##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549



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FORM 10-Q

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

For the quarterly period ended September 30, 2003

OR

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

For the transition period from ____________ to _______________

Commission file numbers 1-12080 and 0-28226



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POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
(Exact name of registrant as specified in its charter)

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

4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327
(Address of principal executive offices  zip code)

(404) 846-5000
(Registrants telephone number, including area code)

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
registrant was 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 whether the registrants are accelerated filers (as
defined in Rule 12b-2 of the Exchange Act).

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



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APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of
common stock as of the latest practicable date:

38,002,848 shares of common stock
outstanding as of November 7, 2003 (excluding treasury stock).





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##### 



POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.INDEX

|        |  |                                                                                                                      |  |  |    |      |    | 
|------- |  | -------------------------------------------------------------------------------------------------------------------- |  |  | -- | ---- | -- | 
|        |  |                                                                                                                      |  |  |    | Page
|        |  |                                                                                                                      |  |  |    |     
|Part I  |  | FINANCIAL INFORMATION                                                                                                |  |  |    |     
|        |  |                                                                                                                      |  |  |    |      |    | 
|        |  | Item 1      Financial Statements                                                                                     |  |  |    |     
|        |  |                                                                                                                      |  |  |    |      |    | 
|        |  | POST PROPERTIES, INC.                                                                                                |  |  |    |     
|        |  | Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002                                           |  |  | 1  |     
|        |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2003 and 2002                |  |  | 2  |     
|        |  | Consolidated
Statement of Shareholders' Equity and Accumulated Earnings for the nine months ended September 30, 2003 |  |  | 3  |     
|        |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002                          |  |  | 4  |     
|        |  | Notes to Consolidated Financial Statements                                                                           |  |  | 5  |     
|        |  |                                                                                                                      |  |  |    |     
|        |  | POST APARTMENT HOMES, L.P.                                                                                           |  |  |    |     
|        |  | Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002                                           |  |  | 17 |     
|        |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2003 and 2002                |  |  | 18 |     
|        |  | Consolidated
Statement of Partners Equity for the nine months ended September 30, 2003                              |  |  | 19 |     
|        |  | Consolidated
Statements of Cash Flows for the nine months ended September 30, 2003 and 2002                          |  |  | 20 |     
|        |  | Notes to Consolidated Financial Statements                                                                           |  |  | 21 |     
|        |  |                                                                                                                      |  |  |    |      |    | 
|        |  | Item 2      Managements Discussion and Analysis of Financial Condition and Results of Operations                    |  |  |    |      | 33 | 
|        |  | Item 3      Quantitative and Qualitative Disclosures about Market Risk                                               |  |  |    |      | 52 | 
|        |  | Item 4      Controls and Procedures                                                                                  |  |  |    |      | 53 | 
|        |  |                                                                                                                      |  |  |    |      |    | 
|Part II |  | OTHER INFORMATION                                                                                                    |  |  | 54 |     
|        |  |                                                                                                                      |  |  |    |      |    | 
|        |  | Item 1      Legal Proceedings                                                                                        |  |  |    |      | 54 | 
|        |  | Item 2      Changes in Securities and Use of Proceeds                                                                |  |  |    |      | 54 | 
|        |  | Item 3      Defaults Upon Senior Securities                                                                          |  |  |    |      | 54 | 
|        |  | Item 4      Submission of Matters to a Vote of Security Holders                                                      |  |  |    |      | 54 | 
|        |  | Item 5      Other Information                                                                                        |  |  |    |      | 54 | 
|        |  | Item 6      Exhibits and Reports on Form 8-K                                                                         |  |  |    |      | 54 | 
|        |  |                                                                                                                      |  |  |    |      |    | 
|        |  | Signatures                                                                                                           |  |  | 56 |     
|        |  | Exhibit Index                                                                                                        |  |  | 58 |     





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##### 



POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS(In thousands)

|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |           |           |           | 
|------------------------------------ | ------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------------- | --------- | ------------ | --------- | --------- | --------- | 
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           | September 30, |           | December 31,
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           | 2003          |           | 2002        
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |             
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           | (Unaudited)   |           |              |           |          
|Assets                               |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     | Real estate assets                                                  |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |           |          
|                                     |                                                                     | Land                                                                                                                                    |                                                                                                                                                 | $         | 254,000       |           |              | $         | 273,058   |          
|                                     |                                                                     | Buildings and improvements                                                                                                              |                                                                                                                                                 |           | 1,880,223     |           |              |           | 1,976,809 |          
|                                     |                                                                     | Furniture, fixtures and equipment                                                                                                       |                                                                                                                                                 |           | 211,791       |           |              |           | 246,634   |          
|                                     |                                                                     | Construction in progress                                                                                                                |                                                                                                                                                 |           | 12,466        |           |              |           | 92,945    |          
|                                     |                                                                     | Investments in and advances to unconsolidated real estate entities                                                                      |                                                                                                                                                 |           | 100,908       |           |              |           | 182,285   |          
|                                     |                                                                     | Land held for future development                                                                                                        |                                                                                                                                                 |           | 11,988        |           |              |           | 24,879    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     |                                                                     |                                                                                                                                         | 2,471,376                                                                                                                                       |           |               |           | 2,796,610    |          
|                                     |                                                                     | Less: accumulated depreciation                                                                                                          |                                                                                                                                                 |           | (411,312      | )         |              |           | (426,136  | )        
|                                     |                                                                     | Assets held for sale net of accumulated depreciation of $82,286 and $17,829 at
September 30, 2003 and December 31, 2002, respectively   |                                                                                                                                                 |           | 199,723       |           |              |           | 73,061    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     |                                                                     |                                                                                                                                         | Total real estate assets                                                                                                                        |           |               | 2,259,787 |              |           |           | 2,443,535 | 
|                                     | Cash and cash equivalents                                           |                                                                                                                                         |                                                                                                                                                 | 4,215     |               |           |              | 6,390     |          
|                                     | Restricted cash                                                     |                                                                                                                                         |                                                                                                                                                 | 2,024     |               |           |              | 1,369     |          
|                                     | Deferred charges, net                                               |                                                                                                                                         |                                                                                                                                                 | 13,171    |               |           |              | 15,584    |          
|                                     | Other assets                                                        |                                                                                                                                         |                                                                                                                                                 | 37,270    |               |           |              | 41,273    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     |                                                                     | Total assets                                                                                                                            |                                                                                                                                                 | $         | 2,316,467     |           |              | $         | 2,508,151 |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|Liabilities and shareholders equity |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     | Notes payable                                                       |                                                                                                                                         | $                                                                                                                                               | 1,255,280 |               |           | $            | 1,414,555 |          
|                                     | Accrued interest payable                                            |                                                                                                                                         |                                                                                                                                                 | 16,420    |               |           |              | 8,994     |          
|                                     | Dividend and distribution payable                                   |                                                                                                                                         |                                                                                                                                                 | 19,466    |               |           |              | 33,252    |          
|                                     | Accounts payable and accrued expenses                               |                                                                                                                                         |                                                                                                                                                 | 81,706    |               |           |              | 49,124    |          
|                                     | Security deposits and prepaid rents                                 |                                                                                                                                         |                                                                                                                                                 | 8,175     |               |           |              | 8,250     |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     |                                                                     | Total liabilities                                                                                                                       |                                                                                                                                                 |           | 1,381,047     |           |              |           | 1,514,175 |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     | Minority interest of preferred unitholders in Operating Partnership |                                                                                                                                         |                                                                                                                                                 | 70,000    |               |           |              | 70,000    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     | Minority interest of common unitholders in Operating Partnership    |                                                                                                                                         |                                                                                                                                                 | 72,714    |               |           |              | 90,277    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     | 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, 37,999,594 and 37,202,290 shares
outstanding at September 30, 2003 and December 31, 2002, respectively |           |               | 396       |              |           |           | 396       | 
|                                     |                                                                     | Additional paid-in capital                                                                                                              |                                                                                                                                                 |           | 873,197       |           |              |           | 940,122   |          
|                                     |                                                                     | Accumulated earnings                                                                                                                    |                                                                                                                                                 |           |              |           |              |           |          |          
|                                     |                                                                     | Accumulated other comprehensive income                                                                                                  |                                                                                                                                                 |           | (14,297       | )         |              |           | (14,822   | )        
|                                     |                                                                     | Deferred compensation                                                                                                                   |                                                                                                                                                 |           | (4,466        | )         |              |           | (639      | )        
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     |                                                                     |                                                                                                                                         | 854,879                                                                                                                                         |           |               |           | 925,106      |          
|                                     |                                                                     | Less common stock in treasury, at cost, 1,676,610 shares and 2,473,914 shares
at September 30, 2003 and December 31, 2002, respectively |                                                                                                                                                 |           | (62,173       | )         |              |           | (91,407   | )        
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     |                                                                     | Total shareholders equity                                                                                                              |                                                                                                                                                 |           | 792,706       |           |              |           | 833,699  
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          
|                                     |                                                                     | Total liabilities and shareholders equity                                                                                              |                                                                                                                                                 | $         | 2,316,467     |           |              | $         | 2,508,151 |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                 |           |               |           |              |          

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

-1-



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##### 



POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)
(Unaudited)

|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |            |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ---------------------------------------- | ------ | ------------------ | ------ | ----------------- | ----- | ---------- | ------ | ---- | ------- | ---------- | ------- | - | ------ | ---------- | ------- | 
|                                                                                                                                                    |                                                                                |                                          |        | Three months ended |        | Nine months ended
|                                                                                                                                                    |                                                                                |                                          |        | September 30,      |        | September 30,    
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                  
|                                                                                                                                                    |                                                                                |                                          |        | 2003               |        | 2002              |       | 2003       |        | 2002
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |     
|Revenues                                                                                                                                            |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Rental                                                                         |                                          | $      | 70,440             |        |                   | $     | 70,263     |        |      | $       | 208,785    |         |   | $      | 205,853    |        
|                                                                                                                                                    | Other                                                                          |                                          |        | 2,817              |        |                   |       | 2,667      |        |      |         | 7,967      |         |   |        | 8,219      |        
|                                                                                                                                                    | Interest                                                                       |                                          |        | 223                |        |                   |       | 316        |        |      |         | 708        |         |   |        | 1,002      |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    |                                                                                | Total revenues                           |        |                    | 73,480 |                   |       |            | 73,246 |      |         |            | 217,460 |   |        |            | 215,074 | 
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                   
|Expenses                                                                                                                                            |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Property operating and maintenance (exclusive of items shown separately below) |                                          |        | 31,247             |        |                   |       | 29,995     |        |      |         | 91,348     |         |   |        | 86,925     |        
|                                                                                                                                                    | Depreciation                                                                   |                                          |        | 21,553             |        |                   |       | 19,311     |        |      |         | 62,097     |         |   |        | 55,637     |        
|                                                                                                                                                    | Interest                                                                       |                                          |        | 17,122             |        |                   |       | 13,676     |        |      |         | 48,992     |         |   |        | 37,386     |        
|                                                                                                                                                    | Amortization of deferred financing costs                                       |                                          |        | 1,084              |        |                   |       | 588        |        |      |         | 2,840      |         |   |        | 1,711      |        
|                                                                                                                                                    | General and administrative                                                     |                                          |        | 3,735              |        |                   |       | 3,495      |        |      |         | 10,697     |         |   |        | 10,980     |        
|                                                                                                                                                    | Minority interest in consolidated property partnerships                        |                                          |        | (677               | )      |                   |       | (537       | )      |      |         | (1,359     | )       |   |        | (1,480     | )      
|                                                                                                                                                    | Other                                                                          |                                          |        | 277                |        |                   |       |           |        |      |         | 844        |         |   |        | 136        |        
|                                                                                                                                                    | Severance charges                                                              |                                          |        |                   |        |                   |       |           |        |      |         | 21,506     |         |   |        |           |        
|                                                                                                                                                    | Proxy and related costs                                                        |                                          |        |                   |        |                   |       |           |        |      |         | 5,231      |         |   |        |           |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    |                                                                                | Total expenses                           |        |                    | 74,341 |                   |       |            | 66,528 |      |         |            | 242,196 |   |        |            | 191,295 | 
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                   
|Income (loss) from continuing operations before equity in income (losses) of
unconsolidated entities, gains on property sales and minority interest |                                                                                |                                          | (861   | )                  |        |                   | 6,718 |            |        |      | (24,736 | )          |         |   | 23,779 |           
|                                                                                                                                                    | Equity in income (losses) of unconsolidated real estate entities               |                                          |        | 60                 |        |                   |       | (441       | )      |      |         | 7,768      |         |   |        | (1,284     | )      
|                                                                                                                                                    | Gains on property sales                                                        |                                          |        |                   |        |                   |       |           |        |      |         |           |         |   |        | 13,275     |        
|                                                                                                                                                    | Minority interest of preferred unitholders                                     |                                          |        | (1,400             | )      |                   |       | (1,400     | )      |      |         | (4,200     | )       |   |        | (4,200     | )      
|                                                                                                                                                    | Minority interest of common unitholders                                        |                                          |        | 457                |        |                   |       | (244       | )      |      |         | 3,160      |         |   |        | (2,791     | )      
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    |                                                                                | Income (loss) from continuing operations |        |                    | (1,744 | )                 |       |            | 4,633  |      |         |            | (18,008 | ) |        |            | 28,779  | 
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                   
|Discontinued operations                                                                                                                             |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Income (loss) from discontinued operations, net of minority interest           |                                          |        | 2,925              |        |                   |       | 3,426      |        |      |         | (3,584     | )       |   |        | 11,937     |        
|                                                                                                                                                    | Gains (losses) on properties held for sale and sold, net of minority interest  |                                          |        | (2,833             | )      |                   |       | (1,906     | )      |      |         | 27,044     |         |   |        | 7,520      |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    |                                                                                | Income from discontinued operations      |        |                    | 92     |                   |       |            | 1,520  |      |         |            | 23,460  |   |        |            | 19,457  | 
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                   
|Net income (loss)                                                                                                                                   |                                                                                |                                          | (1,652 | )                  |        |                   | 6,153 |            |        |      | 5,452   |            |         |   | 48,236 |           
|                                                                                                                                                    | Dividends to preferred shareholders                                            |                                          |        | (2,862             | )      |                   |       | (2,862     | )      |      |         | (8,587     | )       |   |        | (8,587     | )      
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Net income (loss) available to common shareholders                                                                                                  |                                                                                | $                                        | (4,514 | )                  |        | $                 | 3,291 |            |        | $    | (3,135  | )          |         | $ | 39,649 |           
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                   
|Per common share data  Basic                                                                                                                       |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Income (loss) from continuing operations (net of preferred dividends)          |                                          | $      | (0.12              | )      |                   | $     | 0.05       |        |      | $       | (0.71      | )       |   | $      | 0.55       |        
|                                                                                                                                                    | Income from discontinued operations                                            |                                          |        |                   |        |                   |       | 0.04       |        |      |         | 0.63       |         |   |        | 0.52       |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Net income (loss) available to common shareholders                             |                                          | $      | (0.12              | )      |                   | $     | 0.09       |        |      | $       | (0.08      | )       |   | $      | 1.07       |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Dividends declared                                                             |                                          | $      | 0.45               |        |                   | $     | 0.78       |        |      | $       | 1.35       |         |   | $      | 2.34       |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Weighted average common shares outstanding  basic                             |                                          |        | 37,840,954         |        |                   |       | 36,913,074 |        |      |         | 37,522,832 |         |   |        | 36,897,867 |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Weighted average common shares and units outstanding  basic                   |                                          |        | 42,189,895         |        |                   |       | 42,031,962 |        |      |         | 42,102,260 |         |   |        | 42,016,755 |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Per common share data  Diluted                                                                                                                     |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Income (loss) from continuing operations (net of preferred dividends)          |                                          | $      | (0.12              | )      |                   | $     | 0.05       |        |      | $       | (0.71      | )       |   | $      | 0.55       |        
|                                                                                                                                                    | Income from discontinued operations                                            |                                          |        |                   |        |                   |       | 0.04       |        |      |         | 0.63       |         |   |        | 0.52       |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Net income (loss) available to common shareholders                             |                                          | $      | (0.12              | )      |                   | $     | 0.09       |        |      | $       | (0.08      | )       |   | $      | 1.07       |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Dividends declared                                                             |                                          | $      | 0.45               |        |                   | $     | 0.78       |        |      | $       | 1.35       |         |   | $      | 2.34       |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Weighted average common shares outstanding  diluted                           |                                          |        | 37,857,411         |        |                   |       | 36,916,835 |        |      |         | 37,524,488 |         |   |        | 36,941,598 |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                                    | Weighted average common shares and units outstanding  diluted                 |                                          |        | 42,206,352         |        |                   |       | 42,035,723 |        |      |         | 42,103,916 |         |   |        | 42,060,486 |        
|                                                                                                                                                    |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           

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

-2-



---



##### 



POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
ACCUMULATED EARNINGS(In thousands)
(Unaudited)

|                                                                  |                                                                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |       |       |         |             |     |   |        |        |   |   |         |        |   |   |         |         |       | 
|----------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | -- | --------- | - | ------ | --- | ------- | - | ----------- | ------- | ------------- | - | ------------ | - | -------- | ----- | ----- | ------- | ----------- | --- | - | ------ | ------ | - | - | ------- | ------ | - | - | ------- | ------- | ----- | 
|                                                                  |                                                                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |       |       |         | 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, 2002  |                                                                                                                                                           | $                                                        | 49 |           |   | $      | 396 |         |   | $           | 940,122 |               |   | $            |  |          |       | $     | (14,822 | )           |     | $ | (639   | )      |   | $ | (91,407 | )      |   | $ | 833,699 |        
|                                                                  | Comprehensive income                                                                                                                                      |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |       |       |         |             |     |   |        |        |   |   |         |        |   |   |         |         |      
|                                                                  |                                                                                                                                                           | Net income                                               |    |           |  |        |     |         |  |             |         |               |  |              |   |          | 5,452 |       |         |             |    |   |        |        |  |   |         |        |  |   |         |         | 5,452 | 
|                                                                  |                                                                                                                                                           | Net change in derivative value, net of
minority interest |    |           |  |        |     |         |  |             |         |               |  |              |   |          |      |       |         |             | 525 |   |        |        |  |   |         |        |  |   |         |         | 525   | 
|                                                                  |                                                                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |       |       |         |             |     |   |        |        |   |   |         |        |   |   |         |        
|                                                                  |                                                                                                                                                           | Total comprehensive income                               |    |           |   |        |     |         |   |             |         |               |   |              |   |          |       |       |         |             |     |   |        |        |   |   |         |        |   |   |         |         | 5,977 | 
|                                                                  | Proceeds from Dividend Reinvestment and
Employee Stock Purchase Plans                                                                                     |                                                          |    |          |   |        |     |        |   |             |         | (214          | ) |              |   |         |       |       |         |            |     |   |        |       |   |   |         | 790    |   |   |         | 576     |      
|                                                                  | Adjustment for minority interest of
unitholders in Operating Partnership upon
conversion of units into common shares and at
dates of capital transactions |                                                          |    |          |   |        |     |        |   |             |         | (11,236       | ) |              |   |         |       |       |         |            |     |   |        |       |   |   |         | 22,435 |   |   |         | 11,199  |      
|                                                                  | Stock-based compensation                                                                                                                                  |                                                          |    |          |   |        |     |        |   |             |         | 179           |   |              |   |         |       |       |         |            |     |   |        |       |   |   |         |       |   |   |         | 179     |      
|                                                                  | Restricted stock issuances, net of forfeitures                                                                                                            |                                                          |    |          |   |        |     |        |   |             |         | (1,668        | ) |              |   |         |       |       |         |            |     |   |        | (4,341 | ) |   |         | 6,009  |   |   |         |        |      
|                                                                  | Amortization of deferred compensation                                                                                                                     |                                                          |    |          |   |        |     |        |   |             |         |              |   |              |   |         |       |       |         |            |     |   |        | 514    |   |   |         |       |   |   |         | 514     |      
|                                                                  | Dividends to preferred shareholders                                                                                                                       |                                                          |    |          |   |        |     |        |   |             |         |              |   |              |   | (8,587   | )     |       |         |            |     |   |        |       |   |   |         |       |   |   |         | (8,587  | )    
|                                                                  | Dividends to common shareholders                                                                                                                          |                                                          |    |          |   |        |     |        |   |             |         | (53,986       | ) |              |   | 3,135    |       |       |         |            |     |   |        |       |   |   |         |       |   |   |         | (50,851 | )    
|                                                                  |                                                                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |       |       |         |             |     |   |        |        |   |   |         |        |   |   |         |        
|Shareholders Equity and Accumulated Earnings,
September 30, 2003 |                                                                                                                                                           | $                                                        | 49 |           |   | $      | 396 |         |   | $           | 873,197 |               |   | $            |  |          |       | $     | (14,297 | )           |     | $ | (4,466 | )      |   | $ | (62,173 | )      |   | $ | 792,706 |        
|                                                                  |                                                                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |       |       |         |             |     |   |        |        |   |   |         |        |   |   |         |        

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

-3-



---



##### 



POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
(Unaudited)

|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |          |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------ | ----------------- | ------- | ---- | ----- | -------- | ------- | -
|                                                     |                                                                                   |                                                                      |        | Nine months ended
|                                                     |                                                                                   |                                                                      |        | September 30,    
|                                                     |                                                                                   |                                                                      |        |                  
|                                                     |                                                                                   |                                                                      |        | 2003              |         | 2002
|                                                     |                                                                                   |                                                                      |        |                   |         |     
|Cash Flows From Operating Activities                 |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Net income                                                                        |                                                                      | $      | 5,452             |         |      | $     | 48,236   |        
|                                                     | Adjustments to reconcile net income to net cash provided by operating
activities: |                                                                      |        |                   |         |      |       |          |        
|                                                     |                                                                                   | Minority interest of preferred unitholders in Operating Partnership  |        |                   | 4,200   |      |       |          | 4,200   |  
|                                                     |                                                                                   | Minority interest of common unitholders in Operating Partnership     |        |                   | (3,160  | )    |       |          | 2,791   |  
|                                                     |                                                                                   | Minority interest in discontinued operations                         |        |                   | 2,783   |      |       |          | 2,699   |  
|                                                     |                                                                                   | Equity in losses (income) of unconsolidated entities                 |        |                   | (7,768  | )    |       |          | 1,284   |  
|                                                     |                                                                                   | Gains on property sales   continuing operations                     |        |                   |        |      |       |          | (13,275 | )
|                                                     |                                                                                   | Gains on properties held for sale and sold  discontinued operations |        |                   | (30,345 | )    |       |          | (8,563  | )
|                                                     |                                                                                   | Asset impairment charge                                              |        |                   | 14,118  |      |       |          |        |  
|                                                     |                                                                                   | Stock-based compensation                                             |        |                   | 179     |      |       |          |        |  
|                                                     |                                                                                   | Depreciation                                                         |        |                   | 68,372  |      |       |          | 65,013  |  
|                                                     |                                                                                   | Amortization of deferred financing costs                             |        |                   | 2,840   |      |       |          | 1,711   |  
|                                                     | Changes in assets, (increase) decrease in:                                        |                                                                      |        |                   |         |      |       |          |        
|                                                     |                                                                                   | Restricted cash                                                      |        |                   | (655    | )    |       |          | 6       |  
|                                                     |                                                                                   | Other assets                                                         |        |                   | 4,046   |      |       |          | 1,568   |  
|                                                     |                                                                                   | Deferred charges                                                     |        |                   | (1,820  | )    |       |          | (1,740  | )
|                                                     | Changes in liabilities, increase (decrease) in:                                   |                                                                      |        |                   |         |      |       |          |        
|                                                     |                                                                                   | Accrued interest payable                                             |        |                   | 7,426   |      |       |          | 6,757   |  
|                                                     |                                                                                   | Accounts payable and accrued expenses                                |        |                   | 22,740  |      |       |          | (12,695 | )
|                                                     |                                                                                   | Security deposits and prepaid rents                                  |        |                   | (75     | )    |       |          | (604    | )
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Net cash provided by operating activities                                         |                                                                      |        | 88,333            |         |      |       | 97,388   |        
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|Cash Flows From Investing Activities                 |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Construction and acquisition of real estate assets, net of payables               |                                                                      |        | (22,247           | )       |      |       | (114,580 | )      
|                                                     | Net proceeds from property sales                                                  |                                                                      |        | 99,858            |         |      |       | 150,120  |        
|                                                     | Capitalized interest                                                              |                                                                      |        | (3,338            | )       |      |       | (11,293  | )      
|                                                     | Recurring capital expenditures                                                    |                                                                      |        | (6,982            | )       |      |       | (7,315   | )      
|                                                     | Corporate additions and improvements                                              |                                                                      |        | (521              | )       |      |       | (923     | )      
|                                                     | Non-recurring capital expenditures                                                |                                                                      |        | (3,231            | )       |      |       | (2,075   | )      
|                                                     | Revenue generating capital expenditures                                           |                                                                      |        | (837              | )       |      |       | (1,306   | )      
|                                                     | Distributions from (investment in and advances to) unconsolidated entities        |                                                                      |        | 88,935            |         |      |       | (38,663  | )      
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Net cash provided by (used in) investing activities                               |                                                                      |        | 151,637           |         |      |       | (26,035  | )      
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|Cash Flows From Financing Activities                 |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Payment of financing costs                                                        |                                                                      |        |                  |         |      |       | (150     | )      
|                                                     | Proceeds from notes payable                                                       |                                                                      |        |                  |         |      |       | 38,500   |        
|                                                     | Payments on notes payable                                                         |                                                                      |        | (3,207            | )       |      |       | (23,509  | )      
|                                                     | Lines of credit proceeds (repayments), net                                        |                                                                      |        | (156,068          | )       |      |       | 23,829   |        
|                                                     | Proceeds from Dividend Reinvestment and Employee Stock Purchase Plans             |                                                                      |        | 576               |         |      |       | 1,257    |        
|                                                     | Distributions to preferred unitholders                                            |                                                                      |        | (4,200            | )       |      |       | (4,200   | )      
|                                                     | Distributions to common unitholders                                               |                                                                      |        | (7,890            | )       |      |       | (11,979  | )      
|                                                     | Dividends paid to preferred shareholders                                          |                                                                      |        | (8,587            | )       |      |       | (8,587   | )      
|                                                     | Dividends paid to common shareholders                                             |                                                                      |        | (62,769           | )       |      |       | (86,271  | )      
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Net cash used in financing activities                                             |                                                                      |        | (242,145          | )       |      |       | (71,110  | )      
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|Net increase (decrease) in cash and cash equivalents |                                                                                   |                                                                      | (2,175 | )                 |         |      | 243   |         
|Cash and cash equivalents, beginning of period       |                                                                                   |                                                                      | 6,390  |                   |         |      | 4,803 |         
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|Cash and cash equivalents, end of period             |                                                                                   | $                                                                    | 4,215  |                   |         | $    | 5,046 |         
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         

