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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


Form 10-Q[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

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

For the transition period from                      to
Commission file numbers 1-12080 and 0-28226



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

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

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

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

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

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

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

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

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.

37,351,774 shares of common stock outstanding as of May 9, 2003 (excluding treasury stock).



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TABLE OF CONTENTS



|                                               |                                                                                               |                                                                          |  |  |  |  |  | 
|---------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ |  |  |  |  |  | 
|                                               |                                                                                               | POST PROPERTIES, INC.                                                   
|                                               |                                                                                               | CONSOLIDATED BALANCE SHEETS                                             
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS                                   
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND ACCUMULATED EARNINGS
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
|                                               |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              
|                                               |                                                                                               | POST APARTMENT HOMES, L.P.                                              
|                                               |                                                                                               | CONSOLIDATED BALANCE SHEETS                                             
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS                                   
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF PARTNERS EQUITY                             
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
|                                               |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              
|                                               | 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                                
|EXHIBIT INDEX                                 
|EX-10.1 RABBI TRUST AGREEMENT                 
|EX-99.1 CERTIFICATION OF THE PRESIDENT AND CEO
|EX-99.2 CERTIFICATION OF THE EXEC. VP AND CFO 



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##### Table of Contents



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

INDEX

|                             |                                                                                              |                                                                                                                   |                                                                                          |    |   |    | 
|---------------------------- | -------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | -- | - | -- | 
|Part I FINANCIAL INFORMATION |                                                                                              | Page                                                                                                             
|                             | Item 1 Financial Statements                                                                  |                                                                                                                   |                                                                                          |    |  
|                             | POST PROPERTIES, INC.                                                                        |                                                                                                                   |                                                                                          |    |  
|                             |                                                                                              | Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002                                            |                                                                                          |    | 1 |   
|                             |                                                                                              | Consolidated Statements of Operations for the three months ended March 31, 2003 and 2002                          |                                                                                          |    | 2 |   
|                             |                                                                                              | Consolidated Statement of Shareholders Equity and Accumulated Earnings
for the three months ended March 31, 2003 |                                                                                          |    | 3 |   
|                             |                                                                                              | Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002                          |                                                                                          |    | 4 |   
|                             |                                                                                              | Notes to Consolidated Financial Statements                                                                        |                                                                                          |    | 5 |   
|                             | POST APARTMENT HOMES, L.P.                                                                   |                                                                                                                   |                                                                                          |    |  
|                             |                                                                                              |                                                                                                                   | Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002                   |    |   | 16 | 
|                             |                                                                                              |                                                                                                                   | Consolidated Statements of Operations for the three months ended March 31, 2003 and 2002 |    |   | 17 | 
|                             |                                                                                              |                                                                                                                   | Consolidated Statement of Partners Equity for the three months ended March 31, 2003     |    |   | 18 | 
|                             |                                                                                              |                                                                                                                   | Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002 |    |   | 19 | 
|                             |                                                                                              |                                                                                                                   | Notes to Consolidated Financial Statements                                               |    |   | 20 | 
|                             | Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                   |                                                                                          | 31 |  
|                             | Item 3 Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                   |                                                                                          | 48 |  
|                             | Item 4 Controls and Procedures                                                               |                                                                                                                   |                                                                                          | 49 |  
|Part II OTHER INFORMATION    |                                                                                              |                                                                                                                   | 50                                                                                       |   
|                             | 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                                                                                   |                                                                                                                   |                                                                                          | 52 |  
|                             | Certifications                                                                               |                                                                                                                   |                                                                                          | 54 |  
|                             | Exhibit Index                                                                                |                                                                                                                   |                                                                                          | 56 |  





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

|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |              |   |           |           | 
|------------------------------------ | ------------------------------------------------------------------- | ----------- | ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | - | --------- | --------- | ------------ | - | --------- | --------- | 
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   | March 31, |           | December 31,
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   | 2003      |           | 2002        
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|Assets                               |                                                                     | (Unaudited) |                                                                                                                                     |                                                                                                                                             |   |          
|                                     | Real estate assets                                                  |             |                                                                                                                                     |                                                                                                                                             |   |           |           |              |  
|                                     |                                                                     |             | Land                                                                                                                                |                                                                                                                                             | $ | 269,669   |           |              | $ | 273,058   |          
|                                     |                                                                     |             | Building and improvements                                                                                                           |                                                                                                                                             |   | 1,995,326 |           |              |   | 1,976,809 |          
|                                     |                                                                     |             | Furniture, fixtures and equipment                                                                                                   |                                                                                                                                             |   | 239,382   |           |              |   | 246,634   |          
|                                     |                                                                     |             | Construction in progress                                                                                                            |                                                                                                                                             |   | 86,388    |           |              |   | 92,945    |          
|                                     |                                                                     |             | Investments in and advances to unconsolidated real estate entities                                                                  |                                                                                                                                             |   | 163,933   |           |              |   | 182,285   |          
|                                     |                                                                     |             | Land held for future development                                                                                                    |                                                                                                                                             |   | 21,754    |           |              |   | 24,879    |          
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|                                     |                                                                     |             | 2,776,452                                                                                                                           |                                                                                                                                             |   |           | 2,796,610 |             
|                                     |                                                                     |             | Less: accumulated depreciation                                                                                                      |                                                                                                                                             |   | (448,341  | )         |              |   | (426,136  | )        
|                                     |                                                                     |             | Assets held for sale                                                                                                                |                                                                                                                                             |   | 46,201    |           |              |   | 73,061    |          
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|                                     |                                                                     |             |                                                                                                                                     | Total real estate assets                                                                                                                    |   |           | 2,374,312 |              |   |           | 2,443,535 | 
|                                     | Cash and cash equivalents                                           |             |                                                                                                                                     | 3,811                                                                                                                                       |   |           |           | 6,390        |  
|                                     | Restricted cash                                                     |             |                                                                                                                                     | 1,443                                                                                                                                       |   |           |           | 1,369        |  
|                                     | Deferred charges, net                                               |             |                                                                                                                                     | 15,195                                                                                                                                      |   |           |           | 15,584       |  
|                                     | Other assets                                                        |             |                                                                                                                                     | 43,863                                                                                                                                      |   |           |           | 41,273       |  
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |              |   |           |          
|                                     |                                                                     |             | Total assets                                                                                                                        |                                                                                                                                             | $ | 2,438,624 |           |              | $ | 2,508,151 |          
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|Liabilities and shareholders equity |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|                                     | Notes payable                                                       |             | $                                                                                                                                   | 1,384,266                                                                                                                                   |   |           | $         | 1,414,555    |  
|                                     | Accrued interest payable                                            |             |                                                                                                                                     | 16,450                                                                                                                                      |   |           |           | 8,994        |  
|                                     | Dividend and distribution payable                                   |             |                                                                                                                                     | 19,392                                                                                                                                      |   |           |           | 33,252       |  
|                                     | Accounts payable and accrued expenses                               |             |                                                                                                                                     | 62,065                                                                                                                                      |   |           |           | 49,124       |  
|                                     | Security deposits and prepaid rents                                 |             |                                                                                                                                     | 7,955                                                                                                                                       |   |           |           | 8,250        |  
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|                                     |                                                                     |             | Total liabilities                                                                                                                   |                                                                                                                                             |   | 1,490,128 |           |              |   | 1,514,175 |          
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|                                     | Minority interest of preferred unitholders in Operating Partnership |             |                                                                                                                                     | 70,000                                                                                                                                      |   |           |           | 70,000       |  
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |              |   |           |          
|                                     | Minority interest of common unitholders in Operating Partnership    |             |                                                                                                                                     | 83,275                                                                                                                                      |   |           |           | 90,277       |  
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|                                     | Commitments and contingencies                                       |             |                                                                                                                                     |                                                                                                                                            |   |           |           |             |  
|                                     | Shareholders equity                                                |             |                                                                                                                                     |                                                                                                                                             |   |           |           |              |  
|                                     |                                                                     |             | Preferred stock, $.01 par value, 20,000,000 authorized:                                                                             |                                                                                                                                             |   |           |           |              |   |           |          
|                                     |                                                                     |             |                                                                                                                                     | 8 1/2% Series A Cumulative
Redeemable Shares, liquidation
preference $50 per share, 900,000 shares issued and outstanding                   |   |           | 9         |              |   |           | 9         | 
|                                     |                                                                     |             |                                                                                                                                     | 7
5/8% Series B Cumulative Redeemable Shares, liquidation
preference $25 per share, 2,000,000 shares issued and outstanding                 |   |           | 20        |              |   |           | 20        | 
|                                     |                                                                     |             |                                                                                                                                     | 7
5/8% Series C Cumulative Redeemable Shares, liquidation
preference $25 per share, 2,000,000 shares issued and outstanding                 |   |           | 20        |              |   |           | 20        | 
|                                     |                                                                     |             | Common stock, $.01 par value, 100,000,000 authorized:                                                                               |                                                                                                                                             |   |           |           |              |   |           |          
|                                     |                                                                     |             |                                                                                                                                     | 39,676,204 and 39,676,204 shares issued, 37,325,182 and
37,202,290 shares outstanding at March 31, 2003 and December 31, 2002, respectively |   |           | 396       |              |   |           | 396       | 
|                                     |                                                                     |             | Additional paid-in capital                                                                                                          |                                                                                                                                             |   | 897,643   |           |              |   | 940,122   |          
|                                     |                                                                     |             | Accumulated earnings                                                                                                                |                                                                                                                                             |   |          |           |              |   |          |          
|                                     |                                                                     |             | Accumulated other comprehensive income                                                                                              |                                                                                                                                             |   | (15,250   | )         |              |   | (14,822   | )        
|                                     |                                                                     |             | Deferred compensation                                                                                                               |                                                                                                                                             |   | (852      | )         |              |   | (639      | )        
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             
|                                     |                                                                     |             | 881,986                                                                                                                             |                                                                                                                                             |   |           | 925,106   |             
|                                     |                                                                     |             | Less common stock in treasury, at cost, 2,351,022 shares and
2,473,914 shares at March 31, 2003 and December 31, 2002, respectively |                                                                                                                                             |   | (86,765   | )         |              |   | (91,407   | )        
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |              |   |           |          
|                                     |                                                                     |             | Total shareholders equity                                                                                                          |                                                                                                                                             |   | 795,221   |           |              |   | 833,699   |          
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |              |   |           |          
|                                     |                                                                     |             | Total liabilities and shareholders equity                                                                                          |                                                                                                                                             | $ | 2,438,624 |           |              | $ | 2,508,151 |          
|                                     |                                                                     |             |                                                                                                                                     |                                                                                                                                             |   |           |           |             

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
|                                                                                              |                                                                               |                |                                            |            | March 31,         
|                                                                                              |                                                                               |                |                                            |            |                   
|                                                                                              |                                                                               |                |                                            |            | 2003               |         | 2002  
|                                                                                              |                                                                               |                |                                            |            |                    |         |       
|Revenues                                                                                      |                                                                               |                |                                            |            |                    |         |        |           
|                                                                                              | Rental                                                                        |                | $                                          | 78,862     |                    |         | $      | 78,788     |       
|                                                                                              | Other                                                                         |                |                                            | 2,911      |                    |         |        | 2,993      |       
|                                                                                              | Interest                                                                      |                |                                            | 234        |                    |         |        | 405        |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              |                                                                               | Total revenues |                                            |            | 82,007             |         |        |            | 82,186 |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|Expenses                                                                                      |                                                                               |                |                                            |            |                    |         |        |           
|                                                                                              | Property operating and maintenance (excluding items shown separately below)   |                |                                            | 33,626     |                    |         |        | 32,850     |       
|                                                                                              | Depreciation                                                                  |                |                                            | 22,728     |                    |         |        | 19,902     |       
|                                                                                              | Interest                                                                      |                |                                            | 16,561     |                    |         |        | 13,144     |       
|                                                                                              | Amortization of deferred loan costs                                           |                |                                            | 788        |                    |         |        | 555        |       
|                                                                                              | General and administrative                                                    |                |                                            | 3,624      |                    |         |        | 3,765      |       
|                                                                                              | Minority interest in consolidated property partnerships                       |                |                                            | (334       | )                  |         |        | (483       | )     
|                                                                                              | Other                                                                         |                |                                            | 567        |                    |         |        |           |       
|                                                                                              | Severance charges                                                             |                |                                            | 19,712     |                    |         |        |           |       
|                                                                                              | Asset impairment charge                                                       |                |                                            | 14,118     |                    |         |        |           |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              |                                                                               | Total expenses |                                            |            | 111,390            |         |        |            | 69,733 |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|Income (loss) from continuing operations before gains on property sales and
minority interest |                                                                               |                | (29,383                                    | )          |                    |         | 12,453 |           
|                                                                                              | Equity in losses of unconsolidated real estate entities                       |                |                                            | (393       | )                  |         |        | (343       | )     
|                                                                                              | Gains on property sales                                                       |                |                                            |           |                    |         |        | 13,275     |       
|                                                                                              | Minority interest of preferred unitholders                                    |                |                                            | (1,400     | )                  |         |        | (1,400     | )     
|                                                                                              | Minority interest of common unitholders                                       |                |                                            | 3,877      |                    |         |        | (2,543     | )     
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              |                                                                               |                | Income (loss) from continuing operations   |            |                    | (27,299 | )      |            |        | 21,442 |  
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|Discontinued operations                                                                       |                                                                               |                |                                            |            |                    |         |        |           
|                                                                                              | Income from discontinued operations, net of minority interest                 |                |                                            | 620        |                    |         |        | 2,309      |       
|                                                                                              | Gains (losses) on properties held for sale and sold, net of minority interest |                |                                            | 6,091      |                    |         |        | (6,731     | )     
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              |                                                                               |                | Income (loss) from discontinued operations |            |                    | 6,711   |        |            |        | (4,422 | )
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|Net income (loss)                                                                             |                                                                               |                | (20,588                                    | )          |                    |         | 17,020 |           
|                                                                                              | Dividends to preferred shareholders                                           |                |                                            | (2,862     | )                  |         |        | (2,862     | )     
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|Net income (loss) available to common shareholders                                            |                                                                               | $              | (23,450                                    | )          |                    | $       | 14,158 |           
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|Earnings per common share  basic                                                             |                                                                               |                |                                            |            |                    |         |        |           
|                                                                                              | Income (loss) from continuing operations (net of preferred dividends)         |                | $                                          | (0.81      | )                  |         | $      | 0.50       |       
|                                                                                              | Income (loss) from discontinued operations                                    |                |                                            | 0.18       |                    |         |        | (0.12      | )     
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              | Net income (loss) available to common shareholders                            |                | $                                          | (0.63      | )                  |         | $      | 0.38       |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              | Weighted average common shares outstanding  basic                            |                |                                            | 37,261,643 |                    |         |        | 36,937,682 |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|Earnings per common share  diluted                                                           |                                                                               |                |                                            |            |                    |         |        |           
|                                                                                              | Income (loss) from continuing operations (net of preferred dividends)         |                | $                                          | (0.81      | )                  |         | $      | 0.50       |       
|                                                                                              | Income (loss) from discontinued operations                                    |                |                                            | 0.18       |                    |         |        | (0.12      | )     
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              | Net income (loss) available to common shareholders                            |                | $                                          | (0.63      | )                  |         | $      | 0.38       |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              | Weighted average common shares outstanding  diluted                          |                |                                            | 37,261,648 |                    |         |        | 37,049,164 |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       
|                                                                                              | Dividends declared                                                            |                | $                                          | 0.45       |                    |         | $      | 0.78       |       
|                                                                                              |                                                                               |                |                                            |            |                    |         |        |            |       

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

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##### Table of Contents






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

|                                                                 |                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |         |       |         |             |      |   |      |      |   |   |         |       |   |   |         |         |         |  
|---------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | -- | --------- | - | ------ | --- | ------- | - | ----------- | ------- | ------------- | - | ------------ | - | -------- | ------- | ----- | ------- | ----------- | ---- | - | ---- | ---- | - | - | ------- | ----- | - | - | ------- | ------- | ------- | -
|                                                                 |                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |         |       |         | Accumulated |      |   |      |      |   |   |         |       |   |   |         |        
|                                                                 |                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         | Additional    |   |              |   |          |         | Other |         |             |      |   |      |      |   |   |         |       |   |  
|                                                                 |                                                                                                           |                                                          |    | Preferred |   | Common |     | Paid-in |   | Accumulated |         | Comprehensive |   | Deferred     |   | Treasury
|                                                                 |                                                                                                           |                                                          |    | Stock     |   | Stock  |     | Capital |   | Earnings    |         | Income        |   | Compensation |   | Stock    |         | Total
|                                                                 |                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |         |      
|Shareholders Equity and
Accumulated Earnings, December 31, 2002 |                                                                                                           | $                                                        | 49 |           |   | $      | 396 |         |   | $           | 940,122 |               |   | $            |  |          |         | $     | (14,822 | )           |      | $ | (639 | )    |   | $ | (91,407 | )     |   | $ | 833,699 |        
|                                                                 | Comprehensive income                                                                                      |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |         |       |         |             |      |   |      |      |   |   |         |       |   |   |         |         |        
|                                                                 |                                                                                                           | Net income (loss)                                        |    |           |  |        |     |         |  |             |         |               |  |              |   |          | (20,588 | )     |         |             |     |   |      |      |  |   |         |       |  |   |         |         | (20,588 | )
|                                                                 |                                                                                                           | Net change in derivative value, net of minority interest |    |           |  |        |     |         |  |             |         |               |  |              |   |          |        |       |         |             | (428 | ) |      |      |  |   |         |       |  |   |         |         | (428    | )
|                                                                 |                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |         |       |         |             |      |   |      |      |   |   |         |       |   |   |         |        
|                                                                 |                                                                                                           | Total comprehensive income (loss)                        |    |           |   |        |     |         |   |             |         |               |   |              |   |          |         |       |         |             |      |   |      |      |   |   |         |       |   |   |         |         | (21,016 | )
|                                                                 | Proceeds from Dividend
Reinvestment and Employee
Stock Purchase Plans                                     |                                                          |    |          |   |        |     |        |   |             |         | (3,897        | ) |              |   |         |         |       |         |            |      |   |      |     |   |   |         | 4,160 |   |   |         | 263     |        
|                                                                 | Adjustment for minority interest of unitholders in
Operating Partnership at dates of capital transactions |                                                          |    |          |   |        |     |        |   |             |         | 1,801         |   |              |   |         |         |       |         |            |      |   |      |     |   |   |         |      |   |   |         | 1,801   |        
|                                                                 | Stock-based compensation                                                                                  |                                                          |    |          |   |        |     |        |   |             |         | 44            |   |              |   |         |         |       |         |            |      |   |      |     |   |   |         |      |   |   |         | 44      |        
|                                                                 | Restricted stock issuances, net of forfeitures                                                            |                                                          |    |          |   |        |     |        |   |             |         | (174          | ) |              |   |         |         |       |         |            |      |   |      | (308 | ) |   |         | 482   |   |   |         |        |        
|                                                                 | Amortization of deferred compensation                                                                     |                                                          |    |          |   |        |     |        |   |             |         |              |   |              |   |         |         |       |         |            |      |   |      | 95   |   |   |         |      |   |   |         | 95      |        
|                                                                 | Dividends to preferred shareholders                                                                       |                                                          |    |          |   |        |     |        |   |             |         |              |   |              |   | (2,862   | )       |       |         |            |      |   |      |     |   |   |         |      |   |   |         | (2,862  | )      
|                                                                 | Dividends to common shareholders                                                                          |                                                          |    |          |   |        |     |        |   |             |         | (40,253       | ) |              |   | 23,450   |         |       |         |            |      |   |      |     |   |   |         |      |   |   |         | (16,803 | )      
|                                                                 |                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |         |       |         |             |      |   |      |      |   |   |         |       |   |   |         |        
|Shareholders Equity and
Accumulated Earnings, March 31, 2003    |                                                                                                           | $                                                        | 49 |           |   | $      | 396 |         |   | $           | 897,643 |               |   | $            |  |          |         | $     | (15,250 | )           |      | $ | (852 | )    |   | $ | (86,765 | )     |   | $ | 795,221 |        
|                                                                 |                                                                                                           |                                                          |    |           |   |        |     |         |   |             |         |               |   |              |   |          |         |       |         |             |      |   |      |      |   |   |         |       |   |   |         |        

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

3



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##### Table of Contents






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

|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |       |         |         |  
|---------------------------------------------------- | --------------------------------------------------- | ---------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------- | ------------------ | ------ | ----- | ----- | ------- | ------- | -
|                                                     |                                                     |                                                                                          |                                                                                                |         | Three Months Ended
|                                                     |                                                     |                                                                                          |                                                                                                |         | March 31,         
|                                                     |                                                     |                                                                                          |                                                                                                |         |                   
|                                                     |                                                     |                                                                                          |                                                                                                |         | 2003               |        | 2002 
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |      
|Cash Flows From Operating Activities                 |                                                     |                                                                                          |                                                                                                |         |                    |        |       |      
|                                                     |                                                     | Net income (loss)                                                                        |                                                                                                | $       | (20,588            | )      |       | $     | 17,020  |        
|                                                     |                                                     | Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                                                                                |         |                    |        |       |       |         |        
|                                                     |                                                     |                                                                                          | Gains on property sales   continuing operations                                               |         |                    |       |       |       |         | (13,275 | )
|                                                     |                                                     |                                                                                          | Gains on properties held for sale and sold  discontinued operations, net of
minority interest |         |                    | (6,091 | )     |       |         | 6,731   |  
|                                                     |                                                     |                                                                                          | Severance charges                                                                              |         |                    | 19,712 |       |       |         |        |  
|                                                     |                                                     |                                                                                          | Asset impairment charge                                                                        |         |                    | 14,118 |       |       |         |        |  
|                                                     |                                                     |                                                                                          | Minority interest of preferred unitholders in Operating Partnership                            |         |                    | 1,400  |       |       |         | 1,400   |  
|                                                     |                                                     |                                                                                          | Minority interest of common unitholders in Operating Partnership                               |         |                    | (3,877 | )     |       |         | 2,543   |  
|                                                     |                                                     |                                                                                          | Minority interest in discontinued operations                                                   |         |                    | 79     |       |       |         | 315     |  
|                                                     |                                                     |                                                                                          | Equity in loss of unconsolidated entities                                                      |         |                    | 393    |       |       |         | 343     |  
|                                                     |                                                     |                                                                                          | Stock-based compensation                                                                       |         |                    | 44     |       |       |         |        |  
|                                                     |                                                     |                                                                                          | Depreciation                                                                                   |         |                    | 23,194 |       |       |         | 20,905  |  
|                                                     |                                                     |                                                                                          | Amortization of deferred financing costs                                                       |         |                    | 788    |       |       |         | 555     |  
|                                                     |                                                     | Changes in assets, (increase) decrease in:                                               |                                                                                                |         |                    |        |       |       |         |        
|                                                     |                                                     |                                                                                          | Restricted cash                                                                                |         |                    | (74    | )     |       |         | 93      |  
|                                                     |                                                     |                                                                                          | Other assets                                                                                   |         |                    | (2,495 | )     |       |         | (7,980  | )
|                                                     |                                                     |                                                                                          | Deferred charges                                                                               |         |                    | (936   | )     |       |         | (894    | )
|                                                     |                                                     | Changes in liabilities, increase (decrease) in:                                          |                                                                                                |         |                    |        |       |       |         |        
|                                                     |                                                     |                                                                                          | Accrued interest payable                                                                       |         |                    | 7,456  |       |       |         | 7,766   |  
|                                                     |                                                     |                                                                                          | Accounts payable and accrued expenses                                                          |         |                    | (6,131 | )     |       |         | (8,792  | )
|                                                     |                                                     |                                                                                          | Security deposits and prepaid rents                                                            |         |                    | (295   | )     |       |         | (375    | )
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |       |         |        
|                                                     |                                                     | Net cash provided by operating activities                                                |                                                                                                |         | 26,697             |        |       |       | 26,355  |        
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |      
|Cash Flows From Investing Activities                 |                                                     |                                                                                          |                                                                                                |         |                    |        |       |      
|                                                     |                                                     | Construction and acquisition of real estate assets, net of payables                      |                                                                                                |         | (13,774            | )      |       |       | (44,702 | )      
|                                                     |                                                     | Net proceeds from property sales                                                         |                                                                                                |         | 38,262             |        |       |       | 41,393  |        
|                                                     |                                                     | Capitalized interest                                                                     |                                                                                                |         | (1,869             | )      |       |       | (4,433  | )      
|                                                     |                                                     | Recurring capital expenditures                                                           |                                                                                                |         | (1,462             | )      |       |       | (1,879  | )      
|                                                     |                                                     | Corporate additions and improvements                                                     |                                                                                                |         | (208               | )      |       |       | (279    | )      
|                                                     |                                                     | Non-recurring capital expenditures                                                       |                                                                                                |         | (958               | )      |       |       | (547    | )      
|                                                     |                                                     | Revenue generating capital expenditures                                                  |                                                                                                |         | (89                | )      |       |       | (327    | )      
|                                                     |                                                     | Distributions from
(investment in and advances to) unconsolidated entities               |                                                                                                |         | 17,902             |        |       |       | (17,860 | )      
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |       |         |        
|                                                     |                                                     | Net cash provided by (used in) investing activities                                      |                                                                                                |         | 37,804             |        |       |       | (28,634 | )      
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |      
|Cash Flows From Financing Activities                 |                                                     |                                                                                          |                                                                                                |         |                    |        |       |      
|                                                     |                                                     | Payments on notes payable                                                                |                                                                                                |         | (659               | )      |       |       | (580    | )      
|                                                     |                                                     | Lines of credit proceeds (repayments), net                                               |                                                                                                |         | (29,630            | )      |       |       | 43,336  |        
|                                                     |                                                     | Proceeds from Dividend Reinvestment and Employee Stock Purchase Plans                    |                                                                                                |         | 263                |        |       |       | 1,025   |        
|                                                     |                                                     | Distributions to preferred unitholders                                                   |                                                                                                |         | (1,400             | )      |       |       | (1,400  | )      
|                                                     |                                                     | Distributions to common unitholders                                                      |                                                                                                |         | (3,767             | )      |       |       | (3,993  | )      
|                                                     |                                                     | Dividends paid to preferred shareholders                                                 |                                                                                                |         | (2,862             | )      |       |       | (2,862  | )      
|                                                     |                                                     | Dividends paid to common shareholders                                                    |                                                                                                |         | (29,025            | )      |       |       | (28,699 | )      
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |       |         |        
|                                                     | Net cash provided by (used in) financing activities |                                                                                          |                                                                                                | (67,080 | )                  |        |       | 6,827 |        
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |      
|Net increase (decrease) in cash and cash equivalents |                                                     |                                                                                          | (2,579                                                                                         | )       |                    |        | 4,548 |      
|Cash and cash equivalents, beginning of period       |                                                     |                                                                                          | 6,390                                                                                          |         |                    |        | 4,803 |      
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |       |         |        
|Cash and cash equivalents, end of period             |                                                     | $                                                                                        | 3,811                                                                                          |         |                    | $      | 9,351 |      
|                                                     |                                                     |                                                                                          |                                                                                                |         |                    |        |       |      

