##### Table of Contents






UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549



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Form 10-Q

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

For the quarterly period ended September 30, 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                                                |  | 58-1550675
58-2053632               
|(State or other jurisdiction
of incorporation or organization) |  | (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

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.

36,913,894 shares of common stock
outstanding as of November 8, 2002 (excluding treasury
stock).










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TABLE OF CONTENTS



|                                 |                                                                                               |                                                     |  |  |  |  |  | 
|-------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------- |  |  |  |  |  | 
|Part I FINANCIAL INFORMATION    
|                                 | Item 1 Financial Statements                                                                  
|POST PROPERTIES, INC.           
|                                 |                                                                                               | CONSOLIDATED BALANCE SHEETS                        
|                                 |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS              
|                                 |                                                                                               | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
|                                 |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS              
|POST APARTMENT HOMES, L.P.      
|                                 |                                                                                               | CONSOLIDATED BALANCE SHEETS                        
|                                 |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS              
|                                 |                                                                                               | CONSOLIDATED STATEMENTS OF PARTNERS EQUITY        
|                                 |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS              
|                                 | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                 | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                 | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION      
|                                 | 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 HOLDERS                                  
|                                 | ITEM 5. OTHER INFORMATION                                                                    
|                                 | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                      
|CERTIFICATIONS                  
|EX-99.1 CERTIFICATION OF THE CEO
|EX-99.2 CERTIFICATION OF THE CFO



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##### Table of Contents



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

INDEX

|                             |                                                                                              |                                                                                                                      |    |      |    | 
|---------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                             |                                                                                              |                                                                                                                      |    | Page
|                             |                                                                                              |                                                                                                                      |    |     
|Part I FINANCIAL INFORMATION |                                                                                              |                                                                                                                      |    |     
|                             | Item 1 Financial Statements                                                                  |                                                                                                                      |    |      |   
|                             |                                                                                              | POST PROPERTIES, INC.                                                                                                |    |      |    | 
|                             |                                                                                              | Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001                                           |    |      | 1  | 
|                             |                                                                                              | Consolidated Statements of Operations for the three and nine months ended
September 30, 2002 and 2001                |    |      | 2  | 
|                             |                                                                                              | Consolidated Statement of Shareholders Equity and Accumulated Earnings for
the nine months ended September 30, 2002 |    |      | 3  | 
|                             |                                                                                              | Consolidated Statements of Cash Flows for the nine months ended September 30,
2002 and 2001                          |    |      | 4  | 
|                             |                                                                                              | Notes to Consolidated Financial Statements                                                                           |    |      | 5  | 
|                             |                                                                                              | POST APARTMENT HOMES, L.P.                                                                                           |    |      |    | 
|                             |                                                                                              | Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001                                           |    |      | 15 | 
|                             |                                                                                              | Consolidated Statements of Operations for the three and nine months ended
September 30, 2002 and 2001                |    |      | 16 | 
|                             |                                                                                              | Consolidated Statement of Partners Equity for the nine months ended
September 30, 2002                              |    |      | 17 | 
|                             |                                                                                              | Consolidated Statements of Cash Flows for the nine months ended September 30,
2002 and 2001                          |    |      | 18 | 
|                             |                                                                                              | Notes to Consolidated Financial Statements                                                                           |    |      | 19 | 
|                             | Item 2 Managements Discussion and Analysis of Financial Condition and
Results of Operations |                                                                                                                      |    | 30   |   
|                             | Item 3 Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                      |    | 44   |   
|                             | Item 4 Controls and Procedures                                                               |                                                                                                                      |    | 44   |   
|Part II OTHER INFORMATION    |                                                                                              |                                                                                                                      | 45 |     
|                             | 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 Holders                                   |                                                                                                                      |    |      |   
|                             | Item 5 Other Information                                                                     |                                                                                                                      |    |      |   
|                             | Item 6 Exhibits and Reports on Form 8-K                                                      |                                                                                                                      |    |      |   
|                             | Signatures                                                                                   |                                                                                                                      |    | 46   |   
|                             | Certifications                                                                               |                                                                                                                      |    | 48   |   
|                             | Exhibit
Index                                                                                |                                                                                                                      |    | 50   |   





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##### Table of Contents












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

|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |           |           |           | 
|------------------------------------ | ------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------------- | --------- | ------------ | --------- | --------- | --------- | 
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           | September 30, |           | December 31,
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           | 2002          |           | 2001        
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |             
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           | (Unaudited)   |           |              |           |          
|Assets                               |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     | Real estate assets                                                  |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |           |          
|                                     |                                                                     | Land                                                                                                                                    |                                                                                                                                                                                     | $         | 282,414       |           |              | $         | 277,146   |          
|                                     |                                                                     | Building and improvements                                                                                                               |                                                                                                                                                                                     |           | 1,987,297     |           |              |           | 1,794,658 |          
|                                     |                                                                     | Furniture, fixtures and equipment                                                                                                       |                                                                                                                                                                                     |           | 247,456       |           |              |           | 212,390   |          
|                                     |                                                                     | Construction in progress                                                                                                                |                                                                                                                                                                                     |           | 115,320       |           |              |           | 419,449   |          
|                                     |                                                                     | Investments in and advances to unconsolidated real estate entities                                                                      |                                                                                                                                                                                     |           | 170,240       |           |              |           | 89,692    |          
|                                     |                                                                     | Land held for future development                                                                                                        |                                                                                                                                                                                     |           | 20,023        |           |              |           | 23,658    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     |                                                                     |                                                                                                                                         | 2,822,750                                                                                                                                                                           |           |               |           | 2,816,993    |          
|                                     |                                                                     | Less: accumulated depreciation                                                                                                          |                                                                                                                                                                                     |           | (421,150      | )         |              |           | (393,014  | )        
|                                     |                                                                     | Assets held for sale                                                                                                                    |                                                                                                                                                                                     |           | 38,123        |           |              |           | 39,419    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     |                                                                     |                                                                                                                                         | Total real estate assets                                                                                                                                                            |           |               | 2,439,723 |              |           |           | 2,463,398 | 
|                                     | Cash and cash equivalents                                           |                                                                                                                                         |                                                                                                                                                                                     | 5,046     |               |           |              | 4,803     |          
|                                     | Restricted cash                                                     |                                                                                                                                         |                                                                                                                                                                                     | 1,309     |               |           |              | 1,315     |          
|                                     | Deferred charges, net                                               |                                                                                                                                         |                                                                                                                                                                                     | 17,093    |               |           |              | 18,203    |          
|                                     | Other assets                                                        |                                                                                                                                         |                                                                                                                                                                                     | 48,022    |               |           |              | 50,632    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     |                                                                     | Total assets                                                                                                                            |                                                                                                                                                                                     | $         | 2,511,193     |           |              | $         | 2,538,351 |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|Liabilities and shareholders equity |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     | Notes payable                                                       |                                                                                                                                         | $                                                                                                                                                                                   | 1,375,339 |               |           | $            | 1,336,520 |          
|                                     | Accrued interest payable                                            |                                                                                                                                         |                                                                                                                                                                                     | 16,417    |               |           |              | 9,660     |          
|                                     | Dividend and distribution payable                                   |                                                                                                                                         |                                                                                                                                                                                     | 33,252    |               |           |              | 33,208    |          
|                                     | Accounts payable and accrued expenses                               |                                                                                                                                         |                                                                                                                                                                                     | 61,975    |               |           |              | 72,277    |          
|                                     | Security deposits and prepaid rents                                 |                                                                                                                                         |                                                                                                                                                                                     | 8,412     |               |           |              | 9,016     |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     |                                                                     | Total liabilities                                                                                                                       |                                                                                                                                                                                     |           | 1,495,395     |           |              |           | 1,460,681 |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     | Minority interest of preferred unitholders in Operating Partnership |                                                                                                                                         |                                                                                                                                                                                     | 70,000    |               |           |              | 70,000    |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     | Minority interest of common unitholders in Operating Partnership    |                                                                                                                                         |                                                                                                                                                                                     | 98,356    |               |           |              | 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 September 30, 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:                                                                                   |                                                                                                                                                                                     |           |               |           |              |           |           |          
|                                     |                                                                     |                                                                                                                                         | 39,676,204 and 39,676,204 shares issued, 36,913,963 and
36,856,559 shares outstanding at September 30, 2002 and
December 31, 2001, respectively                                     |           |               | 396       |              |           |           | 396       | 
|                                     |                                                                     | Additional paid-in capital                                                                                                              |                                                                                                                                                                                     |           | 964,122       |           |              |           | 1,010,954 |          
|                                     |                                                                     | Accumulated earnings                                                                                                                    |                                                                                                                                                                                     |           |              |           |              |           |          |          
|                                     |                                                                     | Accumulated other comprehensive income                                                                                                  |                                                                                                                                                                                     |           | (14,793       | )         |              |           | (5,864    | )        
|                                     |                                                                     | Deferred compensation                                                                                                                   |                                                                                                                                                                                     |           | (742          | )         |              |           | (445      | )        
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     |                                                                     |                                                                                                                                         | 949,032                                                                                                                                                                             |           |               |           | 1,005,090    |          
|                                     |                                                                     | Less common stock in treasury, at cost, 2,762,241 shares and
2,819,645 shares at September 30, 2002 and December 31, 2001,
respectively |                                                                                                                                                                                     |           | (101,590      | )         |              |           | (103,573  | )        
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     |                                                                     | Total shareholders equity                                                                                                              |                                                                                                                                                                                     |           | 847,442       |           |              |           | 901,517   |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          
|                                     |                                                                     | Total liabilities and shareholders equity                                                                                              |                                                                                                                                                                                     | $         | 2,511,193     |           |              | $         | 2,538,351 |          
|                                     |                                                                     |                                                                                                                                         |                                                                                                                                                                                     |           |               |           |              |          

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

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##### Table of Contents



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

|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |            |         |        | 
|-------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | -------------- | ------------------------------------------ | ---------- | ------------------ | ------ | ----------------- | ---------- | ------ | ------ | ------ | ---------- | ------- | ------ | ------ | ---------- | ------- | ------ | 
|                                                                                       |                                                                                                           |                |                                            |            | Three months ended |        | Nine months ended
|                                                                                       |                                                                                                           |                |                                            |            | September 30,      |        | September 30,    
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                  
|                                                                                       |                                                                                                           |                |                                            |            | 2002               |        | 2001              |            | 2002   |        | 2001  
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |       
|Revenues                                                                               |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Rental                                                                                                    |                | $                                          | 83,232     |                    |        | $                 | 85,919     |        |        | $      | 244,534    |         |        | $      | 263,426    |        
|                                                                                       | Other                                                                                                     |                |                                            | 3,160      |                    |        |                   | 3,499      |        |        |        | 9,388      |         |        |        | 11,023     |        
|                                                                                       | Interest                                                                                                  |                |                                            | 316        |                    |        |                   | 370        |        |        |        | 1,002      |         |        |        | 1,358      |        
|                                                                                       | Third party services                                                                                      |                |                                            |           |                    |        |                   | 3,981      |        |        |        |           |         |        |        | 11,939     |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       |                                                                                                           | Total revenues |                                            |            | 86,708             |        |                   |            | 93,769 |        |        |            | 254,924 |        |        |            | 287,746 |       
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|Expenses                                                                               |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Property operating and maintenance                                                                        |                |                                            | 35,232     |                    |        |                   | 32,542     |        |        |        | 102,028    |         |        |        | 99,143     |        
|                                                                                       | Depreciation                                                                                              |                |                                            | 22,464     |                    |        |                   | 18,192     |        |        |        | 64,738     |         |        |        | 52,696     |        
|                                                                                       | Interest                                                                                                  |                |                                            | 15,763     |                    |        |                   | 13,101     |        |        |        | 43,716     |         |        |        | 40,934     |        
|                                                                                       | Amortization of deferred loan costs                                                                       |                |                                            | 588        |                    |        |                   | 513        |        |        |        | 1,711      |         |        |        | 1,456      |        
|                                                                                       | General and administrative                                                                                |                |                                            | 3,495      |                    |        |                   | 3,441      |        |        |        | 10,981     |         |        |        | 10,087     |        
|                                                                                       | Minority interest in consolidated property partnerships                                                   |                |                                            | (537       | )                  |        |                   | (527       | )      |        |        | (1,480     | )       |        |        | (1,344     | )      
|                                                                                       | Third party services                                                                                      |                |                                            |           |                    |        |                   | 3,676      |        |        |        |           |         |        |        | 10,603     |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       |                                                                                                           | Total expenses |                                            |            | 77,005             |        |                   |            | 70,938 |        |        |            | 221,694 |        |        |            | 213,575 |       
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|Income from continuing operations before gains on property sales and minority
interest |                                                                                                           |                | 9,703                                      |            |                    |        | 22,831            |            |        |        | 33,230 |            |         |        | 74,171 |           
|                                                                                       | Gains on property sales                                                                                   |                |                                            |           |                    |        |                   | 8,179      |        |        |        | 13,275     |         |        |        | 23,950     |        
|                                                                                       | Minority interest of preferred unitholders                                                                |                |                                            | (1,400     | )                  |        |                   | (1,400     | )      |        |        | (4,200     | )       |        |        | (4,200     | )      
|                                                                                       | Minority interest of common unitholders                                                                   |                |                                            | (661       | )                  |        |                   | (3,190     | )      |        |        | (4,090     | )       |        |        | (10,069    | )      
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       |                                                                                                           |                | Income from continuing operations          |            |                    | 7,642  |                   |            |        | 26,420 |        |            |         | 38,215 |        |            |         | 83,852 | 
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|Discontinued operations                                                                |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Income from discontinued operations, net of minority interest                                             |                |                                            | 417        |                    |        |                   | 969        |        |        |        | 2,632      |         |        |        | 3,175      |        
|                                                                                       | Gains (losses) on properties held for sale and sold, net of minority interest                             |                |                                            | (1,906     | )                  |        |                   |           |        |        |        | 7,509      |         |        |        |           |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       |                                                                                                           |                | Income
(loss) from discontinued operations |            |                    | (1,489 | )                 |            |        | 969    |        |            |         | 10,141 |        |            |         | 3,175  | 
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|Income before cumulative effect of accounting change and extraordinary items           |                                                                                                           |                | 6,153                                      |            |                    |        | 27,389            |            |        |        | 48,356 |            |         |        | 87,027 |           
|                                                                                       | Cumulative effect of accounting change, net of minority interest                                          |                |                                            |           |                    |        |                   |           |        |        |        |           |         |        |        | (613       | )      
|                                                                                       | Extraordinary items, net of minority interest                                                             |                |                                            |           |                    |        |                   |           |        |        |        | (120       | )       |        |        | (77        | )      
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|Net income                                                                             |                                                                                                           |                | 6,153                                      |            |                    |        | 27,389            |            |        |        | 48,236 |            |         |        | 86,337 |           
|Dividends to preferred shareholders                                                    |                                                                                                           |                | (2,862                                     | )          |                    |        | (2,969            | )          |        |        | (8,587 | )          |         |        | (8,906 | )         
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|Net income available to common shareholders                                            |                                                                                                           | $              | 3,291                                      |            |                    | $      | 24,420            |            |        | $      | 39,649 |            |         | $      | 77,431 |           
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|Earnings per common share  basic                                                      |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Income from continuing operations (net of preferred dividends)                                            |                | $                                          | 0.13       |                    |        | $                 | 0.61       |        |        | $      | 0.80       |         |        | $      | 1.95       |        
|                                                                                       | Income from discontinued operations                                                                       |                |                                            | (0.04      | )                  |        |                   | 0.03       |        |        |        | 0.27       |         |        |        | 0.08       |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Income before cumulative effect of accounting change and extraordinary items
(net of preferred dividends) |                |                                            | 0.09       |                    |        |                   | 0.64       |        |        |        | 1.07       |         |        |        | 2.03       |        
|                                                                                       | Cumulative effect of accounting change, net of minority interest                                          |                |                                            |           |                    |        |                   |           |        |        |        |           |         |        |        | (0.02      | )      
|                                                                                       | Extraordinary items, net of minority interest                                                             |                |                                            |           |                    |        |                   |           |        |        |        |           |         |        |        |           |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Net income available to common shareholders                                                               |                | $                                          | 0.09       |                    |        | $                 | 0.64       |        |        | $      | 1.07       |         |        | $      | 2.01       |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Weighted average common shares outstanding  basic                                                        |                |                                            | 36,913,074 |                    |        |                   | 37,899,668 |        |        |        | 36,897,867 |         |        |        | 38,463,672 |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|Earnings per common share  diluted                                                    |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Income from continuing operations (net of preferred dividends)                                            |                | $                                          | 0.13       |                    |        | $                 | 0.61       |        |        | $      | 0.80       |         |        | $      | 1.94       |        
|                                                                                       | Income from discontinued operations                                                                       |                |                                            | (0.04      | )                  |        |                   | 0.03       |        |        |        | 0.27       |         |        |        | 0.08       |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Income before cumulative effect of accounting change and extraordinary items
(net of preferred dividends) |                |                                            | 0.09       |                    |        |                   | 0.64       |        |        |        | 1.07       |         |        |        | 2.02       |        
|                                                                                       | Cumulative effect of accounting change, net of minority interest                                          |                |                                            |           |                    |        |                   |           |        |        |        |           |         |        |        | (0.02      | )      
|                                                                                       | Extraordinary items, net of minority interest                                                             |                |                                            |           |                    |        |                   |           |        |        |        |           |         |        |        |           |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Net income available to common shareholders                                                               |                | $                                          | 0.09       |                    |        | $                 | 0.64       |        |        | $      | 1.07       |         |        | $      | 2.00       |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Weighted average common shares outstanding  diluted                                                      |                |                                            | 36,916,835 |                    |        |                   | 38,185,054 |        |        |        | 36,941,598 |         |        |        | 38,721,056 |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           
|                                                                                       | Dividends declared                                                                                        |                | $                                          | 0.78       |                    |        | $                 | 0.78       |        |        | $      | 2.34       |         |        | $      | 2.34       |        
|                                                                                       |                                                                                                           |                |                                            |            |                    |        |                   |            |        |        |        |            |         |        |        |           

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

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##### Table of Contents



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

|                                                                  |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |                   |         |       |         |   |        |   |      |   |      |   |          |       |     |   |         |       |         |  
|----------------------------------------------------------------- | --------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | -- | --------- | - | ------ | --- | ------- | - | ----------- | --------- | ------------- | ------- | ------------ | - | ----------------- | ------- | ----- | ------- | - | ------ | - | ---- | - | ---- | - | -------- | ----- | --- | - | ------- | ----- | ------- | -
|                                                                  |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           | Additional    |         |              |   | Accumulated 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                                                                                                |    |           |  |        |     |         |  |             |           |               |        |              |   |                   | 48,236  |       |         |   |       |   |      |   |     |   |          |       |    |   |         |       | 48,236  |  
|                                                                  |                                                                       | Net change in derivative value, net of
minority interest                                                  |    |           |  |        |     |         |  |             |           |               |        |              |   |                   |        |       |         |   | (8,929 | ) |      |   |     |   |          |       |    |   |         |       | (8,929  | )
|                                                                  |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |                   |         |       |         |   |        |   |      |   |      |   |          |       |     |   |         |      
|                                                                  |                                                                       | Total comprehensive income                                                                                |    |           |   |        |     |         |   |             |           |               |         |              |   |                   |         |       |         |   |        |   |      |   |      |   |          |       |     |   |         |       | 39,307  |  
|                                                                  | Proceeds from Dividend Reinvestment and Employee
Stock Purchase Plans |                                                                                                           |    |          |   |        |     |        |   |             |           | (202          | )       |              |   |                  |         |       |         |  |        |   |      |  |      |   |          | 1,459 |     |   |         | 1,257 |        
|                                                                  |                                                                       | Adjustment for minority interest of
unitholders in Operating Partnership at dates
of capital transactions |    |           |  |        |     |         |  |             |           |               | 67      |              |   |                   |        |       |         |   |       |   |      |   |     |   |          |       |    |   |         |       | 67      |  
|                                                                  |                                                                       | Restricted stock issuances, net of forfeitures                                                            |    |           |  |        |     |         |  |             |           |               | (30     | )            |   |                   |        |       |         |   |       |   |      |   | (494 | ) |          |       | 524 |   |         |       |        |  
|                                                                  |                                                                       | Amortization of deferred compensation                                                                     |    |           |  |        |     |         |  |             |           |               |        |              |   |                   |        |       |         |   |       |   |      |   | 197  |   |          |       |    |   |         |       | 197     |  
|                                                                  |                                                                       | Dividends to preferred shareholders                                                                       |    |           |  |        |     |         |  |             |           |               |        |              |   |                   | (8,587  | )     |         |   |       |   |      |   |     |   |          |       |    |   |         |       | (8,587  | )
|                                                                  |                                                                       | Dividends to common shareholders                                                                          |    |           |  |        |     |         |  |             |           |               | (46,667 | )            |   |                   | (39,649 | )     |         |   |       |   |      |   |     |   |          |       |    |   |         |       | (86,316 | )
|                                                                  |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |                   |         |       |         |   |        |   |      |   |      |   |          |       |     |   |         |      
|Shareholders Equity and Accumulated Earnings,
September 30, 2002 |                                                                       | $                                                                                                         | 49 |           |   | $      | 396 |         |   | $           | 964,122   |               |         | $            |  |                   |         | $     | (14,793 | ) |        | $ | (742 | ) |      | $ | (101,590 | )     |     | $ | 847,442 |      
|                                                                  |                                                                       |                                                                                                           |    |           |   |        |     |         |   |             |           |               |         |              |   |                   |         |       |         |   |        |   |      |   |      |   |          |       |     |   |         |      

