##### 



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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 March 31, 2002

OR

| |   |  |                                                                                          | 
| | - |  | ---------------------------------------------------------------------------------------- | 
| | o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | 

For the transition period from            
   to       
Commission file 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
Georgia
(State or other jurisdiction
of incorporation or organization) |  | 58-1550675
58-2053632
(I.R.S. Employer
Identification No.)

4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327
(Address of principal executive 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 |  | o
|                          
|                          
|                          
|                          
|Post Apartment Homes, L.P. |  | Yes |  | x |  | No |  | o



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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.

36,905,017 shares of common stock outstanding as of May 13, 2002 (excluding treasury stock).



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##### 



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

INDEX

|        |  |                                                                                                                        |  |                                                                                        |    |      |    | 
|------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- | -- | ---- | -- | 
|        |  |                                                                                                                        |  |                                                                                        |    | Page
|Part I  |  | FINANCIAL INFORMATION                                                                                                  |  |                                                                                        |    |     
|       
|       
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|       
|        |  |                                                                                                                        |  |                                                                                        |    |      |    | 
|       
|       
|       
|       
|        |  | Item 1                                                                                                                 |  | Financial Statements                                                                   |    |      |    | 
|       
|       
|       
|       
|        |  |                                                                                                                        |  |                                                                                        |    |      |   
|       
|       
|       
|       
|        |  | POST PROPERTIES, INC.                                                                                                  |  |                                                                                        |    |     
|       
|       
|       
|       
|        |  | Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001                                                 |  |                                                                                        | 1  |     
|       
|       
|       
|       
|        |  | Consolidated Statements of Operations for the three months ended March
31, 2002 and 2001                               |  |                                                                                        | 2  |     
|       
|       
|       
|       
|        |  | Consolidated Statement of Shareholders Equity and Accumulated Earnings
for the three months ended
     March 31, 2002 |  |                                                                                        | 3  |     
|       
|       
|       
|       
|        |  | Consolidated Statements of Cash Flows for the three months ended March
31, 2002 and 2001                               |  |                                                                                        | 4  |     
|       
|       
|       
|       
|        |  | Notes to Consolidated Financial Statements                                                                             |  |                                                                                        | 5  |     
|       
|       
|       
|       
|        |  |                                                                                                                        |  |                                                                                        |    |      |    | 
|       
|       
|       
|       
|        |  | POST APARTMENT HOMES, L.P.                                                                                             |  |                                                                                        |    |     
|       
|       
|       
|       
|        |  | Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001                                                 |  |                                                                                        | 12 |     
|       
|       
|       
|       
|        |  | Consolidated Statements of Operations for the three months ended March
31, 2002 and 2001                               |  |                                                                                        | 13 |     
|       
|       
|       
|       
|        |  | Consolidated Statement of Shareholders Equity and Accumulated Earnings
for the three months ended
     March 31, 2002 |  |                                                                                        | 14 |     
|       
|       
|       
|       
|        |  | Consolidated Statements of Cash Flows for the three months ended March
31, 2002 and 2001                               |  |                                                                                        | 15 |     
|       
|       
|       
|       
|        |  | Notes to Consolidated Financial Statements                                                                             |  |                                                                                        | 16 |     
|       
|       
|       
|       
|        |  |                                                                                                                        |  |                                                                                        |    |      |    | 
|       
|       
|       
|       
|        |  | Item 2                                                                                                                 |  | Management's Discussion and Analysis of  Financial Condition and Results of Operations |    |      | 24 | 
|       
|       
|       
|       
|        |  | Item 3                                                                                                                 |  | Quantitative and Qualitative                                                           |    |      | 37 | 
|       
|       
|       
|       
|        |  |                                                                                                                        |  |                                                                                        |    |      |    | 
|       
|       
|       
|       
|Part II |  | OTHER INFORMATION                                                                                                      |  |                                                                                        | 38 |     
|       
|       
|       
|       
|        |  |                                                                                                                        |  |                                                                                        |    |      |    | 
|       
|       
|       
|       
|        |  | Item 1                                                                                                                 |  | Legal proceedings                                                                      |    |      |    | 
|       
|       
|       
|       
|        |  | Item 2                                                                                                                 |  | Changes in Securities and Use of Proceeds                                              |    |      |    | 
|       
|       
|       
|       
|        |  | Item 3                                                                                                                 |  | Defaults Upon Senior Securities                                                        |    |      |    | 
|       
|       
|       
|       
|        |  | Item 4                                                                                                                 |  | Submission of matters to a Vote of Security-Holder                                     |    |      |    | 
|       
|       
|       
|       
|        |  | Item 5                                                                                                                 |  | Other Information                                                                      |    |      |    | 
|       
|       
|       
|       
|        |  | Item 6                                                                                                                 |  | Exhibits and Reports on Form 8-K                                                       |    |      |    | 
|       
|       
|       
|       
|        |  |                                                                                                                        |  |                                                                                        |    |      |    | 
|       
|       
|       
|       
|        |  | Signatures                                                                                                             |  |                                                                                        | 39 |     





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##### 



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

|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |     | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | --------- | --- | ------------ | --------- | --------- | --- | 
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           | March 31, |     | December 31,
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           | 2002      |     | 2001        
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |             
|Assets                               |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |          
|                                    
|                                    
|                                    
|                                    
|                                     | Real estate assets                                                                                                                  |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Land                                                               |                                                                                                                                                                                 | $         | 270,050   |     |              | $         | 277,146   |    
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Building and improvements                                          |                                                                                                                                                                                 |           | 1,853,237 |     |              |           | 1,794,658 |    
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Furniture, fixtures and equipment                                  |                                                                                                                                                                                 |           | 225,272   |     |              |           | 212,390   |    
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Construction in progress                                           |                                                                                                                                                                                 |           | 294,020   |     |              |           | 419,449   |    
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Investments in and advances to unconsolidated real estate entities |                                                                                                                                                                                 |           | 107,209   |     |              |           | 89,692    |    
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Land held for future development                                   |                                                                                                                                                                                 |           | 24,701    |     |              |           | 23,658    |    
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     |                                                                                                                                     |                                                                    | 2,774,489                                                                                                                                                                       |           |           |     | 2,816,993    |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Less: accumulated depreciation                                     |                                                                                                                                                                                 |           | (389,136  | )   |              |           | (393,014  | )  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Assets held for sale                                               |                                                                                                                                                                                 |           | 91,451    |     |              |           | 39,419    |    
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     |                                                                                                                                     | Total real estate assets                                           |                                                                                                                                                                                 |           | 2,476,804 |     |              |           | 2,463,398 |    
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                                           |                                                                    |                                                                                                                                                                                 | 9,351     |           |     |              | 4,803     |          
|                                    
|                                    
|                                    
|                                    
|                                     | Restricted cash                                                                                                                     |                                                                    |                                                                                                                                                                                 | 1,222     |           |     |              | 1,315     |          
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred charges, net                                                                                                               |                                                                    |                                                                                                                                                                                 | 17,440    |           |     |              | 18,203    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other assets                                                                                                                        |                                                                    |                                                                                                                                                                                 | 58,330    |           |     |              | 50,632    |          
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     |                                                                                                                                     | Total assets                                                       |                                                                                                                                                                                 | $         | 2,563,147 |     |              | $         | 2,538,351 |    
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|Liabilities and shareholders equity |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |          
|                                    
|                                    
|                                    
|                                    
|                                     | Notes payable                                                                                                                       |                                                                    | $                                                                                                                                                                               | 1,379,276 |           |     | $            | 1,336,520 |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued interest payable                                                                                                            |                                                                    |                                                                                                                                                                                 | 17,426    |           |     |              | 9,660     |          
|                                    
|                                    
|                                    
|                                    
|                                     | Dividend and distribution payable                                                                                                   |                                                                    |                                                                                                                                                                                 | 33,245    |           |     |              | 33,208    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable and accrued expenses                                                                                               |                                                                    |                                                                                                                                                                                 | 60,233    |           |     |              | 72,277    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Security deposits and prepaid rents                                                                                                 |                                                                    |                                                                                                                                                                                 | 8,641     |           |     |              | 9,016     |          
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     |                                                                                                                                     | Total liabilities                                                  |                                                                                                                                                                                 |           | 1,498,821 |     |              |           | 1,460,681 |    
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     | Minority interest of preferred unitholders in Operating Partnership                                                                 |                                                                    |                                                                                                                                                                                 | 70,000    |           |     |              | 70,000    |          
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                    
|                                    
|                                    
|                                    
|                                     | Minority interest of common unitholders in Operating Partnership                                                                    |                                                                    |                                                                                                                                                                                 | 104,247   |           |     |              | 106,153   |          
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     | Commitments and contingencies                                                                                                       |                                                                    |                                                                                                                                                                                 |          |           |     |              |          |          
|                                    
|                                    
|                                    
|                                    
|                                     | Shareholders equity                                                                                                                |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     | Preferred stock, $.01 par value, 20,000,000 authorized:            |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     |                                                                    | 8 1/2% Series A Cumulative Redeemable Shares, liquidation
preference $50 per share, 900,000 shares issued
and outstanding at March 31, 2002 and December 31, 2001, respectively |           |           | 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:              |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                     |                                                                    | 39,738,727 and 39,676,204 shares issued, 36,967,365 and
36,856,559 shares outstanding at March 31, 2002 and December
31, 2001, respectively                                     |           |           | 396 |              |           |           | 396 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                          |                                                                    |                                                                                                                                                                                 | 996,343   |           |     |              | 1,010,954 |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated earnings                                                                                                                |                                                                    |                                                                                                                                                                                 |          |           |     |              |          |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive income                                                                                              |                                                                    |                                                                                                                                                                                 | (3,931    | )         |     |              | (5,864    | )        
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred compensation                                                                                                               |                                                                    |                                                                                                                                                                                 | (873      | )         |     |              | (445      | )        
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     |                                                                                                                                     |                                                                    | 991,984                                                                                                                                                                         |           |           |     | 1,005,090    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Less common stock in treasury, at cost, 2,771,362 shares and
2,819,645 shares at March 31, 2002 and December 31, 2001,
respectively |                                                                    |                                                                                                                                                                                 | (101,905  | )         |     |              | (103,573  | )        
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     |                                                                                                                                     | Total shareholders equity                                         |                                                                                                                                                                                 |           | 890,079   |     |              |           | 901,517   |    
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    
|                                     |                                                                                                                                     | Total liabilities and shareholders equity                         |                                                                                                                                                                                 | $         | 2,563,147 |     |              | $         | 2,538,351 |    
|                                     |                                                                                                                                     |                                                                    |                                                                                                                                                                                 |           |           |     |              |           |           |    

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
|                                                                                       |                                                                                   |                |                                            |        | March 31,         
|                                                                                       |                                                                                   |                |                                            |        |                   
|                                                                                       |                                                                                   |                |                                            |        | 2002               |        | 2001  
|                                                                                       |                                                                                   |                |                                            |        |                    |        |       
|Revenues                                                                               |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Rental                                                                            |                | $                                          | 82,795 |                    |        | $      | 91,028 |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Interest                                                                          |                |                                            | 406    |                    |        |        | 484    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other                                                                             |                |                                            | 2,925  |                    |        |        | 3,519  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Third party services                                                              |                |                                            |       |                    |        |        | 3,606  |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   | Total revenues |                                            |        | 86,126             |        |        |        | 98,637 |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Expenses                                                                               |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Property operating and maintenance (exclusive of items shown separately below)    |                |                                            | 34,270 |                    |        |        | 33,967 |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Depreciation expense                                                              |                |                                            | 20,904 |                    |        |        | 17,023 |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Interest                                                                          |                |                                            | 13,638 |                    |        |        | 14,062 |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Amortization of deferred loan costs                                               |                |                                            | 555    |                    |        |        | 452    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | General and administrative                                                        |                |                                            | 3,868  |                    |        |        | 3,402  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Minority interest in consolidated property partnerships                           |                |                                            | (482   | )                  |        |        | (281   | )     
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Third party services                                                              |                |                                            |       |                    |        |        | 3,200  |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   | Total expenses |                                            |        | 72,753             |        |        |        | 71,825 |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|Income
from continuing operations before gains on property sales and
minority interest |                                                                                   |                | 13,373                                     |        |                    |        | 26,812 |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Gains on property sales                                                           |                |                                            | 13,275 |                    |        |        | 111    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Minority interest of preferred unitholders                                        |                |                                            | (1,400 | )                  |        |        | (1,400 | )     
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Minority interest of common unitholders                                           |                |                                            | (2,695 | )                  |        |        | (2,652 | )     
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   |                | Income from continuing operations          |        |                    | 22,553 |        |        |        | 22,871 | 
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Discontinued Operations                                                                |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Income from discontinued operations, net of minority interest                     |                |                                            | 1,198  |                    |        |        | 577    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Reserve for losses on properties held for sale, net of minority interest          |                |                                            | (6,731 | )                  |        |        |       |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   |                | Income (loss) from discontinued operations |        |                    | (5,533 | )      |        |        | 577    | 
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Income
before cumulative effect of accounting change                                   |                                                                                   |                | 17,020                                     |        |                    |        | 23,448 |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Cumulative
effect of accounting change, net of minority interest                       |                                                                                   |                |                                           |        |                    |        | (613   | )     
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|Net
income                                                                             |                                                                                   |                | 17,020                                     |        |                    |        | 22,835 |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Dividends
to preferred shareholders                                                    |                                                                                   |                | (2,862                                     | )      |                    |        | (2,969 | )     
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|Net income available to common shareholders                                            |                                                                                   | $              | 14,158                                     |        |                    | $      | 19,866 |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Earnings per common share  basic                                                      |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Income from continuing operations (net of preferred dividends)                    |                | $                                          | 0.53   |                    |        | $      | 0.51   |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Income (loss) from discontinued operations                                        |                |                                            | (0.15  | )                  |        |        | 0.02   |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       | Income before cumulative effect of accounting change (net of preferred dividends) |                |                                            | 0.38   |                    |        |        | 0.53   |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Cumulative effect of accounting change, net of minority interest                  |                |                                            |       |                    |        |        | (0.02  | )     
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       | Net income available to common shareholders                                       |                | $                                          | 0.38   |                    |        | $      | 0.51   |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       | Weighted average common shares outstanding  basic                                |                |                                            | 36,938 |                    |        |        | 38,848 |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Earnings per common share  diluted                                                    |                                                                                   |                |                                            |        |                    |        |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Income from continuing operations (net of preferred dividends)                    |                | $                                          | 0.53   |                    |        | $      | 0.51   |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Income (loss) from discontinued operations                                        |                |                                            | (0.15  | )                  |        |        | 0.02   |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       | Income before cumulative effect of accounting change (net of preferred dividends) |                |                                            | 0.38   |                    |        |        | 0.53   |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Cumulative effect of accounting change, net of minority interest                  |                |                                            |       |                    |        |        | (0.02  | )     
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       | Net income available to common shareholders                                       |                | $                                          | 0.38   |                    |        | $      | 0.51   |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       | Weighted average common shares outstanding  diluted                              |                |                                            | 37,049 |                    |        |        | 39,108 |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       
|                                                                                       | Dividends
Declared                                                                |                | $                                          | 0.78   |                    |        | $      | 0.78   |       
|                                                                                       |                                                                                   |                |                                            |        |                    |        |        |        |       

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)

|                                                                 |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |          |         |       |        |             |       |   |      |   |      |   |          |       |     |   |         |       |         |  
|---------------------------------------------------------------- | --------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | -- | --------- | - | ------ | --- | ------- | - | ----------- | --------- | ------------- | ------- | ------------ | - | -------- | ------- | ----- | ------ | ----------- | ----- | - | ---- | - | ---- | - | -------- | ----- | --- | - | ------- | ----- | ------- | -
|                                                                 |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |          |         |       |        | 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, 2001 |                                                                       | $                                                                                                         | 49 |           |   | $      | 396 |         |   | $           | 1,010,954 |               |         | $            |  |          |         | $     | (5,864 | )           |       | $ | (445 | ) |      | $ | (103,573 | )     |     | $ | 901,517 |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Comprehensive income                                                  |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |          |         |       |        |             |       |   |      |   |      |   |          |       |     |   |         |       |        
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                       | Net income                                                                                                |    |           |  |        |     |         |  |             |           |               |        |              |   |          | 17,020  |       |        |             |      |   |      |   |     |   |          |       |    |   |         |       | 17,020  |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                       | Net change in derivative value, net
of minority interest                                                  |    |           |  |        |     |         |  |             |           |               |        |              |   |          |        |       |        |             | 1,933 |   |      |   |     |   |          |       |    |   |         |       | 1,933   |  
|                                                                 |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |          |         |       |        |             |       |   |      |   |      |   |          |       |     |   |         |      
|                                                                 |                                                                       | Total comprehensive income                                                                                |    |           |   |        |     |         |   |             |           |               |         |              |   |          |         |       |        |             |       |   |      |   |      |   |          |       |     |   |         |       | 18,953  |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Proceeds from Dividend Reinvestment
and Employee Stock Purchase Plans |                                                                                                           |    |          |   |        |     |        |   |             |           | (118          | )       |              |   |         |         |       |        |            |       |   |      |  |      |   |          | 1,143 |     |   |         | 1,025 |        
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                       | Adjustment for minority interest of
unitholders in Operating
Partnership at dates of capital
transactions |    |           |  |        |     |         |  |             |           |               | 115     |              |   |          |        |       |        |             |      |   |      |   |     |   |          |       |    |   |         |       | 115     |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                       | Restricted stock issuances, net of
forfeitures                                                            |    |           |  |        |     |         |  |             |           |               | (29     | )            |   |          |        |       |        |             |      |   |      |   | (496 | ) |          |       | 525 |   |         |       |        |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                       | Amortization of deferred
compensation                                                                     |    |           |  |        |     |         |  |             |           |               |        |              |   |          |        |       |        |             |      |   |      |   | 68   |   |          |       |    |   |         |       | 68      |  
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                       | Dividends to preferred shareholders                                                                       |    |           |  |        |     |         |  |             |           |               |        |              |   |          | (2,862  | )     |        |             |      |   |      |   |     |   |          |       |    |   |         |       | (2,862  | )
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                       | Dividends to common shareholders                                                                          |    |           |  |        |     |         |  |             |           |               | (14,579 | )            |   |          | (14,158 | )     |        |             |      |   |      |   |     |   |          |       |    |   |         |       | (28,737 | )
|                                                                 |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |          |         |       |        |             |       |   |      |   |      |   |          |       |     |   |         |      
|Shareholders Equity and Accumulated
Earnings, March 31, 2002    |                                                                       | $                                                                                                         | 49 |           |   | $      | 396 |         |   | $           | 996,343   |               |         | $            |  |          |         | $     | (3,931 | )           |       | $ | (873 | ) |      | $ | (101,905 | )     |     | $ | 890,079 |      
|                                                                 |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |          |         |       |        |             |       |   |      |   |      |   |          |       |     |   |         |      

