##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended: September 30, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 0-20707
 COLONIAL REALTY LIMITED PARTNERSHIP
 (Exact name of registrant as specified in its charter)
 Delaware
    
    63-1098468(State or other jurisdiction 
of incorporation)
    
    (IRS Employer
Identification Number)
 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35203  Address of principal executive offices) (Zip Code)
 (205) 250-8700  (Registrants telephone number, including area code)
 Not applicable  (Former name, former address and former fiscal year, if changed since last report)
  þ o
  þ o
  o þ




---



##### 



COLONIAL REALTY LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
 PagePART I: FINANCIAL INFORMATIONItem 1. Consolidated Condensed Financial Statements (Unaudited):Consolidated Condensed Balance Sheets as of September 30, 2007 and December 31, 2006
    
    
    3Consolidated Condensed Statements of Income and Comprehensive Income for the Three and Nine Months ended September 30, 2007 and 2006
    
    
    4Consolidated Condensed Statements of Cash Flows for the Nine Months ended September 30, 2007 and 2006
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Report of Independent Registered Public Accounting Firm *
    
    
    24Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    40Item 4. Controls and Procedures
    
    
    40PART II: OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 6. Exhibits
    
    
    40SIGNATURES
    
    
    41EXHIBIT INDEX
    
    
    42EX-12.1 RATIO OF EARNINGS TO FIXED CHARGESEX-15.1 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATIONEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO
  * Review by Independent Registered Public Accounting Firm
  2




---



##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED CONDENSED BALANCE SHEETS
 (Unaudited)
 (in thousands, except unit data)
 September 30, 2007
    
    
    December 31, 2006ASSETSLand, buildings, & equipment
    
    $
    2,612,443
    
    
    $
    3,601,865Undeveloped land and construction in progress
    
    
    519,852
    
    
    
    434,196Less: Accumulated depreciation
    
    
    (301,760
    )
    
    
    (420,359
    )Real estate assets held for sale, net
    
    
    49,652
    
    
    
    381,445Net real estate assets
    
    
    2,880,187
    
    
    
    3,997,147Cash and equivalents
    
    
    152,841
    
    
    
    87,647Restricted cash
    
    
    10,754
    
    
    
    15,907Accounts receivable, net
    
    
    26,273
    
    
    
    26,138Notes receivable
    
    
    31,747
    
    
    
    61,269Prepaid expenses
    
    
    7,402
    
    
    
    19,519Deferred debt and lease costs
    
    
    15,207
    
    
    
    42,258Investment in partially owned entities
    
    
    77,359
    
    
    
    92,892Other assets
    
    
    48,318
    
    
    
    88,997Total assets
    
    $
    3,250,088
    
    
    $
    4,431,774LIABILITIES AND PARTNERS EQUITYNotes and mortgages payable
    
    $
    1,602,502
    
    
    $
    2,165,884Unsecured credit facility
    
    
    27,000
    
    
    
    185,000Mortgages payable related to real estate assets held for sale
    
    
    
    
    
    
    47,022Total debt
    
    
    1,629,502
    
    
    
    2,397,906Accounts payable
    
    
    72,967
    
    
    
    75,185Accrued interest
    
    
    26,112
    
    
    
    32,469Accrued expenses
    
    
    23,527
    
    
    
    16,557Other liabilities
    
    
    10,255
    
    
    
    26,546Total liabilities
    
    
    1,762,363
    
    
    
    2,548,663Redeemable units, at redemption value - 10,219,343 and 10,579,261
units outstanding at September 30, 2007 and December 31, 2006, respectively
    
    
    350,523
    
    
    
    495,956Limited partners minority interest in consolidated partnership
    
    
    2,613
    
    
    
    7,406General partner -Common equity - 46,976,839 and 46,144,909 units outstanding at
September 30, 2007 and December 31, 2006, respectively
    
    
    923,812
    
    
    
    1,066,063Preferred equity ($125,000 liquidation preference)
    
    
    120,550
    
    
    
    224,986Limited partners preferred equity ($100,000 liquidation preference)
    
    
    97,406
    
    
    
    97,406Accumulated other comprehensive income (loss)
    
    
    (7,179
    )
    
    
    (8,706
    )Total general partners equity
    
    
    1,134,589
    
    
    
    1,379,749Total liabilities and partners equity
    
    $
    3,250,088
    
    
    $
    4,431,774
  3




---



##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 (Unaudited)
 (in thousands, except per unit data)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Minimum rent
    
    $
    67,892
    
    
    $
    93,858
    
    
    $
    264,006
    
    
    $
    279,229Tenant recoveries
    
    
    1,026
    
    
    
    5,391
    
    
    
    10,672
    
    
    
    16,950Construction revenues
    
    
    11,154
    
    
    
    7,617
    
    
    
    26,340
    
    
    
    22,283Other property related revenue
    
    
    7,828
    
    
    
    6,868
    
    
    
    32,007
    
    
    
    26,793Other non-property related revenue
    
    
    5,490
    
    
    
    4,891
    
    
    
    14,044
    
    
    
    13,523Total revenue
    
    
    93,390
    
    
    
    118,625
    
    
    
    347,069
    
    
    
    358,778Operating Expenses:Property operating expenses
    
    
    21,966
    
    
    
    27,120
    
    
    
    76,697
    
    
    
    76,489Taxes, licenses, and insurance
    
    
    10,301
    
    
    
    13,138
    
    
    
    36,942
    
    
    
    37,684Construction expenses
    
    
    9,280
    
    
    
    6,653
    
    
    
    29,146
    
    
    
    25,680Property management expenses
    
    
    2,365
    
    
    
    3,258
    
    
    
    9,812
    
    
    
    9,800General and administrative expenses
    
    
    5,782
    
    
    
    6,279
    
    
    
    19,710
    
    
    
    16,025Management fee and other expense
    
    
    3,984
    
    
    
    3,051
    
    
    
    11,145
    
    
    
    9,044Restructuring charge
    
    
    
    
    
    
    
    
    
    
    1,528
    
    
    
    Depreciation
    
    
    23,842
    
    
    
    32,189
    
    
    
    89,763
    
    
    
    96,561Amortization
    
    
    835
    
    
    
    4,479
    
    
    
    9,741
    
    
    
    13,454Impairment
    
    
    44,129
    
    
    
    
    
    
    
    44,129
    
    
    
    Total operating expenses
    
    
    122,484
    
    
    
    96,167
    
    
    
    328,613
    
    
    
    284,737Income from operations
    
    
    (29,094
    )
    
    
    22,458
    
    
    
    18,456
    
    
    
    74,041Other income (expense):Interest expense and debt cost amortization
    
    
    (19,111
    )
    
    
    (31,585
    )
    
    
    (76,527
    )
    
    
    (93,710
    )Losses on retirement of debt
    
    
    
    
    
    
    
    
    
    
    (12,521
    )
    
    
    (628
    )Interest income
    
    
    2,852
    
    
    
    1,929
    
    
    
    6,124
    
    
    
    5,864Income (loss) from partially owned entities
    
    
    6,886
    
    
    
    (2,101
    )
    
    
    11,609
    
    
    
    (4,105
    )Gain (loss) on hedging activities
    
    
    
    
    
    
    37
    
    
    
    345
    
    
    
    2,589Gains from sales of property, net of income taxes of $628 (Q3) and
$1,475 (YTD) in 2007 and $162 (Q3) and $1,484 (YTD) in 2006
    
    
    4,689
    
    
    
    1,443
    
    
    
    17,549
    
    
    
    39,551Transaction costs
    
    
    
    
    
    
    
    
    
    
    (11,026
    )
    
    
    Minority interest of limited partners
    
    
    20
    
    
    
    406
    
    
    
    245
    
    
    
    482Income taxes and other
    
    
    16,545
    
    
    
    138
    
    
    
    15,733
    
    
    
    (1,008
    )Total other income (expense)
    
    
    11,881
    
    
    
    (29,733
    )
    
    
    (48,469
    )
    
    
    (50,965
    )Income (loss) from continuing operations
    
    
    (17,213
    )
    
    
    (7,275
    )
    
    
    (30,013
    )
    
    
    23,076Income from discontinued operations
    
    
    759
    
    
    
    8,119
    
    
    
    9,370
    
    
    
    22,229Gain on disposal of discontinued operations, net of taxes of $95 (Q3) and $1,779 (YTD) in 2007
and $2,178 (Q3) and $6,766 (YTD) in 2006
    