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

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##### Table of Contents



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

|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |          |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ----- | ----------------- | ------- | ---- | ------ | -------- | ------- | -
|                                                     |                                                                                   |                                                                                |       | Nine Months Ended
|                                                     |                                                                                   |                                                                                |       | September 30,    
|                                                     |                                                                                   |                                                                                |       |                  
|                                                     |                                                                                   |                                                                                |       | 2002              |         | 2001
|                                                     |                                                                                   |                                                                                |       |                   |         |     
|Cash Flows From Operating Activities                 |                                                                                   |                                                                                |       |                   |         |      |        |         
|                                                     | Net income                                                                        |                                                                                | $     | 48,236            |         |      | $      | 86,337   |        
|                                                     | Adjustments to reconcile net income to net cash provided by operating activities: |                                                                                |       |                   |         |      |        |          |        
|                                                     |                                                                                   | Net gain on sale of assets   continuing operations                            |       |                   | (13,275 | )    |        |          | (23,950 | )
|                                                     |                                                                                   | Net gain on sale of assets  discontinued operations, net of minority interest |       |                   | (7,509  | )    |        |          |        |  
|                                                     |                                                                                   | Minority interest of preferred unitholders in Operating Partnership            |       |                   | 4,200   |      |        |          | 4,200   |  
|                                                     |                                                                                   | Minority interest of common unitholders in Operating Partnership               |       |                   | 4,090   |      |        |          | 10,069  |  
|                                                     |                                                                                   | Minority interest in discontinued operations                                   |       |                   | 362     |      |        |          | 426     |  
|                                                     |                                                                                   | Equity in loss of unconsolidated entities                                      |       |                   | 1,284   |      |        |          | 26      |  
|                                                     |                                                                                   | Cumulative effect of accounting change, net of minority interest               |       |                   |        |      |        |          | 613     |  
|                                                     |                                                                                   | Extraordinary items, net of minority interest                                  |       |                   | 120     |      |        |          | 77      |  
|                                                     |                                                                                   | Depreciation                                                                   |       |                   | 65,013  |      |        |          | 56,106  |  
|                                                     |                                                                                   | Amortization of deferred loan costs                                            |       |                   | 1,711   |      |        |          | 1,456   |  
|                                                     | Changes in assets, (increase) decrease in:                                        |                                                                                |       |                   |         |      |        |          |        
|                                                     |                                                                                   | Restricted cash                                                                |       |                   | 6       |      |        |          | (72     | )
|                                                     |                                                                                   | Other assets                                                                   |       |                   | 1,568   |      |        |          | (4,607  | )
|                                                     |                                                                                   | Deferred charges                                                               |       |                   | (1,876  | )    |        |          | (292    | )
|                                                     | Changes in liabilities, increase (decrease) in:                                   |                                                                                |       |                   |         |      |        |          |        
|                                                     |                                                                                   | Accrued interest payable                                                       |       |                   | 6,757   |      |        |          | 5,108   |  
|                                                     |                                                                                   | Accounts payable and accrued expenses                                          |       |                   | (12,695 | )    |        |          | 8,419   |  
|                                                     |                                                                                   | Security deposits and prepaid rents                                            |       |                   | (604    | )    |        |          | (15     | )
|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |         
|                                                     | Net cash provided by operating activities                                         |                                                                                |       | 97,388            |         |      |        | 143,901  |        
|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |         
|Cash Flows From Investing Activities                 |                                                                                   |                                                                                |       |                   |         |      |        |         
|                                                     | Construction and acquisition of real estate assets, net of payables               |                                                                                |       | (114,580          | )       |      |        | (173,571 | )      
|                                                     | Net proceeds from sale of assets                                                  |                                                                                |       | 150,120           |         |      |        | 215,660  |        
|                                                     | Capitalized interest                                                              |                                                                                |       | (11,293           | )       |      |        | (16,803  | )      
|                                                     | Recurring capital expenditures                                                    |                                                                                |       | (7,315            | )       |      |        | (9,719   | )      
|                                                     | Corporate additions and improvements                                              |                                                                                |       | (923              | )       |      |        | (1,850   | )      
|                                                     | Non-recurring capital expenditures                                                |                                                                                |       | (2,075            | )       |      |        | (1,220   | )      
|                                                     | Revenue generating capital expenditures                                           |                                                                                |       | (1,306            | )       |      |        | (2,620   | )      
|                                                     | Investment in and advances to unconsolidated entities                             |                                                                                |       | (38,663           | )       |      |        | (6,820   | )      
|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |         
|                                                     | Net cash provided by (used in) investing activities                               |                                                                                |       | (26,035           | )       |      |        | 3,057    |        
|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |         
|Cash Flows From Financing Activities                 |                                                                                   |                                                                                |       |                   |         |      |        |         
|                                                     | Payment of financing costs                                                        |                                                                                |       | (150              | )       |      |        | (300     | )      
|                                                     | Debt proceeds                                                                     |                                                                                |       | 38,500            |         |      |        | 50,000   |        
|                                                     | Debt payments                                                                     |                                                                                |       | (23,509           | )       |      |        | (69,530  | )      
|                                                     | Lines of credit proceeds, net                                                     |                                                                                |       | 23,829            |         |      |        | 63,025   |        
|                                                     | Proceeds from Dividend Reinvestment and Employee Stock Purchase Plans             |                                                                                |       | 1,257             |         |      |        | 8,396    |        
|                                                     | Treasury stock acquisitions                                                       |                                                                                |       |                  |         |      |        | (86,069  | )      
|                                                     | Distributions to preferred unitholders                                            |                                                                                |       | (4,200            | )       |      |        | (4,200   | )      
|                                                     | Distributions to common unitholders                                               |                                                                                |       | (11,979           | )       |      |        | (12,006  | )      
|                                                     | Dividends paid to preferred shareholders                                          |                                                                                |       | (8,587            | )       |      |        | (8,906   | )      
|                                                     | Dividends paid to common shareholders                                             |                                                                                |       | (86,271           | )       |      |        | (89,901  | )      
|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |         
|                                                     | Net cash used in financing activities                                             |                                                                                |       | (71,110           | )       |      |        | (149,491 | )      
|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |         
|Net increase (decrease) in cash and cash equivalents |                                                                                   |                                                                                | 243   |                   |         |      | (2,533 | )       
|Cash and cash equivalents, beginning of period       |                                                                                   |                                                                                | 4,803 |                   |         |      | 7,459  |         
|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |         
|Cash and cash equivalents, end of period             |                                                                                   | $                                                                              | 5,046 |                   |         | $    | 4,926  |         
|                                                     |                                                                                   |                                                                                |       |                   |         |      |        |         

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

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##### Table of Contents



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 September 30, 2002, approximately
51.2%, 18.4% and 7.2% (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 accounting
principles for interim financial information and applicable rules and
regulations of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normally recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the nine month period ended September 30, 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. 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

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##### Table of Contents



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






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | extraordinary items under APB No. 30. Since the definition of an
extraordinary item is more restrictive under APB No. 30, SFAS No. 145 will
generally cause the Company to treat gains or losses from early debt
retirements as part of income before extraordinary items. This part of SFAS
No. 145 is effective for fiscal years beginning after May 15, 2002 and
requires the reclassification of prior period extraordinary items not meeting
the APB No. 30 criteria. The Company expects to implement this requirement
of SFAS No. 145 on January 1, 2003. The Company believes
the provisions of this Statement will not have a significant effect
on the Company's results of operations on its financial position. The remaining provisions of SFAS No. 145
are generally not applicable to the Company.



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

3.    NOTES PAYABLE



| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | At September 30, 2002 and December 31, 2001, the Companys indebtedness
consisted of the following:

|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |           | 
|---------------------------------------- | ------------------------ | ------------- | ------------- | ------------- | ---- | ----------------- | ------------ | ------------------ | --- | ----------------- | --- | --- | ---- | --------- | ---- | ---- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | --------- | 
|Description                              |                          | Payment Terms |               | Interest Rate |      | Maturity Date (1) |              | September 30, 2002 |     | December 31, 2001
|                                         |                          |               |               |               |      |                   |              |                    |     |                  
|Senior Notes (Unsecured)                 |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | Senior Notes             |               | Int           |               |      | 6.11% - 7.70      | %            |                    |     |                   |     |     |      | 2003-2010 |      |      | $       | 385,000 |         |           | $       | 360,000 |        
|                                         | Medium Term Notes        |               | Int           |               |      | 6.69% - 8.12%     | %            |                    |     | (2)               |     |     |      | 2004-2015 |      |      |         | 323,000 |         |           |         | 323,000 |        
|                                         | Northwestern Mutual Life |               | Int           |               |      | 8.37              | %            |                    |     |                   |     |     |      | 2002      |      |      |         |        |         |           |         | 20,000  |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 708,000 |           |         |         | 703,000 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Unsecured Lines of Credit & Other        |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | Revolver  Syndicated    |               |               | N/A           |      |                   | LIBOR + 0.85 | %                  |     |                   | (3) |     |      |           | 2004 |      |         |         | 180,000 |           |         |         | 155,000 |          
|                                         | Cash Management Line     |               |               | N/A           |      |                   | LIBOR + 0.75 | %                  |     |                   |     |     |      |           | 2003 |      |         |         | 10,031  |           |         |         | 11,202  |          
|                                         | Other                    |               |               | N/A           |      |                   |              | 5.00               | %   |                   |     | (4) |      |           |      | 2021 |         |         |         | 2,000     |         |         |         | 2,000     | 
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 192,031 |           |         |         | 168,202 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Conventional Fixed Rate (Secured)        |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | FNMA                     |               | Prin. and Int |               |      | 6.975             | %            |                    |     | (5)               |     |     |      | 2029      |      |      |         | 101,100 |         |           |         | 102,200 |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 7.69              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 49,959  |         |           |         | 50,527  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 6.50              | %            |                    |     | (6)               |     |     |      | 2009      |      |      |         | 46,953  |         |           |         | 47,681  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 7.69              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 27,951  |         |           |         | 28,268  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 6.29              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 13,465  |         |           |         |        |        
|                                         | Parkwood Townhomes TM    |               | Prin. and Int |               |      | 7.375             | %            |                    |     |                   |     |     |      | 2014      |      |      |         |        |         |           |         | 762     |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 239,428 |           |         |         | 229,438 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Tax Exempt Floating Rate
Bonds (Secured) |                          | Int           |               |               | 1.37 | %                 |              |                    | (7) |                   |     |     | 2025 |           |      |      | 235,880 |         |         |           | 235,880 |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         | Total                    |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | $       | 1,375,339 |         |         | $       | 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 March 16, 2005 (the Remarketing
Date) is 6.85%. On the Remarketing Date, they are subject to mandatory
tender for remarketing.                                                                                                                                                      
|
| | (3) |  | Represents stated rate. At September 30, 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 and matures in April 2004.                                                                                                                                       
|
| | (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 the average rate for the nine months ended
September 30, 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%.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to the unsecured lines of credit reflected in the above table,
the Company also has in place an additional $125,000 line of credit facility
for general corporate purposes. Upon the renewal of this credit facility in
April 2002, the total borrowing capacity was reduced from $185,000 to
$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 September
30, 2002.



| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 in February 2003.

-6-



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##### Table of Contents



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






| |                   
| | ------------------
| | New debt issuances



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 2002, the Company issued $25,000 of unsecured notes at par. These
notes bear interest at 6.11% and mature June 18, 2007. Also in June 2002,
the Company closed a $13,500 secured mortgage loan. The loan bears interest
at 6.29% and monthly principal and interest payments are based on a 25-year
amortization schedule. The loan matures on October 1, 2007. Net proceeds
from these transactions were used to repay amounts outstanding under the
Companys credit facility.

Debt maturities

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

|           |  |   |           | 
|---------- |  | - | --------- | 
|2002       |  | $ | 672       | 
|2003       |  |   | 103,809   | 
|2004       |  |   | 27,094    | 
|2005       |  |   | 204,402   | 
|2006       |  |   | 79,732    | 
|Thereafter |  |   | 769,599   | 
|           |  |   |           | 
|           |  | $ | 1,185,308 | 
|           |  |   |           | 



| | (1) |  | Excludes outstanding balances on
lines of credit of $190,031 maturing in 2004.
| | --- |  | ------------------------------------------------------------------------------

4.    INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At September 30, 2002, the Company holds investments in four individual
limited liability companies (the Property LLCs) with an institutional
investor. Each Property LLC owns a newly developed or under development
apartment community. The Company holds a 35% equity interest in the Property
LLCs. The total estimated development cost of the apartment communities of
$217,000 is being funded through member equity contributions proportionate to
the members ownership interests and through construction financing provided
by the Company. The Company accounts for its investments in these Property
LLCs using the equity method of accounting. The excess of the Companys
investment over its equity in the underlying net assets of the Property LLCs
was approximately $6,818 at September 30, 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. 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 operating results of the Company include its proportionate share of net
income (loss) from the investments in the Property LLCs. A summary of
financial information for the Property LLCs in the aggregate is as follows:

|                                              |  |               |         |              |  |   |         | 
|--------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                              |  | September 30, |         | December 31,
|                                              |  | 2002          |         | 2001        
|                                              |  |               |         |             
|Real estate assets, net                       |  | $             | 195,914 |              |  | $ | 115,664 | 
|Cash and other                                |  |               | 2,485   |              |  |   | 533     | 
|                                              |  |               |         |              |  |   |         | 
|Total assets                                  |  | $             | 198,399 |              |  | $ | 116,197 | 
|                                              |  |               |         |              |  |   |         | 
|Construction notes payable to Company (1)     |  | $             | 150,195 |              |  | $ | 77,019  | 
|Other liabilities                             |  |               | 10,381  |              |  |   | 11,892  | 
|                                              |  |               |         |              |  |   |         | 
|Total liabilities                             |  |               | 160,576 |              |  |   | 88,911  | 
|Members equity                               |  |               | 37,823  |              |  |   | 27,286  | 
|                                              |  |               |         |              |  |   |         | 
|Total liabilities and members equity         |  | $             | 198,399 |              |  | $ | 116,197 | 
|                                              |  |               |         |              |  |   |         | 
|Companys equity investment                   |  | $             | 20,045  |              |  | $ | 12,673  | 
|                                              |  |               |         |              |  |   |         | 
|Companys share of construction notes payable |  | $             | 52,568  |              |  | $ | 26,957  | 
|                                              |  |               |         |              |  |   |         | 

-7-



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##### Table of Contents



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




|                            |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |    |    | 
|--------------------------- | ------------------------------------------------------------------------------ | -------------- | ------ | ------------------ | ----- | ----------------- | --- | ---- | -- | ---- | ------ | ----- | ----- | - | --- | -- | -- | 
|                            |                                                                                |                |        | Three Months Ended |       | Nine Months Ended
|                            |                                                                                |                |        | September 30,      |       | September 30,    
|                            |                                                                                |                |        |                    |       |                  
|                            |                                                                                |                |        | 2002               |       | 2001              |     | 2002 |    | 2001
|                            |                                                                                |                |        |                    |       |                   |     |      |    |     
|Revenues                    |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|                            | Rental                                                                         |                | $      | 1,874              |       |                   | $   |     |    |      | $      | 3,056 |       |   | $   |   |   
|                            | Other                                                                          |                |        | 95                 |       |                   |     | 15   |    |      |        | 255   |       |   |     | 15 |   
|                            |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|                            |                                                                                | Total revenues |        |                    | 1,969 |                   |     |      | 15 |      |        |       | 3,311 |   |     |    | 15 | 
|                            |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|Expenses                    |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|                            | Property operating and maintenance
(exclusive of items shown
separately below) |                |        | 1,335              |       |                   |     | 90   |    |      |        | 3,112 |       |   |     | 90 |   
|                            | Depreciation                                                                   |                |        | 930                |       |                   |     |     |    |      |        | 2,071 |       |   |     |   |   
|                            | Interest                                                                       |                |        | 930                |       |                   |     |     |    |      |        | 1,764 |       |   |     |   |   
|                            |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|                            |                                                                                | Total expenses |        |                    | 3,195 |                   |     |      | 90 |      |        |       | 6,947 |   |     |    | 90 | 
|                            |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|Net loss                    |                                                                                |                | (1,226 | )                  |       |                   | (75 | )    |    |      | (3,636 | )     |       |   | (75 | ) 
|                            |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|Companys share of net loss |                                                                                | $              | (441   | )                  |       | $                 | (26 | )    |    | $    | (1,284 | )     |       | $ | (26 | ) 
|                            |                                                                                |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   



| | (1) |  | All of the Companys construction financing to these
unconsolidated real estate entities is included in the Companys
outstanding debt and real estate assets. At September 30, 2002
and 2001, the venture partners share of the construction loans
was $97,627 and $19,899, respectively.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At September 30, 2002, three 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 $167,967 ($150,195 funded at September 30, 2002). These loans earn
interest at LIBOR plus 1.75% and are secured by the apartment communities.
The loans mature on dates ranging from February 2003 to November 2004 and are
expected to be repaid from the proceeds of permanent project financings.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As part of the development and construction services agreements entered into
between the Company and the Property LLCs, the Company guaranteed the maximum
total amount for certain construction cost categories subject to aggregate
limits (approximately $19,000). At September 30, 2002, the Companys
estimated obligations under the agreements total approximately $1,200. 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 September 30, 2002, the
Company has met and believes that it will meet the remaining completion date
requirements and not be subject to any additional costs.

