##### 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: June 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
  o þ




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##### 



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
June 30, 2007 and December 31, 2006
    
    
    3Consolidated Condensed Statements of Income and Comprehensive
Income for the Three and Six Months ended June 30, 2007 and 2006
    
    
    4Consolidated Condensed Statements of Cash Flows for the Six Months
ended June 30, 2007 and 2006
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Report of Independent Registered Public Accounting Firm *
    
    
    23Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    37Item 4. Controls and Procedures
    
    
    37PART II: OTHER INFORMATIONItem 1A. Risk Factors
    
    
    38Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 6. Exhibits
    
    
    38SIGNATURES
    
    
    39EXHIBIT INDEX
    
    
    40EX-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




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COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED CONDENSED BALANCE SHEETS
 (Unaudited)
 (in thousands, except unit data)
 June 30, 2007
    
    
    December 31, 2006ASSETSLand, buildings, & equipment
    
    $
    2,624,605
    
    
    $
    3,601,865Undeveloped land and construction in progress
    
    
    515,653
    
    
    
    434,196Less: Accumulated depreciation
    
    
    (280,519
    )
    
    
    (420,359
    )Real estate assets held for sale, net
    
    
    189,349
    
    
    
    381,445Net real estate assets
    
    
    3,049,088
    
    
    
    3,997,147Cash and equivalents
    
    
    186,033
    
    
    
    87,647Restricted cash
    
    
    10,518
    
    
    
    15,907Accounts receivable, net
    
    
    29,961
    
    
    
    26,138Notes receivable
    
    
    36,356
    
    
    
    61,269Prepaid expenses
    
    
    14,374
    
    
    
    19,519Deferred debt and lease costs
    
    
    16,878
    
    
    
    42,258Investment in partially owned entities
    
    
    123,308
    
    
    
    92,892Other assets
    
    
    36,308
    
    
    
    88,997Total assets
    
    $
    3,502,824
    
    
    $
    4,431,774LIABILITIES AND PARTNERS EQUITYNotes and mortgages payable
    
    $
    1,777,464
    
    
    $
    2,165,884Unsecured credit facility
    
    
    27,000
    
    
    
    185,000Mortgages payable related to real estate assets held for sale
    
    
    47,000
    
    
    
    47,022Total debt
    
    
    1,851,464
    
    
    
    2,397,906Accounts payable
    
    
    48,045
    
    
    
    75,185Accrued interest
    
    
    28,551
    
    
    
    32,469Accrued expenses
    
    
    28,686
    
    
    
    16,557Other liabilities
    
    
    13,676
    
    
    
    26,546Total liabilities
    
    
    1,970,422
    
    
    
    2,548,663Redeemable units, at redemption value  10,219,343 and 10,579,261
units outstanding at June 30, 2007 and December 31, 2006, respectively
    
    
    372,495
    
    
    
    495,956Limited partners minority interest in consolidated partnership
    
    
    3,356
    
    
    
    7,406General partner -Common equity    46,919,300 and 46,144,909 units outstanding at
June 30, 2007 and December 31, 2006, respectively
    
    
    945,926
    
    
    
    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)
    
    
    (7,331
    )
    
    
    (8,706
    )Total general partners equity
    
    
    1,156,551
    
    
    
    1,379,749Total liabilities and partners equity
    
    $
    3,502,824
    
    
    $
    4,431,774
  3




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##### 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
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Minimum rent
    
    $
    96,291
    
    
    $
    93,464
    
    
    $
    196,327
    
    
    $
    186,726Tenant recoveries
    
    
    4,430
    
    
    
    5,600
    
    
    
    9,664
    
    
    
    11,652Construction revenues
    
    
    10,112
    
    
    
    7,943
    
    
    
    18,517
    
    
    
    14,597Other property related revenue
    
    
    8,068
    
    
    
    7,785
    
    
    
    20,853
    
    
    
    19,925Other non-property related revenue
    
    
    5,312
    
    
    
    4,592
    
    
    
    8,549
    
    
    
    8,700Total revenue
    
    
    124,213
    
    
    
    119,384
    
    
    
    253,910
    
    
    
    241,600Operating Expenses:Property operating expenses
    
    
    27,483
    
    
    
    25,473
    
    
    
    54,742
    
    
    
    49,919Taxes, licenses, and insurance
    
    
    12,974
    
    
    
    12,173
    
    
    
    26,651
    
    
    
    24,664Construction expenses
    
    
    7,495
    
    
    
    7,657
    
    
    
    19,866
    
    
    
    19,026Property management expenses
    
    
    3,958
    
    
    
    2,831
    
    
    
    7,448
    
    
    
    6,542General and administrative expenses
    
    
    7,814
    
    
    
    4,483
    
    
    
    13,929
    
    
    
    9,746Management fee and other expense
    
    
    4,218
    
    
    
    3,453
    
    
    
    7,161
    
    
    
    5,993Restructuring charge
    
    
    1,528
    
    
    
    
    
    
    
    1,528
    
    
    
    Depreciation
    
    
    31,806
    
    
    
    31,789
    
    
    
    65,920
    
    
    