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

4



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##### Table of Contents






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



|1. |  | ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | Post Properties, Inc. and its subsidiaries develop, own and manage upscale
multifamily apartment communities in selected markets in the United States.
As used herein, the term Company includes Post Properties, Inc. and its
subsidiaries, including Post Apartment Homes, L.P. (the Operating
Partnership), unless the context indicates otherwise. The Company, through
its wholly owned subsidiaries is the general partner and owns a majority
interest in the Operating Partnership which, through its subsidiaries,
conducts substantially all of the on-going operations of the Company. The
Company owns 30,078 apartment units in 80 apartment communities, including
859 apartment units under development and lease-up in three apartment
communities. At March 31, 2003,
approximately 52.5%, 18.8% and 7.4% (on a unit basis) of the Companys
communities were located in the Atlanta, Dallas and Tampa metropolitan areas,
respectively.                                                                                                                                                                   
|  
|   |  | The Company has elected to qualify and operate as a self-administrated and
self-managed real estate investment trust (REIT) for federal income tax
purposes. A REIT is a legal entity which holds real estate interests and,
through payments of dividends to shareholders, in practical effect is not
subject to federal income taxes at the corporate level.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | As of March 31, 2003, the Company had outstanding 37,325,182 shares of common
stock and owned the same number of units of common limited partnership
interests (Common Units) in the Operating Partnership, representing an
88.7% ownership interest in the Operating Partnership. Common Units held by
persons (including three directors of the Company) other than the Company
totaled 4,731,653 as of March 31, 2003 and represented a 11.3% common
minority interest in the Operating Partnership. Each Common Unit may be
redeemed by the holder thereof for either one share of Company common stock
or cash equal to the fair market value thereof at the time of redemption, at
the option of the Company. The Companys weighted average common ownership
interest in the Operating Partnership was 88.6% and 88.0% for the three
months ended March 31, 2003 and 2002, respectively.                                                                                                                                                                                                                               
|  
|   |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The accompanying unaudited financial statements have been prepared by the
Companys management in accordance with generally accepted accounting
principles for interim financial information and applicable rules and
regulations of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normally recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the three-month period ended March 31, 2003
are not necessarily indicative of the results that may be expected for the
full year. These financial statements should be read in conjunction with the
Companys audited financial statements and notes thereto included in the Post
Properties, Inc. Annual Report on Form 10-K for the year ended December 31,
2002. Certain 2002 amounts have been reclassified to conform to the current
years financial statement presentation.
|  
|   |  | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | On January 1, 2003, the Company elected to voluntarily change its method of
accounting for stock-based compensation to the fair value method prescribed
by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-Based Compensation, using the prospective method prescribed in
SFAS No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure. SFAS No. 148 also amended the disclosure requirements in both
annual and interim financial statements about the method of accounting used
for stock-based compensation and the effect of the method on reported
results. In prior periods, the Company accounted for stock-based
compensation under the intrinsic value method prescribed by Accounting Principles Board
(APB) Opinion 25, Accounting for Stock Issued to Employees.                                                                                                                                                                                                                                                                                    
|  
|   |  | Under the prospective method of adoption of SFAS No. 123 and SFAS No. 148,
the Company will reflect as an expense each period the estimated cost of
stock-based compensation calculated under the Black-Scholes option pricing
model for stock options, for all stock-based compensation granted after
January 1, 2003. For stock-based compensation granted prior to December 31,
2002, compensation expense was generally not recognized for stock options
granted at the Companys current stock price on the grant date. As a result,
the Companys general and administrative expenses may not be comparable
between periods. For the three months ended March 31, 2003, general and
administrative expenses included compensation expense of $44 recognized under
the fair value method.                                                                                                                                                                                                                                                                                                                                  

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##### Table of Contents





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

|                                                   |                                              |                                                                                                          |  |                    |         |      |  |   |        |  
|-------------------------------------------------- | -------------------------------------------- | -------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ---- |  | - | ------ | -
|                                                   |                                              |                                                                                                          |  | Three months ended
|                                                   |                                              |                                                                                                          |  | March 31,         
|                                                   |                                              |                                                                                                          |  |                   
|                                                   |                                              |                                                                                                          |  | 2003               |         | 2002
|                                                   |                                              |                                                                                                          |  |                    |         |     
|Net income (loss) available to common shareholders |                                              |                                                                                                          |  |                    |         |      |  |  
|                                                   |                                              | As reported                                                                                              |  | $                  | (23,450 | )    |  | $ | 14,158 |  
|                                                   |                                              | Stock-based compensation included in net income (loss) as reported, net of
minority interest             |  |                    | 39      |      |  |   |       |  
|                                                   |                                              | Stock-based compensation determined under the fair value method for all
awards, net of minority interest |  |                    | (94     | )    |  |   | (176   | )
|                                                   |                                              |                                                                                                          |  |                    |         |      |  |  
|                                                   |                                              | Pro forma                                                                                                |  | $                  | (23,505 | )    |  | $ | 13,982 |  
|                                                   |                                              |                                                                                                          |  |                    |         |      |  |  
|                                                   | Net income (loss) per common share  basic   |                                                                                                          |  |                    |         |      |  |   |       
|                                                   |                                              | As reported                                                                                              |  | $                  | (0.63   | )    |  | $ | 0.38   |  
|                                                   |                                              | Pro forma                                                                                                |  | $                  | (0.63   | )    |  | $ | 0.38   |  
|                                                   | Net income (loss) per common share  diluted |                                                                                                          |  |                    |         |      |  |   |       
|                                                   |                                              | As reported                                                                                              |  | $                  | (0.63   | )    |  | $ | 0.38   |  
|                                                   |                                              | Pro forma                                                                                                |  | $                  | (0.63   | )    |  | $ | 0.38   |  



| |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In 2002 and 2003, the Financial Accounting Standards Board issued several new
accounting pronouncements and the pronouncements with a potential impact on
the Company are discussed below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13 and Technical Corrections was issued in May 2002.
SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishments of Debt, which provided that gains and losses from early
debt retirements be treated as extraordinary items. Under SFAS No. 145,
gains and losses from early debt retirements will only be treated as
extraordinary items if they meet the criteria for extraordinary items under
APB No. 30. Since the definition of an extraordinary item is more
restrictive under APB No. 30, SFAS No. 145 will generally cause the Company
to treat gains or losses from early debt retirements as part of income before
extraordinary items. This part of SFAS No. 145 is effective for fiscal years
beginning after May 15, 2002 and requires the reclassification of prior
period extraordinary items not meeting the APB No. 30 criteria. The Company
adopted the requirements of SFAS No. 145 on January 1, 2003. The
implementation of the statement had no impact on the Companys results of
operations or financial position in the three months ended March 31, 2003 and
2002. In the second quarter of 2003, the Company will reclassify $120, net
of minority interest, of extraordinary items recorded in the second quarter
of 2002 from its prior period treatment as extraordinary items to expenses
used in the determination of income from continuing operations. The Company
believes this change will not be significant to the Companys results of
operations or its financial position. The remaining provisions of SFAS No.
145 are generally not applicable to the Company.
|
| |  | SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities was issued in July 2002. This Statement addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). SFAS 146 is effective for exit or disposal activities
initiated after December 31, 2002. The implementation of this Statement did
not have a significant effect on the Companys results of operations or its
financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | FASB Interpretation No. 45 (FIN No. 45), Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness
of Others was issued in November 2002. FIN No. 45 clarifies disclosure
requirements to be made by a guarantor in its interim and annual financial
statements regarding its obligations under certain guarantees that it has
issued. Additionally, it clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The disclosure
requirements of FIN No. 45 are effective for interim and annual financial
statements issued after December 15, 2002. The initial recognition and
measurement provisions of FIN No. 45 are applicable for guarantees issued or
modified after December 31, 2002. The                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

6



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##### Table of Contents





|   |  | Company has implemented the disclosure
requirements of FIN No. 45 effective with its December 31, 2002 financial
statements and adopted the recognition and measurement provisions effective
January 1, 2003. The adoption of the recognition and measurement provisions
of FIN No. 45 did not have a significant impact on the Companys financial
position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | FASB Interpretation No. 46 (FIN No. 46), Consolidation of Variable
Interest Entities, an interpretation of ARB No. 51 was issued in January
2003. FIN No. 46 requires consolidation of all legal entities in which the
enterprise holds contractual, ownership or other monetary interests that
change with changes in the entitys net asset value (such entities being
designated as variable interest entities) where the enterprise is deemed the
primary beneficiary. The consolidation provisions of FIN No. 46 are
applicable immediately to all variable interest entities created after
January 31, 2003. For variable interest entities created prior to February
1, 2003 where the Company is deemed to be the primary beneficiary,
consolidation of such entities will be required for the interim period ending
September 30, 2003. Information required to be disclosed in 2003 pursuant to
FIN No. 46 includes the nature, purpose, size and activities of all variable
interest entities where it is reasonably possible that such entities will be
required to be consolidated by the Company and the Companys maximum exposure
to loss from these entities. The Company currently does not have any
interests in variable interest entities and believes that FIN No. 46 will not
have a significant effect on its results of operations or financial position.
|  
|2. |  | NOTES PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | At March 31, 2003 and December 31, 2002, the Companys indebtedness consisted
of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |           | 
|--------------------------------- | -------------------- | ------------- | ------------- | ------------- |  | ----------------- | ---------------- | -------------- |  | ----------------- |  |  | - | ------- | ------- | --------- | - | ------- | ------- | --------- | 
|Description                       |                      | Payment Terms |               | Interest Rate |  | Maturity Date (1) |                  | March 31, 2003 |  | December 31, 2002
|                                  |                      |               |               |               |  |                   |                  |                |  |                  
|Unsecured Notes                   |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|                                  | Senior Notes         |               | Int           |               |  | 6.11% - 7.70      | %                |                |  | 2003-2010         |  |  | $ | 385,000 |         |           | $ | 385,000 |        
|                                  | Medium Term Notes    |               | Int           |               |  | 6.69% - 8.12      | %(2)             |                |  | 2004-2015         |  |  |   | 323,000 |         |           |   | 323,000 |        
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         | 708,000 |           |   |         | 708,000 |          
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|Unsecured Lines of Credit & Other |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|                                  | Revolver             |               |               | N/A           |  |                   | LIBOR + 0.85%(3) |                |  | 2004              |  |  |   | 155,000 |         |           |   | 185,000 |        
|                                  | Cash Management Line |               |               | N/A           |  |                   | LIBOR + 0.75%    |                |  | 2003              |  |  |   | 11,739  |         |           |   | 11,369  |        
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         | 166,739 |           |   |         | 196,369 |          
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|Conventional Fixed Rate (Secured) |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|                                  | FNMA                 |               | Prin. and Int |               |  | 6.975             | %(4)             |                |  | 2029              |  |  |   | 101,100 |         |           |   | 101,100 |        
|                                  | Other                |               | Prin. and Int |               |  | 5.50% - 7.69      | %                |                |  | 2007-2013         |  |  |   | 194,047 |         |           |   | 194,706 |        
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         | 295,147 |           |   |         | 295,806 |          
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|Tax Exempt Floating Rate          |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|                                  | Bonds (Secured)      |               | Int           |               |  | 1.15              | %(5)             |                |  | 2025              |  |  |   | 214,380 |         |           |   | 214,380 |        
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          
|                                  | Total                |               |               |               |  |                   |                  |                |  |                   |  |  |   |         | $       | 1,384,266 |   |         | $       | 1,414,555 | 
|                                  |                      |               |               |               |  |                   |                  |                |  |                   |  |  |   |         |         |           |   |         |         |          



---

|(1) |  | All outstanding indebtedness can be prepaid at any time, subject to
certain prepayment penalties.                                                                                                                                                                                                                                                                
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Contains $100,000 of Mandatory Par Put Remarketed Securities. The
annual interest rate on these securities to 2005 (the Remarketing
Date) is 6.85%. On the Remarketing Date, they are subject to mandatory
tender for remarketing.                                                                                                                             
|   
|(3) |  | Represents stated rate. At March 31, 2003, the average interest rate
was 2.08%.                                                                                                                                                                                                                                                                                  
|   
|(4) |  | Interest rate is fixed at 6.975%, inclusive of credit enhancement and
other fees, to 2009 through an interest rate swap arrangement.                                                                                                                                                                                                                             
|   
|(5) |  | FNMA credit enhanced bond indebtedness. Interest based on FNMA AAA
tax exempt rate plus credit enhancement and other fees of 0.639%.
Interest rate represents the rate at March 31, 2003 before credit
enhancements. The Company has outstanding interest rate cap
arrangements that limit the Companys exposure to increases in the base
interest rate to 5%.

Debt maturities

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

|                  |  |   |           | 
|----------------- |  | - | --------- | 
|Remainder of 2003 |  | $ | 103,149   | 
|2004              |  |   | 27,094    | 
|2005              |  |   | 204,402   | 
|2006              |  |   | 79,732    | 
|2007              |  |   | 112,178   | 
|Thereafter        |  |   | 690,972   | 
|                  |  |   |           | 
|                  |  | $ | 1,217,527 | 
|                  |  |   |           | 



---

|(1) |  | Excludes outstanding balances on
lines of credit of $166,739 discussed below.
|--- |  | -----------------------------------------------------------------------------

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|   |  | Unsecured Lines of Credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company utilizes a $320,000 three-year syndicated revolving line of
credit (the Revolver), for its short-term financing needs. At March 31,
2003, the stated interest rate for the Revolver was LIBOR plus 0.85% or prime
minus 0.25%. The Revolver provides for the rate to be adjusted up or down
based on changes in the credit ratings on the Companys senior unsecured
debt. The Revolver also includes a money market competitive bid option for
short-term funds up to $160,000 at rates below the stated line rate. The
credit agreement for the Revolver contains customary representations,
covenants and events of default, including covenants which restrict the
ability of the Operating Partnership to make distributions, in excess of
stated amounts, which in turn restrict the discretion of the Company to
declare and pay dividends. In general, during any fiscal year the Operating
Partnership may only distribute up to 100% of the Operating Partnerships
consolidated income available for distribution (as defined in the credit
agreement) exclusive of distributions of up to $30,000 of capital gains for
such year. The credit agreement contains exceptions to these limitations to
allow the Operating Partnership to make distributions necessary to allow the
Company to maintain its status as a REIT. The Company does not anticipate
that this covenant will adversely affect the ability of the Operating
Partnership to make distributions, or the Company to declare dividends, at
the Companys current dividend level. The Revolver matures in April 2004,
however, management expects to renew this facility later in 2003.
|  
|   |  | Through April 2003, the Company also had in place an additional $125,000 line
of credit facility for general corporate purposes. This line matured in
April 2003 and was not renewed. There were no outstanding borrowings under
this facility at March 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | 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 June 2003. Management expects to renew this facility at its
maturity. At March 31, 2003, the Company has issued letters of credit to
third parties totaling $963 under this facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|3. |  | INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | At March 31, 2003, 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 $10,321 at March 31, 2003. This excess investment is being
amortized as a reduction to earnings on a straight-line basis over the lives
of the related assets. The Company provides real estate services
(development, construction and property management) to the Property LLCs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

8



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##### Table of Contents





| |  | The operating results of the Company include its proportionate share of net
income (loss) from the investments in the Property LLCs. As of March 31,
2003, all of the apartment communities had commenced rental operations. A
summary of financial information for the Property LLCs in the aggregate is as
follows:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                           |  |           |         |              |  |   |         | 
|---------------------------------------------------------- |  | --------- | ------- | ------------ |  | - | ------- | 
|                                                           |  | March 31, |         | December 31,
|                                                           |  | 2003      |         | 2002        
|                                                           |  |           |         |             
|Real estate assets, net                                    |  | $         | 199,078 |              |  | $ | 198,854 | 
|Cash and other                                             |  |           | 3,640   |              |  |   | 2,330   | 
|                                                           |  |           |         |              |  |   |         | 
|Total assets                                               |  | $         | 202,718 |              |  | $ | 201,184 | 
|                                                           |  |           |         |              |  |   |         | 
|Mortgage notes payable                                     |  | $         | 16,977  |              |  | $ |        | 
|Construction notes payable to Company (1)                  |  |           | 138,791 |              |  |   | 160,294 | 
|Other liabilities                                          |  |           | 4,067   |              |  |   | 3,975   | 
|                                                           |  |           |         |              |  |   |         | 
|Total liabilities                                          |  |           | 159,835 |              |  |   | 164,269 | 
|Members equity                                            |  |           | 42,883  |              |  |   | 36,915  | 
|                                                           |  |           |         |              |  |   |         | 
|Total liabilities and members equity                      |  | $         | 202,718 |              |  | $ | 201,184 | 
|                                                           |  |           |         |              |  |   |         | 
|Companys equity investment                                |  | $         | 25,142  |              |  | $ | 21,991  | 
|                                                           |  |           |         |              |  |   |         | 
|Companys share of mortgage and construction notes payable |  | $         | 54,519  |              |  | $ | 56,103  | 
|                                                           |  |           |         |              |  |   |         | 



---

|(1) |  | All of the Companys construction financing to
these unconsolidated real estate entities is included
in the Companys outstanding debt and real estate
assets. At March 31, 2003 and December 31, 2002, the
venture partners share of the construction loans was
$90,214 and $104,191, respectively.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            |                                                                                |                |        |                    |       |      |      |     |       | 
|--------------------------- | ------------------------------------------------------------------------------ | -------------- | ------ | ------------------ | ----- | ---- | ---- | --- | ----- | 
|                            |                                                                                |                |        | Three Months Ended
|                            |                                                                                |                |        | March 31,         
|                            |                                                                                |                |        |                   
|                            |                                                                                |                |        | 2003               |       | 2002
|                            |                                                                                |                |        |                    |       |     
|Revenues                    |                                                                                |                |        |                    |       |      |      |    
|                            | Rental                                                                         |                | $      | 3,246              |       |      | $    | 331 |      
|                            | Other                                                                          |                |        | 139                |       |      |      | 72  |      
|                            |                                                                                |                |        |                    |       |      |      |    
|                            |                                                                                | Total revenues |        |                    | 3,385 |      |      |     | 403   | 
|                            |                                                                                |                |        |                    |       |      |      |    
|Expenses                    |                                                                                |                |        |                    |       |      |      |    
|                            | Property operating and maintenance
(exclusive of items shown
separately below) |                |        | 2,019              |       |      |      | 727 |      
|                            | Depreciation                                                                   |                |        | 1,333              |       |      |      | 396 |      
|                            | Interest                                                                       |                |        | 1,157              |       |      |      | 259 |      
|                            |                                                                                |                |        |                    |       |      |      |    
|                            |                                                                                | Total expenses |        |                    | 4,509 |      |      |     | 1,382 | 
|                            |                                                                                |                |        |                    |       |      |      |    
|Net loss                    |                                                                                | $              | (1,124 | )                  |       | $    | (979 | )  
|                            |                                                                                |                |        |                    |       |      |      |    
|Companys share of net loss |                                                                                | $              | (393   | )                  |       | $    | (343 | )  
|                            |                                                                                |                |        |                    |       |      |      |    



| |  | The Company has committed construction financing to three Property LLCs
totaling $144,402 ($138,791 funded at March 31, 2003). These loans earn
interest at LIBOR plus 1.75% and are secured by the apartment communities.
The loans mature on dates ranging from September 2003 to November 2004 and
are expected to be repaid from the proceeds of permanent project financings.
In February 2003, one of the Property LLCs repaid its outstanding
construction note payable to the Company of $24,071 through the proceeds from
a third-party non-recourse permanent mortgage note totaling $17,000 and from
additional member equity contributions. The mortgage note bears interest at
4.28%, requires monthly principal and interest payments based on a 30-year
amortization schedule and matures in March 2008. The Company issued a limited
guarantee and indemnity to the lender regarding certain customary
recourse liabilities and environmental matters up to a maximum
potential exposure of $5,000. The other member of the Property LLC is
obligated to reimburse the Company for up to its 65% share ($3,250)
of the maximum potential exposure under these arrangements.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9