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

-4-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|1. |  | ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | 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. The
Company owns 28,917 apartment units in 78 apartment communities, including
468 apartment units in two apartment communities under development and
lease-up. At September 30, 2003, approximately 51.9%, 19.6% and 7.7% (on a
unit basis) of the Companys communities were 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 September 30, 2003, the Company had outstanding 37,999,594 shares of
common stock and owned the same number of units of common limited partnership
interests (Common Units) in the Operating Partnership, representing 90.0%
ownership interest in the Operating Partnership. Common Units held by persons
(including two directors of the Company) other than the Company totaled
4,220,428 as of September 30, 2003 and represented a 10.0% 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 89.7% and 87.8% for the three months and 89.1% and
87.8% for the nine months ended September 30, 2003 and 2002, respectively.                                                                                                                                                                        
|  
|   |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | The accompanying unaudited financial statements have been prepared by the
Companys management in accordance with generally accepted accounting
principles for interim financial information and applicable rules and
regulations of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normally recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the three and nine month periods ended
September 30, 2003 are not necessarily indicative of the results that may be
expected for the full year. These financial statements should be read in
conjunction with the Companys audited financial statements and notes thereto
included in its Annual Report on Form 10-K for the year ended December 31,
2002. Certain 2002 amounts have been reclassified to conform to the current
years financial statement presentation.
|  
|   |  | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | On January 1, 2003, the Company elected to voluntarily change its method of
accounting for stock-based compensation to the fair value method prescribed
by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-Based Compensation, using the prospective method prescribed in
SFAS No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure. SFAS No. 148 also amended the disclosure requirements in both
annual and interim financial statements about the method of accounting used
for stock-based compensation and the effect of the method on reported
results. In prior periods, 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 the prospective method of adoption prescribed by SFAS No. 123 and SFAS
No. 148, the Company will reflect as an expense each period the estimated
cost of stock-based compensation, calculated under the Black-Scholes option
pricing model for stock options, for all stock-based compensation granted
after January 1, 2003. For stock-based compensation granted prior to
December 31, 2002, compensation expense was generally not recognized for
stock options granted at the Companys current stock price on the grant date.
As a result, the Companys general and administrative expenses may not be
comparable between periods. For the three and nine months ended September
30, 2003, general and administrative expenses included compensation expense
of $59 ($53, net of minority interest) and $179 ($159, net of minority
interest), respectively, recognized under the fair value method.                                                                                                                                                                                                        

-5-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | The following table reflects the effect on 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 period.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   |                                                                                                          |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|-------------------------------------------------- | -------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                   |                                                                                                          |  | Three months ended |        | Nine months ended
|                                                   |                                                                                                          |  | September 30,      |        | September 30,    
|                                                   |                                                                                                          |  |                    |        |                  
|                                                   |                                                                                                          |  | 2003               |        | 2002              |  | 2003 |       | 2002
|                                                   |                                                                                                          |  |                    |        |                   |  |      |       |     
|Net income (loss) available to common shareholders |                                                                                                          |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                   | As reported                                                                                              |  | $                  | (4,514 | )                 |  | $    | 3,291 |      |  | $ | (3,135 | ) |  | $ | 39,649 |  
|                                                   | Stock-based compensation included in net income as reported,
net of minority interest                    |  |                    | 53     |                   |  |      |      |      |  |   | 159    |   |  |   |       |  
|                                                   | Stock-based compensation determined under the fair value
method for all awards, net of minority interest |  |                    | (81    | )                 |  |      | (132  | )    |  |   | (263   | ) |  |   | (433   | )
|                                                   |                                                                                                          |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                   | Pro forma                                                                                                |  | $                  | (4,542 | )                 |  | $    | 3,159 |      |  | $ | (3,239 | ) |  | $ | 39,216 |  
|                                                   |                                                                                                          |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|Net income (loss) per common share  basic         |                                                                                                          |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                   | As reported                                                                                              |  | $                  | (0.12  | )                 |  | $    | 0.09  |      |  | $ | (0.08  | ) |  | $ | 1.07   |  
|                                                   | Pro forma                                                                                                |  | $                  | (0.12  | )                 |  | $    | 0.09  |      |  | $ | (0.09  | ) |  | $ | 1.06   |  
|                                                   |                                                                                                          |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|Net income (loss) per common share  diluted       |                                                                                                          |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                   | As reported                                                                                              |  | $                  | (0.12  | )                 |  | $    | 0.09  |      |  | $ | (0.08  | ) |  | $ | 1.07   |  
|                                                   | Pro forma                                                                                                |  | $                  | (0.12  | )                 |  | $    | 0.09  |      |  | $ | (0.09  | ) |  | $ | 1.06   |  



| |  | 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 below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | 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
adopted the requirements of SFAS No. 145 on January 1, 2003. The
implementation of the statement had no impact on the Companys results of
operations or financial position in the three and nine months ended September
30, 2003. In the second quarter of 2003, the Company reclassified $136 ($120
net of minority interest) of extraordinary items recorded in the second
quarter of 2002 from its prior period presentation as extraordinary items to
operating expenses used in the determination of income from continuing
operations. 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 implementation of this Statement did
not have a significant effect on the Companys results of operations or its
financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | 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 its December 31, 2002 financial
statements and adopted the recognition and measurement provisions effective
January 1, 2003. The adoption of the recognition and measurement provisions
of FIN No. 45 did not have a significant impact on the Companys financial
position or results of operations.                                                                                                                                                                                                                                                                                                                                                            

-6-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|   |  | 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, as amended, 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
December 31, 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 is evaluating its investments in
unconsolidated real estate entities to determine whether they fall within the
definition of variable interest entities. The Company believes that FIN No.
46 will not have a significant effect on its results of operations or
financial position.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity, was issued in May 2003.
SFAS No. 150 established standards for how an issuer classifies and measures
certain liabilities and equity. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise
effective at the beginning of the first quarterly period beginning after June
15, 2003. On October 29, 2003, the FASB deferred certain provisions of SFAS
No. 150, as they were to apply to non-controlling interests, in which
redemption is mandatory, in finite-lived entities. The deferral of these
provisions is expected to remain in effect until these issues are
incorporated into future FASB accounting standards. The Company has not
entered into any transactions involving financial instruments impacted by the
outstanding provisions of SFAS No. 150 and the implementation of SFAS No. 150
in the third quarter of 2003 had no effect on the
Companys financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                
|  
|2. |  | NOTES PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | At September 30, 2003 and December 31, 2002, the Companys indebtedness
consisted of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |           | 
|--------------------------------- | -------------------- | ----- | -------------- | ------------- |  | ------------ | ---------------- | ---- | -------- | --------- | ------------- |  | ------------ | ------- | ------- | --------- | - | ------- | ------- | --------- | 
|                                  |                      |       | Payment        |               |  |              |                  |      | Maturity |           | September 30, |  | December 31,
|Description                       |                      | Terms |                | Interest Rate |  | Date(1)      |                  | 2003 |          | 2002     
|                                  |                      |       |                |               |  |              |                  |      |          |          
|Unsecured Notes                   |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | Senior Notes         |       | Int.           |               |  | 6.11% - 7.70 | %                |      |          | 2003-2010 |               |  | $            | 385,000 |         |           | $ | 385,000 |        
|                                  | Medium Term Notes    |       | Int.           |               |  | 6.69% - 8.12 | %(2)             |      |          | 2004-2015 |               |  |              | 323,000 |         |           |   | 323,000 |        
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         | 708,000 |           |   |         | 708,000 |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|Unsecured Lines of Credit & Other |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | Revolver             |       |                | N/A           |  |              | LIBOR + 0.85%(3) |      |          | 2004      |               |  |              | 35,000  |         |           |   | 185,000 |        
|                                  | Cash Management Line |       |                | N/A           |  |              | LIBOR + 0.75%    |      |          | 2004      |               |  |              | 5,301   |         |           |   | 11,369  |        
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         | 40,301  |           |   |         | 196,369 |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|Conventional Fixed Rate (Secured) |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | FNMA                 |       | Prin. and
Int. |               |  | 6.975        | %(4)             |      |          | 2029      |               |  |              | 99,800  |         |           |   | 101,100 |        
|                                  | Other                |       | Prin. and
Int. |               |  | 5.50% - 7.69 | %                |      |          | 2007-2013 |               |  |              | 192,799 |         |           |   | 194,706 |        
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         | 292,599 |           |   |         | 295,806 |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|Tax Exempt Floating Rate          |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | Bonds (Secured)      |       | Int.           |               |  | 1.08         | %(5)             |      |          | 2025      |               |  |              | 214,380 |         |           |   | 214,380 |        
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | Total                |       |                |               |  |              |                  |      |          |           |               |  |              |         | $       | 1,255,280 |   |         | $       | 1,414,555 | 
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          



---

|(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 September 30, 2003, the average
interest rate was 1.98%.                                                                                                                                                                                                                                                                                  
|   
|(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 the rate at September 30, 2003
before credit enhancements. The Company has outstanding interest rate
cap arrangements that limit the Companys exposure to increases in the
base interest rate to 5%.

-7-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



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

|                  |  |   |           | 
|----------------- |  | - | --------- | 
|Remainder of 2003 |  | $ | 100,601   | 
|2004              |  |   | 27,094    | 
|2005              |  |   | 204,402   | 
|2006              |  |   | 79,732    | 
|2007              |  |   | 112,178   | 
|Thereafter        |  |   | 690,972   | 
|                  |  |   |           | 
|                  |  | $ | 1,214,979 | 
|                  |  |   |           | 



---

|(1) |  | Excludes outstanding balances on
lines of credit of $40,301 discussed below.
|--- |  | ----------------------------------------------------------------------------



|   |  | Debt retirements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Upon their maturity on October 1, 2003, the Company repaid $100,000 of its
7.25% senior, unsecured notes, using borrowings under its unsecured lines of
credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | Unsecured Lines of Credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | The Company utilizes a $320,000 three-year syndicated revolving line of
credit (the Revolver), for its short-term financing needs. At September
30, 2003, 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 prior to its maturity.
|  
|   |  | In July 2003, the Companys unsecured debt rating was downgraded from Baa2 to
Baa3 by Moodys Investor Services, resulting in a split unsecured debt rating
(Standard & Poors rates the Companys unsecured debt at BBB). Under the
terms of the credit agreement, the interest rate on the revolver will remain
at LIBOR plus 0.85% as the interest rate is based on the higher of the
Companys unsecured debt ratings. If Standard & Poors were to lower its
unsecured debt ratings one level, the interest rate on Revolver borrowings
would increase to LIBOR plus 1.10%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | 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 April 2004. Management expects to renew this facility at its
maturity. At September 30, 2003, there were letters of credit to third
parties totaling $963.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|3. |  | INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | At September 30, 2003, the Company holds investments in three individual
limited liability companies (the Property LLCs) with an institutional
investor. Each Property LLC owns a newly developed apartment community. At
September 30, 2003, two of the apartment communities had achieved stabilized
occupancy and one apartment community was in initial lease-up. The Company
holds a 35% equity interest in the Property LLCs. The initial development
costs of the apartment communities were funded through member equity
contributions proportionate to the members ownership interests and through
construction financing provided by the Company. In June 2003, the underlying
apartment community held by a fourth Property LLC was sold. The financial
information below for the nine months ended September 30, 2003 reflects the
gain on property sale of $8,395 and the operating results of this Property
LLC through the sale date. The Companys share of this gain is included in
the Companys share of net income (loss) shown in the table below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

-8-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | 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
$6,822 at September 30, 2003. 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 for which it earns fees.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | 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:                                                                                                                                                                                                                                                                                                                  

|                                                           |  |               |         |              |  |   |         | 
|---------------------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                                           |  | September 30, |         | December 31,
|                                                           |  | 2003          |         | 2002        
|                                                           |  |               |         |             
|Real estate assets, net                                    |  | $             | 128,278 |              |  | $ | 198,854 | 
|Cash and other                                             |  |               | 3,725   |              |  |   | 2,330   | 
|                                                           |  |               |         |              |  |   |         | 
|Total assets                                               |  | $             | 132,003 |              |  | $ | 201,184 | 
|                                                           |  |               |         |              |  |   |         | 
|                                                           |  |               |         |              |  |   |         | 
|Mortgage notes payable                                     |  | $             | 16,835  |              |  | $ |        | 
|Construction notes payable to Company (1)                  |  |               | 83,552  |              |  |   | 160,294 | 
|Other liabilities                                          |  |               | 1,593   |              |  |   | 3,975   | 
|                                                           |  |               |         |              |  |   |         | 
|Total liabilities                                          |  |               | 101,980 |              |  |   | 164,269 | 
|Members equity                                            |  |               | 30,023  |              |  |   | 36,915  | 
|                                                           |  |               |         |              |  |   |         | 
|Total liabilities and members equity                      |  | $             | 132,003 |              |  | $ | 201,184 | 
|                                                           |  |               |         |              |  |   |         | 
|                                                           |  |               |         |              |  |   |         | 
|Companys equity investment                                |  | $             | 17,356  |              |  | $ | 21,991  | 
|                                                           |  |               |         |              |  |   |         | 
|Companys share of mortgage and construction notes payable |  | $             | 35,136  |              |  | $ | 56,103  | 
|                                                           |  |               |         |              |  |   |         | 



---

|(1) |  | All of the Companys construction financing to
these unconsolidated real estate entities is
included in the Companys outstanding debt and real
estate assets. At September 30, 2003 and December
31, 2002, the venture partners share of the
construction loans was $54,309 and $104,191,
respectively.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |   |        |       | 
|---------------------------------------- |  | ------------------------------------------ | -------------- | - | ------------------ | ----- | ----------------- | - | ----- | ----- | ------ | - | ------ | ----- | ------ | - | ------ | ----- | 
|                                         |  |                                            |                |   | Three months ended |       | Nine months ended
|                                         |  |                                            |                |   | September 30,      |       | September 30,    
|                                         |  |                                            |                |   |                    |       |                  
|                                         |  |                                            |                |   | 2003               |       | 2002              |   | 2003  |       | 2002  
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |       
|Revenues                                 |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|                                         |  | Rental                                     |                | $ | 2,638              |       |                   | $ | 1,006 |       |        | $ | 6,434  |       |        | $ | 1,888  |      
|                                         |  | Other                                      |                |   | 130                |       |                   |   | 85    |       |        |   | 357    |       |        |   | 225    |      
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|                                         |  |                                            | Total revenues |   |                    | 2,768 |                   |   |       | 1,091 |        |   |        | 6,791 |        |   |        | 2,113 | 
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|Expenses                                 |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|                                         |  | Property operating and maintenance         |                |   | 866                |       |                   |   | 665   |       |        |   | 3,301  |       |        |   | 1,796  |      
|                                         |  | Depreciation                               |                |   | 954                |       |                   |   | 502   |       |        |   | 2,798  |       |        |   | 1,343  |      
|                                         |  | Interest                                   |                |   | 777                |       |                   |   | 450   |       |        |   | 2,296  |       |        |   | 1,058  |      
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|                                         |  |                                            | Total expenses |   |                    | 2,597 |                   |   |       | 1,617 |        |   |        | 8,395 |        |   |        | 4,197 | 
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|Income (loss) from continuing operations |  |                                            | 171            |   |                    |       | (526              | ) |       |       | (1,604 | ) |        |       | (2,084 | )
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|Discontinued operations                  |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|                                         |  | Loss from discontinued operations          |                |   |                   |       |                   |   | (700  | )     |        |   | (188   | )     |        |   | (1,553 | )    
|                                         |  | Gain on property sale                      |                |   |                   |       |                   |   |      |       |        |   | 26,179 |       |        |   |       |      
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|                                         |  | Income (loss) from discontinued operations |                |   |                   |       |                   |   | (700  | )     |        |   | 25,991 |       |        |   | (1,553 | )    
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|Net income (loss)                        |  | $                                          | 171            |   |                    | $     | (1,226            | ) |       | $     | 24,387 |   |        | $     | (3,637 | )
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  
|Companys share of net income (loss)     |  | $                                          | 60             |   |                    | $     | (441              | ) |       | $     | 7,768  |   |        | $     | (1,284 | )
|                                         |  |                                            |                |   |                    |       |                   |   |       |       |        |   |        |       |        |  



| |  | The Company has committed construction financing to two Property LLCs
totaling $85,491 ($83,552 funded at September 30, 2003). These loans earn
interest at LIBOR plus 1.75% and are secured by the apartment communities.
The loans mature on dates ranging from November 2003 to November 2004 and are
expected to be repaid from the proceeds of permanent project financings. In
the first quarter of 2003, one of the Property LLCs repaid its outstanding
construction note payable to the Company of $24,071 through the proceeds from
a third-party non-recourse permanent mortgage note totaling $17,000 and from
additional member equity contributions. The mortgage note bears interest at
4.28%, requires monthly principal and interest payments based on a 30-year
amortization schedule and matures in March 2008. 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.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-9-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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. 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 the Property LLC. Additionally,
under these agreements, the Company is subject to project completion date
requirements, as defined. At September 30, 2003, the Company had met its
remaining completion date requirements and will not be subject to any
additional costs.                                                                                                                                                                                                                                                                                                                                       
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|4. |  | 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 September 30, 2003, the Company had
classified 11 apartment communities, containing 5,175 units, and multiple
tracts of land as held for sale. These real estate assets are reflected in
the accompanying consolidated balance sheet at $199,723, which represents the
lower of depreciated cost or fair value less costs to sell.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | One of the 11 properties discussed above, a 166-unit apartment community,
located in Atlanta, GA, is currently under contract to be sold to an entity
controlled by L. Barry Teague, a unitholder who served as a director of the
Company from February 2003 to September 2003. Mr. Teague was the high bidder
for the asset in an auction sales process conducted by a third-party broker.
The contract with Mr. Teague stipulates that approximately 40% of the $13,000
purchase price will consist of a redemption of a portion of Mr. Teagues
partnership units in the Operating Partnership that owns substantially all of
the Companys assets. Partnership units are convertible, on a one-for-one
basis, into shares of the Company, or into cash at the Companys option. The
redemption price per unit has been set at $24.83, which is a discount of 10%
to the average daily closing price of the Companys common stock on the New
York Stock Exchange for the twenty consecutive trading days prior to the
effective date of the contract.
|  
|   |  | Under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, the operating results of real estate assets designated as held for
sale subsequent to January 1, 2002 are included in discontinued operations in
the consolidated statement of operations for all periods presented. Also
under the provisions of SFAS No. 144, the reserves, if any, to write down the
carrying value of real estate assets designated and classified as held for
sale after January 1, 2002 are included in discontinued operations. All
subsequent gains or additional losses on the sale of these assets are also
included in discontinued operations. Additionally under SFAS No. 144, any
impairment losses on assets held for continuing use are included in
continuing operations.                                                                                                                                                                                                                                                         
|  
|   |  | For the three and nine months ended September 30, 2003, income from
discontinued operations included the results of operations of the 11
communities, containing 5,175 units, classified as held for sale at September
30, 2003 and the results of operations of communities sold in 2003 through
their sale date. For the three and nine months ended September 30, 2002,
income from discontinued operations included the results of operations of all
communities classified as held for sale at September 30, 3003, communities
sold in 2003 and the results of operations of communities and commercial
properties sold in 2002 through their sale dates.                                                                                                                                                                                                                                                                                                                                                                                           

-10-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | The revenues and expenses of these communities for the three and nine months
ended September 30, 2003 and 2002 were as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------

|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |        |        | 
|------------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------- | ----- | ------------------ | ------ | ----------------- | ----- | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                    |                                                                                |                |       | Three months ended |        | Nine months ended
|                                                                    |                                                                                |                |       | September 30,      |        | September 30,    
|                                                                    |                                                                                |                |       |                    |        |                  
|                                                                    |                                                                                |                |       | 2003               |        | 2002              |       | 2003   |        | 2002
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |     
|Revenues                                                            |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    | Rental                                                                         |                | $     | 9,918              |        |                   | $     | 14,085 |        |      | $      | 32,837 |        |   | $      | 46,746 |       
|                                                                    | Other                                                                          |                |       | 510                |        |                   |       | 644    |        |      |        | 1,521  |        |   |        | 2,025  |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    |                                                                                | Total revenues |       |                    | 10,428 |                   |       |        | 14,729 |      |        |        | 34,358 |   |        |        | 48,771 | 
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Expenses                                                            |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    | Property operating and maintenance
(exclusive of items shown separately below) |                |       | 4,196              |        |                   |       | 5,772  |        |      |        | 13,482 |        |   |        | 18,966 |       
|                                                                    | Depreciation                                                                   |                |       | 1,610              |        |                   |       | 2,816  |        |      |        | 6,276  |        |   |        | 8,640  |       
|                                                                    | Interest                                                                       |                |       | 1,361              |        |                   |       | 2,240  |        |      |        | 4,584  |        |   |        | 7,572  |       
|                                                                    | Asset impairment charge                                                        |                |       |                   |        |                   |       |       |        |      |        | 14,118 |        |   |        |       |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    |                                                                                | Total expenses |       |                    | 7,167  |                   |       |        | 10,828 |      |        |        | 38,460 |   |        |        | 35,178 | 
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Income (loss) from discontinued operations
before minority interest |                                                                                |                | 3,261 |                    |        |                   | 3,901 |        |        |      | (4,102 | )      |        |   | 13,593 |       
|                                                                    | Minority interest                                                              |                |       | (336               | )      |                   |       | (475   | )      |      |        | 518    |        |   |        | (1,656 | )     
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Income (loss) from discontinued operations                          |                                                                                | $              | 2,925 |                    |        | $                 | 3,426 |        |        | $    | (3,584 | )      |        | $ | 11,937 |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       



| |  | During the third quarter of 2003, the Company reclassified an impairment loss
of $14,118 from continuing operations to discontinued operations. The
impairment loss, originally recorded in the first quarter 2003, related to
the write-down of the net book value of the Companys apartment community
located in Phoenix, Arizona to its estimated fair value. The
reclassification of the impairment loss to income (loss) from discontinued
operations in the nine months ended September 30, 2003 reflects the
designation of this community as held for sale during the third quarter of
2003.                                                                                                                                                                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For the three months ended September 30, 2003, the Company recognized net
losses from discontinued operations of $3,344 ($2,999 net of minority
interest), resulting from the reserve to write-down to fair value one
community containing 474 units classified as held for sale during the period reduced by gains of
$185 ($166 net of minority interest) from the sale of land. For the nine
months ended September 30, 2003, the Company recognized net gains from
discontinued operations of $35,102 ($31,283 net of minority interest) on the
sale of two communities containing 1,009 units and a land parcel, reduced by
losses of $4,757 ($4,239 net of minority interest) resulting from losses on
the sale of certain land parcels and reserves to write-down to fair value one
community and certain other land parcels classified as held for sale.
|
| |  | For the three months ended September 30, 2002, the Company recognized net
losses of $2,170 ($1,906 net of minority interest) on the sale of one
apartment community and reserves to write-down to fair value certain other
land parcels classified as held for sale during the period. For the nine
months ended September 30, 2002, the Company recognized net gains of $18,065
($15,875 net of minority interest) on the sale of five apartment communities,
containing 1,617 units and one commercial property offset by losses of $9,502
($8,355 net of minority interest) to write-down to fair value an apartment
community, a commercial property and certain parcels classified as held for
sale during the period.                                                                                                                                     
|
| |  | Under prior accounting pronouncement FAS 121, 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
may not be comparable between periods. In the first quarter of 2002, the
Company recognized net gains in continuing operations of approximately
$13,275 on the sale of two apartment communities containing 540 units and
one commercial property.                                                                                                                                                                                                                                                                                                  

