  |  | 09/98    |  |  |  | 09/98 |  |  |  | 5-40 Years | 
|Post Park at Phillips Place  |       |             | Mixed Use  |              |  |               |  |              |  |                            | 4,305  |         |  |              |      |          |  |              | 36,855  |              |  |          | 4,307 |             |  |  | 36,853  |           |  |  | 41,160  |           |  |  | 8,100  |         |  |  | 01/96    |  |  |  | 11/95 |  |  |  | 5-40 Years | 
|Arizona                      |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |             |  |  |         |           |  |  |         |           |  |  |        |         |  |  |          |  |  |  |       |  |  |  |            | 
|Roosevelt Square I  III(10) |       |             | Mixed Use  |              |  |               |  |              |  |                            | 1,920  |         |  |              |      |          |  |              | 44,683  |              |  |          | 2,297 |             |  |  | 44,306  |           |  |  | 46,603  |           |  |  | 2,085  |         |  |  | 02/99    |  |  |  | 02/99 |  |  |  | 5-40 Years | 
|Tennessee                    |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |             |  |  |         |           |  |  |         |           |  |  |        |         |  |  |          |  |  |  |       |  |  |  |            | 
|Bennie Dillon                |       |             | Mixed Use  |              |  |               |  |              |  |                            |       |         |  |              |      |          |  |              | 8,414   |              |  |          |      |             |  |  | 8,414   |           |  |  | 8,414   |           |  |  | 720    |         |  |  | 07/98    |  |  |  | 07/98 |  |  |  | 5-40 Years | 
|Colorado                     |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |             |  |  |         |           |  |  |         |           |  |  |        |         |  |  |          |  |  |  |       |  |  |  |            | 
|Uptown Square I, II & III    |       |             | Apartments |              |  |               |  |              |  |                            | 2,963  |         |  |              | 580   |          |  |              | 103,224 |              |  |          | 3,988 |             |  |  | 102,779 |           |  |  | 106,767 |           |  |  | 3,383  |         |  |  | 10/97    |  |  |  | 10/97 |  |  |  | 5-40 Years | 
|Miscellaneous Investments    |       |             |            |              |  |               |  |              |  |                            | 19,757 |         |  |              | 4,930 |          |  |              | 36,649  |              |  |          | 5,222 |             |  |  | 56,114  |           |  |  | 61,336  | (9)       |  |  | 12,514 |         |  |  |          |  |  |  |       |  |  |  | 5-40 Years | 
|                             |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |             |  |  |         |           |  |  |         |           |  |  |        |         |  |  |          |  |  |  |       |  |  |  |            | 
|                             | Total |             |            |              |  |               | $ | 510,186      |  |                            | $      | 283,964 |  |              | $     | 320,603  |  |              | $       | 2,100,648    |  |          | $     | 289,353     |  |  | $       | 2,415,862 |  |  | $       | 2,705,215 |  |  | $      | 443,965 |  |  |          |  |  |  |       |  |  |  |            |  | 
|                             |       |             |            |              |  |               |   |              |  |                            |        |         |  |              |       |          |  |              |         |              |  |          |       |             |  |  |         |           |  |  |         |           |  |  |        |         |  |  |          |  |  |  |       |  |  |  |            | 



| |     |                                                                                                                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The aggregate cost for Federal Income Tax
    purposes to the Company was approximately $2,219,817 at
    December 31, 2002, 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 the possible
    loss of $3,700 which was taken in prior years.                                                                                                                                                          
| | (4) | Property is under construction or initial
    lease-up at December 31, 2002.                                                                                                                                                                               
| | (5) | Additional land was acquired for construction of
    a second phase.                                                                                                                                                                                       
| | (6) | This property was held for sale at
    December 31, 2002. The carrying value of the assets
    represents historical cost, which is lower than the fair value
    of the properties.                                                                       
| | (7) | This community was sold during the first quarter
    of 2003.                                                                                                                                                                                              
| | (8) | Balance is net of a reserve of $2,055 to write
    down the asset to fair value.                                                                                                                                                                           
| | (9) | Balance is net of reserves of $10,430 to write
    down certain land parcels to fair value.                                                                                                                                                                

|     |                                                                                   
|---- | ----------------------------------------------------------------------------------
|(10) | The Company has a leasehold interest in the land
    underlying these communities.