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|   |  | 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 March 31, 2003, the Company had
substantially completed three of the communities and had funded approximately
$845 under the guarantee provisions of the agreements. The amounts funded
were accounted for as part of the Companys investment in the Property LLCs.
The Companys remaining maximum exposure for the fourth Property LLC totals
approximately $5,200. The Company does not currently expect to be required
to fund any guarantees relating to the Property LLC. Additionally, under
theses agreements, the Company is subject to project completion date
requirements, as defined. At March 31, 2003, the Company had met and
believes that it will meet the remaining completion date requirements and not
be subject to any additional costs.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|4. |  | REAL ESTATE ASSETS HELD FOR SALE / DISCONTINUED OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | The Company classifies real estate assets as held for sale after the approval
of its internal investment committee and after the Company has commenced an
active program to sell the assets. At March 31, 2003, the Company had
classified one apartment community and certain tracts of land as held for
sale. These real estate assets are reflected in the accompanying
consolidated balance sheet at $46,201, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, the operating results of real estate assets designated as held for
sale subsequent to January 1, 2002 are included in discontinued operations in
the consolidated statement of operations for all periods presented. Also
under the provisions of SFAS No. 144, the reserves, if any, to write down the
carrying value of real estate assets designated and classified as held for
sale after January 1, 2002 are included in discontinued operations. All
subsequent gains or additional losses on the sale of these assets are also
included in discontinued operations. Additionally under SFAS No. 144, any
impairment losses on assets held for continuing use are included in
continuing operations.                                                                                                                                                                                                                                          
|  
|   |  | For the three months ended March 31, 2003, income from discontinued
operations included the results of operations, through the earlier of
community sale date (if the community was sold between January 1, 2003 and
March 31, 2003) or March 31, 2003, of two apartment communities containing
1,009 units that were classified as held for sale at December 31, 2002. For
the three months ended March 31, 2002, income from discontinued operations
included the results of operations of eight apartment communities containing
3,134 units and one commercial property.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | The revenues and expenses of these communities for the three months ended
March 31, 2003 and 2002 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                                               |                                                                                |                |     |                    |       |      |       |       |       | 
|-------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------- | --- | ------------------ | ----- | ---- | ----- | ----- | ----- | 
|                                                               |                                                                                |                |     | Three Months Ended
|                                                               |                                                                                |                |     | March 31,         
|                                                               |                                                                                |                |     |                   
|                                                               |                                                                                |                |     | 2003               |       | 2002
|                                                               |                                                                                |                |     |                    |       |     
|Revenues                                                       |                                                                                |                |     |                    |       |      |       |      
|                                                               | Rental                                                                         |                | $   | 2,173              |       |      | $     | 7,662 |      
|                                                               | Other                                                                          |                |     | 71                 |       |      |       | 264   |      
|                                                               |                                                                                |                |     |                    |       |      |       |      
|                                                               |                                                                                | Total revenues |     |                    | 2,244 |      |       |       | 7,926 | 
|                                                               |                                                                                |                |     |                    |       |      |       |      
|Expenses                                                       |                                                                                |                |     |                    |       |      |       |      
|                                                               | Property operating and maintenance (exclusive of items shown separately below) |                |     | 805                |       |      |       | 3,054 |      
|                                                               | Depreciation                                                                   |                |     |                   |       |      |       | 864   |      
|                                                               | Interest                                                                       |                |     | 739                |       |      |       | 1,383 |      
|                                                               |                                                                                |                |     |                    |       |      |       |      
|                                                               |                                                                                | Total expenses |     |                    | 1,544 |      |       |       | 5,301 | 
|                                                               |                                                                                |                |     |                    |       |      |       |      
|Income from discontinued operations (before minority interest) |                                                                                | $              | 700 |                    |       | $    | 2,625 |      
|                                                               |                                                                                |                |     |                    |       |      |       |      



| |  | For the three months ended March 31, 2003, the Company recognized net gains
from discontinued operations of $7,981 ($7,072 net of minority interest), on
the sale of one community, containing 239 apartment units, reduced by losses
of $1,107 ($981 net of minority interest) resulting from losses on the sale
of certain land parcels and additional reserves to write-down to fair value
certain other land parcels previously classified as held for sale at December
31, 2002.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10



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|   |  | For the three months ended March 31, 2003, the Company recorded an impairment
loss of $14,118, under the provisions of SFAS No. 144, to write-down the cost
of an apartment community, located in Phoenix, Arizona, to its estimated fair
value, based upon a revised determination that it was more probable that this
community would be marketed for sale in the near term instead of held for
long-term investment. This community has not been classified as held for
sale at March 31, 2003 as
the Companys internal investment committee has not approved the sale of the
community and no program has been initiated to actively sell the community.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Under prior accounting pronouncements, operating results and net gains or
losses on the sale of assets classified as held for sale prior to December
31, 2001 are included in continuing operations. As a result of this
presentation, income from continuing operation and gains on property sales
are not comparable between periods. The discussion below relates to the
gains on property sales reported in continuing operations in the consolidated
statements of operations for the three months ended March 31, 2002.                                                                                                                                
|  
|   |  | 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. For the three months ended March 31, 2002, the consolidated
statements of operations include net income of $366 from these two
communities and one commercial property held for sale at December 31, 2001.                                                         
|  
|5. |  | EARNINGS PER SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | For the three months ended March 31, 2003 and 2002, a reconciliation of the
numerator and denominator used in the computation of basic and diluted income
from continuing operations per common share is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                                                                       |                                                                           |  |                    |            |      |  |   |            |  
|-------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- |  | ------------------ | ---------- | ---- |  | - | ---------- | -
|                                                                                       |                                                                           |  | Three Months Ended
|                                                                                       |                                                                           |  | March 31,         
|                                                                                       |                                                                           |  |                   
|                                                                                       |                                                                           |  | 2003               |            | 2002
|                                                                                       |                                                                           |  |                    |            |     
|Income (loss) from continuing operations
available to common shareholders (numerator): |                                                                           |  |                    |            |      |  |   |           
|                                                                                       | Income (loss) from continuing operations                                  |  | $                  | (27,299    | )    |  | $ | 21,442     |  
|                                                                                       | Less: Preferred stock dividends                                           |  |                    | (2,862     | )    |  |   | (2,862     | )
|                                                                                       |                                                                           |  |                    |            |      |  |   |           
|                                                                                       | Income (loss) from continuing operations available
to common shareholders |  | $                  | (30,161    | )    |  | $ | 18,580     |  
|                                                                                       |                                                                           |  |                    |            |      |  |   |           
|Common shares (denominator):                                                           |                                                                           |  |                    |            |      |  |   |           
|                                                                                       | Weighted average shares outstanding  basic                               |  |                    | 37,261,643 |      |  |   | 36,937,682 |  
|                                                                                       | Incremental shares from assumed conversion of
stock options               |  |                    | 5          |      |  |   | 111,482    |  
|                                                                                       |                                                                           |  |                    |            |      |  |   |           
|                                                                                       | Weighted average shares outstanding  diluted                             |  |                    | 37,261,648 |      |  |   | 37,049,164 |  
|                                                                                       |                                                                           |  |                    |            |      |  |   |           



|6. |  | DERIVATIVE FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | At March 31, 2003 and 2002, the Company had outstanding interest rate swap
agreements with a notional value of $129,000 with maturity dates ranging from
2005 to 2009. For the three months ended March 31, 2003 and 2002, the Company
recorded the unrealized net gains of $172, net of minority interest, and
$1,933, net of minority interest, respectively, on these cash flow hedges as
an increase in accumulated other comprehensive income, a shareholders equity
account, in the accompanying consolidated balance sheet. Within the next
twelve months, the Company expects to reclassify out of accumulated other
comprehensive income approximately $6,066.                                                                                                                                                                                                             
|  
|   |  | During the first quarter of 2003, the Company entered into two interest rate
cap arrangements with two financial institutions. The new interest rate cap
arrangements replaced three expiring interest rate cap arrangements and were
structured as cash flow hedges to provide a fixed ceiling at 5% for the
Companys variable rate, tax exempt borrowings. The Company is required to
maintain the interest rate exposure protection under the terms of the
financing arrangements. The interest rate cap arrangements are included on
the accompanying balance sheet at fair value. At March 31, 2003, the
difference of $600, net of minority interest, between the amortized costs of
the interest rate cap arrangements of $2,720 and their fair value of $2,044
is included in accumulated other comprehensive income, a shareholders equity
account. The $2,720 cost of the

11



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|   |  | arrangements is being amortized as
additional expense over their five-year term in accordance with SFAS No. 133,
as amended.                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Comprehensive income (loss) for the three months ended March 31, 2003 totaled
a loss of $21,016, as summarized on the consolidated statement of
shareholders equity and accumulated earnings. Comprehensive income for the
three months ended March 31, 2002 totaled income of $18,953 and consisted of
net income of $17,020 plus the net change in the value of the derivatives
discussed above of $1,933.                                                                                    
|  
|7. |  | SEGMENT INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | Segment Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | In accordance with SFAS No. 131, Disclosure About the Segments of an
Enterprise and Related Information, the Company presents segment information
based on the way that management organizes the segments within the enterprise
for making operating decisions and assessing performance. The segment
information is prepared on substantially the same basis as the internally
reported information used by the Companys chief operating decision makers to
manage the business.             
|  
|   |  | The Companys chief operating decision makers focus on the Companys primary
sources of income from apartment community rental operations. Apartment
community rental operations are broken down into four segments based on the
various stages in the apartment community ownership lifecycle. These segments
are described below. All commercial properties and other ancillary service
and support operations are aggregated in the line item other in the accompanying segment
information.



| |  |  | Fully stabilized communities  those apartment communities which have
been stabilized (the earlier of the point at which a property reaches
95% occupancy or one year after completion of construction) for both the
current and prior year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Communities stabilized during 2002  communities which reached
stabilized occupancy in the prior year.                                                                                                                                      
|
| |  |  | Development and lease-up communities  those communities that are in
lease-up but were not stabilized by the beginning of the current year,
including communities that stabilized during the current year.                                  
|
| |  |  | Sold communities  communities which were sold in the
prior year and not reflected as discontinued operations (see note 4).                                                                                                                 



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

12



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

|                                                        |                       |   |                    |        |      |   |         |        | 
|------------------------------------------------------- | --------------------- | - | ------------------ | ------ | ---- | - | ------- | ------ | 
|                                                        |                       |   | Three months ended
|                                                        |                       |   | March 31,         
|                                                        |                       |   |                   
|                                                        |                       |   | 2003               |        | 2002
|                                                        |                       |   |                    |        |     
|Revenues                                                |                       |   |                    |        |      |   |         |       
|Fully stabilized communities                            |                       | $ | 64,945             |        |      | $ | 68,105  |       
|Communities stabilized during 2002                      |                       |   | 8,787              |        |      |   | 6,223   |       
|Development and lease-up communities                    |                       |   | 3,414              |        |      |   | 1,721   |       
|Sold communities                                        |                       |   |                   |        |      |   | 736     |       
|Other                                                   |                       |   | 4,627              |        |      |   | 4,996   |       
|Interest income                                         |                       |   | 234                |        |      |   | 405     |       
|                                                        |                       |   |                    |        |      |   |         |       
|                                                        | Consolidated revenues |   | $                  | 82,007 |      |   | $       | 82,186 | 
|                                                        |                       |   |                    |        |      |   |         |       
|Contribution to NOI                                     |                       |   |                    |        |      |   |         |       
|Fully stabilized communities                            |                       | $ | 41,791             |        |      | $ | 44,891  |       
|Communities stabilized during 2002                      |                       |   | 5,642              |        |      |   | 3,389   |       
|Development and lease-up communities                    |                       |   | 1,695              |        |      |   | 953     |       
|Sold communities                                        |                       |   |                   |        |      |   | 366     |       
|Other                                                   |                       |   | (981               | )      |      |   | (668    | )     
|                                                        |                       |   |                    |        |      |   |         |       
|Consolidated net operating income                       |                       |   | 48,147             |        |      |   | 48,931  |       
|                                                        |                       |   |                    |        |      |   |         |       
|Interest income                                         |                       |   | 234                |        |      |   | 405     |       
|Minority interest in consolidated property
partnerships |                       |   | 334                |        |      |   | 483     |       
|Gains on property sales                                 |                       |   |                   |        |      |   | 13,275  |       
|Depreciation                                            |                       |   | (22,728            | )      |      |   | (19,902 | )     
|Interest                                                |                       |   | (16,561            | )      |      |   | (13,144 | )     
|Amortization of deferred loan costs                     |                       |   | (788               | )      |      |   | (555    | )     
|General and administrative                              |                       |   | (3,624             | )      |      |   | (3,765  | )     
|Other expenses                                          |                       |   | (567               | )      |      |   |        |       
|Severance charges                                       |                       |   | (19,712            | )      |      |   |        |       
|Asset impairment charge                                 |                       |   | (14,118            | )      |      |   |        |       
|Equity in losses of unconsolidated real
estate entities |                       |   | (393               | )      |      |   | (343    | )     
|Minority interest of preferred unitholders              |                       |   | (1,400             | )      |      |   | (1,400  | )     
|Minority interest of common unitholders                 |                       |   | 3,877              |        |      |   | (2,543  | )     
|                                                        |                       |   |                    |        |      |   |         |       
|Income (loss) from continuing operations                |                       | $ | (27,299            | )      |      | $ | 21,442  |       
|                                                        |                       |   |                    |        |      |   |         |       

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|8.  |  | SEVERANCE AND ASSET IMPAIRMENT CHARGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | In the first quarter of 2003, the Company recorded a $19,712 ($17,467 net
of minority interest) severance charge relating to the change in roles from
executive to non-executive status of the Companys former chairman and
vice-chairman of the board of directors. In addition, the Company recorded
a $14,118 ($12,510 net of minority interest) asset impairment charge, under
the provisions of SFAS No. 144, to write-down the cost of an apartment
community, located in Phoenix, Arizona, to its estimated fair value.                                                                                                                                                                                                
|   
|    |  | The severance charges consisted of a $13,994 charge representing the
discounted present value of the estimated payments to be made to the former
chairman and vice-chairman under their existing employment arrangements and
a $5,718 charge representing the discounted present value of estimated net
costs that may be incurred by the Company as a result of the settlement of
split-dollar life insurance obligations to the individuals under their
employment contracts. The estimated charge for the settlement of the
split-dollar life insurance obligations may change based upon a final legal
determination regarding these insurance contracts and a final settlement
among the parties.                         
|   
|    |  | The asset impairment charge relating to the Companys Phoenix, Arizona
apartment community was based upon a revised determination that it was more
probable that this community would be marketed for sale in the near term
instead of held for long-term investment. This determination was
based on the views of the Companys new chairman and current
chief executive officer resulting from a review of the Companys
apartment communities during the quarter ended March 31, 2003. This community has not been
classified as held for sale at March 31, 2003 as the Companys internal
investment committee has not approved the sale of the community and no
program has been initiated to actively sell the community.
|   
|9.  |  | SUPPLEMENTAL CASH FLOW INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Non-cash investing and financing activities for the three months ended
March 31, 2003 and 2002 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | During the three months ended March 31, 2003, the Companys derivative
financial instruments (see note 6) decreased in value causing an increase
in accounts payable and accrued expenses and a corresponding decrease in
shareholders equity of $428, net of minority interest. During the three
months ended March 31, 2002, the Companys derivative financial instruments
increased in value causing a decrease in accounts payable and accrued
expenses and a corresponding increase in shareholders equity of $1,933,
net of minority interest.                                                                                                                                                                        
|   
|    |  | During the three months ended March 31, 2003, holders of 97,772 units in
the Operating partnership exercised their option to convert their units to
shares of common stock of the Company on a one-for-one basis. These
conversions and adjustments for the dilutive impact of the Dividend
Reinvestment and Employee Stock Purchase and Option Plans and other capital
transactions result in adjustments to minority interest. The net effect of
the conversions and adjustments was a reclassification decreasing minority
interest and increasing shareholders equity in the amounts of $1,801 and
$115 for the three months ended March 31, 2003 and 2002, respectively.                                                 
|   
|10. |  | STOCK-BASED COMPENSATION PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | During the first quarter of 2003, the Company granted 13,117 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,
net of forfeitures, of $308 was initially reflected in shareholders equity
as additional capital and as deferred compensation, a contra shareholders
equity account. Such deferred compensation is amortized ratably into
compensation expense over the vesting period.                                                                                                                                                                                                                             
|   
|11. |  | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | On April 7, 2003, John A. Williams, chairman emeritus of the board,
withdrew a complaint for injunctive relief and damages filed on March 21,
2003. As a result, the temporary restraining order issued by the Superior
Court of Cobb County, Georgia in connection with the complaint also has
been withdrawn. The board of directors was to have voted on a number of
resolutions that would have restricted Mr. Williams with respect to certain
company matters, including restrictions on access to employees and
information. The temporary restraining order had enjoined the board from
voting on any such resolutions during the 30-day period.                                                                       

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|    |  | On May 5, 2003, the Company received notice that a shareholder derivative
and purported class action lawsuit was filed against members of the board
of directors of the Company, including John Williams, and the Company as a
nominal defendant. This complaint was filed in the Superior Court of Fulton
County, Atlanta, Georgia on May 2, 2003 and alleges various breaches of
fiduciary duties by the board of directors of the Company and seeks, among
other relief, the disclosure of certain information by the defendants. This
complaint also seeks to compel the defendants to undertake various actions
to facilitate a sale of the Company. On May 7, 2003, the plaintiff made a
request for voluntary expedited discovery. The defendants have not yet
filed an answer. The Company believes this lawsuit is without merit and
intends to vigorously defend against it.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On May 13, 2003, the Company
received notice that a shareholder derivative and purported class
action lawsuit was filed against certain members of the board of
directors of the Company and against the Company as a nominal defendant. Mr.
Williams was not named as a defendant in the lawsuit. The complaint
was filed in the Superior Court of Fulton County, Atlanta, Georgia on
May 12, 2003 and alleges breaches of fiduciary duties, abuse of
control and corporate waste by the defendants. The plaintiff seeks
monetary damages and, as appropriate, injunctive relief. The
defendants have not yet filed an answer. The Company believes this
lawsuit is without merit and intends to vigorously defend against it.                                                                                                                                                       
|   
|    |  | The Company is involved in various other legal proceedings incidental to
its business from time to time, most of which are expected to be covered by
liability insurance. Management of the Company believes that any resolution
of pending proceedings or liability to the Company which may arise as a
result of these proceedings, including the shareholder derivative and
purported class action litigation discussed above, will not have a material
adverse effect on the Companys results of operations or financial
position.                                                                                                                                                                                                                                                                                                                                               
|   
|12. |  | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | On April 7, 2003, Mr. Williams, former chairman and current chairman
emeritus of the board of directors, commenced a proxy contest to elect a
slate of five nominees to the board of directors at the 2003 annual meeting
of shareholders to be held on May 22, 2003 in opposition to the nominees proposed by the current
board. Management of the Company is aggressively opposing the Williams
nominees and supporting the re-election of the current board. The Company
estimates expenses related to the solicitation of proxies from
shareholders, in excess of expenses normally incurred for its annual
meeting, to aggregate up to approximately $4,000.                                                                                                                                                                                                                     
|   
|    |  | In April 2003, the Company announced that its executive vice president and
chief financial officer, and its executive vice president of asset
management, would be leaving the Company during the second quarter of 2003.
The Company estimates that total severance costs associated with the
departure of these two executives will be approximately $1,600 to $1,700.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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

|                                 |                                       |                                                                    |                          |           |           |           |              |           |           |           | 
|-------------------------------- | ------------------------------------- | ------------------------------------------------------------------ | ------------------------ | --------- | --------- | --------- | ------------ | --------- | --------- | --------- | 
|                                 |                                       |                                                                    |                          |           | March 31, |           | December 31,
|                                 |                                       |                                                                    |                          |           | 2003      |           | 2002        
|                                 |                                       |                                                                    |                          |           |           |           |             
|                                 |                                       | (Unaudited)                                                        |                          |           |           |          
|Assets                           |                                       |                                                                    |                          |           |           |          
|                                 | Real estate assets                    |                                                                    |                          |           |           |           |              |           |          
|                                 |                                       | Land                                                               |                          | $         | 269,669   |           |              | $         | 273,058   |          
|                                 |                                       | Building and improvements                                          |                          |           | 1,995,326 |           |              |           | 1,976,809 |          
|                                 |                                       | Furniture, fixtures and equipment                                  |                          |           | 239,382   |           |              |           | 246,634   |          
|                                 |                                       | Construction in progress                                           |                          |           | 86,388    |           |              |           | 92,945    |          
|                                 |                                       | Investments in and advances to unconsolidated real estate entities |                          |           | 163,933   |           |              |           | 182,285   |          
|                                 |                                       | Land held for future development                                   |                          |           | 21,754    |           |              |           | 24,879    |          
|                                 |                                       |                                                                    |                          |           |           |           |              |          
|                                 |                                       |                                                                    | 2,776,452                |           |           |           | 2,796,610    |          
|                                 |                                       | Less: accumulated depreciation                                     |                          |           | (448,341  | )         |              |           | (426,136  | )        
|                                 |                                       | Assets held for sale                                               |                          |           | 46,201    |           |              |           | 73,061    |          
|                                 |                                       |                                                                    |                          |           |           |           |              |          
|                                 |                                       |                                                                    | Total real estate assets |           |           | 2,374,312 |              |           |           | 2,443,535 | 
|                                 | Cash and cash equivalents             |                                                                    |                          | 3,811     |           |           |              | 6,390     |          
|                                 | Restricted cash                       |                                                                    |                          | 1,443     |           |           |              | 1,369     |          
|                                 | Deferred charges, net                 |                                                                    |                          | 15,195    |           |           |              | 15,584    |          
|                                 | Other assets                          |                                                                    |                          | 43,863    |           |           |              | 41,273    |          
|                                 |                                       |                                                                    |                          |           |           |           |              |          
|                                 |                                       |                                                                    | Total assets             |           | $         | 2,438,624 |              |           | $         | 2,508,151 | 
|                                 |                                       |                                                                    |                          |           |           |           |              |          
|Liabilities and partners equity |                                       |                                                                    |                          |           |           |           |              |          
|                                 | Notes payable                         |                                                                    | $                        | 1,384,266 |           |           | $            | 1,414,555 |          
|                                 | Accrued interest payable              |                                                                    |                          | 16,450    |           |           |              | 8,994     |          
|                                 | Distribution payable                  |                                                                    |                          | 19,392    |           |           |              | 33,252    |          
|                                 | Accounts payable and accrued expenses |                                                                    |                          | 62,065    |           |           |              | 49,124    |          
|                                 | Security deposits and prepaid rents   |                                                                    |                          | 7,955     |           |           |              | 8,250     |          
|                                 |                                       |                                                                    |                          |           |           |           |              |          
|                                 |                                       |                                                                    | Total liabilities        |           |           | 1,490,128 |              |           |           | 1,514,175 | 
|                                 |                                       |                                                                    |                          |           |           |           |              |          
|                                 | Commitments and contingencies         |                                                                    |                          |           |           |           |              |           |          
|                                 | Partners equity                      |                                                                    |                          |           |           |           |              |           |          
|                                 |                                       | Preferred units                                                    |                          |           | 215,000   |           |              |           | 215,000   |          
|                                 |                                       | Common units                                                       |                          |           |           |           |              |           |           |          
|                                 |                                       |                                                                    | General partner          |           |           | 8,607     |              |           |           | 9,143     | 
|                                 |                                       |                                                                    | Limited partners         |           |           | 742,220   |              |           |           | 786,682   | 
|                                 |                                       | Accumulated other comprehensive income                             |                          |           | (17,331   | )         |              |           | (16,849   | )        
|                                 |                                       |                                                                    |                          |           |           |           |              |          
|                                 |                                       |                                                                    | Total partners equity   |           |           | 948,496   |              |           |           | 993,976   | 
|                                 |                                       |                                                                    |                          |           |           |           |              |          
|                                 |                                       | Total liabilities and partners equity                             |                          | $         | 2,438,624 |           |              | $         | 2,508,151 |          
|                                 |                                       |                                                                    |                          |           |           |           |              |          