    
    17,193
    
    
    
    23,661
    
    
    
    91,477
    
    
    
    41,382Minority interest of limited partners
    
    
    (4,079
    )
    
    
    24
    
    
    
    (4,152
    )
    
    
    (2,650
    )Income from discontinued operations
    
    
    13,873
    
    
    
    31,804
    
    
    
    96,695
    
    
    
    60,961Net income
    
    
    (3,340
    )
    
    
    24,529
    
    
    
    66,682
    
    
    
    84,037Distributions to general partner preferred unitholders
    
    
    (2,539
    )
    
    
    (4,550
    )
    
    
    (10,900
    )
    
    
    (16,354
    )Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (5,437
    )
    
    
    (5,438
    )Preferred unit issuance costs write-off
    
    
    (29
    )
    
    
    (45
    )
    
    
    (360
    )
    
    
    (2,128
    )Net income available to common unitholders
    
    $
    (7,721
    )
    
    $
    18,121
    
    
    $
    49,985
    
    
    $
    60,117Net income available to common unitholders allocated to limited partners
    
    
    1,380
    
    
    
    (3,389
    )
    
    
    (9,132
    )
    
    
    (11,441
    )Net income (loss) available to common unitholders allocated to general partner
    
    $
    (6,341
    )
    
    $
    14,732
    
    
    $
    40,853
    
    
    $
    48,676Net income per common unit  Basic:Income (loss) from continuing operations
    
    $
    (0.38
    )
    
    $
    (0.24
    )
    
    $
    (0.83
    )
    
    $
    (0.02
    )Income from discontinued operations
    
    
    0.24
    
    
    
    0.57
    
    
    
    1.71
    
    
    
    1.09Net income per common unit  Basic
    
    $
    (0.14
    )
    
    $
    0.32
    
    
    $
    0.89
    
    
    $
    1.07Net income per common unit  Diluted:Income (loss) from continuing operations
    
    $
    (0.38
    )
    
    $
    (0.24
    )
    
    $
    (0.83
    )
    
    $
    (0.02
    )Income from discontinued operations
    
    
    0.24
    
    
    
    0.57
    
    
    
    1.71
    
    
    
    1.09Net income per common unit  Diluted
    
    $
    (0.14
    )
    
    $
    0.32
    
    
    $
    0.89
    
    
    $
    1.07Average units outstanding:Basic
    
    
    56,793
    
    
    
    56,286
    
    
    
    56,474
    
    
    
    56,084Diluted
    
    
    56,793
    
    
    
    56,286
    
    
    
    56,474
    
    
    
    56,084CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOMENet income
    
    $
    (3,340
    )
    
    $
    24,529
    
    
    $
    66,682
    
    
    $
    84,037Other comprehensive incomeUnrealized income (loss) on cash flow hedging activities
    
    
    
    
    
    
    (13,731
    )
    
    
    (138
    )
    
    
    (2,492
    )Change in additional minimum pension liability
    
    
    
    
    
    
    
    
    
    
    1,600
    
    
    
    Comprehensive income
    
    $
    (3,340
    )
    
    $
    10,798
    
    
    $
    68,144
    
    
    $
    81,545
  4




---



##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (in thousands)
 Nine Months EndedSeptember 30,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    66,682
    
    
    $
    84,036Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    99,729
    
    
    
    126,108Loss (income) from partially-owned unconsolidated entities
    
    
    (11,609
    )
    
    
    4,105Gains from sales of property
    
    
    (112,280
    )
    
    
    (89,182
    )Transaction costs
    
    
    11,026
    
    
    
    Impairment
    
    
    46,629
    
    
    
    Loss on retirement of debt
    
    
    12,521
    
    
    
    Prepayment penalties
    
    
    (29,207
    )
    
    
    Distributions of income from partially-owned unconsolidated entities
    
    
    8,489
    
    
    
    7,345Decrease (increase) in:Restricted cash
    
    
    5,153
    
    
    
    (7,060
    )Accounts receivable
    
    
    (1,015
    )
    
    
    7,545Prepaid expenses
    
    
    12,386
    
    
    
    (980
    )Other assets
    
    
    (33,629
    )
    
    
    (8,340
    )Increase (decrease) in:Accounts payable
    
    
    15,280
    
    
    
    (13,248
    )Accrued interest
    
    
    (6,359
    )
    
    
    3,363Accrued expenses and other
    
    
    13,123
    
    
    
    28,212Net cash provided by operating activities
    
    
    96,919
    
    
    
    141,904Cash flows from investing activities:Acquisition of properties
    
    
    (125,400
    )
    
    
    (306,245
    )Development expenditures
    
    
    (292,115
    )
    
    
    (251,514
    )Tenant improvements
    
    
    (5,881
    )
    
    
    (19,397
    )Capital expenditures
    
    
    (23,940
    )
    
    
    (21,475
    )Proceeds from sales of property, net of selling costs
    
    
    590,533
    
    
    
    528,735Transaction costs
    
    
    (11,026
    )
    
    
    Issuance of notes receivable
    
    
    (19,725
    )
    
    
    (30,964
    )Proceeds from notes receivable
    
    
    49,247
    
    
    
    12,150Distributions from partially-owned unconsolidated entities
    
    
    68,331
    
    
    
    27,648Capital contributions to partially-owned unconsolidated entities
    
    
    (13,319
    )
    
    
    (10,836
    )Net cash provided by (used in) investing activities
    
    
    216,705
    
    
    
    (71,898
    )Cash flows from financing activities:Proceeds from dividend reinvestment plan and exercise of stock options
    
    
    12,979
    
    
    
    22,539Principal reductions of debt
    
    
    (655,073
    )
    
    
    (186,741
    )Proceeds from additional borrowings
    
    
    818,748
    
    
    
    274,011Net change in revolving credit balances
    
    
    (171,544
    )
    
    
    41,783Dividends paid to common and preferred unitholders
    
    
    (137,104
    )
    
    
    (136,551
    )Special distributions
    
    
    (11,999
    )
    
    
    Redemption of Preferred Series C Shares
    
    
    
    
    
    
    (50,083
    )Redemption of Preferred Series E Shares
    
    
    (104,768
    )
    
    
    (28,444
    )Other financing activities, net
    
    
    331
    
    
    
    (7,958
    )Net cash used in financing activities
    
    
    (248,430
    )
    
    
    (71,444
    )Increase (decrease) in cash and cash equivalents
    
    
    65,194
    
    
    
    (1,438
    )Cash and cash equivalents, beginning of period
    
    
    87,647
    
    
    
    30,615Cash and cash equivalents, end of period
    
    $
    152,841
    
    
    $
    29,177Supplemental disclosure of cash flow information:Cash paid during the period for interest, including amounts capitalized
    
    $
    100,529
    
    
    $
    103,727Cash paid during the period for income taxes
    
    $
    4,463
    
    
    $
    16,876Supplemental disclosure of non-cash transactions:Cash flow hedging activities
    
    $
    (138
    )
    
    $
    2,492
  5




---



##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO
 
 CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 September 30, 2007
  The consolidated condensed financial statements of Colonial Realty Limited Partnership have
been prepared pursuant to the Securities and Exchange Commission (SEC) rules and regulations.
The following notes, which represent interim disclosures as required by the SEC, highlight
significant changes to the notes included in the December 31, 2006 audited consolidated financial
statements of Colonial Realty Limited Partnership and should be read together with the consolidated
financial statements and notes thereto included in the Colonial Realty Limited Partnership 2006
Annual Report on Form 10-K .
 Note 1
 Organization and Business
  Note 2
 Strategic Initiative
   6




---



##### Table of Contents



Note 3  Summary of Significant Accounting Policies
 Basis of Presentation
   7




---



##### Table of Contents



,
  Federal Income Tax Status
      Use of Estimates
  8




---



##### Table of Contents



Unaudited Interim Statements
  Revenue Recognition
 Accounting for Sales of Real Estate
     Impairment
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 9




---



##### Table of Contents



Notes Receivable
  New Accounting Pronouncements
 Fair Value Measurements 
 Applicability of
the Assessment of a Buyers Continuing Investment under FASB Statement No. 66 for Sales of
Condominiums
 The Fair Value Option for Financial Assets
and Financial Liabilities  including an amendment of FASB Statement No. 115
 Note 4 Capital Structure
  10




---



##### Table of Contents



Note 5  Acquisition and Disposition Activity
 Property Acquisitions
    Property Dispositions
  11