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

|                         |                              |                                               |   |           |          |      |   |           |          |   |   |           |          |   |  | 
|------------------------ | ---------------------------- | --------------------------------------------- | - | --------- | -------- | ---- | - | --------- | -------- | - | - | --------- | -------- | - |  | 
|                         |                              | 2002                                          |   | 2001      |          | 2000 |   |          
|                         |                              |                                               |   |           |          |      |   |          
|Real estate investments  |                              |                                               |   |           |          |      |   |           |          |   |   |           |          |  
|                         | Balance at beginning of year |                                               | $ | 2,777,980 |          |      | $ | 2,827,094 |          |   | $ | 2,582,785 |          |   | 
|                         |                              | Improvements                                  |   |           | 121,110  |      |   |           | 211,881  |   |   |           | 380,856  |   |  | 
|                         |                              | Disposition of property                       |   |           | (193,875 | )    |   |           | (260,995 | ) |   |           | (136,547 | ) |  | 
|                         |                              |                                               |   |           |          |      |   |           |          |   |   |           |          |  
|                         | Balance at end of year       |                                               | $ | 2,705,215 |          |      | $ | 2,777,980 |          |   | $ | 2,827,094 |          |   | 
|                         |                              |                                               |   |           |          |      |   |           |          |   |   |           |          |  
|Accumulated depreciation |                              |                                               |   |           |          |      |   |           |          |   |   |           |          |  
|                         | Balance at beginning of year |                                               | $ | 404,274   |          |      | $ | 357,180   |          |   | $ | 303,016   |          |   | 
|                         |                              | Depreciation                                  |   |           | 87,927   |      |   |           | 76,111   |   |   |           | 71,113   |   |  | 
|                         |                              | Accumulated depreciation on disposed property |   |           | (48,236  | )    |   |           | (29,017  | ) |   |           | (16,949  | ) |  | 
|                         |                              |                                               |   |           |          |      |   |           |          |   |   |           |          |  
|                         | Balance at end of year       |                                               | $ | 443,965   | (a)      |      | $ | 404,274   | (a)      |   | $ | 357,180   | (a)      |   | 
|                         |                              |                                               |   |           |          |      |   |           |          |   |   |           |          |  



|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Accumulated depreciation on the balance sheet is
    net of accumulated depreciation on assets held for sale in the
    amounts of $17,829, $11,260 and $12,059 for the years ended
    December 31, 2002, 2001 and 2000, respectively.




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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, 2002 and 2001 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 28, 2003





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POST PROPERTIES, INC.

1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE
PLAN


STATEMENT OF NET ASSETS AVAILABLE FOR PLAN
BENEFITS


|                                           |                                                |                         |   |         |  |  |   |         | 
|------------------------------------------ | ---------------------------------------------- | ----------------------- | - | ------- |  |  | - | ------- | 
|                                           |                                                |                        
|                                           |                                                | Year Ended December 31,
|                                           |                                                |                        
|                                           |                                                | 2002                    |   | 2001   
|                                           |                                                |                         |   |        
|ASSETS                                     |                                                |                         |   |         |  |  |   |        
|                                           | Receivable from Post Apartment Homes,
    L.P. |                         | $ | 176,895 |  |  | $ | 455,119 | 
|                                           |                                                |                         |   |         |  |  |   |        
|NET ASSETS AVAILABLE FOR PLAN
    BENEFITS |                                                |                         |   |         |  |  |   |        
|                                           | Net assets available for plan benefits         |                         | $ | 176,895 |  |  | $ | 455,119 | 
|                                           |                                                |                         |   |         |  |  |   |        




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POST PROPERTIES, INC.