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

16



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

|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |            |        |        |  
|----------------------------------------------------------------------- | --------------------------------------------------------------------------- | -------------------------------------- | ------------------------------------------ | ---------- | ------------------ | ------- | ------ | ---------- | ------ | ------ | -
|                                                                        |                                                                             |                                        |                                            |            | Three months ended
|                                                                        |                                                                             |                                        |                                            |            | March 31,         
|                                                                        |                                                                             |                                        |                                            |            |                   
|                                                                        |                                                                             |                                        |                                            |            | 2003               |         | 2002  
|                                                                        |                                                                             |                                        |                                            |            |                    |         |       
|Revenues                                                                |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Rental                                                                      |                                        | $                                          | 78,862     |                    |         | $      | 78,788     |       
|                                                                        | Other                                                                       |                                        |                                            | 2,911      |                    |         |        | 2,993      |       
|                                                                        | Interest                                                                    |                                        |                                            | 234        |                    |         |        | 405        |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        |                                                                             | Total revenues                         |                                            |            | 82,007             |         |        |            | 82,186 |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|Expenses                                                                |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Property operating and maintenance (excluding items shown separately below) |                                        |                                            | 33,626     |                    |         |        | 32,850     |       
|                                                                        | Depreciation                                                                |                                        |                                            | 22,728     |                    |         |        | 19,902     |       
|                                                                        | Interest                                                                    |                                        |                                            | 16,561     |                    |         |        | 13,144     |       
|                                                                        | Amortization of deferred loan costs                                         |                                        |                                            | 788        |                    |         |        | 555        |       
|                                                                        | General and administrative                                                  |                                        |                                            | 3,624      |                    |         |        | 3,765      |       
|                                                                        | Minority interest in consolidated property partnerships                     |                                        |                                            | (334       | )                  |         |        | (483       | )     
|                                                                        | Other                                                                       |                                        |                                            | 567        |                    |         |        |           |       
|                                                                        | Severance charges                                                           |                                        |                                            | 19,712     |                    |         |        |           |       
|                                                                        | Asset impairment charge                                                     |                                        |                                            | 14,118     |                    |         |        |           |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        |                                                                             | Total expenses                         |                                            |            | 111,390            |         |        |            | 69,733 |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|Income (loss) from continuing operations before gains on property sales |                                                                             |                                        | (29,383                                    | )          |                    |         | 12,453 |           
|                                                                        | Equity in losses of unconsolidated real estate entities                     |                                        |                                            | (393       | )                  |         |        | (343       | )     
|                                                                        | Gains on property sales                                                     |                                        |                                            |           |                    |         |        | 13,275     |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        |                                                                             |                                        | Income (loss) from continuing operations   |            |                    | (29,776 | )      |            |        | 25,385 |  
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|Discontinued operations                                                 |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Income from discontinued operations                                         |                                        |                                            | 699        |                    |         |        | 2,625      |       
|                                                                        | Gains (losses) on properties held for sale and sold                         |                                        |                                            | 6,874      |                    |         |        | (7,652     | )     
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        |                                                                             |                                        | Income (loss) from discontinued operations |            |                    | 7,573   |        |            |        | (5,027 | )
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|Net income (loss)                                                       |                                                                             |                                        | (22,203                                    | )          |                    |         | 20,358 |           
|                                                                        |                                                                             | Distributions to preferred unitholders |                                            |            | (4,262             | )       |        |            | (4,262 | )     
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|Net income (loss) available to common unitholders                       |                                                                             | $                                      | (26,465                                    | )          |                    | $       | 16,096 |           
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|Earnings per common unit  basic                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Income (loss) from continuing operations (net of preferred distributions)   |                                        | $                                          | (0.81      | )                  |         | $      | 0.50       |       
|                                                                        | Income (loss) from discontinued operations                                  |                                        |                                            | 0.18       |                    |         |        | (0.12      | )     
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Net income (loss) available to common unitholders                           |                                        | $                                          | (0.63      | )                  |         | $      | 0.38       |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Weighted average common units outstanding  basic                           |                                        |                                            | 42,049,315 |                    |         |        | 41,994,047 |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|Earnings per common unit  diluted                                      |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Income (loss) from continuing operations (net of preferred distributions)   |                                        | $                                          | (0.81      | )                  |         | $      | 0.50       |       
|                                                                        | Income (loss) from discontinued operations                                  |                                        |                                            | 0.18       |                    |         |        | (0.12      | )     
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Net income (loss) available to common unitholders                           |                                        | $                                          | (0.63      | )                  |         | $      | 0.38       |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Weighted average common units outstanding  diluted                         |                                        |                                            | 42,049,320 |                    |         |        | 42,105,529 |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           
|                                                                        | Distributions declared                                                      |                                        | $                                          | 0.45       |                    |         | $      | 0.78       |       
|                                                                        |                                                                             |                                        |                                            |            |                    |         |        |           

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

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

|                                    |                                                                                                            |                                   |         |           |        |         |       |              |      |               |         |         |         |   |         |   |      |   |         |         |         |  
|----------------------------------- | ---------------------------------------------------------------------------------------------------------- | --------------------------------- | ------- | --------- | ------ | ------- | ----- | ------------ | ---- | ------------- | ------- | ------- | ------- | - | ------- | - | ---- | - | ------- | ------- | ------- | -
|                                    |                                                                                                            |                                   |         |           |        |         |       | Common Units |      | Accumulated   |         |         |         |  
|                                    |                                                                                                            |                                   |         |           |        |         |       |              |      | Other         |         |         |         |  
|                                    |                                                                                                            |                                   |         | Preferred |        | General |       | Limited      |      | Comprehensive |         |         |         |  
|                                    |                                                                                                            |                                   |         | Units     |        | Partner |       | Partners     |      | Income        |         | Total  
|                                    |                                                                                                            |                                   |         |           |        |         |       |              |      |               |         |        
|Partners Equity, December 31, 2002 |                                                                                                            | $                                 | 215,000 |           |        | $       | 9,143 |              |      | $             | 786,682 |         |         | $ | (16,849 | ) |      | $ | 993,976 |        
|                                    | Comprehensive Income                                                                                       |                                   |         |           |        |         |       |              |      |               |         |         |         |   |         |   |      |   |         |         |        
|                                    |                                                                                                            | Net income (loss)                 |         |           | 12,849 |         |       |              | (351 | )             |         |         | (34,701 | ) |         |   |     |   |         |         | (22,203 | )
|                                    |                                                                                                            | Net change in derivative value    |         |           |       |         |       |              |     |               |         |         |        |   |         |   | (482 | ) |         |         | (482    | )
|                                    |                                                                                                            |                                   |         |           |        |         |       |              |      |               |         |         |         |   |         |   |      |   |         |        
|                                    |                                                                                                            | Total comprehensive income (loss) |         |           |        |         |       |              |      |               |         |         |         |   |         |   |      |   |         |         | (22,685 | )
|                                    | Contributions from the Company related to
Dividend Reinvestment and Employee
Stock Purchase Plans          |                                   |         |          |        |         |       | 3            |      |               |         | 260     |         |   |         |  |      |   |         | 263     |        
|                                    | Stock-based compensation                                                                                   |                                   |         |          |        |         |       |             |      |               |         | 44      |         |   |         |  |      |   |         | 44      |        
|                                    | Distributions to preferred Unitholders                                                                     |                                   |         | (12,849   | )      |         |       |             |      |               |         | 8,587   |         |   |         |  |      |   |         | (4,262  | )      
|                                    | Distributions to common Unitholders                                                                        |                                   |         |          |        |         |       | (189         | )    |               |         | (18,746 | )       |   |         |  |      |   |         | (18,935 | )      
|                                    | Contributions from the Company related to
shares issued for restricted stock, net
of deferred compensation |                                   |         |          |        |         |       | 1            |      |               |         | 94      |         |   |         |  |      |   |         | 95      |        
|                                    |                                                                                                            |                                   |         |           |        |         |       |              |      |               |         |         |         |   |         |   |      |   |         |        
|Partners Equity, March 31, 2003    |                                                                                                            | $                                 | 215,000 |           |        | $       | 8,607 |              |      | $             | 742,220 |         |         | $ | (17,331 | ) |      | $ | 948,496 |        
|                                    |                                                                                                            |                                   |         |           |        |         |       |              |      |               |         |         |         |   |         |   |      |   |         |        

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

18



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##### Table of Contents






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

|                                     |                                                                                          |                                                                      |   |                    |        |      |   |         |         |  
|------------------------------------ | ---------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | - | ------------------ | ------ | ---- | - | ------- | ------- | -
|                                     |                                                                                          |                                                                      |   | Three Months Ended
|                                     |                                                                                          |                                                                      |   | March 31,         
|                                     |                                                                                          |                                                                      |   |                   
|                                     |                                                                                          |                                                                      |   | 2003               |        | 2002
|                                     |                                                                                          |                                                                      |   |                    |        |     
|Cash Flows From Operating Activities |                                                                                          |                                                                      |   |                    |        |      |   |        
|                                     | Net income (loss)                                                                        |                                                                      | $ | (22,203            | )      |      | $ | 20,358  |        
|                                     | Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |                                                                      |   |                    |        |      |   |         |        
|                                     |                                                                                          | Gains on property sales  continuing operations                      |   |                    |       |      |   |         | (13,275 | )
|                                     |                                                                                          | Gains on properties held for sale and sold  discontinued
operations |   |                    | (6,874 | )    |   |         | 7,652   |  
|                                     |                                                                                          | Severance charges                                                    |   |                    | 19,712 |      |   |         |        |  
|                                     |                                                                                          | Asset impairment charge                                              |   |                    | 14,118 |      |   |         |        |  
|                                     |                                                                                          | Stock-based compensation                                             |   |                    | 44     |      |   |         |        |  
|                                     |                                                                                          | Equity in loss of unconsolidated real estate entities                |   |                    | 393    |      |   |         | 343     |  
|                                     |                                                                                          | Depreciation                                                         |   |                    | 23,194 |      |   |         | 20,904  |  
|                                     |                                                                                          | Amortization of deferred financing costs                             |   |                    | 788    |      |   |         | 555     |  
|                                     | Changes in assets, (increase) decrease in:                                               |                                                                      |   |                    |        |      |   |         |        
|                                     |                                                                                          | Restricted cash                                                      |   |                    | (74    | )    |   |         | 93      |  
|                                     |                                                                                          | Other assets                                                         |   |                    | (2,495 | )    |   |         | (7,980  | )
|                                     |                                                                                          | Deferred charges                                                     |   |                    | (936   | )    |   |         | (894    | )
|                                     | Changes in liabilities, increase (decrease) in:                                          |                                                                      |   |                    |        |      |   |         |        
|                                     |                                                                                          | Accrued interest payable                                             |   |                    | 7,456  |      |   |         | 7,766   |  
|                                     |                                                                                          | Accounts payable and accrued expenses                                |   |                    | (6,131 | )    |   |         | (8,792  | )
|                                     |                                                                                          | Security deposits and prepaid rents                                  |   |                    | (295   | )    |   |         | (375    | )
|                                     |                                                                                          |                                                                      |   |                    |        |      |   |        
|                                     | Net cash provided by operating activities                                                |                                                                      |   | 26,697             |        |      |   | 26,355  |        
|                                     |                                                                                          |                                                                      |   |                    |        |      |   |        
|Cash Flows From Investing Activities |                                                                                          |                                                                      |   |                    |        |      |   |        
|                                     | Construction and acquisition of real estate assets, net of payables                      |                                                                      |   | (13,774            | )      |      |   | (44,702 | )      
|                                     | Net proceeds from property sales                                                         |                                                                      |   | 38,262             |        |      |   | 41,393  |        
|                                     | Capitalized interest                                                                     |                                                                      |   | (1,869             | )      |      |   | (4,433  | )      
|                                     | Recurring capital expenditures                                                           |                                                                      |   | (1,462             | )      |      |   | (1,879  | )      
|                                     | Corporate additions and improvements                                                     |                                                                      |   | (208               | )      |      |   | (279    | )      
|                                     | Non-recurring capital expenditures                                                       |                                                                      |   | (958               | )      |      |   | (547    | )      
|                                     | Revenue generating capital expenditures                                                  |                                                                      |   | (89                | )      |      |   | (327    | )      
|                                     | Distributions from
(investment in and advances to) unconsolidated entities               |                                                                      |   | 17,902             |        |      |   | (17,860 | )      
|                                     |                                                                                          |                                                                      |   |                    |        |      |   |        
|                                     | Net cash provided by (used in) investing activities                                      |                                                                      |   | 37,804             |        |      |   | (28,634 | )      
|                                     |                                                                                          |                                                                      |   |                    |        |      |   |        
|Cash Flows From Financing Activities |                                                                                          |                                                                      |   |                    |        |      |   |        
|                                     | Payments on notes payable                                                                |                                                                      |   | (659               | )      |      |   | (580    | )      
|                                     | Lines of credit proceeds (repayments), net                                               |                                                                      |   | (29,630            | )      |      |   | 43,336  |        
|                                     | Proceeds from Dividend Reinvestment and Employee Stock Purchase
Plans                    |                                                                      |   | 263                |        |      |   | 1,025   |        
|                                     | Distributions to preferred unitholders                                                   |                                                                      |   | (4,262             | )      |      |   | (4,262  | )      
|                                     | Distributions to common unitholders                                                      |                                                                      |   | (32,792            | )      |      |   | (32,692 | )      
|                                     |                                                                                          |                                                                      |   |                    |        |      |   |        
|                                     | Net cash provided by (used in) financing activities                                      |                                                                      |   | (67,080            | )      |      |   | 6,827   |        
|                                     |                                                                                          |                                                                      |   |                    |        |      |   |        
|                                     | Net increase (decrease) in cash and cash equivalents                                     |                                                                      |   | (2,579             | )      |      |   | 4,548   |        
|                                     | Cash and cash equivalents, beginning of period                                           |                                                                      |   | 6,390              |        |      |   | 4,803   |        
|                                     |                                                                                          |                                                                      |   |                    |        |      |   |        
|                                     | Cash and cash equivalents, end of period                                                 |                                                                      | $ | 3,811              |        |      | $ | 9,351   |        
|                                     |                                                                                          |                                                                      |   |                    |        |      |   |        

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

19



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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 Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | Post Apartment Homes, L.P. (the Operating Partnership), a Georgia limited
partnership, and its subsidiaries develop, own and manage upscale
multi-family apartment communities in selected markets in the United
States. Post Properties, Inc. (the Company) through its wholly owned
subsidiaries is the sole general partner, a limited partner and owns a
majority interest in the Operating Partnership. The Operating Partnership,
through its operating divisions and subsidiaries conducts substantially all
of the on-going operations of Post Properties, Inc., a publicly traded
company which operates as a self-administered and self-managed real estate
investment trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | At March 31, 2003, the Company owned 88.7% of the common limited
partnership interests (Common Units) in the Operating Partnership and
63.6% of the preferred limited partnership interests (Preferred
Units). The Companys weighted average common ownership interest in the Operating
Partnership was 88.6% and 88.0% for the three months ended March 31, 2003
and 2002 respectively. At March 31, 2003, Common Units held by persons
(including three directors of the Company) other than the Company
represented a 11.3% ownership interest in the Operating Partnership. Each
Common Unit may be redeemed by the holder thereof for either one share of
Company common stock or cash equal to the fair market value thereof at the
time of such redemptions, at the option of the Operating Partnership. The
Operating Partnership presently anticipates that it will cause shares of
common stock to be issued in connection with each such redemption rather
than paying cash (as has been done in all redemptions to date). With each
redemption of outstanding Common Units for Company common stock, the
Companys percentage ownership interest in the Operating Partnership will
increase. In addition, whenever the Company issues shares of common stock,
the Company will contribute any net proceeds therefrom to the Operating
Partnership and the Operating Partnership will issue an equivalent number
of Common Units to the Company.
|  
|   |  | The Operating Partnership owns 30,078 apartment units in 80 apartment
communities, including 859 apartment units under development and
lease-up in three apartment communities. At March 31, 2003, approximately 52.5%, 18.8% and 7.4% (on a
unit basis) of the Companys communities were located in the Atlanta,
Dallas and Tampa metropolitan areas, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | Under the provisions of the limited partnership agreement, as amended,
Operating Partnership net profits, net losses and cash flow (after
allocations to preferred ownership interests) are allocated to the partners
in proportion to their common ownership interests. Cash distributions from
the Operating Partnership shall be, at a minimum, sufficient to enable the
Company to satisfy its annual dividend requirements to maintain its REIT
status under the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The accompanying unaudited financial statements have been prepared by the
Operating Partnerships management in accordance with generally accepted
accounting principles for interim financial information and applicable
rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and disclosures
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting only
of normally recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations for the
three-month period ended March 31, 2003 are not necessarily indicative of
the results that may be expected for the full year. These financial
statements should be read in conjunction with the Operating Partnerships
audited financial statements and notes thereto included in the Post
Apartment Homes, L.P. Annual Report on Form 10-K for the year ended
December 31, 2002. Certain 2002 amounts have been reclassified to conform
to the current years financial statement presentation.                                                                                                                                                                                                                                                                                               
|  
|   |  | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | On January 1, 2003, the Operating Partnership elected to voluntarily change
its method of accounting for stock-based compensation to the fair value
method prescribed by Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based Compensation, using the prospective
method prescribed in SFAS No. 148, Accounting for Stock-Based Compensation
- Transition and Disclosure. SFAS No. 148 also amended the disclosure
requirements in both annual and interim financial statements about the
method of accounting used for stock-based compensation and the effect of
the method on reported results. In prior periods, the Operating Partnership
accounted for stock-based compensation under the intrinsic value
method prescribed by
Accounting Principles Board (APB) Opinion 25, Accounting for Stock
Issued to Employees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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| |  | Under the prospective method of adoption of SFAS No. 123 and SFAS No. 148,
the Operating Partnership will reflect as an expense each period the
estimated cost of stock-based compensation calculated under the
Black-Scholes option pricing model for stock options, for all stock-based
compensation granted after January 1, 2003. For stock-based compensation
granted prior to December 31, 2002, compensation expense was generally not
recognized for stock options granted at the Companys current stock price
on the grant date. As a result, the Operating Partnerships general and
administrative expenses may not be comparable between periods. For the
three months ended March 31, 2003, general and administrative expenses
included compensation expense of $44 recognized under the fair value
method.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The following table reflects the effect on the Operating Partnerships net
income and earnings per common share had the fair value method of
accounting under SFAS No. 123 been applied for each period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                                  |                                                                                |  |                    |         |      |  |   |        |  
|------------------------------------------------- | ------------------------------------------------------------------------------ |  | ------------------ | ------- | ---- |  | - | ------ | -
|                                                  |                                                                                |  | Three Months Ended
|                                                  |                                                                                |  | March 31,         
|                                                  |                                                                                |  |                   
|                                                  |                                                                                |  | 2003               |         | 2002
|                                                  |                                                                                |  |                    |         |     
|Net income (loss) available to common unitholders |                                                                                |  |                    |         |      |  |   |       
|                                                  | As reported                                                                    |  | $                  | (26,465 | )    |  | $ | 16,096 |  
|                                                  | Stock-based compensation included in net income
(loss) as reported             |  |                    | 44      |      |  |   |       |  
|                                                  | Stock-based compensation determined under the fair
value method for all awards |  |                    | (106    | )    |  |   | (200   | )
|                                                  |                                                                                |  |                    |         |      |  |   |       
|                                                  | Pro forma                                                                      |  | $                  | (26,527 | )    |  | $ | 15,896 |  
|                                                  |                                                                                |  |                    |         |      |  |   |       
|Net income (loss) per common unit  basic         |                                                                                |  |                    |         |      |  |   |       
|                                                  | As reported                                                                    |  | $                  | (0.63   | )    |  | $ | 0.38   |  
|                                                  | Pro forma                                                                      |  | $                  | (0.63   | )    |  | $ | 0.38   |  
|Net income (loss) per common unit  diluted       |                                                                                |  |                    |         |      |  |   |       
|                                                  | As reported                                                                    |  | $                  | (0.63   | )    |  | $ | 0.38   |  
|                                                  | Pro forma                                                                      |  | $                  | (0.63   | )    |  | $ | 0.38   |  



| |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In 2002 and 2003, the Financial Accounting Standards Board issued several
new accounting pronouncements and the pronouncements with a potential
impact on the Operating Partnership are discussed below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13 and Technical Corrections was issued in May 2002.
SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishments of Debt, which provided that gains and losses from early
debt retirements be treated as extraordinary items. Under SFAS No. 145,
gains and losses from early debt retirements will only be treated as
extraordinary items if they meet the criteria for extraordinary items under
APB No. 30. Since the definition of an extraordinary item is more
restrictive under APB No. 30, SFAS No. 145 will generally cause the
Operating Partnership to treat gains or losses from early debt retirements
as part of income before extraordinary items. This part of SFAS No. 145 is
effective for fiscal years beginning after May 15, 2002 and requires the
reclassification of prior period extraordinary items not meeting the APB
No. 30 criteria. The Operating Partnership adopted the requirements of SFAS
No. 145 on January 1, 2003. The implementation of the statement had no
impact on the Operating Partnerships results of operations or financial
position in the three months ended March 31, 2003 and 2002. In the second
quarter of 2003, the Operating Partnership will reclassify $136 of
extraordinary items recorded in the second quarter of 2002 from its prior
period treatment as extraordinary items to expenses used in the
determination of income from continuing operations. The Operating
Partnership believes this change will not be significant to the
Operating Partnerships results of operations or its financial position.
The remaining provisions of SFAS No. 145 are generally not applicable to
the Operating Partnership.
|
| |  | SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities was issued in July 2002. This Statement addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). SFAS 146 is effective for exit or disposal activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

21



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|   |  | initiated after December 31, 2002. The implementation of this Statement did
not have a significant effect on the Operating Partnerships results of
operations or its financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | FASB Interpretation No. 45 (FIN No. 45), Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Guarantees of
Indebtedness of Others was issued in November 2002. FIN No. 45 clarifies
disclosure requirements to be made by a guarantor in its interim and annual
financial statements regarding its obligations under certain guarantees
that it has issued. Additionally, it clarifies that a guarantor is required
to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee. The disclosure
requirements of FIN No. 45 are effective for interim and annual financial
statements issued after December 15, 2002. The initial recognition and
measurement provisions of FIN No. 45 are applicable for guarantees issued
or modified after December 31, 2002. The Operating Partnership has
implemented the disclosure requirements of FIN No. 45 effective with its
December 31, 2002 financial statements and adopted the recognition and
measurement provisions effective January 1, 2003. The adoption of the
recognition and measurement provisions of FIN No. 45 did not have a
significant impact on the Operating Partnerships financial position or
results of operations.                                                                                                                                                   
|  
|   |  | FASB Interpretation No. 46 (FIN No. 46), Consolidation of Variable
Interest Entities, an interpretation of ARB No. 51 was issued in January
2003. FIN No. 46 requires consolidation of all legal entities in which the
enterprise holds contractual, ownership or other monetary interests that
change with changes in the entitys net asset value (such entities being
designated as variable interest entities) where the enterprise is deemed
the primary beneficiary. The consolidation provisions of FIN No. 46 are
applicable immediately to all variable interest entities created after
January 31, 2003. For variable interest entities created prior to February
1, 2003 where the Operating Partnership is deemed to be the primary
beneficiary, consolidation of such entities will be required for the
interim period ending September 30, 2003. Information required to be
disclosed in 2003 pursuant to FIN No. 46 includes the nature, purpose, size
and activities of all variable interest entities where it is reasonably
possible that such entities will be required to be consolidated by the
Operating Partnership and the Operating Partnerships maximum exposure to
loss from these entities. The Operating Partnership currently does not have
any interests in variable interest entities and believes that FIN No. 46
will not have a significant effect on its results of operations or
financial position.
|  
|2. |  | NOTES PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | At March 31, 2003 and December 31, 2002, the Operating Partnerships
indebtedness consisted of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |           | 
|------------------------------------------ | -------------------- | ----- | ------------- | ------------- | ---- | ---------------- | ------------- | -------------- | -------- | --------- |  |  | ------- | ------- | ------------ | --------- | ------- | ------- | ------- | --------- | 
|                                           |                      |       | Payment       |               |      |                  |               |                | Maturity |           |  |  |         |         | December 31,
|Description                                |                      | Terms |               | Interest Rate |      | Date (1)         |               | March 31, 2003 |          | 2002     
|                                           |                      |       |               |               |      |                  |               |                |          |          
|Unsecured Notes                            |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |        
|                                           | Senior Notes         |       | Int           |               |      | 6.11% - 7.70     | %             |                |          | 2003-2010 |  |  | $       | 385,000 |              |           | $       | 385,000 |        
|                                           | Medium Term Notes    |       | Int           |               |      | 6.69% - 8.12     | %(2)          |                |          | 2004-2015 |  |  |         | 323,000 |              |           |         | 323,000 |        
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         | 708,000      |           |         |         | 708,000 |          
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          
|Unsecured Lines of Credit & Other
Revolver |                      |       | N/A           |               |      | LIBOR + 0.85%(3) |               |                | 2004     |           |  |  | 155,000 |         |              |           | 185,000 |        
|                                           | Cash Management Line |       |               | N/A           |      |                  | LIBOR + 0.75% |                |          | 2003      |  |  |         | 11,739  |              |           |         | 11,369  |        
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         | 166,739      |           |         |         | 196,369 |          
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          
|Conventional Fixed Rate (Secured)          |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          
|                                           | FNMA                 |       | Prin. and Int |               |      | 6.975%           | (4)           |                |          | 2029      |  |  |         | 101,100 |              |           |         | 101,100 |        
|                                           | Other                |       | Prin. and Int |               |      | 5.50% - 7.69     | %             |                |          | 2007-2013 |  |  |         | 194,047 |              |           |         | 194,706 |        
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         | 295,147      |           |         |         | 295,806 |          
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          
|Tax Exempt Floating Rate                   |                      | Int   |               |               | 1.15 | %(5)             |               |                | 2025     |           |  |  | 214,380 |         |              |           | 214,380 |        
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          
|                                           | Bonds (Secured)      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |          |         |         |         |          | 
|                                           | Total                |       |               |               |      |                  |               |                |          |           |  |  |         |         | $            | 1,384,266 |         |         | $       | 1,414,555 | 
|                                           |                      |       |               |               |      |                  |               |                |          |           |  |  |         |         |              |           |         |         |         |          



---

|(1) |  | All outstanding indebtedness can be prepaid at any time, subject to
certain prepayment penalties.                                                                                                                                                                                                                                                                                            
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Contains $100,000 of Mandatory Par Put Remarketed Securities. The
annual interest rate on these securities to 2005 (the Remarketing
Date) is 6.85%. On the Remarketing Date, they are subject to mandatory
tender for remarketing.                                                                                                                                                         
|   
|(3) |  | Represents stated rate. At March 31, 2003, the average interest rate
was 2.08%.                                                                                                                                                                                                                                                                                                              
|   
|(4) |  | Interest rate is fixed at 6.975%, inclusive of credit enhancement and
other fees, to 2009 through an interest rate swap arrangement.                                                                                                                                                                                                                                                         
|   
|(5) |  | FNMA credit enhanced bond indebtedness. Interest based on FNMA AAA
tax exempt rate plus credit enhancement and other fees of 0.639%.
Interest rate represents the rate at March 31, 2003 before credit
enhancements. The Operating Partnership has outstanding interest rate
cap arrangements that limit the Operating Partnerships exposure to
increases in the base interest rate to 5%.