---



##### Table of Contents



Property Name
    
    Location
    
    Square FeetBritt David Shopping Center
    
    Columbus, GA
    
    
    102,600Colonial Mall Decatur
    
    Huntsville, AL
    
    
    576,100Colonial Mall Lakeshore
    
    Gainesville, GA
    
    
    518,300Colonial Mall Staunton
    
    Staunton, VA
    
    
    424,000Colonial Mayberry Mall
    
    Mount Airy, NC
    
    
    206,900Colonial Promenade Montgomery
    
    Montgomery, AL
    
    
    209,100Colonial Promenade Montgomery North
    
    Montgomery, AL
    
    
    209,900Colonial Shoppes Bellwood
    
    Montgomery, AL
    
    
    87,500Colonial Shoppes McGehee Place
    
    Montgomery, AL
    
    
    98,300Colonial Shoppes Quaker Village
    
    Greensboro, NC
    
    
    101,900Olde Town Shopping Center
    
    Montgomery, AL
    
    
    38,700
        12




---



##### Table of Contents



Units/ SquareProperty
    
    Location
    
    Date Sold
    
    FeetMultifamilyMayflower Seaside
    
    Virginia Beach, VA
    
    June 2007
    
    
    265Cape Landing
    
    Myrtle Beach, SC
    
    June 2007
    
    
    288Colonial Grand at Natchez Trace
    
    Jackson, MS
    
    June 2007
    
    
    328Colonial Grand at The Reservoir
    
    Jackson, MS
    
    June 2007
    
    
    170Colonial Grand at Promenade
    
    Montgomery, AL
    
    February 2007
    
    
    384Beacon Hill
    
    Charlotte, NC
    
    January 2007
    
    
    349Clarion Crossing
    
    Raleigh, NC
    
    January 2007
    
    
    260Colonial Grand at Enclave
    
    Atlanta, GA
    
    January 2007
    
    
    200Colonial Village at Poplar Place
    
    Atlanta, GA
    
    January 2007
    
    
    324Colonial Village at Regency Place
    
    Raleigh, NC
    
    January 2007
    
    
    180Colonial Village at Spring Lake
    
    Atlanta, GA
    
    January 2007
    
    
    188Colonial Village at Timothy Woods
    
    Athens, GA
    
    January 2007
    
    
    204Colonial Grand at Galleria
    
    Birmingham, AL
    
    December 2006
    
    
    1,080Colonial Grand at Riverchase
    
    Birmingham, AL
    
    December 2006
    
    
    468Colonial Village at Research Park
    
    Huntsville, AL
    
    December 2006
    
    
    736Colonial Village at Haverhill
    
    San Antonio, TX
    
    October 2006
    
    
    322Arbor Trace
    
    Norfolk, VA
    
    April 2006
    
    
    148Colonial Village at Estrada
    
    Dallas, TX
    
    March 2006
    
    
    248Copper Crossing
    
    Fort Worth, TX
    
    March 2006
    
    
    400The Meadows I, II & III
    
    Asheville, NC
    
    March 2006
    
    
    392The Trestles
    
    Raleigh, NC
    
    March 2006
    
    
    280Colonial Grand at Caledon Woods
    
    Greenville, SC
    
    January 2006
    
    
    350Colonial Village at Paces Glen
    
    Charlotte, NC
    
    January 2006
    
    
    172Colonial Village at Remington Place
    
    Raleigh, NC
    
    January 2006
    
    
    136Colonial Village at Whitemarsh
    
    Savannah, GA
    
    January 2006
    
    
    352Summerwalk
    
    Charlotte, NC
    
    January 2006
    
    
    160The Timbers
    
    Raleigh, NC
    
    January 2006
    
    
    176OfficeColonial Bank Centre
    
    Miami, FL
    
    September 2006
    
    
    235,500RetailVillage on the Parkway
    
    Dallas, TX
    
    July 2007
    
    
    380,500Britt David Shopping Center
    
    Columbus, GA
    
    July 2007
    
    
    102,600Colonial Mall Decatur
    
    Huntsville, AL
    
    July 2007
    
    
    576,100Colonial Mall Lakeshore
    
    Gainesville, GA
    
    July 2007
    
    
    518,300Colonial Mall Staunton
    
    Staunton, VA
    
    July 2007
    
    
    424,000Colonial Mayberry Mall
    
    Mount Airy, NC
    
    July 2007
    
    
    206,900Colonial Promenade Montgomery
    
    Montgomery, AL
    
    July 2007
    
    
    209,100Colonial Promenade Montgomery North
    
    Montgomery, AL
    
    July 2007
    
    
    209,900Colonial Shoppes Bellwood
    
    Montgomery, AL
    
    July 2007
    
    
    87,500Colonial Shoppes McGehee Place
    
    Montgomery, AL
    
    July 2007
    
    
    98,300Colonial Shoppes Quaker Village
    
    Greensboro, NC
    
    July 2007
    
    
    101,900Olde Town Shopping Center
    
    Montgomery, AL
    
    July 2007
    
    
    38,700Colonial Shoppes Wekiva
    
    Orlando, FL
    
    May 2007
    
    
    208,600Colonial Shoppes Bear Lake
    
    Orlando, FL
    
    April 2007
    
    
    131,300Colonial Shoppes Yadkinville
    
    Yadkinville, NC
    
    March 2007
    
    
    90,917Rivermont Shopping Center
    
    Chattanooga, TN
    
    February 2007
    
    
    73,481
   13




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Property revenues:Base rent
    
    $
    1,166
    
    
    $
    20,905
    
    
    $
    18,826
    
    
    $
    68,164Percentage rent
    
    
    169
    
    
    
    127
    
    
    
    532
    
    
    
    382Tenant recoveries
    
    
    342
    
    
    
    1,870
    
    
    
    3,418
    
    
    
    5,799Other revenue
    
    
    370
    
    
    
    1,855
    
    
    
    1,799
    
    
    
    6,543Total revenues
    
    
    2,047
    
    
    
    24,757
    
    
    
    24,575
    
    
    
    80,888Property operating and administrative expenses
    
    
    1,323
    
    
    
    9,921
    
    
    
    10,576
    
    
    
    31,883Depreciation
    
    
    16
    
    
    
    4,349
    
    
    
    1,076
    
    
    
    16,395Amortization
    
    
    2
    
    
    
    589
    
    
    
    66
    
    
    
    3,482Impairment
    
    
    
    
    
    
    
    
    
    
    2,500
    
    
    
    Total expenses
    
    
    1,341
    
    
    
    14,859
    
    
    
    14,218
    
    
    
    51,760Interest expense, net
    
    
    53
    
    
    
    (1,779
    )
    
    
    (985
    )
    
    
    (6,337
    )Other income (expenses)
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (562
    )Income from discontinued operations before net gain
on disposition of discontinued operations
    
    
    759
    
    
    
    8,119
    
    
    
    9,370
    
    
    
    22,229Net gain on disposition of discontinued operations
    
    
    17,193
    
    
    
    23,661
    
    
    
    91,477
    
    
    
    41,382Minority interest to limited partners
    
    
    (4,079
    )
    
    
    24
    
    
    
    (4,152
    )
    
    
    (2,650
    )Income from discontinued operations
    
    $
    13,873
    
    
    $
    31,804
    
    
    $
    96,695
    
    
    $
    60,961
 Note 6  For-Sale Activities and Impairment
 For-Sale Residential Activities
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(amounts in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Condominium revenues, net
    
    $
    5,373
    
    
    $
    22,634
    
    
    $
    49,127
    
    
    $
    97,528Condominium costs
    
    
    (4,915
    )
    
    
    (14,987
    )
    
    
    (39,123
    )
    
    
    (73,072
    )Gains on condominium sales, before minority interest and income taxes
    
    
    458
    
    
    
    7,647
    
    
    
    10,004
    
    
    
    24,456For-sale residential revenues, net
    
    
    5,264
    
    
    
    3,841
    
    
    
    21,224
    
    
    
    3,841For-sale residential costs
    
    
    (4,662
    )
    
    
    (2,960
    )
    
    
    (18,032
    )
    
    
    (2,960
    )Gains on for-sale residential sales, before minority interest and income taxes
    
    
    602
    
    
    
    881
    
    
    
    3,192
    
    
    
    881Minority interest
    
    
    26
    
    
    
    413
    
    
    
    250
    
    
    
    (2,225
    )Provision for income taxes
    
    
    (178
    )
    
    
    (2,340
    )
    
    
    (2,602
    )
    