1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE
PLAN


STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS


|                                                        |                                                         |                         |         |          |   |   |         |          |  
|------------------------------------------------------- | ------------------------------------------------------- | ----------------------- | ------- | -------- | - | - | ------- | -------- | -
|                                                        |                                                         |                        
|                                                        |                                                         | Year ended December 31,
|                                                        |                                                         |                        
|                                                        |                                                         | 2002                    |         | 2001    
|                                                        |                                                         |                         |         |         
|NET ASSETS AVAILABLE FOR PLAN BENEFITS,
    JANUARY 1   |                                                         | $                       | 455,119 |          |   | $ | 473,017 |         
|DEDUCTIONS:                                             |                                                         |                         |         |          |   |   |         |         
|                                                        | Purchase of participants shares                        |                         |         | (649,485 | ) |   |         | (937,218 | )
|                                                        | Payment for payroll taxes on behalf of
    participants |                         |         | (27,488  | ) |   |         | (50,930  | )
|                                                       
|ADDITIONS:                                              |                                                         |                         |         |          |   |   |         |         
|                                                        | Participant contributions                               |                         |         | 398,749  |   |   |         | 970,250  |  
|                                                        |                                                         |                         |         |          |   |   |         |         
|                                                       
|NET ASSETS AVAILABLE FOR PLAN BENEFITS,
    DECEMBER 31 |                                                         | $                       | 176,895 |          |   | $ | 455,119 |         
|                                                        |                                                         |                         |         |          |   |   |         |         




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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.




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3. Exhibits

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

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

|        |          |   |  |             |  |                                                                                                                                           
|------- | -------- | - |  | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |   |  |            
|No.     |          |   |  | Description
|        |          |   |  |            
|        | 3.1(a)   |   |  |            |  | Articles of Incorporation of the Company                                                                                                  
|        | 3.2      |   |  |            |  | Articles of Amendment to the Articles of
    Incorporation of the Company                                                                 
|        | 3.3      |   |  |            |  | Articles of Amendment to the Articles of
    Incorporation of the Company                                                                 
|        | 3.4      |   |  |            |  | Articles of Amendment to the Articles of
    Incorporation of the Company                                                                 
|        | 3.5(b)   |   |  |            |  | Articles of Amendment to the Articles of
    Incorporation of the Company                                                                 
|        | 3.6      |   |  |            |  | Bylaws of the Company (as Amended and Restated as
    of March 22, 2003)                                                                  
|        | 4.1(c)   |   |  |            |  | Indenture between the Company and SunTrust Bank,
    as Trustee                                                                           
|        | 4.2(c)   |   |  |            |  | First Supplemental Indenture to the Indenture
    between the Company and SunTrust Bank, as Trustee                                       
|        | 10.1     |   |  |            |  | Second Amended and Restated Agreement of Limited
    Partnership of the Operating Partnership                                             
|        | 10.2     |   |  |            |  | First Amendment to Second Amended and Restated
    Partnership Agreement                                                                  
|        | 10.3     |   |  |            |  | Second Amendment to Second Amended and Restated
    Partnership Agreement                                                                 
|        | 10.4(d)  |   |  |            |  | Third Amendment to Second Amended and Restated
    Partnership Agreement                                                                  
|        | 10.5(d)  |   |  |            |  | Fourth Amendment to Second Amended and Restated
    Partnership Agreement                                                                 
|        | 10.6(b)  |   |  |            |  | Fifth Amendment to the Second Amended and
    Restated Partnership Agreement                                                              
|        | 10.7(e)  |   |  |            |  | Sixth Amendment to Amended and Restated
    Partnership Agreement                                                                         
|        | 10.8(f)* |   |  |            |  | Employee Stock Plan                                                                                                                       
|        | 10.9*    |   |  |            |  | Amendment to Employee Stock Plan                                                                                                          
|        | 10.10*   |   |  |            |  | Amendment No. 2 to Employee Stock Plan                                                                                                    
|        | 10.11*   |   |  |            |  | Amendment No. 3 to Employee Stock Plan                                                                                                    
|        | 10.12*   |   |  |            |  | Amendment No. 4 to Employee Stock Plan                                                                                                    
|        | 10.13(f) | * |  |            |  | Noncompetition Agreement between the Company, the
    Operating Partnership and John A. Williams                                          
|        | 10.14(f) | * |  |            |  | Noncompetition Agreement between the Company, the
    Operating Partnership and John T. Glover                                            
|        | 10.15(d) | * |  |            |  | Amendment of Noncompetition Agreement between the
    Company, the Operating Partnership and John A. Williams dated as
    of June 1, 1998
|        | 10.16(d) | * |  |            |  | Amendment of Noncompetition Agreement between the
    Company, the Operating Partnership and John T. Glover dated as
    of June 1, 1998  
|        | 10.17(b) | * |  |            |  | Option and Transfer Agreement among the Operating
    Partnership, Post Services, John A. Williams and John T. Glover                     
|        | 10.18(f) |   |  |            |  | Promissory Note made by Post Services, Inc. in
    favor of RAM Partners, Inc.                                                            
|        | 10.19    |   |  |            |  | Form of Indemnification Agreement for officers
    and directors                                                                          
|        | 10.20(a) | * |  |            |  | Profit Sharing Plan of the Company                                                                                                        
|        | 10.21*   |   |  |            |  | Amendment Number One to Profit Sharing Plan                                                                                               
|        | 10.22*   |   |  |            |  | Amendment Number Two to Profit Sharing Plan                                                                                               
|        | 10.23*   |   |  |            |  | Amendment Number Three to Profit Sharing Plan                                                                                             
|        | 10.24*   |   |  |            |  | Amendment Number Four to Profit Sharing Plan                                                                                              
|        | 10.25(f) |   |  |            |  | Form of General Partner 1% Exchange Agreement                                                                                             
|        | 10.26(g) | * |  |            |  | Employee Stock Purchase Plan                                                                                                              