    64,985Amortization
    
    
    3,182
    
    
    
    3,329
    
    
    
    8,906
    
    
    
    9,038Total operating expenses
    
    
    100,458
    
    
    
    91,188
    
    
    
    206,151
    
    
    
    189,913Income from operations
    
    
    23,755
    
    
    
    28,196
    
    
    
    47,759
    
    
    
    51,687Other income (expense):Interest expense and debt cost amortization
    
    
    (28,445
    )
    
    
    (30,326
    )
    
    
    (57,109
    )
    
    
    (61,507
    )Losses on retirement of debt
    
    
    (12,490
    )
    
    
    
    
    
    
    (12,556
    )
    
    
    (628
    )Interest income
    
    
    1,325
    
    
    
    2,405
    
    
    
    3,457
    
    
    
    3,936Income (loss) from partially owned entities
    
    
    (2,090
    )
    
    
    (1,433
    )
    
    
    4,723
    
    
    
    (2,005
    )Gain (loss) on hedging activities
    
    
    352
    
    
    
    87
    
    
    
    345
    
    
    
    2,551Gains from sales of property, net of income taxes of $357 (Q2) and
$1,104 (YTD) in 2007 and $807 (Q2) and $1,320 (YTD) in 2006
    
    
    11,424
    
    
    
    30,760
    
    
    
    12,749
    
    
    
    38,092Transaction
costs (Note 2)
    
    
    (11,026
    )
    
    
    
    
    
    
    (11,026
    )
    
    
    Minority interest of limited partners
    
    
    81
    
    
    
    229
    
    
    
    225
    
    
    
    76Other
    
    
    (291
    )
    
    
    (350
    )
    
    
    (519
    )
    
    
    (1,146
    )Total other income (expense)
    
    
    (41,160
    )
    
    
    1,372
    
    
    
    (59,711
    )
    
    
    (20,631
    )Income (loss) from continuing operations
    
    
    (17,405
    )
    
    
    29,568
    
    
    
    (11,952
    )
    
    
    31,056Income from discontinued operations
    
    
    2,683
    
    
    
    8,234
    
    
    
    7,909
    
    
    
    13,388Gain on disposal of discontinued operations, net of taxes of $156 (Q2) and $1,684 (YTD) in 2007
and $3,321 (Q2) and $4,590 (YTD) in 2006
    
    
    39,336
    
    
    
    8,537
    
    
    
    74,137
    
    
    
    17,737Minority interest of limited partners
    
    
    (31
    )
    
    
    (1,728
    )
    
    
    (73
    )
    
    
    (2,674
    )Income from discontinued operations
    
    
    41,988
    
    
    
    15,043
    
    
    
    81,973
    
    
    
    28,451Net income
    
    
    24,583
    
    
    
    44,611
    
    
    
    70,021
    
    
    
    59,507Distributions to general partner preferred unitholders
    
    
    (3,870
    )
    
    
    (5,705
    )
    
    
    (8,361
    )
    
    
    (11,804
    )Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (3,625
    )
    
    
    (3,625
    )Preferred unit issuance costs write-off
    
    
    (330
    )
    
    
    (1,924
    )
    
    
    (330
    )
    
    
    (2,083
    )Net income available to common unitholders
    
    $
    18,570
    
    
    $
    35,169
    
    
    $
    57,705
    
    
    $
    41,995Net income available to common unitholders allocated to limited partners
    
    
    (3,569
    )
    
    
    (6,674
    )
    
    
    (10,836
    )
    
    
    (8,060
    )Net income available to common unitholders allocated to general partner
    
    $
    15,001
    
    
    $
    28,495
    
    
    $
    46,869
    
    
    $
    33,935Net income per common unit  Basic:Income (loss) from continuing operations
    
    $
    (0.41
    )
    
    $
    0.36
    
    
    $
    (0.43
    )
    
    $
    0.24Income from discontinued operations
    
    
    0.74
    
    
    
    0.27
    
    
    
    1.45
    
    
    
    0.51Net income per common unit  Basic
    
    $
    0.33
    
    
    $
    0.63
    
    
    $
    1.02
    
    
    $
    0.75Net income per common unit  Diluted:Income (loss) from continuing operations
    
    $
    (0.41
    )
    
    $
    0.36
    
    
    $
    (0.43
    )
    
    $
    0.24Income from discontinued operations
    
    
    0.74
    
    
    
    0.27
    
    
    
    1.45
    
    
    
    0.50Net income per common unit  Diluted
    
    $
    0.33
    
    
    $
    0.62
    
    
    $
    1.02
    
    
    $
    0.74Average units outstanding:Basic
    
    
    56,706
    
    
    
    56,117
    
    
    
    56,625
    
    
    
    55,981Diluted
    
    
    56,706
    
    
    
    56,590
    
    
    
    56,625
    
    
    
    56,466CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOMENet income
    
    $
    24,583
    
    
    $
    44,611
    
    
    $
    70,021
    
    
    $
    59,507Other comprehensive incomeUnrealized income (loss) on cash flow hedging activities
    
    
    47
    
    
    
    4,895
    
    
    
    (138
    )
    