    
    (7,454
    )Gains on condominium converstions, for-sale residential sales and
developments, net of minority interest and income taxes
    
    $
    908
    
    
    $
    6,601
    
    
    $
    10,844
    
    
    $
    15,658
 14




---



##### Table of Contents



Impairment
   Commercial Developments
  Note 7  Net Income Per Unit
  15




---



##### Table of Contents



Three Months Ended
    
    

Nine Months EndedSept. 30,
    
    
    Sept. 30,
    
    
    Sept. 30,
    
    
    Sept. 30,(amounts in table in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Income from continuing operations
    
    $
    (17,213
    )
    
    $
    (7,275
    )
    
    $
    (30,013
    )
    
    $
    23,076Less: Distributions to general partner preferred unitholders
    
    
    (2,539
    )
    
    
    (4,550
    )
    
    
    (10,900
    )
    
    
    (16,354
    )Less: Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (5,437
    )
    
    
    (5,438
    )Less: Preferred unit issuance costs
    
    
    (29
    )
    
    
    (45
    )
    
    
    (360
    )
    
    
    (2,128
    )Net income (loss) available to common unitholders
    
    $
    (21,594
    )
    
    $
    (13,683
    )
    
    $
    (46,710
    )
    
    $
    (844
    )Denominator:Denominator for basic net income per unit  weighted average units
    
    
    56,793
    
    
    
    56,286
    
    
    
    56,474
    
    
    
    56,084Effect of dilutive securities:Trustee and employee stock options, treasury method
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted net income per unit -
adjusted weighted average units
    
    
    56,793
    
    
    
    56,286
    
    
    
    56,474
    
    
    
    56,084
  Note 8  Segment Information
  16




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Segment Revenues:Multifamily
    
    $
    75,836
    
    
    $
    81,089
    
    
    $
    230,762
    
    
    $
    236,488Office
    
    
    12,945
    
    
    
    41,735
    
    
    
    84,322
    
    
    
    131,659Retail
    
    
    10,270
    
    
    
    26,133
    
    
    
    59,775
    
    
    
    81,312Total Segment Revenues
    
    
    99,051
    
    
    
    148,957
    
    
    
    374,859
    
    
    
    449,459Partially-owned unconsolidated entities  Mfam
    
    
    (2,587
    )
    
    
    (4,766
    )
    
    
    (7,817
    )
    
    
    (14,275
    )Partially-owned unconsolidated entities  Off
    
    
    (12,128
    )
    
    
    (8,626
    )
    
    
    (28,298
    )
    
    
    (25,604
    )Partially-owned unconsolidated entities  Rtl
    
    
    (5,543
    )
    
    
    (3,942
    )
    
    
    (13,151
    )
    
    
    (10,230
    )Construction revenues
    
    
    11,154
    
    
    
    6,868
    
    
    
    32,007
    
    
    
    26,793Unallocated corporate revenues
    
    
    5,490
    
    
    
    4,891
    
    
    
    14,044
    
    
    
    13,523Discontinued operations property revenues
    
    
    (2,047
    )
    
    
    (24,757
    )
    
    
    (24,575
    )
    
    
    (80,888
    )Total Consolidated Revenues
    
    
    93,390
    
    
    
    118,625
    
    
    
    347,069
    
    
    
    358,778NOI:Segment NOI:Multifamily
    
    
    43,635
    
    
    
    46,979
    
    
    
    135,701
    
    
    
    140,301Office
    
    
    7,558
    
    
    
    26,435
    
    
    
    54,815
    
    
    
    85,446Retail
    
    
    6,457
    
    
    
    18,339
    
    
    
    40,962
    
    
    
    58,264Total Segment NOI
    
    
    57,650
    
    
    
    91,753
    
    
    
    231,478
    
    
    
    284,011Partially-owned unconsolidated entities  Mfam
    
    
    (1,309
    )
    
    
    (2,590
    )
    
    
    (3,669
    )
    
    
    (8,318
    )Partially-owned unconsolidated entities  Off
    
    
    (7,426
    )
    
    
    (5,038
    )
    
    
    (17,370
    )
    
    
    (15,510
    )Partially-owned unconsolidated entities  Rtl
    
    
    (3,855
    )
    
    
    (2,669
    )
    
    
    (9,057
    )
    
    
    (6,850
    )Unallocated corporate revenues
    
    
    5,490
    
    
    
    4,891
    
    
    
    14,044
    
    
    
    13,523Discontinued operations property NOI
    
    
    (724
    )
    
    
    (14,836
    )
    
    
    (11,499
    )
    
    
    (49,005
    )Impairment  discontinued operations (1)
    
    
    
    
    
    
    
    
    
    
    (2,500
    )
    
    
    Impairment  continued operations (2)
    
    
    (44,129
    )
    
    
    
    
    
    
    (44,129
    )
    
    
    Construction NOI
    
    
    1,874
    
    
    
    215
    
    
    
    2,861
    
    
    
    1,113Property management expenses
    
    
    (2,365
    )
    
    
    (3,258
    )
    
    
    (9,812
    )
    
    
    (9,800
    )General and administrative expenses
    
    
    (5,782
    )
    
    
    (6,279
    )
    
    
    (19,710
    )
    
    
    (16,025
    )Management fee and other expenses
    
    
    (3,984
    )
    
    
    (3,051
    )
    
    
    (11,145
    )
    
    
    (9,044
    )Restructuring charge
    
    
    
    
    
    
    
    
    
    
    (1,528
    )
    
    
    Depreciation
    
    
    (23,842
    )
    
    
    (32,189
    )
    
    
    (89,763
    )
    
    
    (96,561
    )Amortization
    
    
    (835
    )
    
    
    (4,479
    )
    
    
    (9,741
    )
    
    
    (13,454
    )Other
    
    
    143
    
    
    
    (12
    )
    
    
    (4
    )
    
    
    (39
    )Income from operations
    
    
    (29,094
    )
    
    
    22,458
    
    
    
    18,456
    
    
    
    74,041Total other income (expense), net (3)
    
    
    11,881
    
    
    
    (29,733
    )
    
    
    (48,469
    )
    
    
    (50,965
    )Income (loss) from continuing operations
    
    $
    (17,213
    )
    
    $
    (7,275
    )
    
    $
    (30,013
    )
    
    $
    23,076
 September 30,
    
    
    December 31,(in thousands)
    
    2007
    
    
    2006AssetsSegment AssetsMultifamily
    
    $
    2,426,905
    
    
    $
    2,539,367Office
    
    
    74,630
    
    
    
    799,089Retail
    
    
    171,489
    
    
    
    663,216For-Sale Residential
    
    
    187,519
    
    
    
    99,518Total Segment Assets
    
    
    2,860,543
    
    
    
    4,101,190Unallocated corporate assets (4)
    
    
    389,545
    
    
    
    330,584$
    3,250,088
    
    
    $
    4,431,774
 footnotes on following page
 17




---



##### Table of Contents



(1)
    
    The $2.5 million impairment charge was related to a retail asset classified as held for sale
on CRLPs consolidated condensed balance sheet; and therefore, it is also included in discontinued
operations.(2)
    
    During the three months ended September 30, 2007, CRLP recorded a $43.3 million non-cash
impairment charge related to CRLPs for-sale residential business and an $0.8 million non-cash
impairment charge as a result of fires at two multifamily apartment communities.(3)
    
    For-sale residential activities including net gain on sales and income tax expense (benefit)
are included in other income. (see below for additional details).(4)
    
    Includes CRLPs investment in partially-owned entities of $77,359 as of September 30, 2007 and
$92,892 as of December 31, 2006. For-Sale Residential
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Gains on for-sale residential sales
    
    $
    602
    
    
    $
    881
    
    
    $
    3,192
    
    
    $
    881Impairment
    
    
    (43,300
    )
    
    
    
    
    
    
    (43,300
    )
    
    
    Income tax benefit (expense)
    
    
    16,289
    
    
    
    (353
    )
    
    
    15,370
    
    
    
    (353
    )Income (loss) from for-sale residential sales
    
    $
    (26,409
    )
    
    $
    528
    
    
    $
    (24,738
    )
    
    $
    528
 Note 9  Investment in Partially-Owned Entities
  18




---



##### Table of Contents



(in thousands)Percent
    
    
    September 30,
    
    
    December 31,Owned
    
    
    2007
    
    
    2006Multifamily:Arbors at Windsor Lake, Columbia, SC
    
    
    10.00
    %
    
    $
    574
    
    
    $
    614Auberry at Twin Creeks, Dallas, TX
    
    
    15.00
    %
    
    
    723
    
    
    