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|        |          |   |  |             |  |                                                                                                                                                                                                                                         
|------- | -------- | - |  | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |   |  |            
|No.     |          |   |  | Description
|        |          |   |  |            
|        | 10.27*   |   |  |            |  | Amendment to Employee Stock Purchase Plan                                                                                                                                                                                               
|        | 10.28(g) | * |  |            |  | Amended and Restated Dividend Reinvestment and
    Stock Purchase Plan                                                                                                                                                                  
|        | 10.29(e) |   |  |            |  | 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 thereto (the Fifth Credit Agreement)
|        | 10.30(i) | * |  |            |  | Deferred Compensation Plan for Directors and
    Executive Committee Members                                                                                                                                                            
|        | 10.31(j) | * |  |            |  | Form of Change of Control Agreement and schedule
    of executive officers who have entered into such agreement                                                                                                                         
|        | 10.32(j) | * |  |            |  | Form of Change of Control Agreement and schedule
    of executive officers who have entered into such agreement                                                                                                                         
|        | 10.33(j) | * |  |            |  | Master Employment Agreement between the Company,
    the Operating Partnership, Post Services, Inc. and John A.
    Williams dated as of March 25, 2002                                                                                 
|        | 10.34(j) | * |  |            |  | Master Employment Agreement between the Company,
    the Operating Partnership, Post Services, Inc. and John T.
    Glover dated as of March 22, 2002                                                                                   
|        | 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)                                                                                                                                        
|        | 23.12    |   |  |            |  | Consent of PricewaterhouseCoopers LLP for
    Registration Statement on Form S-8 (No. 333-38725)                                                                                                                                        
|        | 23.13    |   |  |            |  | Consent of PricewaterhouseCoopers LLP for
    Registration Statement on Form S-8 (No. 333-02374)                                                                                                                                        
|        | 99.1     |   |  |            |  | Certification pursuant to section 906 of the
    Sarbanes-Oxley Act of 2002  President and Chief Executive
    Officer                                                                                                                 
|        | 99.2     |   |  |            |  | Certification pursuant to section 906 of the
    Sarbanes-Oxley Act of 2002  Executive Vice President and
    Chief Financial Officer                                                                                                  






|  |                                                                                   
|- | ----------------------------------------------------------------------------------
|* | Identifies each management contract or
    compensatory plan required to be filed.

|    |                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------
|(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 Quarterly Report on
    Form 10-Q for the quarter ended September 30, 1999.                     