-11-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|5. |  | EARNINGS PER SHARE                                                                                                                                                                                                               
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | For the three and nine months ended September 30, 2003 and 2002, a
reconciliation of the numerator and denominator used in the computation of
basic and diluted income from continuing operations per common share is as
follows:

|                                                                                       |                                                                           |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |            |  
|-------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- |  | ------------------ | ---------- | ----------------- |  | ---- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                       |                                                                           |  | Three months ended |            | Nine months ended
|                                                                                       |                                                                           |  | September 30,      |            | September 30     
|                                                                                       |                                                                           |  |                    |            |                  
|                                                                                       |                                                                           |  | 2003               |            | 2002              |  | 2003 |            | 2002
|                                                                                       |                                                                           |  |                    |            |                   |  |      |            |     
|Income (loss) from continuing operations available to common
shareholders (numerator): |                                                                           |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|                                                                                       | Income (loss) from continuing operations                                  |  | $                  | (1,744     | )                 |  | $    | 4,633      |      |  | $ | (18,008    | ) |  | $ | 28,779     |  
|                                                                                       | Less: Preferred stock dividends                                           |  |                    | (2,862     | )                 |  |      | (2,862     | )    |  |   | (8,587     | ) |  |   | (8,587     | )
|                                                                                       |                                                                           |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|                                                                                       | Income (loss) from continuing operations available to
common shareholders |  | $                  | (4,606     | )                 |  | $    | 1,771      |      |  | $ | (26,595    | ) |  | $ | 20,192     |  
|                                                                                       |                                                                           |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|Common shares (denominator):                                                           |                                                                           |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|                                                                                       | Weighted average shares outstanding  basic                               |  |                    | 37,840,954 |                   |  |      | 36,913,074 |      |  |   | 37,522,832 |   |  |   | 36,897,867 |  
|                                                                                       | Incremental shares from assumed conversion of stock options               |  |                    | 16,457     |                   |  |      | 3,761      |      |  |   | 1,656      |   |  |   | 43,731     |  
|                                                                                       |                                                                           |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|                                                                                       | Weighted average shares outstanding  diluted                             |  |                    | 37,857,411 |                   |  |      | 36,916,835 |      |  |   | 37,524,488 |   |  |   | 36,941,598 |  
|                                                                                       |                                                                           |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           



|At September 30, 2003,
stock options to purchase 4,932,996 shares of common stock were
excluded from the computation of diluted earnings per common share as
these stock options were anti-dilutive.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | DERIVATIVE FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | At September 30, 2003 and 2002, the Company had outstanding interest rate
swap agreements with a notional value of $129,000 with maturity dates ranging
from 2005 to 2009. The Company recorded unrealized net gains of $3,296, net
of minority interest, and an unrealized net loss of $6,205, net of minority
interest, for the three months ended September 30, 2003 and 2002
respectively, and net gains of $525, net of minority interest, and net losses
of $8,929, net of minority interest, for the nine months ended September 30,
2003 and 2002, respectively, on these cash flow hedges as an increase in
accumulated other comprehensive income, a shareholders equity account, in
the accompanying consolidated balance sheet. Within the next twelve months,
the Company expects to reclassify out of accumulated other comprehensive
income approximately $6,121.                                                                                                                                   
|  
|   |  | In the first quarter of 2003, 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 the interest rate exposure protection under the terms of the
financing arrangements. The interest rate cap arrangements are included on
the accompanying balance sheet at fair value. At September 30, 2003, the
difference of $1,019, net of minority interest, between the amortized costs
of the interest rate cap arrangements of $2,720 and their fair value of
$1,701 is included in accumulated other comprehensive income, a shareholders
equity account. The $2,720 cost of the arrangements is being amortized as
additional expense over their five-year term in accordance with SFAS No. 133,
as amended.
|  
|   |  | Comprehensive income for the three and nine months ended September 30, 2003
totaled $1,647 and $5,977, respectively, as summarized on the consolidated
statement of shareholders equity and accumulated earnings. The
comprehensive loss for the three months ended September 30, 2002 totaled $51
and consisted of net income of $6,153 less the net change in the value of the
derivatives discussed above of ($6,204). Comprehensive income for the nine
months ended September 30, 2002 totaled $39,307 and consisted of net income
of $48,236 less the net change in the value of the derivatives discussed
above of $8,929.                                                                                                                                                                                                                                                                                                                                                                                  

-12-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|7. |  | 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 apartment community rental operations. Apartment
community rental operations are broken down into four segments based on the
various stages in the apartment community ownership lifecycle. These segments
are described below. All commercial properties and other ancillary service
and support operations are aggregated in the line item other in the
accompanying segment information.



| |  |  | 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 2002  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 prior year and
not reflected as discontinued operations (see note 4).                                                                                                                 



| |  | Segment Performance Measure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Management uses contribution to consolidated property net operating income
(NOI) as the performance measure for its operating segments. The Company
uses net operating income, including net operating income of stabilized
communities, as an operating measure. Net operating income is defined as
rental and other revenue from real estate operations less total property and
maintenance expenses from real estate operations (excluding depreciation and
amortization). The Company believes that net operating income is an
important supplemental measure of operating performance for a REITs
operating real estate because it provides a measure of the core operations,
rather than factoring in depreciation and amortization, financing costs and
general and administrative expenses generally incurred at the corporate
level. This measure is particularly useful, in the opinion of the Company,
in evaluating the performance of geographic operations, operating segment
groupings and individual properties. Additionally, the Company believes that
net operating income, as defined, is a widely accepted measure of comparative
operating performance in the real estate investment community. The Company
believes that the line on the Companys consolidated statement of operations
entitled income (loss) from continuing operations is the most directly
comparable GAAP measure to net operating income.

-13-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The following table reflects each segments contribution to consolidated
revenues and property NOI together with a reconciliation of segment
contribution to property NOI 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.

|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|------------------------------------------------------- | --------------------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                        |                       |   | Three months ended |        | Nine months ended
|                                                        |                       |   | September 30,      |        | September 30,    
|                                                        |                       |   |                    |        |                  
|                                                        |                       |   | 2003               |        | 2002              |   | 2003    |        | 2002
|                                                        |                       |   |                    |        |                   |   |         |        |     
|Revenues                                                |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Fully stabilized communities                            |                       | $ | 55,974             |        |                   | $ | 58,007  |        |      | $ | 166,541 |         |  | $ | 173,436 |        
|Communities stabilized during 2002                      |                       |   | 7,749              |        |                   |   | 7,228   |        |      |   | 23,566  |         |  |   | 18,533  |        
|Development and lease-up communities                    |                       |   | 4,282              |        |                   |   | 2,511   |        |      |   | 11,614  |         |  |   | 5,975   |        
|Sold communities                                        |                       |   |                   |        |                   |   |        |        |      |   |        |         |  |   | 745     |        
|Other                                                   |                       |   | 5,252              |        |                   |   | 5,184   |        |      |   | 15,031  |         |  |   | 15,383  |        
|Interest income                                         |                       |   | 223                |        |                   |   | 316     |        |      |   | 708     |         |  |   | 1,002   |        
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                        | Consolidated revenues |   | $                  | 73,480 |                   |   | $       | 73,246 |      |   | $       | 217,460 |  |   | $       | 215,074 | 
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Contribution to NOI                                     |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Fully stabilized communities                            |                       | $ | 35,247             |        |                   | $ | 37,483  |        |      | $ | 105,980 |         |  | $ | 113,376 |        
|Communities stabilized during 2002                      |                       |   | 4,794              |        |                   |   | 4,306   |        |      |   | 15,109  |         |  |   | 10,423  |        
|Development and lease-up communities                    |                       |   | 2,212              |        |                   |   | 1,169   |        |      |   | 5,940   |         |  |   | 3,056   |        
|Sold communities                                        |                       |   |                   |        |                   |   |        |        |      |   |        |         |  |   | 369     |        
|Other                                                   |                       |   | (243               | )      |                   |   | (23     | )      |      |   | (1,625  | )       |  |   | (77     | )      
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Consolidated net operating income                       |                       |   | 42,010             |        |                   |   | 42,935  |        |      |   | 125,404 |         |  |   | 127,147 |        
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Interest income                                         |                       |   | 223                |        |                   |   | 316     |        |      |   | 708     |         |  |   | 1,002   |        
|Minority interest in consolidated property partnerships |                       |   | 677                |        |                   |   | 537     |        |      |   | 1,359   |         |  |   | 1,480   |        
|Gains on property sales                                 |                       |   |                   |        |                   |   |        |        |      |   |        |         |  |   | 13,,275 |        
|Depreciation                                            |                       |   | (21,553            | )      |                   |   | (19,311 | )      |      |   | (62,097 | )       |  |   | (55,637 | )      
|Interest                                                |                       |   | (17,122            | )      |                   |   | (13,676 | )      |      |   | (48,992 | )       |  |   | (37,386 | )      
|Amortization of deferred loan costs                     |                       |   | (1,084             | )      |                   |   | (588    | )      |      |   | (2,840  | )       |  |   | (1,711  | )      
|General and administrative                              |                       |   | (3,735             | )      |                   |   | (3,495  | )      |      |   | (10,697 | )       |  |   | (10,980 | )      
|Other expenses                                          |                       |   | (277               | )      |                   |   |        |        |      |   | (844    | )       |  |   | (136    | )      
|Severance charges                                       |                       |   |                   |        |                   |   |        |        |      |   | (21,506 | )       |  |   |        |        
|Proxy and related costs                                 |                       |   |                   |        |                   |   |        |        |      |   | (5,231  | )       |  |   |        |        
|Equity in losses of unconsolidated real estate entities |                       |   | 60                 |        |                   |   | (441    | )      |      |   | 7,768   |         |  |   | (1,284  | )      
|Minority interest of preferred unitholders              |                       |   | (1,400             | )      |                   |   | (1,400  | )      |      |   | (4,200  | )       |  |   | (4,200  | )      
|Minority interest of common unitholders                 |                       |   | 457                |        |                   |   | (244    | )      |      |   | 3,160   |         |  |   | (2,791  | )      
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Income (loss) from continuing operations                |                       | $ | (1,744             | )      |                   | $ | 4,633   |        |      | $ | (18,008 | )       |  | $ | 28,779  |        
|                                                        |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        



|8. |  | SEVERANCE AND PROXY CHARGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In the second quarter of 2003, the Company recorded severance charges of
$1,795 ($1,598 net of minority interest) relating to the departures of its
executive vice president and chief financial officer and its executive vice
president of asset management. In addition, the Company recorded the actual
and estimated costs associated with the recently concluded proxy contest of
$5,231 ($4,658 net of minority interest). In the first quarter of 2003, the
Company recorded severance charges of $19,711 ($17,467 net of minority
interest) relating to the change in roles from executive to non-executive
status of the Companys former chairman and vice-chairman of the board of
directors.                                                                                                                                                                                                                        
|  
|   |  | The severance charges recorded in the second quarter of 2003 represented the
aggregate amount of the estimated payments and benefits to be made to the
departing executive officers. The severance charges recorded in the first
quarter of 2003 consisted of a $13,994 charge representing the discounted
present value of the estimated payments to be made to the former chairman and
vice-chairman under their existing employment arrangements and a $5,718
charge representing the discounted present value of estimated net costs that
may be incurred by the Company as a result of the settlement of split-dollar
life insurance obligations to the individuals under their employment
contracts. The estimated charge for the settlement of the split-dollar life
insurance obligations may change based upon a final legal determination
regarding these insurance contracts and a final settlement among the parties.

-14-



---



##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | As discussed above, the Company recorded severance charges in the first and
second quarters of 2003. The following table summarizes the activity
relating to the accrued severance charges for the period from the date of the
charges through September 30, 2003:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                |  |   |        |  
|----------------------------------------------- |  | - | ------ | -
|Aggregate severance charges                     |  | $ | 21,506 |  
|Payments for period                             |  |   | (2,173 | )
|Interest accretion                              |  |   | 627    |  
|                                                |  |   |        |  
|Accrued severance charges at September 30, 2003 |  | $ | 19,960 |  
|                                                |  |   |        |  



|    |  | Substantially all of these remaining amounts will be paid over the remaining
terms of the former executives employment contracts (10 to 13 years).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Proxy and related costs of $5,231 represent the actual and estimated legal,
advisory and other expenses associated with the solicitation of proxies from
shareholders resulting from the proxy contest initiated in April 2003 by the
Companys former chairman and current chairman emeritus of the board of
directors. Additionally, the $5,231 amount includes the estimated legal and
resolution costs associated with the settlement of two derivative and
purported class action lawsuits filed against the Company during the proxy
contest. These lawsuits are expected to be settled subsequent to September
30, 2003. Through September 30, 2003, substantially all of the proxy and
related costs have been paid.                                                    
|   
|9.  |  | SUPPLEMENTAL CASH FLOW INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | Non-cash investing and financing activities for the nine months ended
September 30, 2003 and 2002 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | During the nine months ended September 30, 2003, the Companys derivative
financial instruments (see note 6) increased in value causing a decrease in
accounts payable and accrued expenses and a corresponding increase in
shareholders equity of $525, net of minority interest. During the nine
months ended September 30, 2002, the Companys derivative financial
instruments decreased in value causing an increase in accounts payable and
accrued expenses and a corresponding increase in shareholders equity of
$8,929, net of minority interest.                                                                                                                                                                                                                   
|   
|    |  | During the nine months ended September 30, 2003, holders of 608,997 units in
the Operating Partnership exercised their option to convert their units to
shares of common stock of the Company on a one-for-one basis. These
conversions and adjustments for the dilutive impact of the dividend
reinvestment and employee stock purchase and option plans and other capital
transactions result in adjustments to minority interest. The net effect of
the conversions and adjustments was a reclassification decreasing minority
interest and increasing shareholders equity in the amounts of $11,199 and
$67 for the nine months ended September 30, 2003 and 2002, respectively.                                                                                           
|   
|10. |  | STOCK-BASED COMPENSATION PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | During the three and nine months ended September 30, 2003, the Company
granted 124,087 and 167,077 shares, respectively, of restricted stock to
company officers and directors, of which 7,672 shares were granted to the
Companys non-executive Chairman of the Board. The restricted shares vest
ratably over periods ranging from three to eight years. The total value of
the restricted share grants, net of forfeitures, of $3,235 and $4,341 for the
three and nine months ended September 30, 2003, respectively, 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.
|   
|    |  | Additionally, in the three and nine months ended September 30, 2003, the
Company granted stock options to purchase 789,500 and 1,184,936 shares of
company common stock to company officers and directors, of which 100,000
shares were granted to the Companys non-executive Chairman of the Board. As
discussed in note 1, the Company expenses the estimated costs of stock
options over their three to five-year vesting periods.                                                                                                                                                                                                                                                                                                                                          

-15-



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##### 



POST PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|11. |  | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On May 5, 2003, the Company received notice that a shareholder derivative and
purported class action lawsuit was filed against members of the board of
directors of the Company, including John Williams, and the Company as a
nominal defendant. This complaint was filed in the Superior Court of Fulton
County, Atlanta, Georgia on May 2, 2003 and alleges various breaches of
fiduciary duties by the board of directors of the Company and seeks, among
other relief, the disclosure of certain information by the defendants. This
complaint also seeks to compel the defendants to undertake various actions to
facilitate a sale of the Company. On May 7, 2003, the plaintiff made a
request for voluntary expedited discovery. On May 13, 2003, the Company
received notice that a shareholder derivative and purported class action
lawsuit was filed against certain members of the board of directors of the
Company and against the Company as a nominal defendant. Mr. Williams was not
named as a defendant in the lawsuit. The complaint was filed in the Superior
Court of Fulton County, Atlanta, Georgia on May 12, 2003 and alleges breaches
of fiduciary duties, abuse of control and corporate waste by the defendants.
The plaintiff seeks monetary damages and, as appropriate, injunctive relief.
These lawsuits are expected to be settled subsequent to September 30, 2003.
The estimated legal and settlement costs, not covered by insurance,
associated with the expected resolution of the lawsuits were recorded in the
second quarter of 2003 as a component of the proxy and related costs charge.
|   
|    |  | 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, will not have a material adverse effect on the
Companys results of operations or financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

-16-



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##### 



POST APARTMENT HOMES, L.P.
CONSOLIDATED BALANCE SHEETS(In thousands)

|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |              |           |           |  | 
|-------------------------------- | ------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | --------- | --------- | ------------- | --------- | ------------ | --------- | --------- |  | 
|                                 |                                       |                                                                                                                                       |                          |           |           | September 30, |           | December 31,
|                                 |                                       |                                                                                                                                       |                          |           |           | 2003          |           | 2002        
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       |                                                                                                                                       |                          |           |           | (Unaudited)   |           |              |           |          
|Assets                           |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 | Real estate assets                    |                                                                                                                                       |                          |           |           |               |           |              |          
|                                 |                                       | Land                                                                                                                                  |                          | $         | 254,000   |               |           | $            | 273,058   |          
|                                 |                                       | Buildings and improvements                                                                                                            |                          |           | 1,880,223 |               |           |              | 1,976,809 |          
|                                 |                                       | Furniture, fixtures and equipment                                                                                                     |                          |           | 211,791   |               |           |              | 246,634   |          
|                                 |                                       | Construction in progress                                                                                                              |                          |           | 12,466    |               |           |              | 92,945    |          
|                                 |                                       | Investments in and advances to unconsolidated real estate entities                                                                    |                          |           | 100,908   |               |           |              | 182,285   |          
|                                 |                                       | Land held for future development                                                                                                      |                          |           | 11,988    |               |           |              | 24,879    |          
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       |                                                                                                                                       | 2,471,376                |           |           |               | 2,796,610 |             
|                                 |                                       | Less: accumulated depreciation                                                                                                        |                          |           | (411,312  | )             |           |              | (426,136  | )        
|                                 |                                       | Assets held for sale net of accumulated depreciation of $82,286 and $17,829 at
September 30, 2003 and December 31, 2002, respectively |                          |           | 199,723   |               |           |              | 73,061    |          
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       |                                                                                                                                       | Total real estate assets |           |           | 2,259,787     |           |              |           | 2,443,535 | 
|                                 | Cash and cash equivalents             |                                                                                                                                       |                          | 4,215     |           |               |           | 6,390        |          
|                                 | Restricted cash                       |                                                                                                                                       |                          | 2,024     |           |               |           | 1,369        |          
|                                 | Deferred charges, net                 |                                                                                                                                       |                          | 13,171    |           |               |           | 15,584       |          
|                                 | Other assets                          |                                                                                                                                       |                          | 37,270    |           |               |           | 41,273       |          
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       | Total assets                                                                                                                          |                          | $         | 2,316,467 |               |           | $            | 2,508,151 |          
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|Liabilities and partners equity |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 | Notes payable                         |                                                                                                                                       | $                        | 1,255,280 |           |               | $         | 1,414,555    |          
|                                 | Accrued interest payable              |                                                                                                                                       |                          | 16,420    |           |               |           | 8,994        |          
|                                 | Distribution payable                  |                                                                                                                                       |                          | 19,466    |           |               |           | 33,252       |          
|                                 | Accounts payable and accrued expenses |                                                                                                                                       |                          | 81,706    |           |               |           | 49,124       |          
|                                 | Security deposits and prepaid rents   |                                                                                                                                       |                          | 8,175     |           |               |           | 8,250        |          
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       | Total liabilities                                                                                                                     |                          |           | 1,381,047 |               |           |              | 1,514,175 |          
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 | Commitments and contingencies         |                                                                                                                                       |                          |           |           |               |           |              |          
|                                 | Partners equity                      |                                                                                                                                       |                          |           |           |               |           |              |          
|                                 |                                       | Preferred units                                                                                                                       |                          |           | 215,000   |               |           |              | 215,000   |          
|                                 |                                       | Common units                                                                                                                          |                          |           |           |               |           |              |           |          
|                                 |                                       |                                                                                                                                       | General partner          |           |           | 8,552         |           |              |           | 9,143     | 
|                                 |                                       |                                                                                                                                       | Limited partners         |           |           | 728,157       |           |              |           | 786,682   | 
|                                 |                                       | Accumulated other comprehensive income (loss)                                                                                         |                          |           | (16,289   | )             |           |              | (16,849   | )        
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       | Total partners equity                                                                                                                |                          |           | 935,420   |               |           |              | 993,976   |          
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             
|                                 |                                       | Total liabilities and partners equity                                                                                                |                          | $         | 2,316,467 |               |           | $            | 2,508,151 |          
|                                 |                                       |                                                                                                                                       |                          |           |           |               |           |             

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

-17-



---



##### 



POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per unit data)
(Unaudited)

|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |            |         | 
|-------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ---------------------------------------- | ------ | ------------------ | ------ | ----------------- | ----- | ---------- | ------ | ---- | ------- | ---------- | ------- | - | ------ | ---------- | ------- | 
|                                                                                                                                 |                                                                                |                                          |        | Three months ended |        | Nine months ended
|                                                                                                                                 |                                                                                |                                          |        | September 30,      |        | September 30,    
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                  
|                                                                                                                                 |                                                                                |                                          |        | 2003               |        | 2002              |       | 2003       |        | 2002
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |     
|Revenues                                                                                                                         |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Rental                                                                         |                                          | $      | 70,440             |        |                   | $     | 70,263     |        |      | $       | 208,785    |         |   |        | 205,853    |        
|                                                                                                                                 | Other                                                                          |                                          |        | 2,817              |        |                   |       | 2,667      |        |      |         | 7,967      |         |   |        | 8,219      |        
|                                                                                                                                 | Interest                                                                       |                                          |        | 223                |        |                   |       | 316        |        |      |         | 708        |         |   |        | 1,002      |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                | Total revenues                           |        |                    | 73,480 |                   |       |            | 73,246 |      |         |            | 217,460 |   |        |            | 215,074 | 
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Expenses                                                                                                                         |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Property operating and maintenance (exclusive of items shown separately
below) |                                          |        | 31,247             |        |                   |       | 29,995     |        |      |         | 91,348     |         |   |        | 86,925     |        
|                                                                                                                                 | Depreciation                                                                   |                                          |        | 21,553             |        |                   |       | 19,311     |        |      |         | 62,097     |         |   |        | 55,637     |        
|                                                                                                                                 | Interest                                                                       |                                          |        | 17,122             |        |                   |       | 13,676     |        |      |         | 48,992     |         |   |        | 37,386     |        
|                                                                                                                                 | Amortization of deferred financing costs                                       |                                          |        | 1,084              |        |                   |       | 588        |        |      |         | 2,840      |         |   |        | 1,711      |        
|                                                                                                                                 | General and administrative                                                     |                                          |        | 3,735              |        |                   |       | 3,495      |        |      |         | 10,697     |         |   |        | 10,980     |        
|                                                                                                                                 | Minority interest in consolidated property partnerships                        |                                          |        | (677               | )      |                   |       | (537       | )      |      |         | (1,359     | )       |   |        | (1,480     | )      
|                                                                                                                                 | Other                                                                          |                                          |        | 277                |        |                   |       |           |        |      |         | 844        |         |   |        | 136        |        
|                                                                                                                                 | Severance charges                                                              |                                          |        |                   |        |                   |       |           |        |      |         | 21,506     |         |   |        |           |        
|                                                                                                                                 | Proxy and related costs                                                        |                                          |        |                   |        |                   |       |           |        |      |         | 5,231      |         |   |        |           |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                | Total expenses                           |        |                    | 74,341 |                   |       |            | 66,528 |      |         |            | 242,196 |   |        |            | 191,295 | 
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Income (loss) from continuing operations before equity in income (losses)
of unconsolidated entities and gains on property sales |                                                                                |                                          | (861   | )                  |        |                   | 6,718 |            |        |      | (24,736 | )          |         |   | 23,779 |           
|                                                                                                                                 | Equity in income (losses) of unconsolidated real estate entities               |                                          |        | 60                 |        |                   |       | (441       | )      |      |         | 7,768      |         |   |        | (1,284     | )      
|                                                                                                                                 | Gains on property sales                                                        |                                          |        |                   |        |                   |       |           |        |      |         |           |         |   |        | 13,275     |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                | Income (loss) from continuing operations |        |                    | (801   | )                 |       |            | 6,277  |      |         |            | (16,968 | ) |        |            | 35,770  | 
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Discontinued operations                                                                                                          |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Income (loss) from discontinued operations                                     |                                          |        | 3,261              |        |                   |       | 3,901      |        |      |         | (4,102     | )       |   |        | 13,593     |        
|                                                                                                                                 | Gains (losses) on properties held for sale and sold                            |                                          |        | (3,159             | )      |                   |       | (2,170     | )      |      |         | 30,345     |         |   |        | 8,563      |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                | Income from discontinued operations      |        |                    | 102    |                   |       |            | 1,731  |      |         |            | 26,243  |   |        |            | 22,156  | 
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Net income (loss)                                                                                                                |                                                                                |                                          | (699   | )                  |        |                   | 8,008 |            |        |      | 9,275   |            |         |   | 57,926 |           
|                                                                                                                                 | Distributions to preferred unitholders                                         |                                          |        | (4,262             | )      |                   |       | (4,262     | )      |      |         | (12,787    | )       |   |        | (12,787    | )      
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Net income (loss) available to common unitholders                                                                                |                                                                                | $                                        | (4,961 | )                  |        | $                 | 3,746 |            |        | $    | (3,512  | )          |         | $ | 45,139 |           
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Per common unit data  Basic                                                                                                     |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Income (loss) from continuing operations (net of preferred distributions)      |                                          | $      | (0.12              | )      |                   | $     | 0.05       |        |      | $       | (0.71      | )       |   | $      | 0.55       |        
|                                                                                                                                 | Income from discontinued operations                                            |                                          |        |                   |        |                   |       | 0.04       |        |      |         | 0.63       |         |   |        | 0.52       |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Net income (loss) available to common unitholders                              |                                          | $      | (0.12              | )      |                   | $     | 0.09       |        |      | $       | (0.08      | )       |   | $      | 1.07       |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Distributions declared                                                         |                                          | $      | 0.45               |        |                   | $     | 0.78       |        |      | $       | 1.35       |         |   | $      | 2.34       |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Weighted average common units outstanding  basic                              |                                          |        | 42,189,895         |        |                   |       | 42,031,962 |        |      |         | 42,102,260 |         |   |        | 42,016,755 |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|Per common unit data  Diluted                                                                                                   |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Income (loss) from continuing operations (net of preferred distributions)      |                                          | $      | (0.12              | )      |                   | $     | 0.05       |        |      | $       | (0.71      | )       |   | $      | 0.55       |        
|                                                                                                                                 | Income from discontinued operations                                            |                                          |        |                   |        |                   |       | 0.04       |        |      |         | 0.63       |         |   |        | 0.52       |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Net income (loss) available to common unitholders                              |                                          | $      | (0.12              | )      |                   | $     | 0.09       |        |      | $       | (0.08      | )       |   | $      | 1.07       |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Distributions declared                                                         |                                          | $      | 0.45               |        |                   | $     | 0.78       |        |      | $       | 1.35       |         |   | $      | 2.34       |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           
|                                                                                                                                 | Weighted average common units outstanding  diluted                            |                                          |        | 42,206,352         |        |                   |       | 42,035,723 |        |      |         | 42,103,916 |         |   |        | 42,060,486 |        
|                                                                                                                                 |                                                                                |                                          |        |                    |        |                   |       |            |        |      |         |            |         |   |        |           