    Belterra, Ft. Worth, TX
    
    
    10.00
    %
    
    
    841
    
    
    
    944Carter Regents Park, Atlanta, GA
    
    
    40.00
    %(1)
    
    
    5,235
    
    
    
    6,231CG at Canyon Creek, Austin, TX
    
    
    25.00
    %
    
    
    1,220
    
    
    
    1,416CG at Huntcliff, Atlanta, GA
    
    
    20.00
    %
    
    
    2,166
    
    
    
    2,327CG at Research Park, Raleigh, NC
    
    
    20.00
    %
    
    
    1,222
    
    
    
    1,247CG at Traditions, Gulf Shores, AL
    
    
    35.00
    %
    
    
    1,924
    
    
    
    CMS / Colonial Joint Venture I
    
    
    15.00
    %
    
    
    448
    
    
    
    498CMS / Colonial Joint Venture II
    
    
    15.00
    %(2)
    
    
    (412
    )
    
    
    (252
    )CMS Florida
    
    
    25.00
    %(3)
    
    
    (286
    )
    
    
    1,072CMS Tennessee
    
    
    25.00
    %(4)
    
    
    405
    
    
    
    1,234CV at Matthews, Charlotte, NC
    
    
    25.00
    %
    
    
    991
    
    
    
    1,059DRA Alabama
    
    
    10.00
    %
    
    
    2,268
    
    
    
    2,311DRA CV at Cary, Raleigh, NC
    
    
    20.00
    %
    
    
    2,165
    
    
    
    DRA Cunningham, Austin, TX
    
    
    20.00
    %
    
    
    990
    
    
    
    1,053DRA Southwest Partnership
    
    
    23.00
    %(5)
    
    
    
    
    
    
    495DRA The Grove at Riverchase, Birmingham, AL
    
    
    20.00
    %
    
    
    1,434
    
    
    
    1,552Fairmont at Fossil Creek, Fort Worth, TX
    
    
    15.00
    %
    
    
    580
    
    
    
    Heritage at Deerwood, Jacksonville, FL
    
    
    47.00
    %(6)
    
    
    
    
    
    
    4,765Merritt at Godley Station, Savannah, GA
    
    
    35.00
    %(7)
    
    
    
    
    
    
    3,169Park Crossing, Fairfield, CA
    
    
    10.00
    %
    
    
    868
    
    
    
    1,000Stone Ridge, Columbia, SC
    
    
    10.00
    %
    
    
    455
    
    
    
    492Total Multifamily
    
    
    
    
    
    
    23,811
    
    
    
    31,227Office:600 Building Partnership, Birmingham, AL
    
    
    33.33
    %
    
    
    65
    
    
    
    50Colonial Center Mansell JV
    
    
    15.00
    %
    
    
    1,643
    
    
    
    2,513DRA / CRT JV
    
    
    15.00
    %(8)
    
    
    22,558
    
    
    
    38,069DRA / CLP JV
    
    
    15.00
    %(9)
    
    
    13,675
    
    
    
    Total Office
    
    
    
    
    
    
    37,941
    
    
    
    40,632Retail:Colonial Promenade Madison, Huntsville, AL
    
    
    25.00
    %
    
    
    2,252
    
    
    
    2,308Colonial Promenade Smyrna, Smyrna, TN (Development)
    
    
    50.00
    %
    
    
    2,312
    
    
    
    2,393GPT / Colonial Retail JV
    
    
    10.00
    %(10)
    
    
    (4,637
    )
    
    
    (3,068
    )Highway 150, LLC, Birmingham, AL
    
    
    10.00
    %
    
    
    67
    
    
    
    70OZRE JV
    
    
    15.00
    %(11)
    
    
    (5,556
    )
    
    
    Parkway Place Limited Partnership, Huntsville, AL
    
    
    45.00
    %
    
    
    10,732
    
    
    
    11,012Colonial Promenade Craft Farms, Gulf Shores, AL
    
    
    15.00
    %
    
    
    1,443
    
    
    
    Parkside Drive LLC, Knoxville, TN
    
    
    50.00
    %
    
    
    7,412
    
    
    
    7,17814,025
    
    
    
    19,893Other:Heathrow, Orlando, FL
    
    
    50.00
    %
    
    
    1,570
    
    
    
    1,106Colonial /
Polar-BEK Management Company, Birmingham, AL
    
    
    50.00
    %
    
    
    12
    
    
    
    341,582
    
    
    
    1,140$
    77,359
    
    
    $
    92,892
 footnotes on following page
 19




---



##### Table of Contents



(1)
    
    Carter at Regents Park includes a $1.2 million non-cash impairment charge that was
recorded during the three months ended September 30, 2007. This impairment is included in
Impairments in CRLPs Consolidated Condensed Statements of Income for the three and nine
months ended September 30, 2007.(2)
    
    The CMS/Colonial Joint Venture II holds one property in which CRLP has a 15%
partnership interest. CRLP sold its 5% partnership interest in the other property in May
2007.(3)
    
    CRLP sold its interest in Colonial Grand at Bayshore
during January 2007.(4)
    
    CRLP sold its interest in Colonial Village at Hendersonville during September 2007.(5)
    
    The DRA Southwest Partnership, comprised of 15 multifamily properties totaling
3,957 units, sold the properties held in the joint venture on December 21, 2006.(6)
    
    CRLP sold its interest in Heritage at Deerwood during March 2007.(7)
    
    CRLP acquired the remaining 65% interest in Merritt at Godley Station during May
2007.(8)
    
    As of September 30, 2007, this joint venture included 18 properties located in Ft.
Lauderdale, Jacksonville and Orlando, Florida; Atlanta, Georgia; Rockville, Maryland;
Charlotte, North Carolina; Memphis, Tennessee and Houston, Texas.(9)
    
    As of September 30, 2007, this joint venture included 24 office properties and 2
retail properties located in Birmingham and Huntsville, Alabama; Orlando and Tampa,
Florida; Atlanta, Georgia; Charlotte, North Carolina and Austin, Texas. Amount includes
the value of CRLPs investment of approximately $62.8 million, offset by the excess basis
difference on the transaction of approximately $49.2 million, which is being amortized
over the life of the properties. CRLP sold its interest in Saint Petersburg Centre and
Las Olas Centre during 2007.(10)
    
    Amount includes the value of CRLPs investment of approximately $5.6 million,
offset by the excess basis difference on the transaction of approximately $10.2 million,
which is being amortized over the life of the properties.(11)
    
    As of September 30, 2007, this joint venture included 11 retail properties located
in Birmingham, Alabama; Jacksonville, Orlando, Punta Gorda and Tampa, Florida; Athens,
Georgia and Houston, Texas. Amount includes the value of CRLPs investment of
approximately $12.1 million, offset by the excess basis difference on the transaction of
approximately $17.7 million, which is being amortized over the life of the properties.      Total Assets
    
    
    Total Debt
    
    
    Total Equity2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006DRA/CRT
    
    $
    1,234,432
    
    
    $
    1,523,349
    
    
    $
    983,692
    
    
    $
    1,163,968
    
    
    $
    214,347
    
    
    $
    327,902DRA/CLP
    
    
    1,179,479
    
    
    
    
    
    
    
    741,907
    
    
    
    
    
    
    
    416,743
    
    
    
    OZRE
    
    
    368,082
    
    
    
    
    
    
    
    284,000
    
    
    
    
    
    
    
    78,840
    
    
    
    $
    2,781,993
    
    
    $
    1,523,349
    
    
    $
    2,009,599
    
    
    $
    1,163,968
    
    
    $
    709,930
    
    
    $
    327,902
  Total Revenues
    
    
    Net Income
    
    
    Share of Net Income2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006DRA/CRT
    
    $
    42,534
    
    
    $
    53,123
    
    
    $
    33,789
    
    
    $
    (8,852
    )
    
    $
    5,388
    
    
    $
    (1,328
    )DRA/CLP
    
    
    35,707
    
    
    
    
    
    
    
    (2,501
    )
    
    
    
    
    
    
    302
    
    
    
    OZRE
    
    
    8,755
    
    
    
    
    
    
    
    (2,292
    )
    
    
    
    
    
    
    (116
    )
    
    
    $
    86,996
    
    
    $
    53,123
    
    
    $
    28,996
    
    
    $
    (8,852
    )
    