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|    |                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------
|(c) | Filed as an exhibit to the Registration Statement
    on Form S-3 (SEC File No. 333-42884) of the Company.            
|(d) | Filed as an exhibit to the Annual Report on
    Form 10-K of the Registrants for the year ended
    December 31, 1998.
|(e) | Filed as an exhibit to the Annual Report on
    Form 10-K of the Registrants for the year ended
    December 31, 2000.

|    |                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------
|(f) | Filed as an exhibit to the Registration Statement
    on Form S-11 (SEC File No. 33-71650), as amended, of
    the Company.

|    |                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(g) | Filed as an exhibit to the Registration Statement
    on Form S-8 (SEC File No. 33-86674) of the Company.                                         
|(h) | Filed within the prospectus that is a part of the
    Registration Statement on Form S-3 (SEC File
    No. 333-44722), as amended, of the Company.

|    |                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------
|(i) | Filed as an exhibit to the Annual Report on
    Form 10-K of the Registrants for the year ended
    December 31, 1999.
|(j) | Filed as an exhibit to the Annual Report on
    Form 10-K of the Registrants for the year ended
    December 31, 2001.



| |     |                    
| | --- | -------------------
| | (b) | Reports on Form 8-K

None




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##### Table of Contents



SIGNATURES

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

|               |  |                                                                                                                        
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------
|               |  | POST PROPERTIES, INC.                                                                                                  
|               |  | (Registrant)                                                                                                           
|March 25, 2003 |  | By  /s/ DAVID P. STOCKERTDavid P. Stockert, President and Chief
    Executive Officer
    (Principal Executive Officer)

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:

|                                                 |  |                                                                                        |  |               
|------------------------------------------------ |  | -------------------------------------------------------------------------------------- |  | --------------
|Signature                                        |  | Title                                                                                  |  | Date          
|                                                 |  |                                                                                        |  |               
|/s/ ROBERT C. GODDARD, IIIRobert C. Goddard, III |  | Chairman of the Board and Director                                                     |  | March 25, 2003
|                                                
|/s/ DAVID P. STOCKERTDavid P. Stockert           |  | President, Chief Executive Officer and Director
    (Principal Executive Officer)      |  | March 25, 2003
|                                                
|/s/ R. GREGORY FOXR. Gregory Fox                 |  | Executive Vice President and Chief Financial
    Officer (Principal Financial Officer) |  | March 25, 2003
|                                                
|/s/ ARTHUR J. QUIRKArthur J. Quirk               |  | Senior Vice President and Chief Accounting
    Officer (Principal Accounting Officer)  |  | March 25, 2003
|                                                
|/s/ ROBERT L. ANDERSONRobert L. Anderson         |  | Director                                                                               |  | March 25, 2003
|                                                
|/s/ ARTHUR M. BLANKArthur M. Blank               |  | Director                                                                               |  | March 25, 2003
|                                                
|/s/ HERSCHEL M. BLOOMHerschel M. Bloom           |  | Director                                                                               |  | March 25, 2003
|                                                
|/s/ RUSSELL R. FRENCHRussell R. French           |  | Director                                                                               |  | March 25, 2003
|                                                
|/s/ JOHN T. GLOVERJohn T. Glover                 |  | Director                                                                               |  | March 25, 2003
|                                                
|/s/ CHARLES E. RICECharles E. Rice               |  | Director                                                                               |  | March 25, 2003
|                                                
|/s/ L. BARRY TEAGUEL. Barry Teague               |  | Director                                                                               |  | March 25, 2003
|                                                
|/s/ RONALD DE WAALRonald de Waal                 |  | Director                                                                               |  | March 25, 2003
|                                                
|John A. Williams                                 |  | Chairman Emeritus and Director                                                         |  |               




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##### Table of Contents



SIGNATURES

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

|               |  |                                                                                                                        
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------
|               |  | POST PROPERTIES, INC.                                                                                                  
|               |  | By: Post G.P. Holdings, Inc., as General Partner                                                                       
|March 25, 2003 |  | By  /s/ DAVID P. STOCKERTDavid P. Stockert, President and Chief
    Executive Officer
    (Principal Executive Officer)