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

-18-



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##### 



POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS EQUITY(In thousands)
(Unaudited)

|                                     |                                                                                                            |                                |         |           |        |         |       |              |     |               |         |         |        |   |         |   |     |   |         |         |       | 
|------------------------------------ | ---------------------------------------------------------------------------------------------------------- | ------------------------------ | ------- | --------- | ------ | ------- | ----- | ------------ | --- | ------------- | ------- | ------- | ------ | - | ------- | - | --- | - | ------- | ------- | ----- | 
|                                     |                                                                                                            |                                |         |           |        |         |       | Common Units |     | Accumulated   |         |         |        |  
|                                     |                                                                                                            |                                |         |           |        |         |       |              |     | Other         |         |         |        |  
|                                     |                                                                                                            |                                |         | Preferred |        | General |       | Limited      |     | Comprehensive |         |         |        |  
|                                     |                                                                                                            |                                |         | Units     |        | Partner |       | Partners     |     | Income        |         | Total  
|                                     |                                                                                                            |                                |         |           |        |         |       |              |     |               |         |        
|Partners Equity, December 31, 2002  |                                                                                                            | $                              | 215,000 |           |        | $       | 9,143 |              |     | $             | 786,682 |         |        | $ | (16,849 | ) |     | $ | 993,976 |        
|                                     | Comprehensive income                                                                                       |                                |         |           |        |         |       |              |     |               |         |         |        |   |         |   |     |   |         |         |      
|                                     |                                                                                                            | Net income                     |         |           | 12,787 |         |       |              | (35 | )             |         |         | (3,477 | ) |         |   |    |   |         |         | 9,275 | 
|                                     |                                                                                                            | Net change in derivative value |         |           |       |         |       |              |    |               |         |         |       |   |         |   | 560 |   |         |         | 560   | 
|                                     |                                                                                                            |                                |         |           |        |         |       |              |     |               |         |         |        |   |         |   |     |   |         |        
|                                     |                                                                                                            | Total comprehensive income     |         |           |        |         |       |              |     |               |         |         |        |   |         |   |     |   |         |         | 9,835 | 
|                                     | Contributions from the Company related
to Dividend Reinvestment and Employee
Stock Purchase Plans          |                                |         |          |        |         |       | 6            |     |               |         | 570     |        |   |         |  |     |   |         | 576     |      
|                                     | Stock-based compensation                                                                                   |                                |         |          |        |         |       | 2            |     |               |         | 177     |        |   |         |  |     |   |         | 179     |      
|                                     | Distributions to preferred Unitholders                                                                     |                                |         | (12,787   | )      |         |       |             |     |               |         |        |        |   |         |  |     |   |         | (12,787 | )    
|                                     | Distributions to common Unitholders                                                                        |                                |         |          |        |         |       | (569         | )   |               |         | (56,305 | )      |   |         |  |     |   |         | (56,874 | )    
|                                     | Contributions from the Company related
to shares issued for restricted stock,
net of deferred compensation |                                |         |          |        |         |       | 5            |     |               |         | 510     |        |   |         |  |     |   |         | 515     |      
|                                     |                                                                                                            |                                |         |           |        |         |       |              |     |               |         |         |        |   |         |   |     |   |         |        
|Partners Equity, September 30, 2003 |                                                                                                            | $                              | 215,000 |           |        | $       | 8,552 |              |     | $             | 728,157 |         |        | $ | (16,289 | ) |     | $ | 935,420 |        
|                                     |                                                                                                            |                                |         |           |        |         |       |              |     |               |         |         |        |   |         |   |     |   |         |        

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

-19-



---



##### 



POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
(Unaudited)

|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |          |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------ | ----------------- | ------- | ---- | ----- | -------- | ------- | -
|                                                     |                                                                                   |                                                                      |        | Nine months ended
|                                                     |                                                                                   |                                                                      |        | September 30,    
|                                                     |                                                                                   |                                                                      |        |                  
|                                                     |                                                                                   |                                                                      |        | 2003              |         | 2002
|                                                     |                                                                                   |                                                                      |        |                   |         |     
|Cash Flows From Operating Activities                 |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Net income                                                                        |                                                                      | $      | 9,275             |         |      | $     | 57,926   |        
|                                                     | Adjustments to reconcile net income to net cash provided by operating
activities: |                                                                      |        |                   |         |      |       |          |        
|                                                     |                                                                                   | Gains on property sales   continuing operations                     |        |                   |        |      |       |          | (13,275 | )
|                                                     |                                                                                   | Gains on properties held for sale and sold  discontinued operations |        |                   | (30,345 | )    |       |          | (8,563  | )
|                                                     |                                                                                   | Asset impairment charge                                              |        |                   | 14,118  |      |       |          |        |  
|                                                     |                                                                                   | Equity in losses (income) of unconsolidated entities                 |        |                   | (7,768  | )    |       |          | 1,284   |  
|                                                     |                                                                                   | Stock-based compensation                                             |        |                   | 179     |      |       |          |        |  
|                                                     |                                                                                   | Depreciation                                                         |        |                   | 68,372  |      |       |          | 65,013  |  
|                                                     |                                                                                   | Amortization of deferred financing costs                             |        |                   | 2,840   |      |       |          | 1,711   |  
|                                                     | Changes in assets, (increase) decrease in:                                        |                                                                      |        |                   |         |      |       |          |        
|                                                     |                                                                                   | Restricted cash                                                      |        |                   | (655    | )    |       |          | 6       |  
|                                                     |                                                                                   | Other assets                                                         |        |                   | 4,046   |      |       |          | 1,568   |  
|                                                     |                                                                                   | Deferred charges                                                     |        |                   | (1,820  | )    |       |          | (1,740  | )
|                                                     | Changes in liabilities, increase (decrease) in:                                   |                                                                      |        |                   |         |      |       |          |        
|                                                     |                                                                                   | Accrued interest payable                                             |        |                   | 7,426   |      |       |          | 6,757   |  
|                                                     |                                                                                   | Accounts payable and accrued expenses                                |        |                   | 22,740  |      |       |          | (12,695 | )
|                                                     |                                                                                   | Security deposits and prepaid rents                                  |        |                   | (75     | )    |       |          | (604    | )
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Net cash provided by operating activities                                         |                                                                      |        | 88,333            |         |      |       | 97,388   |        
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|Cash Flows From Investing Activities                 |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Construction and acquisition of real estate assets, net of payables               |                                                                      |        | (22,247           | )       |      |       | (114,580 | )      
|                                                     | Net proceeds from property sales                                                  |                                                                      |        | 99,858            |         |      |       | 150,120  |        
|                                                     | Capitalized interest                                                              |                                                                      |        | (3,338            | )       |      |       | (11,293  | )      
|                                                     | Recurring capital expenditures                                                    |                                                                      |        | (6,982            | )       |      |       | (7,315   | )      
|                                                     | Corporate additions and improvements                                              |                                                                      |        | (521              | )       |      |       | (923     | )      
|                                                     | Non-recurring capital expenditures                                                |                                                                      |        | (3,231            | )       |      |       | (2,075   | )      
|                                                     | Revenue generating capital expenditures                                           |                                                                      |        | (837              | )       |      |       | (1,306   | )      
|                                                     | Distributions from (investment in and advances to) unconsolidated entities        |                                                                      |        | 88,935            |         |      |       | (38,663  | )      
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Net cash provided by (used in) investing activities                               |                                                                      |        | 151,637           |         |      |       | (26,035  | )      
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|Cash Flows From Financing Activities                 |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Payment of financing costs                                                        |                                                                      |        |                  |         |      |       | (150     | )      
|                                                     | Proceeds from notes payable                                                       |                                                                      |        |                  |         |      |       | 38,500   |        
|                                                     | Payments on notes payable                                                         |                                                                      |        | (3,207            | )       |      |       | (23,509  | )      
|                                                     | Lines of credit proceeds (repayments), net                                        |                                                                      |        | (156,068          | )       |      |       | 23,829   |        
|                                                     | Proceeds from Dividend Reinvestment and Employee Stock Purchase Plans             |                                                                      |        | 576               |         |      |       | 1,257    |        
|                                                     | Distributions to preferred unitholders                                            |                                                                      |        | (12,787           | )       |      |       | (12,787  | )      
|                                                     | Distributions to common unitholders                                               |                                                                      |        | (70,659           | )       |      |       | (98,250  | )      
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|                                                     | Net cash used in financing activities                                             |                                                                      |        | (242,145          | )       |      |       | (71,110  | )      
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|Net increase (decrease) in cash and cash equivalents |                                                                                   |                                                                      | (2,175 | )                 |         |      | 243   |         
|Cash and cash equivalents, beginning of period       |                                                                                   |                                                                      | 6,390  |                   |         |      | 4,803 |         
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         
|Cash and cash equivalents, end of period             |                                                                                   | $                                                                    | 4,215  |                   |         | $    | 5,046 |         
|                                                     |                                                                                   |                                                                      |        |                   |         |      |       |         

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

-20-



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##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|1. |  | ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | 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 September 30, 2003, the Company owned 90.0% 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 89.7% and 87.8% for the three months and 89.1% and 87.8% for
the nine months ended September 30, 2003 and 2002, respectively. At
September 30, 2003, Common Units held by persons (including three directors
of the Company) other than the Company represented an 10.0% 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.
|  
|   |  | The Operating Partnership owns 28,917 apartment units in 78 apartment
communities, including 468 apartment units under development and lease-up in
two apartment communities. At September 30, 2003, approximately 51.9%, 19.6%
and 7.7% (on a unit basis) of the Companys communities were 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 unaudited financial statements have been prepared by the
Operating Partnerships management in accordance with generally accepted
accounting principles for interim financial information and applicable rules
and regulations of the Securities and Exchange Commission. Accordingly, they
do not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normally recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the three and nine month periods ended
September 30, 2003 are not necessarily indicative of the results that may be
expected for the full year. These financial statements should be read in
conjunction with the Operating Partnerships audited financial statements and
notes thereto included in its Annual Report on Form 10-K for the year ended
December 31, 2002. Certain 2002 amounts have been reclassified to conform to
the current years financial statement presentation.                                                                                                                                                                                                                                                                                                                                                                  

-21-



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##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On January 1, 2003, the Operating Partnership elected to voluntarily change
its method of accounting for stock-based compensation to the fair value
method prescribed by Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation, using the prospective method
prescribed in SFAS No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure. SFAS No. 148 also amended the disclosure
requirements in both annual and interim financial statements about the method
of accounting used for stock-based compensation and the effect of the method
on reported results. In prior periods, 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 the prospective method of adoption prescribed by SFAS No. 123 and SFAS
No. 148, the Operating Partnership will reflect as an expense each period the
estimated cost of stock-based compensation, calculated under the
Black-Scholes option pricing model for stock options, for all stock-based
compensation granted after January 1, 2003. For stock-based compensation
granted prior to December 31, 2002, compensation expense was generally not
recognized for stock options granted at the Companys current stock price on
the grant date. As a result, the Operating Partnerships general and
administrative expenses may not be comparable between periods. For the three
and nine months ended September 30, 2003, general and administrative expenses
included compensation expense of $59 and $179, respectively, recognized under
the fair value method.
|
| |  | 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 period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                                                  |                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|------------------------------------------------- | ------------------------------------------------------------------------------ |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                  |                                                                                |  | Three months ended |        | Nine months ended
|                                                  |                                                                                |  | September 30,      |        | September 30,    
|                                                  |                                                                                |  |                    |        |                  
|                                                  |                                                                                |  | 2003               |        | 2002              |  | 2003 |       | 2002
|                                                  |                                                                                |  |                    |        |                   |  |      |       |     
|Net income (loss) available to common unitholders |                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                  | As reported                                                                    |  | $                  | (4,961 | )                 |  | $    | 3,746 |      |  | $ | (3,512 | ) |  | $ | 45,139 |  
|                                                  | Stock-based compensation included in net income as reported                    |  |                    | 59     |                   |  |      |      |      |  |   | 179    |   |  |   |       |  
|                                                  | Stock-based compensation determined under the fair value
method for all awards |  |                    | (90    | )                 |  |      | (150  | )    |  |   | (295   | ) |  |   | (493   | )
|                                                  |                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                  | Pro forma                                                                      |  | $                  | (4,992 | )                 |  | $    | 3,596 |      |  | $ | (3,628 | ) |  | $ | 44,646 |  
|                                                  |                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                  |                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|Net income (loss) per common unit  basic         |                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                  | As reported                                                                    |  |                    | (0.12  | )                 |  |      | 0.09  |      |  |   | (0.08  | ) |  |   | 1.07   |  
|                                                  | Pro forma                                                                      |  |                    | (0.12  | )                 |  |      | 0.09  |      |  |   | (0.09  | ) |  |   | 1.06   |  
|                                                  |                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|Net income (loss) per common unit  diluted       |                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       
|                                                  | As reported                                                                    |  |                    | (0.12  | )                 |  |      | 0.09  |      |  |   | (0.08  | ) |  |   | 1.07   |  
|                                                  | Pro forma                                                                      |  |                    | (0.12  | )                 |  |      | 0.09  |      |  |   | (0.09  | ) |  |   | 1.06   |  



| |  | 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 below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | 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 adopted the requirements of SFAS No.
145 on January 1, 2003. The implementation of the statement had no impact on
the Operating Partnerships results of operations or financial position in
the three and nine months ended September 30, 2003. In the second quarter of
2003, the Operating Partnership reclassified $136 of extraordinary items
recorded in the second quarter of 2002 from its prior period presentation as
extraordinary items to operating expenses used in

-22-



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##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | the determination of income from continuing operations. 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 implementation of this Statement did
not have a significant effect on the Operating Partnerships results of
operations or its financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | 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 its December 31,
2002 financial statements and adopted the recognition and measurement
provisions effective January 1, 2003. The adoption of the recognition and
measurement provisions of FIN No. 45 did not 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, as amended, 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 December 31, 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 is evaluating its investments in unconsolidated
real estate entities to determine whether they fall within the definition of
variable interest entities. The Operating Partnership believes that FIN No.
46 will not have a significant effect on its results of operations or
financial position.
|
| |  | SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity, was issued in May 2003.
SFAS No. 150 established standards for how an issuer classifies and measures
certain liabilities and equity. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise
effective at the beginning of the first quarterly period beginning after June
15, 2003. On October 29, 2003, the FASB deferred certain provisions of SFAS No.
150, as they were to apply to non-controlling interests, in which redemption
is mandatory, in finite-lived entities. The deferral of these provisions is
expected to remain in effect until these issues are incorporated into future
FASB accounting standards. The Operating Partnership has not entered into
any transactions involving financial instruments impacted by the outstanding
provisions of SFAS No. 150 and the implementation of SFAS No. 150 in the
third quarter of 2003 had no effect on the Operating
Partnerships financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                          

-23-



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|2. |  | NOTES PAYABLE                                                                                                    
|-- |  | -----------------------------------------------------------------------------------------------------------------
|  
|   |  | At September 30, 2003 and December 31, 2002, the Operating Partnerships
indebtedness consisted of the following:

|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |           | 
|--------------------------------- | -------------------- | ----- | -------------- | ------------- |  | ------------ | ---------------- | ---- | -------- | --------- | ------------- |  | ------------ | ------- | ------- | --------- | - | ------- | ------- | --------- | 
|                                  |                      |       | Payment        |               |  |              |                  |      | Maturity |           | September 30, |  | December 31,
|Description                       |                      | Terms |                | Interest Rate |  | Date(1)      |                  | 2003 |          | 2002     
|                                  |                      |       |                |               |  |              |                  |      |          |          
|Unsecured Notes                   |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | Senior Notes         |       | Int.           |               |  | 6.11% - 7.70 | %                |      |          | 2003-2010 |               |  | $            | 385,000 |         |           | $ | 385,000 |        
|                                  | Medium Term Notes    |       | Int.           |               |  | 6.69% - 8.12 | %(2)             |      |          | 2004-2015 |               |  |              | 323,000 |         |           |   | 323,000 |        
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         | 708,000 |           |   |         | 708,000 |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|Unsecured Lines of Credit & Other |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | Revolver             |       |                | N/A           |  |              | LIBOR + 0.85%(3) |      |          | 2004      |               |  |              | 35,000  |         |           |   | 185,000 |        
|                                  | Cash Management Line |       |                | N/A           |  |              | LIBOR + 0.75%    |      |          | 2004      |               |  |              | 5,301   |         |           |   | 11,369  |        
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         | 40,301  |           |   |         | 196,369 |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|Conventional Fixed Rate (Secured) |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | FNMA                 |       | Prin. and Int. |               |  | 6.975        | %(4)             |      |          | 2029      |               |  |              | 99,800  |         |           |   | 101,100 |        
|                                  | Other                |       | Prin. and Int. |               |  | 5.50% - 7.69 | %                |      |          | 2007-2013 |               |  |              | 192,799 |         |           |   | 194,706 |        
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         | 292,599 |           |   |         | 295,806 |          
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|Tax Exempt Floating Rate          |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | Bonds (Secured)      |       | Int.           |               |  | 1.08         | %(5)             |      |          | 2025      |               |  |              | 214,380 |         |           |   | 214,380 |        
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          
|                                  | Total                |       |                |               |  |              |                  |      |          |           |               |  |              |         | $       | 1,255,280 |   |         | $       | 1,414,555 | 
|                                  |                      |       |                |               |  |              |                  |      |          |           |               |  |              |         |         |           |   |         |         |          



---

|(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 September 30, 2003, the average
interest rate was 1.98%.                                                                                                                                                                                                                                                                                                              
|   
|(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 the rate at September 30, 2003
before credit enhancements. The Operating Partnership has outstanding
interest rate cap arrangements that limit the Operating Partnerships
exposure to increases in the base interest rate to 5%.



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

|                  |  |   |           | 
|----------------- |  | - | --------- | 
|Remainder of 2003 |  | $ | 100,601   | 
|2004              |  |   | 27,094    | 
|2005              |  |   | 204,402   | 
|2006              |  |   | 79,732    | 
|2007              |  |   | 112,178   | 
|Thereafter        |  |   | 690,972   | 
|                  |  |   |           | 
|                  |  | $ | 1,214,979 | 
|                  |  |   |           | 



---

|(2) |  | Excludes outstanding balances on
lines of credit of $40,301 discussed below.
|--- |  | ----------------------------------------------------------------------------



| |  | Debt retirements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Upon their maturity on October 1, 2003, the Operating Partnership repaid
$100,000 of its 7.25% senior, unsecured notes, using borrowings under its
unsecured lines of credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | 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 needs. At
September 30, 2003, 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

-24-



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|   |  | 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 prior to its maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In July 2003, the Operating Partnerships unsecured debt rating was
downgraded from Baa2 to Baa3 by Moodys Investor Services, resulting in a
split unsecured debt rating (Standard & Poors rates the Operating
Partnerships unsecured debt at BBB). Under the terms of the credit
agreement, the interest rate on the revolver will remain at LIBOR plus 0.85%
as the interest rate is based on the higher of the Operating Partnerships
unsecured debt ratings. If Standard & Poors were to lower its unsecured
debt ratings one level, the interest rate on Revolver borrowings would
increase to LIBOR plus 1.10%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | 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 April 2004. Management expects to renew this facility at its
maturity. At September 30, 2003, there were letters of credit to third
parties totaling $963.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|3. |  | INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | At September 30, 2003, the Operating Partnership holds investments in three
individual limited liability companies (the Property LLCs) with an
institutional investor. Each Property LLC owns a newly developed apartment
community. At September 30, 2003, two of the apartment communities had
achieved stabilized occupancy and one apartment community was in initial
lease-up. The Operating Partnership holds a 35% equity interest in the
Property LLCs. The initial development costs of the apartment communities
were funded through member equity contributions proportionate to the members
ownership interests and through construction financing provided by the
Operating Partnership. In June 2003, the underlying apartment community held
by a fourth Property LLC was sold. The financial information below for the
nine months ended September 30, 2003 reflects the gain on property sale of
$8,395 and the operating results of this Property LLC through the sale date.
The Operating Partnerships share of this gain is included in the Operating
Partnerships share of net income (loss) shown in the table below.
|  
|   |  | 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 $6,822 at September 30, 2003. 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 for which it earns fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                                                                         |  |               |         |              |  |   |         | 
|------------------------------------------------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                                                         |  | September 30, |         | December 31,
|                                                                         |  | 2003          |         | 2002        
|                                                                         |  |               |         |             
|Real estate assets, net                                                  |  | $             | 128,278 |              |  | $ | 198,854 | 
|Cash and other                                                           |  |               | 3,725   |              |  |   | 2,330   | 
|                                                                         |  |               |         |              |  |   |         | 
|Total assets                                                             |  | $             | 132,003 |              |  | $ | 201,184 | 
|                                                                         |  |               |         |              |  |   |         | 
|                                                                         |  |               |         |              |  |   |         | 
|Mortgage notes payable                                                   |  | $             | 16,835  |              |  | $ |        | 
|Construction notes payable to Operating Partnership (1)                  |  |               | 83,552  |              |  |   | 160,294 | 
|Other liabilities                                                        |  |               | 1,593   |              |  |   | 3,975   | 
|                                                                         |  |               |         |              |  |   |         | 
|Total liabilities                                                        |  |               | 101,980 |              |  |   | 164,269 | 
|Members equity                                                          |  |               | 30,023  |              |  |   | 36,915  | 
|                                                                         |  |               |         |              |  |   |         | 
|Total liabilities and members equity                                    |  | $             | 132,003 |              |  | $ | 201,184 | 
|                                                                         |  |               |         |              |  |   |         | 
|Operating Partnerships equity investment                                |  | $             | 17,356  |              |  | $ | 21,991  | 
|                                                                         |  |               |         |              |  |   |         | 
|Operating Partnerships share of mortgage and construction notes payable |  | $             | 35,136  |              |  | $ | 56,103  | 
|                                                                         |  |               |         |              |  |   |         | 



---

|(1) |  | All of the Operating Partnerships construction
financing to these unconsolidated real estate
entities is included in the Operating Partnerships
outstanding debt and real estate assets. At
September 30, 2003 and December 31, 2002, the
venture partners share of the construction loans
was $54,309 and $104,191, respectively.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-25-