5.    REAL ESTATE ASSETS HELD FOR SALE / DISCONTINUED OPERATIONS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company classifies real estate assets as held for sale after the approval
of its internal investment committee and after the Company has commenced an
active program to sell the assets. At September 30, 2002, the Company has
classified one apartment community and eight tracts of land as held for sale.
These real estate assets are reflected in the accompanying consolidated
balance sheet at $38,123 which represents the lower of cost or fair value
less costs to sell. The Company expects the sale of these assets to occur in
the next twelve months.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the three months ended September 30, 2002, the Company designated and
classified two land parcels as held for sale. In the six months ended June
30, 2002, the Company designated and classified six apartment communities and
one commercial property as held for sale. Under SFAS No. 144, all gains and
losses on the sale of these assets and the operating results from these
properties are included in discontinued operations for both the current and
prior periods.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the three months ended September 30, 2002, the Company recognized losses
of $2,170 ($1,906 net of minority interest), on the sale of one community and
the write down to fair market value of two land parcels designated as held
for sale in the third quarter of 2002. The community sale generated net
proceeds of approximately $9,753. For the nine months ended September 30,
2002, the Company recognized net gains of $10,412 ($9,144 net of minority
interest) on the sale of real estate

-8-



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##### Table of Contents



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






| |                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | assets designated for sale subsequent to December 31, 2001, offset by
reserves of $1,849 ($1,635 net of minority interest) to write down to fair
market value the land parcels designated as held for sale in the third
quarter of 2002.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the three and nine month periods presented, income from discontinued
operations includes the results of operations through the earlier of the
community sale date (if the community was sold prior to September 30, 2002)
or September 30, 2002, of six apartment communities containing 2,125 units
and one commercial property that were designated as held for sale in 2002.
The revenues and expenses of these properties for the three and nine months
ended September 30, 2002 and 2001 are as follows:

|                                                               |                                                                                |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |        |        | 
|-------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------- | --- | ------------------ | ----- | ----------------- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | - | ----- | ------ | ------ | 
|                                                               |                                                                                |                |     | Three Months Ended |       | Nine Months Ended
|                                                               |                                                                                |                |     | September 30,      |       | September 30,    
|                                                               |                                                                                |                |     |                    |       |                  
|                                                               |                                                                                |                |     | 2002               |       | 2001              |       | 2002  |       | 2001
|                                                               |                                                                                |                |     |                    |       |                   |       |       |       |     
|Revenues                                                       |                                                                                |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                                               | Rental                                                                         |                | $   | 1,116              |       |                   | $     | 5,117 |       |      | $     | 8,065 |       |   | $     | 15,455 |       
|                                                               | Other                                                                          |                |     | 47                 |       |                   |       | 232   |       |      |       | 307   |       |   |       | 663    |       
|                                                               |                                                                                |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                                               |                                                                                | Total revenues |     |                    | 1,163 |                   |       |       | 5,349 |      |       |       | 8,372 |   |       |        | 16,118 | 
|                                                               |                                                                                |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|Expenses                                                       |                                                                                |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                                               | Property operating and maintenance
(exclusive of items shown
separately below) |                |     | 536                |       |                   |       | 2,140 |       |      |       | 3,863 |       |   |       | 6,278  |       
|                                                               | Depreciation                                                                   |                |     |                   |       |                   |       | 1,151 |       |      |       | 275   |       |   |       | 3,410  |       
|                                                               | Interest                                                                       |                |     | 153                |       |                   |       | 957   |       |      |       | 1,240 |       |   |       | 2,829  |       
|                                                               |                                                                                |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                                               |                                                                                | Total expenses |     |                    | 689   |                   |       |       | 4,248 |      |       |       | 5,378 |   |       |        | 12,517 | 
|                                                               |                                                                                |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|Income from discontinued operations
(before minority interest) |                                                                                | $              | 474 |                    |       | $                 | 1,101 |       |       | $    | 2,994 |       |       | $ | 3,601 |       
|                                                               |                                                                                |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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
September 30, 2002 and 2001, the consolidated statements of operations
include net income of $0 and $797, respectively, from these two communities
and one commercial property held for sale at December 31, 2001. For the nine
months ended September 30, 2002 and 2001, the consolidated statements of
operations included net income of $353 and $2,443, respectively, from these
properties. For the three and nine months ended September 30, 2001, net
income reflected above includes depreciation expense of $212 and $628,
respectively.

-9-



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##### Table of Contents



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




6.    EARNINGS PER SHARE



| |                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the three and nine months ended September 30, 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 |        | Nine Months Ended
|                                                                                                  |                                                                    |                                 |   | September 30,      |        | September 30,    
|                                                                                                  |                                                                    |                                 |   |                    |        |                  
|                                                                                                  |                                                                    |                                 |   | 2002               |        | 2001              |   | 2002       |        | 2001
|                                                                                                  |                                                                    |                                 |   |                    |        |                   |   |            |        |     
|Basic and diluted income from continuing
operations available to common shareholders
(numerator): |                                                                    |                                 |   |                    |        |                   |   |            |        |      |   |            |        |   |   |           
|                                                                                                  | Income from continuing operations                                  |                                 | $ | 7,642              |        |                   | $ | 26,420     |        |      | $ | 38,215     |        |   | $ | 83,852     |       
|                                                                                                  |                                                                    | Less: Preferred stock dividends |   |                    | (2,862 | )                 |   |            | (2,969 | )    |   |            | (8,587 | ) |   |            | (8,906 | )
|                                                                                                  |                                                                    |                                 |   |                    |        |                   |   |            |        |      |   |            |        |   |   |           
|                                                                                                  | Income from continuing operations available
to common shareholders |                                 | $ | 4,780              |        |                   | $ | 23,451     |        |      | $ | 29,628     |        |   | $ | 74,946     |       
|                                                                                                  |                                                                    |                                 |   |                    |        |                   |   |            |        |      |   |            |        |   |   |           
|Common shares (denominator):                                                                      |                                                                    |                                 |   |                    |        |                   |   |            |        |      |   |            |        |   |   |           
|                                                                                                  | Weighted average shares outstanding  basic                        |                                 |   | 36,913,074         |        |                   |   | 37,899,668 |        |      |   | 36,897,867 |        |   |   | 38,463,672 |       
|                                                                                                  | Incremental shares from assumed conversion of
stock options        |                                 |   | 3,761              |        |                   |   | 285,386    |        |      |   | 43,731     |        |   |   | 257,384    |       
|                                                                                                  |                                                                    |                                 |   |                    |        |                   |   |            |        |      |   |            |        |   |   |           
|                                                                                                  | Weighted average shares outstanding  diluted                      |                                 |   | 36,916,835         |        |                   |   | 38,185,054 |        |      |   | 36,941,598 |        |   |   | 38,721,056 |       
|                                                                                                  |                                                                    |                                 |   |                    |        |                   |   |            |        |      |   |            |        |   |   |           

7.    DERIVATIVE INSTRUMENTS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 nine months ended September 30, 2001.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At September 30, 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 nine months ended September 30, 2002, the Company
recorded the unrealized net loss of $8,929, net of minority interest, on
these cash flow hedges as a decrease in accumulated other comprehensive
income, a shareholders equity account, in the accompanying consolidated
balance sheet. This unrealized net loss of $8,929 was comprised of an
unrealized net gain of $1,933, net of minority interest, for the three months
ended March 31, 2002 and an unrealized net loss of $4,657, net of minority
interest, for the three months ended June 30, 2002 and an unrealized net loss
of $6,205 for the three months ended September 30, 2002. 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 nine months ended September 30, 2002. This charge against earnings
during the period and the fair value of the interest rate cap agreements as
of September 30, 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 $3,168.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At September 30, 2001, the Company had outstanding interest rate swap
agreements with a notional value of $129,000 and maturity dates ranging from
2005 to 2009. For the nine months ended September 30, 2001, the Company
recorded the unrealized net loss of $7,845, net of minority interest, on
these cash flow hedges as a liability and a reduction in accumulated other
comprehensive income, a shareholders equity account, in the accompanying
balance sheet. This unrealized net loss of $7,845 was comprised of an
unrealized net loss of $2,764, net of minority interest, for the three months
ended March 31, 2001, an unrealized net gain of $2,314, net of minority
interest for the three months ended June 30, 2001 and an unrealized net loss
of $7,395, net of minority interest for the three months ended September 30,
2001.

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##### Table of Contents



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




8.    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.

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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.

|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|---------------------------------------------------------------- | --------------------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                 |                       |   | Three Months Ended |        | Nine Months Ended
|                                                                 |                       |   | September 30,      |        | September 30,    
|                                                                 |                       |   |                    |        |                  
|                                                                 |                       |   | 2002               |        | 2001              |   | 2002    |        | 2001
|                                                                 |                       |   |                    |        |                   |   |         |        |     
|Revenues                                                         |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Fully stabilized communities                                     |                       | $ | 66,507             |        |                   | $ | 71,242  |        |      | $ | 199,185 |         |  | $ | 214,232 |        
|Communities stabilized during 2001                               |                       |   | 5,401              |        |                   |   | 5,249   |        |      |   | 16,002  |         |  |   | 13,496  |        
|Development and lease-up communities                             |                       |   | 10,846             |        |                   |   | 6,967   |        |      |   | 27,469  |         |  |   | 18,079  |        
|Sold communities                                                 |                       |   |                   |        |                   |   | 2,471   |        |      |   | 745     |         |  |   | 17,833  |        
|Other                                                            |                       |   | 3,954              |        |                   |   | 7,840   |        |      |   | 11,523  |         |  |   | 24,106  |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                                 | Consolidated revenues |   | $                  | 86,708 |                   |   | $       | 93,769 |      |   | $       | 254,924 |  |   | $       | 287,746 | 
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Contribution
to FFO from Continuing Operations                   |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Fully stabilized communities                                     |                       | $ | 42,654             |        |                   | $ | 47,773  |        |      | $ | 129,427 |         |  | $ | 145,951 |        
|Communities stabilized during 2001                               |                       |   | 3,429              |        |                   |   | 3,440   |        |      |   | 10,328  |         |  |   | 8,312   |        
|Development and lease-up communities                             |                       |   | 6,097              |        |                   |   | 4,290   |        |      |   | 15,064  |         |  |   | 10,672  |        
|Sold communities                                                 |                       |   |                   |        |                   |   | 1,550   |        |      |   | 369     |         |  |   | 11,249  |        
|Other                                                            |                       |   |                   |        |                   |   | 305     |        |      |   |        |         |  |   | 1,336   |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Contribution
to FFO from continuing operations                   |                       |   | 52,180             |        |                   |   | 57,358  |        |      |   | 155,188 |         |  |   | 177,520 |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|FFO  discontinued operations                                    |                       |   | 474                |        |                   |   | 1,101   |        |      |   | 2,994   |         |  |   | 3,601   |        
|Other operating income, net of expense                           |                       |   | (2,821             | )      |                   |   | (815    | )      |      |   | (8,369  | )       |  |   | (2,364  | )      
|Depreciation on non-real estate assets                           |                       |   | (506               | )      |                   |   | (611    | )      |      |   | (1,490  | )       |  |   | (1,857  | )      
|Minority interest in consolidated property
partnerships          |                       |   | 537                |        |                   |   | 527     |        |      |   | 1,480   |         |  |   | 1,344   |        
|Interest expense                                                 |                       |   | (15,763            | )      |                   |   | (13,101 | )      |      |   | (43,716 | )       |  |   | (40,934 | )      
|Amortization of deferred loan costs                              |                       |   | (588               | )      |                   |   | (513    | )      |      |   | (1,711  | )       |  |   | (1,456  | )      
|General and administrative expense                               |                       |   | (3,495             | )      |                   |   | (3,441  | )      |      |   | (10,981 | )       |  |   | (10,087 | )      
|Dividends to preferred shareholders                              |                       |   | (2,862             | )      |                   |   | (2,969  | )      |      |   | (8,587  | )       |  |   | (8,906  | )      
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                                 | Total FFO             |   |                    | 27,156 |                   |   |         | 37,536 |      |   |         | 84,808  |  |   |         | 116,861 | 
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Depreciation on real estate assets                               |                       |   | (21,241            | )      |                   |   | (17,973 | )      |      |   | (61,371 | )       |  |   | (52,195 | )      
|Gain on property sales  continuing operations                   |                       |   |                   |        |                   |   | 8,179   |        |      |   | 13,275  |         |  |   | 23,950  |        
|Minority interest of common unitholders in
Operating Partnership |                       |   | (661               | )      |                   |   | (3,190  | )      |      |   | (4,090  | )       |  |   | (10,069 | )      
|Income from discontinued operations                              |                       |   | (474               | )      |                   |   | (1,101  | )      |      |   | (2,994  | )       |  |   | (3,601  | )      
|Dividends to preferred shareholders                              |                       |   | 2,862              |        |                   |   | 2,969   |        |      |   | 8,587   |         |  |   | 8,906   |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Income from continuing operations                                |                       | $ | 7,642              |        |                   | $ | 26,420  |        |      | $ | 38,215  |         |  | $ | 83,852  |        
|                                                                 |                       |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        

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##### Table of Contents



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




9.    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 through 2003. The
following table summarizes the activity relating to the accrued charges
during the nine months ended September 30, 2002.

|                                                        |  |   |        |  
|------------------------------------------------------- |  | - | ------ | -
|Accrued severance and other charges, December 31, 2001  |  | $ | 3,632  |  
|Payments for three months ended March 31, 2002          |  |   | (1,430 | )
|Payments for three months ended June 30, 2002           |  |   | (771   | )
|Payments for three months ended September 30, 2002      |  |   | (397   | )
|                                                        |  |   |        |  
|Accrued severance and other charges, September 30, 2002 |  | $ | 1,034  |  
|                                                        |  |   |        |  



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 payments representing approximately 26% of the
outstanding note balance. As these payments constituted adequate initial
principal payments under the notes, the sale was recognized in the first
quarter of 2002. The impact of the sale recognition was to record the note
receivable (outstanding balance of $2,750 at September 30, 2002) and to
remove the net assets and liabilities of the former PLG from the Companys
financial statements. No further gain or loss was recognized in 2002.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company also sold substantially all of the net assets of RAM Partners,
Inc. (RAM), a separate subsidiary entity that managed apartment communities
for third parties, in the fourth quarter 2001. This business was sold to the
former management team of RAM and the sale was 100% financed by the Company.
Through the second quarter of 2002, the Company had received payments under
the notes representing approximately 10% of the original outstanding note
balance. As these payments constituted adequate initial principal payments
under the notes, the sale was recognized in the second quarter of 2002. The
impact of the sale recognition was to record the note receivable (outstanding
balance of $1,226 at September 30, 2002), record a net gain of $510 and to
remove the net assets and liabilities of the former RAM from the Companys
financial statements.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 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 employ 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 former 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, LLC.

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##### Table of Contents



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




10.  SUPPLEMENTAL CASH FLOW INFORMATION



| |                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------
| | Non-cash investing and financing activities for the nine months ended
September 30, 2002 and 2001 were as follows:



| |                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the nine months ended September 30, 2002 and 2001, the Company
contributed certain apartment communities with aggregate costs of $43,265 and
$29,583, respectively, to unconsolidated limited liability companies in
exchange for equity ownership and construction notes receivable interests in
the entities (see note 4).



| |                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the nine months ended September 30, 2002 and 2001, the Companys
derivative financial instruments (see Note 7) decreased in value causing an
increase in accounts payable and accrued expenses and a corresponding
decrease in shareholders equity of $8,929, net of minority interest, and
$7,845, net of minority interest, respectively.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the nine months ended
September 30, 2001, holders of 38 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 in the amounts of $67 and $5,580
for the nine months ended September 30, 2002 and 2001, respectively.

11.  STOCK BASED COMPENSATION PLAN



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the first quarter of 2002, the
Company granted 15 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.

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##### Table of Contents






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

|                                 |                                       |                                                                    |                          |           |               |           |              |           |           |           | 
|-------------------------------- | ------------------------------------- | ------------------------------------------------------------------ | ------------------------ | --------- | ------------- | --------- | ------------ | --------- | --------- | --------- | 
|                                 |                                       |                                                                    |                          |           | September 30, |           | December 31,
|                                 |                                       |                                                                    |                          |           | 2002          |           | 2001        
|                                 |                                       |                                                                    |                          |           |               |           |             
|                                 |                                       |                                                                    |                          |           | (Unaudited)   |           |              |           |          
|Assets                           |                                       |                                                                    |                          |           |               |           |              |          
|                                 | Real estate assets                    |                                                                    |                          |           |               |           |              |           |          
|                                 |                                       | Land                                                               |                          | $         | 282,414       |           |              | $         | 277,146   |          
|                                 |                                       | Building and improvements                                          |                          |           | 1,987,297     |           |              |           | 1,794,658 |          
|                                 |                                       | Furniture, fixtures and equipment                                  |                          |           | 247,456       |           |              |           | 212,390   |          
|                                 |                                       | Construction in progress                                           |                          |           | 115,320       |           |              |           | 419,449   |          
|                                 |                                       | Investments in and advances to unconsolidated real estate entities |                          |           | 170,240       |           |              |           | 89,692    |          
|                                 |                                       | Land held for future development                                   |                          |           | 20,023        |           |              |           | 23,658    |          
|                                 |                                       |                                                                    |                          |           |               |           |              |          
|                                 |                                       |                                                                    | 2,822,750                |           |               |           | 2,816,993    |          
|                                 | Less: accumulated depreciation        |                                                                    |                          | (421,150  | )             |           |              | (393,014  | )        
|                                 |                                       | Assets held for sale                                               |                          |           | 38,123        |           |              |           | 39,419    |          
|                                 |                                       |                                                                    |                          |           |               |           |              |          
|                                 |                                       |                                                                    | Total real estate assets |           |               | 2,439,723 |              |           |           | 2,463,398 | 
|                                 | Cash and cash equivalents             |                                                                    |                          | 5,046     |               |           |              | 4,803     |          
|                                 | Restricted cash                       |                                                                    |                          | 1,309     |               |           |              | 1,315     |          
|                                 | Deferred charges, net                 |                                                                    |                          | 17,093    |               |           |              | 18,203    |          
|                                 | Other assets                          |                                                                    |                          | 48,022    |               |           |              | 50,632    |          
|                                 |                                       |                                                                    |                          |           |               |           |              |          
|                                 |                                       |                                                                    | Total assets             |           | $             | 2,511,193 |              |           | $         | 2,538,351 | 
|                                 |                                       |                                                                    |                          |           |               |           |              |          
|Liabilities and partners equity |                                       |                                                                    |                          |           |               |           |              |          
|                                 | Notes payable                         |                                                                    | $                        | 1,375,339 |               |           | $            | 1,336,520 |          
|                                 | Accrued interest payable              |                                                                    |                          | 16,417    |               |           |              | 9,660     |          
|                                 | Distribution payable                  |                                                                    |                          | 33,252    |               |           |              | 33,208    |          
|                                 | Accounts payable and accrued expenses |                                                                    |                          | 61,975    |               |           |              | 72,277    |          
|                                 | Security deposits and prepaid rents   |                                                                    |                          | 8,412     |               |           |              | 9,016     |          
|                                 |                                       |                                                                    |                          |           |               |           |              |          
|                                 |                                       | Total liabilities                                                  |                          |           | 1,495,395     |           |              |           | 1,460,681 |          
|                                 |                                       |                                                                    |                          |           |               |           |              |          
|                                 | Commitments and contingencies         |                                                                    |                          |          |               |           |              |          |          
|                                 | Partners equity                      |                                                                    |                          |           |               |           |              |           |          
|                                 |                                       | Preferred units                                                    |                          |           | 215,000       |           |              |           | 215,000   |          
|                                 |                                       | Common units                                                       |                          |           |               |           |              |           |           |          
|                                 |                                       |                                                                    | General partner          |           |               | 9,360     |              |           |           | 9,877     | 
|                                 |                                       |                                                                    | Limited partners         |           |               | 808,253   |              |           |           | 859,438   | 
|                                 |                                       | Accumulated other comprehensive income                             |                          |           | (16,815       | )         |              |           | (6,645    | )        
|                                 |                                       |                                                                    |                          |           |               |           |              |          
|                                 |                                       |                                                                    | Total partners equity   |           |               | 1,015,798 |              |           |           | 1,077,670 | 
|                                 |                                       |                                                                    |                          |           |               |           |              |          
|                                 |                                       | Total liabilities and partners equity                             |                          | $         | 2,511,193     |           |              | $         | 2,538,351 |          
|                                 |                                       |                                                                    |                          |           |               |           |              |          