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

3



---



##### 



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

|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |        |  
|------------------------------------ | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | - | ------------------ | ------- | ---- | - | ------- | ------ | -
|                                     |                                                                                   |                                                                          |   | Three Months Ended
|                                     |                                                                                   |                                                                          |   | March 31,         
|                                     |                                                                                   |                                                                          |   |                   
|                                     |                                                                                   |                                                                          |   | 2002               |         | 2001
|                                     |                                                                                   |                                                                          |   |                    |         |     
|Cash Flows From Operating Activities |                                                                                   |                                                                          |   |                    |         |      |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Net income                                                                        |                                                                          | $ | 17,020             |         |      | $ | 22,835  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Adjustments to reconcile net income to net cash provided by operating
activities: |                                                                          |   |                    |         |      |   |         |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Net gain on sale of assets                                               |   |                    | (13,275 | )    |   |         | (111   | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Reserve for losses on properties held for sale, net of minority interest |   |                    | 6,731   |      |   |         |       |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Minority interest of preferred unitholders in Operating Partnership      |   |                    | 1,400   |      |   |         | 1,400  |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Minority interest of common unitholders in Operating Partnership         |   |                    | 2,695   |      |   |         | 2,652  |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Minority interest in discontinued operations                             |   |                    | 164     |      |   |         | 77     |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Minority interest in cumulative accounting change                        |   |                    |        |      |   |         | (82    | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Equity in loss of unconsolidated entities                                |   |                    | 343     |      |   |         |       |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Depreciation                                                             |   |                    | 20,904  |      |   |         | 17,888 |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Amortization of deferred loan costs                                      |   |                    | 555     |      |   |         | 455    |  
|                                    
|                                    
|                                    
|                                    
|                                     | Changes in assets, (increase) decrease in:                                        |                                                                          |   |                    |         |      |   |         |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Restricted cash                                                          |   |                    | 93      |      |   |         | (4     | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Other assets                                                             |   |                    | (7,980  | )    |   |         | (6,169 | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Deferred charges                                                         |   |                    | (894    | )    |   |         | (814   | )
|                                    
|                                    
|                                    
|                                    
|                                     | Changes in liabilities, increase (decrease) in:                                   |                                                                          |   |                    |         |      |   |         |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Accrued interest payable                                                 |   |                    | 7,766   |      |   |         | 7,854  |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Accounts payable and accrued expenses                                    |   |                    | (8,792  | )    |   |         | (9,523 | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Security deposits and prepaid rents                                      |   |                    | (375    | )    |   |         | 473    |  
|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |       
|                                     | Net cash provided by operating activities                                         |                                                                          |   | 26,355             |         |      |   | 36,931  |       
|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |       
|Cash Flows From Investing Activities |                                                                                   |                                                                          |   |                    |         |      |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Construction and acquisition of real estate assets, net of payables               |                                                                          |   | (44,702            | )       |      |   | (65,165 | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Net proceeds from sale of assets                                                  |                                                                          |   | 41,393             |         |      |   |        |       
|                                    
|                                    
|                                    
|                                    
|                                     | Capitalized interest                                                              |                                                                          |   | (4,433             | )       |      |   | (5,948  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Recurring capital expenditures                                                    |                                                                          |   | (1,879             | )       |      |   | (2,626  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Corporate additions and improvements                                              |                                                                          |   | (279               | )       |      |   | (511    | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Non-recurring capital expenditures                                                |                                                                          |   | (547               | )       |      |   | (322    | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Revenue generating capital expenditures                                           |                                                                          |   | (327               | )       |      |   | (1,102  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Investment in and advances to unconsolidated entities                             |                                                                          |   | (17,860            | )       |      |   |        |       
|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |       
|                                     | Net cash used in investing activities                                             |                                                                          |   | (28,634            | )       |      |   | (75,674 | )     
|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |       
|Cash Flows From Financing Activities |                                                                                   |                                                                          |   |                    |         |      |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Debt proceeds                                                                     |                                                                          |   | 43,336             |         |      |   | 130,000 |       
|                                    
|                                    
|                                    
|                                    
|                                     | Payment of financing costs                                                        |                                                                          |   |                   |         |      |   | (300    | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Debt payments                                                                     |                                                                          |   | (580               | )       |      |   | (53,355 | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Proceeds from Dividend Reinvestment and Employee Stock Purchase Plans             |                                                                          |   | 1,025              |         |      |   | 7,555   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock acquisitions                                                       |                                                                          |   |                   |         |      |   | (11,755 | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Distributions to preferred unitholders                                            |                                                                          |   | (1,400             | )       |      |   | (1,400  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Distributions to common unitholders                                               |                                                                          |   | (3,993             | )       |      |   | (3,937  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Dividends paid to preferred shareholders                                          |                                                                          |   | (2,862             | )       |      |   | (2,969  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Dividends paid to common shareholders                                             |                                                                          |   | (28,699            | )       |      |   | (29,529 | )     
|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |       
|                                     | Net cash provided by financing activities                                         |                                                                          |   | 6,827              |         |      |   | 34,310  |       
|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |       
|                                     | Net increase (decrease) in cash and cash equivalents                              |                                                                          |   | 4,548              |         |      |   | (4,433  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents, beginning of period                                    |                                                                          |   | 4,803              |         |      |   | 7,459   |       
|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |       
|                                     | Cash and cash equivalents, end of period                                          |                                                                          | $ | 9,351              |         |      | $ | 3,026   |       
|                                     |                                                                                   |                                                                          |   |                    |         |      |   |         |       

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

4



---



##### 



POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|1. |  | ORGANIZATION AND FORMATION OF THE COMPANY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Organization and Formation of the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | Post Properties, Inc. (the Company or PPI) through its majority owned
subsidiary, Post Apartment Homes, L.P. (the Operating Partnership)
currently owns and manages or is in the process of developing apartment
communities located in the Atlanta, Dallas, Tampa, Orlando, Washington, D.C.,
Virginia, Nashville, Houston, Austin, Phoenix, Denver, Pasadena, New York
City and Charlotte metropolitan areas. At March 31, 2002, approximately
51.6%, 21.0% and 9.9% (on a unit basis) of the Companys communities are
located in the Atlanta, Dallas and Tampa metropolitan areas, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | The Company elected to be taxed as a real estate investment trust (REIT)
for Federal income tax purposes beginning with the taxable year ended
December 31, 1993. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | The accompanying unaudited financial statements
have been prepared by the Company's management in accordance with
generally accepteds
accounting principles for interim financial information and
applicable rules and regulations of the Securities and Exchange
Commissions. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
the 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 month period ended
March 31, 2002 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 the Post Properties, Inc. Annual Report
on Form 10-K for the year ended December 31, 2001. Certain 2001
amounts have been reclassified to conform to the current year's
financial statement presentation.                                                                                                                                                                                                                                             
|  
|2. |  | NEW ACCOUNTING PRONOUNCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | On January 1, 2002, the Company adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 replaces SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of. SFAS 144 requires that real estate assets held
for investment be measured at the lower of their carrying amount or fair
value and real estate assets held for sale be measured at the lower of their
carrying amount or their fair value less costs to sell.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | As part of its on-going financing strategy, the Company is actively engaged
in a real estate asset sale program. The proceeds from real estate asset
sales are primarily used to fund the construction of new apartment communities. The
Company designates and classifies real estate assets as held for sale when its
internal investment committee approves the sale and the Company has commenced
an active program to sell the assets. The Company generally expects to sell
the assets held for sale within six to twelve months from the date an active
sales program commences. SFAS No. 144 requires the operating results, real estate assets held for sale
on or after January 1, 2002 be
reflected as discontinued operations in the accompanying statement of
operations. The real estate assets held for sale are presented separately in
the consolidated balance sheets. Subsequent to this classification, no
further depreciation is recorded on the assets.                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | In accordance with the implementation provisions of SFAS No. 144, the
operating results of real estate assets designated as held for sale
subsequent to January 1, 2002 are included in discontinued operations in the
consolidated statement of operations. The operating results of real estate
assets held for sale at December 31, 2001 are included in continuing
operations. Subsequent to the date that all real estate assets held for sale
at December 31, 2001 are sold, the operating results of all real estate
assets held for sale will be reflected as discontinued operations in the
consolidated statement of operations. Also under the implementation
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 will also be
included in discontinued operations. The gains or losses on the sale of real
estate assets held for sale at December 31, 2001 are included in continuing
operations. Subsequent to the date that all real estate assets held for sale
at December 31, 2001 are sold, all gains and losses from real estate assets
held for sale and subsequently sold will be reflected as discontinued
operations.
|  
|   |  | In May 2002, SFAS No. 145,
Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13 and Technical Corrections was issued. 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 potentially 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 if 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
remaining provisions of SFAS No. 145 are generally not applicable to
the Company.                                                                                                                                                                                                                                                                                                              

5



---



##### 



POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|   |  | On January 1, 2001, the Company adopted SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended. This standard
established accounting and reporting standards for derivative and hedging
activities and required the Company to recognize all derivative financial
instruments on its balance sheet at fair value. Upon the adoption of SFAS
No. 133, the Company recorded a net transition loss of $613, net of minority
interest, relating to the write down of the book value of its interest rate
cap agreements to their fair value. This loss was reflected as a cumulative
effect of accounting change in the consolidated statement of operations for
the three months ended March 31, 2001.                                                                                                                                                                                                                                                                                            
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | At March 31, 2002, the Company had outstanding interest rate swap agreements
with a notional value of $129,000 with maturity dates ranging from 2005 to
2009. For the three months ended March 31, 2002, the Company recorded the
unrealized net gain of $1,933, net of minority interest, on these cash flow
hedges as an increase in accumulated other comprehensive
income, a shareholders equity account, in the accompanying consolidated
balance sheet. In addition, the Company recorded the change in fair value of
the ineffective component of its outstanding interest rate cap agreements in
the statement of operations for the three months ended March 31, 2002.
This charge against earnings during the period and the fair value of the
interest rate cap agreements as of March 31, 2002 were not significant to the
Companys financial position or results of operations. Within the next
twelve months, the Company expects to reclassify out of accumulated other
comprehensive income approximately $939.
|  
|3. |  | NOTES PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | At March 31, 2002 and December 31, 2001, the Companys indebtedness consisted
of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |           | 
|---------------------------------------- | ------------------------ | ----- | ------------- | ------------- | ---- | ------------ | ------------ | ---- | -- | ---- | -- | -- | -------- | --------- | --------- | ---- | ------------ | ------- | ------- | --------- | ------- | ------- | ------- | --------- | 
|                                         |                          |       | Payment       |               |      |              |              |      |    |      |    |    | Maturity |           | March 31, |      | December 31,
|Description                              |                          | Terms |               | Interest Rate |      | Date(1)      |              | 2002 |    | 2001
|                                         |                          |       |               |               |      |              |              |      |    |     
|Senior Notes (Unsecured)                 |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | Senior Notes             |       | Int           |               |      | 6.71% - 7.70 | %            |      |    |      |    |    |          | 2003-2010 |           |      | $            | 360,000 |         |           | $       | 360,000 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Medium Term Notes        |       | Int           |               |      | 6.69% - 8.12 | %            |      |    | (2   | )  |    |          | 2004-2015 |           |      |              | 323,000 |         |           |         | 323,000 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Int           |               |      | 8.37         | %            |      |    |      |    |    |          | 2002      |           |      |              | 20,000  |         |           |         | 20,000  |        
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         | 703,000 |           |         |         | 703,000 |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|Unsecured Lines of Credit & Other        |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | Revolver                 |       |               | N/A           |      |              | LIBOR + 0.85 | %    |    |      | (3 | )  |          |           | 2004      |      |              |         | 195,000 |           |         |         | 155,000 |          
|                                        
|                                        
|                                        
|                                        
|                                         | Cash Management Line     |       |               | N/A           |      |              | LIBOR + 0.85 | %    |    |      |    |    |          |           | 2003      |      |              |         | 14,538  |           |         |         | 11,202  |          
|                                        
|                                        
|                                        
|                                        
|                                         | Other                    |       |               | N/A           |      |              |              | 5.00 | %  |      |    | (4 | )        |           |           | 2021 |              |         |         | 2,000     |         |         |         | 2,000     | 
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         | 211,538 |           |         |         | 168,202 |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|Conventional Fixed Rate (Secured)        |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | FNMA                     |       | Prin. and Int |               |      | 6.975        | %            |      |    | (5   | )  |    |          | 2029      |           |      |              | 102,200 |         |           |         | 102,200 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int |               |      | 7.69         | %            |      |    |      |    |    |          | 2007      |           |      |              | 50,327  |         |           |         | 50,527  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int |               |      | 6.50         | %            |      |    | (6   | )  |    |          | 2009      |           |      |              | 47,431  |         |           |         | 47,681  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int |               |      | 7.69         | %            |      |    |      |    |    |          | 2007      |           |      |              | 28,147  |         |           |         | 28,268  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Parkwood
Townhomes TM    |       | Prin. and Int |               |      | 7.375        | %            |      |    |      |    |    |          | 2014      |           |      |              | 753     |         |           |         | 762     |        
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         | 228,858 |           |         |         | 229,438 |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|Tax Exempt Floating Rate Bonds (Secured) |                          | Int   |               |               | 1.27 | %            |              |      | (7 | )    |    |    | 2025     |           |           |      | 235,880      |         |         |           | 235,880 |        
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         | Total                    |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         | $       | 1,379,276 |         |         | $       | 1,336,520 | 
|                                         |                          |       |               |               |      |              |              |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          



---

|(1) |  | All outstanding indebtedness can be prepaid at any time, subject to
certain prepayment penalties.                                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Contains $100,000 of Mandatory Par Put Remarketed Securities. The
annual interest rate on these securities to 2005 (the Remarketing
Date) is 6.85%. On the Remarketing Date, they are subject to mandatory
tender for remarketing.                                                                                                                         
|   
|   
|   
|   
|(3) |  | Represents stated rate. At March 31, 2002, the outstanding balance
of the Revolver consisted of money market and LIBOR based loans with an average
interest rate of 2.67%. The Revolver has a total capacity of $320
million.                                                                                                                              
|   
|   
|   
|   
|(4) |  | This loan is interest free for the first three years, with interest
at 5.00% thereafter.                                                                                                                                                                                                                                                                     
|   
|   
|   
|   
|(5) |  | In 2000, interest rate was fixed at 6.975%, inclusive of credit
enhancement and other fees, to 2009 through an interest rate swap
arrangement.                                                                                                                                                                                                               
|   
|   
|   
|   
|(6) |  | This note bears interest at 6.50% with an effective rate of 7.30%.                                                                                                                                                                                                                                                                                           
|   
|   
|   
|   
|(7) |  | 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 March 31, 2002 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%.



| |  | During the first quarter of 2002, the Company renewed its Cash Management
Line. This line of credit has a maximum borrowing capacity of
$20,000, bears interest at LIBOR + 0.75% and matures on February 12, 2003.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6



---



##### 



POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



| |  | At March 31, 2002, the
Company also had in place an additional $185,000 line
of credit facility for general corporate purposes. This credit facility was
renewed on April 22, 2002 with a borrowing capacity of $125,000.
This line bears interest at LIBOR plus 0.90% and matures in April 2003.
There were no outstanding borrowings under this facility at March 31, 2002.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Debt maturities                                                                                                                                                                                                                                                                                                                                                              
|
| |  | The aggregate maturities of the Companys indebtedness are as follows (1):                                                                                                                                                                                                                                                                                                   

|           |  |   |           | 
|---------- |  | - | --------- | 
|2002       |  | $ | 22,787    | 
|          
|          
|          
|          
|2003       |  |   | 103,616   | 
|          
|          
|          
|          
|2004       |  |   | 26,889    | 
|          
|          
|          
|          
|2005       |  |   | 204,183   | 
|          
|          
|          
|          
|2006       |  |   | 79,499    | 
|          
|          
|          
|          
|Thereafter |  |   | 732,764   | 
|           |  |   |           | 
|           |  | $ | 1,169,738 | 
|           |  |   |           | 



---

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



|4. |  | INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In 2001, the Company contributed two apartment communities under development
in Atlanta, Georgia and one apartment community in Pasadena, California to
individual limited liability companies (the Property LLCs) with an
institutional investor. The Company holds a 35% equity interest in the
Property LLCs. The total estimated development cost of the apartment
communities of $144,000 is being funded through member equity contributions
proportionate to the members ownership interests and through construction
financing provided by the Company. No gain or loss was recognized on the
Companys contribution to the Property LLCs. The Company provides real
estate services (development, construction and property management) to the
Property LLCs. 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 $3,291 at March 31, 2002. This excess investment will
primarily be amortized as a reduction to earnings on a straight-line basis
over the lives of the related assets.
|  
|   |  | 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                                              |                                       |   |           |         |              |   |         |         | 
|--------------------------------------------- | ------------------------------------- | - | --------- | ------- | ------------ | - | ------- | ------- | 
|                                              |                                       |   | March 31, |         | December 31,
|                                              |                                       |   | 2002      |         | 2001        
|                                              |                                       |   |           |         |             
|Real estate assets, net                       |                                       | $ | 128,715   |         |              | $ | 115,664 |        
|                                             
|                                             
|                                             
|                                             
|Cash and other                                |                                       |   | 956       |         |              |   | 533     |        
|                                              |                                       |   |           |         |              |   |         |        
|                                              | Total assets                          |   | $         | 129,671 |              |   | $       | 116,197 | 
|                                              |                                       |   |           |         |              |   |         |        
|Construction notes payable to Company         |                                       | $ | 94,712    |         |              | $ | 77,019  |        
|                                             
|                                             
|                                             
|                                             
|Other liabilities                             |                                       |   | 8,652     |         |              |   | 11,892  |        
|                                              |                                       |   |           |         |              |   |         |        
|                                              | Total liabilities                     |   |           | 103,364 |              |   |         | 88,911  | 
|                                              |                                       |   |           |         |              |   |         |        
|Members equity                               |                                       |   | 26,307    |         |              |   | 27,286  |        
|                                              |                                       |   |           |         |              |   |         |        
|                                              | Total liabilities and members equity |   | $         | 129,671 |              |   | $       | 116,197 | 
|                                              |                                       |   |           |         |              |   |         |        
|Companys equity investment                   |                                       | $ | 12,498    |         |              | $ | 12,673  |        
|                                              |                                       |   |           |         |              |   |         |        
|Companys
share of construction notes payable |                                       | $ | 33,149    |         |              | $ | 26,957  |        
|                                              |                                       |   |           |         |              |   |         |        

|                            |  |                    |        |                    |  |  |   | 
|--------------------------- |  | ------------------ | ------ | ------------------ |  |  | - | 
|                            |  | Three Months Ended |        | Three Months Ended
|                            |  | March 31, 2002     |        | March 31, 2001    
|                            |  |                    |        |                   
|Revenue                     |  | $                  | 403    |                    |  |  |  | 
|                           
|                           
|                           
|                           
|Expenses                    |  |                    | (1,382 | )                  |  |  |  | 
|                            |  |                    |        |                    |  |  |   | 
|Net loss                    |  | $                  | (979   | )                  |  |  |  | 
|                            |  |                    |        |                    |  |  |   | 
|Companys share of net loss |  | $                  | (343   | )                  |  |  |  | 
|                            |  |                    |        |                    |  |  |   | 