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)

|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |        |        |       | 
|----------------------- | ---------------------------------------------- | ------------------------------------------ | -------------- | --- | ------------------ | ----- | ----------------- | ------ | ----- | ----- | ---- | ------ | ------ | ----- | - | ------ | ------ | ----- | 
|                        |                                                |                                            |                |     | Three months ended |       | Nine months ended
|                        |                                                |                                            |                |     | September 30,      |       | September 30,    
|                        |                                                |                                            |                |     |                    |       |                  
|                        |                                                |                                            |                |     | 2003               |       | 2002              |        | 2003  |       | 2002
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |     
|Revenues                |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        |                                                | Rental                                     |                | $   | 2,638              |       |                   | $      | 1,006 |       |      | $      | 6,434  |       |   | $      | 1,888  |      
|                        |                                                | Other                                      |                |     | 130                |       |                   |        | 85    |       |      |        | 357    |       |   |        | 225    |      
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        |                                                |                                            | Total revenues |     |                    | 2,768 |                   |        |       | 1,091 |      |        |        | 6,791 |   |        |        | 2,113 | 
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|Expenses                |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        |                                                | Property operating and maintenance         |                |     | 866                |       |                   |        | 665   |       |      |        | 3,301  |       |   |        | 1,796  |      
|                        |                                                | Depreciation                               |                |     | 954                |       |                   |        | 502   |       |      |        | 2,798  |       |   |        | 1,343  |      
|                        |                                                | Interest                                   |                |     | 777                |       |                   |        | 450   |       |      |        | 2,296  |       |   |        | 1,058  |      
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        |                                                |                                            | Total expenses |     |                    | 2,597 |                   |        |       | 1,617 |      |        |        | 8,395 |   |        |        | 4,197 | 
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        | Income (loss) from continuing operations       |                                            |                | 171 |                    |       |                   | (526   | )     |       |      | (1,604 | )      |       |   | (2,084 | )     
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|Discontinued operations |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        |                                                | Loss from discontinued operations          |                |     |                   |       |                   |        | (700  | )     |      |        | (188   | )     |   |        | (1,553 | )    
|                        |                                                | Gain on property sale                      |                |     |                   |       |                   |        |      |       |      |        | 26,179 |       |   |        |       |      
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        |                                                | Income (loss) from discontinued operations |                |     |                   |       |                   |        | (700  | )     |      |        | 25,991 |       |   |        | (1,553 | )    
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        | Net income (loss)                              |                                            | $              | 171 |                    |       | $                 | (1,226 | )     |       | $    | 24,387 |        |       | $ | (3,637 | )     
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       
|                        | Operating Partners share of net income (loss) |                                            | $              | 60  |                    |       | $                 | (441   | )     |       | $    | 7,768  |        |       | $ | (1,284 | )     
|                        |                                                |                                            |                |     |                    |       |                   |        |       |       |      |        |        |       |   |       



|   |  | The Operating Partnership has committed construction financing to two
Property LLCs totaling $85,491 ($83,552 funded at September 30, 2003). These
loans earn interest at LIBOR plus 1.75% and are secured by the apartment
communities. The loans mature on dates ranging from November 2003 to
November 2004 and are expected to be repaid from the proceeds of permanent
project financings. In the first quarter of 2003, one of the Property LLCs
repaid its outstanding construction note payable to the Operating Partnership
of $24,071 through the proceeds from a third-party non-recourse permanent
mortgage note totaling $17,000 and from additional member equity
contributions. The mortgage note bears interest at 4.28%, requires monthly
principal and interest payments based on a 30-year amortization schedule and
matures in March 2008. 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 the 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. 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 the Property LLC. Additionally, under
these agreements, the Operating Partnership is subject to project completion
date requirements, as defined. At September 30, 2003, the Operating
Partnership had met its remaining completion date requirements and will not
be subject to any additional costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|4. |  | 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
September 30, 2003, the Operating Partnership had classified 11 apartment
communities, containing 5,175 units, and multiple tracts of land as held for
sale. These real estate assets are reflected in the accompanying
consolidated balance sheet at $199,723, which represents the lower of
depreciated cost or fair value less costs to sell.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | One of the 11 properties discussed above, a 166-unit apartment community,
located in Atlanta, GA, is currently under contract to be sold to an entity
controlled by L. Barry Teague, a unitholder who served as a director of the
Company from February 2003 to September 2003. Mr. Teague was the high bidder
for the asset in an auction sales process conducted by a third-party broker.
The contract with Mr. Teague stipulates that approximately 40% of the $13,000
purchase price will consist of a redemption of a portion of Mr. Teagues
partnership units in the Operating Partnership. Partnership units are
convertible, on a one-for-one basis, into shares of the Company, or into cash
at the Companys option. The redemption price per unit has been set at
$24.83, which is a discount of 10% to the average daily closing price of the
Companys common stock on the New York Stock Exchange for the twenty
consecutive trading days prior to the effective date of the contract.                                                                                                                                                                                                                                                         

-26-



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | Under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, the operating results of real estate assets designated as held for
sale subsequent to January 1, 2002 are included in discontinued operations in
the consolidated statement of operations for all periods presented. Also
under the provisions of SFAS No. 144, the reserves, if any, to write down the
carrying value of real estate assets designated and classified as held for
sale after January 1, 2002 are included in discontinued operations. All
subsequent gains or additional losses on the sale of these assets are also
included in discontinued operations. Additionally under SFAS No. 144, any
impairment losses on assets held for continuing use are included in
continuing operations.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For the three and nine months ended September 30, 2003, income from
discontinued operations included the results of operations of the 11
communities, containing 166 units, containing 5,175 units, classified as held
for sale at September 30, 2003 and the results of operations of communities
sold in 2003 through their sale date. For the three and nine months ended
September 30, 2002, income from discontinued operations included the results
of operations of all communities classified as held for sale at September 30,
3003, communities sold in 2003 and the results of operations of communities
and commercial properties sold in 2002 through their sale dates.                                                                                                            
|
| |  | The revenues and expenses of these communities for the three and nine months
ended September 30, 2003 and 2002 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |        |        | 
|------------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------- | ----- | ------------------ | ------ | ----------------- | ----- | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                    |                                                                                |                |       | Three months ended |        | Nine months ended
|                                                                    |                                                                                |                |       | September 30,      |        | September 30,    
|                                                                    |                                                                                |                |       |                    |        |                  
|                                                                    |                                                                                |                |       | 2003               |        | 2002              |       | 2003   |        | 2002
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |     
|Revenues                                                            |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    | Rental                                                                         |                | $     | 9,918              |        |                   | $     | 14,085 |        |      | $      | 32,837 |        |   | $      | 46,746 |       
|                                                                    | Other                                                                          |                |       | 510                |        |                   |       | 644    |        |      |        | 1,521  |        |   |        | 2,025  |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    |                                                                                | Total revenues |       |                    | 10,428 |                   |       |        | 14,729 |      |        |        | 34,358 |   |        |        | 48,771 | 
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Expenses                                                            |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    | Property operating and maintenance
(exclusive of items shown separately below) |                |       | 4,196              |        |                   |       | 5,772  |        |      |        | 13,482 |        |   |        | 18,966 |       
|                                                                    | Depreciation                                                                   |                |       | 1,610              |        |                   |       | 2,816  |        |      |        | 6,276  |        |   |        | 8,640  |       
|                                                                    | Interest                                                                       |                |       | 1,361              |        |                   |       | 2,240  |        |      |        | 4,584  |        |   |        | 7,572  |       
|                                                                    | Asset impairment charge                                                        |                |       |                   |        |                   |       |       |        |      |        | 14,118 |        |   |        |       |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    |                                                                                | Total expenses |       |                    | 7,167  |                   |       |        | 10,828 |      |        |        | 38,460 |   |        |        | 35,178 | 
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Income (loss) from discontinued operations
before minority interest |                                                                                |                | 3,261 |                    |        |                   | 3,901 |        |        |      | (4,102 | )      |        |   | 13,593 |       
|                                                                    | Minority interest                                                              |                |       | (336               | )      |                   |       | (475   | )      |      |        | 518    |        |   |        | (1,656 | )     
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Income (loss) from discontinued operations                          |                                                                                | $              | 2,925 |                    |        | $                 | 3,426 |        |        | $    | (3,584 | )      |        | $ | 11,937 |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       



| |  | During the third quarter of 2003, the Operating Partnership reclassified an
impairment loss of $14,118 from continuing operations to discontinued
operations. The impairment loss, originally recorded in the first quarter
2003, related to the write-down of the net book value of the Operating
Partnerships apartment community located in Phoenix, Arizona to its
estimated fair value. The reclassification of the impairment loss to income
(loss) from discontinued operations in the nine months ended September 30,
2003 reflects the designation of this community as held for sale during the
third quarter of 2003.                                                                                                                   
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For the three months ended September 30, 2003, the Operating Partnership
recognized net losses from discontinued operations of $3,344 resulting from
the reserve to write-down to fair value one community containing 474
units classified as held for
sale during the period reduced by gains of $185 from the sale of land. For
the nine months ended September 30, 2003, the Operating Partnership
recognized net gains from discontinued operations of $35,102 on the sale of
two communities containing 1,009 units and a land parcel, reduced by losses
of $4,757 resulting from losses on the sale of certain land parcels and
reserves to write-down to fair value one community and certain other land
parcels classified as held for sale.
|
| |  | For the three months ended September 30, 2002, the Operating Partnership
recognized net losses of $2,170 on the sale of one apartment community and
reserves to write-down to fair value certain other land parcels classified as
held for sale during the period. For the nine months ended September 30,
2002, the Operating Partnership recognized net gains of $18,065 on the sale
of five apartment communities, containing 1,617 units and one commercial
property offset by losses of $9,502 to write-down to fair value an apartment
community, a commercial property and certain parcels classified as held for
sale during the period.                                                                                                    

-27-



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|   |  | Under prior accounting pronouncement FAS 121, 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
may not be comparable between periods. In the first quarter of 2002, the
Operating Partnership recognized net gains in continuing operations of
approximately $13,275 on the sale of two apartment communities containing 540
units and one commercial property.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|5. |  | EARNINGS PER UNIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | For the three and nine months ended September 30, 2003 and 2002, a
reconciliation of the numerator and denominator used in the computation of
basic and diluted income from continuing operations per common unit is as
follows:                                                                                                                                                                                                                                                                                                                                            

|                                                                                      |                                                                          |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ |  | ------------------ | ---------- | ----------------- |  | ---- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                      |                                                                          |  | Three months ended |            | Nine months ended
|                                                                                      |                                                                          |  | September 30,      |            | September 30     
|                                                                                      |                                                                          |  |                    |            |                  
|                                                                                      |                                                                          |  | 2003               |            | 2002              |  | 2003 |            | 2002
|                                                                                      |                                                                          |  |                    |            |                   |  |      |            |     
|Income (loss) from continuing operations available to common unitholders
(numerator): |                                                                          |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|                                                                                      | Income (loss) from continuing operations                                 |  | $                  | (801       | )                 |  | $    | 6,277      |      |  | $ | (16,968    | ) |  | $ | 35,770     |  
|                                                                                      | Less: Preferred unit distributions                                       |  |                    | (4,262     | )                 |  |      | (4,262     | )    |  |   | (12,787    | ) |  |   | (12,787    | )
|                                                                                      |                                                                          |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|                                                                                      | Income (loss) from continuing operations available to common unitholders |  | $                  | (5,063     | )                 |  | $    | 2,015      |      |  | $ | (29,755    | ) |  | $ | 22,983     |  
|                                                                                      |                                                                          |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|Common units (denominator):                                                           |                                                                          |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|                                                                                      | Weighted average units outstanding  basic                               |  |                    | 42,189,895 |                   |  |      | 42,031,962 |      |  |   | 42,102,260 |   |  |   | 42,016,755 |  
|                                                                                      | Incremental units from assumed conversion of stock options               |  |                    | 16,457     |                   |  |      | 3,761      |      |  |   | 1,656      |   |  |   | 43,731     |  
|                                                                                      |                                                                          |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           
|                                                                                      | Weighted average units outstanding  diluted                             |  |                    | 42,206,352 |                   |  |      | 42,035,723 |      |  |   | 42,103,916 |   |  |   | 42,060,486 |  
|                                                                                      |                                                                          |  |                    |            |                   |  |      |            |      |  |   |            |   |  |   |           



| |  | At September 30, 2003,
stock options to purchase 4,932,996 shares of common stock were
excluded from the computation of diluted earnings per common share as
these stock options were anti-dilutive.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | DERIVATIVE FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | At September 30, 2003 and 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. The Operating Partnership recorded
unrealized net gains of $3,675 and an unrealized net loss of $7,065, for the
three months ended September 30, 2003 and 2002 respectively, and net gains of
$560 and net losses of $10,170 for the nine months ended September 30, 2003
and 2002, respectively, on these cash flow hedges as an increase in
accumulated other comprehensive income, a partners equity account, in the
accompanying consolidated balance sheet. Within the next twelve months, the
Operating Partnership expects to reclassify out of accumulated other
comprehensive income approximately $6,121.                                                                                                                                                                                                                                             
|  
|   |  | In the first quarter of 2003, 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 the interest
rate exposure protection under the terms of the financing arrangements. The
interest rate cap arrangements are included on the accompanying balance sheet
at fair value. At September 30, 2003, the difference of $1,019, net of
minority interest, between the amortized costs of the interest rate cap
arrangements of $2,720 and their fair value of $1,701 is included in
accumulated other comprehensive income, a partners equity account. The
$2,720 cost of the arrangements is being amortized as additional expense over
their five-year term in accordance with SFAS No. 133, as amended.
|  
|   |  | Comprehensive income for the three and nine months ended September 30, 2003
totaled $2,979 and $9,835, respectively, as summarized on the consolidated
statement of shareholders equity and accumulated earnings. The
comprehensive income for the three months ended September 30, 2002 totaled
$943 and consisted of net income of $8,008 less the net change in the value
of the derivatives discussed above of ($7,065). Comprehensive income for the
nine months ended September 30, 2002 totaled $47,756 and consisted of net
income of $57,926 less the net change in the value of the derivatives
discussed above of $10,170.                                                                                                                                                                                                                                                                                                                                                                                                                    

-28-



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##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|7. |  | 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 apartment community
rental operations. Apartment community rental operations are broken down
into four segments based on the various stages in the apartment community
ownership lifecycle. These segments are described below. All commercial
properties and other ancillary service and support operations are aggregated
in the line item other in the accompanying segment information.



| |  |  | 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 2002  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 prior year and
not reflected as discontinued operations (see note 4).                                                                                                                 



| |  | Segment Performance Measure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Management uses contribution to consolidated property net operating income
(NOI) as the performance measure for its operating segments. The Operating
Partnership uses net operating income, including net operating income of
stabilized communities, as an operating measure. Net operating income is
defined as rental and other revenue from real estate operations less total
property and maintenance expenses from real estate operations (excluding
depreciation and amortization). The Operating Partnership believes that net
operating income is an important supplemental measure of operating
performance for a REITs operating real estate because it provides a measure
of the core operations, rather than factoring in depreciation and
amortization, financing costs and general and administrative expenses. This
measure is particularly useful, in the opinion of the Operating Partnership,
in evaluating the performance of geographic operations, operating segment
groupings and individual properties. Additionally, the Operating Partnership
believes that net operating income, as defined, is a widely accepted measure
of comparative operating performance in the real estate investment community.
The Operating Partnership believes that the line on the Operating
Partnerships consolidated statement of operations entitled income (loss)
from continuing operations is the most directly comparable GAAP measure to
net operating income.

-29-



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The following table reflects each segments contribution to consolidated
revenues and property NOI together with a reconciliation of segment
contribution to property NOI income from continuing operations. Additionally,
substantially all of the Operating Partnerships assets relate to the
Operating Partnerships property rental operations. Asset cost, depreciation
and amortization by segment are not presented because such information at the
segment level is not reported internally.

|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|---------------------------------------------------------------- | --------------------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                 |                       |   | Three months ended |        | Nine months ended
|                                                                 |                       |   | September 30,      |        | September 30,    
|                                                                 |                       |   |                    |        |                  
|                                                                 |                       |   | 2003               |        | 2002              |   | 2003    |        | 2002
|                                                                 |                       |   |                    |        |                   |   |         |        |     
|Revenues                                                         |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Fully stabilized communities                                     |                       |   | 55,974             |        |                   |   | 58,007  |        |      |   | 166,541 |         |  |   | 173,436 |        
|Communities stabilized during 2002                               |                       |   | 7,749              |        |                   |   | 7,228   |        |      |   | 23,566  |         |  |   | 18,533  |        
|Development and lease-up communities                             |                       |   | 4,282              |        |                   |   | 2,511   |        |      |   | 11,614  |         |  |   | 5,975   |        
|Sold communities                                                 |                       |   |                   |        |                   |   |        |        |      |   |        |         |  |   | 745     |        
|Other                                                            |                       |   | 5,252              |        |                   |   | 5,184   |        |      |   | 15,031  |         |  |   | 15,383  |        
|Interest income                                                  |                       |   | 223                |        |                   |   | 316     |        |      |   | 708     |         |  |   | 1,002   |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                                 | Consolidated revenues |   |                    | 73,480 |                   |   |         | 73,246 |      |   |         | 217,460 |  |   |         | 215,074 | 
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Contribution to NOI                                              |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Fully stabilized communities                                     |                       |   | 35,247             |        |                   |   | 37,483  |        |      |   | 105,980 |         |  |   | 113,376 |        
|Communities stabilized during 2002                               |                       |   | 4,794              |        |                   |   | 4,306   |        |      |   | 15,109  |         |  |   | 10,423  |        
|Development and lease-up communities                             |                       |   | 2,212              |        |                   |   | 1,169   |        |      |   | 5,940   |         |  |   | 3,056   |        
|Sold communities                                                 |                       |   |                   |        |                   |   |        |        |      |   |        |         |  |   | 369     |        
|Other                                                            |                       |   | (243               | )      |                   |   | (23     | )      |      |   | (1,625  | )       |  |   | (77     | )      
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Consolidated net operating income                                |                       |   | 42,010             |        |                   |   | 42,935  |        |      |   | 125,404 |         |  |   | 127,147 |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Interest income                                                  |                       |   | 223                |        |                   |   | 316     |        |      |   | 708     |         |  |   | 1,002   |        
|Minority interest in consolidated property partnerships          |                       |   | 677                |        |                   |   | 537     |        |      |   | 1,359   |         |  |   | 1,480   |        
|Gains on property sales                                          |                       |   |                   |        |                   |   |        |        |      |   |        |         |  |   | 13,275  |        
|Depreciation                                                     |                       |   | (21,553            | )      |                   |   | (19,311 | )      |      |   | (62,097 | )       |  |   | (55,637 | )      
|Interest                                                         |                       |   | (17,122            | )      |                   |   | (13,676 | )      |      |   | (48,992 | )       |  |   | (37,386 | )      
|Amortization of deferred loan costs                              |                       |   | (1,084             | )      |                   |   | (588    | )      |      |   | (2,840  | )       |  |   | (1,711  | )      
|General and administrative                                       |                       |   | (3,735             | )      |                   |   | (3,495  | )      |      |   | (10,697 | )       |  |   | (10,980 | )      
|Other expenses                                                   |                       |   | (277               | )      |                   |   |        |        |      |   | (844    | )       |  |   | (136    | )      
|Severance charges                                                |                       |   |                   |        |                   |   |        |        |      |   | (21,506 | )       |  |   |        |        
|Proxy and related costs                                          |                       |   |                   |        |                   |   |        |        |      |   | (5,231  | )       |  |   |        |        
|Equity in income (losses) of unconsolidated real estate entities |                       |   | 60                 |        |                   |   | (441    | )      |      |   | 7,768   |         |  |   | (1,284  | )      
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Income (loss) from continuing operations                         |                       | $ | (801               | )      |                   | $ | 6,277   |        |      | $ | (16,968 | )       |  | $ | 35,770  |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        



|8. |  | SEVERANCE AND PROXY CHARGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In the second quarter of 2003, the Operating Partnership recorded severance
charges of $1,795 relating to the departures of its executive vice president
and chief financial officer and its executive vice president of asset
management. In addition, the Operating Partnership recorded the actual and
estimated costs associated with the recently concluded proxy contest of
$5,231. In the first quarter of 2003, the Operating Partnership recorded
severance charges of $19,711 relating to the change in roles from executive
to non-executive status of the Companys former chairman and vice-chairman of
the board of directors.                                                                                                                                                                                                                                                                                                   
|  
|   |  | The severance charges recorded in the second quarter of 2003 represented the
aggregate amount of the estimated payments and benefits to be made to the
departing executive officers. The severance charges recorded in the first
quarter of 2003 consisted of a $13,994 charge representing the discounted
present value of the estimated payments to be made to the former chairman and
vice-chairman under their existing employment arrangements and a $5,718
charge representing the discounted present value of estimated net costs that
may be incurred by the Operating Partnership as a result of the settlement of
split-dollar life insurance obligations to the individuals under their
employment contracts. The estimated charge for the settlement of the
split-dollar life insurance obligations may change based upon a final legal
determination regarding these insurance contracts and a final settlement
among the parties.

-30-



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



| |  | As discussed above, the Operating Partnership recorded severance charges in
the first and second quarters of 2003. The following table summarizes the
activity relating to the accrued severance charges for the period from the
date of the charges through September 30, 2003:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                |  |   |        |  
|----------------------------------------------- |  | - | ------ | -
|Aggregate severance charges                     |  | $ | 21,506 |  
|Payments for period                             |  |   | (2,173 | )
|Interest accretion                              |  |   | 627    |  
|                                                |  |   |        |  
|Accrued severance charges at September 30, 2003 |  | $ | 19,960 |  
|                                                |  |   |        |  



|    |  | Substantially all of these remaining amounts will be paid over the remaining
terms of the former executives employment contracts (10 to 13 years).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Proxy and related costs of $5,231 represent the actual and estimated legal,
advisory and other expenses associated with the solicitation of proxies from
shareholders resulting from the proxy contest initiated in April 2003 by the
Companys former chairman and current chairman emeritus of the board of
directors. Additionally, the $5,231 amount includes the estimated legal and
resolution costs associated with the settlement of two derivative and
purported class action lawsuits filed against the Operating Partnership
during the proxy contest. These lawsuits are expected to be settled
subsequent to September 30, 2003. Through September 30, 2003, substantially
all of the proxy and related costs have been paid.                     
|   
|9.  |  | SUPPLEMENTAL CASH FLOW INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Non-cash investing and financing activities for the nine months ended
September 30, 2003 and 2002 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | During the nine months ended September 30, 2003, the Operating Partnerships
derivative financial instruments (see note 6) increased in value causing a
decrease in accounts payable and accrued expenses and a corresponding
increase in partners equity of $560. During the nine months ended September
30, 2002, the Operating Partnerships derivative financial instruments
decreased in value causing an increase in accounts payable and accrued
expenses and a corresponding decrease in unitholders equity of $10,170.                                                                                                                                                                                                                              
|   
|10. |  | STOCK-BASED COMPENSATION PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | During the three and nine months ended September 30, 2003, the Company
granted 124,087 and 167,077 shares, respectively, of restricted stock to
company officers and directors, of which 7,672 shares were granted to the
Companys non-executive Chairman of the Board. The restricted shares vest
ratably over periods ranging from three to eight years. The total value of
the restricted share grants, net of forfeitures, of $3,235 and $4,341 for the
three and nine months ended September 30, 2003, respectively, was initially
reflected in partners equity as additional paid in capital reduced by
non-amortized deferred compensation expense. Such deferred compensation is
amortized ratably into compensation expense over the vesting period.
|   
|    |  | Additionally, in the three and nine months ended September 30, 2003, the
Company granted stock options to purchase 789,500 and 1,184,936 shares of
company common stock to company officers and directors, of which 100,000
shares were granted to the Companys non-executive Chairman of the Board. As
discussed in note 1, the Operating Partnership expenses the estimated costs
of stock options over their three to five-year vesting periods.                                                                                                                                                                                                                                                                                                           

-31-



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##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)



|11. |  | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On May 5, 2003, the Operating Partnership received notice that a shareholder
derivative and purported class action lawsuit was filed against members of
the board of directors of the Company, including John Williams, and the
Operating Partnership as a nominal defendant. This complaint was filed in the
Superior Court of Fulton County, Atlanta, Georgia on May 2, 2003 and alleges
various breaches of fiduciary duties by the board of directors of the Company
and seeks, among other relief, the disclosure of certain information by the
defendants. This complaint also seeks to compel the defendants to undertake
various actions to facilitate a sale of the Operating Partnership. On May 7,
2003, the plaintiff made a request for voluntary expedited discovery. On May
13, 2003, the Operating Partnership received notice that a shareholder
derivative and purported class action lawsuit was filed against certain
members of the board of directors of the Company and against the Operating
Partnership as a nominal defendant. Mr. Williams was not named as a
defendant in the lawsuit. The complaint was filed in the Superior Court of
Fulton County, Atlanta, Georgia on May 12, 2003 and alleges breaches of
fiduciary duties, abuse of control and corporate waste by the defendants.
The plaintiff seeks monetary damages and, as appropriate, injunctive relief.
These lawsuits are expected to be settled subsequent to September 30, 2003.
The estimated legal and settlement costs, not covered by insurance,
associated with the expected resolution of the lawsuits were recorded in the
second quarter of 2003 as a component of the proxy and related costs charge.
|   
|    |  | The Operating Partnership 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 Operating Partnership
believes that any resolution of pending proceedings or liability to the
Operating Partnership, which may arise as a result of these proceedings, will
not have a material adverse effect on the Operating Partnerships results of
operations or financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

-32-



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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

ITEM 2.     MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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. The Company owns
28,917 apartment units in 78 apartment communities, including 468 apartment
units in two apartment communities under development and lease-up. At
September 30, 2003, approximately 51.9%, 19.6% and 7.7% (on a unit basis) of
the Companys communities are located in the Atlanta, Georgia, Dallas, Texas
and Tampa, Florida 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.

At September 30, 2003, the Company owned approximately 90.0% 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 10.0% common minority interest in the Operating
Partnership.

The following discussion should be read in conjunction 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 their financial condition are
substantially the same except for the effect of the 10.0% 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, the settlement of certain lawsuits, debt maturities and financing
needs, interest expenses, dividend payments, our ability to meet new
construction, development, acquisition 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.

-33-



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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

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 and acquisition of additional apartment communities;                                                                  
| 
| |  | The uncertainties associated with the Companys current real estate development, including actual costs exceeding the Companys
budgets or development periods exceeding expectations;       
| 
| |  | Uncertainties associated with the timing and amount of asset sales and the resulting gains/losses associated with such asset
sales;                                                          
| 
| |  | 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 REIT under the Code.                                                                                                                       

Other important risk factors regarding the Company are included under the
caption Risk Factors in the companys Annual Report on Form 10-K for the year
ended December 31, 2002 and may be discussed in subsequent filings with the
SEC.

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. The Companys significant accounting policies are included in the
notes to the Companys audited financial statements included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2002. The
discussion below addresses the implementation and the impact of new
pronouncements and accounting policies in the nine months ended September 30,
2003.