22



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##### Table of Contents





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

|                  |  |   |           | 
|----------------- |  | - | --------- | 
|Remainder of 2003 |  | $ | 103,149   | 
|2004              |  |   | 27,094    | 
|2005              |  |   | 204,402   | 
|2006              |  |   | 79,732    | 
|2007              |  |   | 112,178   | 
|Thereafter        |  |   | 690,972   | 
|                  |  |   |           | 
|                  |  | $ | 1,217,527 | 
|                  |  |   |           | 



---

|(2) |  | Excludes outstanding balances on lines of credit of $166,739 discussed below.
|--- |  | -----------------------------------------------------------------------------



|   |  | Unsecured Lines of Credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Operating Partnership utilizes a $320,000 three-year syndicated
revolving line of credit (the Revolver), for its short-term financing
needs. At March 31, 2003, the stated interest rate for the Revolver was
LIBOR plus 0.85% or prime minus 0.25%. The Revolver provides for the rate
to be adjusted up or down based on changes in the credit ratings on the
Operating Partnerships senior unsecured debt. The Revolver also includes a
money market competitive bid option for short-term funds up to $160,000 at
rates below the stated line rate. The credit agreement for the Revolver
contains customary representations, covenants and events of default,
including covenants which restrict the ability of the Operating Partnership
to make distributions, in excess of stated amounts, which in turn restrict
the discretion of the Company to declare and pay dividends. In general,
during any fiscal year the Operating Partnership may only distribute up to
100% of the Operating Partnerships consolidated income available for
distribution (as defined in the credit agreement) exclusive of
distributions of up to $30,000 of capital gains for such year. The credit
agreement contains exceptions to these limitations to allow the Operating
Partnership to make distributions necessary to allow the Company to
maintain its status as a REIT. The Operating Partnership does not
anticipate that this covenant will adversely affect the ability of the
Operating Partnership to make distributions, or the Company to declare
dividends, at the Companys current dividend level. The Revolver matures in
April 2004, however, management expects to renew this facility later in
2003.
|  
|   |  | Through April 2003, the Operating Partnership also had in place an
additional $125,000 line of credit facility for general corporate purposes.
This line matured in April 2003 and was not renewed. There were no
outstanding borrowings under this facility at March 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | Additionally, the Operating Partnership has a $20,000 unsecured line of
credit with Wachovia Bank of Georgia, N.A. (the Cash Management Line).
The Cash Management Line bears interest at LIBOR plus 0.75% or prime minus
..25% and matures in June 2003. Management expects to renew this facility at
its maturity. At March 31, 2003, the Operating Partnership has issued
letters of credit to third parties totaling $963 under this facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|3. |  | INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | At March 31, 2003, 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 $10,321 at March 31, 2003. This excess
investment is being amortized as a reduction to earnings on a straight-line
basis over the lives of the related assets. The Operating Partnership
provides real estate services (development, construction and property
management) to the Property LLCs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

23



---



##### Table of Contents





| |  | The operating results of the Operating Partnership include its
proportionate share of net income (loss) from the investments in the
Property LLCs. As of March 31, 2003, all of the apartment communities had
commenced rental operations. A summary of financial information for the
Property LLCs in the aggregate is as follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                         |  |           |         |              |  |   |         | 
|------------------------------------------------------------------------ |  | --------- | ------- | ------------ |  | - | ------- | 
|                                                                         |  | March 31, |         | December 31,
|                                                                         |  | 2003      |         | 2002        
|                                                                         |  |           |         |             
|Real estate assets, net                                                  |  | $         | 199,078 |              |  | $ | 198,854 | 
|Cash and other                                                           |  |           | 3,640   |              |  |   | 2,330   | 
|                                                                         |  |           |         |              |  |   |         | 
|Total assets                                                             |  | $         | 202,718 |              |  | $ | 201,184 | 
|                                                                         |  |           |         |              |  |   |         | 
|Mortgage notes payable                                                   |  | $         | 16,977  |              |  | $ |        | 
|Construction notes payable to Operating Partnership (1)                  |  |           | 138,791 |              |  |   | 160,294 | 
|Other liabilities                                                        |  |           | 4,067   |              |  |   | 3,975   | 
|                                                                         |  |           |         |              |  |   |         | 
|Total liabilities                                                        |  |           | 159,835 |              |  |   | 164,269 | 
|Members equity                                                          |  |           | 42,883  |              |  |   | 36,915  | 
|                                                                         |  |           |         |              |  |   |         | 
|Total liabilities and members equity                                    |  | $         | 202,718 |              |  | $ | 201,184 | 
|                                                                         |  |           |         |              |  |   |         | 
|Operating Partnerships equity investment                                |  | $         | 25,142  |              |  | $ | 21,991  | 
|                                                                         |  |           |         |              |  |   |         | 
|Operating Partnerships share of mortgage and construction notes payable |  | $         | 54,519  |              |  | $ | 56,103  | 
|                                                                         |  |           |         |              |  |   |         | 



---

|(2) |  | 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 March 31,
2003 and December 31, 2002, the venture partners share of the
construction loans was $90,214 and $104,191, respectively.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                          |                                                                                |                |        |                    |       |      |      |     |       | 
|----------------------------------------- | ------------------------------------------------------------------------------ | -------------- | ------ | ------------------ | ----- | ---- | ---- | --- | ----- | 
|                                          |                                                                                |                |        | Three Months Ended
|                                          |                                                                                |                |        | March 31,         
|                                          |                                                                                |                |        |                   
|                                          |                                                                                |                |        | 2003               |       | 2002
|                                          |                                                                                |                |        |                    |       |     
|Revenues                                  |                                                                                |                |        |                    |       |      |      |    
|                                          | Rental                                                                         |                | $      | 3,246              |       |      | $    | 331 |      
|                                          | Other                                                                          |                |        | 139                |       |      |      | 72  |      
|                                          |                                                                                |                |        |                    |       |      |      |    
|                                          |                                                                                | Total Revenues |        |                    | 3,385 |      |      |     | 403   | 
|                                          |                                                                                |                |        |                    |       |      |      |    
|Expenses                                  |                                                                                |                |        |                    |       |      |      |    
|                                          | Property operating and maintenance
(exclusive of items shown separately
below) |                |        | 2,019              |       |      |      | 727 |      
|                                          | Depreciation                                                                   |                |        | 1,333              |       |      |      | 396 |      
|                                          | Interest                                                                       |                |        | 1,157              |       |      |      | 259 |      
|                                          |                                                                                |                |        |                    |       |      |      |    
|                                          |                                                                                | Total expenses |        |                    | 4,509 |      |      |     | 1,382 | 
|                                          |                                                                                |                |        |                    |       |      |      |    
|Net loss                                  |                                                                                |                | (1,124 | )                  |       |      | (979 | )  
|                                          |                                                                                |                |        |                    |       |      |      |    
|Operating Partnerships share of net loss |                                                                                | $              | (393   | )                  |       | $    | (343 | )  
|                                          |                                                                                |                |        |                    |       |      |      |    



| |  | The Operating Partnership has committed construction financing to three
Property LLCs totaling $144,402 ($138,791 funded at March 31, 2003). These
loans earn interest at LIBOR plus 1.75% and are secured by the apartment
communities. The loans mature on dates ranging from September 2003 to
November 2004 and are expected to be repaid from the proceeds of permanent
project financings. In February 2003, one of the Property LLCs repaid its
outstanding construction note payable to the Operating Partnership of
$24,071 through the proceeds from a third-party non-recourse permanent
mortgage note totaling $17,000 and from additional member equity
contributions. The mortgage note bears interest at 4.28%, requires monthly
principal and interest payments based on a 30-year amortization schedule
and matures in March 2008. The Operating Partnership issued a limited guarantee and
indemnity to the lender regarding certain customary recourse
liabilities and environmental matters up to a maximum potential
exposure of $5,000. The other member of the Property LLC is obligated
to reimburse the Operating Partnership for up to its 65% share ($3,250) of the
maximum potential exposure under these arrangements.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | As part of the development and construction services agreements entered
into between the Operating Partnership and the Property LLCs, the Operating
Partnership guaranteed the maximum total amount for certain construction
cost categories subject to aggregate limits (approximately $19,000). At
March 31, 2003, the Operating Partnership had substantially completed three
of the communities and had funded approximately $845 under the guarantee
provisions of the agreements. The amounts funded were accounted for as part
of the Operating Partnerships investment in the Property LLCs. The
Operating Partnerships remaining maximum exposure for the fourth Property
LLC totals approximately $5,200. The                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

24



---



##### Table of Contents





|   |  | Operating Partnership does not
currently expect to be required to fund any guarantees relating to the
Property LLC. Additionally, under theses agreements, the Operating
Partnership is subject to project completion date requirements, as defined.
At March 31, 2003, the Operating Partnership had met and believes that it
will meet the remaining completion date requirements and not be subject to
any additional costs.                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|4. |  | REAL ESTATE ASSETS HELD FOR SALE / DISCONTINUED OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | The Operating Partnership classifies real estate assets as held for sale
after the approval of its internal investment committee and after the
Operating Partnership has commenced an active program to sell the assets.
At March 31, 2003, the Operating Partnership had classified one apartment
community and certain tracts of land as held for sale. These real estate
assets are reflected in the accompanying consolidated balance sheet at
$46,201, 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.                                                                                                                                                                 
|  
|   |  | Under SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the operating results of real estate assets designated
as held for sale subsequent to January 1, 2002 are included in discontinued
operations in the consolidated statement of operations for all periods
presented. Also under the provisions of SFAS No. 144, the reserves, if any,
to write down the carrying value of real estate assets designated and
classified as held for sale after January 1, 2002 are included in
discontinued operations. All subsequent gains or additional losses on the
sale of these assets are also included in discontinued operations.
Additionally under SFAS No. 144, any impairment losses on assets held for
continuing use are included in continuing operations.
|  
|   |  | For the three months ended March 31, 2003, income from discontinued
operations included the results of operations, through the earlier of
community sale date (if the community was sold between January 1, 2003 and
March 31, 2003) or March 31, 2003, of two apartment communities containing
1,009 units that were classified as held for sale at December 31, 2002. For
the three months ended March 31, 2002, income from discontinued operations
included the results of operations of eight apartment communities
containing 3,134 units and one commercial property.                                                                                                                                                                                                                    
|  
|   |  | The revenues and expenses of these communities for the three months ended
March 31, 2003 and 2002 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                                               |                                                                                |                |     |                    |       |      |       |       |       | 
|-------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------- | --- | ------------------ | ----- | ---- | ----- | ----- | ----- | 
|                                                               |                                                                                |                |     | Three Months Ended
|                                                               |                                                                                |                |     | March 31,         
|                                                               |                                                                                |                |     |                   
|                                                               |                                                                                |                |     | 2003               |       | 2002
|                                                               |                                                                                |                |     |                    |       |     
|Revenues                                                       |                                                                                |                |     |                    |       |      |       |      
|                                                               | Rental                                                                         |                | $   | 2,173              |       |      | $     | 7,662 |      
|                                                               | Other                                                                          |                |     | 71                 |       |      |       | 264   |      
|                                                               |                                                                                |                |     |                    |       |      |       |      
|                                                               |                                                                                | Total Revenues |     |                    | 2,244 |      |       |       | 7,926 | 
|                                                               |                                                                                |                |     |                    |       |      |       |      
|Expenses                                                       |                                                                                |                |     |                    |       |      |       |      
|                                                               | Property operating and maintenance (exclusive of items
shown separately below) |                |     | 805                |       |      |       | 3,054 |      
|                                                               | Depreciation                                                                   |                |     |                   |       |      |       | 864   |      
|                                                               | Interest                                                                       |                |     | 739                |       |      |       | 1,383 |      
|                                                               |                                                                                |                |     |                    |       |      |       |      
|                                                               |                                                                                | Total expenses |     |                    | 1,544 |      |       |       | 5,301 | 
|                                                               |                                                                                |                |     |                    |       |      |       |      
|Income from discontinued operations
(before minority interest) |                                                                                | $              | 700 |                    |       | $    | 2,625 |      
|                                                               |                                                                                |                |     |                    |       |      |       |      



| |  | For the three months ended March 31, 2003, the Operating Partnership
recognized net gains from discontinued operations of $7,981 on the sale of
one community, containing 239 apartment units, reduced by losses of $1,107
resulting from losses on the sale of certain land parcels and additional
reserves to write-down to fair value certain other land parcels previously
classified as held for sale at December 31, 2002.                                                                                                                                                                                                                                                         
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For the three months ended March 31, 2003, the Operating Partnership
recorded an impairment loss of $14,118, under the provisions of SFAS No.
144, to write-down the cost of an apartment community, located in Phoenix,
Arizona, to its estimated fair value, based upon a revised determination
that it was more probable that this community would be marketed for sale in
the near term instead of held for long-term investment. This community has
not been classified as held for sale at March 31, 2003 as the Operating
Partnerships internal investment committee has not approved the sale of
the community and no program has been initiated to actively sell the
community.

25



---



##### Table of Contents





|   |  | Under prior accounting pronouncements, operating results and net gains or
losses on the sale of assets classified as held for sale prior to December
31, 2001 are included in continuing operations. As a result of this
presentation, income from continuing operation and gains on property sales
are not comparable between periods. The discussion below relates to the
gains on property sales reported in continuing operations in the
consolidated statements of operations for the three months ended March 31,
2002.                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | 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. For the three months ended March 31, 2002,
the consolidated statements of operations include net income of $366 from
these two communities and one commercial property held for sale at December
31, 2001.
|  
|5. |  | EARNINGS PER UNIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | For the three months ended March 31, 2003 and 2002, a reconciliation of the
numerator and denominator used in the computation of basic and diluted
income from continuing operations per common unit is as follows:                                                                                                                                                                                                                                                                                                                                                                                               

|                                                          |                                                                          |                                    |   |                    |        |      |   |            |        |  
|--------------------------------------------------------- | ------------------------------------------------------------------------ | ---------------------------------- | - | ------------------ | ------ | ---- | - | ---------- | ------ | -
|                                                          |                                                                          |                                    |   | Three Months Ended
|                                                          |                                                                          |                                    |   | March 31,         
|                                                          |                                                                          |                                    |   |                   
|                                                          |                                                                          |                                    |   | 2003               |        | 2002
|                                                          |                                                                          |                                    |   |                    |        |     
|Income (loss) available to common unitholders (numerator) |                                                                          |                                    |   |                    |        |      |   |           
|                                                          | Income (loss) from continuing operations                                 |                                    | $ | (29,776            | )      |      | $ | 25,385     |       
|                                                          |                                                                          | Less: preferred unit distributions |   |                    | (4,262 | )    |   |            | (4,262 | )
|                                                          |                                                                          |                                    |   |                    |        |      |   |           
|                                                          | Income (loss) from continuing operations available to common
unitholders |                                    | $ | (34,038            | )      |      | $ | 21,123     |       
|                                                          |                                                                          |                                    |   |                    |        |      |   |           
|Common units (denominator)                                |                                                                          |                                    |   |                    |        |      |   |           
|                                                          | Weighted average units outstanding  basic                               |                                    |   | 42,049,315         |        |      |   | 41,994,047 |       
|                                                          | Incremental units from assumed conversion of stock options               |                                    |   | 5                  |        |      |   | 111,482    |       
|                                                          |                                                                          |                                    |   |                    |        |      |   |           
|                                                          | Weighted average units outstanding  diluted                             |                                    |   | 42,049,320         |        |      |   | 42,105,529 |       
|                                                          |                                                                          |                                    |   |                    |        |      |   |           



|6. |  | DERIVATIVE FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | At March 31, 2003 and 2002, the Operating Partnership had outstanding
interest rate swap agreements with a notional value of $129,000 with
maturity dates ranging from 2005 to 2009. For the three months ended March
31, 2003 and 2002, the Operating Partnership recorded the unrealized net gains of
$194 and $2,198 respectively, on these cash flow hedges as an increase in
accumulated other comprehensive income, a shareholders equity account, in
the accompanying consolidated balance sheet. Within the next twelve months,
the Operating Partnership expects to reclassify out of accumulated other
comprehensive income approximately $6,066.                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | During the first quarter of 2003, the Operating Partnership entered into
two interest rate cap arrangements with two financial institutions. The new
interest rate cap arrangements replaced three expiring interest rate cap
arrangements and were structured as cash flow hedges to provide a fixed
ceiling at 5% for the Operating Partnerships variable rate, tax exempt
borrowings. The Operating Partnership is required to maintain the interest
rate exposure protection under the terms of the financing arrangements. The
interest rate cap arrangements are included on the accompanying balance
sheet at fair value. At March 31, 2003, the difference of $676 between the
amortized costs of the interest rate cap arrangements of $2,720 and their
fair value of $2,044 is included in accumulated other comprehensive income,
a shareholders equity account. The $2,720 cost of the arrangements is
being amortized as additional expense over their five-year term in
accordance with SFAS No. 133, as amended.
|  
|   |  | Comprehensive income (loss) for the three months ended March 31, 2003
totaled a loss of $22,685, as summarized on the consolidated statement of
shareholders equity and accumulated earnings. Comprehensive income for the
three months ended March 31, 2002 totaled income of $22,556 and consisted
of net income of $20,358 plus the net change in the value of the
derivatives discussed above of $2,198.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

26



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##### Table of Contents





|7. |  | SEGMENT INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Segment Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | In accordance with SFAS No. 131, Disclosure About the Segments of an
Enterprise and Related Information, the Operating Partnership presents
segment information based on the way that management organizes the segments
within the enterprise for making operating decisions and assessing
performance. The segment information is prepared on substantially the same
basis as the internally reported information used by the Operating
Partnerships chief operating decision makers to manage the business.             
|  
|   |  | The Operating Partnerships chief operating decision makers focus on the
Operating Partnerships primary sources of income from apartment community
rental operations. Apartment community rental operations are broken down
into four segments based on the various stages in the apartment community
ownership lifecycle. These segments are described below. All commercial
properties and other ancillary service and support operations are
aggregated in the line item other in the accompanying segment information.



| |  |  | Fully stabilized communities  those apartment communities which have
been stabilized (the earlier of the point at which a property reaches
95% occupancy or one year after completion of construction) for both
the current and prior year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Communities stabilized during 2002  communities which reached
stabilized occupancy in the prior year.                                                                                                                                      
|
| |  |  | Development and lease-up communities  those communities that are in
lease-up but were not stabilized by the beginning of the current year,
including communities that stabilized during the current year.                                  
|
| |  |  | Sold communities  communities which were sold in the prior
year and not reflected as discontinued operations (see note 4).                                                                                                                 



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

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

|                                                        |                       |   |                    |        |      |   |         |        | 
|------------------------------------------------------- | --------------------- | - | ------------------ | ------ | ---- | - | ------- | ------ | 
|                                                        |                       |   | Three Months Ended
|                                                        |                       |   | March 31,         
|                                                        |                       |   |                   
|                                                        |                       |   | 2003               |        | 2002
|                                                        |                       |   |                    |        |     
|Revenues                                                |                       |   |                    |        |      |   |         |       
|Fully Stabilized Communities                            |                       | $ | 64,945             |        |      | $ | 68,105  |       
|Communities Stabilized During 2002                      |                       |   | 8,787              |        |      |   | 6,223   |       
|Development and Lease-up Communities                    |                       |   | 3,414              |        |      |   | 1,721   |       
|Sold Communities                                        |                       |   |                   |        |      |   | 736     |       
|Other                                                   |                       |   | 4,627              |        |      |   | 4,996   |       
|Interest Income                                         |                       |   | 234                |        |      |   | 405     |       
|                                                        |                       |   |                    |        |      |   |         |       
|                                                        | Consolidated Revenues |   | $                  | 82,007 |      |   | $       | 82,186 | 
|                                                        |                       |   |                    |        |      |   |         |       
|Contribution to NOI                                     |                       |   |                    |        |      |   |         |       
|Fully stabilized communities                            |                       | $ | 41,791             |        |      | $ | 44,891  |       
|Communities stabilized during 2002                      |                       |   | 5,642              |        |      |   | 3,389   |       
|Development and lease-up communities                    |                       |   | 1,695              |        |      |   | 953     |       
|Sold communities                                        |                       |   |                   |        |      |   | 366     |       
|Other                                                   |                       |   | (981               | )      |      |   | (668    | )     
|                                                        |                       |   |                    |        |      |   |         |       
|Consolidated net operating income                       |                       |   | 48,147             |        |      |   | 48,931  |       
|                                                        |                       |   |                    |        |      |   |         |       
|Interest income                                         |                       |   | 234                |        |      |   | 405     |       
|Minority interest in consolidated property
partnerships |                       |   | 334                |        |      |   | 483     |       
|Gains on property sales                                 |                       |   |                   |        |      |   | 13,275  |       
|Depreciation                                            |                       |   | (22,728            | )      |      |   | (19,902 | )     
|Interest                                                |                       |   | (16,561            | )      |      |   | (13,144 | )     
|Amortization of deferred loan costs                     |                       |   | (788               | )      |      |   | (555    | )     
|General and administrative                              |                       |   | (3,624             | )      |      |   | (3,765  | )     
|Other expenses                                          |                       |   | (567               | )      |      |   |        |       
|Severance charges                                       |                       |   | (19,712            | )      |      |   |        |       
|Asset impairment charge                                 |                       |   | (14,118            | )      |      |   |        |       
|Equity in losses of unconsolidated real estate
entities |                       |   | (393               | )      |      |   | (343    | )     
|                                                        |                       |   |                    |        |      |   |         |       
|Income (loss) from continuing operations                |                       | $ | (29,776            | )      |      | $ | 25,385  |       
|                                                        |                       |   |                    |        |      |   |         |       