7



---



##### 



POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|   |  | At March 31, 2002, all of the apartment communities had commenced initial
rental operations. The Companys share of the net loss
from these investments is included in other revenue in the accompanying
consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company has committed construction financing to the Property LLCs
totaling $111,271 ($94,712 funded at March 31, 2002). These loans earn
interest at LIBOR plus 1.75% and are secured by the apartment communities.
The loans mature on dates ranging from February 2003 to February 2004 and are
expected to be repaid from the proceeds of permanent project financings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | As part of the development and construction services agreements entered into
between the Company and the Property LLCs, the Company guaranteed the maximum
total amount for certain construction cost categories subject to aggregate
limits (approximately $14,000). At March 31, 2002, the Companys estimated
obligations under the agreements total approximately $900. If the Company is
unsuccessful in mitigating these estimated costs, the Company will be
required to fund the amounts to the Property LLCs. Any amounts funded will
be accounted for as part of the Companys investment in the Property LLCs.
Additionally, under these agreements, the Company is subject to project
completion requirements, as defined. At March 31, 2002, the Company believes
that it will meet the completion date requirements and not be subject to any
additional costs.                                                               
|  
|   |  | In May 2002, the Company formed a fourth Property LLC with the same
institutional investor through the contribution of an apartment community under development in
Washington, DC. The terms of this Property LLC are substantially similar to the arrangements
discussed above. The total estimated development costs of the apartment community are approximately
$70,900 and the Company has committed construction financing to the Property LLC totaling $56,700.
The Company guaranteed the maximum total amount for certain cost categories up to an aggregate limit of
$5,200 under the development and construction services agreements between the
Company and the Property LLC.                                                                                                                                                                                                                                                  
|  
|5. |  | REAL ESTATE ASSETS HELD FOR SALE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | 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 March 31, 2002, the Company has
classified four apartment communities, six tracts of land and one commercial
property as held for sale. These real estate assets are reflected in the
accompanying consolidated balance sheet at $91,451 which represents the lower
of cost or fair value less costs to sell. The Company expects the sale of
these assets to occur in 2002.                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | In the three months ended March 31, 2002, the Company designated and
classified four apartment communities and one commercial property as held for
sale. As discussed in Note 2 under SFAS No. 144, the Company recorded
write-downs to fair value less costs to sell of $7,652 ($6,731 net of
minority interest) on certain of these assets. These losses are reflected in
discontinued operations in the consolidated statement of operations.
Additionally, the operating results from these properties are included in
discontinued operations for both the current and prior periods.                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | In the three months ended March 31, 2002, the Company sold two apartment
communities containing 540 units and one commercial property for net proceeds
of approximately $41,393. The communities sold were located in Tampa,
Florida and Clearwater, Florida and the commercial property was located in
Grand Prairie, Texas. These sales resulted in net gains of approximately
$13,275. As these assets were accounted for as held for sale assets at
December 31, 2001, the net gains and operating results from these assets were
included in continuing operations (see Note 2). For the three months ended March
31, 2002 and 2001, the consolidated statement of operations include net
income of $366 and $830, respectively from these two communities and one
commercial property held for sale at December 31, 2001. For the three months
ended March 31, 2001, net income reflected above includes depreciation
expense of $207.

8



---



##### 



POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|6. |  | EARNINGS PER SHARE                                                                                                                                                                                                  
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | For the three months ended
March 31, 2002 and 2001, 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
|                                                                                                  |                                                                    |                                 |   | March 31,         
|                                                                                                  |                                                                    |                                 |   |                   
|                                                                                                  |                                                                    |                                 |   | 2002               |        | 2001
|                                                                                                  |                                                                    |                                 |   |                    |        |     
|Basic and diluted income from continuing operations
available to common shareholders (numerator): |                                                                    |                                 |   |                    |        |      |   |       
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Income from continuing operations                                  |                                 | $ | 22,553             |        |      | $ | 22,871 |       
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                                                                    | Less: Preferred stock dividends |   |                    | (2,862 | )    |   |        | (2,969 | )
|                                                                                                  |                                                                    |                                 |   |                    |        |      |   |        |       
|                                                                                                  | Income from continuing operations available to common
shareholders |                                 | $ | 19,691             |        |      | $ | 19,902 |       
|                                                                                                  |                                                                    |                                 |   |                    |        |      |   |        |       
|Common shares (denominator):                                                                      |                                                                    |                                 |   |                    |        |      |   |       
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Weighted average shares outstanding  basic                        |                                 |   | 36,938             |        |      |   | 38,848 |       
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Incremental shares from assumed conversion of options              |                                 |   | 111                |        |      |   | 260    |       
|                                                                                                  |                                                                    |                                 |   |                    |        |      |   |        |       
|                                                                                                  | Weighted average shares outstanding  diluted                      |                                 |   | 37,049             |        |      |   | 39,108 |       
|                                                                                                  |                                                                    |                                 |   |                    |        |      |   |        |       



|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 property rental operations. Property rental
operations are broken down into four segments based on the various stages in
the property ownership lifecycle. These segments are described below. All
other ancillary service and support operations are aggregated 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 2001  communities which reached
stabilized occupancy in the prior year.                                                                                                                                      
|
| |  |  | Development and lease up communities  those communities that
are in lease-up but were not stabilized by the beginning of the
current year, including communities that stabilized during the
current year.                                  
|
| |  |  | Sold communities  communities which were sold in the current
or prior year and not reflected as discontinued operations (see
Note 2).                                                                                                      



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

9



---



##### 



POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



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

|                                                                 |  |      |         |      |  |   |         |  
|---------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                                                 |  | 2002 |         | 2001
|                                                                 |  |      |         |     
|Revenues                                                         |  |      |         |      |  |   |         |  
|                                                                
|                                                                
|                                                                
|                                                                
|Fully stabilized communities                                     |  | $    | 68,271  |      |  | $ | 72,845  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Communities stabilized during 2001                               |  |      | 5,331   |      |  |   | 3,673   |  
|                                                                
|                                                                
|                                                                
|                                                                
|Development and lease-up communities                             |  |      | 8,023   |      |  |   | 5,190   |  
|                                                                
|                                                                
|                                                                
|                                                                
|Sold communities                                                 |  |      | 736     |      |  |   | 9,319   |  
|                                                                
|                                                                
|                                                                
|                                                                
|Other                                                            |  |      | 3,765   |      |  |   | 7,610   |  
|                                                                 |  |      |         |      |  |   |         |  
|Consolidated revenues                                            |  | $    | 86,126  |      |  | $ | 98,637  |  
|                                                                 |  |      |         |      |  |   |         |  
|Contribution to Funds from Operations                            |  |      |         |      |  |   |         |  
|                                                                
|                                                                
|                                                                
|                                                                
|Fully stabilized communities                                     |  | $    | 44,936  |      |  | $ | 50,247  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Communities stabilized during 2001                               |  |      | 3,437   |      |  |   | 2,017   |  
|                                                                
|                                                                
|                                                                
|                                                                
|Development and lease-up communities                             |  |      | 4,361   |      |  |   | 2,925   |  
|                                                                
|                                                                
|                                                                
|                                                                
|Sold communities                                                 |  |      | 366     |      |  |   | 6,107   |  
|                                                                
|                                                                
|                                                                
|                                                                
|Other                                                            |  |      |        |      |  |   | 406     |  
|                                                                 |  |      |         |      |  |   |         |  
|Contribution to FFO                                              |  |      | 53,100  |      |  |   | 61,702  |  
|                                                                 |  |      |         |      |  |   |         |  
|Other
operating income, net of expense                           |  |      | (1,996  | )    |  |   | (725    | )
|                                                                
|                                                                
|                                                                
|                                                                
|Depreciation on non-real estate assets                           |  |      | (467    | )    |  |   | (654    | )
|                                                                
|                                                                
|                                                                
|                                                                
|Minority interest in consolidated property partnerships          |  |      | 482     |      |  |   | 281     |  
|                                                                
|                                                                
|                                                                
|                                                                
|Interest expense                                                 |  |      | (13,638 | )    |  |   | (14,062 | )
|                                                                
|                                                                
|                                                                
|                                                                
|Amortization of deferred loan costs                              |  |      | (555    | )    |  |   | (452    | )
|                                                                
|                                                                
|                                                                
|                                                                
|General
and administrative expense                               |  |      | (3,868  | )    |  |   | (3,402  | )
|                                                                
|                                                                
|                                                                
|                                                                
|Dividends to preferred shareholders                              |  |      | (2,862  | )    |  |   | (2,969  | )
|                                                                 |  |      |         |      |  |   |         |  
|Total FFO                                                        |  |      | 30,196  |      |  |   | 39,719  |  
|                                                                 |  |      |         |      |  |   |         |  
|Depreciation on real estate assets                               |  |      | (19,723 | )    |  |   | (16,622 | )
|                                                                
|                                                                
|                                                                
|                                                                
|Gain on property sales  continuing operations                   |  |      | 13,275  |      |  |   | 111     |  
|                                                                
|                                                                
|                                                                
|                                                                
|Minority interest of common unitholders in Operating Partnership |  |      | (2,695  | )    |  |   | (2,652  | )
|                                                                
|                                                                
|                                                                
|                                                                
|Income from discontinued operations                              |  |      | (1,362  | )    |  |   | (654    | )
|                                                                
|                                                                
|                                                                
|                                                                
|Dividends to preferred shareholders                              |  |      | 2,862   |      |  |   | 2,969   |  
|                                                                 |  |      |         |      |  |   |         |  
|Income from continuing operations                                |  | $    | 22,553  |      |  | $ | 22,871  |  
|                                                                 |  |      |         |      |  |   |         |  



|8. |  | PROJECT ABANDONMENT, EMPLOYEE SEVERANCE AND IMPAIRMENT CHARGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In the fourth quarter of 2001, the Company recorded a charge based on
managements decision to focus its business and new development strategy on
fewer markets, to focus on its core business of owning, developing and
managing multifamily real estate assets and to do so with a smaller workforce
and lower overhead expenses. As part of the charge, the Company established
approximately $3,632 of accrued liabilities, primarily related to employee
severance costs. These amounts are expected to be paid in 2002. The
following table summarizes the activity relating to the accrued charges
during the three months ended March 31, 2002.

|                                                       |  |   |        |  
|------------------------------------------------------ |  | - | ------ | -
|Accrued severance and other charges, December 31, 2001 |  | $ | 3,632  |  
|                                                      
|                                                      
|                                                      
|                                                      
|Payments through March 31, 2002                        |  |   | (1,430 | )
|                                                       |  |   |        |  
|Accrued severance and other charges, March 31, 2002    |  | $ | 2,202  |  
|                                                       |  |   |        |  

10



---



##### 



POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|    |  | In the fourth quarter of 2001, the Company sold substantially all of the net
assets of Post Landscape Group, Inc. (PLG) a subsidiary entity that
provided landscape maintenance, design and installation services to third
parties. As the business was sold to the former management team and
initially financed 100% by the Company, the transaction was not reflected
as a sale at December 31, 2001. As the transaction resulted in a
net loss, the
net loss was recognized in the fourth quarter of 2001. In the first quarter of
2002, the Company received principal payments representing approximately
22% of the outstanding note balance. As these payments constitute adequate
initial principal payments under the notes, the sale was recognized in the
first quarter of 2002. The impact of the sale recognition was to
record the note receivable (outstanding balance of $3,100 at March 31, 2002) and to
remove the net assets and liabilities of the former PLG from the
Companys financial
statements. No further gain or loss was recognized in the first quarter of
2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company also sold substantially all of the net assets of RAM Partners,
Inc. (RAM), a separate subsidiary entity that managed apartment communities
for third parties, in the fourth quarter 2001. This business was sold
to the former management team of RAM and the sale was 100% by the Company.
Through March 31, 2002, the Company has not received adequate initial
principal payment under the notes receivable, therefore, full sales recognition for this
transaction continues to be deferred. A deferred gain of approximately $591
will be recorded on this transaction when conditions for full sales recognition, primarily the
receipt of an adequate down payment on the notes, are met (expected later in
2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | During the first quarter of
2002, the Company agreed to transfer certain
construction contracts of Post Construction Services Inc., its third party
construction business, to Oxford Properties, LLC in exchange for $100 and
Oxford Properties assumption of substantially all of Post Construction
Services liabilities related to the transferred assets. In approving the
transaction the Companys board of directors ascribed nominal value to the
assets being transferred. The assets consisted principally of third party
construction contracts for the construction of four garden style apartment,
condominium and townhouse communities as well as related subcontracts,
indemnities and guarantees. In connection with the transfer of Post
Construction Services construction contracts, Oxford Properties has the
right to receive a deferred fee upon completion of one of the construction
projects in the amount of $500. Oxford Properties has also agreed to
employee 28 former Company and Post Construction Services employees.
As a result, the Company will not be responsible for costs that would otherwise result
from winding up third party construction business. The Company recorded a
charge of $500 in the fourth quarter of 2001 relating to its exit from
the third party construction business. Oxford Properties, LLC is an
entity owned by former officers of the Company and by the son of the Companys
chairman and chief executive officer, John A. Williams. Mr. Williams does
not own any of the outstanding equity interests in Oxford Properties and he
will not have any management role in Oxford Properties.
|   
|9.  |  | SUPPLEMENTAL CASH FLOW INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Non-cash investing and financing activities for the three months ended March
31, 2002 and 2001 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | During the three months ended March 31, 2001, holders of 2,600 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 shareholders
equity the amounts of $115 and $390 for the three months ended March 31,
2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|10. |  | STOCK BASED COMPENSATION PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | During the first quarter of
2002, the Company granted 15,353 shares of restricted stock to
company officers. The restricted shares vest ratably over a three-year
period. The total value of the restricted share grant was initially
reflected in shareholders equity as additional capital and as deferred
compensation, a contra shareholders equity account. Such deferred
compensation is amortized ratably into compensation expense over the vesting
period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

11



---



##### 



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

|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |         | 
|-------------------------------- | -------------------------------------- | ------------------------------------------------------------------ | ---------------- | --------- | --------- | ------- | ------------ | --------- | --------- | ------- | 
|                                 |                                        |                                                                    |                  |           | March 31, |         | December 31,
|                                 |                                        |                                                                    |                  |           | 2002      |         | 2001        
|                                 |                                        |                                                                    |                  |           |           |         |             
|Assets                           |                                        |                                                                    |                  |           |           |         |              |          
|                                
|                                
|                                
|                                
|                                 | Real estate assets                     |                                                                    |                  |           |           |         |              |           |          
|                                
|                                
|                                
|                                
|                                 |                                        | Land                                                               |                  | $         | 270,050   |         |              | $         | 277,146   |        
|                                
|                                
|                                
|                                
|                                 |                                        | Building and improvements                                          |                  |           | 1,853,237 |         |              |           | 1,794,658 |        
|                                
|                                
|                                
|                                
|                                 |                                        | Furniture, fixtures and equipment                                  |                  |           | 225,272   |         |              |           | 212,390   |        
|                                
|                                
|                                
|                                
|                                 |                                        | Construction in progress                                           |                  |           | 294,020   |         |              |           | 419,449   |        
|                                
|                                
|                                
|                                
|                                 |                                        | Investments in and advances to unconsolidated real estate entities |                  |           | 107,209   |         |              |           | 89,692    |        
|                                
|                                
|                                
|                                
|                                 |                                        | Land held for future development                                   |                  |           | 24,701    |         |              |           | 23,658    |        
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        
|                                 |                                        |                                                                    | 2,774,489        |           |           |         | 2,816,993    |          
|                                
|                                
|                                
|                                
|                                 |                                        | Less: accumulated depreciation                                     |                  |           | (389,136  | )       |              |           | (393,014  | )      
|                                
|                                
|                                
|                                
|                                 |                                        | Assets held for sale                                               |                  |           | 91,451    |         |              |           | 39,419    |        
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        
|                                 |                                        | Total
real estate assets                                           |                  |           | 2,476,804 |         |              |           | 2,463,398 |        
|                                
|                                
|                                
|                                
|                                 | Cash and cash equivalents              |                                                                    |                  | 9,351     |           |         |              | 4,803     |          
|                                
|                                
|                                
|                                
|                                 | Restricted cash                        |                                                                    |                  | 1,222     |           |         |              | 1,315     |          
|                                
|                                
|                                
|                                
|                                 | Deferred charges, net                  |                                                                    |                  | 17,440    |           |         |              | 18,203    |          
|                                
|                                
|                                
|                                
|                                 | Other assets                           |                                                                    |                  | 58,330    |           |         |              | 50,632    |          
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        
|                                 |                                        | Total assets                                                       |                  | $         | 2,563,147 |         |              | $         | 2,538,351 |        
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        
|Liabilities
and partners equity |                                        |                                                                    |                  |           |           |         |              |          
|                                
|                                
|                                
|                                
|                                 | Notes payable                          |                                                                    | $                | 1,379,276 |           |         | $            | 1,336,520 |          
|                                
|                                
|                                
|                                
|                                 | Accrued interest payable               |                                                                    |                  | 17,426    |           |         |              | 9,660     |          
|                                
|                                
|                                
|                                
|                                 | Dividend and distribution payable      |                                                                    |                  | 33,245    |           |         |              | 33,208    |          
|                                
|                                
|                                
|                                
|                                 | Accounts payable and accrued expenses  |                                                                    |                  | 60,233    |           |         |              | 72,277    |          
|                                
|                                
|                                
|                                
|                                 | Security deposits and prepaid rents    |                                                                    |                  | 8,641     |           |         |              | 9,016     |          
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        
|                                 |                                        | Total liabilities                                                  |                  |           | 1,498,821 |         |              |           | 1,460,681 |        
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        
|                                 | Commitments and contingencies          |                                                                    |                  |          |           |         |              |          |          
|                                
|                                
|                                
|                                
|                                 | Partners equity                       |                                                                    |                  |           |           |         |              |           |          
|                                 |                                        | Preferred units                                                    |                  |           | 215,000   |         |              |           | 215,000   |        
|                                
|                                
|                                
|                                
|                                 |                                        | Common units                                                       |                  |           |           |         |              |           |           |        
|                                 |                                        |                                                                    | General partner  | 9,722     |           |         |              | 9,877     |          
|                                
|                                
|                                
|                                
|                                 |                                        |                                                                    | Limited partners |           |           | 844,051 |              |           |           | 859,438 | 
|                                
|                                
|                                
|                                
|                                 | Accumulated other comprehensive income |                                                                    |                  | (4,447    | )         |         |              | (6,645    | )        
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        
|                                 |                                        | Total partners equity                                             |                  |           | 1,064,326 |         |              |           | 1,077,670 |        
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        
|                                 |                                        | Total liabilities and partners equity                             |                  | $         | 2,563,147 |         |              | $         | 2,538,351 |        
|                                 |                                        |                                                                    |                  |           |           |         |              |           |           |        