On January 1, 2003, the Company elected to voluntarily change its method of
accounting for stock-based compensation to the fair value method prescribed by
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, using the prospective method prescribed by SFAS No.
148, Accounting for Stock-Based Compensation  Transition and Disclosure.
SFAS No. 148 also amended the disclosure requirements in both annual and
interim financial statements about the method of accounting used for
stock-based compensation and the effect of the method on reported results. In
prior periods, 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 the prospective method of adoption prescribed by SFAS No. 123 and SFAS
No. 148, the Company will reflect as an expense each period the estimated cost
of stock-based compensation, calculated under the Black-Scholes option pricing
model for stock options, for all stock-based compensation granted on or after
January 1, 2003. For stock-based compensation granted on or before December
31, 2002, compensation expense was generally not recognized for stock options
granted at the Companys current stock price on the grant date. As a result,
the Companys general and administrative expenses may not be comparable between
periods. For the three and nine months ended September 30, 2003, general and
administrative expenses included stock-based compensation expense of $59 ($53,
net of minority interest) and $179 ($159, net of minority interest),
respectively, recognized under the fair value method. Note 1 to the
consolidated financial statements reflects the Companys net income and
earnings per share had the fair value method of accounting under SFAS No. 123
been applied for each period.

-34-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

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 adopted the requirements of SFAS No. 145 on January 1,
2003. The implementation of this statement had no impact on the Companys
results of operations or financial position in the three and nine months ended
September 30, 2003. In the second quarter of 2003, the Company reclassified
$136 ($120 net of minority interest) of extraordinary items recorded in the
second quarter of 2002 from its prior period presentation as extraordinary
items to expenses used in the determination of income from continuing
operations. 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 No.
146 is effective for exit or disposal activities initiated after December 31,
2002. The implementation of this Statement did not have a significant effect on
the Companys results of operations or its financial position in the three and
nine months ended September 30, 2003.

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 its December 31, 2002 financial statements and adopted the
recognition and measurement provisions effective January 1, 2003. The adoption
of the recognition and measurement provisions of FIN No. 45 did not 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, as amended, 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 December 31, 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 is evaluating its investments in unconsolidated real estate
entities to determine whether they fall within the definition of variable
interest entities. The Company believes that FIN No. 46 will not have a
significant effect on its results of operations or financial position.

SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity, was issued in May 2003. SFAS
No. 150 established standards for how an issuer classifies and measures certain
liabilities and equity. This Statement is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise effective at the
beginning of the first quarterly period beginning after June 15, 2003. On
October 29, 2003, the FASB deferred certain provisions of SFAS No. 150, as they
were to apply to non-controlling interests, in which redemption is mandatory,
in finite-lived entities. The deferral of these provisions is expected to
remain in effect until these issues are incorporated into future FASB
accounting standards. The Company has not entered into any transactions
involving financial instruments impacted by the outstanding provisions SFAS No.
150 and the implementation of SFAS No. 150 in the third quarter
of 2003 had no effect on the Companys financial position or results of
operations.

-35-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Results of Operations

The following discussion of results of operations should be read in conjunction
with the consolidated statements of operations 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. The Company generally
considers a community 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 September 30, 2003, the Companys portfolio of wholly-owned and
majority-owned apartment communities consisted of the following: (1) 57
communities that were completed and stabilized for all of the current and prior
year, (2) four communities that achieved full stabilization during 2002, and
(3) three communities currently in the development or lease-up stage. Sold
communities include communities sold in 2002 that were not reflected in
discontinued operations under SFAS No. 144 (see discussion under Discontinued
Operations). These operating segments exclude the operations of apartment
communities classified as discontinued operations and apartment communities
held in unconsolidated entities for the periods presented.

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 were $1,634 and $324
for the three months ended September 30, 2003 and 2002, respectively, and
$2,612 and $1,182 for the nine months ended September 30, 2003 and 2002,
respectively.

In order to evaluate the operating performance of its communities for the
comparative periods listed below, the Company has presented financial
information which summarizes the rental and other revenues and property
operating and maintenance expenses (excluding depreciation and amortization)
and net operating income on a comparative basis for all of its operating
communities and for its stabilized operating communities. Net operating income
is a supplemental non-GAAP financial measure. The Company believes that the
line on the Companys consolidated statement of operations entitled income
(loss) from continuing operations is the most directly comparable GAAP measure
to net operating income. See note 7 to the consolidated financial statements
for a reconciliation of net operating income to GAAP income (loss) from
continuing operations. The Company believes that net operating income is an
important supplemental measure of operating performance for a REITs operating
real estate because it provides a measure of the core operations, rather than
factoring in depreciation and amortization, financing costs and general and
administrative expenses. This measure is particularly useful, in the opinion
of the Company, in evaluating the performance of geographic operations,
operating segment groupings and individual properties. Additionally, the
Company believes that net operating income, as defined, is a widely accepted
measure of comparative operating performance in the real estate investment
community.

-36-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

All Operating Communities

The operating performance from continuing operations for all of the Companys
apartment communities summarized by operating segment for the three and nine
months ended September 30, 2003 and 2002 is summarized as follows:

|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|------------------------------------------------------------------------------------- |  | ------------------ | ------ | ---- |  | -------- | ------ | ----------------- |  | ---- | ---- | -------- |  | - | ------- |  |  | - | ------- |  |  |  | ---- | --
|                                                                                      |  | Three months ended |        |      |  |          |        | Nine months ended |  |      |      |         
|                                                                                      |  | September 30,      |        |      |  |          |        | September 30,     |  |      |      |         
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |         
|                                                                                      |  | 2003               |        | 2002 |  | % Change |        | 2003              |  | 2002 |      | % Change
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |         
|Rental and other revenues                                                             |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|Fully stabilized communities (1)                                                      |  | $                  | 55,974 |      |  | $        | 58,007 |                   |  |      | (3.5 | )%       |  | $ | 166,541 |  |  | $ | 173,436 |  |  |  | (4.0 | )%
|Communities stabilized during 2002                                                    |  |                    | 7,749  |      |  |          | 7,228  |                   |  |      | 7.2  | %        |  |   | 23,566  |  |  |   | 18,533  |  |  |  | 27.2 | % 
|Lease-up communities (2)                                                              |  |                    | 4,282  |      |  |          | 2,511  |                   |  |      | 70.5 | %        |  |   | 11,614  |  |  |   | 5,975   |  |  |  | 94.4 | % 
|Sold communities (3)                                                                  |  |                    |       |      |  |          |       |                   |  |      |     |          |  |   |        |  |  |   | 745     |  |  |  |     |   
|Other revenues (4)                                                                    |  |                    | 5,252  |      |  |          | 5,184  |                   |  |      | 1.3  | %        |  |   | 15,031  |  |  |   | 15,383  |  |  |  | (2.3 | )%
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|                                                                                      |  |                    | 73,257 |      |  |          | 72,930 |                   |  |      | 0.4  | %        |  |   | 216,752 |  |  |   | 214,072 |  |  |  | 1.3  | % 
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|Property operating and maintenance
expenses (excluding depreciation
and amortization) |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|Fully stabilized communities (1)                                                      |  |                    | 20,727 |      |  |          | 20,524 |                   |  |      | 1.0  | %        |  |   | 60,561  |  |  |   | 60,060  |  |  |  | 0.8  | % 
|Communities stabilized during 2002                                                    |  |                    | 2,955  |      |  |          | 2,922  |                   |  |      | 1.1  | %        |  |   | 8,457   |  |  |   | 8,110   |  |  |  | 4.3  | % 
|Lease-up communities (2)                                                              |  |                    | 2,070  |      |  |          | 1,342  |                   |  |      | 54.2 | %        |  |   | 5,674   |  |  |   | 2,919   |  |  |  | 94.4 | % 
|Sold communities (3)                                                                  |  |                    |       |      |  |          |       |                   |  |      |     |          |  |   |        |  |  |   | 376     |  |  |  |     |   
|Other expenses (5)                                                                    |  |                    | 5,495  |      |  |          | 5,207  |                   |  |      | 5.5  | %        |  |   | 16,656  |  |  |   | 15,460  |  |  |  | 7.7  | % 
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|                                                                                      |  |                    | 31,247 |      |  |          | 29,995 |                   |  |      | 4.2  | %        |  |   | 91,348  |  |  |   | 86,925  |  |  |  | 5.1  | % 
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|Net operating income                                                                  |  | $                  | 42,010 |      |  | $        | 42,935 |                   |  |      | (2.2 | )%       |  | $ | 125,404 |  |  | $ | 127,147 |  |  |  | (1.4 | )%
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|Recurring capital expenditures:                                                       |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  | (6   | ) 
|Carpet                                                                                |  | $                  | 892    |      |  | $        | 796    |                   |  |      | 12.1 | %        |  | $ | 2,277   |  |  | $ | 2,157   |  |  |  | 5.6  | % 
|Other                                                                                 |  |                    | 2,104  |      |  |          | 1,788  |                   |  |      | 17.7 | %        |  |   | 4,705   |  |  |   | 5,158   |  |  |  | (8.8 | )%
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|Total                                                                                 |  | $                  | 2,996  |      |  | $        | 2,584  |                   |  |      | 15.9 | %        |  | $ | 6,982   |  |  | $ | 7,315   |  |  |  | (4.6 | )%
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|Non-recurring capital expenditures                                                    |  | $                  | 1,160  |      |  | $        | 1,150  |                   |  |      | 0.8  | %        |  | $ | 4,068   |  |  | $ | 3,381   |  |  |  | 20.3 | % 
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   
|Average apartment units in service                                                    |  |                    | 28,720 |      |  |          | 30,047 |                   |  |      | (4.4 | )%       |  |   | 28,798  |  |  |   | 30,226  |  |  |  | (4.7 | )%
|                                                                                      |  |                    |        |      |  |          |        |                   |  |      |      |          |  |   |         |  |  |   |         |  |  |  |      |   



---

|(1) |  | Communities which reached stabilization prior to January 1, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Communities in the construction, development or lease-up stage
during 2003 and, therefore, not considered fully stabilized for all
of the periods presented.                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) |  | Includes results from two communities containing 540 units and one
commercial property in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(4) |  | Other revenues include revenues from commercial properties, from the
Companys corporate apartment rental business and revenues not
directly related to property operations. Other revenues exclude
interest income included in total revenues in the consolidated
statements of operations.                                                                                                                                                                                                                                                          
|   
|(5) |  | Other expenses include certain indirect central office operating
expenses related to management, grounds maintenance, and costs
associated with commercial properties and the Companys corporate
apartment rental business.                                                                                                                                                                                                                                                                                                                          
|   
|(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.

-37-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Stabilized Communities

The Company defines fully stabilized, or same store communities as those
which have reached stabilization prior to the beginning of the previous year,
adjusted by communities sold and classified as held for sale. At September 30,
2003, the fully stabilized portfolio of 57 communities with 19,646 units
includes 31 communities with 11,886 units (60.5%) located in Atlanta, Georgia,
16 communities with 4,353 units (22.2%) located in Dallas, Texas, three
communities with 1,439 units (7.3%) located in Tampa, Florida and seven
communities with 1,968 units (10.0%) located in other markets. The operating
performance of these communities is summarized as follows:

|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |      |      |  
|------------------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------------ | ------ | ------------------ | ----- | ---- | ------ | -------- | ----- | ----------------- | ---- | ----- | ---- | -------- | ------- | ----- | ----- | - | ------- | ----- | ----- |  | ---- | ---- | ---- | -
|                                                                                      |                                                     |                                |        | Three months ended |       |      |        |          |       | Nine months ended |      |       |      |         
|                                                                                      |                                                     |                                |        | September 30,      |       |      |        |          |       | September 30,     |      |       |      |         
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |         
|                                                                                      |                                                     |                                |        | 2003               |       | 2002 |        | % Change |       | 2003              |      | 2002  |      | % Change
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |         
|Rental and other revenues                                                             |                                                     | $                              | 55,974 |                    |       | $    | 58,007 |          |       |                   | (3.5 | )%    |      | $        | 166,541 |       |       | $ | 173,436 |       |       |  | (4.0 | )%  
|Property operating and maintenance
expenses (excluding depreciation and
amortization) |                                                     |                                | 20,727 |                    |       |      | 20,524 |          |       |                   | 1.0  | %     |      |          | 60,561  |       |       |   | 60,060  |       |       |  | 0.8  | %   
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     
|Same store net operating income (1)                                                   |                                                     | $                              | 35,247 |                    |       | $    | 37,483 |          |       |                   | (6.0 | )%    |      | $        | 105,980 |       |       | $ | 113,376 |       |       |  | (6.5 | )%  
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     
|Capital
expenditures (2)                                                              |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     
|                                                                                      | Recurring                                           |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |      |     
|                                                                                      | Carpet                                              |                                | $      | 649                |       |      | $      | 536      |       |                   |      | 21.1  | %    |          | $       | 1,637 |       |   | $       | 1,279 |       |  |      | 28.0 | %   
|                                                                                      | Other                                               |                                |        | 1,604              |       |      |        | 1,259    |       |                   |      | 27.4  | %    |          |         | 3,520 |       |   |         | 3,340 |       |  |      | 5.4  | %   
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     
|                                                                                      |                                                     | Total recurring                |        |                    | 2,253 |      |        |          | 1,795 |                   |      |       | 25.5 | %        |         |       | 5,157 |   |         |       | 4,619 |  |      |      | 11.6 | %
|                                                                                      | Non-recurring                                       |                                |        | 912                |       |      |        | 438      |       |                   |      | 108.2 | %    |          |         | 2,214 |       |   |         | 1,229 |       |  |      | 80.1 | %   
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     
|                                                                                      |                                                     | Total capital expenditures (A) |        | $                  | 3,165 |      |        | $        | 2,233 |                   |      |       | 41.7 | %        |         | $     | 7,371 |   |         | $     | 5,848 |  |      |      | 26.0 | %
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     
|                                                                                      | Total capital expenditures per unit(A÷19,646 units) |                                | $      | 161                |       |      | $      | 114      |       |                   |      | 41.2  | %    |          | $       | 375   |       |   | $       | 298   |       |  |      | 25.8 | %   
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     
|Average monthly rental rate per unit (3)                                              |                                                     | $                              | 980    |                    |       | $    | 1,028  |          |       |                   | (4.7 | )%    |      | $        | 995     |       |       | $ | 1,050   |       |       |  | (5.2 | )%  
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     
|Average economic occupancy (4)                                                        |                                                     |                                | 93.1   | %                  |       |      | 93.0   | %        |       |                   | 0.1  | %     |      |          | 91.5    | %     |       |   | 91.0    | %     |       |  | 0.5  | %   
|                                                                                      |                                                     |                                |        |                    |       |      |        |          |       |                   |      |       |      |          |         |       |       |   |         |       |       |  |      |     



---

|(1) |  | Net operating income of stabilized communities is a supplemental
non-GAAP financial measure. See note 7 to the consolidated financial
statements for a reconciliation of net operating income for
stabilized communities to GAAP income (loss) from continuing
operations. The Company uses net operating income including net
operating income of stabilized communities, as an operating measure.
Net operating income is defined as rental and other revenues from
real estate operations less total property operating and maintenance
expenses from real estate operations (excluding depreciation and
amortization). The Company believes that net operating income is an
important supplemental measure of operating performance for a REITs
operating real estate because it provides a measure of the core
operations, rather than, factoring in depreciation and amortization,
financing costs and general and administrative expenses. This
measure is particularly useful, in the opinion of the Company, in
evaluating the performance of geographic operations, operating
segment groupings and individual properties. Additionally, the
Company believes that net operating income, as defined, is a widely
accepted measure of comparative operating performance in the real
estate investment community. The Company believes that the line on
the Companys consolidated statement of operations entitled income
(loss) from continuing operations is the most directly comparable
GAAP measure to net operating income.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | A reconciliation of these segment components of property capital
expenditures to total recurring and non-recurring capital
expenditures as presented in the consolidated statements of cash
flows prepared under GAAP is detailed below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                                                                                                  |  |                    |       |                   |  |      |       |      |  |   |       |  |  |   |       | 
|------------------------------------------------------------------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|                                                                                                  |  | Three months ended |       | Nine months ended
|                                                                                                  |  | September 30,      |       | September 30,    
|                                                                                                  |  |                    |       |                  
|                                                                                                  |  | 2003               |       | 2002              |  | 2003 |       | 2002
|                                                                                                  |  |                    |       |                   |  |      |       |     
|Recurring capital expenditures by operating segment                                               |  |                    |       |                   |  |      |       |      |  |   |       |  |  |   |       | 
|Same
store                                                                                        |  | $                  | 2,253 |                   |  | $    | 1,795 |      |  | $ | 5,157 |  |  | $ | 4,619 | 
|Partially stabilized                                                                              |  |                    | 21    |                   |  |      | 19    |      |  |   | 42    |  |  |   | 33    | 
|Construction and lease-up                                                                         |  |                    | 15    |                   |  |      | 34    |      |  |   | 42    |  |  |   | 55    | 
|Other segments                                                                                    |  |                    | 707   |                   |  |      | 736   |      |  |   | 1,741 |  |  |   | 2,608 | 
|                                                                                                  |  |                    |       |                   |  |      |       |      |  |   |       |  |  |   |       | 
|Total recurring capital expenditures per statements of
cash flows                                 |  | $                  | 2,966 |                   |  | $    | 2,584 |      |  | $ | 6,982 |  |  | $ | 7,315 | 
|                                                                                                  |  |                    |       |                   |  |      |       |      |  |   |       |  |  |   |       | 
|Non-recurring capital expenditures by operating segment                                           |  |                    |       |                   |  |      |       |      |  |   |       |  |  |   |       | 
|Same store                                                                                        |  | $                  | 912   |                   |  | $    | 438   |      |  | $ | 2,214 |  |  | $ | 1,229 | 
|Partially stabilized                                                                              |  |                    | 10    |                   |  |      | 9     |      |  |   | 42    |  |  |   | 14    | 
|Construction and lease-up                                                                         |  |                    | 41    |                   |  |      | 3     |      |  |   | 48    |  |  |   | 11    | 
|Other segments                                                                                    |  |                    | 92    |                   |  |      | 360   |      |  |   | 927   |  |  |   | 821   | 
|                                                                                                  |  |                    |       |                   |  |      |       |      |  |   |       |  |  |   |       | 
|Total non-recurring capital expenditures, net of
revenue generating, per statements of cash flows |  | $                  | 1,055 |                   |  | $    | 810   |      |  | $ | 3,231 |  |  | $ | 2,075 | 
|                                                                                                  |  |                    |       |                   |  |      |       |      |  |   |       |  |  |   |       | 



---

| |  | The Company uses same store recurring and non-recurring capital
expenditures as cash flow measures. Same store recurring and
non-recurring capital expenditures are supplemental non-GAAP financial
measures. The Company believes that same store recurring and
non-recurring capital expenditures are important indicators of the
costs incurred by the Company in maintaining same store communities.
The corresponding GAAP measures include information with respect to the
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-38-



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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

|    |  | Companys other operating segments consisting of communities stabilized
in the prior year, lease-up communities, and sold communities in
addition to same store information. Therefore, the Company believes
that the Companys presentation of same store recurring and
non-recurring capital expenditures is necessary to demonstrate same
store replacement costs over time. The Company believes that the most
directly comparable GAAP measure to same store recurring and
non-recurring capital expenditures are the lines on the Companys
consolidated statements of cash flows entitled recurring capital
expenditures and non-recurring capital expenditures.                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Average monthly rental rate is defined as the average of the gross
actual rental rates for leased units and the average of the anticipated
rental rates for unoccupied units, divided by total units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(4) |  | Average economic occupancy is defined as gross potential rent less
vacancy losses, model expenses and bad debt expenses divided by gross
potential rent for the period, expressed as a percentage. Gross
potential rent is defined as the sum of the gross actual rental rates
for leased units and the anticipated rental rates for unoccupied units.
The calculation of average economic occupancy does not include a
deduction for concessions and employee discounts. Average economic
occupancy including these amounts would have been 92.2% and 91.4% for
the three months ended September 30, 2003 and 2002, respectively, and
90.3% and 89.0% for the nine months ended September 30, 2003 and 2002,
respectively. For the three months ended September 30, 2003 and 2002,
concessions were $428 and $820, respectively, and employee discounts
were $99 and $149, respectively. For the nine months ended September
30, 2003 and 2002, concessions were $1,844 and $3,092, respectively,
and employee discounts were $332 and $484, respectively.

Comparison of Three Months Ended September 30, 2003 to Three Months Ended
September 30, 2002

The Operating Partnership reported a net loss available to common unitholders
of $4,961 for the three months ended September 30, 2003 compared to net income
available to common unitholders of $3,746 for the three months ended September
30, 2002. The Company reported a net loss available to common shareholders of
$4,514 for the three months ended September 30, 2003 compared to net income
available to common shareholders of $3,291 for the three months ended September
30, 2002. The decrease in net income between the three months ended September
30, 2003 and 2002 primarily reflected a decrease in the operating performance
of the Companys fully stabilized apartment communities and reduced earnings
resulting from the Companys asset sale and capital recycling program. The
impact of these items is discussed below. Additionally, the decrease was due
to larger asset impairment losses on assets designated as held for sale in the
three months ended September 30, 2003 compared to 2002 and
reduced capitalized interest to development properties of $2,528
between periods.

Rental and other revenues increased $327 or 0.4% primarily due to increased
rental and other revenues of $2,292 from newly stabilized and lease-up
properties offset by a decrease in rental and other revenues from fully
stabilized communities of $2,033 (see discussion below). Property operating
and maintenance expenses (excluding depreciation and amortization) increased
$1,252 or 4.2% primarily due to increased expenses from lease-up communities as
these expenses typically increase as property occupancy levels increase towards
stabilized occupancy levels and as new lease-up properties are placed in
service. Property operating and maintenance expenses (excluding depreciation
and amortization) for fully stabilized communities increased $203 or 1.0%
between periods (see discussion below).

For the three months ended September 30, 2003, the Company recognized net
losses from discontinued operations of $3,344 ($2,999 net of minority interest)
resulting from the write-down to fair value of one community classified as held
for sale during the period offset by gains of $185 ($166 net of minority
interest) from the sale of land. For the three months ended September 30,
2002, the Company recognized net losses of $2,170 ($1,906 net of minority
interest) on the sale of one apartment community and reserves to write-down to
fair value certain land parcels classified as held for sale during the period.
Fluctuations in gains (losses) on properties held for sale and sold between
periods reflect such variables as the timing of community sales and the size,
age and location of the communities sold as well as the timing and value of
properties designated as held for sale in each period. See the section titled
Discontinued Operations below for further discussion.

Depreciation expense increased $2,242 or 11.6% from 2002 to 2003 primarily due
to increased depreciation on newly stabilized and lease-up properties as these
properties were placed in service.

Interest expense increased $3,446 or 25.2% from 2002 to 2003 primarily due to a
$2,528 reduction in capitalized interest to development properties between
periods as the Companys development pipeline transitioned to operating
properties in late 2002 and into 2003. In addition to the impact of
capitalized interest, the remaining increase in interest expense from
continuing operations results from more of total interest expense being
reflected in discontinued operations in 2002 as compared to 2003. Excluding
the reduction in capitalized interest between periods, the combined interest
expense in continuing and discontinued operations was relatively flat between
periods.

-39-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

General and administrative expenses increased $240 or 6.9% from 2002 to 2003
primarily due to the increased amortization of long-term restricted stock and
stock option incentive awards, increased directors and officers insurance costs
and higher executive recruiting expenses offset somewhat by lower executive
salaries in 2003 due to the change in roles from executive to non-executive
status of the Companys chairman and vice-chairman in February 2003, as such
costs were charged against the $19,712 severance liability established during
the first quarter of 2003. The severance charges recorded in 2003 are
discussed further below.

Other expenses for the three months ended September 30, 2003 primarily include
development personnel and associated costs not allocable to development
projects.

Equity in income (losses) of unconsolidated real estate entities increased from
losses of $441 in 2002 to income of $60 in 2003. This increase was primarily
due to the continued lease-up of the properties held by the entities.

Stabilized Communities

Rental and other revenues decreased $2,033 or 3.5% from 2002 to 2003. This
decrease resulted primarily from a 4.7% decline in the average monthly rental
rate per apartment unit. The decline in average rental rate resulted in a
revenue decrease of approximately $2,812 between periods. These declines were
offset by lower up-front rental concessions of $392 and lower vacancy losses of
$230. The decline in rental rates in 2003 reflects the effect of the soft
economy on the Companys primary markets coupled with a continuing supply of
new apartment units. This trend was especially true for the Companys largest
markets, Atlanta, Georgia and Dallas, Texas, which experienced rental and other
revenue declines of $1,502 and $391 for the three months ended September 30,
2003 and 2002, respectively.

Property operating and maintenance expenses (excluding depreciation and
amortization) increased $203 or 1.0% between periods. This increase was
primarily due to increased insurance expenses of $223 or 22.8% and increased
repairs and maintenance expenses of $315 or 12.9% offset somewhat by decreased
utility expenses of $376 or 22.1%. Insurance costs increased primarily due to
higher premiums caused by the volatility in insurance markets in late 2002
caused by, among other things, increased terrorism risks and lower insurance
company investment returns. Repairs and maintenance expenses increased
primarily due to higher exterior painting costs between periods. Utility
expenses decreased primarily due to the benefits associated with the conversion
to the Companys in-house water billing systems.