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|8.  |  | SEVERANCE AND ASSET IMPAIRMENT CHARGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | In the first quarter of 2003, the Operating Partnership recorded a $19,712
severance charge relating to the change in roles from executive to
non-executive status of the Companys former chairman and vice-chairman of
the board of directors. In addition, the Operating Partnership recorded a
$14,118 asset impairment charge, under the provisions of SFAS No. 144, to
write-down the cost of an apartment community, located in Phoenix, Arizona,
to its estimated fair value.                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | The severance charges consisted of a $13,994 charge representing the
discounted present value of the estimated payments to be made to the former
chairman and vice-chairman under their existing employment arrangements and a
$5,718 charge representing the discounted present value of estimated net
costs that may be incurred by the Operating Partnership as a result of the
settlement of split-dollar life insurance obligations to the individuals
under their employment contracts. The estimated charge for the settlement of
the split-dollar life insurance obligations may change based upon a final
legal determination regarding these insurance contracts and a final
settlement among the parties.                                                                                                                                                                  
|   
|    |  | The asset impairment charge relating to the Operating Partnerships Phoenix,
Arizona apartment community was based upon a revised determination that it
was more probable that this community would be marketed for sale in the near
term instead of held for long-term investment. This determination was
based on the views of the Companys new chairman and current
chief executive officer resulting from a review of the Operating Partnerships
apartment communities during the quarter ended March 31, 2003. This community has not been
classified as held for sale at March 31, 2003 as the Operating Partnerships
internal investment committee has not approved the sale of the community and
no program has been initiated to actively sell the community.                                                                                                             
|   
|9.  |  | SUPPLEMENTAL CASH FLOW INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Non-cash investing and financing activities for the three months ended March
31, 2003 and 2002 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | During the three months ended March 31, 2003, the Operating Partnerships
derivative financial instruments (see note 6) decreased in value causing an
increase in accounts payable and accrued expenses and a corresponding
decrease in partners equity of $482. During the three months ended March
31, 2002, the Operating Partnerships derivative financial instruments
increased in value causing a decrease in accounts payable and accrued
expenses and a corresponding increase in partners equity of $2,198.                                                                                                                                                                                                                                                                                                                                                               
|   
|10. |  | STOCK BASED COMPENSATION PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | During the first quarter of 2003, the Company granted 13,117 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, net of forfeitures, of $308 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.                                                                                                                                                                                                                                                                                                                                                                                       
|   
|11. |  | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | On April 7, 2003, John A. Williams, chairman emeritus of the board, withdrew
a complaint for injunctive relief and damages filed on March 21, 2003. As a
result, the temporary restraining order issued by the Superior Court of Cobb
County, Georgia in connection with the complaint also has been withdrawn. The
board of directors was to have voted on a number of resolutions that would
have restricted Mr. Williams with respect to certain company matters,
including restrictions on access to employees and information. The temporary
restraining order had enjoined the board from voting on any such resolutions
during the 30-day period.                                                                                                                                                                                                                              
|   
|    |  | On May 5, 2003, the Company received notice that a shareholder derivative and
purported class action lawsuit was filed against members of the board of
directors of the Company, including John Williams, and the Company as a
nominal defendant. This complaint was filed in the Superior Court of Fulton
County, Atlanta, Georgia on May 2, 2003 and alleges various breaches of
fiduciary duties by the board of directors of the Company and seeks, among
other relief, the disclosure of certain information by the defendants. This
complaint also seeks to compel the defendants to undertake various actions to
facilitate a sale of the Company. On May 7, 2003, the plaintiff made a
request for voluntary expedited discovery. The defendants have not yet filed
an answer. The Company believes this lawsuit is without merit and intends to
vigorously defend against it.
|   
|    |  | On May 13, 2003, the
Company received notice that a shareholder derivative and purported
class action lawsuit was filed against certain members of the board
of directors of the Company and against the Company as a nominal
defendant. Mr. Williams was not named as a defendant in the
lawsuit. The complaint was filed in the Superior Court of Fulton
County, Atlanta, Georgia on May 12, 2003 and alleges breaches of
fiduciary duties, abuse of control and corporate waste by the
defendants. The plaintiff seeks monetary damages and, as appropriate,
injunctive relief. The defendants have not yet filed an answer. The
Company believes this lawsuit is without merit and intends to
vigorously defend against it.                                                                                                                                                       

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|    |  | The Operating Partnership is involved in various other legal proceedings
incidental to its business from time to time, most of which are expected to
be covered by liability insurance. Management of the Operating Partnership
believes that any resolution of pending proceedings or liability to the
Operating Partnership which may arise as a result of these proceedings,
including the shareholder derivative and purported class action litigation
discussed above, will not have a material adverse effect on the Operating
Partnerships results of operations or financial position.                                                                  
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|12. |  | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | On April 7, 2003, Mr. Williams, former chairman and current chairman emeritus
of the board of directors, commenced a proxy contest to elect a slate of five
nominees to the board of directors at the 2003 annual meeting of shareholders
to be held on May 22, 2003 in opposition to the nominees proposed by the current board. Management of
the Company is aggressively opposing the Williams nominees and supporting the
re-election of the current board. The Company estimates expenses related to
the solicitation of proxies from shareholders, in excess of expenses normally
incurred for its annual meeting, to aggregate up to approximately $4,000.
|   
|    |  | In April 2003, the Operating Partnership announced that its executive vice
president and chief financial officer, and its executive vice president of
asset management, would be leaving the Operating Partnership during the
second quarter of 2003. The Operating Partnership estimates that total
severance costs associated with the departure of these two executives will be
approximately $1,600 to $1,700.                                                                                                                                                                                                                                               

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




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

General

Post Properties, Inc. and its subsidiaries develop, own and manage upscale
multifamily apartment communities in selected markets in the United States. As
used in this report, the term Company includes Post Properties, Inc. and its
subsidiaries, including Post Apartment Homes, L.P. (the Operating
Partnership), unless the context indicates otherwise. The Company, through
its wholly owned subsidiaries is the general partner and owns a majority
interest in the Operating Partnership which, through its subsidiaries, conducts
substantially all of the on-going operations of the Company. The Company owns
30,078 apartment units in 80 apartment communities, including 859 apartment
units in three apartment communities under development and lease-up. At March 31, 2003, approximately 52.5%, 18.8% and
7.4% (on a unit basis) of the Companys communities are located in the Atlanta,
Dallas and Tampa metropolitan area, respectively.

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

At March 31, 2003, the Company owned approximately 88.7% of the common limited
partnership interests (Common Units) in the Operating Partnership. Common
Units held by persons (including certain officers and directors) other than the
Company represented a 11.3% common minority interest in the Operating
Partnership.

The following discussion should be read in conjunction with all of the
accompanying consolidated financial statements appearing elsewhere in this
report. This discussion is combined for the Company and the Operating
Partnership as their results of operations and the financial condition are
substantially the same except for the effect of the 11.3% common minority
interest in the Operating Partnership. See the summary financial information
in the section below titled, Results of Operations.

Disclosure Regarding Forward-Looking Statements

Certain statements made in this report, and other written or oral statements
made by or on behalf of the Company, may constitute forward-looking
statements within the meaning of the federal securities laws. Statements
regarding future events and developments and the Companys future performance,
as well as managements expectations, beliefs, plans, estimates or projections
relating to the future, are forward-looking statements within the meaning of
these laws. Forward-looking statements include statements preceded by, followed
by or that include the words believes, expects, anticipates, plans,
estimates, or similar expressions. Examples of such statements in this report
include our expectations with regard to: net operating income for 2003,
occupancy levels and rental rates, operating expenses, stabilized community
revenues in excess of specified expenses, accounting recognition and
measurement of guarantees, employee severance charges and other accrued
liabilities, debt maturities and financing needs, dividend payments, our
ability to meet new construction, development and other long-term liquidity
requirements, and our ability to execute asset sales. All forward-looking
statements are subject to certain risks and uncertainties that could cause
actual events to differ materially from those projected. Management believes
that these forward-looking statements are reasonable; however, you should not
place undue reliance on such statements. These statements are based on current
expectations and speak only as of the date of such statements. The Company
undertakes no obligation to publicly update or revise any forward-looking
statement, whether as a result of future events, new information or otherwise.

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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:



| |  | The Companys ability to successfully defend against Mr. Williams proxy contest;                                                                                                            
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | 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;       
| 
| |  | Uncertainties associated with the timing and amount of asset sales and the resulting gains/losses associated with such
asset sales;                                                          
| 
| |  | Conditions affecting ownership of residential real estate and general conditions in the multi-family residential real
estate market;                                                         
| 
| |  | The effects of changes in accounting policies and other regulatory matters detailed in the Companys filings with the
Securities and Exchange Commission and uncertainties of litigation; and
| 
| |  | The Companys ability to continue to qualify as a real estate investment trust under the Code.                                                                                               

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

Critical Accounting Policies and New Accounting Pronouncements

In the preparation of financial statements and in the determination of Company
operating performance, the Company utilizes certain significant accounting
polices. The Companys significant accounting policies are included in the
notes to the Companys audited financial statements included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2002. The
discussion below addresses the implementation and the impact of new
pronouncements and accounting policies in the three months ended March 31,
2003.

On January 1, 2003, the Company elected to voluntarily change its method of
accounting for stock-based compensation to the fair value method prescribed by
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, using the prospective method
prescribed by SFAS No.
148, Accounting for Stock-Based Compensation  Transition and Disclosure.
SFAS No. 148 also amended the disclosure requirements in both annual and
interim financial statements about the method of accounting used for
stock-based compensation and the effect of the method on reported results. In
prior periods, the Company accounted for stock-based compensation under the
intrinsic value method by Accounting Principles Board (APB) Opinion 25,
Accounting for Stock Issued to Employees.

Under the prospective method of adoption of SFAS No. 123 and SFAS No. 148, the
Company will reflect as an expense each period the estimated cost of
stock-based compensation, calculated under the Black-Scholes option pricing
model for stock options, for all stock-based compensation granted after January
1, 2003. For stock-based compensation granted prior to December 31, 2002,
compensation expense was generally not recognized for stock options granted at
the Companys current stock price on the grant date. As a result, the
Companys general and administrative expenses may not be comparable between
periods. For the three months ended March 31, 2003, general and administrative
expenses included stock-based compensation expense of $44 recognized under the
fair value method. Note 1 to the consolidated financial statements reflects
the Companys net income and earnings per share had the fair value method of
accounting under SFAS No. 123 been applied for each period.

SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13 and Technical Corrections was issued in May 2002. SFAS No. 145
rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishments of Debt,
which provided that gains and losses from early debt retirements be treated as
extraordinary items. Under SFAS No. 145, gains and losses from early debt
retirements will only be treated as extraordinary items if they meet the
criteria for extraordinary items under APB No. 30. Since the definition of an
extraordinary item is more restrictive under APB No. 30, SFAS No. 145 will
generally cause the Company to treat gains or losses from early debt
retirements as part of income before extraordinary items. This part of SFAS
No. 145 is effective for fiscal years beginning after May 15, 2002 and requires
the reclassification of prior period extraordinary items not meeting the APB
No. 30 criteria. The Company adopted the requirements of SFAS No. 145 on January
1, 2003. The implementation of this statement had no impact on the Companys
results of operations or its financial

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position in the three months ended March 31, 2003 and 2002. In the second
quarter of 2003, the Company will reclassify $120, net of minority interest, of
extraordinary items recorded in the second quarter of 2002 from its prior
period treatment as extraordinary items to expenses used in the determination
of income from continuing operations. The Company believes this change will
not be significant to the Companys results of operations or its financial
position. The remaining provisions of SFAS No. 145 are generally not applicable
to the Company.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities
was issued in July 2002. This Statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring). SFAS No. 146 is effective
for exit or disposal activities initiated after December 31, 2002. The
implementation of this Statement did not have a significant effect on the
Companys results of operations or its financial position in the three months
ended March 31, 2003.

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

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

Results of Operations

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

The Companys revenues and earnings are generated primarily from the operation
of its apartment communities. For purposes of evaluating comparative operating
performance, the Company categorizes its operating communities based on the
period each community reaches stabilized occupancy. A community is generally
considered by the Company to have achieved stabilized occupancy on the earlier
to occur of (1) attainment of 95% physical occupancy on the first day of any
month or (2) one year after completion of construction.

At March 31, 2003, the Companys portfolio of wholly-owned and majority-owned
apartment communities consisted of the following: (1) 67 communities that were
completed and stabilized for all of the current and prior year, (2) five
communities that achieved full stabilization during 2002, and (3) three
communities and additions to an existing community currently in the development
or lease-up stage. Sold communities include communities sold in 2002 that
were not reflected in discontinued operations under SFAS No. 144 (see below).
These operating segments exclude one apartment community held for sale at March
31, 2003 and four apartment communities held in unconsolidated entities.

The Company has adopted an accounting policy related to communities in the
lease-up stage whereby substantially all operating expenses (including
pre-opening marketing and management and leasing personnel expenses) are
expensed as incurred. During the lease-up phase, the sum of interest expense on
completed units and other operating expenses (including pre-opening

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marketing and management and leasing personnel expenses) will initially exceed
rental revenues, resulting in a lease-up deficit, which continues until such
time as rental revenues exceed such expenses. Lease up deficits for the three
months ended March 31, 2003 and 2002 were $258 and $455, respectively.

In order to evaluate the operating performance of its communities for the
comparative years listed below, the Company has presented financial information
which summarizes the rental and other revenues and property operating and
maintenance expense (excluding depreciation and amortization) and net operating
income on a comparative basis for all of its operating communities. Net
operating income is a supplemental non-GAAP financial measure. The Company
believes that the line on the Companys consolidated statement of operations
entitled income (loss) from continuing operations is the most directly
comparable GAAP measure to net operating income. See note 7 to the
consolidated financial statements for a reconciliation of net operating income
to GAAP income (loss) from continuing operations.

Comparison of Three Months Ended March 31, 2003 to Year Ended March 31, 2002

The operating performance from continuing operations for all of the Companys
apartment communities summarized by operating segment for the three months
ended March 31, 2003 and 2002 is summarized as follows:

|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|------------------------------------------------------------------------------------- |  | ------------------ | ------ | ---- |  | -------- | ------ |  |  |  | ----- | --
|                                                                                      |  | Three months ended
|                                                                                      |  | March 31,         
|                                                                                      |  |                   
|                                                                                      |  | 2003               |        | 2002 |  | % Change
|                                                                                      |  |                    |        |      |  |         
|Rental and other revenues                                                             |  |                    |        |      |  |          |        |  |  |  |       |   
|Fully stabilized communities (1)                                                      |  | $                  | 64,945 |      |  | $        | 68,105 |  |  |  | (4.6  | )%
|Communities stabilized during 2002                                                    |  |                    | 8,787  |      |  |          | 6,223  |  |  |  | 41.2  | % 
|Lease-up communities (2)                                                              |  |                    | 3,414  |      |  |          | 1,721  |  |  |  | 98.4  | % 
|Sold communities (3)                                                                  |  |                    |       |      |  |          | 736    |  |  |  |      |   
|Other revenue (4)                                                                     |  |                    | 4,627  |      |  |          | 4,996  |  |  |  | (7.4  | )%
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|                                                                                      |  |                    | 81,773 |      |  |          | 81,781 |  |  |  |      |   
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|Property operating and maintenance
expenses (excluding depreciation
and amortization) |  |                    |        |      |  |          |        |  |  |  |       |   
|Fully stabilized communities (1)                                                      |  |                    | 23,154 |      |  |          | 23,214 |  |  |  | (0.3  | )%
|Communities stabilized during 2002                                                    |  |                    | 3,145  |      |  |          | 2,834  |  |  |  | 11.0  | % 
|Lease-up communities (2)                                                              |  |                    | 1,719  |      |  |          | 768    |  |  |  | 123.8 | % 
|Sold communities (3)                                                                  |  |                    |       |      |  |          | 370    |  |  |  |      |   
|Other expense (5)                                                                     |  |                    | 5,608  |      |  |          | 5,664  |  |  |  | (1.0  | )%
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|                                                                                      |  |                    | 33,626 |      |  |          | 32,850 |  |  |  | 2.4   | % 
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|Net operating income                                                                  |  | $                  | 48,147 |      |  | $        | 48,931 |  |  |  | (1.6  | )%
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|Recurring capital expenditures: (6)                                                   |  |                    |        |      |  |          |        |  |  |  |       |   
|Carpet                                                                                |  | $                  | 598    |      |  | $        | 659    |  |  |  | (9.3  | )%
|Other                                                                                 |  |                    | 864    |      |  |          | 1,220  |  |  |  | (29.2 | )%
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|Total                                                                                 |  | $                  | 1,462  |      |  | $        | 1,879  |  |  |  | (22.2 | )%
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|Non recurring capital expenditures                                                    |  | $                  | 1,047  |      |  | $        | 874    |  |  |  | 19.8  | % 
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   
|Average apartment units in service                                                    |  |                    | 29,409 |      |  |          | 30,405 |  |  |  | (3.3  | )%
|                                                                                      |  |                    |        |      |  |          |        |  |  |  |       |   



| | (1) |  | Communities which reached stabilization prior to January 1,
2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Communities in the construction, development or
lease-up stage during 2003 and, therefore, not considered fully
stabilized for all of the periods presented.                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (3) |  | Includes results from two communities containing 540 units
and one commercial property in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (4) |  | Other revenues include revenues from commercial properties,
from the Companys corporate apartment rental business and
revenues not directly related to property operations. Other
revenue excludes interest income included in total revenues in
the consolidated statements of operations.                                                                                                                                                                                                                                                          
|
| | (5) |  | Other expenses include certain indirect central office
operating expenses related to management, grounds maintenance,
and costs associated with commercial properties and the Companys
corporate apartment rental business.                                                                                                                                                                                                                                                                                                                          
|
| | (6) |  | In addition to those expenses which relate to property
operations, the Company incurs recurring and non-recurring
expenditures relating to acquiring and developing new assets,
materially enhancing the value of an existing asset, or
substantially extending the useful life of an existing asset, all
of which are capitalized. Recurring capital expenditures are
those that are generally expected to be incurred on an annual
basis. Non-recurring capital expenditures are those that
generally occur less frequently than on an annual basis.

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The Operating Partnership reported net income (loss) available to common
unitholders of ($26,465) and $16,096 for the three months ended March 31, 2003
and 2002, respectively, and the Company reported net income (loss) available to
common shareholders of ($23,450) and $14,158 for the three months ended March
31, 2003 and 2002, respectively. The decline in net income between the three
months ended March 31, 2003 and 2002 reflected the impact of two separate,
non-cash charges totaling $33,830 ($29,997 net of minority interest) recorded
in the three months ended March 31, 2003. The first non-cash charge totaling
$19,712 ($17,467 net of minority interest) was a severance charge related to
the change in roles from executive to non-executive status of the Companys
former chairman and vice-chairman of the board of directors. The amount
consists of a $13,994 charge representing the discounted present value of the
estimated payments to be made to these individuals under their existing
employment arrangements and a $5,718 charge representing the discontinued
present value of estimated net costs that may be incurred by the Company as a
result of the settlement of split-dollar life insurance obligations to the
individuals under their employment arrangements. The second non-cash charge
totaling $14,118 ($12,510 net of minority interest) was an asset impairment
loss recorded under the provisions of SFAS No. 144 to write-down the cost of an
apartment community located in Phoenix, Arizona, to its estimated fair value.
This charge was recorded under SFAS No. 144 based on a revised determination
that it was more probable that this community would be marketed for sale in the
near term instead of held for long-term investment. In addition, the decline
in net income (loss) reflects a decrease in fully stabilized communities
operating performance and reduced earnings resulting from the Companys asset
sale and capital recycling program. The impact of these items is discussed
below.

Rental and other revenues remained almost flat between periods resulting from a
decrease in rental and other revenues from fully stabilized communities of
$3,160 (see discussion below) and sold communities of $736 offset by increased
rental and other revenues from new stabilized and lease-up properties of
$4,257. Property operating and maintenance expenses (excluding depreciation
and amortization) increased $776 or 2.4% primarily due to increased expenses
from newly stabilized and lease-up communities as these expenses typically
increase as property occupancy levels increase towards stabilized occupancy
levels. Property operating and maintenance expenses (excluding depreciation
and amortization) for fully stabilized communities remained essentially flat
between periods (see discussion below).

The Company reported no net gains on property sales in continuing operations in
2003, as under the provisions of SFAS No. 144 all gains (losses) on sales of
properties classified as held for sale subsequent to January 1, 2002 are
classified as discontinued operations. The net gains on property sales
included in continuing operations of $13,275 in 2002 resulted from the sale of
two communities containing 540 units and one commercial property. These assets
were all classified as assets held for sale at December 31, 2001. For the
three months ended March 31, 2003, the Company recognized net gains from
discontinued operations of $7,981 ($7,072 net of minority interest), on the
sale of one community, containing 239 apartment units, reduced by losses of
$1,107 ($981 net of minority interest) resulting from losses on the sale of
certain land parcels and additional reserves to write-down to fair value
certain other land parcels previously classified as held for sale at December
31, 2002. For the three months ended March 31, 2002, the Company recorded a
reserve for losses totaling $7,652 ($6,731 net of minority interest) to reduce
the carrying value of certain of the assets designated as held for sale to
their fair value less costs to sell in discontinued operations under SFAS No.
144. See the section titled Discontinued Operations below for further
discussion.

Depreciation expense increased $2,826 or 14.2% from 2002 to 2003 primarily due
to increased depreciation on newly stabilized and lease-up properties,
partially offset by the cessation of depreciation on properties sold and
currently held for sale.

Interest expense increased $3,417 or 26.0% from 2002 to 2003 primarily due to a
$2,564 reduction in capitalized interest to development properties between
periods as the Companys development pipeline transitioned to operating
properties. Excluding the reduction in capitalized interest, the increase in
interest expense was a result of more interest expense reclassified to
discontinued operations in 2002 of $644.

General and administrative expenses decreased $141 or 3.7% from 2002 to 2003
primarily due to lower executive salaries and associated costs due to the
change in roles from executive to non-executive status of the Companys
chairman and vice-chairman in February 2003 as such costs were charged against
the $19,712 severance reserve established during the first quarter of 2003.

Other expenses of $567 in 2003 includes legal expenses of $373 relating to
board of directors governance and transition matters, the settlement cost of
$100 relating to the bankruptcy of a former technology investment and the
estimated loss of $94 on the disposal of the Companys partial ownership
interest in a corporate aircraft.

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Equity in losses of unconsolidated real estate entities increased from $343 in
2002 to $393 in 2003. These losses reflect the Companys share of earnings and
losses from four single community limited liability companies (see note 3 to
the consolidated financial statements). The losses increased in 2003 primarily
due to the losses associated with one of the four communities being in the
lease-up phase in 2003.