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

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##### Table of Contents



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

|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |            |         |       |        | 
|---------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | -------------- | ------------------------------------------ | --------------------------------- | ------ | ------------------ | ------ | ----------------- | ------ | ----- | ------- | ---------- | ------- | ------ | ------- | ---------- | ------- | ----- | ------ | 
|                                                                             |                                                                                                               |                |                                            |                                   |        | Three Months Ended |        | Nine Months Ended
|                                                                             |                                                                                                               |                |                                            |                                   |        | September 30,      |        | September 30,    
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                  
|                                                                             |                                                                                                               |                |                                            |                                   |        | 2002               |        | 2001              |        | 2002  |         | 2001      
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |           
|Revenues                                                                     |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Rental                                                                                                        |                | $                                          | 83,232                            |        |                    | $      | 85,919            |        |       | $       | 244,534    |         |        | $       | 263,426    |        
|                                                                             | Other                                                                                                         |                |                                            | 3,160                             |        |                    |        | 3,499             |        |       |         | 9,388      |         |        |         | 11,023     |        
|                                                                             | Interest                                                                                                      |                |                                            | 316                               |        |                    |        | 370               |        |       |         | 1,002      |         |        |         | 1,358      |        
|                                                                             | Third party services                                                                                          |                |                                            |                                  |        |                    |        | 3,981             |        |       |         |           |         |        |         | 11,939     |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             |                                                                                                               | Total revenues |                                            |                                   | 86,708 |                    |        |                   | 93,769 |       |         |            | 254,924 |        |         |            | 287,746 |      
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|Expenses                                                                     |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Property operating and maintenance (exclusive of items shown
separately below)                                |                |                                            | 35,232                            |        |                    |        | 32,542            |        |       |         | 102,028    |         |        |         | 99,143     |        
|                                                                             | Depreciation expense                                                                                          |                |                                            | 22,464                            |        |                    |        | 18,192            |        |       |         | 64,738     |         |        |         | 52,696     |        
|                                                                             | Interest                                                                                                      |                |                                            | 15,763                            |        |                    |        | 13,101            |        |       |         | 43,716     |         |        |         | 40,934     |        
|                                                                             | Amortization of deferred loan costs                                                                           |                |                                            | 588                               |        |                    |        | 513               |        |       |         | 1,711      |         |        |         | 1,456      |        
|                                                                             | General and administrative                                                                                    |                |                                            | 3,495                             |        |                    |        | 3,441             |        |       |         | 10,981     |         |        |         | 10,087     |        
|                                                                             | Minority interest in consolidated property partnerships                                                       |                |                                            | (537                              | )      |                    |        | (527              | )      |       |         | (1,480     | )       |        |         | (1,344     | )      
|                                                                             | Third party services                                                                                          |                |                                            |                                  |        |                    |        | 3,676             |        |       |         |           |         |        |         | 10,603     |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             |                                                                                                               | Total expenses |                                            |                                   | 77,005 |                    |        |                   | 70,938 |       |         |            | 221,694 |        |         |            | 213,575 |      
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|Income from continuing operations before gains on property sales             |                                                                                                               |                | 9,703                                      |                                   |        |                    | 22,831 |                   |        |       | 33,230  |            |         |        | 74,171  |           
|                                                                             | Gains on property sales                                                                                       |                |                                            |                                  |        |                    |        | 8,179             |        |       |         | 13,275     |         |        |         | 23,950     |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             |                                                                                                               |                |                                            | Income from continuing operations |        |                    | 9,703  |                   |        |       | 31,010  |            |         |        | 46,505  |            |         |       | 98,121 | 
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|Discontinued operations                                                      |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Income from discontinued operations                                                                           |                |                                            | 474                               |        |                    |        | 1,101             |        |       |         | 2,994      |         |        |         | 3,601      |        
|                                                                             | Gains (losses) on property held for sale and sold                                                             |                |                                            | (2,170                            | )      |                    |        |                  |        |       |         | 8,563      |         |        |         |           |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             |                                                                                                               |                | Income
(loss) from discontinued operations |                                   |        | (1,696             | )      |                   |        | 1,101 |         |            |         | 11,557 |         |            |         | 3,601 |       
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|Income before cumulative effect of accounting change and
extraordinary items |                                                                                                               |                | 8,007                                      |                                   |        |                    | 32,111 |                   |        |       | 58,062  |            |         |        | 101,722 |           
|                                                                             | Cumulative effect of accounting change                                                                        |                |                                            |                                  |        |                    |        |                  |        |       |         |           |         |        |         | (695       | )      
|                                                                             | Extraordinary items                                                                                           |                |                                            |                                  |        |                    |        |                  |        |       |         | (136       | )       |        |         | (88        | )      
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|Net income                                                                   |                                                                                                               |                | 8,007                                      |                                   |        |                    | 32,111 |                   |        |       | 57,926  |            |         |        | 100,939 |           
|Distributions to preferred unitholders                                       |                                                                                                               |                | (4,262                                     | )                                 |        |                    | (4,369 | )                 |        |       | (12,787 | )          |         |        | (13,106 | )         
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|Net income available to common unitholders                                   |                                                                                                               | $              | 3,745                                      |                                   |        | $                  | 27,742 |                   |        | $     | 45,139  |            |         | $      | 87,833  |           
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|Earnings per common unit  basic                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Income from continuing operations (net of preferred distributions)                                            |                | $                                          | 0.13                              |        |                    | $      | 0.61              |        |       | $       | 0.80       |         |        | $       | 1.95       |        
|                                                                             | Income from discontinued operations                                                                           |                |                                            | (0.04                             | )      |                    |        | 0.03              |        |       |         | 0.27       |         |        |         | 0.08       |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Income before cumulative effect of accounting change and
extraordinary items (net of preferred distributions) |                |                                            | 0.09                              |        |                    |        | 0.64              |        |       |         | 1.07       |         |        |         | 2.03       |        
|                                                                             | Cumulative effect of accounting change                                                                        |                |                                            |                                  |        |                    |        |                  |        |       |         |           |         |        |         | (0.02      | )      
|                                                                             | Extraordinary items                                                                                           |                |                                            |                                  |        |                    |        |                  |        |       |         |           |         |        |         |           |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Net income available to common unitholders                                                                    |                | $                                          | 0.09                              |        |                    | $      | 0.64              |        |       | $       | 1.07       |         |        | $       | 2.01       |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Weighted average common units outstanding  basic                                                             |                |                                            | 42,031,962                        |        |                    |        | 43,054,521        |        |       |         | 42,016,755 |         |        |         | 43,631,222 |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|Earnings per common unit  diluted                                           |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Income from continuing operations (net of preferred distributions)                                            |                | $                                          | 0.13                              |        |                    | $      | 0.61              |        |       | $       | 0.80       |         |        | $       | 1.94       |        
|                                                                             | Income from discontinued operations                                                                           |                |                                            | (0.04                             | )      |                    |        | 0.03              |        |       |         | 0.27       |         |        |         | 0.08       |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Income before cumulative effect of accounting change and
extraordinary items (net of preferred distributions) |                |                                            | 0.09                              |        |                    |        | 0.64              |        |       |         | 1.07       |         |        |         | 2.02       |        
|                                                                             | Cumulative effect of accounting change                                                                        |                |                                            |                                  |        |                    |        |                  |        |       |         |           |         |        |         | (0.02      | )      
|                                                                             | Extraordinary items                                                                                           |                |                                            |                                  |        |                    |        |                  |        |       |         |           |         |        |         |           |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Net income available to common unitholders                                                                    |                | $                                          | 0.09                              |        |                    | $      | 0.64              |        |       | $       | 1.07       |         |        | $       | 2.00       |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Weighted average common units outstanding  diluted                                                           |                |                                            | 42,035,723                        |        |                    |        | 43,339,907        |        |       |         | 42,060,486 |         |        |         | 43,888,606 |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           
|                                                                             | Distributions declared                                                                                        |                | $                                          | 0.78                              |        |                    | $      | 0.78              |        |       | $       | 2.34       |         |        | $       | 2.34       |        
|                                                                             |                                                                                                               |                |                                            |                                   |        |                    |        |                   |        |       |         |            |         |        |         |           

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

-16-



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##### Table of Contents



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

|                                     |                                                                                                            |                            |         |           |   |         |       |              |   |               |         |         |   |   |         |         |   |   |           |         |        | 
|------------------------------------ | ---------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | --------- | - | ------- | ----- | ------------ | - | ------------- | ------- | ------- | - | - | ------- | ------- | - | - | --------- | ------- | ------ | 
|                                     |                                                                                                            |                            |         |           |   |         |       | Common Units |   | Accumulated   |         |         |   |  
|                                     |                                                                                                            |                            |         |           |   |         |       |              |   | Other         |         |         |   |  
|                                     |                                                                                                            |                            |         | Preferred |   | General |       | Limited      |   | Comprehensive |         |         |   |  
|                                     |                                                                                                            |                            |         | Units     |   | Partner |       | Partners     |   | Income        |         | Total  
|                                     |                                                                                                            |                            |         |           |   |         |       |              |   |               |         |        
|Partners Equity, December 31, 2001  |                                                                                                            | $                          | 215,000 |           |   | $       | 9,877 |              |   | $             | 859,438 |         |   | $ | (6,645  | )       |   | $ | 1,077,670 |        
|                                     | Comprehensive income                                                                                       |                            |         |           |   |         |       |              |   |               |         |         |   |   |         |         |   |   |           |         |       
|                                     | Net income                                                                                                 |                            |         | 12,787    |   |         |       | 451          |   |               |         | 44,688  |   |   |         |        |   |   |           | 57,926  |       
|                                     | Net change in derivative value                                                                             |                            |         |          |   |         |       |             |   |               |         |        |   |   |         | (10,170 | ) |   |           | (10,170 | )     
|                                     |                                                                                                            |                            |         |           |   |         |       |              |   |               |         |         |   |   |         |         |   |   |           |        
|                                     |                                                                                                            | Total comprehensive income |         |           |   |         |       |              |   |               |         |         |   |   |         |         |   |   |           |         | 47,756 | 
|                                     | Contributions from the Company related
to Dividend Reinvestment and Employee
Stock Purchase Plans          |                            |         |          |   |         |       | 13           |   |               |         | 1,244   |   |   |         |        |   |   |           | 1,257   |       
|                                     | Distributions to preferred Unitholders                                                                     |                            |         | (12,787   | ) |         |       |             |   |               |         |        |   |   |         |        |   |   |           | (12,787 | )     
|                                     | Distributions to common Unitholders                                                                        |                            |         |          |   |         |       | (983         | ) |               |         | (97,312 | ) |   |         |        |   |   |           | (98,295 | )     
|                                     | Contributions from the Company related
to shares issued for restricted stock,
net of deferred compensation |                            |         |          |   |         |       | 2            |   |               |         | 195     |   |   |         |        |   |   |           | 197     |       
|                                     |                                                                                                            |                            |         |           |   |         |       |              |   |               |         |         |   |   |         |         |   |   |           |        
|Partners Equity, September 30, 2002 |                                                                                                            | $                          | 215,000 |           |   | $       | 9,360 |              |   | $             | 808,253 |         |   | $ | (16,815 | )       |   | $ | 1,015,798 |        
|                                     |                                                                                                            |                            |         |           |   |         |       |              |   |               |         |         |   |   |         |         |   |   |           |        

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

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##### Table of Contents



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

|                                     |                                                                                   |                                                       |   |                   |         |      |   |          |         |  
|------------------------------------ | --------------------------------------------------------------------------------- | ----------------------------------------------------- | - | ----------------- | ------- | ---- | - | -------- | ------- | -
|                                     |                                                                                   |                                                       |   | Nine Months Ended
|                                     |                                                                                   |                                                       |   | September 30,    
|                                     |                                                                                   |                                                       |   |                  
|                                     |                                                                                   |                                                       |   | 2002              |         | 2001
|                                     |                                                                                   |                                                       |   |                   |         |     
|Cash Flows From Operating Activities |                                                                                   |                                                       |   |                   |         |      |   |         
|                                     | Net income                                                                        |                                                       | $ | 57,926            |         |      | $ | 100,939  |        
|                                     | Adjustments to reconcile net income to net cash provided by operating activities: |                                                       |   |                   |         |      |   |          |        
|                                     |                                                                                   | Net gain on sale of assets  continuing operations    |   |                   | (13,275 | )    |   |          | (23,950 | )
|                                     |                                                                                   | Net gain on sale of assets  discontinued operations  |   |                   | (8,563  | )    |   |          |        |  
|                                     |                                                                                   | Equity in loss of unconsolidated real estate entities |   |                   | 1,284   |      |   |          | 26      |  
|                                     |                                                                                   | Extraordinary items                                   |   |                   | 136     |      |   |          | 88      |  
|                                     |                                                                                   | Depreciation                                          |   |                   | 65,013  |      |   |          | 56,106  |  
|                                     |                                                                                   | Amortization of deferred loan costs                   |   |                   | 1,711   |      |   |          | 1,456   |  
|                                     |                                                                                   | Cumulative effect of accounting change                |   |                   |        |      |   |          | 695     |  
|                                     | Changes in assets, (increase) decrease in:                                        |                                                       |   |                   |         |      |   |          |        
|                                     |                                                                                   | Restricted cash                                       |   |                   | 6       |      |   |          | (72     | )
|                                     |                                                                                   | Other assets                                          |   |                   | 1,568   |      |   |          | (4,607  | )
|                                     |                                                                                   | Deferred charges                                      |   |                   | (1,876  | )    |   |          | (292    | )
|                                     | Changes in liabilities, increase (decrease) in:                                   |                                                       |   |                   |         |      |   |          |        
|                                     |                                                                                   | Accrued interest payable                              |   |                   | 6,757   |      |   |          | 5,108   |  
|                                     |                                                                                   | Accounts payable and accrued expenses                 |   |                   | (12,695 | )    |   |          | 8,419   |  
|                                     |                                                                                   | Security deposits and prepaid rents                   |   |                   | (604    | )    |   |          | (15     | )
|                                     |                                                                                   |                                                       |   |                   |         |      |   |         
|                                     | Net cash provided by operating activities                                         |                                                       |   | 97,388            |         |      |   | 143,901  |        
|                                     |                                                                                   |                                                       |   |                   |         |      |   |         
|Cash Flows From Investing Activities |                                                                                   |                                                       |   |                   |         |      |   |         
|                                     | Construction and acquisition of real estate assets, net of payables               |                                                       |   | (114,580          | )       |      |   | (173,571 | )      
|                                     | Net proceeds from sale of assets                                                  |                                                       |   | 150,120           |         |      |   | 215,660  |        
|                                     | Capitalized interest                                                              |                                                       |   | (11,293           | )       |      |   | (16,803  | )      
|                                     | Recurring capital expenditures                                                    |                                                       |   | (7,315            | )       |      |   | (9,719   | )      
|                                     | Corporate additions and improvements                                              |                                                       |   | (923              | )       |      |   | (1,850   | )      
|                                     | Non-recurring capital expenditures                                                |                                                       |   | (2,075            | )       |      |   | (1,220   | )      
|                                     | Revenue generating capital expenditures                                           |                                                       |   | (1,306            | )       |      |   | (2,620   | )      
|                                     | Investment in and advances to unconsolidated entities                             |                                                       |   | (38,663           | )       |      |   | (6,820   | )      
|                                     |                                                                                   |                                                       |   |                   |         |      |   |         
|                                     | Net cash provided by (used in) investing activities                               |                                                       |   | (26,035           | )       |      |   | 3,057    |        
|                                     |                                                                                   |                                                       |   |                   |         |      |   |         
|Cash Flows From Financing Activities |                                                                                   |                                                       |   |                   |         |      |   |         
|                                     | Payment of financing costs                                                        |                                                       |   | (150              | )       |      |   | (300     | )      
|                                     | Debt proceeds                                                                     |                                                       |   | 38,500            |         |      |   | 50,000   |        
|                                     | Debt payments                                                                     |                                                       |   | (23,509           | )       |      |   | (69,530  | )      
|                                     | Lines of credit proceeds, net                                                     |                                                       |   | 23,829            |         |      |   | 63,025   |        
|                                     | Purchase of units                                                                 |                                                       |   |                  |         |      |   | (86,069  | )      
|                                     | Proceeds from Dividend Reinvestment and Employee Stock Purchase Plans             |                                                       |   | 1,257             |         |      |   | 8,396    |        
|                                     | Distributions to preferred unitholders                                            |                                                       |   | (12,787           | )       |      |   | (13,106  | )      
|                                     | Distributions to common unitholders                                               |                                                       |   | (98,250           | )       |      |   | (101,907 | )      
|                                     |                                                                                   |                                                       |   |                   |         |      |   |         
|                                     | Net cash used in financing activities                                             |                                                       |   | (71,110           | )       |      |   | (149,491 | )      
|                                     |                                                                                   |                                                       |   |                   |         |      |   |         
|                                     | Net increase (decrease) in cash and cash equivalents                              |                                                       |   | 243               |         |      |   | (2,533   | )      
|                                     | Cash and cash equivalents, beginning of period                                    |                                                       |   | 4,803             |         |      |   | 7,459    |        
|                                     |                                                                                   |                                                       |   |                   |         |      |   |         
|                                     | Cash and cash equivalents, end of period                                          |                                                       | $ | 5,046             |         |      | $ | 4,926    |        
|                                     |                                                                                   |                                                       |   |                   |         |      |   |         

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

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##### Table of Contents



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
September 30, 2002, the Company, through wholly owned subsidiaries,
controlled the Operating Partnership as the sole general partner and as the
holder of 87.8% of the common units in the Operating Partnership (Common
Units) and 63.6% of the Perpetual Preferred Partnership Units (Preferred
Units). The other limited partners of the Operating Partnership, who hold
Common Units, are those persons (including certain officers and directors of
the Company) who, at the time of 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
connection with each such redemption rather than paying cash. With each redemption of outstanding Common
Units for Common Stock, the Companys percentage ownership interest in the
Operating Partnership will increase. In addition, whenever the Company
issues shares of 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
September 30, 2002, approximately 51.2%, 18.4% and 7.2% (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 Exchange Commission. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normally recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the nine month period ended September 30, 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
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 primarily used 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. 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.

-19-



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##### Table of Contents



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






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 generally cause the Operating
Partnership to treat gains or losses from early debt retirements as part of
income before extraordinary items. This part of SFAS No. 145 is effective
for fiscal years beginning after May 15, 2002 and requires the
reclassification of prior period extraordinary items not meeting the APB No.
30 criteria. The Operating Partnership expects to implement this requirement
of SFAS No. 145 on January 1, 2003. The Operating
Partnership believes the provisions of this Statement will not have a
significant effect on the Operating Partnership's results of
operations or its financial position. The remaining provisions of SFAS No. 145
are generally not applicable to the Operating Partnership.



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

-20-



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##### Table of Contents



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




3.    NOTES PAYABLE



| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | At September 30, 2002 and December 31, 2001, the Operating Partnerships
indebtedness consisted of the following:

|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |           | 
|---------------------------------------- | ------------------------ | ------------- | ------------- | ------------- | ---- | ----------------- | ------------ | ------------------ | --- | ----------------- | --- | --- | ---- | --------- | ---- | ---- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | --------- | 
|Description                              |                          | Payment Terms |               | Interest Rate |      | Maturity Date (1) |              | September 30, 2002 |     | December 31, 2001
|                                         |                          |               |               |               |      |                   |              |                    |     |                  
|Senior Notes (Unsecured)                 |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | Senior Notes             |               | Int           |               |      | 6.11% - 7.70      | %            |                    |     |                   |     |     |      | 2003-2010 |      |      | $       | 385,000 |         |           | $       | 360,000 |        
|                                         | Medium Term Notes        |               | Int           |               |      | 6.69% - 8.12%     | %            |                    |     | (2)               |     |     |      | 2004-2015 |      |      |         | 323,000 |         |           |         | 323,000 |        
|                                         | Northwestern Mutual Life |               | Int           |               |      | 8.37              | %            |                    |     |                   |     |     |      | 2002      |      |      |         |        |         |           |         | 20,000  |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 708,000 |           |         |         | 703,000 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Unsecured Lines of Credit & Other        |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | Revolver  Syndicated    |               |               | N/A           |      |                   | LIBOR + 0.85 | %                  |     |                   | (3) |     |      |           | 2004 |      |         |         | 180,000 |           |         |         | 155,000 |          
|                                         | Cash Management Line     |               |               | N/A           |      |                   | LIBOR + 0.75 | %                  |     |                   |     |     |      |           | 2003 |      |         |         | 10,031  |           |         |         | 11,202  |          
|                                         | Other                    |               |               | N/A           |      |                   |              | 5.00               | %   |                   |     | (4) |      |           |      | 2021 |         |         |         | 2,000     |         |         |         | 2,000     | 
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 192,031 |           |         |         | 168,202 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Conventional Fixed Rate (Secured)        |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | FNMA                     |               | Prin. and Int |               |      | 6.975             | %            |                    |     | (5)               |     |     |      | 2029      |      |      |         | 101,100 |         |           |         | 102,200 |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 7.69              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 49,959  |         |           |         | 50,527  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 6.50              | %            |                    |     | (6)               |     |     |      | 2009      |      |      |         | 46,953  |         |           |         | 47,681  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 7.69              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 27,951  |         |           |         | 28,268  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 6.29              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 13,465  |         |           |         |        |        
|                                         | Parkwood Townhomes TM    |               | Prin. and Int |               |      | 7.375             | %            |                    |     |                   |     |     |      | 2014      |      |      |         |        |         |           |         | 762     |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 239,428 |           |         |         | 229,438 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Tax Exempt Floating Rate
Bonds (Secured) |                          | Int           |               |               | 1.37 | %                 |              |                    | (7) |                   |     |     | 2025 |           |      |      | 235,880 |         |         |           | 235,880 |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         | Total                    |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | $       | 1,375,339 |         |         | $       | 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 September 30, 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 and matures in April 2004.                                                                                                                                                                   
|
| | (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 the average rate for the nine months ended
September 30, 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%.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to the unsecured lines of credit reflected in the above table,
the Operating Partnership also has in place an additional $125,000 line of
credit facility for general corporate purposes. Upon the renewal of this
credit facility in April 2002, the total borrowing capacity was reduced from
$185,000 to $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 September 30, 2002.



| |                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 in February 2003.



| |                   
| | ------------------
| | New debt issuances



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 2002, the Operating Partnership issued $25,000 of unsecured notes at
par. These notes bear interest at 6.11% and mature June 18, 2007. Also in
June 2002, the Operating Partnership closed a $13,500 secured mortgage loan.
The loan bears interest at 6.29% and monthly principal and interest payments
are based on a 25-year amortization schedule. The loan matures on October 1,
2007. Net proceeds from these transactions were used to repay amounts
outstanding under the Operating Partnerships credit facility.