    $
    5,574
    
    
    $
    (1,328
    )
 20




---



##### Table of Contents



Total Revenues
    
    
    Net Income
    
    
    Share of Net Income2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006DRA/CRT
    
    $
    135,357
    
    
    $
    165,216
    
    
    $
    17,250
    
    
    $
    (30,507
    )
    
    $
    3,193
    
    
    $
    (4,576
    )DRA/CLP
    
    
    42,300
    
    
    
    
    
    
    
    (2,557
    )
    
    
    
    
    
    
    380
    
    
    
    OZRE
    
    
    9,920
    
    
    
    
    
    
    
    (2,100
    )
    
    
    
    
    
    
    (68
    )
    
    
    $
    187,577
    
    
    $
    165,216
    
    
    $
    12,593
    
    
    $
    (30,507
    )
    
    $
    3,505
    
    
    $
    (4,576
    )
 Note
10  Financing Activities
          21




---



##### Table of Contents



Note 11  Derivatives and Hedging
    Note 12 Contingencies
     Note 13  Subsequent Events
 Distribution
  22




---



##### Table of Contents



Joint Venture Sales Activity
 
 23




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
  24




---



##### Table of Contents



COLONIAL
REALTY LIMITED PARTNERSHIP
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    national and local economic, business and real estate conditions, including, but
not limited to, the effect of demand for multifamily units, office and retail rental
space, the extent, strength and duration of any economic recovery, such as the
effects on demand for units and rental space and the creation of new multifamily,
office and retail developments, availability and creditworthiness of tenants, the
level of lease rents, and the availability of financing for both tenants and us;
    
    adverse changes in real estate markets, including, but not limited to, the extent
of tenant bankruptcies, financial difficulties and defaults, the extent of future
demand for multifamily units and office and retail space in our core markets and
barriers of entry into new markets which we may seek to enter in the future, the
extent of decreases in rental rates, competition, our ability to identify and
consummate attractive acquisitions on favorable terms, our ability to consummate any
planned dispositions in a timely manner on acceptable terms;
    
    actions, strategies and performance of affiliates that we may not control or
companies, including joint ventures, in which we have made investments;
    
    changes in operating costs, including real estate taxes, utilities, and
insurance;
    
    higher than expected construction costs;
    
    development or conversion of for-sale projects could adversely affect our results
of operations;
    
    legislative or other regulatory decisions, including government approvals,
actions and initiatives, including the need for compliance with environmental and
safety requirements, and changes in laws and regulations or the interpretation
thereof;
    
    effects of tax legislative action;
    
    our general partners ability to maintain its status as a real estate investment
trust (REIT) for federal income tax purposes, our ability to maintain our status
as a partnership for federal income tax purposes, the ability of certain of our
subsidiaries to maintain their status as taxable REIT subsidiaries for federal
income tax purposes, and our ability and the ability of our subsidiaries to operate
effectively within the limitations imposed by these rules;
    
    effect of any rating agency actions on the cost and availability of new debt
financing;
    
    level and volatility of interest rates or capital market conditions;
    
    effect of any terrorist activity or other heightened geopolitical crisis; and
    
    other factors affecting the real estate industry generally.
  25




---



##### Table of Contents



Overview
 As used herein, the terms CRLP, we, us, our and Operating Partnership refer to
Colonial Realty Limited Partnership, a Delaware limited partnership, and its subsidiaries and other
affiliates, including Colonial Properties Services Limited Partnership, Colonial Property Services,
Inc. and CLNL Acquisition Sub, LLC or, as the context may require, Colonial Realty Limited
Partnership only. As used herein, the term the Company or the Trust includes Colonial
Properties Trust, an Alabama real estate investment trust, and one or more of its subsidiaries and
other affiliates, including CRLP, Colonial Properties Services Limited Partnership, Colonial
Properties Services, Inc. and CLNL Acquisition Sub, LLC or, as the context may require, Colonial
Properties Trust only or Colonial Realty Limited Partnership only.
     26




---



##### Table of Contents



Business Strategy
      27




---



##### Table of Contents



Executive Summary of Results of Operations
    
    
    Operations for the three months ended September 30, 2007 included a $43.3 million
non-cash impairment charge ($26.8 million net of income tax) associated with our for-sale
residential communities as a result of the deterioration in the single family housing
market and dislocation in the mortgage markets. In addition, we had separate fires at two
of our multifamily apartment communities resulting in an impairment charge of $0.8 million.
    
    Total multifamily revenues decreased $3.0 million, or 3.9%, primarily as a result of
disposition activities, which were partially offset by acquisitions, new developments
placed into service and improved operations.
    
    Total multifamily NOI decreased $2.0 million, or 4.4%, primarily as a result of
disposition activities, which were partially offset by acquisitions, new developments
placed into service and improved operations.
    
    Rental revenues and NOI associated with our office and retail assets decreased $49.9
million and $34.3 million, respectively, compared to the same period in 2006 as a result of
the office and retail joint venture transactions that closed in June 2007. Additionally,
retail rental revenues and retail NOI decreased as a result of the outright sale of 12 of
our retail malls and shopping centers during July 2007.
  
    
    We incurred a $43.3 million non-cash impairment charge ($26.8 million net of income tax)
as described above.
    
    Total multifamily revenues increased $0.7 million, or 0.3%, primarily as a result of net
acquisition and disposition activities.
    
    Total multifamily NOI remained flat for the period as a result of net acquisition and
disposition activities.
    
    Rental revenues and NOI associated with our office and retail assets decreased due to
the office and retail joint venture transactions that were consummated during June 2007 as
a part of our strategic initiative discussed above. Rental revenues and NOI associated
with our office and retail assets also decreased as a result of the sale of 85% of our
interest in the office assets contributed to the Colonial Center Mansell joint venture in
June 2006, the outright sale of three other office assets throughout the remainder of 2006,
and the outright sale of 17 retail assets since September 30, 2006.
    
    Gains on sale of real estate increased as a result of net gains of approximately $278.1
million recognized in connection with the sale of our 69.8% interest in the DRA/CLP JV and
our 69.8% interest in the OZRE JV during June 2007, as discussed above. During the three
months ended September 30, 2007, we recognized an additional $8.1 million of gain on sale
related to these transactions as a result of a reduction of the related obligations.
 28




---



##### Table of Contents




    
    Operations for the nine months ended September 30, 2007 included approximately $18.2
million of net expenses associated with our strategic initiative (see below for detailed
discussion of these expenses).
  Reconciliation of Operating Results Summary to Consolidated Condensed Statements of Income
  Three Months Ended September 30, 2007
    
    
    Three Months Ended September 30, 2006Continuing
    
    
    Discontinued
    
    
    
    
    
    
    Continuing
    
    
    DiscontinuedOperations
    
    
    Operations
    
    
    Total
    
    
    Operations
    
    
    Operations
    
    
    TotalRental revenues (1)
    
    $
    76,746
    
    
    $
    2,047
    
    
    $
    78,793
    
    
    $
    106,866
    
    
    $
    24,757
    
    
    $
    131,623Construction revenues
    
    
    11,154
    
    
    
    
    
    
    
    11,154
    
    
    
    6,868
    
    
    
    
    
    
    
    6,868Non-property related revenues
    
    
    5,490
    
    
    
    
    
    
    
    5,490
    
    
    
    4,891
    
    
    
    
    
    
    
    4,891Property operating expenses
(rental expense and real estate taxes)
    
    
    (32,267
    )
    
    
    (1,323
    )
    
    
    (33,590
    )
    
    
    (40,258
    )
    
    
    (9,921
    )
    
    
    (50,179
    )Construction expenses
    
    
    (9,280
    )
    
    
    
    
    
    
    (9,280
    )
    
    
    (6,653
    )
    
    
    
    
    
    
    (6,653
    )Property management expenses
    
    
    (2,365
    )
    
    
    
    
    
    
    (2,365
    )
    
    
    (3,258
    )
    
    
    
    
    
    
    (3,258
    )General and adminstrative expenses
    
    
    (5,782
    )
    
    
    
    
    
    
    (5,782
    )
    
    
    (6,279
    )
    
    
    
    
    
    
    (6,279
    )Management fee and other expenses
    
    
    (3,984
    )
    
    
    
    
    
    
    (3,984
    )
    
    
    (3,051
    )
    
    
    
    
    
    
    (3,051
    )Depreciation and amortization
    
    
    (24,677
    )
    
    
    (18
    )
    
    
    (24,695
    )
    