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

12



---



##### 



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

|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |        |        | 
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------- | ------------------------------------------ | ------ | ------------------ | ------ | ------ | ------ | ------ | ------ | 
|                                                                 |                                                                                       |                |                                            |        | Three Months Ended
|                                                                 |                                                                                       |                |                                            |        | March 31,         
|                                                                 |                                                                                       |                |                                            |        |                   
|                                                                 |                                                                                       |                |                                            |        | 2002               |        | 2001  
|                                                                 |                                                                                       |                |                                            |        |                    |        |       
|Revenues                                                         |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Rental                                                                                |                | $                                          | 82,795 |                    |        | $      | 91,028 |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Interest                                                                              |                |                                            | 406    |                    |        |        | 484    |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Other                                                                                 |                |                                            | 2,925  |                    |        |        | 3,519  |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Third party services                                                                  |                |                                            |       |                    |        |        | 3,606  |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 |                                                                                       | Total revenues |                                            |        | 86,126             |        |        |        | 98,637 |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|Expenses                                                         |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Property operating and maintenance (exclusive of items shown separately below)        |                |                                            | 34,270 |                    |        |        | 33,967 |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Depreciation expense                                                                  |                |                                            | 20,904 |                    |        |        | 17,023 |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Interest                                                                              |                |                                            | 13,638 |                    |        |        | 14,062 |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Amortization of deferred loan costs                                                   |                |                                            | 555    |                    |        |        | 452    |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | General and administrative                                                            |                |                                            | 3,868  |                    |        |        | 3,402  |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Minority interest in consolidated property partnerships                               |                |                                            | (482   | )                  |        |        | (281   | )     
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Third party services                                                                  |                |                                            |       |                    |        |        | 3,200  |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 |                                                                                       | Total expenses |                                            |        | 72,753             |        |        |        | 71,825 |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|Income
from continuing operations before gains on property sales |                                                                                       |                | 13,373                                     |        |                    |        | 26,812 |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Gains on property sales                                                               |                |                                            | 13,275 |                    |        |        | 111    |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 |                                                                                       |                | Income from continuing operations          |        |                    | 26,648 |        |        |        | 26,923 | 
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|Discontinued Operations                                          |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Income from discontinued operations                                                   |                |                                            | 1,362  |                    |        |        | 654    |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Reserve for losses on properties held for sale                                        |                |                                            | (7,652 | )                  |        |        |       |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 |                                                                                       |                | Income (loss) from discontinued operations |        |                    | (6,290 | )      |        |        | 654    | 
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|Income before cumulative effect of accounting change             |                                                                                       |                | 20,358                                     |        |                    |        | 27,577 |       
|                                                                
|                                                                
|                                                                
|                                                                
|Cumulative effect of accounting change                           |                                                                                       |                |                                           |        |                    |        | (695   | )     
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|Net income                                                       |                                                                                       |                | 20,358                                     |        |                    |        | 26,882 |       
|                                                                
|                                                                
|                                                                
|                                                                
|Distributions to preferred unitholders                           |                                                                                       |                | (4,262                                     | )      |                    |        | (4,369 | )     
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|Net income available to common unitholders                       |                                                                                       | $              | 16,096                                     |        |                    | $      | 22,513 |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|Earnings per common unit  basic                                 |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Income from continuing operations (net of preferred distributions)                    |                | $                                          | 0.53   |                    |        | $      | 0.51   |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Income (loss) from discontinued operations                                            |                |                                            | (0.15  | )                  |        |        | 0.02   |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 | Income before cumulative effect of accounting change (net of preferred distributions) |                |                                            | 0.38   |                    |        |        | 0.53   |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Cumulative effect of accounting change                                                |                |                                            |       |                    |        |        | (0.02  | )     
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 | Net income available to common unitholders                                            |                | $                                          | 0.38   |                    |        | $      | 0.51   |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 | Weighted average common units outstanding  basic                                     |                |                                            | 41,994 |                    |        |        | 44,028 |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|Earnings per common unit  diluted                               |                                                                                       |                |                                            |        |                    |        |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Income from continuing operations (net of preferred distributions)                    |                | $                                          | 0.53   |                    |        | $      | 0.51   |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Income (loss) from discontinued operations                                            |                |                                            | (0.15  | )                  |        |        | 0.02   |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 | Income before cumulative effect of accounting change (net of preferred distributions) |                |                                            | 0.38   |                    |        |        | 0.53   |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Cumulative effect of accounting change                                                |                |                                            |       |                    |        |        | (0.02  | )     
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 | Net income available to common unitholders                                            |                | $                                          | 0.38   |                    |        | $      | 0.51   |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 | Weighted average common units outstanding  diluted                                   |                |                                            | 42,166 |                    |        |        | 44,288 |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       
|                                                                 | Distributions declared                                                                |                | $                                          | 0.78   |                    |        | $      | 0.78   |       
|                                                                 |                                                                                       |                |                                            |        |                    |        |        |        |       

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

13



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##### 



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

|                                    |                                                                                                         |                            |         |           |   |         |       |              |   |               |         |         |   |   |        |       |  |   |           |         |        | 
|----------------------------------- | ------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | --------- | - | ------- | ----- | ------------ | - | ------------- | ------- | ------- | - | - | ------ | ----- |  | - | --------- | ------- | ------ | 
|                                    |                                                                                                         |                            |         |           |   |         |       | Common Units |   | Accumulated   |         |         |   |  
|                                    |                                                                                                         |                            |         |           |   |         |       |              |   | Other         |         |         |   |  
|                                    |                                                                                                         |                            |         | Preferred |   | General |       | Limited      |   | Comprehensive |         |         |   |  
|                                    |                                                                                                         |                            |         | Units     |   | Partner |       | Partners     |   | Income        |         | Total  
|                                    |                                                                                                         |                            |         |           |   |         |       |              |   |               |         |        
|Partners Equity, December 31, 2001 |                                                                                                         | $                          | 215,000 |           |   | $       | 9,877 |              |   | $             | 859,438 |         |   | $ | (6,645 | )     |  | $ | 1,077,670 |        
|                                   
|                                   
|                                   
|                                   
|                                    | Comprehensive income                                                                                    |                            |         |           |   |         |       |              |   |               |         |         |   |   |        |       |  |   |           |         |       
|                                   
|                                   
|                                   
|                                   
|                                    | Net income                                                                                              |                            |         | 4,262     |   |         |       | 161          |   |               |         | 15,935  |   |   |        |      |  |   |           | 20,358  |       
|                                   
|                                   
|                                   
|                                   
|                                    | Net change in derivative value                                                                          |                            |         |          |   |         |       |             |   |               |         |        |   |   |        | 2,198 |  |   |           | 2,198   |       
|                                    |                                                                                                         |                            |         |           |   |         |       |              |   |               |         |         |   |   |        |       |  |   |           |        
|                                    |                                                                                                         | Total comprehensive income |         |           |   |         |       |              |   |               |         |         |   |   |        |       |  |   |           |         | 22,556 | 
|                                   
|                                   
|                                   
|                                   
|                                    | Contributions from the Company related to
Dividend Reinvestment and Employee Stock
Purchase Plans       |                            |         |          |   |         |       | 10           |   |               |         | 1,015   |   |   |        |      |  |   |           | 1,025   |       
|                                   
|                                   
|                                   
|                                   
|                                    | Distributions to preferred Unitholders                                                                  |                            |         | (4,262    | ) |         |       |             |   |               |         |        |   |   |        |      |  |   |           | (4,262  | )     
|                                   
|                                   
|                                   
|                                   
|                                    | Distributions to common Unitholders                                                                     |                            |         |          |   |         |       | (327         | ) |               |         | (32,404 | ) |   |        |      |  |   |           | (32,731 | )     
|                                   
|                                   
|                                   
|                                   
|                                    | Contributions from the Company related to
shares issued for restricted stock, net
deferred compensation |                            |         |          |   |         |       | 1            |   |               |         | 67      |   |   |        |      |  |   |           | 68      |       
|                                    |                                                                                                         |                            |         |           |   |         |       |              |   |               |         |         |   |   |        |       |  |   |           |        
|Partners Equity, March 31, 2002    |                                                                                                         | $                          | 215,000 |           |   | $       | 9,722 |              |   | $             | 844,051 |         |   | $ | (4,447 | )     |  | $ | 1,064,326 |        
|                                    |                                                                                                         |                            |         |           |   |         |       |              |   |               |         |         |   |   |        |       |  |   |           |        

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

14



---



##### 



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

|                                     |                                                                                   |                                                       |   |                    |         |      |   |         |        |  
|------------------------------------ | --------------------------------------------------------------------------------- | ----------------------------------------------------- | - | ------------------ | ------- | ---- | - | ------- | ------ | -
|                                     |                                                                                   |                                                       |   | Three Months Ended
|                                     |                                                                                   |                                                       |   | March 31,         
|                                     |                                                                                   |                                                       |   |                   
|                                     |                                                                                   |                                                       |   | 2002               |         | 2001
|                                     |                                                                                   |                                                       |   |                    |         |     
|Cash Flows From Operating Activities |                                                                                   |                                                       |   |                    |         |      |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Net income                                                                        |                                                       | $ | 20,358             |         |      | $ | 26,882  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Adjustments to reconcile net income to net cash provided by
operating activities: |                                                       |   |                    |         |      |   |         |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Net gain on sale of assets                            |   |                    | (13,275 | )    |   |         | (111   | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Reserve for losses on properties held for sale        |   |                    | 7,652   |      |   |         |       |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Equity in loss of unconsolidated real estate entities |   |                    | 343     |      |   |         |       |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Depreciation                                          |   |                    | 20,904  |      |   |         | 17,888 |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Amortization of deferred loan costs                   |   |                    | 555     |      |   |         | 455    |  
|                                    
|                                    
|                                    
|                                    
|                                     | Changes in assets, (increase) decrease in:                                        |                                                       |   |                    |         |      |   |         |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Restricted cash                                       |   |                    | 93      |      |   |         | (4     | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Other assets                                          |   |                    | (7,980  | )    |   |         | (6,169 | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Deferred charges                                      |   |                    | (894    | )    |   |         | (814   | )
|                                    
|                                    
|                                    
|                                    
|                                     | Changes in liabilities, increase (decrease) in:                                   |                                                       |   |                    |         |      |   |         |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Accrued interest payable                              |   |                    | 7,766   |      |   |         | 7,854  |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Accounts payable and accrued expenses                 |   |                    | (8,792  | )    |   |         | (9,523 | )
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                   | Security deposits and prepaid rents                   |   |                    | (375    | )    |   |         | 473    |  
|                                     |                                                                                   |                                                       |   |                    |         |      |   |        
|                                     | Net cash provided by operating activities                                         |                                                       |   | 26,355             |         |      |   | 36,931  |       
|                                     |                                                                                   |                                                       |   |                    |         |      |   |        
|Cash Flows From Investing Activities |                                                                                   |                                                       |   |                    |         |      |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Construction and acquisition of real estate assets, net of payables               |                                                       |   | (44,702            | )       |      |   | (65,165 | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Net proceeds from sale of assets                                                  |                                                       |   | 41,393             |         |      |   |        |       
|                                    
|                                    
|                                    
|                                    
|                                     | Capitalized interest                                                              |                                                       |   | (4,433             | )       |      |   | (5,948  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Recurring capital expenditures                                                    |                                                       |   | (1,879             | )       |      |   | (2,626  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Corporate additions and improvements                                              |                                                       |   | (279               | )       |      |   | (511    | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Non-recurring capital expenditures                                                |                                                       |   | (547               | )       |      |   | (322    | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Revenue generating capital expenditures                                           |                                                       |   | (327               | )       |      |   | (1,102  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Investment in and advances to unconsolidated entities                             |                                                       |   | (17,860            | )       |      |   |        |       
|                                     |                                                                                   |                                                       |   |                    |         |      |   |        
|                                     | Net cash used in investing activities                                             |                                                       |   | (28,634            | )       |      |   | (75,674 | )     
|                                     |                                                                                   |                                                       |   |                    |         |      |   |        
|Cash Flows From Financing Activities |                                                                                   |                                                       |   |                    |         |      |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Debt proceeds                                                                     |                                                       |   | 43,336             |         |      |   | 130,000 |       
|                                    
|                                    
|                                    
|                                    
|                                     | Payment of financing costs                                                        |                                                       |   |                   |         |      |   | (300    | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Debt payments                                                                     |                                                       |   | (580               | )       |      |   | (53,355 | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Proceeds from Dividend Reinvestment and Employee Stock Purchase
Plans             |                                                       |   | 1,025              |         |      |   | 7,555   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Purchase of units                                                                 |                                                       |   |                   |         |      |   | (11,755 | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Distributions to preferred unitholders                                            |                                                       |   | (4,262             | )       |      |   | (4,369  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Distributions to common unitholders                                               |                                                       |   | (32,692            | )       |      |   | (33,466 | )     
|                                     |                                                                                   |                                                       |   |                    |         |      |   |        
|                                     | Net cash provided by financing activities                                         |                                                       |   | 6,827              |         |      |   | 34,310  |       
|                                     |                                                                                   |                                                       |   |                    |         |      |   |        
|                                     | Net increase (decrease) in cash and cash equivalents                              |                                                       |   | 4,548              |         |      |   | (4,433  | )     
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents, beginning of period                                    |                                                       |   | 4,803              |         |      |   | 7,459   |       
|                                     |                                                                                   |                                                       |   |                    |         |      |   |        
|                                     | Cash and cash equivalents, end of period                                          |                                                       | $ | 9,351              |         |      | $ | 3,026   |       
|                                     |                                                                                   |                                                       |   |                    |         |      |   |        

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

15



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|1. |  | ORGANIZATION AND FORMATION OF THE COMPANY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Organization and Formation of the Company
Post Apartment Homes, L.P. (the Operating Partnership), a Georgia limited
partnership, was formed on January 22, 1993, to conduct the business of
developing, leasing and managing upscale multi-family apartment communities
for its general partner, Post Properties, Inc. (the Company or PPI). The
Operating Partnership, through its operating divisions and subsidiaries, is
the entity through which all of the Companys operations are conducted. At
March 31, 2002, the Company, through wholly owned subsidiaries, controlled
the Operating Partnership as the sole general partner and as the holder of
88.0% of the common units in the Operating Partnership (Common Units) and
63.6% of the Perpetual Preferred Partnership Units (Preferred Units). As
the sole general partner, the Company holds approximately 1% of the common
units in the Operating Partnership. The other limited partners of the
Operating Partnership, who hold Common Units, are those persons (including
certain officers and directors of the Company) who, at the time of Initial
Offering, elected to hold all or a portion of the their interest in the form
of Common Units rather than receiving shares of Company common stock. 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 connections 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 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 Company elected to be taxed as a real estate investment trust (REIT)
for Federal income tax purposes beginning with the year ended December 31,
1993. A REIT is a legal entity that holds real estate interest and, through
payments of dividends to shareholder, in practical effect is not subject to
Federal income taxes at the corporate level.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | The Operating partnership currently owns and manages or in the process of
developing apartment communities located in the Atlanta, Dallas, Tampa,
Orlando, Washington, D.C., Virginia, Nashville, Houston, Austin, Phoenix,
Denver, Pasadena, New York City and Charlotte metropolitan areas. At March
31, 2002, approximately 51.6%, 21.0% and 9.9% (on a unit basis) of the
Operating Partnerships communities are located in the Atlanta, Dallas and
Tampa metropolitan areas, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | 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 Exchanges
Commissions. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles
for the 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 month period ended March 31,
2002 are not necessarily indicative of the results that may be
expected for the full year. These financial statements should be read
in conjunction with Operating Partnerships audited financial
statements and notes thereto included in the Post Apartment Homes,
L.P. Annual Report on Form 10-K for the year ended
December 31, 2001. Certain 2001 amounts have been reclassified
to conform to the current years financial statement presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|2. |  | NEW ACCOUNTING PRONOUNCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | On January 1, 2002, the Operating Partnership adopted SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No.
144 replaces SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of. SFAS 144 requires that
real estate assets held for investment be measured at the lower of their
carrying amount or fair value and real estate assets held for sale be
measured at the lower of their carrying amount or their fair value less costs
to sell.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | As part of its on-going financing strategy, the Operating Partnership is
actively engaged in a real estate asset sale program. The proceeds from real
estate asset sales are used primarily to fund the construction of new apartment
communities. The Operating Partnership designates and classifies real estate
assets as held for sale when its internal investment committee approves the
sale and the Operating Partnership has commenced an active program to sell
the assets. The Operating Partnership generally expects to sell the assets
held for sale within six to twelve months from the date an active sales
program commences. SFAS No. 144 requires the operating results
of real estate assets held for sale on or after January 1, 2002 be reflected as
discontinued operations in the accompanying statement of operations. The
real estate assets held for sale are presented                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