-21-



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##### Table of Contents



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






| |                
| | ---------------
| | Debt maturities



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

|           |  |   |           | 
|---------- |  | - | --------- | 
|2002       |  | $ | 672       | 
|2003       |  |   | 103,809   | 
|2004       |  |   | 27,094    | 
|2005       |  |   | 204,402   | 
|2006       |  |   | 79,732    | 
|Thereafter |  |   | 769,599   | 
|           |  |   |           | 
|           |  | $ | 1,185,308 | 
|           |  |   |           | 



| | (1) |  | Excludes outstanding balances on
lines of credit of $190,031 maturing in 2004.
| | --- |  | ------------------------------------------------------------------------------

4.    INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At September 30, 2002, the Operating Partnership holds investments in four
individual limited liability companies (the Property LLCs) with an
institutional investor. Each Property LLC owns a newly developed or under
development apartment community. The Operating Partnership holds a 35%
equity interest in the Property LLCs. The total estimated development cost
of the apartment communities of $217,000 is being funded through member
equity contributions proportionate to the members ownership interests and
through construction financing provided by the Operating Partnership. The
Operating Partnership accounts for its investments in these Property LLCs
using the equity method of accounting. The excess of the Operating
Partnerships investment over its equity in the underlying net assets of the
Property LLCs was approximately $6,818 at September 30, 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. No gain or loss was
recognized on the Operating Partnerships contribution to the Property LLCs.
The Operating Partnership provides real estate services (development,
construction and property management) to the Property LLCs.



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

|                                                            |  |               |         |              |  |   |         | 
|----------------------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                                            |  | September 30, |         | December 31,
|                                                            |  | 2002          |         | 2001        
|                                                            |  |               |         |             
|Real estate assets, net                                     |  | $             | 195,914 |              |  | $ | 115,664 | 
|Cash and other                                              |  |               | 2,485   |              |  |   | 533     | 
|                                                            |  |               |         |              |  |   |         | 
|Total assets                                                |  | $             | 198,399 |              |  | $ | 116,197 | 
|                                                            |  |               |         |              |  |   |         | 
|Construction notes payable to Operating Partnership (1)     |  | $             | 150,195 |              |  | $ | 77,019  | 
|Other liabilities                                           |  |               | 10,381  |              |  |   | 11,892  | 
|                                                            |  |               |         |              |  |   |         | 
|Total liabilities                                           |  |               | 160,576 |              |  |   | 88,911  | 
|Members equity                                             |  |               | 37,823  |              |  |   | 27,286  | 
|                                                            |  |               |         |              |  |   |         | 
|Total liabilities and members equity                       |  | $             | 198,399 |              |  | $ | 116,197 | 
|                                                            |  |               |         |              |  |   |         | 
|Operating Partnerships equity investment                   |  | $             | 20,045  |              |  | $ | 12,673  | 
|                                                            |  |               |         |              |  |   |         | 
|Operating Partnerships share of construction notes payable |  | $             | 52,568  |              |  | $ | 26,957  | 
|                                                            |  |               |         |              |  |   |         | 

-22-



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##### Table of Contents



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




|                                          |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |    |    | 
|----------------------------------------- | ----------------------------------------------------------------------------- | -------------- | ------ | ------------------ | ----- | ----------------- | --- | ---- | -- | ---- | ------ | ----- | ----- | - | --- | -- | -- | 
|                                          |                                                                               |                |        | Three Months Ended |       | Nine Months Ended
|                                          |                                                                               |                |        | September 30,      |       | September 30,    
|                                          |                                                                               |                |        |                    |       |                  
|                                          |                                                                               |                |        | 2002               |       | 2001              |     | 2002 |    | 2001
|                                          |                                                                               |                |        |                    |       |                   |     |      |    |     
|Revenues                                  |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|                                          | Rental                                                                        |                | $      | 1,874              |       |                   | $   |     |    |      | $      | 3,056 |       |   | $   |   |   
|                                          | Other                                                                         |                |        | 95                 |       |                   |     | 15   |    |      |        | 255   |       |   |     | 15 |   
|                                          |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|                                          |                                                                               | Total revenues |        |                    | 1,969 |                   |     |      | 15 |      |        |       | 3,311 |   |     |    | 15 | 
|                                          |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|Expenses                                  |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|                                          | Property operating and maintenance(exclusive of items shown separately below) |                |        | 1,335              |       |                   |     | 90   |    |      |        | 3,112 |       |   |     | 90 |   
|                                          | Depreciation                                                                  |                |        | 930                |       |                   |     |     |    |      |        | 2,071 |       |   |     |   |   
|                                          | Interest                                                                      |                |        | 930                |       |                   |     |     |    |      |        | 1,764 |       |   |     |   |   
|                                          |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|                                          |                                                                               | Total expenses |        |                    | 3,195 |                   |     |      | 90 |      |        |       | 6,947 |   |     |    | 90 | 
|                                          |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|Net loss                                  |                                                                               |                | (1,226 | )                  |       |                   | (75 | )    |    |      | (3,636 | )     |       |   | (75 | ) 
|                                          |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   
|Operating
Partnerships share of net loss |                                                                               | $              | (441   | )                  |       | $                 | (26 | )    |    | $    | (1,284 | )     |       | $ | (26 | ) 
|                                          |                                                                               |                |        |                    |       |                   |     |      |    |      |        |       |       |   |     |   



| | (1) |  | All of the Operating Partnerships construction financing
to these unconsolidated real estate entities is included in the
Operating Partnerships outstanding debt and real estate assets.
At September 30, 2002 and 2001, the venture partners share of
the construction loans was $97,627 and $19,899, respectively.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At September 30, 2002, three 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 $167,967 ($150,195 funded at September 30, 2002).
These loans earn interest at LIBOR plus 1.75% and are secured by the
apartment communities. The loans mature on dates ranging from February 2003
to November 2004 and are expected to be repaid from the proceeds of permanent
project financings.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As part of the development and construction services agreements entered into
between the Operating Partnership and the Property LLCs, the Operating
Partnership guaranteed the maximum total amount for certain construction cost
categories subject to aggregate limits (approximately $19,000). At September
30, 2002, the Operating Partnerships estimated obligations under the
agreements total approximately $1,200. 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 September 30, 2002, the Operating Partnership has met and
believes that it will meet the remaining completion date requirements and not
be subject to any additional costs.

5.    REAL ESTATE ASSETS HELD FOR SALE / DISCONTINUED OPERATIONS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Operating Partnership classifies real estate assets as held for sale
after the approval of its internal investment committee and after the
Operating Partnership has commenced an active program to sell the assets. At
September 30, 2002, the Operating Partnership has classified one apartment
community and eight tracts of land as held for sale. These real estate
assets are reflected in the accompanying consolidated balance sheet at
$38,123, 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 the
next twelve months.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the three months ended September 30, 2002, the Operating Partnership
designated and classified two land parcels as held for sale. In the six
months ended June 30, 2002, the Operating Partnership designated and
classified six apartment communities and one commercial property as held for
sale. Under SFAS No. 144, all gains and losses on the sale of these assets
and the operating results from these properties are included in discontinued
operations for both the current and prior periods.

-23-



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##### Table of Contents



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






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the three months ended September 30, 2002, the Operating Partnership
recognized losses of $2,170 on the sale of one community and the write down
to fair market value of two land parcels designated as held for sale in the
third quarter of 2002. The community sale generated net proceeds of
approximately $9,753. For the nine months ended September 30, 2002, the
Operating Partnership recognized net gains of $10,412 on the sale of real
estate assets designated for sale subsequent to December 31, 2001, offset by
reserves of $1,849 to write down to fair market value the land parcels
designated as held for sale in the third quarter of 2002.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the three and nine month periods presented, income from discontinued
operations includes the results of operations through the earlier of the
community sale date (if the community was sold prior to September 30, 2002)
or September 30, 2002, of six apartment communities containing 2,125 units
and one commercial property that were designated as held for sale in 2002.
The revenues and expenses of these properties for the three and nine months
ended September 30, 2002 and 2001 are as follows:

|                                    |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |        |        | 
|----------------------------------- | ----------------------------------------------------------------------------- | -------------- | --- | ------------------ | ----- | ----------------- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | - | ----- | ------ | ------ | 
|                                    |                                                                               |                |     | Three Months Ended |       | Nine Months Ended
|                                    |                                                                               |                |     | September 30,      |       | September 30,    
|                                    |                                                                               |                |     |                    |       |                  
|                                    |                                                                               |                |     | 2002               |       | 2001              |       | 2002  |       | 2001
|                                    |                                                                               |                |     |                    |       |                   |       |       |       |     
|Revenues                            |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                    | Rental                                                                        |                | $   | 1,116              |       |                   | $     | 5,117 |       |      | $     | 8,065 |       |   | $     | 15,455 |       
|                                    | Other                                                                         |                |     | 47                 |       |                   |       | 232   |       |      |       | 307   |       |   |       | 663    |       
|                                    |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                    |                                                                               | Total revenues |     |                    | 1,163 |                   |       |       | 5,349 |      |       |       | 8,372 |   |       |        | 16,118 | 
|                                    |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|Expenses                            |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                    | Property operating and maintenance(exclusive of items shown separately below) |                |     | 536                |       |                   |       | 2,140 |       |      |       | 3,863 |       |   |       | 6,278  |       
|                                    | Depreciation                                                                  |                |     |                   |       |                   |       | 1,151 |       |      |       | 275   |       |   |       | 3,410  |       
|                                    | Interest                                                                      |                |     | 153                |       |                   |       | 957   |       |      |       | 1,240 |       |   |       | 2,829  |       
|                                    |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                    |                                                                               | Total expenses |     |                    | 689   |                   |       |       | 4,248 |      |       |       | 5,378 |   |       |        | 12,517 | 
|                                    |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|Income from discontinued operations |                                                                               | $              | 474 |                    |       | $                 | 1,101 |       |       | $    | 2,994 |       |       | $ | 3,601 |       
|                                    |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 September 30, 2002 and 2001, the consolidated statements of
operations include net income of $0 and $797, respectively, from these two
communities and one commercial property held for sale at December 31, 2001.
For the nine months ended September 30, 2002 and 2001, the consolidated
statements of operations included net income of $353 and $2,443,
respectively, from these properties. For the three and nine months ended
September 30, 2001, net income reflected above includes depreciation expense
of $212 and $628, respectively.

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




6.    EARNINGS PER UNIT



| |                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the three and nine months ended September 30, 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 |        | Nine Months Ended
|                                                                      |                                                                   |                                    |   | September 30,      |        | September 30,    
|                                                                      |                                                                   |                                    |   |                    |        |                  
|                                                                      |                                                                   |                                    |   | 2002               |        | 2001              |   | 2002       |        | 2001
|                                                                      |                                                                   |                                    |   |                    |        |                   |   |            |        |     
|Basic and diluted income available to common
unitholders (numerator): |                                                                   |                                    |   |                    |        |                   |   |            |        |      |   |            |         |   |   |           
|                                                                      | Income from continuing operations                                 |                                    | $ | 9,703              |        |                   | $ | 31,010     |        |      | $ | 46,505     |         |   | $ | 98,121     |        
|                                                                      |                                                                   | Less: Preferred unit distributions |   |                    | (4,262 | )                 |   |            | (4,369 | )    |   |            | (12,787 | ) |   |            | (13,106 | )
|                                                                      |                                                                   |                                    |   |                    |        |                   |   |            |        |      |   |            |         |   |   |           
|                                                                      | Income from continuing operations available
to common unitholders |                                    | $ | 5,441              |        |                   | $ | 26,641     |        |      | $ | 33,718     |         |   | $ | 85,015     |        
|                                                                      |                                                                   |                                    |   |                    |        |                   |   |            |        |      |   |            |         |   |   |           
|Common units (denominator):                                           |                                                                   |                                    |   |                    |        |                   |   |            |        |      |   |            |         |   |   |           
|                                                                      | Weighted average units outstanding  basic                        |                                    |   | 42,031,962         |        |                   |   | 43,054,521 |        |      |   | 42,016,755 |         |   |   | 43,631,222 |        
|                                                                      | Incremental units from assumed conversion of
stock options        |                                    |   | 3,761              |        |                   |   | 285,386    |        |      |   | 43,731     |         |   |   | 257,384    |        
|                                                                      |                                                                   |                                    |   |                    |        |                   |   |            |        |      |   |            |         |   |   |           
|                                                                      | Weighted average units outstanding  diluted                      |                                    |   | 42,035,723         |        |                   |   | 43,339,907 |        |      |   | 42,060,486 |         |   |   | 43,888,606 |        
|                                                                      |                                                                   |                                    |   |                    |        |                   |   |            |        |      |   |            |         |   |   |           

7.    DERIVATIVE INSTRUMENTS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 nine months ended September 30, 2001.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At September 30, 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 nine months ended September 30, 2002, the
Operating Partnership recorded the unrealized net loss of $10,170 on these
cash flow hedges as a decrease in accumulated other comprehensive income, a
partners equity account, in the accompanying consolidated balance sheet.
This unrealized net loss of $10,170 was comprised of an unrealized net gain
of $2,198 for the three months ended March 31, 2002, an unrealized net loss
of $5,303 for the three months ended June 30, 2002 and an unrealized net loss
of $7,065 for the three months ended September 30, 2002. In addition, the
Operating Partnership recorded the change in fair value of the ineffective
component of its outstanding interest rate cap agreements in the statement of
operations for the nine months ended September 30, 2002. This charge against
earnings during the period and the fair value of the interest rate cap
agreements as of September 30, 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 $3,168.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At September 30, 2001, the Operating Partnership had outstanding interest
rate swap agreements with a notional value of $129,000 and maturity dates
ranging from 2005 to 2009. For the nine months ended September 30, 2001, the
Operating Partnership recorded the unrealized net loss of $8,909 on these
cash flow hedges as a liability and a reduction in accumulated other
comprehensive income, a partners equity account, in the accompanying
consolidated balance sheet. This unrealized net loss of $8,909 was comprised
of an unrealized net loss of $3,134 for the three months ended March 31,
2001, an unrealized net gain of $2,622 for the three months ended June 30,
2001 and an unrealized net loss of $8,397 for the three months ended
September 30, 2001.

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##### Table of Contents



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




8.    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.



| |  |  | 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 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.

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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 Operating Partnerships assets relate to the
Operating Partnerships property rental operations. Asset cost, depreciation
and amortization by segment are not presented because such information at the
segment level is not reported internally.

|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |         | 
|------------------------------------------------------- | ---------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                        |                                                |   | Three Months Ended |        | Nine Months Ended
|                                                        |                                                |   | September 30,      |        | September 30,    
|                                                        |                                                |   |                    |        |                  
|                                                        |                                                |   | 2002               |        | 2001              |   | 2002    |        | 2001
|                                                        |                                                |   |                    |        |                   |   |         |        |     
|Revenues                                                |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Fully stabilized communities                            |                                                | $ | 66,507             |        |                   | $ | 71,242  |        |      | $ | 199,185 |         |  | $ | 214,232 |        
|Communities stabilized during 2001                      |                                                |   | 5,401              |        |                   |   | 5,249   |        |      |   | 16,002  |         |  |   | 13,496  |        
|Development and lease-up communities                    |                                                |   | 10,846             |        |                   |   | 6,967   |        |      |   | 27,469  |         |  |   | 18,079  |        
|Sold communities                                        |                                                |   |                   |        |                   |   | 2,471   |        |      |   | 745     |         |  |   | 17,833  |        
|Other                                                   |                                                |   | 3,954              |        |                   |   | 7,840   |        |      |   | 11,523  |         |  |   | 24,106  |        
|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                        | Consolidated revenues                          |   | $                  | 86,708 |                   |   | $       | 93,769 |      |   | $       | 254,924 |  |   | $       | 287,746 | 
|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Contribution
to FFO from continuing operations          |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Fully stabilized communities                            |                                                | $ | 42,654             |        |                   | $ | 47,773  |        |      | $ | 129,427 |         |  | $ | 145,951 |        
|Communities stabilized during 2001                      |                                                |   | 3,429              |        |                   |   | 3,440   |        |      |   | 10,328  |         |  |   | 8,312   |        
|Development and lease-up communities                    |                                                |   | 6,097              |        |                   |   | 4,290   |        |      |   | 15,064  |         |  |   | 10,672  |        
|Sold communities                                        |                                                |   |                   |        |                   |   | 1,550   |        |      |   | 369     |         |  |   | 11,249  |        
|Other                                                   |                                                |   |                   |        |                   |   | 305     |        |      |   |        |         |  |   | 1,336   |        
|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                        | Contribution to FFO from continuing
operations |   |                    | 52,180 |                   |   |         | 57,358 |      |   |         | 155,188 |  |   |         | 177,520 | 
|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|FFO  discontinued operations                           |                                                |   | 474                |        |                   |   | 1,101   |        |      |   | 2,994   |         |  |   | 3,601   |        
|Other operating income, net of expense                  |                                                |   | (1,421             | )      |                   |   | 585     |        |      |   | (4,169  | )       |  |   | 1,836   |        
|Depreciation on non-real estate assets                  |                                                |   | (506               | )      |                   |   | (611    | )      |      |   | (1,490  | )       |  |   | (1,857  | )      
|Minority interest in consolidated property
partnerships |                                                |   | 537                |        |                   |   | 527     |        |      |   | 1,480   |         |  |   | 1,344   |        
|Interest expense                                        |                                                |   | (15,763            | )      |                   |   | (13,101 | )      |      |   | (43,716 | )       |  |   | (40,934 | )      
|Amortization of deferred loan costs                     |                                                |   | (588               | )      |                   |   | (513    | )      |      |   | (1,711  | )       |  |   | (1,456  | )      
|General and administrative expense                      |                                                |   | (3,495             | )      |                   |   | (3,441  | )      |      |   | (10,981 | )       |  |   | (10,087 | )      
|Distributions to preferred unitholders                  |                                                |   | (4,262             | )      |                   |   | (4,369  | )      |      |   | (12,787 | )       |  |   | (13,106 | )      
|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                        | Total FFO                                      |   |                    | 27,156 |                   |   |         | 37,536 |      |   |         | 84,808  |  |   |         | 116,861 | 
|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|Depreciation on real estate assets                      |                                                |   | (21,241            | )      |                   |   | (17,973 | )      |      |   | (61,371 | )       |  |   | (52,195 | )      
|Gain on property sales  continuing operations          |                                                |   |                   |        |                   |   | 8,179   |        |      |   | 13,275  |         |  |   | 23,950  |        
|Income from discontinued operations                     |                                                |   | (474               | )      |                   |   | (1,101  | )      |      |   | (2,994  | )       |  |   | (3,601  | )      
|Distributions to preferred unitholders                  |                                                |   | 4,262              |        |                   |   | 4,369   |        |      |   | 12,787  |         |  |   | 13,106  |        
|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        
|                                                        | Income from continuing operations              |   | $                  | 9,703  |                   |   | $       | 31,010 |      |   | $       | 46,505  |  |   | $       | 98,121  | 
|                                                        |                                                |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        

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




9.    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 through 2003. The following table summarizes the activity relating
to the accrued charges during the nine months ended September 30, 2002.

|                                                        |  |   |        |  
|------------------------------------------------------- |  | - | ------ | -
|Accrued severance and other charges, December 31, 2001  |  | $ | 3,632  |  
|Payments for three months ended March 31, 2002          |  |   | (1,430 | )
|Payments for three months ended June 30, 2002           |  |   | (771   | )
|Payments for the three months ended September 30, 2002  |  |   | (397   | )
|                                                        |  |   |        |  
|Accrued severance and other charges, September 30, 2002 |  | $ | 1,034  |  
|                                                        |  |   |        |  



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the fourth quarter of 2001, the Operating Partnership sold substantially
all of the net assets of Post Landscape Group, Inc. (PLG) a subsidiary
entity that provided landscape maintenance, design and installation services
to third parties. As the business was sold to the former management team and
initially financed 100% by the Operating Partnership, the transaction was not
reflected as a sale at December 31, 2001. As the transaction resulted in a
net loss, the net loss was recognized in the fourth quarter of 2001. In the
first quarter of 2002, the Operating Partnership received payments
representing approximately 26% of the outstanding note balance. As these
payments constitute adequate initial principal payments under the note, the
sale was recognized in the first quarter of 2002. The impact of the sale
recognition was to record the note receivable (outstanding balance of $2,750
at September 30, 2002) and to remove the net assets and liabilities of the
former PLG from the Operating Partnerships financial statements. No further
gain or loss was recognized in 2002.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Operating Partnership also sold substantially all of the net assets of
RAM Partners, Inc. (RAM), a separate subsidiary entity that managed
apartment communities for third parties, in the fourth quarter 2001. This
business was sold to the former management team of RAM and the sale was 100%
financed by the Operating Partnership. Through the second quarter of 2002,
the Operating Partnership had received payments under the notes representing
approximately 10% of the original outstanding note balance. As these
payments constituted adequate initial principal payments under the notes, the
sale was recognized in the second quarter of 2002. The impact of the sale
recognition was to record the note receivable (outstanding balance of $1,226
at September 30, 2002), record a net gain of $510 and to remove the net
assets and liabilities of the former RAM from the Operating Partnerships
financial statements.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the first quarter of 2002, the Operating Partnership agreed to
transfer certain construction contracts of Post Construction Services Inc.,
its third party construction business, to Oxford Properties, LLC in exchange
for Oxford Properties assumption of substantially all of Post Construction
Services liabilities related to the transferred assets. In approving the
transaction the Companys board of directors ascribed nominal value to the
assets being transferred. The assets consisted principally of third party
construction contracts for the construction of four garden style apartment,
condominium and townhouse communities as well as related subcontracts,
indemnities and guarantees. In connection with the transfer of Post
Construction Services construction contracts, Oxford Properties 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 employ
28 former Operating Partnership and Post Construction Services employees. As
a result, the Operating Partnership will not be responsible for costs that
would otherwise result from winding up the third party construction business.
The Operating Partnership recorded a charge of $500 in the fourth quarter of
2001 relating to its exit from the third party construction business. Oxford
Properties, LLC is an entity owned by former officers of the Operating
Partnership and by the son of the Operating Partnerships chairman and former
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, LLC.