    
    (36,668
    )
    
    
    (4,939
    )
    
    
    (41,607
    )Impairments
    
    
    (44,129
    )
    
    
    
    
    
    
    (44,129
    )
    
    
    
    
    
    
    
    
    
    
    Interest expense and debt cost amortization
    
    
    (19,111
    )
    
    
    (48
    )
    
    
    (19,159
    )
    
    
    (31,585
    )
    
    
    (1,781
    )
    
    
    (33,366
    )Income tax and other
    
    
    16,545
    
    
    
    
    
    
    
    16,545
    
    
    
    175
    
    
    
    
    
    
    
    175Interest income
    
    
    2,852
    
    
    
    101
    
    
    
    2,953
    
    
    
    1,929
    
    
    
    3
    
    
    
    1,932Income (loss) from unconsolidated entities
    
    
    6,886
    
    
    
    
    
    
    
    6,886
    
    
    
    (2,101
    )
    
    
    
    
    
    
    (2,101
    )Gains, net of taxes
    
    
    4,689
    
    
    
    17,193
    
    
    
    21,882
    
    
    
    1,443
    
    
    
    23,661
    
    
    
    25,104Minority interest of limited partners
    
    
    20
    
    
    
    (4,079
    )
    
    
    (4,059
    )
    
    
    406
    
    
    
    24
    
    
    
    430Net income (loss)
    
    
    (17,213
    )
    
    
    13,873
    
    
    
    (3,340
    )
    
    
    (7,275
    )
    
    
    31,804
    
    
    
    24,529Dividends to preferred unitholders
    
    
    (4,352
    )
    
    
    
    
    
    
    (4,352
    )
    
    
    (6,363
    )
    
    
    
    
    
    
    (6,363
    )Preferred share issuance costs write-off
    
    
    (29
    )
    
    
    
    
    
    
    (29
    )
    
    
    (45
    )
    
    
    
    
    
    
    (45
    )Net income (loss) available to common
shareholders
    
    $
    (21,594
    )
    
    $
    13,873
    
    
    $
    (7,721
    )
    
    $
    (13,683
    )
    
    $
    31,804
    
    
    $
    18,121
 Nine Months Ended September 30, 2007
    
    
    Nine Months Ended September 30, 2006Continuing
    
    
    Discontinued
    
    
    
    
    
    
    Continuing
    
    
    DiscontinuedOperations
    
    
    Operations
    
    
    Total
    
    
    Operations
    
    
    Operations
    
    
    TotalRental revenues (1)
    
    $
    301,018
    
    
    $
    24,575
    
    
    $
    325,593
    
    
    $
    318,462
    
    
    $
    80,888
    
    
    $
    399,350Construction revenues
    
    
    32,007
    
    
    
    
    
    
    
    32,007
    
    
    
    26,793
    
    
    
    
    
    
    
    26,793Non-property related revenues
    
    
    14,044
    
    
    
    
    
    
    
    14,044
    
    
    
    13,523
    
    
    
    
    
    
    
    13,523Property operating expenses
(rental expense and real estate taxes)
    
    
    (113,639
    )
    
    
    (10,576
    )
    
    
    (124,215
    )
    
    
    (114,173
    )
    
    
    (31,883
    )
    
    
    (146,056
    )Construction expenses
    
    
    (29,146
    )
    
    
    
    
    
    
    (29,146
    )
    
    
    (25,680
    )
    
    
    
    
    
    
    (25,680
    )Property management expenses
    
    
    (9,812
    )
    
    
    
    
    
    
    (9,812
    )
    
    
    (9,800
    )
    
    
    
    
    
    
    (9,800
    )General and adminstrative expenses
    
    
    (19,710
    )
    
    
    
    
    
    
    (19,710
    )
    
    
    (16,025
    )
    
    
    
    
    
    
    (16,025
    )Management fee and other expenses
    
    
    (11,145
    )
    
    
    
    
    
    
    (11,145
    )
    
    
    (9,044
    )
    
    
    
    
    
    
    (9,044
    )Restructuring charges
    
    
    (1,528
    )
    
    
    
    
    
    
    (1,528
    )
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    (99,504
    )
    
    
    (1,142
    )
    
    
    (100,646
    )
    
    
    (110,015
    )
    
    
    (19,877
    )
    
    
    (129,892
    )Impairments
    
    
    (44,129
    )
    
    
    (2,500
    )
    
    
    (46,629
    )
    
    
    
    
    
    
    
    
    
    
    Interest expense and debt cost amortization
    
    
    (76,527
    )
    
    
    (1,275
    )
    
    
    (77,802
    )
    
    
    (93,710
    )
    
    
    (6,356
    )
    
    
    (100,066
    )Loss on retirement of debt
    
    
    (12,521
    )
    
    
    (2
    )
    
    
    (12,523
    )
    
    
    (628
    )
    
    
    (562
    )
    
    
    (1,190
    )Income tax and other
    
    
    16,078
    
    
    
    
    
    
    
    16,078
    
    
    
    1,581
    
    
    
    
    
    
    
    1,581Interest income
    
    
    6,124
    
    
    
    290
    
    
    
    6,414
    
    
    
    5,864
    
    
    
    19
    
    
    
    5,883Income (loss) from unconsolidated entities
    
    
    11,609
    
    
    
    
    
    
    
    11,609
    
    
    
    (4,105
    )
    
    
    
    
    
    
    (4,105
    )Gains, net of taxes
    
    
    17,549
    
    
    
    91,477
    
    
    
    109,026
    
    
    
    39,551
    
    
    
    41,382
    
    
    
    80,933Transaction costs
    
    
    (11,026
    )
    
    
    
    
    
    
    (11,026
    )
    
    
    
    
    
    
    
    
    
    
    Minority interest of limited partners
    
    
    245
    
    
    
    (4,152
    )
    
    
    (3,907
    )
    
    
    482
    
    
    
    (2,650
    )
    
    
    (2,168
    )Net income (loss)
    
    
    (30,013
    )
    
    
    96,695
    
    
    
    66,682
    
    
    
    23,076
    
    
    
    60,961
    
    
    
    84,037Dividends to preferred unitholders
    
    
    (16,337
    )
    
    
    
    
    
    
    (16,337
    )
    
    
    (21,792
    )
    
    
    
    
    
    
    (21,792
    )Preferred share issuance costs write-off
    
    
    (360
    )
    
    
    
    
    
    
    (360
    )
    
    
    (2,128
    )
    
    
    
    
    
    
    (2,128
    )Net income (loss) available to common shareholders
    
    $
    (46,710
    )
    
    $
    96,695
    
    
    $
    49,985
    
    
    $
    (844
    )
    
    $
    60,961
    
    
    $
    60,117
 
 (1)
    
    Rental revenues include minimum rent, tenant recoveries and other property related revenue
from our Consolidated Condensed Statements of Income. 29




---



##### Table of Contents



Operating Results Summary
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(amounts in thousands)
    
    2007
    
    
    2006
    
    
    Variance
    
    
    2007
    
    
    2006
    
    
    VarianceRental revenues:Multifamily Same Property (1)
    
    $
    58,150
    
    
    $
    55,513
    
    
    $
    2,637
    
    
    $
    173,274
    
    
    $
    165,197
    
    
    $
    8,077Multifamily Non-Same Property & Other
    
    
    15,098
    
    
    
    20,706
    
    
    
    (5,608
    )
    
    
    49,672
    
    
    
    57,016
    
    
    
    (7,344
    )Office
    
    
    819
    
    
    
    33,109
    
    
    
    (32,290
    )
    
    
    56,025
    
    
    
    106,055
    
    
    
    (50,030
    )Retail
    
    
    4,726
    
    
    
    22,295
    
    
    
    (17,569
    )
    
    
    46,622
    
    
    
    71,082
    
    
    
    (24,460
    )Total rental revenues
    
    
    78,793
    
    
    
    131,623
    
    
    
    (52,830
    )
    
    
    325,593
    
    
    
    399,350
    
    
    
    (73,757
    )Property operating expenses (rental expenses and real estate taxes):Multifamily Same Property (1)
    
    
    (23,244
    )
    
    
    (22,354
    )
    
    
    (890
    )
    
    
    (67,339
    )
    
    
    (64,500
    )
    
    
    (2,839
    )Multifamily Non-Same Property & Other
    
    
    (7,685
    )
    
    
    (9,579
    )
    
    
    1,894
    
    
    
    (23,593
    )
    
    
    (25,730
    )
    