16



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



| |  | separately in the consolidated balance sheets. Subsequent to this
classification, no further depreciation is recorded on the assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In accordance with the implementation provisions of SFAS No. 144, the
operating results of real estate assets designated as held for sale
subsequent to January 1, 2002 are included in discontinued operations in the
consolidated statement of operations. The operating results of real estate
assets held for sale at December 31, 2001 are included in continuing
operations. Subsequent to the date that all real estate assets held for sale
at December 31, 2001 are sold, the operating results of all real estate
assets held for sale will be reflected as discontinued operations in the
consolidated statement of operations. Also under the implementation
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.
The subsequent gains or losses on the sale of these assets will also be
included in discontinued operations. The gains or losses on the sale of real
estate assets held for sale at December 31, 2001 are included in continuing
operations. Subsequent to the date that all real estate assets held for sale
at December 31, 2001 are sold, all gains and losses from real estate assets
held for sale and subsequently sold will be reflected as discontinued
operations.
|
| |  | In May 2002, SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical
Corrections was issued. 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 potentially 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 remaining provisions
of SFAS No. 145 are generally not applicable to the Company.                                                                                                                                                                                                                                                                                     
|
| |  | On January 1, 2001, the Operating Partnership adopted SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended.
This standard established accounting and reporting standards for derivative
and hedging activities and required the Operating Partnership to recognize
all derivative financial instruments on its balance sheet at fair value.
Upon the adoption of SFAS No. 133, the Operating Partnership recorded a net
transition loss of $695, relating to the write down
of the book value of its interest rate cap agreements to their fair value.
This loss was reflected as a cumulative effect of accounting change in the
consolidated statement of operations for the three months ended March 31,
2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | At March 31, 2002, the Operating Partnership had outstanding interest rate
swap agreements with a notional value of $129,000 with maturity dates ranging
from 2005 to 2009. For the three months ended March 31, 2002, the Operating
Partnership recorded the unrealized net gain of $2,198 on these cash flow
hedges as an increase in accumulated other comprehensive
income, a partners equity account, in the accompanying consolidated
balance sheet. In addition, the Company recorded the change in fair value of
the ineffective component of its outstanding interest rate cap agreements in
the its statement of operations for the three months ended March 31, 2002.
This charge against earnings during the period and the fair value of the
interest rate cap agreements as of March 31, 2002 were not significant to the
Operating Partnerships financial position or results of operations. Within
the next twelve months, the Operating Partnership expects to reclassify out
of accumulated other comprehensive income approximately $939.                                                                                                                                                                                                                                                                                                         

17



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|3. |  | NOTES PAYABLE                                                                                                
|-- |  | -------------------------------------------------------------------------------------------------------------
|  
|   |  | At March 31, 2002 and December 31, 2001, the Operating Partnerships
indebtedness consisted of the following:

|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |           | 
|---------------------------------------- | ------------------------ | ----- | -------------- | ------------- | ---- | ------------ | ------------- | ---- | -- | ------- | - | ---- | -------- | --------- | --------- | ---- | ------------ | ------- | ------- | --------- | ------- | ------- | ------- | --------- | 
|                                         |                          |       | Payment        |               |      |              |               |      |    |         |   |      | Maturity |           | March 31, |      | December 31,
|Description                              |                          | Terms |                | Interest Rate |      |              |               |      |    | Date(1) |   | 2002 |          | 2001     
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |          
|Senior Notes (Unsecured)                 |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | Senior Notes             |       | Int.           |               |      | 6.71% - 7.70 | %             |      |    |         |   |      |          | 2003-2010 |           |      | $            | 360,000 |         |           | $       | 360,000 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Medium Term Notes        |       | Int.           |               |      | 6.69% - 8.12 | %             |      |    | (2      | ) |      |          | 2004-2015 |           |      |              | 323,000 |         |           |         | 323,000 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Int.           |               |      | 8.37         | %             |      |    |         |   |      |          | 2002      |           |      |              | 20,000  |         |           |         | 20,000  |        
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         | 703,000 |           |         |         | 703,000 |          
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|Unsecured Lines of Credit & Other        |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | Revolver                 |       |                | N/A           |      |              | LIBOR + 0.85% |      |    | (3      | ) |      |          | 2004      |           |      |              | 195,000 |         |           |         | 155,000 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Cash Management Line     |       |                | N/A           |      |              | LIBOR + 0.75% |      |    |         |   |      |          | 2003      |           |      |              | 14,538  |         |           |         | 11,202  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Other                    |       |                | N/A           |      |              |               | 5.00 | %  |         |   | (4   | )        |           |           | 2021 |              |         |         | 2,000     |         |         |         | 2,000     | 
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         | 211,538 |           |         |         | 168,202 |          
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|Conventional Fixed Rate (Secured)        |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | FNMA                     |       | Prin. and Int. |               |      | 6.975        | %             |      |    | (5      | ) |      |          | 2029      |           |      |              | 102,200 |         |           |         | 102,200 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int. |               |      | 7.69         | %             |      |    |         |   |      |          | 2007      |           |      |              | 50,327  |         |           |         | 50,527  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int. |               |      | 6.50         | %             |      |    | (6      | ) |      |          | 2009      |           |      |              | 47,431  |         |           |         | 47,681  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int. |               |      | 7.69         | %             |      |    |         |   |      |          | 2007      |           |      |              | 28,147  |         |           |         | 28,268  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Parkwood
TownhomesTM     |       | Prin. and Int. |               |      | 7.375        | %             |      |    |         |   |      |          | 2014      |           |      |              | 753     |         |           |         | 762     |        
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         | 228,858 |           |         |         | 229,438 |          
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|Tax Exempt Floating Rate Bonds (Secured) |                          | Int.  |                |               | 1.27 | %            |               |      | (7 | )       |   |      | 2025     |           |           |      | 235,880      |         |         |           | 235,880 |        
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | Total                    |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         | $       | 1,379,276 |         |         | $       | 1,336,520 | 
|                                         |                          |       |                |               |      |              |               |      |    |         |   |      |          |           |           |      |              |         |         |           |         |         |         |          



---

|(1) |  | All outstanding indebtedness can be prepaid at any time, subject to
certain prepayment penalties.                                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Contains $100,000 of Mandatory Par Put Remarketed Securities. The
annual interest rate on these securities to 2005 (the Remarketing
Date) is 6.85%. On the Remarketing Date, they are subject to mandatory
tender for remarketing.                                                                                                                                                     
|   
|   
|   
|   
|(3) |  | Represents stated rate. At March 31, 2002, the outstanding balance
of the Revolver consisted of money market and LIBOR based loans with an average
interest rate of 2.67%. The Revolver has a total capacity of
$320 million.                                                                                                                                                          
|   
|   
|   
|   
|(4) |  | This loan is interest free for the first three years, with interest
at 5.00% thereafter.                                                                                                                                                                                                                                                                                                 
|   
|   
|   
|   
|(5) |  | In 2000, interest rate was fixed at 6.975%, inclusive of credit
enhancement and other fees, to 2009 through an interest rate swap
arrangement.                                                                                                                                                                                                                                           
|   
|   
|   
|   
|(6) |  | This note bears interest at 6.50% with an effective rate of 7.30%.                                                                                                                                                                                                                                                                                                                       
|   
|   
|   
|   
|(7) |  | 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 March 31, 2002 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%.

During the first quarter of 2002, the Operating Partnership renewed its Cash
Management Line. This line of credit has a maximum borrowing capacity of
$20,000, bears interest at LIBOR + 0.75% and matures on February 12, 2003.

At March 31, 2002, the Operating Partnership
also had in place an additional
$185,000 line of credit facility for general corporate purposes. This credit
facility was renewed on April 22, 2002 with a borrowing capacity of
$125,000. This line bears interest at LIBOR plus 0.90% and matures in April
2003. There were no outstanding borrowings under this facility at March 31,
2002.

Debt maturities

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

|           |  |   |           | 
|---------- |  | - | --------- | 
|2002       |  | $ | 22,787    | 
|          
|          
|          
|          
|2003       |  |   | 103,616   | 
|          
|          
|          
|          
|2004       |  |   | 26,889    | 
|          
|          
|          
|          
|2005       |  |   | 204,183   | 
|          
|          
|          
|          
|2006       |  |   | 79,499    | 
|          
|          
|          
|          
|Thereafter |  |   | 732,764   | 
|           |  |   |           | 
|           |  | $ | 1,169,738 | 
|           |  |   |           | 



---

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

18



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|4. |  | INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In 2001, the Operating Partnership contributed two apartment communities
under development in Atlanta, Georgia and one apartment community in
Pasadena, California to individual limited liability companies (the Property
LLCs) with an institutional investor. The Company holds a 35% equity
interest in the Property LLCs. The total estimated development cost of the
apartment communities of $144,000 is being funded through member equity
contributions proportionate to the members ownership interests and through
construction financing provided by the Company. No gain or loss was
recognized on the Companys contribution to the Property LLCs. The Company
provides real estate services (development, construction and property
management) to the Property LLCs. 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 $3,291 at March 31, 2002. This excess
investment will primarily be amortized as a reduction to earnings on a
straight-line basis over the lives of the related assets.
|  
|   |  | 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                                                            |                                       |   |           |         |              |   |         |         | 
|----------------------------------------------------------- | ------------------------------------- | - | --------- | ------- | ------------ | - | ------- | ------- | 
|                                                            |                                       |   | March 31, |         | December 31,
|                                                            |                                       |   | 2002      |         | 2001        
|                                                            |                                       |   |           |         |             
|Real estate assets, net                                     |                                       | $ | 128,715   |         |              | $ | 115,664 |        
|                                                           
|                                                           
|                                                           
|                                                           
|Cash and other                                              |                                       |   | 956       |         |              |   | 533     |        
|                                                            |                                       |   |           |         |              |   |         |        
|                                                            | Total assets                          |   | $         | 129,671 |              |   | $       | 116,197 | 
|                                                            |                                       |   |           |         |              |   |         |        
|                                                            |                                       |   |           |         |              |   |         |        
|                                                           
|                                                           
|                                                           
|                                                           
|Construction
notes payable to Operating Partnership         |                                       | $ | 94,712    |         |              | $ | 77,019  |        
|                                                           
|                                                           
|                                                           
|                                                           
|Other liabilities                                           |                                       |   | 8,652     |         |              |   | 11,892  |        
|                                                            |                                       |   |           |         |              |   |         |        
|                                                            | Total liabilities                     |   |           | 103,364 |              |   |         | 88,911  | 
|                                                            |                                       |   |           |         |              |   |         |        
|Members equity                                             |                                       |   | 26,307    |         |              |   | 27,286  |        
|                                                            |                                       |   |           |         |              |   |         |        
|                                                            | Total liabilities and members equity |   | $         | 129,671 |              |   | $       | 116,197 | 
|                                                            |                                       |   |           |         |              |   |         |        
|                                                            |                                       |   |           |         |              |   |         |        
|                                                           
|                                                           
|                                                           
|                                                           
|Operating
Partnerships equity investment                   |                                       | $ | 12,498    |         |              | $ | 12,673  |        
|                                                            |                                       |   |           |         |              |   |         |        
|Operating
Partnerships share of construction notes payable |                                       | $ | 33,149    |         |              | $ | 26,957  |        
|                                                            |                                       |   |           |         |              |   |         |        

|                                          |  |                    |        |                    |  |   |   | 
|----------------------------------------- |  | ------------------ | ------ | ------------------ |  | - | - | 
|                                          |  | Three Months Ended |        | Three Months Ended
|                                          |  | March 31, 2002     |        | March 31, 2001    
|                                          |  |                    |        |                   
|Revenue                                   |  | $                  | 403    |                    |  | $ |  | 
|                                         
|                                         
|                                         
|                                         
|Expenses                                  |  |                    | (1,382 | )                  |  |   |  | 
|                                          |  |                    |        |                    |  |   |   | 
|Net loss                                  |  | $                  | (979   | )                  |  | $ |  | 
|                                          |  |                    |        |                    |  |   |   | 
|                                          |  |                    |        |                    |  |   |   | 
|                                         
|                                         
|                                         
|                                         
|Operating Partnerships share of net loss |  | $                  | (343   | )                  |  | $ |  | 
|                                          |  |                    |        |                    |  |   |   | 



| |  | At March 31, 2002, all of the apartment communities had commenced initial
rental operations. The Operating Partnerships share of
the net loss from these investments is included in other revenue in the
accompanying consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Operating Partnership has committed construction financing to the
Property LLCs totaling $111,271 ($94,715 funded at March 31, 2002). These
loans earn interest at LIBOR plus 1.75% and are secured by the apartment
communities. The loans mature on dates ranging from February 2003 to
February 2004 and are expected to be repaid from the proceeds of permanent
project financings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | As part of the development and construction services agreements entered into
between the Operating Partnership and the Property LLCs, the Operating
Partnership guaranteed the maximum total amount for certain construction cost
categories subject to aggregate limits (approximately $14,000). At March 31,
2002, the Operating Partnerships estimated obligations under the agreements
total approximately $900. If the Operating Partnership is unsuccessful in
mitigating these estimated costs, the Operating Partnership will be required
to fund the amounts to the Property LLCs. Any amounts funded will be
accounted for as part of the Operating Partnerships investment in the
Property LLCs. Additionally, under these agreements, the Operating
Partnership is subject to project completion requirements, as defined. At
March 31, 2002, the Operating Partnership believes that it will meet the
completion date requirements and not be subject to any additional costs.
|
| |  | In May 2002, the Operating
Partnership formed a fourth Property LLC with the same institutional
investor through the contribution of an apartment community under
development in Washington, DC. The terms of this Property LLC are
substantially similar to the arrangements discussed above. The total
estimated development costs of the apartment community are
approximately $70,900 and the Operating Partnership has committed
construction financing to the Property LLC totaling $56,700. The
Operating Partnership guaranteed the maximum total amount for certain
cost categories up to an aggregate limit of
$5,200 under the development and
construction services agreements between the Operating Partnership and
the Property LLC.                                                                                                                                                                                                                                           

19



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|5. |  | REAL ESTATE ASSETS HELD FOR SALE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | 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 March 31, 2002, the
Operating Partnership has classified four apartment communities, six tracts
of land and one commercial property as held for sale. These real estate
assets are reflected in the accompanying consolidated balance sheet at
$91,451 which represents the lower of cost or fair value less costs to sell.
The Operating Partnership expects the sale of these assets to occur in 2002.                                                                                                                                                                                                                                                                                                                      
|  
|   |  | In the three months ended March 31, 2002, the Operating Partnership
designated and classified four apartment communities and one commercial
property as held for sale. As discussed in Note 2 under SFAS No. 144, the
Operating Partnership recorded write-downs to fair value less costs to sell
of $7,652 on certain of these assets. These losses
are reflected in discontinued operations in the consolidated statement of
operations. Additionally, the operating results from these properties are
included in discontinued operations for both the current and prior periods.                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | In the three months ended March 31, 2002, the Operating Partnership sold two
apartment communities containing 540 units and one commercial property for
net proceeds of approximately $41,393. The communities sold were located in
Tampa, Florida and Clearwater, Florida and the commercial property was
located in Grand Prairie, Texas. These sales resulted in net gains of
approximately $13,275. As these assets were accounted for as held for sale
assets at December 31, 2001, the net gains and operating results from these
assets were included in continuing operations (see Note 2). For the
three months
ended March 31, 2002 and 2001, the consolidated statement of operations
include net income of $366 and $830, respectively from these two
communities and one commercial property held for sale at December 31, 2001.
For the three months ended March 31, 2001, net income reflected above
includes depreciation expense of $207.
|  
|6. |  | EARNINGS PER UNIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | For the three months ended March 31, 2002 and 2001, 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
|                                                                                                 |                                                                   |                                    |   | March 31,         
|                                                                                                 |                                                                   |                                    |   |                   
|                                                                                                 |                                                                   |                                    |   | 2002               |        | 2001
|                                                                                                 |                                                                   |                                    |   |                    |        |     
|Basic and diluted income from continuing operations
available to common unitholders (numerator): |                                                                   |                                    |   |                    |        |      |   |       
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 | Income from continuing operations                                 |                                    | $ | 26,648             |        |      | $ | 26,923 |       
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 |                                                                   | Less: Preferred unit distributions |   |                    | (4,262 | )    |   |        | (4,369 | )
|                                                                                                 |                                                                   |                                    |   |                    |        |      |   |       
|                                                                                                 | Income from continuing operations available to common
unitholders |                                    | $ | 22,386             |        |      | $ | 22,554 |       
|                                                                                                 |                                                                   |                                    |   |                    |        |      |   |       
|Common
units (denominator):                                                                      |                                                                   |                                    |   |                    |        |      |   |       
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 | Weighted
average units outstanding  basic                        |                                    |   | 41,995             |        |      |   | 44,028 |       
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 | Incremental
units from assumed conversion of options              |                                    |   | 111                |        |      |   | 260    |       
|                                                                                                 |                                                                   |                                    |   |                    |        |      |   |       
|                                                                                                 | Weighted
average units outstanding  diluted                      |                                    |   | 42,106             |        |      |   | 44,288 |       
|                                                                                                 |                                                                   |                                    |   |                    |        |      |   |       



|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 Companys chief operating decision makers focus on the Operating
Partnerships primary sources of income from property rental operations.
Property rental operations are broken down into four segments based on the
various stages in the property ownership lifecycle. These segments are
described below. All other ancillary service and support operations are aggregated in the
accompanying segment information.                                                                                     

20



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



| |  |  | 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 2001  communities which reached
stabilized occupancy in the prior year.                                                                                                                                      
|
| |  |  | Development and lease up communities  those communities that
are in lease-up but were not stabilized by the beginning of the
current year, including communities that stabilized during the
current year.                                  
|
| |  |  | Sold communities  communities which were sold in the current
or prior year and not reflected as discontinued operators
(see Note 2).                                                                                                       