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:

|                                                 |  |                                                                                        |  |               
|------------------------------------------------ |  | -------------------------------------------------------------------------------------- |  | --------------
|Signature                                        |  | Title                                                                                  |  | Date          
|                                                 |  |                                                                                        |  |               
|/s/ ROBERT C. GODDARD, IIIRobert C. Goddard, III |  | Chairman of the Board and Director                                                     |  | March 25, 2003
|/s/ DAVID P. STOCKERTDavid P. Stockert           |  | President, Chief Executive Officer and Director
    (Principal Executive Officer)      |  | March 25, 2003
|/s/ R. GREGORY FOXR. Gregory Fox                 |  | Executive Vice President and Chief Financial
    Officer (Principal Financial Officer) |  | March 25, 2003
|/s/ ARTHUR J. QUIRKArthur J. Quirk               |  | Senior Vice President and Chief Accounting
    Officer (Principal Accounting Officer)  |  | March 25, 2003
|/s/ ROBERT L. ANDERSONRobert L. Anderson         |  | Director                                                                               |  | March 25, 2003
|/s/ ARTHUR M. BLANKArthur M. Blank               |  | Director                                                                               |  | March 25, 2003
|/s/ HERSCHEL M. BLOOMHerschel M. Bloom           |  | Director                                                                               |  | March 25, 2003
|/s/ RUSSELL R. FRENCHRussell R. French           |  | Director                                                                               |  | March 25, 2003
|/s/ JOHN T. GLOVERJohn T. Glover                 |  | Director                                                                               |  | March 25, 2003
|/s/ CHARLES E. RICECharles E. Rice               |  | Director                                                                               |  | March 25, 2003
|/s/ L. BARRY TEAGUEL. Barry Teague               |  | Director                                                                               |  | March 25, 2003
|/s/ RONALD DE WAALRonald de Waal                 |  | Director                                                                               |  | March 25, 2003
|John A. Williams                                 |  | Chairman Emeritus and Director                                                         |  |               




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##### Table of Contents



CERTIFICATIONS

I, David P. Stockert, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K of Post Properties, Inc. and Post Apartment
    Homes, L.P.;                                                                                                                                                                                                                            
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|
| | 4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                       



| |    |                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | Designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this annual report is being prepared;
|
| | b) | Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) | Presented in this annual report our conclusions
    about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |    |                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent function):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | All significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) | Any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



| |    |                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officers
    and I have indicated in this annual report whether there were
    significant changes in internal controls or in other factors
    that could significantly affect internal controls subsequent to
    the date of our most recent evaluation, including any corrective
    actions with regard to significant deficiencies and material
    weaknesses.

March 27, 2003

|                                                                                 |  |                                                                                                                                                                    
|-------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|POST PROPERTIES, INC
    a Georgia corporation                                   |  | POST APARTMENT HOMES, L.P.
    a Georgia limited partnership                                                                                                       
|/s/ David P. StockertDavid P. Stockert
    President and Chief Executive Officer |  | By: POST GP HOLDINGS, INC.,
    a Georgia corporation, its
    sole general partner/s/ David P. StockertDavid P. Stockert
    President and Chief Executive Officer






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---



##### Table of Contents



I, R. Gregory Fox, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K of Post Properties, Inc. and Post Apartment
    Homes, L.P.;                                                                                                                                                                                                                            
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|
| | 4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                       



| |    |                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | Designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this annual report is being prepared;
|
| | b) | Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) | Presented in this annual report our conclusions
    about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |    |                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent function):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | All significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) | Any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



| |    |                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officers
    and I have indicated in this annual report whether there were
    significant changes in internal controls or in other factors
    that could significantly affect internal controls subsequent to
    the date of our most recent evaluation, including any corrective
    actions with regard to significant deficiencies and material
    weaknesses.