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




10.  SUPPLEMENTAL CASH FLOW INFORMATION



| |                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------
| | Non-cash investing and financing activities for the nine months ended
September 30, 2002 and 2001 were as follows:



| |                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the nine months ended September 30, 2002 and 2001, the Operating
Partnerships derivative financial instruments (See Note 7) decreased in
value causing an increase in accounts payable and accrued expenses and a
corresponding decrease in partners equity of $10,170 and $8,909,
respectively.



| |                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the nine months ended September 30, 2002 and 2001, the Operating
Partnership contributed certain apartment communities with aggregate costs of
$43,265 and $29,583, respectively, to unconsolidated limited liability
companies in exchange for equity ownership and construction notes receivable
interests in the entities (see note 4).

11.  STOCK BASED COMPENSATION PLAN



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the first quarter of 2002, the Company 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.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(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 September 30, 2002, there were 42,032,851 Units outstanding, of which
36,913,963 or 87.8%, were owned by the Company and 5,118,888 or 12.2% were
owned by other limited partners (including certain officers and directors of
the Company). As of September 30, 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
polices. The Companys significant accounting policies are included in the
notes to the Companys audited financial statements included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2001. The
discussion below addresses the implementation of new accounting pronouncements
and policies during the nine months ended September 30, 2002.

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. 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 stricter under APB No. 30, the impact to 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 Company expects to implement the requirements of SFAS No.
145 on January 1, 2003. The Company believes the provisions of
this Statement will not have a significant effect on the Company's
results of operations or its financial position. The remaining provisions of SFAS No. 145 are generally
not applicable to the Company.

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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(In thousands, except apartment unit data)




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

Results of Operations

The following discussion of results of operations should be read in conjunction
with the consolidated statements of operations.

Comparison of Three Months Ended September 30, 2002 to Three Months Ended September 30, 2001

The Company reported net income available to common
shareholders of $3,291 and $24,420 for the three months ended September 30,
2002 and 2001, respectively. The decrease in Company net income available to
common shareholders of $21,129 from 2001 to 2002 was due to the weaker
operating performance of the fully stabilized communities primarily as a result
of weaker market fundamentals in the Companys primary markets (see discussion under section
entitled, Fully Stabilized Communities), lower gains on property sales
due to the timing and mix of assets sold between periods, the slower lease-up
of new development communities and the dilutive impact of the Companys asset
sale and capital reinvestment program.

Rental and other revenues decreased $3,026, or 3.4% primarily due to a decrease
of $4,735 or 6.6% in revenues from fully stabilized communities discussed
further below. The rental and other revenue increases from the Companys newly
stabilized and lease-up properties of $4,031 were partially offset by the
revenue reduction of $2,471 from assets sold under the Companys asset sale and
capital recycling program. As discussed in the section titled Liquidity and
Capital Resources, the Companys asset sale and capital recycling program
refers to the sale of existing apartment communities and using the cash proceeds
to fund the development of new apartment communities.

Property operating and maintenance expenses (exclusive of depreciation and
amortization) increased $2,690 or 8.3% from 2001 to 2002 primarily due to
increased expenses in the Companys newly stabilized and lease-up communities,
partially offset by reduced expenses from assets sold between periods.

As more fully discussed in Note 9 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 respective management teams. These sales allowed the Company to simplify its
operations through a reduced workforce (from approximately 2,100 employees
prior to the sale to approximately 1,100 employees as of September 30, 2002)
and focus on its core business of owning, developing and managing multifamily
real estate assets.

The loss on properties held for sale and sold in 2002 is included in
discontinued operations in accordance with SFAS No. 144. See the section
titled Discontinued Operations below for further discussion. Under SFAS No.
144, all future gains and losses from property sales will be included in
discontinued operations.

Depreciation expense increased $4,272 or 23.5% from 2001 to 2002 primarily due
to increased depreciation on newly stabilized and lease-up properties,
partially offset by the cessation of depreciation on properties sold and
currently held for sale.

General and administrative expenses increased $54 or 1.6% from 2001 to 2002
primarily due to reduced capitalization of certain incremental costs
associated with the Companys development and construction efforts resulting from the
reduced volume of development and construction between periods offset
by reduced costs due to management emphasis on cost control and cost
reduction.

Comparison of Nine Months Ended September 30, 2002 to Nine Months Ended September 30, 2001

The Company reported net income available to common
shareholders of $39,649 and $77,431 for the nine months ended September 30,
2002 and 2001, respectively. The decrease in net income available to common
shareholders of $37,782 from 2001 to 2002 was primarily due to the weaker
operating performance of the fully stabilized communities primarily as a result
of the state of the national economy (see discussion under section
entitled, Fully Stabilized Communities), lower gains on property sales
due to the timing and mix of assets sold between periods, the slower lease-up
of new development communities and the dilutive impact of the Companys asset
sale and capital reinvestment program. The decrease in income from operations
was partially
offset by increased gains on property sales (from continuing and discontinuing
operations) due to the timing and mix of assets sold between periods.

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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(In thousands, except apartment unit data)




Rental and other revenues decreased $20,527, or 7.5%, from 2001 to 2002
primarily due to a decrease of $15,047, or 7.0%, in revenues from fully
stabilized communities discussed further below. Rental and other revenue
increases from the Companys newly stabilized and lease-up properties of
$11,896 were offset by revenue reduction of $17,088 from assets sold under the
Companys asset sale and capital recycling program.

Property operating and maintenance expense (exclusive of depreciation and
amortization) increased $2,885 or 2.9% from 2001 to 2002, primarily due to
increased expenses of $1,478 or 2.2% in the Companys fully stabilized
communities discussed further below. The expense increases from newly
stabilized and lease-up communities were offset by the reduction of expenses
from assets sold between periods.

As discussed above and in Note 9 to the consolidated financial statements, the
Company exited the third party property management and landscape service
business in the fourth quarter of 2001 through the sale of the businesses to
their respective management teams. These sales allowed the Company to simplify its
operations through reduced work force (from approximately 2,100 employees prior
to the sale to approximately 1,100 employees as of September 30, 2002) and
focus on its core business of owning, developing and managing multifamily real
estate assets.

The net gain on property sales included in continuing operations of $23,950 for
2001 resulted from the sale of six communities containing 2,799 units and three
land parcels. The net gain on property sales included in continuing operations
of $13,275 for 2002 resulted from the sale of two communities containing 540
units and one commercial property. These assets were all sold or classified as
assets held for sale at December 31, 2001. The net gain on property sales of
$10,412 ($9,144 net of minority interest) included in discontinued operations,
under SFAS No. 144, in 2002 resulted from the sale of five communities
containing 1,617 units and one commercial property, less reserves of $1,849
($1,635 net of minority interest) to write down to fair value certain real
estate assets designated as held for sale at September 30, 2002. See the
section titled Discontinued Operations below for further discussion.

Depreciation expense increased $12,042, or 22.9%, from 2001 to 2002 primarily
due to increased depreciation on newly stabilized and lease-up properties,
partially offset by the cessation of depreciation on properties sold and
currently held for sale.

General and administrative expenses increased $894, or 8.9%, from 2001 to 2002
primarily due to reduced capitalization of certain incremental costs associated
with the Companys development and construction efforts resulting from the reduced volume
of development and construction activity between periods.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(In thousands, except apartment unit data)




Discontinued Operations

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

For the three and nine month periods presented, income from discontinued
operations includes the results of operations through the earlier community
sale date (if the community was sold prior to September 30, 2002) or September
30, 2002, of six apartment communities containing 2,125 units and one
commercial property that were designated as held for sale in 2002. The revenues
and expenses of these properties for the three and nine months ended September
30, 2002 and 2001 are as follows:

|                                                               |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |        |        | 
|-------------------------------------------------------------- | ----------------------------------------------------------------------------- | -------------- | --- | ------------------ | ----- | ----------------- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | - | ----- | ------ | ------ | 
|                                                               |                                                                               |                |     | Three Months Ended |       | Nine Months Ended
|                                                               |                                                                               |                |     | September 30,      |       | September 30,    
|                                                               |                                                                               |                |     |                    |       |                  
|                                                               |                                                                               |                |     | 2002               |       | 2001              |       | 2002  |       | 2001
|                                                               |                                                                               |                |     |                    |       |                   |       |       |       |     
|Revenues                                                       |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                                               | Rental                                                                        |                | $   | 1,116              |       |                   | $     | 5,117 |       |      | $     | 8,065 |       |   | $     | 15,455 |       
|                                                               | Other                                                                         |                |     | 47                 |       |                   |       | 232   |       |      |       | 307   |       |   |       | 663    |       
|                                                               |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                                               |                                                                               | Total revenues |     |                    | 1,163 |                   |       |       | 5,349 |      |       |       | 8,372 |   |       |        | 16,118 | 
|                                                               |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|Expenses                                                       |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                                               | Property operating and maintenance(exclusive of items shown separately below) |                |     | 536                |       |                   |       | 2,140 |       |      |       | 3,863 |       |   |       | 6,278  |       
|                                                               | Depreciation                                                                  |                |     |                   |       |                   |       | 1,151 |       |      |       | 275   |       |   |       | 3,410  |       
|                                                               | Interest                                                                      |                |     | 153                |       |                   |       | 957   |       |      |       | 1,240 |       |   |       | 2,829  |       
|                                                               |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|                                                               |                                                                               | Total expenses |     |                    | 689   |                   |       |       | 4,248 |      |       |       | 5,378 |   |       |        | 12,517 | 
|                                                               |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       
|Income from discontinued operations
(before minority interest) |                                                                               | $              | 474 |                    |       | $                 | 1,101 |       |       | $    | 2,994 |       |       | $ | 3,601 |       
|                                                               |                                                                               |                |     |                    |       |                   |       |       |       |      |       |       |       |   |       |       

The decrease between periods for both the three and nine month period ended
September 30, 2002, results from the 2002 periods including the results of
operations of five communities and one commercial property through their actual sale
dates (generally in the second and third quarters) and one community
for the full periods presented. The results for the 2001
periods include full operating results for all six of the communities and the
commercial property for the periods presented.

In the three months ended September 30, 2002, the Company recognized losses of
$2,170 ($1,906 net of minority interest), on the sale of one community and the
write down to fair market value of two land parcels designated as held for sale
in the third quarter of 2002. The community sale generated net proceeds of
approximately $9,753. For the nine months ended September 30, 2002, the
Company recognized net gains of $10,412 ($9,144 net of minority interest) on
the sale of real estate assets designated for sale subsequent to December 31,
2001, offset by reserves of $1,849 ($1,635 net of minority interest) to write
down to fair market value the land parcels designated as held for sale in the
third quarter of 2002.

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 September 30, 2002, the Companys portfolio of apartment communities
consisted of the following: (i) 66 communities that were completed and
stabilized for all of the current and prior year, (ii) eight communities and an
addition to an existing community that achieved full stabilization during 2001,
and (iii) ten communities and additions to three existing communities that are
currently in development or lease-up. Sold communities include communities
sold in 2001 and 2002 that are not reflected in discontinued operations under
SFAS No. 144.

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

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(In thousands, except apartment unit data)




revenues, resulting in a lease-up deficit, which continues until such time as
rental revenues exceed such expenses. Lease-up deficits for the three and nine
months ended September 30, 2002 were $324 and $1,182, respectively. Lease-up
deficits for the three and nine months ended September 30, 2001 were $488 and
$2,256, 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. The financial information
presented excludes activity from properties classified as discontinued
operations under SFAS No. 144.

All Operating Communities

The operating performance for all of the Companys apartment communities
combined for the three and nine months ended September 30, 2002 and 2001 is
summarized as follows:

|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|--------------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | -------- | ------ | ---- |  | ---- | ------ | -------- |  | - | ------- |  |  | - | ------- |  |  |  | ----- | --
|                                                                                        |  | Three Months Ended |        | Nine Months Ended
|                                                                                        |  | September 30,      |        | September 30,    
|                                                                                        |  |                    |        |                  
|                                                                                        |  | 2002               |        | 2001              |  | % Change |        | 2002 |  | 2001 |        | % Change
|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |         
|Rental and other revenue:                                                               |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|Fully stabilized communities (1)                                                        |  | $                  | 66,507 |                   |  | $        | 71,242 |      |  |      | (6.6   | )%       |  | $ | 199,185 |  |  | $ | 214,232 |  |  |  | (7.0  | )%
|Communities stabilized during 2001                                                      |  |                    | 5,401  |                   |  |          | 5,249  |      |  |      | 2.9    | %        |  |   | 16,002  |  |  |   | 13,496  |  |  |  | 18.6  | % 
|Lease-up communities (2)                                                                |  |                    | 10,846 |                   |  |          | 6,967  |      |  |      | 55.7   | %        |  |   | 27,469  |  |  |   | 18,079  |  |  |  | 51.9  | % 
|Sold communities (3)                                                                    |  |                    |       |                   |  |          | 2,471  |      |  |      | (100.0 | )%       |  |   | 745     |  |  |   | 17,833  |  |  |  | (95.2 | )%
|Other revenue (4)                                                                       |  |                    | 3,638  |                   |  |          | 3,489  |      |  |      | 4.3    | %        |  |   | 10,521  |  |  |   | 10,809  |  |  |  | (2.7  | )%
|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|                                                                                        |  |                    | 86,392 |                   |  |          | 89,418 |      |  |      | (3.4   | )%       |  |   | 253,922 |  |  |   | 274,449 |  |  |  | (7.5  | )%
|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|Property operating and maintenance expense(exclusive of depreciation and
amortization): |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|Fully stabilized communities (1)                                                        |  |                    | 23,853 |                   |  |          | 23,469 |      |  |      | 1.6    | %        |  |   | 69,758  |  |  |   | 68,281  |  |  |  | 2.2   | % 
|Communities stabilized during 2001                                                      |  |                    | 1,972  |                   |  |          | 1,809  |      |  |      | 9.0    | %        |  |   | 5,674   |  |  |   | 5,184   |  |  |  | 9.5   | % 
|Lease-up communities (2)                                                                |  |                    | 4,749  |                   |  |          | 2,677  |      |  |      | 77.4   | %        |  |   | 12,405  |  |  |   | 7,407   |  |  |  | 67.5  | % 
|Sold communities (3)                                                                    |  |                    |       |                   |  |          | 921    |      |  |      | (100.0 | )%       |  |   | 376     |  |  |   | 6,584   |  |  |  | (94.3 | )%
|Other expense (5)                                                                       |  |                    | 4,658  |                   |  |          | 3,666  |      |  |      | 27.1   | %        |  |   | 13,815  |  |  |   | 11,687  |  |  |  | 18.2  | % 
|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|                                                                                        |  |                    | 35,232 |                   |  |          | 32,542 |      |  |      | 8.3    | %        |  |   | 102,028 |  |  |   | 99,143  |  |  |  | 2.9   | % 
|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|Revenue in excess of specified expense                                                  |  | $                  | 51,160 |                   |  | $        | 56,876 |      |  |      | (10.1  | )%       |  | $ | 151,894 |  |  | $ | 175,306 |  |  |  | (13.4 | )%
|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|Recurring capital expenditures: (6)                                                     |  | $                  | 2,584  |                   |  | $        | 2,780  |      |  |      | (7.1   | )%       |  | $ | 7,315   |  |  | $ | 9,719   |  |  |  | (24.7 | )%
|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   
|Average apartment units in service                                                      |  |                    | 30,047 |                   |  |          | 31,318 |      |  |      | (4.1   | )%       |  |   | 30,226  |  |  |   | 31,777  |  |  |  | (4.9  | )%
|                                                                                        |  |                    |        |                   |  |          |        |      |  |      |        |          |  |   |         |  |  |   |         |  |  |  |       |   



|(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 from 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 three and nine months ended September 30, 2002, rental and other
revenue decreased $3,026, or 3.4%, and $20,527, or 7.5%, respectively, compared
to the same periods in the prior year. The decrease in revenue from fully
stabilized communities was a result of declining average occupancy and
increased rental concessions between periods. 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.