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

21



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



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

|                                                        |  |      |         |      |  |   |         |  
|------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                                        |  | 2002 |         | 2001
|                                                        |  |      |         |     
|Revenues                                                |  |      |         |      |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Fully stabilized communities                            |  | $    | 68,271  |      |  | $ | 72,845  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Communities stabilized during 2001                      |  |      | 5,331   |      |  |   | 3,673   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Development and lease-up communities                    |  |      | 8,023   |      |  |   | 5,190   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Sold communities                                        |  |      | 736     |      |  |   | 9,319   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Other                                                   |  |      | 3,765   |      |  |   | 7,610   |  
|                                                        |  |      |         |      |  |   |         |  
|Consolidated revenues                                   |  | $    | 86,126  |      |  | $ | 98,637  |  
|                                                        |  |      |         |      |  |   |         |  
|                                                        |  |      |         |      |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Contribution to Funds from Operations                   |  |      |         |      |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Fully stabilized communities                            |  | $    | 44,936  |      |  | $ | 50,247  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Communities stabilized during 2001                      |  |      | 3,437   |      |  |   | 2,017   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Development and lease-up communities                    |  |      | 4,361   |      |  |   | 2,925   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Sold communities                                        |  |      | 366     |      |  |   | 6,107   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Other                                                   |  |      |        |      |  |   | 406     |  
|                                                        |  |      |         |      |  |   |         |  
|                                                        |  |      |         |      |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Contribution to FFO                                     |  |      | 53,100  |      |  |   | 61,702  |  
|                                                        |  |      |         |      |  |   |         |  
|                                                        |  |      |         |      |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Other
operating income, net of expense                  |  |      | (596    | )    |  |   | 675     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Depreciation on non-real estate assets                  |  |      | (467    | )    |  |   | (654    | )
|                                                       
|                                                       
|                                                       
|                                                       
|Minority interest in consolidated property partnerships |  |      | 482     |      |  |   | 281     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Interest expense                                        |  |      | (13,638 | )    |  |   | (14,062 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Amortization of deferred loan costs                     |  |      | (555    | )    |  |   | (452    | )
|                                                       
|                                                       
|                                                       
|                                                       
|General
and administrative expense                      |  |      | (3,868  | )    |  |   | (3,402  | )
|                                                       
|                                                       
|                                                       
|                                                       
|Distributions to preferred unitholders                  |  |      | (4,262  | )    |  |   | (4,369  | )
|                                                        |  |      |         |      |  |   |         |  
|Total FFO                                               |  |      | 30,196  |      |  |   | 39,719  |  
|                                                        |  |      |         |      |  |   |         |  
|                                                        |  |      |         |      |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Depreciation on real estate assets                      |  |      | (19,723 | )    |  |   | (16,622 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Gain on property sales  continuing operations          |  |      | 13,275  |      |  |   | 111     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Income from discontinued operations                     |  |      | (1,362  | )    |  |   | (654    | )
|                                                       
|                                                       
|                                                       
|                                                       
|Distributions to preferred unitholders                  |  |      | 4,262   |      |  |   | 4,369   |  
|                                                        |  |      |         |      |  |   |         |  
|Income from continuing operations                       |  | $    | 26,648  |      |  | $ | 26,923  |  
|                                                        |  |      |         |      |  |   |         |  



|8. |  | PROJECT ABANDONMENT, EMPLOYEE SEVERANCE AND IMPAIRMENT CHARGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In the fourth quarter of 2001, the Operating Partnership recorded a charge
based on managements decision to focus its business and new development
strategy on fewer markets, to focus on its core business of owning developing
and managing multifamily real estate assets and to do so with a smaller
workforce and lower overhead expenses. As part of the charge, the Operating
Partnership established approximately $3,632 of accrued liabilities,
primarily related to employee severance costs. These amounts are expected to
be paid in 2002. The following table summarizes the activity relating to the
accrued charges during the three months ended March 31, 2002.

|                                                       |  |   |        |  
|------------------------------------------------------ |  | - | ------ | -
|Accrued severance and other charges, December 31, 2001 |  | $ | 3,632  |  
|                                                      
|                                                      
|                                                      
|                                                      
|Payments through March 31, 2002                        |  |   | (1,430 | )
|                                                       |  |   |        |  
|Accrued severance and other charges, March 31, 2002    |  | $ | 2,202  |  
|                                                       |  |   |        |  



| |  | In the fourth quarter of 2001, the Operating Partnership sold substantially
all of the net assets of Post Landscape Group, Inc. (PLG) a subsidiary
entity that provided landscape maintenance, design and installation services
to third parties. As the
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22



---



##### 



POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except apartment unit data)



|   |  | business was sold to the former management team and initially financed 100%
by the Operating Partnership, the transaction was not reflected as a sale at
December 31, 2001. As the transaction resulted in a net loss,
the net loss was
recognized in the fourth quarter of 2001. In the first quarter of 2002, the
Operating Partnership has received principal payments representing
approximately 22% of the outstanding note balance. As these payments
constitute adequate initial principal payments under the notes, the sale was
recognized in the first quarter of 2002. The impact of the sale recognition
was to record the note receivable (outstanding balance of $3,100 at March
31, 2002) and to remove the net assets and liabilities of the former PLG from
the Operating Partnerships financial statements. No further gain or loss was recognized in the
first quarter of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Operating Partnership also sold substantially all of the net assets of
RAM Partners, Inc. (RAM), a separate subsidiary entity that managed
apartment communities for third parties, in the fourth quarter 2001. This
business was sold to the former management team of RAM and the sale was
100% by the Operating Partnership. Through March 31, 2002, the Operating
Partnership has not received adequate initial principal payments under the
notes receivable, therefore full sales recognition for this transaction continues to be deferred.
A deferred gain of approximately $591 will be recorded on this
transaction when conditions for
full sales recognition, primarily the receipt of an adequate down payment on
the notes, are met (expected later in 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | During the first quarter of
2002, the Company agreed to transfer certain
construction contracts of Post Construction Services Inc., its third party
construction business, to Oxford Properties, LLC in exchange for $100 and
Oxford Properties assumption of substantially all of Post Construction
Services liabilities related to the transferred assets. In approving the
transaction the Companys board of directors ascribed nominal value to the
assets being transferred. The assets consisted principally of third party
construction contracts for the construction of four garden style apartment,
condominium and townhouse communities as well as related subcontracts,
indemnities and guarantees. In connection with the transfer of Post
Construction Services construction contracts, Oxford Properties has the
right to receive a deferred fee upon completion of one of the construction
projects in the amount of $500. Oxford Properties has also agreed to
employee 28 former Post Properties and Post Construction Services employees.
As a result, the Operating Partnership will not be responsible for costs that would otherwise result
from winding up third party construction business. The Operating Partnership
recorded a charge of $500 in the fourth quarter of 2001 relating to its
exit from the third party construction business. Oxford Properties,
LLC is an
entity owned by former officers of the Operating Partnership and by the son
of the Operating Partnerships chairman and chief executive officer, John A.
Williams. Mr. Williams does not own any of the outstanding equity interests
in Oxford Properties and he will not have any management role in Oxford
Properties.
|  
|9. |  | STOCK BASED COMPENSATION PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | During the first quarter of
2002, the Operating Partnership granted 15,353 shares of
restricted stock to Operating Partnership officers. The restricted shares
vest ratably over a three-year period. The total value of the restricted
share grant was initially reflected in partners equity as additional capital
reduced by non-amortized deferred compensation expense. Such
deferred compensation is amortized ratably into compensation expense over the
vesting period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

23



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)



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

Overview

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

As of March 31, 2002, there were 42,023,730 Units outstanding, of which
36,967,365 or 88.0%, were owned by the Company and 5,056,365, or 12.0% were
owned by other limited partners (including certain officers and directors of
the Company). As of March 31, 2002, there were 7,700,000 preferred units
outstanding, of which 4,900,000 were owned by the Company.

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
policies. The Companys significant accounting policies are
included in the notes to the Companys audited financial
statement included in the Companys Annual Report on Form 10-K
for the year ended December 31, 2001. The discussion below
addresses the implementation of new accounting pronouncements and
policies during the three months ended March 31, 2002.

24



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

On January 1, 2002, the Company adopted SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS No. 144 replaces SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. SFAS 144 required
that real estate assets held for investment be measured at the lower
of their carrying value or fair value and real estate assets held for
sale be measured at the lower of their carrying amount of their fair
value less cost to sell.

As part of its on-going financing strategy, the Company is actively engaged in
a real estate asset sale program. The proceeds from real estate asset sales
are primarily used to fund the construction of new apartment communities. The Company
designates and classifies real estate assets as held for sale when its internal
investment committee approves the sale and the Company has commenced an active
program to sell the assets. The Company generally expects to sell the assets
held for sale within six to twelve months from the date an active sales program
commences. SFAS No. 144 requires the operating results of real
estate assets held for sale on or after January 1, 2002 be reflected as discontinued
operations in the accompanying statement of operations. The real estate assets
held for sale are presented separately in the consolidated balance sheets.
Subsequent to this classification, no further depreciation is recorded on the
assets.

In accordance with the implementation provisions of SFAS No. 144, the operating
results of real estate assets designated as held for sale subsequent to January
1, 2002 are included in discontinued operations in the consolidated statement
of operations. The operating results of real estate assets held for sale at
December 31, 2001 are included in continuing operations. Subsequent to the
date that all real estate assets held for sale at December 31, 2001 are sold,
the operating results of all real estate assets held for sale will be reflected
as discontinued operations in the consolidated statement of operations. Also
under the implementation 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. The subsequent gains or losses on the sale of these
assets will also be included in discontinued operations. The gains or losses
on the sale of real estate assets held for sale at December 31, 2001 are
included in continuing operations. Subsequent to the date that all real estate
assets held for sale at December 31, 2001 are sold, all gains and losses from
real estate assets held for sale and subsequently sold will be reflected as
discontinued operations.

In May 2002, SFAS No. 145, Rescission of
FASB Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections was issued. 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 stricter under APB
No. 30, the impact of the Company will be for the potential
treatment of 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 remaining provisions of
SFAS No. 145 are generally not applicable to the Company.

Results of Operations

The following discussion of results of operations should be read in conjunction
with the consolidated statements of operations and the accompanying selected
financial data.

25



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

Comparison of Three Months Ended March 31, 2002 to Three Months Ended March 31, 2001

The Operating Partnership reported net income available to common unitholders
of $16,096 and $22,513 for the three months ended March 31, 2002 and 2001,
respectively, and the Company reported net income available to common
shareholders of $14,158 and $19,866 for the three months ended March 31, 2002
and 2001, respectively. The decrease in Company net income available to common
shareholders of $5,708 from 2001 to 2002 was due to weaker operating
performance of the fully stabilized communities (see below), the
slower lease-up of new development communities and the dilutive
impact of the Companys asset sale and capital recycling
program. The decrease in income from weaker operating performance was
partially offset by increased gains on property sales of $13,164
($11,468 net of minority interest), net of reserves of $7,652
($6,731 net of minority interest) to write down properties held for
sale to their fair values.

Rental and other revenues decreased $8,827 or 9.3%
from 2001 to 2002 primarily due to a decrease of $4,574 or 6.3% in revenues
from fully stabilized communities, discussed further below. The
rental revenue increases from the Companys newly stabilized and
lease-up properties of $4,491 were offset by the revenue reduction of
$8,583 from assets sold under the Companys asset sale and
capital recycling program.

Property operating and maintenance expenses
(exclusive of depreciation and amortization) increased by $303, or
0.9%, primarily due to the $737, or 3.3% increase for fully
stabilized communities.

As more fully discussed in Note 8 to the
consolidated financial statements, the Company exited the third party
property management and landscape service businesses in the fourth
quarter of 2001 through the sale of the businesses to their former
management teams. These sales allowed the Company to simplify its
operations through reduced workforce (approximately 2,100 employees prior to
the sales to approximately 1,200 employees as of March 31, 2002) and focus on
its core business of owning, developing and managing multifamily real
estate assets.

The net gain on property sales resulted from the sale of two communities and one
commercial property, in the three months ended March 31, 2002. These
assets were classified as assets held for sale at December 31, 2001.
In future periods (see discussion under discontinued operations
below), the gains and losses from operating assets sales will be
included in discontinued operations under newly issued accounting
standard, SFAS No. 144.

Depreciation expense increased $3,881, or 22.8%
from 2001 to 2002 primarily due to increased depreciation
on newly stabilized and lease-up properties, partially offset by lost
depreciation on properties sold and currently held for sale.

General and administrative expense increased $466,
or 13.7% from 2001 to 2002 primarily due to reduced
capitalization of overhead to communities under construction between
periods.

Discontinued Operations

In accordance with the implementation provisions of SFAS No. 144, the operating
results of real estate assets designated as held for sale subsequent to January
1, 2002 are included in discontinued operations in the consolidated statement
of operations. For the periods presented, income from discontinued operations
includes the results of operations of four communities containing 1,450 units
and one commercial property designated as held for sale in the three
months ended March 31, 2002.

For the three months ended March 31, 2002, revenues and property operating and
maintenance expense (exclusive of depreciation and amortization expense) from
this group of assets totaled $3,782 and $1,531, respectively. Additionally, in
accordance with SFAS No. 144, interest expense of $889 was allocated
to these assets for the three months ended March 31, 2002. No
depreciation expense was recorded on these assets for the three
months ended March 31, 2002.

For the three months ended March 31, 2001, revenues
and property operating and maintenance expense (exclusive of
depreciation and amortization expense) from this group of assets
totaled $3,946 and $1,501, respectively. In accordance with SFAS No.
144, interest expense of $923 was allocated to these assets for the
three months ended March 31, 2001. Depreciation expense of $868 was
recorded on these assets for the three months ended March 31,
2001.

A reserve for losses totaling $7,652 ($6,731 net of
minority interest) to reduce the carrying value of certain of the
assets designated as held for sale in the first quarter of 2002 to
their fair value less costs to sell was also recorded in discontinued
operations under SFAS No. 144. Any gains and losses from the sale of
future operating real estate assets will be included in discontinued
operations, along with their operating results.

Community Operations / Segment Performance

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

At March 31, 2002, the Companys portfolio of apartment communities consisted
of the following: (i) 68 communities that were completed and stabilized for all
of the current and prior year, (ii) eight communities that achieved full stabilization during 2001, (iii) ten
communities and additions to three existing communities that are currently in
the development or lease-up stages, and (iv) six stabilized communities classified
as held for sale.

The Company has adopted an accounting policy related to communities in the
lease-up stage whereby substantially all operating expenses (including
pre-opening marketing 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 expenses) will initially exceed
rental revenues, resulting in a lease-up deficit, which continues until such
time as rental revenues exceed such expenses. Lease up deficits for the three
months ended March 31, 2002 and 2001 were $455 and $1,163, respectively.

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

26



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

All Operating Communities

The operating performance for all of the Companys apartment communities
combined for the quarter ended March 31, 2002 and 2001 is summarized as
follows:

|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   
|---------------------------------------------------------------------------------------- |  | ------------------ | ------ | ---- |  | -------- | ------ |  |  |  | ----- | --
|                                                                                         |  | Three Months Ended
|                                                                                         |  | March 31,         
|                                                                                         |  |                   
|                                                                                         |  | 2002               |        | 2001 |  | % Change
|                                                                                         |  |                    |        |      |  |         
|Rental and other revenue:                                                                |  |                    |        |      |  |          |        |  |  |  |       |   
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Fully stabilized communities(1)                                                          |  | $                  | 68,271 |      |  | $        | 72,845 |  |  |  | (6.3  | )%
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Communities stabilized during 2001                                                       |  |                    | 5,331  |      |  |          | 3,673  |  |  |  | 45.1  | % 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Lease-up communities(2)                                                                  |  |                    | 8,023  |      |  |          | 5,190  |  |  |  | 54.6  | % 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Sold communities(3)                                                                      |  |                    | 736    |      |  |          | 9,319  |  |  |  | (92.1 | )%
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Other revenue(4)                                                                         |  |                    | 3,359  |      |  |          | 3,520  |  |  |  | (4.6  | )%
|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   
|                                                                                         |  |                    | 85,720 |      |  |          | 94,547 |  |  |  | (9.3  | )%
|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   
|Property operating and maintenance
expense (exclusive of depreciation and
amortization): |  |                    |        |      |  |          |        |  |  |  |       |   
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Fully stabilized communities(1)                                                          |  |                    | 23,335 |      |  |          | 22,598 |  |  |  | 3.3   | % 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Communities stabilized during 2001                                                       |  |                    | 1,894  |      |  |          | 1,656  |  |  |  | 14.4  | % 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Lease-up communities(2)                                                                  |  |                    | 3,662  |      |  |          | 2,265  |  |  |  | 61.7  | % 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Sold communities(3)                                                                      |  |                    | 370    |      |  |          | 3,212  |  |  |  | (88.5 | )%
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Other expense(5)                                                                         |  |                    | 5,009  |      |  |          | 4,236  |  |  |  | 18.3  | % 
|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   
|                                                                                         |  |                    | 34,270 |      |  |          | 33,967 |  |  |  | 0.9   | % 
|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   
|Revenue in excess of specified expense                                                   |  | $                  | 51,450 |      |  | $        | 60,580 |  |  |  | (15.1 | )%
|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   
|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Recurring capital expenditures:(6)                                                       |  | $                  | 1,879  |      |  | $        | 2,626  |  |  |  | (28.4 | )%
|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   
|Average apartment units in service                                                       |  |                    | 30,405 |      |  |          | 32,237 |  |  |  | (5.7  | )%
|                                                                                         |  |                    |        |      |  |          |        |  |  |  |       |   



---

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

For the quarter ended March 31, 2002, rental and other revenue decreased $8,827
or 9.3% compared to the same period in the prior year. The revenue increase
from the completion and lease-up of new development communities was offset by
the revenue reduction from assets sold under the Companys asset sales
and capital recycling program. The decrease in revenue from fully stabilized
communities was a result of declining average occupancy and
increasing rental concessions between periods.

For the quarter ended March 31, 2002, property operating and maintenance
expenses (exclusive of depreciation and amortization) increased $303, or 0.9%,
compared to the same period in the prior year, primarily due to increases in
real estate taxes and property insurance on the fully stabilized properties.