March 27, 2003

|                                                                                              |  |                                                                                                                                                                                 
|--------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|POST PROPERTIES, INC
    a Georgia corporation                                                |  | POST APARTMENT HOMES, L.P.
    a Georgia limited partnership                                                                                                                    
|/s/ R. Gregory FoxR. Gregory Fox
    Executive Vice President and
    Chief Financial Officer |  | By: POST GP HOLDINGS, INC.,
    a Georgia corporation, its
    sole general partner/s/ R. Gregory FoxR. Gregory Fox
    Executive Vice President and
    Chief Financial Officer






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##### Table of Contents



Index to Exhibits

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

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

|        |          |   |  |             |  |                                                                                                                                           
|------- | -------- | - |  | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |   |  |            
|No.     |          |   |  | Description
|        |          |   |  |            
|        | 3.1(a)   |   |  |            |  | Articles of Incorporation of the Company                                                                                                  
|        | 3.2      |   |  |            |  | Articles of Amendment to the Articles of
    Incorporation of the Company                                                                 
|        | 3.3      |   |  |            |  | Articles of Amendment to the Articles of
    Incorporation of the Company                                                                 
|        | 3.4      |   |  |            |  | Articles of Amendment to the Articles of
    Incorporation of the Company                                                                 
|        | 3.5(b)   |   |  |            |  | Articles of Amendment to the Articles of
    Incorporation of the Company                                                                 
|        | 3.6      |   |  |            |  | Bylaws of the Company (as Amended and Restated as
    of March 22, 2003)                                                                  
|        | 4.1(c)   |   |  |            |  | Indenture between the Company and SunTrust Bank,
    as Trustee                                                                           
|        | 4.2(c)   |   |  |            |  | First Supplemental Indenture to the Indenture
    between the Company and SunTrust Bank, as Trustee                                       
|        | 10.1     |   |  |            |  | Second Amended and Restated Agreement of Limited
    Partnership of the Operating Partnership                                             
|        | 10.2     |   |  |            |  | First Amendment to Second Amended and Restated
    Partnership Agreement                                                                  
|        | 10.3     |   |  |            |  | Second Amendment to Second Amended and Restated
    Partnership Agreement                                                                 
|        | 10.4(d)  |   |  |            |  | Third Amendment to Second Amended and Restated
    Partnership Agreement                                                                  
|        | 10.5(d)  |   |  |            |  | Fourth Amendment to Second Amended and Restated
    Partnership Agreement                                                                 
|        | 10.6(b)  |   |  |            |  | Fifth Amendment to the Second Amended and
    Restated Partnership Agreement                                                              
|        | 10.7(e)  |   |  |            |  | Sixth Amendment to Amended and Restated
    Partnership Agreement                                                                         
|        | 10.8(f)* |   |  |            |  | Employee Stock Plan                                                                                                                       
|        | 10.9*    |   |  |            |  | Amendment to Employee Stock Plan                                                                                                          
|        | 10.10*   |   |  |            |  | Amendment No. 2 to Employee Stock Plan                                                                                                    
|        | 10.11*   |   |  |            |  | Amendment No. 3 to Employee Stock Plan                                                                                                    
|        | 10.12*   |   |  |            |  | Amendment No. 4 to Employee Stock Plan                                                                                                    
|        | 10.13(f) | * |  |            |  | Noncompetition Agreement between the Company, the
    Operating Partnership and John A. Williams                                          
|        | 10.14(f) | * |  |            |  | Noncompetition Agreement between the Company, the
    Operating Partnership and John T. Glover                                            
|        | 10.15(d) | * |  |            |  | Amendment of Noncompetition Agreement between the
    Company, the Operating Partnership and John A. Williams dated as
    of June 1, 1998
|        | 10.16(d) | * |  |            |  | Amendment of Noncompetition Agreement between the
    Company, the Operating Partnership and John T. Glover dated as
    of June 1, 1998  
|        | 10.17(b) | * |  |            |  | Option and Transfer Agreement among the Operating
    Partnership, Post Services, John A. Williams and John T. Glover                     
|        | 10.18(f) |   |  |            |  | Promissory Note made by Post Services, Inc. in
    favor of RAM Partners, Inc.                                                            
|        | 10.19    |   |  |            |  | Form of Indemnification Agreement for officers
    and directors                                                                          
|        | 10.20(a) | * |  |            |  | Profit Sharing Plan of the Company                                                                                                        
|        | 10.21*   |   |  |            |  | Amendment Number One to Profit Sharing Plan                                                                                               
|        | 10.22*   |   |  |            |  | Amendment Number Two to Profit Sharing Plan                                                                                               
|        | 10.23*   |   |  |            |  | Amendment Number Three to Profit Sharing Plan                                                                                             
|        | 10.24*   |   |  |            |  | Amendment Number Four to Profit Sharing Plan                                                                                              
|        | 10.25(f) |   |  |            |  | Form of General Partner 1% Exchange Agreement                                                                                             
|        | 10.26(g) | * |  |            |  | Employee Stock Purchase Plan                                                                                                              