For the three and nine months ended September 30, 2002, property operating and
maintenance expenses (exclusive of depreciation and amortization) increased
$2,690 or 8.3% and $2,885 or 2.9%, primarily due to increased expenses at fully
stabilized properties.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(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
September 30, 2002, the fully stabilized portfolio of 66 communities with
23,388 units includes 38 communities with 14,932 units (64%) located in
Atlanta, Georgia, 18 communities with 4,535 units (19%) in Dallas, Texas, three
communities with 1,439 units (6%) located in Tampa, Florida and seven
communities with 2,482 units (11%) located in other markets. The operating
performance of these communities is summarized as follows:

|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |       |      |   
|---------------------------------------------------------------------------------------------- | ---------------- | -------------------------- | ------ | ------------------ | ----- | ----------------- | ------ | -------- | ----- | ---- | ----- | ----- | ---- | -------- | ------- | ----- | ----- | - | ------- | ----- | ----- |  | ----- | ----- | ---- | --
|                                                                                               |                  |                            |        | Three Months Ended |       | Nine Months Ended
|                                                                                               |                  |                            |        | September 30,      |       | September 30,    
|                                                                                               |                  |                            |        |                    |       |                  
|                                                                                               |                  |                            |        | 2002               |       | 2001              |        | % Change |       | 2002 |       | 2001  |      | % Change
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |         
|Rental and other revenue                                                                       |                  | $                          | 66,507 |                    |       | $                 | 71,242 |          |       |      | (6.6  | )%    |      | $        | 199,185 |       |       | $ | 214,232 |       |       |  | (7.0  | )%   
|Property operating and maintenance
expense (exclusive of depreciation and
amortization) (1)(2) |                  |                            | 23,853 |                    |       |                   | 23,469 |          |       |      | 1.6   | %     |      |          | 69,758  |       |       |   | 68,281  |       |       |  | 2.2   | %    
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|Revenue in excess of specified expense                                                         |                  | $                          | 42,654 |                    |       | $                 | 47,773 |          |       |      | (10.7 | )%    |      | $        | 129,427 |       |       | $ | 145,951 |       |       |  | (11.3 | )%   
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|Capital expenditures(1)(2)                                                                     |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|                                                                                               | Recurring
Carpet |                            | $      | 623                |       |                   | $      | 512      |       |      |       | 21.7  | %    |          | $       | 1,526 |       |   | $       | 1,279 |       |  |       | 19.3  | %   
|                                                                                               | Other            |                            |        | 1,824              |       |                   |        | 1,728    |       |      |       | 5.6   | %    |          |         | 5,073 |       |   |         | 5,851 |       |  |       | (13.3 | )%  
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|                                                                                               |                  | Total recurring            |        |                    | 2,447 |                   |        |          | 2,240 |      |       |       | 9.2  | %        |         |       | 6,599 |   |         |       | 7,130 |  |       |       | (7.4 | )%
|                                                                                               | Non-recurring    |                            |        | 676                |       |                   |        | 223      |       |      |       | 203.1 | %    |          |         | 1,899 |       |   |         | 866   |       |  |       | 119.3 | %   
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|                                                                                               |                  | Total capital expenditures |        | $                  | 3,123 |                   |        | $        | 2,463 |      |       |       | 26.8 | %        |         | $     | 8,498 |   |         | $     | 7,996 |  |       |       | 6.3  | % 
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|Total capital expenditure per unit                                                             |                  | $                          | 134    |                    |       | $                 | 105    |          |       |      | 27.6  | %     |      | $        | 363     |       |       | $ | 342     |       |       |  | 6.1   | %    
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|Average economic occupancy (3)                                                                 |                  |                            | 92.9   | %                  |       |                   | 94.6   | %        |       |      | (1.7  | )%    |      |          | 90.9    | %     |       |   | 95.0    | %     |       |  | (4.1  | )%   
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|Average monthly rental rate per
apartment unit (4)                                             |                  | $                          | 973    |                    |       | $                 | 1,014  |          |       |      | (4.0  | )%    |      | $        | 994     |       |       | $ | 1,011   |       |       |  | (1.7  | )%   
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      
|Apartment units in service                                                                     |                  |                            | 23,388 |                    |       |                   | 23,388 |          |       |      |       |       |      |          | 23,388  |       |       |   | 23,388  |       |       |  |       |      
|                                                                                               |                  |                            |        |                    |       |                   |        |          |       |      |       |       |      |          |         |       |       |   |         |       |       |  |       |      



|(1) |  | In addition to those expenses which relate to property operations, the
Company incurs recurring and non-recurring expenditures relating to
acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset,
all of which are capitalized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | In addition to such expenditures, the Company expensed $185 and $204 per
unit on building maintenance (inclusive of direct salaries) and $57 and
$59 per unit on landscaping (inclusive of direct salaries) for the three
months ended September 30, 2002 and 2001, respectively, and $523 and $546
per unit on building maintenance (inclusive of direct salaries) and $174
and $177 per unit on landscaping (inclusive of direct salaries) for the
nine months ended September 30, 2002 and 2001 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 including these
amounts would have been 91.3% and 93.6% for the three months ended
September 30, 2002 and 2001, respectively and 89.0% and 94.0% for the
nine months ended September 30, 2002 and 2001, respectively. For the
three months ended September 30, 2002 and 2001, concessions were $910 and
$533, respectively, and employee discounts were $163 and $233,
respectively. For the nine months ended September 30, 2002 and 2001,
concessions were $3,361 and $1,251, respectively, and employee discounts
were $536 and $714, 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 three and nine months ended September 30, 2002, rental and other
revenue decreased $4,735, or 6.6%, and $15,047, or 7.0%, respectively, compared
to the same periods in the prior year. This decrease was primarily due to the
aggregate impact of the decrease in average rents totaling $2,890 and $3,538
for the three and nine months ended September 30, 2002 and to increased vacancy
losses of $1,082 and $8,184 for the three and nine months ended September 30,
2002, respectively. The reduction in aggregate rents reflects the Companys
reaction to weaker market fundamentals to lower rents, when necessary, in order
to maintain occupancy levels in excess of 90%. The increase in vacancy loss
resulted from a decrease in average economic occupancy from 94.6% to 92.9% for
the three months ended September 30, 2001 and 2002, respectively, and from
95.0% to 90.9% for the nine months ended September 30, 2001 and
2002,
respectively. In addition, revenues decreased due to increased rental
concessions of $377 and $2,110 for the three and nine months ended September
30, 2002, respectively, given to residents as incentives to lease apartment
units. This occupancy decline and the Companys resulting increase in
concessions and rent reductions reflected the sharp decline in economic and
market activity across most of the Companys markets.

Property operating and maintenance expense (exclusive of depreciation and
amortization) increased $384, or 1.6%, and $1,477, or 2.2% for the three and
nine months ended September 30, 2002, respectively, over the prior periods.
These increases are primarily due to higher insurance costs, as a result of the
effects on the insurance markets of the terrorist attacks in September 2001,
increased unit turnkey costs and vacancy unit utility costs, partially offset
in the nine months ended by favorable property tax settlements of approximately
$500 relating to prior years on certain Dallas, Texas communities.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(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 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 through 2003. The
following table summarizes the activity relating to the accrued charges during
the nine months ended September 30, 2002.

|                                                        |  |   |        |  
|------------------------------------------------------- |  | - | ------ | -
|Accrued severance and other charges, December 31, 2001  |  | $ | 3,632  |  
|Payments for the three months ended March 31, 2002      |  |   | (1,430 | )
|Payments for the three months ended June 30, 2002       |  |   | (771   | )
|Payments for the three months ended September 30, 2002  |  |   | (397   | )
|                                                        |  |   |        |  
|Accrued severance and other charges, September 30, 2002 |  | $ | 1,034  |  
|                                                        |  |   |        |  

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 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 payments representing approximately 26% of the outstanding note
receivable balance. As these payments constitute adequate initial principal
payments under the note, the sale was recognized in the first quarter of 2002.
The impact of the sale recognition was to record the note receivable
(outstanding balance of $2,750 at September 30, 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
management team of RAM and the sale was 100% financed by the Company.
Through the second quarter of 2002, the Company had received payments under the
notes representing approximately 10% of the original outstanding note balance.
As these payments constituted adequate initial principal payments under the
notes, the sale was recognized in the second quarter of 2002. The impact of
the sale recognition was to record the note receivable (outstanding balance of
$1,226 at September 30, 2002), record a net gain of $510 and to remove the net
assets and liabilities of the former RAM from the Companys financial
statements.

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 Oxford
Properties assumption of substantially all of Post Construction Services
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 former 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, LLC.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(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 $143,901
in 2001 to $97,388 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 provided by (used in) investing activities decreased from net cash
provided of $3,057 in 2001 to net cash used of $26,035 in 2002 primarily due to
reduced proceeds from asset sales in 2002 compared to 2001 of $65,540 partially offset by
reduced construction and development expenditures in 2002.

Net cash used in financing activities decreased from $149,491 in 2001 to
$71,110 in 2002 primarily due to the reduction of treasury stock purchases
from $86,069 in 2001 to none in 2002 under the Companys stock repurchase
program.

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 third quarter of 2002, the
Companys net cash flow from operations reduced by annual capital expenditures
discussed above has not been 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. It is managements intent to fund the
shortfall between operating cash flow and its dividend requirements through
proceeds from asset sales, however, from time to time the additional funding
required to pay the current dividends may be obtained through a combination of
line of credit borrowings and proceeds from asset sales. The factors that have
led to this condition are the decline in economic and market conditions
beginning in the fourth quarter of 2001 and continuing through the third
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 these factors will remain
present through the remainder of 2002, resulting in the need to fund
a portion of its current level of dividend payment primarily through
proceeds from asset sales. Depending on market conditions for the
remainder of 2002, the Company will fund dividends ranging from
$33,000 to $35,000 from these sources in 2002. For the fourth quarter
of 2002, the Company has declared a quarterly dividend on its common
stock of $0.78, a rate equal to its current quarterly dividend level.
The dividend for the fourth quarter of 2002 will be paid on
January 15, 2003 to common shareholders of record on
January 2, 2003. For 2003, the Company's board of directors had
indicated that it intends to reduce the Companys current quarterly
dividend on its common stock to $0.45 per share, subject to quarterly
dividend declarations by the board of directors. At this reduced
dividend level of 2003, management expects that its 2003 dividends
will be funded from its net cash flow provided by operating
activities. Reducing the dividends in 2003 will free up additional
cash flow in 2003, which the Company will use to partially fund its
limited development pipeline, to reduce indebtedness and to
opportunistically repurchase common shares.

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 access to real estate sales markets to fund these requirements.
Additionally, in 2001, 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. In the nine months ended September 30, 2002, the Company received
equity capital through the joint ventures totaling $9,213, and for the year
ended December 31, 2001 the Company received equity capital through the joint
ventures of $18,082. The Company may continue to use joint venture
arrangements in future periods.

The Company currently has development projects in progress that will be
completed over the next twelve to fifteen months. At September 30, 2002, the
Companys share of the estimated future cash expenditures to complete these
projects will approximate
$54,000. 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.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(In thousands, except apartment unit data)




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
three months ended September 30, 2002, the Company sold one community
containing 167 units for net proceeds of $9,753. For the nine months ended
September 30, 2002, the Company sold seven communities containing 2,157 units
and two commercial properties for net proceeds of approximately $150,120. For
the three and nine months ended September 30, 2001, the Company generated net
proceeds from asset sales of $24,320 and $215,660, respectively. In
October 2002, the Company sold one community containing 508 units for
net proceeds of $30,096. Management
believes that the asset sales markets remain viable to provide the necessary
funding into 2003.

At September 30, 2002, the Company had available credit facility borrowing
capacity of approximately $274,969 under its existing credit facilities. The
Companys primary credit facility with total capacity of $320,000 matures in
2004 while a second incremental credit facility has a borrowing capacity of
$125,000 and matures in April 2003. 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 September 30, 2002, the
stated interest rate for the Revolver was LIBOR plus 0.85% or prime minus
0.25%. The Revolver provides for the rate to be adjusted up or down based on
changes in the credit ratings on the Companys senior unsecured debt. The
Revolver also includes a money market competitive bid option for short-term
funds up to $160,000 at rates below the stated line rate. The credit agreement
for the Revolver contains customary representations, covenants and events of
default, including covenants which restrict the ability of the Operating
Partnership to make distributions, in excess of stated amounts, which in turn
restrict the discretion of the Company to declare and pay dividends. In
general, during any fiscal year the Operating Partnership may only distribute
up to 100% of the Operating Partnerships consolidated income available for
distribution (as defined in the credit agreement) exclusive of distributions of
up to $30,000 of capital gains for such year. The credit agreement contains
exceptions to these limitations to allow the Operating Partnership to make
distributions necessary to allow the Company to maintain its status as a REIT.
The Company does not anticipate that this covenant will adversely affect the
ability of the Operating Partnership to make distributions, or the Company to
declare dividends, at the Companys current dividend level in
2002. The Revolver matures in April 2004.

In addition to the Revolver, the Company also has in place an additional
$125,000 line of credit facility for general corporate purposes. Upon the
renewal of this credit facility in 2002, the total borrowing capacity was
reduced from $185,000 to $125,000. The reduced borrowing capacity is
consistent with the Companys reduced development spending. This line bears
interest at LIBOR plus 0.90% and matures in April 2003. There were no
outstanding borrowings under this facility at September 30, 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.

New debt issuances

In June 2002, the Company issued $25,000 of unsecured notes at par. These
notes bear interest at 6.11% and mature June 18, 2007. Also in June 2002, the
Company closed a $13,500 secured mortgage loan. The loan bears interest at
6.29% and monthly
principal and interest payments are based on a 25-year amortization schedule.
The loan matures on October 1, 2007. Net proceeds from these transactions were
used to repay amounts outstanding under the Companys credit facility.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(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 had repurchased
approximately 3,128,000 shares at a total cost of $114,126. The Company did
not repurchase any shares during the nine months ended September 30, 2002.
Management has indicated it will be opportunistic with respect to additional
share repurchases and intends to finance additional repurchases with asset sale
proceeds rather than additional borrowings.

Schedule of Indebtedness

The following table reflects the Companys indebtedness at September 30, 2002
and December 31, 2001:

|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |           | 
|---------------------------------------- | ------------------------ | ------------- | ------------- | ------------- | ---- | ----------------- | ------------ | ------------------ | --- | ----------------- | --- | --- | ---- | --------- | ---- | ---- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | --------- | 
|Description                              |                          | Payment Terms |               | Interest Rate |      | Maturity Date (1) |              | September 30, 2002 |     | December 31, 2001
|                                         |                          |               |               |               |      |                   |              |                    |     |                  
|Senior Notes (Unsecured)                 |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | Senior Notes             |               | Int           |               |      | 6.11% - 7.70      | %            |                    |     |                   |     |     |      | 2003-2010 |      |      | $       | 385,000 |         |           | $       | 360,000 |        
|                                         | Medium Term Notes        |               | Int           |               |      | 6.69% - 8.12%     | %            |                    |     | (2)               |     |     |      | 2004-2015 |      |      |         | 323,000 |         |           |         | 323,000 |        
|                                         | Northwestern Mutual Life |               | Int           |               |      | 8.37              | %            |                    |     |                   |     |     |      | 2002      |      |      |         |        |         |           |         | 20,000  |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 708,000 |           |         |         | 703,000 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Unsecured Lines of Credit & Other        |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | Revolver  Syndicated    |               |               | N/A           |      |                   | LIBOR + 0.85 | %                  |     |                   | (3) |     |      |           | 2004 |      |         |         | 180,000 |           |         |         | 155,000 |          
|                                         | Cash Management Line     |               |               | N/A           |      |                   | LIBOR + 0.75 | %                  |     |                   |     |     |      |           | 2003 |      |         |         | 10,031  |           |         |         | 11,202  |          
|                                         | Other                    |               |               | N/A           |      |                   |              | 5.00               | %   |                   |     | (4) |      |           |      | 2021 |         |         |         | 2,000     |         |         |         | 2,000     | 
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 192,031 |           |         |         | 168,202 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Conventional Fixed Rate (Secured)        |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |          
|                                         | FNMA                     |               | Prin. and Int |               |      | 6.975             | %            |                    |     | (5)               |     |     |      | 2029      |      |      |         | 101,100 |         |           |         | 102,200 |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 7.69              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 49,959  |         |           |         | 50,527  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 6.50              | %            |                    |     | (6)               |     |     |      | 2009      |      |      |         | 46,953  |         |           |         | 47,681  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 7.69              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 27,951  |         |           |         | 28,268  |        
|                                         | Northwestern Mutual Life |               | Prin. and Int |               |      | 6.29              | %            |                    |     |                   |     |     |      | 2007      |      |      |         | 13,465  |         |           |         |        |        
|                                         | Parkwood Townhomes TM    |               | Prin. and Int |               |      | 7.375             | %            |                    |     |                   |     |     |      | 2014      |      |      |         |        |         |           |         | 762     |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | 239,428 |           |         |         | 229,438 |          
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|Tax Exempt Floating Rate
Bonds (Secured) |                          | Int           |               |               | 1.37 | %                 |              |                    | (7) |                   |     |     | 2025 |           |      |      | 235,880 |         |         |           | 235,880 |        
|                                         |                          |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         |         |           |         |         |         |          
|                                         | Total                    |               |               |               |      |                   |              |                    |     |                   |     |     |      |           |      |      |         |         | $       | 1,375,339 |         |         | $       | 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 March 16, 2005 (the Remarketing Date) is
6.85%. On the Remarketing Date, they are subject to mandatory tender for
remarketing.                                                                                                                                                      
|   
|(3) |  | Represents stated rate. At September 30, 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 and matures in April 2004.                                                                                                                                       
|   
|(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 the average rate for the nine months ended September 30,
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%.

-39-



---



##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(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    |       | Amount       |           |             |               |            |          | Estimated  |          | Estimated |  |        |  |  |  |        |  | 
|                                                                               |          |       |           |                 |      |         | Construction |       | Spent        |           | Quarter of  |               | Quarter of |          | Quarter of |          | %         |  | %     
|                                                                               |          |       | Number of |                 | Cost |         | As of        |       | Construction |           | First Units |               | Stabilized |          | Leased     |          | Occupied 
|Metropolitan Area                                                              |          | Units |           | ($ in millions) |      | 9/30/02 |              | Start |              | Available |             | Occupancy (1) |            | 11/02/02 |            | 11/02/02
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |         
|Wholly Owned Construction/Lease-up Communities                                 |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Tampa, FL                                                                      |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Harbour Place III                                                         |          |       | 259       |                 |      | $       | 35           |       |              | $         | 30          |               |            |          | 2Q '01     |          |           |  | 2Q '02 |  |  |  | 2Q '03 |  |  |  | 60.6 | % |  |  | 56.4 | %
|Subtotal Wholly-Owned Construction/Lease-up
Communities                        |          |       | 259       |                 |      | $       | 35           |       |              | $         | 30          |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Co-Investment
Construction/Lease-up Communities                                |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Atlanta, GA                                                                    |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post PeachtreeTM (2)                                                           |          |       | 121       |                 |      | $       | 31           |       |              | $         | 30          |               |            |          | 2Q '00     |          |           |  | 3Q '01 |  |  |  | 1Q '03 |  |  |  | 74.4 | % |  |  | 72.7 | %
|Post BiltmoreTM (2)                                                            |          |       | 276       |                 |      | $       | 38           |       |              | $         | 37          |               |            |          | 3Q '00     |          |           |  | 4Q '01 |  |  |  | 1Q '03 |  |  |  | 84.8 | % |  |  | 79.7 | %
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                                               | Subtotal |       |           | 397             |      |         | $            | 69    |              |           | $           | 67            |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |   | 
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|New York City, NY                                                              |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post LuminariaTM (3)                                                           |          |       | 138       |                 |      | $       | 52           |       |              | $         | 47          |               |            |          | 3Q '01     |          |           |  | 2Q '02 |  |  |  | 2Q '03 |  |  |  | 78.3 | % |  |  | 72.5 | %
|Post ToscanaTM (4)                                                             |          |       | 199       |                 |      | $       | 97           |       |              | $         | 57          |               |            |          | 1Q '02     |          |           |  | 1Q '03 |  |  |  | 2Q '04 |  |  |  |     |   |  |  |     |  
|                                                                               | Subtotal |       |           | 337             |      |         | $            | 149   |              |           | $           | 104           |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |   | 
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Pasadena, CA                                                                   |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Paseo Colorado (2)                                                        |          |       | 391       |                 |      | $       | 76           |       |              | $         | 73          |               |            |          | 2Q '00     |          |           |  | 1Q '02 |  |  |  | 2Q '03 |  |  |  | 64.7 | % |  |  | 62.4 | %
|Washington D.C.                                                                |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Massachusetts AvenueTM (2)                                                |          |       | 269       |                 |      | $       | 76           |       |              | $         | 65          |               |            |          | 2Q '01     |          |           |  | 4Q '02 |  |  |  | 4Q '03 |  |  |  | 8.9  | % |  |  | 6.3  | %
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Subtotal Co-Investment Construction/Lease-up
Communities                       |          |       | 1,394     |                 |      | $       | 370          |       |              | $         | 309         |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Construction Totals                                                            |          |       | 1,653     |                 |      | $       | 405          |       |              | $         | 339         |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Less Partners Portion                                                         |          |       |           |                 |      | $       | (160         | )     |              | $         | (148        | )             |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Properties Funding Commitment                                            |          |       |           |                 |      | $       | 245          |       |              | $         | 191         |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Weighted average projected FFO
as a % of total estimated
construction cost (5) |          |       |           |                 |      |         | 7.5          | %     |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                                               |          |       |           |                 |      |         |              |       |              |           |             |               |            |          |            |          |           |  |        |  |  |  |        |  |  |  |      |   |  |  |      |  



|(1) |  | The Company defines stabilized occupancy as the earlier to occur of
(i) the attainment of 95% physical occupancy on the first day of any
month or (ii) one year after completion of construction.                                                                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | These communities are being developed as a joint venture (Post
equity ownership is 35%).                                                                                                                                                                                                                                                               
|   
|(3) |  | This development is structured as a joint venture, with Post and
The Clarett Group contributing approximately 70% of the equity and
the landowner contributing the balance.                                                                                                                                                                            
|   
|(4) |  | This development is structured as a joint venture with Post and The
Clarett Group. Post will contribute substantially all of the
capital of the joint venture.                                                                                                                                                                                         
|   
|(5) |  | The calculation represents the aggregate projected unlevered funds
from operations to be earned by each community in its first year of
stabilized operations divided by aggregate estimated construction
costs of the communities. The Company uses funds from operations as
a management tool to measure the operating performance of its
communities.