27



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

Fully Stabilized Communities

The Company defines fully stabilized communities as those which have reached
stabilization prior to the beginning of the previous calendar year. At March
31, 2002, the fully stabilized portfolio of 68 communities with 24,063 units
includes 38 communities with 14,932 units (62%) located in Atlanta, Georgia, 19
communities with 4,702 units (20%) in Dallas, Texas, six communities with 2,932
units (12%) located in Tampa and Orlando, Florida and five communities with
1,497 units (6%) located in other markets. The operating performance of these
communities is summarized as follows:

|                                                                                           |  |                    |        |      |  |          |        |   |  |  |       |   
|------------------------------------------------------------------------------------------ |  | ------------------ | ------ | ---- |  | -------- | ------ | - |  |  | ----- | --
|                                                                                           |  | Three Months Ended
|                                                                                           |  | March 31,         
|                                                                                           |  |                   
|                                                                                           |  | 2002               |        | 2001 |  | % Change
|                                                                                           |  |                    |        |      |  |         
|Rental and other revenue(1)                                                                |  | $                  | 68,271 |      |  | $        | 72,845 |   |  |  | (6.3  | )%
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Property operating and maintenance
expense (exclusive of depreciation and
amortization)(2) |  |                    | 23,335 |      |  |          | 22,598 |   |  |  | 3.3   | % 
|                                                                                           |  |                    |        |      |  |          |        |   |  |  |       |   
|Revenue in excess of specified expense                                                     |  | $                  | 44,936 |      |  | $        | 50,247 |   |  |  | (10.6 | )%
|                                                                                           |  |                    |        |      |  |          |        |   |  |  |       |   
|Average economic occupancy(3)                                                              |  |                    | 90.3   | %    |  |          | 95.3   | % |  |  | (5.1  | )%
|                                                                                           |  |                    |        |      |  |          |        |   |  |  |       |   
|Average monthly rental rate per
apartment unit(4)                                          |  | $                  | 1,002  |      |  | $        | 999    |   |  |  | 0.3   | % 
|                                                                                           |  |                    |        |      |  |          |        |   |  |  |       |   
|Apartment units in service                                                                 |  |                    | 24,063 |      |  |          | 24,063 |   |  |  |       |   
|                                                                                           |  |                    |        |      |  |          |        |   |  |  |       |   



---

|(1) |  | Communities which reached stabilization
prior to January 1, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | In addition to those expenses which
relate to property operations, the Company incurs
recurring and non-recurring expenditures relating
to acquiring new assets, materially enhancing the
value of an existing asset, or substantially
extending the useful life of an existing asset, all
of which are capitalized. For the quarters ended
March 31, 2002 and 2001, recurring expenditures
were $1,623 and $1,983, or $67 and $82 on a per
unit basis, respectively.                                                                                                                                          
|   
|   
|   
|   
|(3) |  | Average economic occupancy is defined
as gross potential rent less vacancy losses, model
expenses and bad debt divided by gross potential
rent for the period, expressed as a percentage. The
calculation of average economic occupancy does not
include a deduction for concessions and employee
discounts. (Average economic occupancy, taking
account of these amounts would have been 88.6% and
94.5% for the quarter ended March 31, 2002 and
2001, respectively). Concessions were $1,017 and
$372 and employee discounts were $198 and $244 for
the quarter ended March 31, 2002 and 2001,
respectively.
|   
|   
|   
|   
|(4) |  | Average monthly rental rate is defined
as the average of the gross actual rental rates for
leased units and the average of the anticipated
rental rates for unoccupied units.                                                                                                                                                                                                                                                                                                                                                                                                                                  

For the quarter ended March 31, 2002, rental and other revenue decreased $4,574
or 6.3% compared to the same period in the prior year. This decrease was
primarily due to increased vacancy loss of $3,539 resulting from the
decrease in weighted average occupancy from 95.3% in the first quarter of 2001
to 90.3% in the first quarter of 2002. Total revenue also decreased
due to increased rental concessions of $643 between periods. Gross
potential rental revenue per unit remained relatively unchanged
between periods. This occupancy decline reflected the
sharp decline in economic and market activity across most of the Companys
markets. This was especially true in the Companys primary market, Atlanta,
Georgia, where new job growth was negative in late 2001 and has not
shown any meaningful increases in early 2002.

The Company anticipates lower occupancies and
greater concessions that will impact the operating results from fully
stabilized properties in the second quarter of 2002. If market
conditions do not improve in the second half of 2002, the operating
results from these communities will not improve over current levels.

Property operating maintenance expense (exclusive of depreciation and
amortization) increased $737, or 3.3%, for the quarter ended March 31, 2002
compared to the same period in the prior year primarily due to increased
property insurance premiums of $423, or 57.1%. Insurance costs
increased primarily due to across the board premium increase of
approximately 60% to 70% as a result of the effect on the insurance
market of the terrorist attack in September 2001. Through certain
staff realignments and reductions and a more intense focus on expense
control, the Company believes the overall increase in property
operating and maintenance expense for 2002 will be in the 2% to 4%
range.

28



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

Project Abandonment, Employee Severance and Impairment Charges

In the fourth quarter of 2001, the Company recorded a charge based on
managements decision to focus its business and new development strategy on
fewer markets, to focus on its core business of owning, developing and managing
multifamily real estate assets and to do so with a smaller workforce and lower
overhead expenses. As part of the charge, the Company established
approximately $3,632 of accrued liabilities, primarily related to employee
severance costs. These amounts are expected to be paid in 2002. The following
table summarizes the activity relating to the accrued charges during the three
months ended March 31, 2002.

|                                                       |  |   |        |  
|------------------------------------------------------ |  | - | ------ | -
|Accrued severance and other charges, December 31, 2001 |  | $ | 3,632  |  
|                                                      
|                                                      
|                                                      
|                                                      
|Payments through March 31, 2002                        |  |   | (1,430 | )
|                                                       |  |   |        |  
|Accrued severance and other charges, March 31, 2002    |  | $ | 2,202  |  
|                                                       |  |   |        |  

In the fourth quarter of 2001, the Company sold substantially all of the net
assets of Post Landscape Group, Inc. (PLG) a subsidiary entity that provided
landscape maintenance, design and installation services to third parties. As
the business was sold to the former management team and initially financed 100%
by the Company, the transaction was not reflected as a sale at December 31,
2001. As the transaction resulted in a net loss, the net loss was recognized in the
fourth quarter of 2001. In the first quarter of 2002, the Company has received
principal payments representing approximately 22% of the outstanding note
receivable balance. As these payments constitute adequate initial principal payments
under the notes, the sale was recognized in the first quarter of 2002. The
impact of the sale recognition was to record to the note receivable (outstanding
balance of $3,100 at March 31, 2002) and to remove the net assets and
liabilities of the former PLG from its financial statements. No further gain
or loss was recognized in the first quarter of 2002.

The Company also sold substantially all of the net assets of RAM Partners, Inc.
(RAM), a separate subsidiary entity that managed apartment communities for
third parties, in the fourth quarter 2001. This business was also sold to the
former management team of RAM and the sale was 100% financed by the Company. Through
March 31, 2002, the Company has not received adequate initial principal
payments under the notes receivable, therefore full sales recognition for this transaction continues
to be deferred. A deferred gain of approximately $591 will be recorded when
conditions for full sales recognition, primarily the receipt of an adequate
principal down payment on the notes, are met (expected later in 2002).

During the first quarter of 2002, the Company agreed to transfer certain
construction contracts of Post Construction Services Inc., its third party
construction business, to Oxford Properties, LLC in exchange for $100 and
Oxford Properties assumption of substantially all of Post Construction
Services liabilities related to the transferred assets. In approving the
transaction the Companys board of directors ascribed nominal value to the
assets being transferred. The assets consisted principally of third party
construction contracts for the construction of four garden style apartment,
condominium and townhouse communities as well as related subcontracts,
indemnities and guarantees. In connection with the transfer of Post
Construction Services construction contracts, Oxford Properties has the right
to receive a deferred fee upon completion of one of the construction projects
in the amount of $500. Oxford Properties has also agreed to employee 28
former Company and Post Construction Services employees. As a result,
the Company will not be responsible for costs that would otherwise result from winding up
the third party construction business. The Company recorded a charge of $500
in the fourth quarter of 2001 relating to its exit from the third party
construction business. Oxford Properties, LLC is an entity owned by former
officers of the Company and by the son of the Companys chairman and chief
executive officer, John A. Williams. Mr. Williams does not own any of the
outstanding equity interests in Oxford Properties and he will not have any
management role in Oxford Properties.

29



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

Liquidity and Capital Resources

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

The Companys net cash provided by operating activities decreased from $36,931
in 2001 to $26,355 in 2002 primarily due to lower net income (before
depreciation and gain on sale of assets), resulting from the operating
performance of the Companys fully stabilized properties and the dilutive
impact of the Companys asset sale and capital recycling program.

Net cash used in investing activities decreased from $75,674 in 2001 to $28,634
in 2002 primarily due to greater proceeds from the sale of apartment
communities in the first quarter of 2002.

Net cash provided by financing activities decreased from $34,310 in 2001 to
$6,827 in 2002 primarily due to reduced net borrowings between periods.

Since 1993, the Company has elected to be taxed as a real estate investment
trust (REIT) under the Internal Revenue Code of 1986, as amended (the
Code). It is managements current intent that the Company will continue to
operate as a REIT in 2002. As a REIT, the Company is subject to a number of
organizational and operating requirements, including a requirement to
distribute 90% of its taxable income to its shareholders. As a REIT, the
Company generally will not be subject to federal income taxes on its taxable
income.

In prior years, the Company met its short-term liquidity requirement of funding
the payment of its current level of quarterly dividends to shareholders from
its net cash flow provided by operating activities, less its annual recurring
and nonrecurring property and corporate capital expenditures. Beginning in the
fourth quarter of 2001 and continuing through the first quarter of 2002, 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. The Companys net cash flow from
operations continues to be sufficient to meet the dividend requirements to
maintain its REIT status under the Code. The additional funding required to
pay the current dividends was obtained through a combination of line of credit
borrowings and proceeds from asset sales. The factors that have lead to this
condition are the decline in economic and market conditions in the fourth
quarter of 2001 and the first quarter of 2002 in the Companys major markets resulting in lower cash flow from its
operating property portfolio, the slower lease-up of its existing development
community portfolio and the short-term negative cash flow impact of funding its
current development portfolio through the sale of operating real estate assets.

Management believes that these factors will remain present, resulting in the
need to fund a portion of its current level of dividend payments primarily
through proceeds from asset sales through the remainder of 2002. Depending on market conditions, the Company
may need to fund dividends ranging from $25,000 to $33,000 from these sources
for the remainder 2002. Management has indicated that it intends to maintain
the quarterly dividend to common shareholders at its current level of $0.78 per
share, as the Company has adequate financing capability to fund the dividends.
Additionally, it is managements belief that as economic and market conditions
recover in periods beyond 2002 operating cash flow will increase and be
adequate to fund the current level of dividend payments. However, if
market conditions do not recover as expected in future periods,
management expects to evaluate its current dividend policy.

Management expects the Company to meet its new construction and development and
certain of its other long-term liquidity requirements, including maturities of
long-term debt, lines of credit and debt and equity commitments to
unconsolidated entities, and possible land and property acquisitions through
the sale of operating properties and through long-term secured and unsecured
borrowings. Management believes the Company has adequate borrowing capacity
and accessibility to real estate sales markets to fund these requirements.
Additionally, the Company began to utilize equity joint ventures as a means of
raising capital and reducing the size and exposure of its development property
pipeline. The Company received equity capital through the joint
ventures totaling $18,082. The Company plans to continue to use joint venture
arrangements in 2002. In May 2002, the Company entered into an
additional joint venture and received equity capital totaling
$9,213.

The Company currently has development projects in progress that will be
completed over the next twelve to eighteen months. At March 31, 2002, the
Companys share of the estimated future cash expenditures to complete these
projects will approximate $169,000. As previously discussed, the Company
intends to use the proceeds from sale of operating properties as the primary
source of capital to fund these future development expenditures.

The Company began an active asset sale and capital recycling program in 2000 as
the primary means to fund its on-going development community program. For the
quarter ended March 31, 2002, the Company sold two communities containing 540
units and one commercial property for net proceeds of approximately $41,393.
The communities sold were located in Tampa, Florida and Clearwater, Florida and
the commercial property was located in Grand Prairie, Texas. These sales
resulted in net

30



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

gains of approximately $13,275. Subsequent to
March 31, 2002, the Company sold three apartment communities
containing 1,354 units for net proceeds of approximately $84,500.
These assets were included in real estate assets held for sale at
March 31, 2002.

At March 31, 2002, the Company had available credit facility borrowing capacity
of approximately $315,462 under its existing credit facilities.
Considering the reduced borrowing capacity on the second incremental
credit facility discussed below, the total available capacity under
the credit facilities would have been approximately $255,462. The Companys
primary credit facility with total capacity of $320,000 matures in 2004 while a
second incremental credit facility which was renewed in April 2002
has a reduced borrowing capacity of $125,000 and matures in April 2003. The reduced borrowing capacity is consistent with the Companys
reduced development spending. The Company has adequate capacity under these
facilities to execute its 2002 business plan without regard to a significant
level of asset sales or other secured and unsecured debt financings.

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

Unsecured Lines of Credit

The Company utilizes a $320,000 three-year syndicated revolving line of credit
(the Revolver), for its short-term financing. At March 31, 2002, the stated
interest rate for the Revolver was LIBOR plus 0.85% or prime minus 0.25%. The
Revolver provides for the rate to be adjusted up or down based on changes in
the credit ratings on the Companys senior unsecured debt. The Revolver also
includes a money market competitive bid option for short-term funds up to
$160,000 at rates below the stated line rate. The credit agreement for the
Revolver contains customary representations, covenants and events of default,
including covenants which restrict the ability of the Operating Partnership to
make distributions, in excess of stated amounts, which in turn restrict the
discretion of the Company to declare and pay dividends. In general, during any
fiscal year the Operating Partnership may only distribute up to 100% of the
Operating Partnerships consolidated income available for distribution (as
defined in the credit agreement) exclusive of distributions of up to $30,000 of
capital gains for such year. The credit agreement contains exceptions to these
limitations to allow the Operating Partnership to make distributions necessary
to allow the Company to maintain its status as a REIT. The Company does not
anticipate that this covenant will adversely affect the ability of the
Operating Partnership to make distributions, or the Company to declare
dividends, under the Companys current dividend level. The Revolver matures
in April 2004.

At March 31, 2002, the Company also has in place an additional $185,000 line of credit facility
for general corporate purposes. This credit facility was renewed in
April 2002 with a reduced borrowing capacity of $125,000 with a
stated interest rate of LIBOR plus
0.90%. This credit facility matures in April 2003. There were no outstanding
borrowings under this facility at March 31, 2002.

Additionally, the Company has a $20,000 unsecured line of credit with Wachovia
Bank of Georgia, N.A. (the Cash Management Line). The Cash Management Line
bears interest at LIBOR plus 0.75% or prime minus .25% and matures in February
2003. Management believes the Cash Management Line will be renewed at maturity
with similar terms.

31



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

Stock Repurchase Program

The Companys Board of Directors has approved the purchase of up to $200,000 of
the Companys common stock. In the fourth quarter of 2000, the Company began
repurchasing shares of its common stock in accordance with the announced stock
repurchase program using funds from operating cash flow and the sale of
properties. Purchases will be made from time to time in the open market and it
is expected that funding of the program will come primarily from the proceeds
from asset sales. Through December 31, 2001, the Company has
repurchased approximately 3,128
shares at a total cost of $114,126. The Company did not repurchase
any shares during the three months ended March 31, 2002. Management has indicated it will be opportunistic with respect to additional
share repurchases and intends to finance any additional repurchases with asset sale
proceeds rather than additional borrowings.

Schedule of Indebtedness

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

|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |           | 
|---------------------------------------- | ------------------------ | ----- | -------------- | ------------- | ---- | ------------ | ------------- | ---- | -- | ---- | -- | -- | -------- | --------- | --------- | ---- | ------------ | ------- | ------- | --------- | ------- | ------- | ------- | --------- | 
|                                         |                          |       | Payment        |               |      |              |               |      |    |      |    |    | Maturity |           | March 31, |      | December 31,
|Description                              |                          | Terms |                | Interest Rate |      | Date(1)      |               | 2002 |    | 2001
|                                         |                          |       |                |               |      |              |               |      |    |     
|Senior Notes (Unsecured)                 |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | Senior Notes             |       | Int.           |               |      | 6.71% - 7.70 | %             |      |    |      |    |    |          | 2003-2010 |           |      | $            | 360,000 |         |           | $       | 360,000 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Medium Term Notes        |       | Int.           |               |      | 6.69% - 8.12 | %             |      |    | (2   | )  |    |          | 2004-2015 |           |      |              | 323,000 |         |           |         | 323,000 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Int.           |               |      | 8.37         | %             |      |    |      |    |    |          | 2002      |           |      |              | 20,000  |         |           |         | 20,000  |        
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         | 703,000 |           |         |         | 703,000 |          
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|Unsecured Lines of Credit & Other        |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | Revolver                 |       |                | N/A           |      |              | LIBOR + 0.85% | %    |    |      | (3 | )  |          |           | 2004      |      |              |         | 195,000 |           |         |         | 155,000 |          
|                                        
|                                        
|                                        
|                                        
|                                         | Cash Management Line     |       |                | N/A           |      |              | LIBOR + 0.75% | %    |    |      |    |    |          |           | 2003      |      |              |         | 14,538  |           |         |         | 11,202  |          
|                                        
|                                        
|                                        
|                                        
|                                         | Other                    |       |                | N/A           |      |              |               | 5.00 | %  |      |    | (4 | )        |           |           | 2021 |              |         |         | 2,000     |         |         |         | 2,000     | 
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         | 211,538 |           |         |         | 168,202 |          
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|Conventional Fixed Rate (Secured)        |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | FNMA                     |       | Prin. and Int. |               |      | 6.975        | %             |      |    | (5   | )  |    |          | 2029      |           |      |              | 102,200 |         |           |         | 102,200 |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int. |               |      | 7.69         | %             |      |    |      |    |    |          | 2007      |           |      |              | 50,327  |         |           |         | 50,527  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int. |               |      | 6.50         | %             |      |    | (6   | )  |    |          | 2009      |           |      |              | 47,431  |         |           |         | 47,681  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Northwestern Mutual Life |       | Prin. and Int. |               |      | 7.69         | %             |      |    |      |    |    |          | 2007      |           |      |              | 28,147  |         |           |         | 28,268  |        
|                                        
|                                        
|                                        
|                                        
|                                         | Parkwood TownhomesTM     |       | Prin. and Int. |               |      | 7.375        | %             |      |    |      |    |    |          | 2014      |           |      |              | 753     |         |           |         | 762     |        
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         | 228,858 |           |         |         | 229,438 |          
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|Tax Exempt Floating Rate Bonds
(Secured) |                          | Int.  |                |               | 1.65 | %            |               |      | (7 | )    |    |    | 2025     |           |           |      | 235,880      |         |         |           | 235,880 |        
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          
|                                         | Total                    |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         | $       | 1,379,276 |         |         | $       | 1,336,520 | 
|                                         |                          |       |                |               |      |              |               |      |    |      |    |    |          |           |           |      |              |         |         |           |         |         |         |          



---

|(1) |  | All outstanding indebtedness can be prepaid at any time, subject to
certain prepayment penalties.                                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Contains $100,000 of Mandatory Par Put Remarketed Securities. The
annual interest rate on these securities to 2005 (the Remarketing
Date) is 6.85%. On the Remarketing Date, they are subject to mandatory
tender for remarketing.                                                                                                                         
|   
|   
|   
|   
|(3) |  | Represents stated rate. At March 31, 2002, the outstanding balance
of the Revolver consisted of money market and LIBOR based loans with an average
interest rate of 2.67%. The Revolver has a total capacity of $320
million.                                                                                                                              
|   
|   
|   
|   
|(4) |  | This loan is interest free for the first three years, with interest
at 5.00% thereafter.                                                                                                                                                                                                                                                                     
|   
|   
|   
|   
|(5) |  | In 2000, interest rate was fixed at 6.975%, inclusive of credit
enhancement and other fees, to 2009 through an interest rate swap
arrangement.                                                                                                                                                                                                               
|   
|   
|   
|   
|(6) |  | This note bears interest at 6.50% with an effective rate of 7.30%.                                                                                                                                                                                                                                                                                           
|   
|   
|   
|   
|(7) |  | 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 March 31, 2002 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%.