Stabilized Communities

The Company defines fully stabilized communities as those which have reached
stabilization prior to the beginning of the previous year. At March 31, 2003,
the fully stabilized portfolio of 67 communities with 24,347 units includes 37
communities with 14,614 units (60.0%) located in Atlanta, Georgia, 18
communities with 5,183 units (21.3%) in Dallas, Texas, three communities with
1,439 units (6%) located in Tampa, Florida and nine communities with 3,111
units (13.0%) located in other markets. The operating performance of these
communities is summarized as follows:

|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |      |      |   
|------------------------------------------------------------------------------------ | ---------------------------------------------------- | ------------------------------ | ------ | ------------------ | ----- | ---- | ------ | -------- | ----- |  | ---- | ---- | ---- | --
|                                                                                     |                                                      |                                |        | Three months ended
|                                                                                     |                                                      |                                |        | March 31,         
|                                                                                     |                                                      |                                |        |                   
|                                                                                     |                                                      |                                |        | 2003               |       | 2002 |        | % Change
|                                                                                     |                                                      |                                |        |                    |       |      |        |         
|Rental and other revenue                                                             |                                                      | $                              | 64,945 |                    |       | $    | 68,105 |          |       |  | (4.6 | )%  
|Property operating and maintenance expense
(excluding depreciation and amortization) |                                                      |                                | 23,154 |                    |       |      | 23,214 |          |       |  | (0.3 | )%  
|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |     
|Same store net operating income (1)                                                  |                                                      | $                              | 41,791 |                    |       | $    | 44,891 |          |       |  | (6.9 | )%  
|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |     
|Capital expenditures (2)                                                             |                                                      |                                |        |                    |       |      |        |          |       |  |      |     
|                                                                                     | Recurring:                                           |                                |        |                    |       |      |        |          |       |  |      |      |     
|                                                                                     | Carpet                                               |                                | $      | 563                |       |      | $      | 499      |       |  |      |      |     
|                                                                                     | Other                                                |                                |        | 745                |       |      |        | 951      |       |  |      |      |     
|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |     
|                                                                                     |                                                      | Total recurring                |        |                    | 1,308 |      |        |          | 1,450 |  |      |      |      |   
|                                                                                     | Non-recurring                                        |                                |        | 599                |       |      |        | 478      |       |  |      |      |     
|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |     
|                                                                                     |                                                      | Total capital expenditures (A) |        | $                  | 1,907 |      |        | $        | 1,928 |  |      |      | (1.1 | )%
|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |     
|                                                                                     | Total capital expenditures per unit
(A÷24,347 units) |                                | $      | 78                 |       |      | $      | 79       |       |  |      | (1.3 | )%  
|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |     
|Average monthly rental rate per apartment unit (3)                                   |                                                      | $                              | 956    |                    |       | $    | 1,009  |          |       |  | (5.3 | )%  
|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |     
|Average economic occupancy (4)                                                       |                                                      |                                | 90.1   | %                  |       |      | 90.1   | %        |       |  |     |     
|                                                                                     |                                                      |                                |        |                    |       |      |        |          |       |  |      |     



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

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| | (2) |  | A reconciliation of these segment components of property capital
expenditures to total recurring and non-recurring capital
expenditures as presented in the consolidated statements of cash
flows prepared under GAAP is detailed below.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                      |  |                    |       |      |  |   |       | 
|--------------------------------------------------------------------- |  | ------------------ | ----- | ---- |  | - | ----- | 
|                                                                      |  | Three months ended
|                                                                      |  | March 31,         
|                                                                      |  |                   
|                                                                      |  | 2003               |       | 2002
|                                                                      |  |                    |       |     
|Recurring capital expenditures by operating segment                   |  |                    |       |      |  |   |       | 
|Same store                                                            |  | $                  | 1,308 |      |  | $ | 1,450 | 
|Partially stabilized                                                  |  |                    | 46    |      |  |   | 2     | 
|Construction and lease-up                                             |  |                    | 10    |      |  |   | 5     | 
|Other segments                                                        |  |                    | 98    |      |  |   | 422   | 
|                                                                      |  |                    |       |      |  |   |       | 
|Total recurring capital expenditures per statements of cash flows     |  | $                  | 1,462 |      |  | $ | 1,879 | 
|                                                                      |  |                    |       |      |  |   |       | 
|Non-recurring capital expenditures by operating segment
Same store    |  | $                  | 599   |      |  | $ | 478   | 
|Partially stabilized                                                  |  |                    | 39    |      |  |   | 3     | 
|Construction and lease-up                                             |  |                    | 4     |      |  |   | 1     | 
|Other segments                                                        |  |                    | 316   |      |  |   | 65    | 
|                                                                      |  |                    |       |      |  |   |       | 
|Total non-recurring capital expenditures per statements of cash flows |  | $                  | 958   |      |  | $ | 547   | 
|                                                                      |  |                    |       |      |  |   |       | 



| | (3) |  | Average monthly rental rate is defined as the average of the
gross actual rental rates for leased units and the average of the
anticipated rental rates for unoccupied units divided by total
units.                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (4) |  | Average economic occupancy is defined as gross potential
rent less vacancy losses, model expenses and bad debt divided by
gross potential rent for the period, expressed as a percentage. The
calculation of average economic occupancy does not include a
deduction for concessions and employee discounts. (Average economic
occupancy, taking account of these amounts would have been 88.8%
and 88.4% for the three months ended March 31, 2003 and 2002,
respectively). Concessions were $734 and $1,092 and employee
discounts were $136 and $206 for the three months ended March 31,
2003 and 2002, respectively.

Rental and other revenues decreased $3,160 or 4.6% from 2002 to 2003. This
decrease resulted primarily from a 5.3% decline in the average monthly rental
rate per apartment unit. The decline in average rental rate resulted in a
revenue decrease of approximately $3,862 between periods. The aggregate
decline in revenues related to other property fees totaled $236. These declines
were offset by lower up-front rental concessions of $358 and lower vacancy
losses of $581. The decline in rental rates in 2003 reflects the effect of the
sluggish economy on the Companys primary markets coupled with a continuing
supply of new apartment units. This trend was especially true for the Companys
largest markets, Atlanta, Georgia and Dallas, Texas, which experienced rental
and other revenue declines of $2,121 and $619, respectively, between periods.

Property operating and maintenance expenses (excluding depreciation and
amortization) were essentially flat between periods. Increased insurance
expenses of $287 or 24.3% were largely offset by decreased personnel expenses
of $185 or 3.0% and decreased property tax expenses of $188 or 2.3%. Insurance
costs increased primarily due to the volatility in insurance markets caused by,
among other things, increased terrorism risks and lower insurance company
investment returns. Personnel costs decreased due primarily to the impact of
prior year staff reductions and continued tight control of wage increases
between years. Property tax expenses decreased due to lower property tax
expense accruals in 2003 that reflect the impact of achieved tax savings in
late 2002 that were not reflected in the property tax expense accruals in the
first quarter of 2002. This was especially true in the Companys Dallas, Texas
market.

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

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Discontinued Operations

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

For the three months ended March 31, 2003, income from discontinued operations
includes the results of operations through the earlier of the community sale
date (if the community was sold between January 1, 2003 and March 31, 2003) or
March 31, 2003, of two apartment communities containing 1,009 units that were
held for sale at December 31, 2002. For the three months ended March 31, 2002,
income from discontinued operations included the results of operations of eight
apartment communities containing 3,134 units and one commercial property. The
revenues and expenses of these properties for the three months ended March 31,
2003 and 2002 were as follows:

|                                                               |                                                                                |                |     |                    |       |      |       |       |       | 
|-------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------- | --- | ------------------ | ----- | ---- | ----- | ----- | ----- | 
|                                                               |                                                                                |                |     | Three months ended
|                                                               |                                                                                |                |     | March 31,         
|                                                               |                                                                                |                |     |                   
|                                                               |                                                                                |                |     | 2003               |       | 2002
|                                                               |                                                                                |                |     |                    |       |     
|Revenues                                                       |                                                                                |                |     |                    |       |      |       |      
|                                                               | Rental                                                                         |                | $   | 2,173              |       |      | $     | 7,662 |      
|                                                               | Other                                                                          |                |     | 71                 |       |      |       | 264   |      
|                                                               |                                                                                |                |     |                    |       |      |       |      
|                                                               |                                                                                | Total revenues |     |                    | 2,244 |      |       |       | 7,926 | 
|                                                               |                                                                                |                |     |                    |       |      |       |      
|Expenses                                                       |                                                                                |                |     |                    |       |      |       |      
|                                                               | Property operating and maintenance
(exclusive of items shown separately below) |                |     | 805                |       |      |       | 3,054 |      
|                                                               | Depreciation                                                                   |                |     |                   |       |      |       | 864   |      
|                                                               | Interest                                                                       |                |     | 739                |       |      |       | 1,383 |      
|                                                               |                                                                                |                |     |                    |       |      |       |      
|                                                               |                                                                                | Total expenses |     |                    | 1,544 |      |       |       | 5,301 | 
|                                                               |                                                                                |                |     |                    |       |      |       |      
|Income from discontinued operations
(before minority interest) |                                                                                | $              | 700 |                    |       | $    | 2,625 |      
|                                                               |                                                                                |                |     |                    |       |      |       |      

The decrease in revenues and expenses between periods results from the three
months ended March 31, 2003 including the results of operations of two
communities (one through the actual sale date and one through March 31, 2003)
and the revenues and expenses for the three months ended March 31, 2002
including full period operating results for seven apartment communities and one
commercial property and one apartment community through the actual sale date.

For the three months ended March 31, 2003, the Company recognized net gains
from discontinued operations of $7,981 ($7,072 net of minority interest), on
the sale of one community, containing 239 apartment units, reduced by losses of
$1,107 ($981 net of minority interest) resulting from losses on the sale of
certain land parcels and additional reserves to write-down to fair value
certain other land parcels previously classified as held for sale at December
31, 2002. For the three months ended March 31, 2002, the Company recorded a
reserve for losses totaling $7,652 ($6,731 net of minority interest) to reduce
the carrying value of certain of the assets designated as held for sale to
their fair value less costs to sell in discontinued operations under
SFAS No. 144.

Severance and Asset Impairment Charges

In the first quarter of 2003, the Company recorded a $19,712 ($17,467 net of
minority interest) severance charge relating to the change in roles from
executive to non-executive status of the Companys former chairman and
vice-chairman of the board of directors. In addition, the Company recorded a
$14,118 ($12,510 net of minority interest) asset impairment charge, under the
provisions of SFAS No. 144, to write-down the cost of an apartment community,
located in Phoenix, Arizona, to its estimated fair value.

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

The asset impairment charge relating to the Companys Phoenix, Arizona
apartment community was based upon a revised determination that it was more
probable that this community would be marketed for sale in the near term instead
of held for long-term investment. This community has not been classified as
held for sale at March 31, 2003 as the Companys internal investment committee
has not approved the sale of the community and no program has been initiated to
actively sell the community.

Subsequent Events

In April 2003, Mr. Williams, former chairman and current chairman emeritus of
the board of directors, commenced a proxy contest to elect a slate of five
nominees to the board of directors at the 2003 annual meeting of shareholders
to be held on May 22, 2003 in opposition to the nominees proposed by the current board. Management of the
Company is aggressively opposing the Williams nominees and supporting the
re-election of the current board. The Company estimates expenses related to
the solicitation of proxies from shareholders, in excess of expenses normally
incurred for its annual meeting, to aggregate up to approximately $4,000.

In April 2003, the Company announced that two executive officers, including its
chief financial officer, would be leaving the Company as management seeks to
add to its base of experience in its executive team. The two
executive officers termination will be effective the earlier of
July 1, 2002 or such earlier date as the chief executive officer may
determine. The Company also
announced that it is seeking to fill the chief financial officer position and a
chief investment officer position. The estimated severance costs associated
with the departing executives of approximately $1,600 to $1,700 will be
recorded in the second quarter of 2003.

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 was relatively flat
from $26,355 in 2002 to $26,698 in 2003 despite the net loss reported in 2003,
as the net loss included $33,830 (before minority interest) of non-cash
severance and asset impairment charges. Additionally, cash flow from operating
activities in 2003 was favorably impacted by the timing differences relating
the changes of other assets and liabilities between periods.

Net cash provided by (used in) investing activities increased from net cash
used of ($28,634) in 2002 to net cash provided of $37,804 in 2003 primarily due
to reduced development and construction expenditures in 2003 and a net
repayment of construction loan advances from unconsolidated real estate
entities in 2003.

Net cash provided by (used in) financing activities decreased from net cash
provided of $6,827 in 2002 to net cash used of ($67,080) in 2003 primarily due
to the repayment of outstanding debt in 2003 compared to additional net
borrowings in 2002. The proceeds used to repay consolidated debt balances were
generated from asset sale proceeds and through the repayment of construction
loan advances from unconsolidated entities.

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

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In 2003, the Company expects to meet its short-term liquidity requirement of
funding the payment of its current level of quarterly dividends to shareholders
from its net cash flow provided by operating activities, less its annual
recurring and nonrecurring property and corporate capital expenditures. In
order to meet this stated objective, the Company reduced its quarterly dividend
payment rate to common shareholders from $0.78 per share in 2002 to $0.45 per
share beginning in the first quarter of 2003. The factors that led to the
dividend reduction were the decline in economic and market conditions in the
Companys major markets resulting in lower cash flow from its operating
property portfolio and the short-term negative cash flow impact of funding its
current development portfolio through the sale of operating real estate assets.
If operating results and cash flows in future quarters decline significantly
from current levels, the Company currently intends to use a combination of
proceeds from asset sales and line of credit borrowings to fund the additional
cash flow necessary to fully fund the Companys current quarterly dividend to
common shareholders of $0.45 per share. The Companys net cash flow from
operations continues to be sufficient to meet the dividend requirements
necessary to maintain its REIT status under the Code.

Management expects the Company to meet its construction and development and
certain of its other long-term liquidity requirements, including maturities of
long-term debt and lines of credit, debt and equity commitments to
unconsolidated entities (summarized in the Companys Form 10-K for the year
ended December 31, 2002) and possible land and property acquisitions through
the selective sale of operating properties and through long-term secured and
unsecured borrowings. Management believes the Company has adequate borrowing
capacity and accessibility to real estate sales markets to fund these
requirements. Additionally in prior years, the Company has utilized equity
joint ventures as a means of raising capital and reducing the size and exposure
of its development property pipeline. The Company may continue to use joint
venture arrangements in future years as a source of capital and to reduce the
exposure of its future development pipeline.

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

In the three months ended March 31, 2003, the Company sold one apartment
community, containing 239 apartment units, and certain land parcels for net
proceeds of $38,262. The apartment community sold was the Companys sole
community in Austin, Texas and through this sale the Company exited a
single-asset market as part of its strategy to focus geographically on fewer
markets. In the three months ended March 31, 2002, the Company sold two
communities containing 540 units and one commercial property for net proceeds
of approximately $41,393. The communities sold were located in Tampa, Florida
and Clearwater, Florida and the commercial property was located in Grand
Prairie, Texas.

At March 31, 2003, the Company had available credit facility borrowing capacity
of approximately $173,000 under its existing $320,000 revolving credit facility
and its $20,000 cash management credit facility. The Companys primary credit
facility with total capacity of $320,000 matures in April 2004 and the $20,000
cash management facility matures in June 2003. Through April 2003, the Company
had in place an additional $125,000 line of credit facility that was not
renewed as the Companys financing needs have reduced consistent with its
reduced development spending. As a result of the decline in the Companys
development activities, management currently anticipates the renewal of its
primary credit facility with a capacity of approximately $300,000.
Additionally, management expects to renew and extend its $20,000 cash
management credit facility. Management believes it will have adequate capacity
under its facilities to execute its 2003 business plan without a significant
level of asset sales or other secured and unsecured debt financings.

Subsequent to March 31, 2003, the Companys unsecured public debt ratings were
placed under review with negative implications (potential downgrades) by
Standard & Poors and Moodys Investor Services (the rating agencies) as a
result of the proxy contest and the uncertainty regarding the composition of
the board of directors and management team. The Companys current unsecured
debt ratings are BBB by Standard & Poors and Baa2 by Moodys Investors
Services. The rating agencies have stated that they plan to meet with
management following the conclusion of the Companys annual shareholders
meeting and proxy contest to resolve their unsecured debt ratings on the
Company. A lowering of the Companys unsecured public debt ratings by one
rating level would lead to increased pricing of its syndicated line of credit
by 25 to 30 basis points and may increase the pricing of new issuances of
public 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. If the rating agencies were to downgrade the Companys
current ratings by one rating level, the Company would remain an investment
grade rated company by both Moodys Investors Services and Standard & Poors.
Management does not anticipate that any potential downgrade will materially
affect the Companys ability to obtain the anticipated level of debt financing
to finance its business plan. Should the Company not maintain its investment
grade credit ratings its total dividend payout, exclusive of the portion of the
dividend attributable to capital gains from asset sales up to $30,000, would be
limited to 95% versus 100% of Consolidated Income

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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 needs. At March 31, 2003, the
stated interest rate for the Revolver was LIBOR plus 0.85% or prime minus
0.25%. The Revolver provides for the rate to be adjusted up or down based on
changes in the credit ratings on the Companys senior unsecured debt. The
Revolver also includes a money market competitive bid option for short-term
funds up to $160,000 at rates below the stated line rate. The credit agreement
for the Revolver contains customary representations, covenants and events of
default, including covenants which restrict the ability of the Operating
Partnership to make distributions, in excess of stated amounts, which in turn
restrict the discretion of the Company to declare and pay dividends. In
general, during any fiscal year the Operating Partnership may only distribute
up to 100% of the Operating Partnerships consolidated income available for
distribution (as defined in the credit agreement) exclusive of distributions of
up to $30,000 of capital gains for such year. The credit agreement contains
exceptions to these limitations to allow the Operating Partnership to make
distributions necessary to allow the Company to maintain its status as a REIT.
The Company does not anticipate that this covenant will adversely affect the
ability of the Operating Partnership to make distributions, or the Company to
declare dividends, at the Companys current dividend level. The Revolver
matures in April 2004, however, management expects to renew this facility later
in 2003. This line may be renewed with a total capacity of approximately
$300,000, due to reduced financing requirements resulting from reduced
development activities.

Through April 2003, the Company also had in place an additional $125,000 line
of credit facility for general corporate purposes. This line matured in April
2003 and was not renewed. There were no outstanding borrowings under this
facility at March 31, 2003.

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 June
2003. Management expects to renew and extend this $20,000 cash management
credit facility. At March 31, 2003, the Company has issued letters of credit
to third parties totaling $963 under this facility.

Long-term Debt Issuances

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

Certain Effects of a Change of Control

The current board consists of eleven directors. Arthur M. Blank, a
director of the Company, has informed the Company that he intends to
resign from the board at the time of the 2003 annual meeting. Accordingly,
upon Mr. Blanks resignation, the board will be reduced in size to ten members.
If the Williams nominees are elected to the board at the 2003 annual meeting,
Mr. Williams together with the Williams nominees will hold six of ten positions
on the board and will constitute a majority of the board. Under such
circumstances, there may be a change of control under certain debt
instruments and employee benefits plans of the Company. The debt instruments
and benefits plans that could be affected by Mr. Williams proxy solicitation,
if successful, are described below.

Lines of Credit

With respect to the Revolver, a change of control will occur if a majority of
the members serving on the board during any twelve month period cease to serve
on the board for any reason other than disability or death. If a change of
control is deemed to occur, the administrative agent may terminate the Revolver
at the direction of banks holding at least two-thirds of the total commitments
under the Revolver and require the Company to repay any outstanding
indebtedness under the Revolver.

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With respect to the Cash Management Line, a change of control will occur if a
majority of the members comprising the board during any twelve month period
cease to serve on the board for any reason other than retirement after age 59,
disability or death. If a change of control is deemed to occur, the lender may
elect to terminate this facility and require the Company to repay any
outstanding indebtedness under it.

Unsecured Notes

Under the indenture for the Companys Unsecured Notes (which include the Senior
Notes and the Medium Term Notes described under the caption Schedule of
Indebtedness) if a default is deemed to occur with respect to recourse
indebtedness or under any mortgage or other similar encumbrance, indenture or
instrument, including any indenture which secures any indebtedness or borrowed
money, in excess of $5 million for notes issued prior to September 2000 and $20
million for all other note issuances, and such default results in acceleration
of the maturity of the outstanding principal amount (unless such acceleration
is rescinded or the indebtedness is discharged), this event will result in a
cross-default under the indentures governing the notes and the holders thereof
may declare the aggregate principal amount of the notes due and payable.

Fannie Mae Debt

The Company is party to a credit enhancement agreement with the Federal
National Mortgage Association (Fannie Mae) with respect to certain
outstanding tax-exempt floating rate bonds (the Tax Exempt Floating Rate
Bonds). In addition, on July 23, 1999, the Company issued $104 million of
taxable bonds (the FNMA Conventional Fixed Rate Bonds, and together with the
Tax Exempt Floating Rate Bonds, the Fannie Mae Bonds). With respect to the
Fannie Mae Bonds, a change of control is defined as the replacement of more
than 50% (or such lesser percentage as is required for decision making by the
board) of the members of the board over a one year period from the directors
who constituted the board at the beginning of such period and such replacements
have not been approved by a vote of at least a majority of the board still in
office who either were members of the board at the beginning of the one year
period or whose election as members of the board was previously so approved. If
a change of control is deemed to occur with respect to the Fannie Mae Bonds,
Fannie Mae can elect to declare any outstanding amounts due and accelerate the
payment thereof. If a change in control under such
agreements caused these borrowings to be accelerated and paid prior
to the expiration of the interest rate swap designated as a hedge
against such debt, then the Company may be required to recognize a
loss equal to the negative value of the interest rate swap ($14,398
at March 31, 2003) assuming the swap could not be redesignated as a
hedge of other variable rate debt.

Employee Benefit Plans

Under two of the Companys employee benefit plans, the Deferred Compensation
Plan for Directors and Eligible Employees (the Deferred Compensation Plan)
and the 2002 Shareholder Value Plan (collectively, the Plans), a change of
control will be deemed to have occurred if the members who at the beginning of
any period of two consecutive years or less constitute the board cease for any
reason during such period to constitute at least a majority of the board,
unless the election or nomination for election of each new member of the board
was approved by at least two-thirds of the members of the board then still in
office who were members of the board at the beginning of the applicable period.

If a change of control is deemed to occur under the Deferred Compensation Plan,
participants who have elected to receive payment of deferred compensation upon
a change of control will receive a portion of their deferred compensation at
the time of such change of control. It is estimated that the aggregate amount
of deferred compensation is approximately equal to $1 million. Further, in the
event of a change of control, a rabbi trust, which holds assets to fund the
Companys obligations under the Deferred Compensation Plan, will become
irrevocable. As a result, the Company will no longer have the option of
removing assets from such rabbi trust for other purposes. A change of control
event also requires that payments under the Deferred Compensation Plan be made
directly by the trustee to participants. In addition, payments will be due to
directors who have deferred compensation if they are not re-elected.

Under the 2002 Shareholder Value Plan, if a change of control occurs, each
participant in the plan will receive the greater of: (1) the full amount of his
or her target bonus for the 2002 and 2003 performance periods or (2) a
percentage of his or her target bonus based on the Companys performance in
benchmark rankings.

Stock Repurchase Program

The Companys Board of Directors has approved the purchase of up to $200,000 of
the Companys common stock. Through December 31, 2002, the Company had
acquired 3,127,600 shares of its common stock at an aggregate cost of $114,126
and had acquired 100,000 shares of preferred stock at an aggregate cost of
$5,100. The Company acquired no common or preferred stock in the three months
ended March 31, 2003. Management has indicated it will be opportunistic with
respect to additional share repurchases and intends to finance additional
repurchases with asset sale proceeds rather than additional borrowings.