-40-



---



##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(In thousands, except apartment unit data)




Capitalization of Fixed Assets and Community Improvements

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

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

A summary of community development improvements and other capitalized
expenditures for the three and nine months ended September 30, 2002 and 2001 is
detailed below.

|                                                   |                                                                        |                          |        |                    |       |                   |        |       |       |      |         |       |        |   |         |       |        | 
|-------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------ | ------ | ------------------ | ----- | ----------------- | ------ | ----- | ----- | ---- | ------- | ----- | ------ | - | ------- | ----- | ------ | 
|                                                   |                                                                        |                          |        | Three Months Ended |       | Nine Months Ended
|                                                   |                                                                        |                          |        | September 30,      |       | September 30,    
|                                                   |                                                                        |                          |        |                    |       |                  
|                                                   |                                                                        |                          |        | 2002               |       | 2001              |        | 2002  |       | 2001
|                                                   |                                                                        |                          |        |                    |       |                   |        |       |       |     
|New community development and acquisition activity |                                                                        | $                        | 25,533 |                    |       | $                 | 63,207 |       |       | $    | 118,293 |       |        | $ | 186,545 |      
|Non-recurring capital expenditures:                |                                                                        |                          |        |                    |       |                   |        |       |       |      |         |       |        |   |         |      
|                                                   | Revenue generating additions and improvements (1)                      |                          |        | 340                |       |                   |        | 612   |       |      |         | 1,306 |        |   |         | 2,620 |       
|                                                   | Other community additions and improvements (2)                         |                          |        | 810                |       |                   |        | 401   |       |      |         | 2,075 |        |   |         | 1,220 |       
|Recurring capital expenditures:                    |                                                                        |                          |        |                    |       |                   |        |       |       |      |         |       |        |   |         |      
|                                                   | Carpet replacements and other community additions
and improvements (3) |                          |        | 2,584              |       |                   |        | 2,780 |       |      |         | 7,315 |        |   |         | 9,719 |       
|                                                   | Corporate additions and improvements                                   |                          |        | 375                |       |                   |        | 610   |       |      |         | 923   |        |   |         | 1,850 |       
|                                                   |                                                                        |                          |        |                    |       |                   |        |       |       |      |         |       |        |   |         |      
|                                                   |                                                                        | $                        | 29,642 |                    |       | $                 | 67,610 |       |       | $    | 129,912 |       |        | $ | 201,954 |      
|                                                   |                                                                        |                          |        |                    |       |                   |        |       |       |      |         |       |        |   |         |      
|Other Data                                         |                                                                        |                          |        |                    |       |                   |        |       |       |      |         |       |        |   |         |      
|                                                   |                                                                        | Capitalized interest     |        | $                  | 2,753 |                   |        | $     | 5,050 |      |         | $     | 11,293 |   |         | $     | 16,803 | 
|                                                   |                                                                        |                          |        |                    |       |                   |        |       |       |      |         |       |        |   |         |      
|                                                   |                                                                        | Capitalized overhead (4) |        | $                  | 1,266 |                   |        | $     | 3,448 |      |         | $     | 3,995  |   |         | $     | 11,530 | 
|                                                   |                                                                        |                          |        |                    |       |                   |        |       |       |      |         |       |        |   |         |      



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

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

-41-



---



##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(In thousands, except apartment unit data)




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
incurred in 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.


The calculation of FFO and CAD for the three and nine months ended September
30, 2002 and 2001 presented on a historical basis are summarized in the
following table:

|                                                               |                                                                                |   |                    |        |                   |   |            |        |      |   |            |         |   |   |            |         |  
|-------------------------------------------------------------- | ------------------------------------------------------------------------------ | - | ------------------ | ------ | ----------------- | - | ---------- | ------ | ---- | - | ---------- | ------- | - | - | ---------- | ------- | -
|                                                               |                                                                                |   | Three Months Ended |        | Nine Months Ended
|                                                               |                                                                                |   | September 30,      |        | September 30,    
|                                                               |                                                                                |   |                    |        |                  
|                                                               |                                                                                |   | 2002               |        | 2001              |   | 2002       |        | 2001
|                                                               |                                                                                |   |                    |        |                   |   |            |        |     
|Net income available to common shareholders                    |                                                                                | $ | 3,291              |        |                   | $ | 24,420     |        |      | $ | 39,649     |         |   | $ | 77,431     |        
|                                                               | Cumulative effect of accounting change, net of minority interest               |   |                    |       |                   |   |            |       |      |   |            |        |   |   |            | 613     |  
|                                                               | Extraordinary items, net of minority interest                                  |   |                    |       |                   |   |            |       |      |   |            | 120     |   |   |            | 77      |  
|                                                               | Minority interest of common unitholders -
continuing operations                |   |                    | 661    |                   |   |            | 3,190  |      |   |            | 4,090   |   |   |            | 10,069  |  
|                                                               | Gain on property sales  continuing operations                                 |   |                    |       |                   |   |            | (8,179 | )    |   |            | (13,275 | ) |   |            | (23,950 | )
|                                                               | Gain on property sales, net of minority interest  discontinued
operations (1) |   |                    | 1,906  |                   |   |            |       |      |   |            | (7,509  | ) |   |            |        |  
|                                                               | Minority interest in discontinued operations (2)                               |   |                    | 57     |                   |   |            | 132    |      |   |            | 362     |   |   |            | 426     |  
|                                                               |                                                                                |   |                    |        |                   |   |            |        |      |   |            |         |   |   |            |        
|Adjusted net income                                            |                                                                                |   | 5,915              |        |                   |   | 19,563     |        |      |   | 23,437     |         |   |   | 64,666     |        
|                                                               | Depreciation of real estate assets (3)                                         |   |                    | 21,241 |                   |   |            | 17,973 |      |   |            | 61,371  |   |   |            | 52,195  |  
|                                                               |                                                                                |   |                    |        |                   |   |            |        |      |   |            |         |   |   |            |        
|Funds from Operations                                          |                                                                                |   | 27,156             |        |                   |   | 37,536     |        |      |   | 84,808     |         |   |   | 116,861    |        
|                                                               | Recurring capital expenditures (4)                                             |   |                    | (2,584 | )                 |   |            | (2,780 | )    |   |            | (7,315  | ) |   |            | (9,719  | )
|                                                               | Non-recurring capital expenditures                                             |   |                    | (810   | )                 |   |            | (401   | )    |   |            | (2,075  | ) |   |            | (1,220  | )
|                                                               |                                                                                |   |                    |        |                   |   |            |        |      |   |            |         |   |   |            |        
|Cash Available for Distribution                                |                                                                                | $ | 23,762             |        |                   | $ | 34,355     |        |      | $ | 75,418     |         |   | $ | 105,922    |        
|                                                               |                                                                                |   |                    |        |                   |   |            |        |      |   |            |         |   |   |            |        
|Revenue generating capital expenditures (5)                    |                                                                                | $ | 340                |        |                   | $ | 612        |        |      | $ | 1,306      |         |   | $ | 2,620      |        
|                                                               |                                                                                |   |                    |        |                   |   |            |        |      |   |            |         |   |   |            |        
|Cash Flow Provided By (used in):                               |                                                                                |   |                    |        |                   |   |            |        |      |   |            |         |   |   |            |        
|Operating activities                                           |                                                                                | $ | 35,242             |        |                   | $ | 58,959     |        |      | $ | 97,388     |         |   | $ | 143,901    |        
|Investing activities                                           |                                                                                | $ | (39,936            | )      |                   | $ | (50,934    | )      |      | $ | (26,035    | )       |   | $ | 3,057      |        
|Financing activities                                           |                                                                                | $ | 213                |        |                   | $ | (17,368    | )      |      | $ | (71,110    | )       |   | $ | (149,491   | )      
|Weighted average common shares outstanding  basic             |                                                                                |   | 36,913,074         |        |                   |   | 37,899,668 |        |      |   | 36,897,867 |         |   |   | 38,463,672 |        
|Weighted average common shares and units outstanding  basic   |                                                                                |   | 42,031,962         |        |                   |   | 43,054,521 |        |      |   | 42,016,755 |         |   |   | 43,631,222 |        
|Weighted average common shares outstanding  diluted           |                                                                                |   | 36,916,835         |        |                   |   | 38,185,054 |        |      |   | 36,941,598 |         |   |   | 38,721,056 |        
|Weighted average common shares and units outstanding  diluted |                                                                                |   | 42,035,723         |        |                   |   | 43,339,907 |        |      |   | 42,060,486 |         |   |   | 43,888,606 |        



|(1) |  | For the three months ended September 30, 2002, the Company
recognized losses of $2,170 ($1,906 net of minority interest) on the
sale of one community and the write down to fair market value of two
land parcels designated as held for sale in the third quarter of
2002. For the nine months ended September 30, 2002, the Company
recognized net gains of $10,412 ($9,144 net of minority interest) on
the sale of real estate assets designated for sale subsequent to
December 31, 2001, offset by reserves of $1,849 ($1,635 net of
minority interest) to write down to fair market value the land
parcels designated as held for sale in the third quarter of 2002.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents the minority interest in earnings for periods prior to
the property sale date for real estate assets designated as held for
sale in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(3) |  | Depreciation on real estate assets is net of the minority interest
portion of depreciation in consolidated partnerships.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(4) |  | Since the Company does not add back the depreciation of non-real
estate assets in its calculation of funds from operations, non-real
estate related capital expenditures of $375 and $610 for the three
months ended September 30, 2002 and 2001, respectively, and $923 and
$1,850 for the nine months ended September 30, 2002 and 2001,
respectively, are excluded from the calculation of cash available for
distribution.                                                                                                                                                                                                                                             
|   
|(5) |  | Represents expenditures for major renovations of communities,
water sub-metering equipment and other unit upgrade costs that
enhance the rental value of such units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

-42-



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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(In thousands, except apartment unit data)




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
managements expectations
with regard to net operating income and funds from operations for
2002, managements expectations with regard to occupancy levels and rent growth,
managements expectations
with regard to dividend payments, the Companys ability to meet new construction,
development and other long-term liquidity requirements, and the
Companys ability to
execute asset sales in connection with its 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.

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.                                                                                               

-43-



---



##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(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 September
30, 2002, the Company had $316,131 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.

A summary of the terms of the Companys outstanding derivative financial
instruments at September 30, 2002 is as follows:

|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |         |   |        |               |   | 
|------------------------- | ----------------- | --------------- | ------------------------------ | ----------------- |  | ------------ | ------- | ---- | ------------- | ---------- | ------------- | ------- |  | ------- | -------- | ------- | - | ------ | ------------- | - | 
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         | 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 |  |         | $        | (14,310 | )
|                          | Variable to fixed |                 | $                              | 25,000            |  |              |         | 6.53 | %             |            | 3 month LIBOR |         |  | 2/01/05 |          |         |   | (2,505 | )            
|Interest rate cap         |                   | $               | 76,000                         |                   |  |              | 5.00    | %    |               |            |              |         |  |         | 2/01/03  |         |   |        |              |  
|Interest rate cap         |                   | $               | 141,230                        |                   |  |              | 5.00    | %    |               |            |              |         |  |         | 2/01/03  |         |   |        |              |  
|Interest rate cap         |                   | $               | 18,650                         |                   |  |              | 5.00    | %    |               |            |              |         |  |         | 2/01/03  |         |   |        |              |  
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |         |   |        |               |  
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |         |   | $      | (16,815       | )
|                          |                   |                 |                                |                   |  |              |         |      |               |            |               |         |  |         |          |         |   |        |               |  

As more fully described in Note 2 to the consolidated financial statements, the
interest rate swap and cap arrangements are carried on the consolidated sheet
at the fair value shown above in accordance with SFAS No. 133, as amended. If
interest rates under the Companys floating rate LIBOR-based and tax-exempt
borrowings, in excess of the $101,100 FNMA borrowings and a $25,000 unsecured
note effectively converted to fixed rates discussed above, fluctuated by 1.0%,
interest costs to the Company, based on outstanding borrowings at September 30,
2002, would increase or decrease by approximately $4,300 on an annualized
basis.




ITEM 4. CONTROLS AND PROCEDURES

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

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

-44-



---



##### Table of Contents






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 SECURITY HOLDERS

None




ITEM 5.OTHER INFORMATION

None




ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits
| | --- |  | --------



| |        |  |                                                                                                     
| | ------ |  | ----------------------------------------------------------------------------------------------------
| | 3.1(a) |  | Articles of
Incorporation of the Company                                                            
| | 3.2(b) |  | Articles of
Amendment to the Articles of Incorporation of the Company.                              
| | 3.3(c) |  | Articles of
Amendment to the Articles of Incorporation of the Company.                              
| | 3.4(d) |  | Articles of
Amendment to the Articles of Incorporation of the Company.                              
| | 3.5(e) |  | Articles of
Amendment to the Articles of Incorporation of the Company.                              
| | 3.6(a) |  | Bylaws of
the Company.                                                                              
| | 4.1(f) |  | Indenture
between the Company and SunTrust Bank, as Trustee                                         
| | 4.2(f) |  | First
Supplemental Indenture to the Indenture between the Company and
SunTrust Bank, as Trustee     
| | 99.1   |  | Certification of
Sarbanes - Oxley Act of 2002 - President and Chief Executive Officer               
| | 99.2   |  | Certification of
Sarbanes - Oxley Act of 2002 - Executive Vice President and Chief
Financial Officer



| |     |  |                                                                                                                    
| | --- |  | -------------------------------------------------------------------------------------------------------------------
| | (a) |  | Filed as an
exhibit to the Registration Statement on Form S-11 (SEC File
No. 33-61936), as amended, of the Company.
| | (b) |  | Filed as an
exhibit to the Current Report on Form 8-K, dated as of
October 1, 1996, of the Company.                
| | (c) |  | Filed as an
exhibit to the Current Report on Form 8-K, dated as of
October 28, 1997, of the Company.               
| | (d) |  | Filed as an
exhibit to the Current Report on Form 8-K, dated as of
February 9, 1998, of the Company.               
| | (e) |  | Filed as an
exhibit to the Quarterly Report on Form 10-Q, dated as of
November 15, 1999, of the Company.           
| | (f) |  | Filed as an
exhibit to the Registration Statement on Form S-3 (SEC File No.
333-42884) of the Company.             



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



| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | There were no reports on Form 8K filed by either registrant during the
three month period ended September 30, 2002.

-45-



---



##### Table of Contents






SIGNATURES

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

|                     |  |                                                                                               
|-------------------- |  | ----------------------------------------------------------------------------------------------
|POST PROPERTIES, INC |  |                                                                                               
|                     |  |                                                                                               
|November 14, 2002    |  | /s/ R. Gregory Fox                                                                            
|                     |  |                                                                                               
|(Date)               |  | R. Gregory Fox
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
|                     |  |                                                                                               
|November 14, 2002    |  | /s/ Arthur J. Quirk                                                                           
|                     |  |                                                                                               
|(Date)               |  | Arthur J. Quirk
Vice President and Controller,
Chief Accounting Officer                       

-46-



---



##### Table of Contents



SIGNATURES

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

|                           |  |                                                                                                |  |                                            
|-------------------------- |  | ---------------------------------------------------------------------------------------------- |  | -------------------------------------------
|POST APARTMENT HOMES, L.P. |  |                                                                                                |  |                                            
|                           |  |                                                                                                |  |                                            
|                           |  | By:                                                                                            |  | Post GP
Holdings, Inc., its General Partner
|                           |  |                                                                                                |  |                                            
|November 14, 2002          |  | /s/ R. Gregory Fox                                                                            
|                           |  |                                                                                               
|(Date)                     |  | R. Gregory Fox
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
|                           |  |                                                                                                |  |                                            
|November 14, 2002          |  | /s/ Arthur J. Quirk                                                                           
|                           |  |                                                                                               
|(Date)                     |  | Arthur J. Quirk
Vice President and Controller,
Chief Accounting Officer                       

-47-



---



##### Table of Contents






CERTIFICATIONS

I, David P. Stockert, certify that:

|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | I have reviewed this quarterly report on Form 10-Q of Post
Properties, Inc. and Post Apartment Homes, L.P.;                                                                                                                                                                                                                                                                              
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                                                                              
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                        |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                        |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | c)                                                                                                                                                                                                                                                                                                                                                                                        |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):                                                                                                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                        |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and 
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                        |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

|                                                        |  |                                                          |  |                                                                        
|------------------------------------------------------- |  | -------------------------------------------------------- |  | -----------------------------------------------------------------------
|November 14,
2002                                      
|                                                       
|Post Properties,
Inc.
a Georgia Corporation             |  | Post Apartment Homes, L.P.
a Georgia limited partnership
|                                                       
|                                                        |  | By:                                                      |  | Post GP Holdings, Inc.,
a Georgia corporation, its
sole general partner
|                                                       
|/s/ David P.
Stockert                                   |  |                                                          |  | /s/ David P.
Stockert                                                  
|                                                        |  |                                                          |  |                                                                        
|David P. Stockert
President and Chief Executive Officer |  |                                                          |  | David P. Stockert
President and Chief Executive Officer                

-48-



---



##### Table of Contents



I, R. Gregory Fox, certify that:

|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | I have reviewed this quarterly report on Form 10-Q of Post
Properties, Inc. and Post Apartment Homes, L.P.;                                                                                                                                                                                                                                                                              
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                                                                              
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                        |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                        |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | c)                                                                                                                                                                                                                                                                                                                                                                                        |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):                                                                                                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                        |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and 
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                        |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                
|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

November 14, 2002

|                                                                    |  |                                                          |  |                                                                        
|------------------------------------------------------------------- |  | -------------------------------------------------------- |  | -----------------------------------------------------------------------
|Post Properties,
Inc.
a Georgia Corporation                         |  | Post Apartment Homes, L.P.
a Georgia limited partnership |  |                                                                        
|                                                                   
|                                                                    |  | By:                                                      |  | Post GP Holdings, Inc.,
a Georgia corporation, its
sole general partner
|                                                                   
|/s/ R. Gregory Fox                                                  |  |                                                          |  | /s/ R. Gregory Fox                                                     
|                                                                    |  |                                                          |  |                                                                        
|R. Gregory Fox
Executive Vice President and
Chief Financial Officer |  |                                                          |  | R. Gregory Fox
Executive Vice President and
Chief Financial Officer    

-49-



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##### Table of Contents



EXHIBIT INDEX

|        |      |             |  |                                                                                                            
|------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------------
|Exhibit |      | Description
|        |      |            
|        | 3.1  | (a)         |  | Articles of Incorporation of the Company.                                                                  
|        | 3.2  | (b)         |  | Articles of Amendment to the Articles of
    Incorporation of the Company.                                 
|        | 3.3  | (c)         |  | Articles of Amendment to the Articles of
    Incorporation of the Company.                                 
|        | 3.4  | (d)         |  | Articles of Amendment to the Articles of
    Incorporation of the Company.                                 
|        | 3.5  | (e)         |  | Articles of Amendment to the Articles of
    Incorporation of the Company.                                 
|        | 3.6  | (a)         |  | Bylaws of the Company.                                                                                     
|        | 4.1  | (f)         |  | Indenture between the Company and SunTrust Bank,
    as Trustee.                                           
|        | 4.2  | (f)         |  | First Supplemental Indenture to the Indenture
between the Company and SunTrust Bank, as Trustee.           
|        | 99.1 |             |  | Certification of Sarbanes-Oxley Act of
    2002  President and Chief Executive Officer.                   
|        | 99.2 |             |  | Certification of Sarbanes-Oxley Act of
    2002  Executive Vice President and Chief Financial
    Officer.



---



|    |  |                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------
|(a) |  | Filed as an exhibit to the Registration Statement
    on Form S-11 (SEC File No. 33-61936), as amended, of the Company.
|(b) |  | Filed as an exhibit to the Current Report on Form
    8-K, dated as of October 1, 1996, of the Company.                
|(c) |  | Filed as an exhibit to the Current Report on Form
    8-K, dated as of October 28, 1997, of the Company.               
|(d) |  | Filed as an exhibit to the Current Report on Form
    8-K, dated as of February 9, 1998, of the Company.               
|(e) |  | Filed as an exhibit to the Quarterly Report on
    Form 10-Q, dated as of November 15, 1999, of the Company.           
|(f) |  | Filed as an exhibit to the Registration Statement
    on Form S-3 (SEC File No. 333-42884) of the Company.             

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