32



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

Current Development Activity
The Companys apartment communities under development or in initial lease-up
are summarized in the following table:

|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|-------------------------------------------------------- |  | ---------- | ----- | ------------------ |  | --------------------- | ------ | -------------------- |  | ---------- | ------ |  |  |  | ------ | 
|                                                         |  |            |       |                    |  | Estimated             |        | Estimated            |  | Estimated 
|                                                         |  |            |       |                    |  | Quarter of            |        | Quarter of           |  | Quarter of
|Metropolitan Area                                        |  | # of Units |       | Construction Start |  | First Units Available |        | Stabilized Occupancy
|                                                         |  |            |       |                    |  |                       |        |                     
|Wholly Owned Construction/Lease-Up
Communities:          |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Charlotte, NC                                            |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Gateway Place II                                    |  |            | 204   |                    |  |                       | 3Q '00 |                      |  |            | 4Q '01 |  |  |  | 1Q '03 | 
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Tampa, FL                                                |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Harbour Place III                                   |  |            | 259   |                    |  |                       | 2Q '01 |                      |  |            | 2Q '02 |  |  |  | 2Q '03 | 
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Denver, CO                                               |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Uptown Square                                       |  |            | 247   |                    |  |                       | 1Q '00 |                      |  |            | 4Q '01 |  |  |  | 1Q '03 | 
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Washington, D.C.                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Pentagon Row                                        |  |            | 504   |                    |  |                       | 2Q '99 |                      |  |            | 2Q '01 |  |  |  | 4Q '02 | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Massachusetts Avenue                                |  |            | 269   |                    |  |                       | 2Q '01 |                      |  |            | 1Q '03 |  |  |  | 4Q '03 | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|Subtotal                                                 |  |            | 773   |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Subtotal Wholly-Owned
Construction/Lease-up Communities  |  |            | 1,483 |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Co-Investment Construction/Lease-up Communities:         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Atlanta, GA                                              |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Peachtree(a)                                        |  |            | 121   |                    |  |                       | 2Q '00 |                      |  |            | 3Q '01 |  |  |  | 3Q '02 | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Biltmore(a)                                         |  |            | 276   |                    |  |                       | 3Q '00 |                      |  |            | 4Q '01 |  |  |  | 1Q '03 | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|Subtotal                                                 |  |            | 397   |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|New York, NY                                             |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Luminaria(b)                                        |  |            | 138   |                    |  |                       | 3Q '01 |                      |  |            | 3Q '02 |  |  |  | 2Q '03 | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Toscana(c)                                          |  |            | 199   |                    |  |                       | 1Q '02 |                      |  |            | 2Q '03 |  |  |  | 2Q '04 | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            | 337   |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Pasadena, CA                                             |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Post Paseo Colorado(a)                                   |  |            | 392   |                    |  |                       | 2Q '00 |                      |  |            | 1Q '02 |  |  |  | 2Q '03 | 
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Subtotal Co-Investment Construction/Lease-up Communities |  |            | 1,126 |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|Total                                                    |  |            | 2,609 |                    |  |                       |        |                      |  |            |        |  |  |  |        | 
|                                                         |  |            |       |                    |  |                       |        |                      |  |            |        |  |  |  |        | 



---

|(a) |  | These communities are being developed as a joint venture (Post equity
ownership is 35%).                                                                                 
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | This development is structured as a joint venture, with Post and The
Clarett Group contributing approximately 70% of the equity and a
landowner contributing the balance.
|   
|   
|   
|   
|(c) |  | This development is structured as a joint venture with Post and The
Clarett Group. Post will contribute substantially all of the capital to
the joint venture.           

Capitalization of Fixed Assets and Community Improvements

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

33



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

Acquisition of assets and community improvement expenditures for the three
months ended March 31, 2002 and 2001 are summarized as follows:

|                                                   |                                                                    |   |        |       |      |   |        |       | 
|-------------------------------------------------- | ------------------------------------------------------------------ | - | ------ | ----- | ---- | - | ------ | ----- | 
|                                                   |                                                                    |   | 2002   |       | 2001
|                                                   |                                                                    |   |        |       |     
|New community development and acquisition activity |                                                                    | $ | 48,148 |       |      | $ | 74,466 |      
|                                                  
|                                                  
|                                                  
|                                                  
|Nonrecurring capital expenditures:                 |                                                                    |   |        |       |      |   |        |      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Revenue generating additions and improvements                      |   |        | 327   |      |   |        | 1,102 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Other community additions and improvements                         |   |        | 547   |      |   |        | 322   | 
|                                                  
|                                                  
|                                                  
|                                                  
|Recurring capital expenditures:                    |                                                                    |   |        |       |      |   |        |      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Carpet replacements and other community
additions and improvements |   |        | 1,879 |      |   |        | 2,626 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Corporate additions and improvements                               |   |        | 279   |      |   |        | 511   | 
|                                                   |                                                                    |   |        |       |      |   |        |      
|                                                   |                                                                    | $ | 51,180 |       |      | $ | 79,027 |      
|                                                   |                                                                    |   |        |       |      |   |        |      

Inflation

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

Funds from Operations and Cash Available for Distribution

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

34



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

FFO and CAD for the three months ended March 31, 2002 and 2001 presented on a
historical basis are summarized in the following table:

Calculation of Funds from Operations and Cash Available for Distribution

|                                                               |                                                                                                    |   |                    |         |      |   |        |         |  
|-------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | - | ------------------ | ------- | ---- | - | ------ | ------- | -
|                                                               |                                                                                                    |   | Three Months Ended
|                                                               |                                                                                                    |   | March 31,         
|                                                               |                                                                                                    |   |                   
|                                                               |                                                                                                    |   | 2002               |         | 2001
|                                                               |                                                                                                    |   |                    |         |     
|Net income available to common shareholders                    |                                                                                                    | $ | 14,158             |         |      | $ | 19,866 |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Cumulative effect of accounting change, net of minority interest                                   |   |                    |        |      |   |        | 613     |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Gain on property sales  continuing operations                                                     |   |                    | (13,275 | )    |   |        | (111    | )
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Minority
interest of common unitholders  continuing operations                                    |   |                    | 2,695   |      |   |        | 2,652   |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Reserve for losses on properties held for sale, net of minority
interest  discontinued operations |   |                    | 6,731   |      |   |        |        |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Minority interest in discontinued operations                                                       |   |                    | 164     |      |   |        | 77      |  
|                                                               |                                                                                                    |   |                    |         |      |   |        |        
|Adjusted net income                                            |                                                                                                    |   | 10,473             |         |      |   | 23,097 |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Depreciation of real estate assets(1)                                                              |   |                    | 19,723  |      |   |        | 16,622  |  
|                                                               |                                                                                                    |   |                    |         |      |   |        |        
|Funds from Operations(2)                                       |                                                                                                    |   | 30,196             |         |      |   | 39,719 |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Recurring capital expenditures(3)                                                                  |   |                    | (1,879  | )    |   |        | (2,626  | )
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Non-recurring capital expenditures(4)                                                              |   |                    | (547    | )    |   |        | (322    | )
|                                                               |                                                                                                    |   |                    |         |      |   |        |        
|Cash Available for Distribution                                |                                                                                                    | $ | 27,770             |         |      | $ | 36,771 |        
|                                                               |                                                                                                    |   |                    |         |      |   |        |        
|Revenue generating capital expenditures(5)                     |                                                                                                    | $ | 327                |         |      | $ | 1,102  |        
|                                                               |                                                                                                    |   |                    |         |      |   |        |        
|Cash Flow Provided By (Used In):                               |                                                                                                    |   |                    |         |      |   |        |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Operating activities                                                                               |   | $                  | 26,355  |      |   | $      | 36,931  |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Investing activities                                                                               |   | $                  | (28,634 | )    |   | $      | (75,674 | )
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Financing activities                                                                               |   | $                  | 6,827   |      |   | $      | 34,310  |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                                                                    |   |                    |         |      |   |        |        
|                                                              
|                                                              
|                                                              
|                                                              
|Weighted average common shares outstanding  basic             |                                                                                                    |   | 36,938             |         |      |   | 38,848 |        
|                                                              
|                                                              
|                                                              
|                                                              
|Weighted average common shares outstanding  diluted           |                                                                                                    |   | 37,049             |         |      |   | 39,108 |        
|                                                              
|                                                              
|                                                              
|                                                              
|Weighted average common shares and units outstanding  basic   |                                                                                                    |   | 41,994             |         |      |   | 44,028 |        
|                                                              
|                                                              
|                                                              
|                                                              
|Weighted average common shares and units outstanding  diluted |                                                                                                    |   | 42,106             |         |      |   | 44,288 |        



---

|(1) |  | Depreciation on real estate
assets is net of the minority interest portion of depreciation in
consolidated partnerships and depreciation on non-real estate assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The Company uses the National Association of Real Estate Investment
Trusts (NAREIT) definition of FFO, as amended. FFO for any period
means the Consolidated Net Income of the Company and its subsidiaries
for such period excluding gains or losses from debt restructuring and
sales of property plus depreciation of real estate assets, and after
adjustment for unconsolidated partnerships and joint ventures, all
determined on a consistent basis in accordance with GAAP. FFO presented
herein is not necessarily comparable to FFO presented by other real
estate companies because not all real estate companies use the same
definition. The Companys FFO is comparable to the FFO of real estate
companies that use the current NAREIT definition. FFO should not be
considered as an alternative to net income (determined in accordance
with GAAP) as an indicator of the Companys financial performance or to
cash flow from operating activities (determined in accordance with GAAP)
as a measure of the Companys liquidity, nor is it necessarily
indicative of sufficient cash flow to fund all of the Companys needs or
ability to service indebtedness or make distributions.
|   
|   
|   
|   
|(3) |  | Since the Company does not add back the depreciation of non-real
estate assets in its calculation of FFO, capital expenditures of $279
and $511 are excluded from the calculation of CAD for the three months
ended March 31, 2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|   
|   
|   
|(4) |  | Non-recurring capital expenditures consisted of community additions
and improvements of $547 and $322 for the three months ended March 31,
2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|   
|   
|   
|(5) |  | Revenue generating capital expenditures are primarily comprised of
major renovations of communities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Disclosure Regarding Forward-Looking Statements

Certain statements made in this report, and other written or oral statements
made by or on behalf of the Company, may constitute forward-looking
statements within the meaning of the federal securities laws. Statements
regarding future events and developments and the Companys future performance,
as well as managements expectations, beliefs, plans, estimates or projections
relating to the future, are forward-looking statements within the meaning of
these laws. Examples of such statements in this report include our expectations
with regard to net operating income and funds from operations for 2002, our
expectations with regard to occupancy levels and rent growth, our expectations
with regard to our dividend payments, our ability to meet new construction,
development and other long-term liquidity requirements, and our ability to
execute asset sales in connection with our asset sale and capital recycling
program. All forward-looking statements are subject to certain risks and
uncertainties that could cause actual events to differ materially from those
projected. Management believes that these forward-looking statements are
reasonable; however, you should not place undue reliance on such statements.
These statements are based on current expectations and speak only as of the
date of such statements. The Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result of future
events, new information or otherwise. Additional information concerning the
risk and uncertainties listed above, and other factors that you may wish to
consider, is contained elsewhere in the Companys filings with the Securities
and Exchange Commission.

35



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit 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 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;       
|
| |  |  | conditions affecting ownership of residential real estate and general
conditions in the multi-family residential real estate market;                                                         
|
| |  |  | the effects of changes in accounting policies and other regulatory
matters detailed in the Companys filings with the Securities and
Exchange Commission and uncertainties of litigation; and
|
| |  |  | the Companys ability to continue to qualify as a real estate investment trust under the Code.                                                                                               

36



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)



|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- |  | ----------------------------------------------------------

The Companys primary market risk exposure is
interest rate risk. At March 31, 2002, the Company had $336,738 of variable rate debt tied to LIBOR. In
addition, the Company had $235,880 in variable tax-exempt debt with interest
based 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.

|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |        |   |        |               |   | 
|------------------------- | ----------------- | --------------- | ------------------------------ | ----------------- |  | ------------ | ------- | ---- | ------------- | ---------- | ------------- | ------- |  | ------- | -------- | ------ | - | ------ | ------------- | - | 
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         | Expected |        |   |        |              
|                          |                   |                 |                                |                   |  |              | Average |      | Average       |            | Settlement    |         |  |         |         
|Interest Rate Derivatives |                   | Notional Amount |                                | Pay Rate/Cap Rate |  | Receive Rate |         | Date |               | Fair Value
|                          |                   |                 |                                |                   |  |              |         |      |               |           
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |        |   |        | Asset (Liab.)
|Interest Rate Swaps       |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |        |   |        |               |  
|                         
|                         
|                         
|                         
|                          | Variable to fixed |                 | $104,000 amortizing to $90,270 |                   |  | 6.04         | %       |      | 1 month LIBOR |            |               | 7/31/09 |  |         | $        | (2,910 | )
|                         
|                         
|                         
|                         
|                          | Variable to fixed |                 | $                              | 25,000            |  |              |         | 6.53 | %             |            | 3 month LIBOR |         |  | 2/01/05 |          |        |   | (1,536 | )            
|                         
|                         
|                         
|                         
|Interest rate cap         |                   | $               | 76,000                         |                   |  |              | 5.00    | %    |               |            |              |         |  |         | 2/01/03  |        |   |        |              |  
|                         
|                         
|                         
|                         
|Interest rate cap         |                   | $               | 141,230                        |                   |  |              | 5.00    | %    |               |            |              |         |  |         | 2/01/03  |        |   |        |              |  
|                         
|                         
|                         
|                         
|Interest rate cap         |                   | $               | 18,650                         |                   |  |              | 5.00    | %    |               |            |              |         |  |         | 2/01/03  |        |   |        |              |  
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |        |   |        |               |  
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |        |   | $      | (4,446        | )
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |        |   |        |               |  

As more fully described in Note 1 to the consolidated financial statements, the
interest rate swap and cap arrangements are carried on the consolidated sheet
at the fair value shown above in accordance with SFAS No. 133, as amended. If
interest rates under the Companys floating rate LIBOR-based and tax-exempt
borrowings, in excess of the $102,200 FNMA borrowings effectively converted to
fixed rates discussed above, fluctuated by 1.0%, interest costs to the Company,
based on outstanding borrowings at December 31, 2001, would increase or
decrease by approximately $4,300 on an annualized basis.

37



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)



|PART II. |  | OTHER INFORMATION                                 
|-------- |  | --------------------------------------------------
|        
|ITEM 1.  |  | LEGAL PROCEEDINGS                                 
|        
|         |  | None                                              
|        
|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 SECURITYHOLDERS
|        
|         |  | None                                              
|        
|ITEM 5.  |  | OTHER INFORMATION                                 
|        
|         |  | None                                              
|        
|ITEM 6.  |  | EXHIBITS AND REPORTS ON FORM 8-K                  



| |  | (a)   Exhibits                                                                                                      
| |  | --------------------------------------------------------------------------------------------------------------------
|
| |  | The registrants agree to furnish a copy of all agreements relating to
long-term debt upon request of the Commission.
|
| |  | (b)   Reports on Form 8-K                                                                                           
|
| |  | There were no reports on Form 8-K filed by either registrant during
the three-month period ended March 31, 2002.    

38



---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in thousands, except apartment unit data)

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 |  |                                                                                                                 
|                    
|                     |  |                                                                                                                 
|                    
|May 14, 2002(Date)   |  | /s/ R. Gregory FoxR. Gregory Fox
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
|                    
|                     |  |                                                                                                                 
|                    
|                     |  |                                                                                                                 
|                    
|May 14, 2002(Date)   |  | /s/ Arthur J. QuirkArthur J. Quirk
Vice President and Controller,
Chief Accounting Officer                      

39



---



##### 



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., as General Partner                                                                  
|                          
|                           |  |                                                                                                                 
|                          
|May 14, 2002(Date)         |  | /s/ R. Gregory FoxR. Gregory Fox
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
|                          
|                           |  |                                                                                                                 
|                          
|                           |  |                                                                                                                 
|                          
|May 14, 2002(Date)         |  | /s/ Arthur J. QuirkArthur J. Quirk
Vice President and Controller,
Chief Accounting Officer                      

40