    
    2,137Office
    
    
    (536
    )
    
    
    (11,725
    )
    
    
    11,189
    
    
    
    (18,565
    )
    
    
    (36,158
    )
    
    
    17,593Retail
    
    
    (2,125
    )
    
    
    (6,521
    )
    
    
    4,396
    
    
    
    (14,718
    )
    
    
    (19,668
    )
    
    
    4,950Total property operating expenses
    
    
    (33,590
    )
    
    
    (50,179
    )
    
    
    16,589
    
    
    
    (124,215
    )
    
    
    (146,056
    )
    
    
    21,841Net operating income (rental revenues less property operating
expenses) (2)
    
    $
    45,203
    
    
    $
    81,444
    
    
    
    (36,241
    )
    
    $
    201,378
    
    
    $
    253,294
    
    
    
    (51,916
    )Multifamily Margin (NOI/rental revenues) (3):
    
    
    57.8
    %
    
    
    58.1
    %
    
    
    (0.3
    %)
    
    
    59.2
    %
    
    
    59.4
    %
    
    
    (0.2
    %)Multifamily occupancy at end of period:
    
    
    95.3
    %
    
    
    96.2
    %
    
    
    -0.9
    %
    
    
    95.3
    %
    
    
    96.2
    %
    
    
    -0.9
    %Construction revenues
    
    
    11,154
    
    
    
    6,868
    
    
    
    4,286
    
    
    
    32,007
    
    
    
    26,793
    
    
    
    5,214Construction expenses
    
    
    (9,280
    )
    
    
    (6,653
    )
    
    
    (2,627
    )
    
    
    (29,146
    )
    
    
    (25,680
    )
    
    
    (3,466
    )Non-property related revenues
    
    
    5,490
    
    
    
    4,891
    
    
    
    599
    
    
    
    14,044
    
    
    
    13,523
    
    
    
    521Depreciation & amortization
    
    
    (24,695
    )
    
    
    (41,607
    )
    
    
    16,912
    
    
    
    (100,646
    )
    
    
    (129,892
    )
    
    
    29,246Property management expenses
    
    
    (2,365
    )
    
    
    (3,258
    )
    
    
    893
    
    
    
    (9,812
    )
    
    
    (9,800
    )
    
    
    (12
    )General and administrative expenses
    
    
    (5,782
    )
    
    
    (6,279
    )
    
    
    497
    
    
    
    (19,710
    )
    
    
    (16,025
    )
    
    
    (3,685
    )Management fee and other expense
    
    
    (3,984
    )
    
    
    (3,051
    )
    
    
    (933
    )
    
    
    (11,145
    )
    
    
    (9,044
    )
    
    
    (2,101
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,528
    )
    
    
    
    
    
    
    (1,528
    )Impairments
    
    
    (44,129
    )
    
    
    
    
    
    
    (44,129
    )
    
    
    (46,629
    )
    
    
    
    
    
    
    (46,629
    )Interest expense & debt cost amortization
    
    
    (19,159
    )
    
    
    (33,366
    )
    
    
    14,207
    
    
    
    (77,802
    )
    
    
    (100,066
    )
    
    
    22,264Loss on retirement of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,523
    )
    
    
    (1,190
    )
    
    
    (11,333
    )Interest income
    
    
    2,953
    
    
    
    1,932
    
    
    
    1,021
    
    
    
    6,414
    
    
    
    5,883
    
    
    
    531Income taxes and other
    
    
    16,545
    
    
    
    175
    
    
    
    16,370
    
    
    
    16,078
    
    
    
    1,581
    
    
    
    14,497Earnings (loss) from continuing and discontinued operations
    
    
    (28,049
    )
    
    
    1,096
    
    
    
    (29,145
    )
    
    
    (39,020
    )
    
    
    9,377
    
    
    
    (48,397
    )Equity in earnings from unconsolidated entities
    
    
    6,886
    
    
    
    (2,101
    )
    
    
    8,987
    
    
    
    11,609
    
    
    
    (4,105
    )
    
    
    15,714Gains from sale of property, net of income taxes
    
    
    21,882
    
    
    
    25,104
    
    
    
    (3,222
    )
    
    
    109,026
    
    
    
    80,933
    
    
    
    28,093Transaction costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,026
    )
    
    
    
    
    
    
    (11,026
    )Minority interest of limited partners
    
    
    (4,059
    )
    
    
    430
    
    
    
    (4,489
    )
    
    
    (3,907
    )
    
    
    (2,168
    )
    
    
    (1,739
    )Net income (loss)
    
    
    (3,340
    )
    
    
    24,529
    
    
    
    (27,869
    )
    
    
    66,682
    
    
    
    84,037
    
    
    
    (17,355
    )
 
 (1)
    
    Multifamily Same Properties are communities which were 100% owned and stabilized as of
January 1, 2006, as adjusted for dispositions during the year. We generally consider a
development property to have achieved stabilized occupancy upon the attainment of 93%
physical occupancy on the last day of any month.(2)
    
    Net operating income is a non-GAAP financial measure. See discussion related to this
measure above under Executive Summary of Results of Operations. Multifamily NOI can be
calculated by subtracting Multifamily Same Property and Non-Same Property
and Other operating expenses from Multifamily Same Property and Non-Same Property and Other
rental revenues. Office NOI and Retail NOI each can be calculated by subtracting operating
expenses from corresponding rental revenues.(3)
    
    Multifamily Margin is calculated by adding multifamily rental revenues (same property
and non-same property & other), subtracting multifamily operating expenses (same property
and non-same property & other) and dividing the difference by multifamily rental revenues
(same property and non-same property & other). 30




---



##### Table of Contents



Multifamily analysis
     Commercial property analysis
   Construction activities
  31




---



##### Table of Contents



Non-property related revenues
  Depreciation and amortization expenses
  General and administrative expenses
   Management fee and other expenses
   Property management expenses
  Restructuring charges
  Impairments
  32




---



##### Table of Contents



Interest expense and debt cost amortization
   Loss on retirement of debt
  Income taxes and other
  Equity in earnings from unconsolidated entities
   Gains from sales of property
   Transaction costs
  33




---



##### Table of Contents



Dividends to preferred unitholders
  Discontinued Operations
  Liquidity and Capital Resources
 Overview
    Strategic Initiative
  Credit Ratings
  Rating Agency
    
    Rating
    
    Last update
    
    Ratings OutlookStandard & Poors
    
    BBB-
    
    December 27, 2006
    
    StableMoodys
    
    Baa3
    
    September 27, 2007
    
    NegativeFitch
    
    BBB-
    
    December 15, 2006
    
    Stable
 34




---



##### Table of Contents



Short-Term Liquidity Needs
     Long-Term Liquidity Needs
   35




---



##### Table of Contents



Unsecured Revolving Credit Facilities
    36




---



##### Table of Contents



Investing Activities
     37




---



##### Table of Contents



Distributions
   Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  Revenue Recognition
 Accounting for Sales of Real Estate
  38




---



##### Table of Contents



Impairment
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 Derivatives and Hedging
    Inflation
  39




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4. Controls and Procedures
     
 PART II  OTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 6. Exhibits
  40




---



##### Table of Contents



SIGNATURES
  COLONIAL REALTY LIMITED PARTNERSHIP,A Delaware limited partnershipBy:
    
    Colonial Properties Trust,Its General Partner
 Date: November 9, 2007
    
    By:
    
    /s/ Weston M. Andress

   Weston M. AndressPresident and Chief Financial OfficerDate: November 9, 2007
    
    By:
    
    /s/ John E. TomlinsonJohn E. TomlinsonExecutive Vice President &Chief Accounting Officer(Principal Accounting Officer)
 41




---



##### Table of Contents



Index of Exhibits
 10.1
    
    Second Amendment to Credit Agreement, dated June
21, 2007, among Colonial Realty Limited
Partnership, as Borrower, Colonial Properties
Trust, as Guarantor, Wachovia Bank, National
Association, as Agent for the Lenders, and the
Lenders named therein.
    
    Incorporated by
reference to
Exhibit 10.1 to
CRLPs Current
Report on Form 8-K
filed with the SEC
on July 24, 200712.1
    
    Ratio of Earnings to Fixed Charges
    
    Filed herewith
    
    Page 4315.1
    
    Letter re: Unaudited Interim Financial Information
    
    Filed herewith
    
    Page 4431.1
    
    CEO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 4531.2
    
    CFO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 4632.1
    
    CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 4732.2
    
    CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 48
 42