Comparison of Nine Months Ended September 30, 2003 to Nine Months Ended
September 30, 2002

The Operating Partnership reported a net loss available to common unitholders
of $3,512 for the nine months ended September 30, 2003 compared to net income
available to common unitholders of $45,139 for the nine months ended September
30, 2002. The Company reported a net loss available to common shareholders of
$3,135 for the nine months ended September 30, 2003 compared to net income
available to common shareholders of $39,649 for the nine months ended September
30, 2002. The decline in net income between the nine months ended September 30,
2003 and 2002 primarily reflected the impact of severance, proxy and asset
impairment charges totaling $44,200 ($39,390 net of minority interest) recorded
in the nine months ended September 30, 2003. Severance charges included $1,795
($1,598 net of minority interest) recorded in the second quarter of 2003
related to the departures of two executive officers and $19,711 ($17,467 net of
minority interest) related to the change in roles from executive to
non-executive status of the Companys former chairman and vice-chairman of the
board of directors. The proxy charge of $5,231 ($4,658 net of minority
interest) reflected the legal, advisory and other costs associated with the
proxy contest in the second quarter of 2003. The $5,231 charge also included
the estimated legal and settlement costs associated with resolution of two
derivative and purported class action lawsuits filed against the Company during
the proxy contest. Asset impairment charges totaling $17,462 ($15,562 net of
minority interest) were recorded under the provisions of SFAS No. 144 to
write-down the cost of certain apartment communities to their estimated fair
value. These charges are discussed in more detail in the section below titled,
Discontinued Operations. In addition, the decline in net income reflects a
decrease in fully stabilized communities operating performance and reduced
earnings resulting from the Companys asset sale and capital recycling program.
The impact of these items is also discussed below.

-40-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Rental and other revenues increased $2,680 or 1.3% due to increased rental and
other revenues of $10,672 from newly stabilized and lease-up communities offset
by a decrease in rental and other revenues from fully stabilized communities of
$6,895 (see discussion below) and sold communities of $745. Property operating
and maintenance expenses (excluding depreciation and amortization) increased
$4,423 or 5.1% primarily due to increased expenses from newly stabilized and
lease-up communities as these expenses typically increase as property occupancy
levels increase towards stabilized occupancy levels and as new lease-up
properties are placed in service. Property operating and maintenance expenses
(excluding depreciation and amortization) for fully stabilized communities
increased $501 or 0.8% between periods (see discussion below).

The Company reported no net gains on property sales in continuing operations in
2003, as under the provisions of SFAS No. 144 all gains (losses) on sales of
properties classified as held for sale subsequent to January 1, 2002 are
classified as discontinued operations. The net gains on property sales included
in continuing operations of $13,275 in 2002 resulted from the sale of two
communities containing 540 units and one commercial property. These assets were
all classified as assets held for sale at December 31, 2001. For the nine
months ended September 30, 2003, the Company recognized net gains from
discontinued operations of $35,102 ($31,283 net of minority interest) on the
sale of two communities containing 1,009 units and a land parcel, reduced by
losses of $4,757 ($4,239 net of minority interest) resulting from losses on the
sale of certain land parcels and reserves to write-down to fair value one
community and certain land parcels classified as held for sale. For the nine
months ended September 30, 2002, the Company recognized net gains from
discontinued operations of $18,065 ($15,875 net of minority interest) on the
sale of five communities, containing 1,617 apartment units and one commercial
property, reduced by losses totaling $9,502 ($8,355 net of minority interest)
to reduce the carrying value of an apartment community, a commercial property
and certain land parcels designated as held for sale to their fair value. See
the section titled Discontinued Operations below for further discussion.

Depreciation expense increased $6,460 or 11.6% from 2002 to 2003 primarily due
to increased depreciation on newly stabilized and lease-up properties as these
properties were placed in service.

Interest expense increased $11,606 or 31.0% from 2002 to 2003 primarily due to
a $7,955 reduction in capitalized interest to development properties between
periods as the Companys development pipeline transitioned to operating
properties in late 2002 and early 2003. In addition to the impact of
capitalized interest, the remaining increase in interest expense from
continuing operations results from more of overall interest being reflected in
discontinued operations in 2002 as compared to 2003. Excluding the reduction
in capitalized interest between periods, the combined interest expense in
continuing and discontinued operations was relatively flat between periods.

General and administrative expenses decreased $283 or 2.6% from 2002 to 2003
primarily due to lower executive salaries and associated costs due to the
change in roles from executive to non-executive status of the Companys
chairman and vice-chairman in February 2003, as such costs were charged against
the $19,712 severance reserve established during the first quarter of 2003.
These lower salaries and associated costs were offset somewhat by higher third
quarter 2003 expenses related to incentive stock compensation awards, directors
and officers insurance and recruiting expenses. The severance charges recorded
in 2003 are discussed further below.

Other expenses of $844 in 2003 include legal expenses of $373 relating to board
of directors governance and transition matters, the settlement cost of $100
relating to the bankruptcy of a former technology investment, losses of $152 on
the disposal of the Companys partial ownership interest in a corporate
aircraft and $219 of development personnel and associated costs not allocable
to development projects. Other expenses in 2002 represent the costs associated
with the early extinguishment of indebtedness. This $136 amount was
reclassified from its prior year presentation as an extraordinary item as a
result of the current year implementation of SFAS No. 145.

The Company recorded severance and proxy charges of $21,506 and $5,231,
respectively, in the nine months ended September 30, 2003. These charges are
discussed in more detail below. No such charges were recorded in the
comparable period of 2002.

Equity in income (losses) of unconsolidated real estate entities increased from
a loss of $1,284 in 2002 to income of $7,768 in 2003. This increase was
primarily due to the recognition of the Companys share of a gain of $8,395
resulting from the sale of an apartment community by one of the limited
liability companies accounted for on the equity method (see note 3 to the
consolidated financial statements).

-41-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Stabilized Communities

Rental and other revenues decreased $6,895 or 4.0% from 2002 to 2003. This
decrease resulted primarily from a 5.2% decline in the average monthly rental
rate per apartment unit. The decline in average rental rate resulted in a
revenue decrease of approximately $9,712 between periods. The aggregate
decline in revenues related to other property fees totaled $703. These
declines were offset by lower up-front rental concessions of $1,248 and lower
vacancy losses of $2,272. The decline in rental rates in 2003 reflects the
effect of the soft economy on the Companys primary markets coupled with a
continuing supply of new apartment units. This trend was especially true for
the Companys largest markets, Atlanta, Georgia and Dallas, Texas, which
experienced rental and other revenue declines of $4,889 and $1,236,
respectively, between periods.

Property operating and maintenance expenses (excluding depreciation and
amortization) increased $501 or 0.8% from 2002 to 2003. Increased repairs and
maintenance expenses of $603 or 8.9%, increased insurance expenses of $640 or
21.6% and increased promotional expenses of $355 or 10.7% were offset by
decreased personnel expenses of $415 or 2.7% and decreased utility expenses of
$711 or 15.9%. The increase in repairs and maintenance expenses primarily
reflects increased exterior painting and exterior repairs between periods.
Insurance costs increased primarily due to higher premiums caused by the
volatility in insurance markets in late 2002 caused by, among other things,
increased terrorism risks and lower insurance company investment returns.
Promotional expenses increased primarily due to increased locator fees paid to
brokers as a result of occupancy increases between periods. Utility expenses
decreased primarily due to the benefits associated with the conversion to the
Companys in-house water billing system.

Discontinued Operations

In accordance with 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 three and nine months ended September 30, 2003, income from
discontinued operations included the results of operations of 11 communities,
containing 5,175 units, classified as held for sale at September 30, 2003 and
the results of operations of communities sold in 2003 through their sale date.
For the three and nine months ended September 30, 2002, income from
discontinued operations included the results of operations of all communities
classified as held for sale at September 30, 3003, communities sold in 2003 and
the results of operations of communities and commercial properties sold in 2002
through their sale dates.

The revenues and expenses of these communities for the three and nine months
ended September 30, 2003 and 2002 were as follows:

|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |        |        | 
|------------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------- | ----- | ------------------ | ------ | ----------------- | ----- | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                    |                                                                                |                |       | Three months ended |        | Nine months ended
|                                                                    |                                                                                |                |       | September 30,      |        | September 30,    
|                                                                    |                                                                                |                |       |                    |        |                  
|                                                                    |                                                                                |                |       | 2003               |        | 2002              |       | 2003   |        | 2002
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |     
|Revenues                                                            |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    | Rental                                                                         |                | $     | 9,918              |        |                   | $     | 14,085 |        |      | $      | 32,837 |        |   | $      | 46,746 |       
|                                                                    | Other                                                                          |                |       | 510                |        |                   |       | 644    |        |      |        | 1,521  |        |   |        | 2,025  |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |        |       
|                                                                    |                                                                                | Total revenues |       |                    | 10,428 |                   |       |        | 14,729 |      |        |        | 34,358 |   |        |        | 48,771 | 
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Expenses                                                            |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    | Property operating and maintenance
(exclusive of items shown separately below) |                |       | 4,196              |        |                   |       | 5,772  |        |      |        | 13,482 |        |   |        | 18,966 |       
|                                                                    | Depreciation                                                                   |                |       | 1,610              |        |                   |       | 2,816  |        |      |        | 6,276  |        |   |        | 8,640  |       
|                                                                    | Interest                                                                       |                |       | 1,361              |        |                   |       | 2,240  |        |      |        | 4,584  |        |   |        | 7,572  |       
|                                                                    | Asset impairment charge                                                        |                |       |                   |        |                   |       |       |        |      |        | 14,118 |        |   |        |       |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|                                                                    |                                                                                | Total expenses |       |                    | 7,167  |                   |       |        | 10,828 |      |        |        | 38,460 |   |        |        | 35,178 | 
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Income (loss) from discontinued operations
before minority interest |                                                                                |                | 3,261 |                    |        |                   | 3,901 |        |        |      | (4,102 | )      |        |   | 13,593 |       
|                                                                    | Minority interest                                                              |                |       | (336               | )      |                   |       | (475   | )      |      |        | 518    |        |   |        | (1,656 | )     
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       
|Income (loss) from discontinued operations                          |                                                                                | $              | 2,925 |                    |        | $                 | 3,426 |        |        | $    | (3,584 | )      |        | $ | 11,937 |       
|                                                                    |                                                                                |                |       |                    |        |                   |       |        |        |      |        |        |        |   |        |       

The decrease in revenues and expenses between periods results from the timing
and size of the communities sold.

-42-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

During the third quarter of 2003, the Company reclassified an impairment loss
of $14,118 from continuing operations to discontinued operations. The
impairment loss, originally recorded in the first quarter 2003, related to the
write-down of the cost of the Companys apartment community located in Phoenix,
Arizona to its estimated fair value. The reclassification of the impairment
loss to discontinued operations in the nine months ended September 30, 2003,
reflects the designation of this community as held for sale during the third
quarter of 2003.

For the three months ended September 30, 2003, the Company recognized net
losses from discontinued operations of $3,344 ($2,999 net of minority
interest), resulting from the reserve to write-down to fair value one community
containing 474 units classified as held for sale during the period reduced by gains of $185 ($166
net of minority interest) from the sale of land. For the nine months ended
September 30, 2003, the Company recognized net gains from discontinued
operations of $35,102 ($31,283 net of minority interest) on the sale of two
communities containing 1,009 units and a land parcel, reduced by losses of
$4,757 ($4,239 net of minority interest) resulting from losses on the sale of
certain land parcels and reserves to write-down to fair value one community and
certain other land parcels classified as held for sale.

For the three months ended September 30, 2002, the Company recognized net
losses from discontinued operations of $2,170 ($1,906 net of minority interest)
on the sale of one apartment community and reserves to write-down to fair value
certain other land parcels classified as held for sale during the period. For
the nine months ended September 30, 2002, the Company recognized net gains from
discontinued operations of $18,065 ($15,875 net of minority interest) on the
sale of five apartment communities, containing 1,617 units and one commercial
property offset by losses of $9,502 ($8,355 net of minority interest) to
write-down to fair value an apartment community, a commercial property and
certain parcels classified as held for sale during the period.

Severance and Proxy Charges

In the second quarter of 2003, the Company recorded severance charges of $1,795
($1,598 net of minority interest) relating to the departures of its executive
vice president and chief financial officer and its executive vice president of
asset management. In addition, the Company recorded the actual and estimated
costs associated with the recently concluded proxy contest of $5,231 ($4,658
net of minority interest). In the first quarter of 2003, the Company recorded
severance charges of $19,711 ($17,467 net of minority interest) relating to the
change in roles from executive to non-executive status of the Companys former
chairman and vice-chairman of the board of directors.

The severance charges recorded in the second quarter of 2003 represent the
aggregate amount of the estimated payments and benefits to be made to the
departing executive officers. The severance charges recorded in the first
quarter of 2003 consisted of a $13,994 ($12,399 net of minority interest)
charge representing the discounted present value of the estimated payments to
be made to the former chairman and vice-chairman under their existing
employment arrangements and a $5,718 ($5,068 net of minority interest) charge
representing the discounted present value of estimated net costs that may be
incurred by the Company as a result of the settlement of split-dollar life
insurance obligations to the individuals under their employment arrangements.
The estimated charge for the settlement of the split-dollar life insurance
obligations may change based upon a final legal determination regarding these
insurance contracts and a final settlement among the parties.

As discussed above, the Company recorded severance charges in the first and
second quarters of 2003. The following table summarizes the activity relating
to the accrued severance charges for the period from the date of the charges
through September 30, 2003:

|                                                |  |   |        |  
|----------------------------------------------- |  | - | ------ | -
|Aggregate severance charges                     |  | $ | 21,506 |  
|Payments for period                             |  |   | (2,173 | )
|Interest accretion                              |  |   | 627    |  
|                                                |  |   |        |  
|Accrued severance charges on September 30, 2003 |  | $ | 19,960 |  
|                                                |  |   |        |  

Substantially all of these remaining amounts will be paid over the terms of the
former executives employment contracts (10 to 13 years).

-43-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Proxy and related costs of $5,231 represent the actual and estimated legal,
advisory and other expenses associated with the solicitation of proxies from
shareholders resulting from the contested proxy contest initiated in April 2003
by the Companys former chairman and current chairman emeritus of the board of
directors. Additionally, the $5,231 amount includes the estimated legal and
settlement costs associated with the resolution of two derivative and purported
class action lawsuits filed against the Company during the proxy contest.
These lawsuits are expected to be settled subsequent to September 30, 2003.
Through September 30, 2003, substantially all of the proxy and related costs
have been paid.

Outlook

For the fourth quarter of 2003, management expects a moderation in the rate of
decline in rental and other revenues from fully stabilized communities compared
to the prior year period. Because of continued cost control efforts in 2003,
management expects modest full year increases in fully stabilized community
operating expenses primarily driven by projected full year increases in
property taxes and insurance expenses offset by reductions in personnel and
utility costs. In light of the expectation of decreased revenues and modestly
higher operating expenses for the full year of 2003, management expects
stabilized community net operating income to continue to show period over
period declines when compared to 2002.

For the fourth quarter of 2003, management expects same store property net
operating income to be flat to slightly lower as compared to the third quarter
of 2003, driven primarily by lower rent and upfront fees as leasing efforts are
anticipated to be impacted by the traditionally slower fall and winter seasons.

In the fourth quarter of 2003, management has forecasted the sale of two
apartment communities held for sale at September 30, 2003. These sales are
expected to generate accounting gains in excess of gains recognized in the
fourth quarter of 2002.

Management expects interest expense in the fourth quarter of 2003 to be lower
than in the third quarter of 2003 due to the repayment on October 1, 2003 of
$100,000 of 7.25% senior unsecured notes with lower rate line of credit
borrowings, offset somewhat by anticipated permanent debt financing on assets
owned by joint ventures. Management expects general, administrative and other
expenses to increase in the fourth quarter of 2003 resulting from the
amortization of third quarter restricted stock and stock option awards and the
expensing of previously capitalized development personnel and related costs.

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 declined from $97,388
in the nine months ended September 30, 2002 to $88,333 in the nine months ended
September 30, 2003 primarily due to lower operating earnings, excluding gains
from property sales, from the Companys property portfolio.

Net cash provided by investing activities increased from a net use of $26,035
in the nine months ended September 30, 2002 to net cash provided by investing
activities of $151,637 in the nine months ended September 30, 2003 primarily
due to reduced development and construction expenditures in 2003 and the net
repayment of construction loan advances and cash distributions from
unconsolidated real estate entities in 2003, partially offset by reduced
proceeds from wholly-owned asset sales between periods.

Net cash used in financing activities increased from $71,110 in the nine months
ended September 30, 2002 to $242,145 in the nine months ended September 30,
2003 primarily due to the increased repayment of outstanding debt in 2003
compared to 2002. The proceeds used to repay consolidated debt balances were
generated from asset sale proceeds and through the repayment of construction
loan advances and cash distributions from unconsolidated entities.

The Company has elected to be taxed as 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.

-44-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Through June 30, 2003, 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. In the
third quarter of 2003, the Companys net cash flow from operations, reduced by
annual capital expenditures discussed above, was not sufficient to fully fund
the Companys current level of dividend payments to common shareholders by
approximately $3,000. For the fourth quarter of 2003, the Companys net cash
flow from operations, reduced by annual capital expenditures, is also expected
to be insufficient to fund the Companys current dividend level by
approximately $3,000 to $4,000. The Company currently intends to use a
combination of proceeds from asset sales and line of credit borrowings to fund
the additional cash flow necessary to fully fund the Companys current
quarterly dividend to common shareholders of $0.45 per share. 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 construction and development and
certain of its other long-term liquidity requirements, including maturities of
long-term debt and lines of credit, debt and equity commitments to
unconsolidated entities (summarized in the Companys Form 10-K for the year
ended December 31, 2002) and possible land and property acquisitions through
the selective sale of operating properties and through long-term secured and
unsecured borrowings. Management believes the Company has adequate borrowing
capacity and access to real estate sales markets to fund these requirements.
Subsequent to September 30, 2003, the Company utilized its available borrowing
capacity under its unsecured lines of credit to retire its $100,000 of 7.25%
senior unsecured notes maturing in October 2003. The capacity under the lines
of credit was created primarily through proceeds from property sales.
Additionally, in prior years the Company has utilized equity joint ventures as
a means of raising capital and reducing the size and exposure of its
development property pipeline. The Company may continue to use joint venture
arrangements in future years as a source of capital and to reduce its exposure
to certain risks of its future development pipeline.

As previously discussed, the Company intends to use the proceeds from the sale
of operating properties as the primary source of capital to fund its current
and future development and acquisition expenditures. The Company began an
active asset sale and capital recycling program in 2000 as the primary means to
fund its on-going community development program. Total funds raised in fiscal
2002 and fiscal 2001 were $182,216 and $220,122, respectively. In the nine
months ended September 30, 2003, the Company sold two apartment communities,
containing 1,009 apartment units, and certain land parcels for net proceeds of
$99,858. Additionally in 2003, the Company received net proceeds of
approximately $75,000 (including the repayment of the construction loan from
the venture) from the sale of one apartment community held in an unconsolidated
entity.

In the third quarter of 2003, the Company initiated marketing efforts to sell
11 apartment communities containing 5,175 units, with estimated gross proceeds
ranging from $340,000 to $350,000. The estimated closing dates of the 11
communities range from the fourth quarter of 2003 to the second quarter of
2004. The 11 communities are located in Atlanta, Georgia, Dallas, Texas,
Phoenix, Arizona and Orlando, Florida. The proceeds from these sales are
expected to be used to fund future development expenditures, future property
acquisitions, future debt reduction and to opportunistically repurchase the
Companys preferred and common stock. The sale also may generate significant
taxable capital gains. The Company expects to be able to use its regular
quarterly dividend, as well as other tax planning strategies, to pay out or
otherwise mitigate the impact of these taxable capital gains, but also may
evaluate a special dividend in 2004. In connection with the sale of six of the
properties discussed above, the Company expects that the purchaser(s) will
acquire those properties subject to a combined total of approximately $119
million of tax-exempt mortgage debt. These sales are part of the Companys
plans to focus its operations on fewer markets, maintain the low average age
and high quality of the portfolio and reduce the Companys market
concentrations in Atlanta, Georgia and Dallas, Texas.

One of the 11 properties discussed above, a 166-unit apartment community,
located in Atlanta, GA, is currently under contract to be sold to an entity
controlled by L. Barry Teague, a unitholder who served as a director of the
Company from February 2003 to September 2003. Mr. Teague was the high bidder
for the asset in an auction sales process conducted by a third-party broker.
The contract with Mr. Teague stipulates that approximately 40% of the $13,000
purchase price will consist of a redemption of a portion of Mr. Teagues
partnership units in the Operating Partnership that owns substantially all of
the Companys assets. Partnership units are convertible, on a one-for-one
basis, into shares of the Company, or into cash at the Companys option. The
redemption price per unit has been set at $24.83, which is a discount of 10% to
the average daily closing price of the Companys common stock on the New York
Stock Exchange for the twenty consecutive trading days prior to the effective
date of the contract.

-45-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

As of September 30, 2003, adjusted for line of credit borrowings used to retire
$100,000 of senior unsecured notes on October 1, 2003 (see below), the Company
had available credit facility borrowing capacity of approximately $200,000
under its existing $320,000 revolving credit facility and its $20,000 cash
management credit facility. The Companys primary credit facility with total
capacity of $320,000 and the $20,000 cash management facility mature in April
2004. Management currently expects to renew its primary credit facility with a
capacity of $300,000 or more. Additionally, management expects to renew its
$20,000 cash management credit facility. Management believes it will have
adequate capacity under its facilities to execute its remaining 2003 and 2004
business plans without a significant level of additional asset sales or other
secured and unsecured debt financings.

In the third quarter of 2003, the Companys unsecured public debt ratings were
downgraded by Moodys Investor Service from Baa2 to Baa3. The Companys
current unsecured debt ratings are BBB by Standard & Poors and Baa3 by Moodys
Investors Service. The Company continues to be rated investment grade by both
rating agencies. Under the terms of the Companys credit facility, the
interest rate on borrowings will remain at LIBOR plus 0.85% as the interest
rate is based on the higher of the Companys unsecured debt ratings (in a
situation where the Company has split ratings). A lowering of the Companys
unsecured public debt ratings by one rating level by Standard & Poors would
lead to increased pricing under its credit facility to LIBOR plus 1.10%.
Downgrades may also increase the pricing of new issuances of public unsecured
debt. Management does not anticipate that the downgrade by Moodys Investor
Service will materially affect the Companys ability to obtain the requisite
level of debt financing needed to finance its business plan. Should the
Company not maintain its investment grade credit ratings, 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
lead by Wachovia Bank (the Revolver), for its short-term financing needs. At
September 30, 2003, 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 (see the discussion in the previous section regarding changes in
the Companys credit ratings and the impact on the interest rate under the
credit facility). 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 prior to its maturity. The Company currently
expects that this line will be renewed with a total capacity of $300,000 or
more.

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 April
2004. At September 30, 2003, the Company has issued letters of credit to third
parties totaling $963 under this facility.

Debt Retirements

Upon their maturity on October 1, 2003, the Company repaid $100,000 of its
7.25% senior unsecured notes using borrowings under its unsecured lines of
credit.

-46-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Stock Repurchase Program

Subsequent to September 30, 2003, the Companys Board of Directors adopted a
new stock repurchase program under which the Company may repurchase up to
$200,000 of common stock or preferred stock at market prices from time to time
through December 31, 2004. Under a previous program, which expired in
September 2003, the Company repurchased 3,127,600 shares of common stock and
100,000 shares of preferred stock over a two-year period at an aggregate cost
of approximately $119,226. The Company acquired no common or preferred stock
in the nine months ended September 30, 2003. 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
September 30, 2003 and December 31, 2002:

|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |           | 
|---------------------------------------- | -------------------- | ------------- | -------------- | ------------- | ----- | ------------- | --- | ------------- | ---- | --------- | -------- | ---- | ------------- | ------- | ------------ | --------- | ------- | ------- | ------- | --------- | 
|                                         |                      |               |                |               |       |               |     |               |      |           | Maturity |      | September 30, |         | December 31,
|Description                              |                      | Payment Terms |                | Interest Rate |       | Date (1)      |     | 2003          |      | 2002     
|                                         |                      |               |                |               |       |               |     |               |      |          
|Unsecured Notes                          |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|                                         | Senior Notes         |               | Int.           |               |       | 6.11% - 7.70% |     |               |      | 2003-2010 |          |      | $             | 385,000 |              |           | $       | 385,000 |        
|                                         | Medium Term Notes    |               | Int.           |               |       | 6.69% - 8.12% | (2) |               |      | 2004-2015 |          |      |               | 323,000 |              |           |         | 323,000 |        
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         | 708,000      |           |         |         | 708,000 |          
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|Unsecured Lines of Credit & Other        |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|                                         | Revolver             |               |                | N/A           |       |               |     | LIBOR + 0.85% | (3)  |           |          | 2004 |               |         |              | 35,000    |         |         |         | 185,000   | 
|                                         | Cash Management Line |               |                | N/A           |       |               |     | LIBOR + 0.75% |      |           |          | 2004 |               |         |              | 5,301     |         |         |         | 11,369    | 
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         | 40,301       |           |         |         | 196,369 |          
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|Conventional Fixed Rate (Secured)        |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|                                         | FNMA                 |               | Prin. and Int. |               |       | 6.975%        | (4) |               |      | 2029      |          |      |               | 99,800  |              |           |         | 101,100 |        
|                                         | Other                |               | Prin. and Int. |               |       | 5.50% - 7.69% |     |               |      | 2007-2013 |          |      |               | 192,799 |              |           |         | 194,706 |        
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         | 292,599      |           |         |         | 295,806 |          
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|Tax Exempt Floating Rate
Bonds (Secured) |                      | Int.          |                |               | 1.08% | (5)           |     |               | 2025 |           |          |      | 214,380       |         |              |           | 214,380 |        
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          
|                                         | Total                |               |                |               |       |               |     |               |      |           |          |      |               |         | $            | 1,255,280 |         |         | $       | 1,414,555 | 
|                                         |                      |               |                |               |       |               |     |               |      |           |          |      |               |         |              |           |         |         |         |          



---

|(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 September 30,2003, the weighted average
interest rate was 1.98%.                                                                                                                                                                                                                                                                                             
|   
|(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 September 30, 2003 before credit enhancements. At
September 30, 2003, the Company has outstanding interest rate cap
arrangements that limit the Companys exposure to increases in the base
interest rate to 5%.