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|        |          |   |  |             |  |                                                                                                                                                                                                                                         
|------- | -------- | - |  | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |   |  |            
|No.     |          |   |  | Description
|        |          |   |  |            
|        | 10.27*   |   |  |            |  | Amendment to Employee Stock Purchase Plan                                                                                                                                                                                               
|        | 10.28(g) | * |  |            |  | Amended and Restated Dividend Reinvestment and
    Stock Purchase Plan                                                                                                                                                                  
|        | 10.29(e) |   |  |            |  | 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 thereto (the Fifth Credit Agreement)
|        | 10.30(i) | * |  |            |  | Deferred Compensation Plan for Directors and
    Executive Committee Members                                                                                                                                                            
|        | 10.31(j) | * |  |            |  | Form of Change of Control Agreement and schedule
    of executive officers who have entered into such agreement                                                                                                                         
|        | 10.32(j) | * |  |            |  | Form of Change of Control Agreement and schedule
    of executive officers who have entered into such agreement                                                                                                                         
|        | 10.33(j) | * |  |            |  | Master Employment Agreement between the Company,
    the Operating Partnership, Post Services, Inc. and John A.
    Williams dated as of March 25, 2002                                                                                 
|        | 10.34(j) | * |  |            |  | Master Employment Agreement between the Company,
    the Operating Partnership, Post Services, Inc. and John T.
    Glover dated as of March 22, 2002                                                                                   
|        | 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)                                                                                                                                        
|        | 23.12    |   |  |            |  | Consent of PricewaterhouseCoopers LLP for
    Registration Statement on Form S-8 (No. 333-38725)                                                                                                                                        
|        | 23.13    |   |  |            |  | Consent of PricewaterhouseCoopers LLP for
    Registration Statement on Form S-8 (No. 333-02374)                                                                                                                                        
|        | 99.1     |   |  |            |  | Certification pursuant to section 906 of the
    Sarbanes-Oxley Act of 2002  President and Chief Executive
    Officer                                                                                                                 
|        | 99.2     |   |  |            |  | Certification pursuant to section 906 of the
    Sarbanes-Oxley Act of 2002  Executive Vice President and
    Chief Financial Officer                                                                                                  






|  |                                                                                   
|- | ----------------------------------------------------------------------------------
|* | Identifies each management contract or
    compensatory plan required to be filed.

|    |                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------
|(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 Quarterly Report on
    Form 10-Q for the quarter ended September 30, 1999.                     




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|    |                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | Filed as an exhibit to the Registration Statement
    on Form S-3 (SEC File No. 333-42884) of the Company.                                        
|(d) | Filed as an exhibit to the Annual Report on
    Form 10-K of the Registrants for the year ended
    December 31, 1998.                            
|(e) | Filed as an exhibit to the Annual Report on
    Form 10-K of the Registrants for the year ended
    December 31, 2000.                            
|(f) | Filed as an exhibit to the Registration Statement
    on Form S-11 (SEC File No. 33-71650), as amended, of
    the Company.                       
|(g) | Filed as an exhibit to the Registration Statement
    on Form S-8 (SEC File No. 33-86674) of the Company.                                         
|(h) | Filed within the prospectus that is a part of the
    Registration Statement on Form S-3 (SEC File
    No. 333-44722), as amended, of the Company.
|(i) | Filed as an exhibit to the Annual Report on
    Form 10-K of the Registrants for the year ended
    December 31, 1999.                            
|(j) | Filed as an exhibit to the Annual Report on
    Form 10-K of the Registrants for the year ended
    December 31, 2001.                            



| |     |                    
| | --- | -------------------
| | (b) | Reports on Form 8-K

None




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