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Schedule of Indebtedness

The following table reflects a summary of the Companys indebtedness at March
31, 2003 and December 31, 2002:

|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |   |            | 
|---------------------------------------- |  | ------------- |  | -------- | ------------ | -------- |  | --------- | ------- | ------------ | --------- |  | ------- | - | ---------- | 
|                                         |  | Payment       |  | Interest |              | Maturity |  | March 31, |         | December 31,
|Description                              |  | Terms         |  | Rate     |              | Date (1) |  | 2003      |         | 2002        
|                                         |  |               |  |          |              |          |  |           |         |             
|Unsecured Notes                          |  |               |  |          |              |          |  |           |         |             
|Senior Notes                             |  | Int           |  |          | 6.11%  7.70 | %        |  | 2003-2010 |         | $            | 385,000   |  |         | $ | 385,000    | 
|Medium Term Notes                        |  | Int           |  |          | 6.69%  8.12 | %(2)     |  | 2004-2015 |         |              | 323,000   |  |         |   | 323,000    | 
|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |  
|                                         |  |               |  |          |              |          |  |           | 708,000 |              |           |  | 708,000 |  
|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |  
|Unsecured Lines of
Credit & Other        |  |               |  |          |              |          |  |           |         |             
|Revolver                                 |  | N/A           |  |          | LIBOR + 0.85 | %(3)     |  | 2004      |         |              | 155,000   |  |         |   | 185,000    | 
|Cash Management Line                     |  | N/A           |  |          | LIBOR + 0.75 | %        |  | 2003      |         |              | 11,739    |  |         |   | 11,369     | 
|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |  
|                                         |  |               |  |          |              |          |  |           | 166,739 |              |           |  | 196,369 |  
|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |  
|Conventional Fixed Rate (Secured)        |  |               |  |          |              |          |  |           |        
|FNMA                                     |  | Prin. and Int |  |          | 6.975        | %(4)     |  | 2029      |         |              | 101,100   |  |         |   | 101,100    | 
|Other                                    |  | Prin. and Int |  |          | 5.5%  7.69  | %        |  | 2007-2013 |         |              | 194,047   |  |         |   | 194,706    | 
|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |  
|                                         |  |               |  |          |              |          |  |           | 295,147 |              |           |  | 295,806 |  
|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |   |            | 
|Tax Exempt Floating
Rate Bonds
(Secured) |  | Int.          |  |          | 1.15         | %(5)     |  | 2025      |         |              | 214,380   |  |         |   | 214,380    | 
|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |   |            | 
|Total                                    |  |               |  |          |              |          |  |           |         | $            | 1,384,266 |  |         |   | $1,414,555 | 
|                                         |  |               |  |          |              |          |  |           |         |              |           |  |         |   |            | 



|(1) |  | All outstanding indebtedness can be prepaid at any time, subject to
certain prepayment penalties.                                                                                                                                                                                                                                                                               
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Contains $100,000 of Mandatory Par Put Remarketed Securities. The annual
interest rate on these securities to 2005 (the Remarketing Date) is
6.85%. On the Remarketing Date, they are subject to mandatory tender for
remarketing.                                                                                                                                            
|   
|(3) |  | Represents stated rate. At March 31,2003, the weighted average interest
rate was 2.08%.                                                                                                                                                                                                                                                                                         
|   
|(4) |  | Interest rate is fixed at 6.975%, inclusive of credit enhancement and
other fees, to 2009 through an interest rate swap arrangement.                                                                                                                                                                                                                                            
|   
|(5) |  | FNMA credit enhanced bond indebtedness. Interest based on FNMA AAA tax
exempt rate plus credit enhancement and other fees of 0.639%. Interest
rate represents rate at March 31, 2003 before credit enhancements. At
March 31, 2003, the Company has outstanding interest rate cap arrangements
that limit the Companys exposure to increases in the base interest rate
to 5%.

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Capitalization of Fixed Assets and Community Improvements

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

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

A summary of community development improvements and other capitalized
expenditures for the three months ended March 31, 2003 and 2002 is detailed
below.

|                                   |                                                                        |   |                    |       |      |   |        |       | 
|---------------------------------- | ---------------------------------------------------------------------- | - | ------------------ | ----- | ---- | - | ------ | ----- | 
|                                   |                                                                        |   | Three months ended
|                                   |                                                                        |   | March 31,         
|                                   |                                                                        |   |                   
|                                   |                                                                        |   | 2003               |       | 2002
|                                   |                                                                        |   |                    |       |     
|New community development activity |                                                                        | $ | 14,112             |       |      | $ | 48,148 |      
|Nonrecurring capital expenditures  |                                                                        |   |                    |       |      |   |        |      
|                                   | Revenue generating additions and improvements (1)                      |   |                    | 89    |      |   |        | 327   | 
|                                   | Other community additions and improvements (2)                         |   |                    | 958   |      |   |        | 547   | 
|Recurring capital expenditures     |                                                                        |   |                    |       |      |   |        |      
|                                   | Carpet replacements and other community additions and
improvements (3) |   |                    | 1,462 |      |   |        | 1,879 | 
|                                   | Corporate additions and improvements                                   |   |                    | 208   |      |   |        | 279   | 
|                                   |                                                                        |   |                    |       |      |   |        |      
|                                   |                                                                        | $ | 16,829             |       |      | $ | 51,180 |      
|                                   |                                                                        |   |                    |       |      |   |        |      
|Other Data                         |                                                                        |   |                    |       |      |   |        |      
|                                   | Capitalized interest                                                   |   | $                  | 1,869 |      |   | $      | 4,433 | 
|                                   |                                                                        |   |                    |       |      |   |        |      
|                                   | Capitalized internal personnel and associated costs (4)                |   | $                  | 600   |      |   | $      | 1,383 | 
|                                   |                                                                        |   |                    |       |      |   |        |      



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

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Current Development Activity

The Company has under construction or in initial lease-up
three new communities that will contain an aggregate of 859 units upon
completion. The Companys communities under development or in initial lease-up
are summarized in the following table:

|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|-------------------------------------------------------- |  | --------- | --- | --------------- |  | ------------ | --- | ------------ |  | ----------- | --- | ------------- |  | ---------- | ------ | -------- |  | --------- | ------ |  |  |  | ------ |  |  |  | ---- | - |  |  | ---- | -
|                                                         |  |           |     |                 |  | Estimated    |     | Amount       |  |             |     |               |  |            |        |          |  | Estimated |        |  |  |  |        |  |  | 
|                                                         |  |           |     |                 |  | Construction |     | Spent        |  | Quarter of  |     | Quarter of    |  | Quarter of |        | %        |  | %        
|                                                         |  | Number of |     | Cost            |  | As of        |     | Construction |  | First Units |     | Stabilized    |  | Leased     |        | Occupied
|Metropolitan Area                                        |  | Units     |     | ($ in millions) |  | 3/31/2003    |     | Start        |  | Available   |     | Occupancy (1) |  | 5/3/2003   |        | 5/3/2003
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |         
|Wholly Owned Construction/Lease-up
Communities           |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|New York City, NY                                        |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post ToscanaTM                                           |  |           | 199 |                 |  |              | 93  |              |  |             | 85  |               |  |            | 1Q '02 |          |  |           | 1Q '03 |  |  |  | 2Q '04 |  |  |  | 26.1 | % |  |  | 15.6 | %
|Subtotal Wholly-Owned
Construction/Lease-up Communities  |  |           | 199 |                 |  | $            | 93  |              |  | $           | 85  |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Co-Investment Construction/Lease-up
Communities          |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Pasadena, CA                                             |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Paseo Colorado (2)                                  |  |           | 391 |                 |  |              | 76  |              |  |             | 75  |               |  |            | 2Q '00 |          |  |           | 1Q '02 |  |  |  | 2Q '03 |  |  |  | 88.0 | % |  |  | 84.7 | %
|Washington D.C.                                          |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post
Massachusetts AvenueTM (2)                          |  |           | 269 |                 |  |              | 73  |              |  |             | 70  |               |  |            | 2Q '01 |          |  |           | 4Q '02 |  |  |  | 4Q '03 |  |  |  | 46.8 | % |  |  | 36.1 | %
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Subtotal Co-Investment
Construction/Lease-up Communities |  |           | 660 |                 |  | $            | 149 |              |  | $           | 145 |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Construction Totals                                      |  |           | 859 |                 |  | $            | 242 |              |  | $           | 230 |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|less Partners Portion                                   |  |           |     |                 |  | $            | (97 | )            |  | $           | (94 | )             |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|Post Properties Funding Commitment                      |  |           |     |                 |  | $            | 145 |              |  | $           | 136 |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  
|                                                         |  |           |     |                 |  |              |     |              |  |             |     |               |  |            |        |          |  |           |        |  |  |  |        |  |  |  |      |   |  |  |      |  



|(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%).                                                                                                         

Inflation

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

Funds from Operations and Funds Available for Distribution

The Company uses the National Association for Real Estate Investment Trusts
(NAREIT) definition of funds from operations (FFO). FFO is defined by
NAREIT to mean net income (loss) available to common shareholders determined in
accordance with GAAP, excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation of real estate assets, and after
adjustment for unconsolidated partnerships and joint ventures all determined on
a consistent basis in accordance with GAAP. FFO is a supplemental non-GAAP
financial measure. FFO presented herein is not necessarily comparable to FFO
presented by other real estate companies because not all real estate companies
use the same definition. The Companys FFO is comparable to the FFO of real
estate companies that use the current NAREIT definition.

-45-



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##### Table of Contents



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

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

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

-46-



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##### Table of Contents



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

|                                                                                               |  |                    |            |      |  |           |            |  
|---------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ---- |  | --------- | ---------- | -
|                                                                                               |  | Three months ended
|                                                                                               |  |                   
|                                                                                               |  |                    |            |      |  | March 31,
|                                                                                               |  |                    |            |      |  |          
|                                                                                               |  | 2003               |            | 2002
|                                                                                               |  |                    |            |     
|Net income (loss) available to common shareholders                                             |  | $                  | (23,450    | )    |  | $         | 14,158     |  
|Minority interest of common unitholders  continuing operations                                |  |                    | (3,877     | )    |  |           | 2,543      |  
|Gains on property sales  continuing operations                                                |  |                    |           |      |  |           | (13,275    | )
|Asset impairment charges                                                                       |  |                    | 14,118     |      |  |           |           |  
|Gains on properties held for sale and sold, net of minority
interest  discontinued operations |  |                    | (6,091     | )    |  |           | 6,731      |  
|Minority interest in discontinued operations (1)                                               |  |                    | 79         |      |  |           | 315        |  
|Depreciation on wholly-owned real estate assets, net (2)                                       |  |                    | 21,618     |      |  |           | 19,586     |  
|Depreciation on real estate assets held in unconsolidated entities                             |  |                    | 466        |      |  |           | 138        |  
|                                                                                               |  |                    |            |      |  |           |            |  
|Funds from operations                                                                          |  |                    | 2,863      |      |  |           | 30,196     |  
|Recurring capital expenditures                                                                 |  |                    | (1,462     | )    |  |           | (1,879     | )
|Non-recurring capital expenditures                                                             |  |                    | (958       | )    |  |           | (547       | )
|                                                                                               |  |                    |            |      |  |           |            |  
|Funds available for distribution(3)                                                            |  | $                  | 443        |      |  | $         | 27,770     |  
|                                                                                               |  |                    |            |      |  |           |            |  
|Cash flow provided by (used in):                                                               |  |                    |            |      |  |           |            |  
|Operating activities                                                                           |  | $                  | 26,697     |      |  | $         | 26,355     |  
|Investing activities                                                                           |  | $                  | 37,804     |      |  | $         | (28,634    | )
|Financing activities                                                                           |  | $                  | (67,080    | )    |  | $         | 6,827      |  
|Weighted average shares outstanding  basic                                                    |  |                    | 37,261,643 |      |  |           | 36,937,682 |  
|Weighted average shares and units outstanding  basic                                          |  |                    | 42,049,315 |      |  |           | 41,994,047 |  
|Weighted average shares outstanding  diluted                                                  |  |                    | 37,261,648 |      |  |           | 37,049,164 |  
|Weighted average shares and units outstanding  diluted                                        |  |                    | 42,049,320 |      |  |           | 42,105,529 |  



|(1) |  | Represents the minority interest in earnings of discontinued
operations for the periods presented.                                                                                                                                                                                                                                
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Depreciation on wholly-owned real estate assets is net of
minority interest portion of depreciation in consolidated
partnerships.                                                                                                                                                                                                 
|   
|(3) |  | 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 $208
and $279 for the three months ended March 31, 2003 and 2002,
respectively, are excluded from the calculation of funds
available for distribution.

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##### Table of Contents






ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys primary market risk exposure is interest rate risk. At March 31,
2003, the Company had $292,839 of variable rate debt tied to LIBOR. In
addition, the Company had $214,380 in variable tax-exempt debt with interest
based on the FNMA AAA tax exempt rate. In addition, the Company has interest
rate risk associated with fixed rate debt at maturity. The discussion in this
section is the same for the Company and the Operating Partnership, except that
all indebtedness described herein has been incurred by the Operating
Partnership.

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



| |  | maintain a conservative ratio of fixed rate, long-term debt to total debt such that
variable rate exposure is kept at an acceptable level;   
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | fix certain long-term variable rate debt through the use of interest rate swaps or
interest rate caps with appropriately matching maturities;
| 
| |  | use treasury locks where appropriate to fix rates on anticipated debt transactions, and                                                      
| 
| |  | take advantage of favorable market conditions for long-term debt and/or equity.                                                              

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

The table below provides information about the Companys derivative financial
instruments that are sensitive to changes in interest rates. For interest rate
swap and cap arrangements, the table presents notional amounts and weighted
average interest rates by (expected) contractual maturity dates. Notional
amounts are used to calculate the contractual payments to be exchanged under
the contracts.

|                          |  |                                |  |                   |  |               |  |            |  |              
|------------------------- |  | ------------------------------ |  | ----------------- |  | ------------- |  | ---------- |  | -------------
|                          |  |                                |  |                   |  |               |  | Expected   |  |              
|                          |  |                                |  | Average           |  | Average       |  | Settlement |  |              
|Interest Rate Derivatives |  | Notional Amount                |  | Pay Rate/Cap Rate |  | Receive Rate  |  | Date       |  | Fair Value   
|                          |  |                                |  |                   |  |               |  |            |  |              
|                          |  |                                |  |                   |  |               |  |            |  | Asset (Liab.)
|Interest Rate Swaps       |  |                                |  |                   |  |               |  |            |  |              
|Variable to fixed         |  | $104,000 amortizing
to $90,270 |  | 6.04%             |  | 1 month LIBOR |  | 7/31/09    |  | $(14,398)    
|Variable to fixed         |  | $25,000                        |  | 6.53%             |  | 3 month LIBOR |  | 2/01/05    |  | (2,257)      
|Interest rate cap         |  | $107,190                       |  | 5.00%             |  |              |  | 2/01/08    |  | 1,022        
|Interest rate cap         |  | $107,190                       |  | 5.00%             |  |              |  | 2/01/08    |  | 1,022        
|                          |  |                                |  |                   |  |               |  |            |  |              
|                          |  |                                |  |                   |  |               |  |            |  | $(14,611)    
|                          |  |                                |  |                   |  |               |  |            |  |              

As more fully described in note 1 to the consolidated financial statements, the
interest rate swap and cap arrangements are carried on the consolidated balance
sheet at the fair value shown above in accordance with SFAS No. 133, as
amended. If interest rates under the Companys floating rate LIBOR-based and
tax-exempt borrowings, in excess of the $101,100 FNMA borrowings and $25,000
medium-term notes effectively converted to fixed rates discussed above,
fluctuated by 1.0%, interest costs to the Company, based on outstanding
borrowings at March 31, 2003, would increase or decrease by approximately
$3,800 on an annualized basis.

As discussed in Managements
Discussion and Analysis of Financial Condition and Results of
Operations under the section titled Certain Effects of a
Change in Control, Mr. Williams commenced a proxy contest
which could result in a change in control under certain
of the Companys debt arrangements, including the Fannie Mae
credit enhanced borrowings of $101,100. If a change in control
under such agreements caused these borrowings to be accelerated and
paid prior to the expiration of the interest rate swap designated as
a hedge against such debt, then the Company may be required to
recognize a loss equal to the negative value of the interest rate
swap ($14,398 at March 31, 2003) assuming the swap could not be
redesignated as a hedge of other variable rate debt.

Effective February 1, 2003, the Company entered into two interest rate cap
arrangements with two separate financial institutions with notional amounts
totaling $214,380. The new interest rate cap arrangements replaced three
expiring interest rate cap arrangements and were structured as cash flow hedges
to provide a fixed ceiling at 5% for the Companys variable rate, tax-exempt
borrowings totaling $214,380. The Company is required to maintain this
interest rate exposure protection under the terms of the financing
arrangements. The $2,720 cost of the interest rate arrangements will be
amortized as additional expense over their five year term in accordance with
SFAS No. 133.

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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.

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##### Table of Contents






PART II. OTHER INFORMATION




ITEM 1.LEGAL PROCEEDINGS

On April 7, 2003, John A. Williams, chairman emeritus of the board,
withdrew a complaint for injunctive relief and damages filed on March 21, 2003.
As a result, the temporary restraining order issued by the Superior Court of
Cobb County, Georgia in connection with the complaint also has been withdrawn.
The board of directors was to have voted on a number of resolutions that would
have restricted Mr. Williams with respect to certain company matters, including
restrictions on access to employees and information. The temporary
restraining order had enjoined the
board from voting on any such resolutions during the 30-day period.

On May 5, 2003, the Company received notice that a shareholder derivative
and purported class action lawsuit was filed against members of the board of
directors of the Company, including John Williams, and the Company as a nominal
defendant. This complaint was filed in the Superior Court of Fulton County,
Atlanta, Georgia on May 2, 2003 and alleges various breaches of fiduciary
duties by the board of directors of the Company and seeks, among other relief,
the disclosure of certain information by the defendants. This complaint also
seeks to compel the defendants to undertake various actions to facilitate a
sale of the Company. On May 7, 2003, the plaintiff made a request for voluntary
expedited discovery. The defendants have not yet filed an answer. The Company
believes this lawsuit is without merit and intends to vigorously defend against
it.

On
May 13, 2003, the Company received notice that a shareholder
derivative and purported class action lawsuit was filed against
certain members of the board of directors  of the Company and against
the Company as a nominal defendant. Mr. Williams was not named as a
defendant in the lawsuit. The complaint was filed in the Superior
Court of Fulton County, Atlanta, Georgia on May 12, 2003 and
alleges breaches of fiduciary duties, abuse of control and corporate
waste by the defendants. The plaintiff seeks  monetary damages and,
as appropriate, injunctive relief. The defendants have not yet filed
an answer. The Company believes this lawsuit is without merit and
intends to vigorously defend against it.

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




ITEM 2.CHANGES IN SECURITIES AND USE OF PROCEEDS

None




ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None




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

None




ITEM 5.OTHER INFORMATION

None

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ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

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



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

|        |  |                                                                                                                                
|------- |  | -------------------------------------------------------------------------------------------------------------------------------
|3.1(a)  |  | Articles of Incorporation of the Company.                                                                                      
|3.2(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                         
|3.3(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                         
|3.4(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                         
|3.5(c)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                         
|3.6(b)  |  | Bylaws of the Company (as Amended and Restated as of March 22, 2003).                                                          
|4.1(d)  |  | Indenture between the Company and SunTrust Bank, as Trustee.                                                                   
|4.2(d)  |  | First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee.                               
|10.1    |  | Rabbi Trust Agreement.                                                                                                         
|11.1(e) |  | Statement Regarding Computation of Per Share Earnings.                                                                         
|99.1    |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  President and Chief Executive Officer.               
|99.2    |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  Executive Vice President and Chief
Financial Officer.



| | (a) |  | Filed as an exhibit to the Registration Statement on Form S-11 (SEC File No. 33-61936), as amended, of the Company.  
| | --- |  | ---------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended December 31, 2002.       
|
| | (c) |  | Filed as an exhibit to the Quarterly Report on Form 10-Q of the Registrants for the quarter ended September 30, 1999.
|
| | (d) |  | Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No. 333-42884) of the Company.               
|
| | (e) |  | The information required by this exhibit is included in note 5 to the consolidated financial statements.             
|
| | (b) |  | Reports on Form 8-K                                                                                                  
|
| |     |  | There were no reports on Form 8-K filed by either registrant during the three month period ended March 31, 2003.     

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SIGNATURES

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

|                     |  |                                                                                              
|-------------------- |  | ---------------------------------------------------------------------------------------------
|POST PROPERTIES, INC |  |                                                                                              
|                     |  |                                                                                              
|May 14, 2003         |  | /s/ David P. Stockert                                                                        
|                     |  |                                                                                              
|(Date)               |  | David P. Stockert
President and Chief Executive Officer                                      
|                     |  |                                                                                              
|May 14, 2003         |  | /s/ R. Gregory Fox                                                                           
|                     |  |                                                                                              
|(Date)               |  | R. Gregory Fox
Executive Vice President
Chief Financial Officer
(Principal Financial Officer)
|                    
|May 14, 2003         |  | /s/ Arthur J. Quirk                                                                          
|                     |  |                                                                                              
|(Date)               |  | Arthur J. Quirk
Senior Vice President and Controller,
Chief Accounting Officer               

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##### 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 sole General Partner                                         
|                           |  |                                                                                              
|May 14, 2003               |  | /s/ David P. Stockert                                                                        
|                           |  |                                                                                              
|(Date)                     |  | David P. Stockert
President and Chief Executive Officer                                      
|                           |  |                                                                                              
|May 14, 2003               |  | /s/ R. Gregory Fox                                                                           
|                           |  |                                                                                              
|(Date)                     |  | R. Gregory Fox
Executive Vice President
Chief Financial Officer
(Principal Financial Officer)
|                          
|May 14, 2003               |  | /s/ Arthur J. Quirk                                                                          
|                           |  |                                                                                              
|(Date)                     |  | Arthur J. Quirk
Senior Vice President and Controller,
Chief Accounting Officer               

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##### 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.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                        |  |                                                                                                                                                   
|------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|May 14, 2003                                            |  |                                                                                                                                                   
|                                                        |  |                                                                                                                                                   
|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                                                                                           

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##### 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.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                    |  |                                                                                                                                                   
|------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|May 14, 2003                                                        |  |                                                                                                                                                   
|                                                                    |  |                                                                                                                                                   
|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                                                                               

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EXHIBIT INDEX



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

|        |  |                                                                                                                                
|------- |  | -------------------------------------------------------------------------------------------------------------------------------
|3.1(a)  |  | Articles of Incorporation of the Company.                                                                                      
|3.2(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                         
|3.3(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                         
|3.4(b)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                         
|3.5(c)  |  | Articles of Amendment to the Articles of Incorporation of the Company.                                                         
|3.6(b)  |  | Bylaws of the Company (as Amended and Restated as of March 22, 2003).                                                          
|4.1(d)  |  | Indenture between the Company and SunTrust Bank, as Trustee.                                                                   
|4.2(d)  |  | First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee                                
|10.1    |  | Rabbi Trust Agreement                                                                                                          
|11.1(e) |  | Statement Regarding Computation of Per Share Earnings.                                                                         
|99.1    |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  President and Chief Executive
Officer.               
|99.2    |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  Executive Vice President and Chief
Financial Officer.



| | (a) |  | Filed as an exhibit to the Registration Statement on Form S-11 (SEC File No. 33-61936), as amended, of the
Company.  
| | --- |  | ---------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended December 31, 2002.       
|
| | (c) |  | Filed as an exhibit to the Quarterly Report on Form 10-Q of the Registrants for the quarter ended September
30, 1999.
|
| | (d) |  | Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No. 333-42884) of the Company.               
|
| | (e) |  | The information required by this exhibit is included in note 5 to the consolidated financial statements.             
|
| | (b) |  | Reports on Form 8-K                                                                                                  
|
| |     |  | There were no reports on Form 8-K filed by either registrant during the three month period ended March 31,
2003.     

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