Capitalization of Fixed Assets and Community Improvements

The Company has a policy of capitalizing certain of 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. The
Company expenses as incurred all interior and exterior painting of communities.

-47-



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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

The Company capitalizes interest, real estate taxes, and certain internal
personnel and associated costs related to apartment communities under
development and construction. The internal 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 are 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 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 as well as property management and leasing personnel expenses) of
such communities.

A summary of community development improvements and other capitalized
expenditures for the three and nine months ended September 30, 2003 and 2002 is
detailed below.

|                                                                       |  |                    |       |                   |  |      |        |      |  |   |        |  |  |   |         | 
|---------------------------------------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------- | 
|                                                                       |  | Three months ended |       | Nine months ended
|                                                                       |  | September 30,      |       | September 30,    
|                                                                       |  |                    |       |                  
|                                                                       |  | 2003               |       | 2002              |  | 2003 |        | 2002
|                                                                       |  |                    |       |                   |  |      |        |     
|New community development and acquisition activity                     |  | $                  | 2,991 |                   |  | $    | 25,533 |      |  | $ | 22,823 |  |  | $ | 118,293 | 
|Non-recurring capital expenditures                                     |  |                    |       |                   |  |      |        |      |  |   |        |  |  |   |         | 
|Revenue generating additions and improvements (1)                      |  |                    | 105   |                   |  |      | 340    |      |  |   | 837    |  |  |   | 1,306   | 
|Other community additions and improvements (2)                         |  |                    | 1,055 |                   |  |      | 810    |      |  |   | 3,231  |  |  |   | 2,075   | 
|Recurring capital expenditures                                         |  |                    |       |                   |  |      |        |      |  |   |        |  |  |   |         | 
|Carpet replacements and other community additions
and improvements (3) |  |                    | 2,996 |                   |  |      | 2,584  |      |  |   | 6,982  |  |  |   | 7,315   | 
|Corporate additions and improvements                                   |  |                    | 182   |                   |  |      | 375    |      |  |   | 521    |  |  |   | 923     | 
|                                                                       |  |                    |       |                   |  |      |        |      |  |   |        |  |  |   |         | 
|                                                                       |  | $                  | 7,329 |                   |  | $    | 29,642 |      |  | $ | 34,394 |  |  | $ | 129,912 | 
|                                                                       |  |                    |       |                   |  |      |        |      |  |   |        |  |  |   |         | 
|Other Data                                                             |  |                    |       |                   |  |      |        |      |  |   |        |  |  |   |         | 
|Capitalized interest                                                   |  | $                  | 225   |                   |  | $    | 2,753  |      |  | $ | 3,338  |  |  | $ | 11,293  | 
|                                                                       |  |                    |       |                   |  |      |        |      |  |   |        |  |  |   |         | 
|Capitalized personnel and associated costs (4)                         |  | $                  | 387   |                   |  | $    | 1,266  |      |  | $ | 1,566  |  |  | $ | 3,995   | 
|                                                                       |  |                    |       |                   |  |      |        |      |  |   |        |  |  |   |         | 



---

|(1) |  | Represents expenditures for major renovations of communities, water
sub-metering equipment and other unit 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 personnel and associated costs capitalized to construction and
development activities.                                                                     

-48-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Current Development Activity

The Company has under construction or in initial lease-up two new communities
that will contain an aggregate of 468 units upon completion. The Companys
communities under development or in initial lease-up are summarized in the
following table:

|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|-------------------------------------------------------- |  | --------- | --- | --------------- |  | ------------ | --- | ------------ |  | ----------- | --- | ------------- |  | ---------- | ------ | --------- |  | --------- | ------ |  |  |  | ------ |  |  |  | ---- | - |  |  | ---- | -
|                                                         |  |           |     |                 |  | Estimated    |     | Amount       |  |             |     |               |  |            |        |           |  | Estimated |        |  |  |  |        |  |  | 
|                                                         |  |           |     |                 |  | Construction |     | Spent        |  | Quarter of  |     | Quarter of    |  | Quarter of |        | %         |  | %        
|                                                         |  | Number of |     | Cost            |  | As of        |     | Construction |  | First Units |     | Stabilized    |  | Leased     |        | Occupied 
|Metropolitan Area                                        |  | Units     |     | ($ in millions) |  | 9/30/2003    |     | Start        |  | Available   |     | Occupancy (1) |  | 11/1/2003  |        | 11/1/2003
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          
|Wholly Owned Construction/Lease-up
Communities           |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|New York City, NY                                        |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post ToscanaTM                                           |  |           | 199 |                 |  |              | 92  |              |  |             | 92  |               |  |            | 1Q '02 |           |  |           | 1Q '03 |  |  |  | 2Q '04 |  |  |  | 79.4 | % |  |  | 74.9 | %
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Subtotal Wholly-Owned
Construction/Lease-up Communities  |  |           | 199 |                 |  | $            | 92  |              |  | $           | 92  |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Co-Investment Construction/Lease-up
Communities          |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Washington D.C.                                          |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Massachusetts AvenueTM (2)                          |  |           | 269 |                 |  |              | 72  |              |  |             | 72  |               |  |            | 2Q '01 |           |  |           | 4Q '02 |  |  |  | 4Q '03 |  |  |  | 86.6 | % |  |  | 84.4 | %
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Subtotal Co-Investment
Construction/Lease-up Communities |  |           | 269 |                 |  | $            | 72  |              |  | $           | 72  |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Construction Totals                                      |  |           | 468 |                 |  | $            | 164 |              |  | $           | 164 |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|less Partners Portion                                   |  |           |     |                 |  | $            | (47 | )            |  | $           | (47 | )             |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Properties Funding Commitment                      |  |           |     |                 |  | $            | 117 |              |  | $           | 117 |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |           |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  



---

|(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) |  | This community is being developed in a joint venture accounted for under
the equity method (Post equity ownership is 35%).                                                                       

Inflation

Substantially all of the leases at the Companys apartment 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.

-49-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

Funds from Operations and Funds Available for Distribution

The Company uses the National Association for Real Estate Investment Trusts
(NAREIT) definition of funds from operations (FFO). FFO is defined by
NAREIT as net income (loss) 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 all determined on
a consistent basis in accordance with GAAP. In October 2003, NAREIT issued
additional guidance modifying the definition of FFO. The first modification
revised the treatment of asset impairment losses and impairment losses incurred
to write-down assets to their fair value at the date assets are classified as
held for sale, to include such losses in FFO. Previously such losses were
excluded from FFO consistent with the treatment of gains on property sales.
The second modification clarified the treatment of original issue costs and
premiums paid on preferred stock redemptions to deduct such costs and premiums
in determining FFO available to common shareholders. This modification was
consistent with the recently clarified treatment of these costs under GAAP.
The Company has adopted the modifications to the definition of FFO effective
with its reported results for the period ended September 30, 2003. Prior
period and prior year presentations of FFO have been restated to conform with
the revised definition of FFO. FFO is a supplemental non-GAAP financial
measure. 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.

The Company also uses FFO as an operating measure. Accounting for real estate
assets using historical cost accounting under GAAP assumes that the value of
real estate assets diminishes predictably over time. NAREIT stated in its
April 2002 White Paper on Funds from Operations since real estate asset values
have historically risen or fallen with market conditions, many industry
investors have considered presentations of operating results for real estate
companies that use historical cost accounting to be insufficient by
themselves. As a result, the concept of FFO was created by NAREIT for the
REIT industry to provide an alternate measure. Since the Company agrees with
the concept of FFO and appreciates the reasons surrounding its creation,
management believes that FFO is an important supplemental measure of operating
performance. In addition, since most equity REITs provide FFO information to
the investment community, the Company believes FFO is a useful supplemental
measure for comparing the Companys results to those of other equity REITs.
The Company believes that the line on the Companys consolidated statement of
operations entitled net income available to common shareholders is the most
directly comparable GAAP measure to FFO.

The Company uses funds available for distribution (FAD) as an operating
measure. FAD is defined as FFO less capital expenditures funded by operations.
FAD is a supplemental non-GAAP financial measure. The Company believes that
FAD is an important supplemental measure of operating performance for an equity
REIT because it provides investors with an indication of the REITs ability to
fund its cash needs through earnings, including debt service requirements,
construction and development expenditures and dividends and distributions. In
addition, since most equity REITs provide FAD information to the investment
community, the Company believes FAD is a useful supplemental measure for
comparing the Company to other REITs. The Company believes that the line on
the Companys consolidated statement of operations entitled net income
available to common shareholders is the most directly comparable GAAP measure
to FAD.

FFO and FAD should not be considered as an alternative to net income available
to common shareholders (determined in accordance with GAAP) as an indicator of
the Companys financial performance. While management believes that FFO and FAD
are important supplemental non-GAAP financial measures, management believes it
is also important to stress that FFO and FAD should not be considered as an
alternative to cash flow from operating activities (determined in accordance
with GAAP) as a measure of the Companys liquidity. Further, FFO and FAD are
not necessarily indicative of sufficient cash flow to fund all of the Companys
needs or ability to service indebtedness or make distributions.

-50-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

A reconciliation of net income available to common shareholders to FFO and FAD
is provided below.

|                                                                                                                   |  |                    |            |                   |  |          |            |          |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------------------------------------ |  | ------------------ | ---------- | ----------------- |  | -------- | ---------- | -------- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                                   |  | Three months ended |            | Nine months ended
|                                                                                                                   |  | September 30,      |            | September 30,    
|                                                                                                                   |  |                    |            |                  
|                                                                                                                   |  | 2003               |            | 2002 (1)          |  | 2003 (1) |            | 2002 (1)
|                                                                                                                   |  |                    |            |                   |  |          |            |         
|Net income available to common shareholders                                                                        |  | $                  | (4,514     | )                 |  | $        | 3,291      |          |  | $ | (3,135     | ) |  | $ | 39,649     |  
|Minority interest of common unitholders  continuing operations                                                    |  |                    | (457       | )                 |  |          | 244        |          |  |   | (3,160     | ) |  |   | 2,791      |  
|Minority interest in discontinued operations (2)                                                                   |  |                    | 11         |                   |  |          | 211        |          |  |   | 2,783      |   |  |   | 2,699      |  
|Gains on property sales  continuing operations                                                                    |  |                    |           |                   |  |          |           |          |  |   |           |   |  |   | (13,275    | )
|Gains on property sales  unconsolidated entities                                                                  |  |                    |           |                   |  |          |           |          |  |   | (8,395     | ) |  |   |           |  
|Losses
(gains) on properties held for sale and sold  discontinued
operations (excluding asset impairment charges) |  |                    | (185       | )                 |  |          | 321        |          |  |   | (33,690    | ) |  |   | (18,065    | )
|Depreciation on wholly-owned real estate assets, net (3)                                                           |  |                    | 21,571     |                   |  |          | 20,904     |          |  |   | 64,555     |   |  |   | 60,635     |  
|Depreciation on real estate assets held in unconsolidated entities                                                 |  |                    | 333        |                   |  |          | 336        |          |  |   | 1,236      |   |  |   | 736        |  
|                                                                                                                   |  |                    |            |                   |  |          |            |          |  |   |            |   |  |   |            |  
|Funds from operations available to common shareholders                                                             |  |                    | 16,759     |                   |  |          | 25,307     |          |  |   | 20,194     |   |  |   | 75,170     |  
|Recurring capital expenditures                                                                                     |  |                    | (2,996     | )                 |  |          | (2,584     | )        |  |   | (6,982     | ) |  |   | (7,315     | )
|Non-recurring capital expenditures                                                                                 |  |                    | (1,055     | )                 |  |          | (810       | )        |  |   | (3,231     | ) |  |   | (2,075     | )
|                                                                                                                   |  |                    |            |                   |  |          |            |          |  |   |            |   |  |   |            |  
|Funds available for distribution to common shareholders(4)                                                         |  | $                  | 12,708     |                   |  | $        | 21,913     |          |  | $ | 9,981      |   |  | $ | 65,780     |  
|                                                                                                                   |  |                    |            |                   |  |          |            |          |  |   |            |   |  |   |            |  
|Cash flow provided by (used in):                                                                                   |  |                    |            |                   |  |          |            |          |  |   |            |   |  |   |            |  
|Operating activities                                                                                               |  | $                  | 34,711     |                   |  | $        | 35,242     |          |  | $ | 88,333     |   |  | $ | 97,388     |  
|Investing activities                                                                                               |  | $                  | (7,260     | )                 |  | $        | (39,936    | )        |  | $ | 151,637    |   |  | $ | (26,035    | )
|Financing activities                                                                                               |  | $                  | (27,538    | )                 |  | $        | 213        |          |  | $ | (242,145   | ) |  | $ | (71,110    | )
|Weighted average shares outstanding  basic                                                                        |  |                    | 37,840,954 |                   |  |          | 35,913,074 |          |  |   | 37,522,832 |   |  |   | 36,897,867 |  
|Weighted average shares and units outstanding  basic                                                              |  |                    | 42,189,895 |                   |  |          | 42,031,962 |          |  |   | 42,102,260 |   |  |   | 42,016,755 |  
|Weighted average shares outstanding  diluted                                                                      |  |                    | 37,857,411 |                   |  |          | 36,916,835 |          |  |   | 37,524,488 |   |  |   | 36,941,598 |  
|Weighted average shares and units outstanding  diluted                                                            |  |                    | 42,206,352 |                   |  |          | 42,035,723 |          |  |   | 42,103,916 |   |  |   | 42,060,486 |  



---

|(1) |  | For the three and nine months ended September 30, 2002, FFO available to
common shareholders has been restated from the prior year presentation to
reflect a reduction of $1,849 and $9,502 for impairment losses on real
estate assets resulting from the NAREIT modification of the definition of
FFO. For the nine months ended September 30, 2003, FFO available to
common shareholders has been restated to reflect a reduction of $14,118
for impairment losses on real estate recognized in the first half of 2003.
Additionally, for the nine months ended September 30, 2002, FFO available
to common shareholders has been restated from the prior year presentation
to reflect a reduction of $136 for early debt extinguishment costs
reclassified from extraordinary items to operating expenses under SFAS No.
145.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents the minority interest in earnings and gains (losses) on
properties held for sale and sold reported as discontinued operations for
the periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(3) |  | Depreciation on wholly-owned real estate assets is net of the minority
interest portion of depreciation in consolidated entities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(4) |  | Since the Company does not add back the depreciation of non-real estate
assets in its calculation of funds from operations, non-real estate
related capital expenditures of $182 and $375 for the three months ended
September 30, 2003 and 2002, respectively, and $521 and $923 for the nine
months ended September 30, 2003 and 2002, respectively, are excluded from
the calculation of funds available for distribution.                                                                                                                                                                                                                                                                                                                                                                                                    

-51-



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)

---

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys primary market risk exposure is interest rate risk. At September
30, 2003, the Company had $165,101 of variable rate debt tied to LIBOR. In
addition, the Company had $214,380 of 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
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 table below provides information about the Companys derivative financial
instruments that are sensitive to changes in interest rates. 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
contracts.

|                          |                   |                   |                     |        |            |         |   |  |               |  |               |         |  |         |          |         |   |        |         |   |  |  |  |  | 
|------------------------- | ----------------- | ----------------- | ------------------- | ------ | ---------- | ------- | - |  | ------------- |  | ------------- | ------- |  | ------- | -------- | ------- | - | ------ | ------- | - |  |  |  |  | 
|                          |                   |                   |                     |        |            |         |   |  |               |  |               |         |  |         | 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 | 6.04   | %          |         |   |  | 1 month LIBOR |  |               | 7/31/09 |  |         | $        | (13,519 | )
|                          |                   | to $90,270        |                     |        |            |         |   |  |               |  |               |         |  |         |          |         |   |       
|                          | Variable to fixed |                   | $                   | 25,000 |            | 6.53    | % |  |               |  | 3 month LIBOR |         |  | 2/01/05 |          |         |   | (1,750 | )      
|Interest rate cap         |                   | $                 | 107,190             |        | 5.00       | %       |   |  |               |  |              |         |  |         | 2/01/08  |         |   |        | 850     |  
|Interest rate cap         |                   | $                 | 107,190             |        | 5.00       | %       |   |  |               |  |              |         |  |         | 2/01/08  |         |   |        | 850     |  
|                          |                   |                   |                     |        |            |         |   |  |               |  |               |         |  |         |          |         |   |        |         |  
|                          |                   |                   |                     |        |            |         |   |  |               |  |               |         |  |         |          |         |   | $      | (13,569 | )
|                          |                   |                   |                     |        |            |         |   |  |               |  |               |         |  |         |          |         |   |        |         |  

As more fully described in note 1 to the consolidated financial statements, the
interest rate swap and cap arrangements are carried on the consolidated balance
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 $99,800 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 September 30, 2003, would increase or decrease by approximately
$2,500 on an annualized basis.

Effective February 1, 2003, the Company entered into two interest rate cap
arrangements with two separate financial institutions with notional amounts
totaling $214,380. 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 totaling $214,380. The Company is required to maintain this
interest rate exposure protection under the terms of the financing
arrangements. The $2,720 cost of the interest rate arrangements will be
amortized as additional expense over their five-year term in accordance with
SFAS No. 133.

There have been no material changes in the value of the Companys fixed debt since December 31, 2002.

-52-



---



##### 



ITEM 4. 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 as of the end of the period covered by this quarterly
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 accounting 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 changes to the
Companys internal controls over financial reporting during the period covered
by this report that materially affected, or are reasonably likely to materially
affect, the Companys internal controls over financial reporting 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
Securities Exchange Act of 1934, as amended, 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 or submits
under the Exchange Act are accumulated and communicated to the Companys
management, including its principal executive officer and principal accounting
officer, as appropriate, to allow timely decisions regarding required
disclosure.

-53-



---



##### 



PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

On May 5, 2003, the Company received notice that a shareholder derivative and
purported class action lawsuit was filed against members of the board of
directors of the Company, including Mr. Williams, and the Company as a nominal
defendant. This complaint was filed in the Superior Court of Fulton County,
Atlanta, Georgia on May 2, 2003 and alleges various breaches of fiduciary
duties by the board of directors of the Company and seeks, among other relief,
the disclosure of certain information by the defendants. This complaint also
seeks to compel the defendants to undertake various actions to facilitate a
sale of the Company. On May 7, 2003, the plaintiff made a request for voluntary
expedited discovery. This lawsuit is expected to be settled subsequent to
September 30, 2003.

On May 13, 2003, the Company received notice that a shareholder derivative and
purported class action lawsuit was filed against certain members of the board
of directors of the Company and against the Company as a nominal defendant.
Mr. Williams was not named as a defendant in the lawsuit. The complaint was
filed in the Superior Court of Fulton County, Atlanta, Georgia on May 12, 2003
and alleges breaches of fiduciary duties, abuse of control and corporate waste
by the defendants. The plaintiff seeks monetary damages and, as appropriate,
injunctive relief. This lawsuit is expected to be settled subsequent to
September 30, 2003.

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 will not have a material adverse effect on the Companys
results of operations or financial position.

ITEM 2.CHANGES IN SECURITIES AND USE OF PROCEEDS

None

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 5.OTHER INFORMATION

None

-54-



---



##### 



ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

Certain exhibits required by Item 601 of Regulation S-K have been filed with
previous reports (as indicated in the footnotes to this Exhibit Table) and are
incorporated by reference herein.

|        |  |                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)     |  | Exhibits                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                 
|3.1(a)  |  | Articles of Incorporation of the Company.                                                                                                                                                                                                       
|3.2(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                                                                                                                                          
|3.3(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                                                                                                                                          
|3.4(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                                                                                                                                          
|3.5(c)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                                                                                                                                          
|3.6     |  | Bylaws of the Company (as Amended and Restated as of November 5, 2003).                                                                                                                                                                         
|4.1(d)  |  | Indenture between the Company and SunTrust Bank, as Trustee.                                                                                                                                                                                    
|4.2(d)  |  | First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee.                                                                                                                                                
|10.1    |  | Restricted Stock Grant Certificate for Robert C. Goddard, III, dated July 17, 2003.                                                                                                                                                             
|10.2    |  | Non-Incentive Stock Option Certificate for Robert C. Goddard, III, dated July 17, 2003.                                                                                                                                                         
|10.3    |  | Form of Amendment No. 1 to Employment Agreement with David P. Stockert.                                                                                                                                                                         
|10.4    |  | Form of Amendment No. 2 to Employment Agreement with Thomas D. Senkbeil.                                                                                                                                                                        
|11.1(e) |  | Statement Regarding Computation of Per Share Earnings.                                                                                                                                                                                          
|31.1    |  | Certification of the Chief Executive Officer and acting Chief Financial Officer pursuant to Rule
13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under
Section 302 of the Sarbanes-Oxley Act of 2002.
|32.1    |  | Certification of the Chief Executive Officer and acting Chief Financial Officer pursuant to 18 U.S.C.
1350, as adopted under Section 906 of the Sarbanes-Oxley Act of 2002.                                                                     
|        |  |                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                 
|(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 Annual Report on Form 10-K of the Registrants for the year ended December
31, 2002.                                                                                                                                  
|(c)     |  | Filed as an exhibit to the Quarterly Report on Form 10-Q of the Registrants for the quarter ended
September 30, 1999.                                                                                                                           
|(d)     |  | Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No. 333-42884) of the Company.                                                                                                                                          
|(e)     |  | The information required by this exhibit is included in note 5 to the consolidated financial statements.                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                 
|(b)     |  | Reports on Form 8-K                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                 
|        |  | On August 5, 2003, the Registrants filed a Form 8-K including the Registrants earnings release and
supplemental financial information package relating to the quarterly period ended June 30, 2003.                                            
|        |  |                                                                                                                                                                                                                                                 
|        |  | On August 6, 2003, the Registrants filed a Form 8-K including a schedule of supplemental financial
information used internally to calculate net asset value.                                                                                    

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---



##### 



SIGNATURES

Pursuant to the requirements 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    |  |                                                                                                                  
|                       
|                        |  |                                                                                                                  
|                       
|November 14, 2003(Date) |  | /s/ David P. StockertDavid P. Stockert
President and Chief Executive Officer
(acting Principal Financial Officer)
|                       
|                        |  |                                                                                                                  
|                       
|November 14, 2003(Date) |  | /s/ Arthur J. QuirkArthur J. Quirk
Senior Vice President and Controller,
Chief Accounting Officer                

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---



##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                           |  |                                                                                                                  
|-------------------------- |  | -----------------------------------------------------------------------------------------------------------------
|POST APARTMENT HOMES, L.P. |  | By: Post GP Holdings, Inc., its sole General Partner                                                             
|                          
|November 14, 2003(Date)    |  | /s/ David P. StockertDavid P. Stockert
President and Chief Executive Officer
(acting Principal Financial Officer)
|                          
|November 14, 2003(Date)    |  | /s/ Arthur J. QuirkArthur J. Quirk
Senior Vice President and Controller,
Chief Accounting Officer                

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---



##### 



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(a)  |  | Articles of Incorporation of the Company.                                                                                                                                                                                                       
|3.2(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                                                                                                                                          
|3.3(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                                                                                                                                          
|3.4(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                                                                                                                                          
|3.5(c)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                                                                                                                                          
|3.6     |  | Bylaws of the Company (as Amended and Restated as of November 5, 2003).                                                                                                                                                                         
|4.1(d)  |  | Indenture between the Company and SunTrust Bank, as Trustee.                                                                                                                                                                                    
|4.2(d)  |  | First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee.                                                                                                                                                
|10.1    |  | Restricted Stock Grant Certificate for Robert C. Goddard, III, dated July 17, 2003.                                                                                                                                                             
|10.2    |  | Non-Incentive Stock Option Certificate for Robert C. Goddard, III, dated July 17, 2003.                                                                                                                                                         
|10.3    |  | Form of Amendment No. 1 to Employment Agreement with David P. Stockert.                                                                                                                                                                         
|10.4    |  | Form of Amendment No. 2 to Employment Agreement with Thomas D. Senkbeil.                                                                                                                                                                        
|11.1(e) |  | Statement Regarding Computation of Per Share Earnings.                                                                                                                                                                                          
|31.1    |  | Certification of the Chief Executive Officer and acting Chief Financial Officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under
Section 302 of the Sarbanes-Oxley Act of 2002.
|32.1    |  | Certification of the Chief Executive Officer and acting Chief Financial Officer pursuant to 18 U.S.C.
1350, as adopted under Section 906 of the Sarbanes-Oxley Act of 2002.                                                                     
|        |  |                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                 
|(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 Annual Report on Form 10-K of the Registrants for the year ended December
31, 2002.                                                                                                                                  
|(c)     |  | Filed as an exhibit to the Quarterly Report on Form 10-Q of the Registrants for the quarter ended
September 30, 1999.                                                                                                                           
|(d)     |  | Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No. 333-42884) of the Company.                                                                                                                                          
|(e)     |  | The information required by this exhibit is included in note 5 to the consolidated financial statements.                                                                                                                                        

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