    
    11,238Change in
additional minimum pension liability
    
    
    1,600
    
    
    
    
    
    
    
    1,600
    
    
    
    Comprehensive income
    
    $
    26,230
    
    
    $
    49,506
    
    
    $
    71,483
    
    
    $
    70,745
  4




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COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (in thousands)
 Six Months EndedJune 30,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    70,021
    
    
    $
    59,507Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    74,807
    
    
    
    85,774Loss (income) from partially-owned unconsolidated entities
    
    
    (4,225
    )
    
    
    2,304Gains from sales of property
    
    
    (89,674
    )
    
    
    (56,245
    )Transaction
costs
    
    
    11,026
    
    
    
    Impairment
    
    
    2,500
    
    
    
    Loss on retirement of debt
    
    
    12,556
    
    
    
    Prepayment penalties
    
    
    (29,207
    )
    
    
    Distributions of income from partially-owned unconsolidated entities
    
    
    5,253
    
    
    
    4,792Decrease (increase) in:Restricted cash
    
    
    5,389
    
    
    
    (8,553
    )Accounts receivable
    
    
    (4,703
    )
    
    
    2,274Prepaid expenses
    
    
    5,414
    
    
    
    (1,475
    )Other assets
    
    
    (5,562
    )
    
    
    3,283Increase (decrease) in:Accounts payable
    
    
    (2,382
    )
    
    
    (19,221
    )Accrued interest
    
    
    (3,919
    )
    
    
    117Accrued expenses and other
    
    
    14,589
    
    
    
    17,860Net cash provided by operating activities
    
    
    61,883
    
    
    
    90,417Cash flows from investing activities:Acquisition of properties
    
    
    (125,400
    )
    
    
    (149,534
    )Development expenditures
    
    
    (172,056
    )
    
    
    (180,163
    )Tenant improvements
    
    
    (10,860
    )
    
    
    (14,146
    )Capital expenditures
    
    
    (13,352
    )
    
    
    (12,450
    )Proceeds from sales of property, net of selling costs
    
    
    329,764
    
    
    
    439,927Transaction
costs
    
    
    (11,026
    )
    
    
    Issuance of notes receivable
    
    
    (15,153
    )
    
    
    (16,953
    )Proceeds from notes receivable
    
    
    40,066
    
    
    
    3,503Distributions from partially-owned unconsolidated entities
    
    
    15,474
    
    
    
    1,835Capital contributions to partially-owned unconsolidated entities
    
    
    (9,587
    )
    
    
    (9,564
    )Net cash provided by investing activities
    
    
    27,870
    
    
    
    62,455Cash flows from financing activities:Proceeds from dividend reinvestment plan and exercise of stock options
    
    
    11,804
    
    
    
    16,733Principal reductions of debt
    
    
    (432,984
    )
    
    
    (96,076
    )Proceeds from additional borrowings
    
    
    818,813
    
    
    
    Net change in revolving credit balances
    
    
    (182,802
    )
    
    
    96,094Dividends paid to common and preferred unitholders
    
    
    (73,228
    )
    
    
    (77,119
    )Special distributions
    
    
    (11,999
    )
    
    
    Distributions to minority partners in CRLP
    
    
    (16,534
    )
    
    
    (14,589
    )Redemption of Preferred Series C Shares
    
    
    
    
    
    
    (50,083
    )Redemption of Preferred Series E Shares
    
    
    (104,768
    )
    
    
    (28,444
    )Other financing activities, net
    
    
    331
    
    
    
    (610
    )Net cash provided by (used in) financing activities
    
    
    8,633
    
    
    
    (154,094
    )Increase (decrease) in cash and cash equivalents
    
    
    98,386
    
    
    
    (1,222
    )Cash and cash equivalents, beginning of period
    
    
    87,647
    
    
    
    30,615Cash and cash equivalents, end of period
    
    $
    186,033
    
    
    $
    29,393Supplemental disclosure of cash flow information:Cash paid during the period for interest, including amounts capitalized
    
    $
    76,154
    
    
    $
    64,767Cash paid during the period for income taxes
    
    $
    4,463
    
    
    $
    10,533Supplemental disclosure of non-cash transactions:Cash flow hedging activities
    
    $
    (138
    )
    
    $
    11,238
  5




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##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP
 
 NOTES TO
 CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 June 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




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Note 3  Summary of Significant Accounting Policies
 Basis of Presentation
  Consolidation of Variable Interest Entities,
 7




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Federal Income Tax Status
      Use of Estimates
  Unaudited Interim Statements
  8




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##### Table of Contents



Revenue Recognition
      Impairment
  Notes Receivable
  9




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##### Table of Contents



Contingencies
    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




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##### Table of Contents



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




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12




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##### 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
    
    
    235,500RetailColonial Shoppes Bear Lake
    
    Orlando, FL
    
    April 2007
    
    
    131,300Colonial Shoppes Wekiva
    
    Orlando, FL
    
    May 2007
    
    
    208,600Colonial Shoppes Yadkinville
    
    Yadkinville, NC
    
    March 2007
    
    
    90,917Rivermont Shopping Center
    
    Chattanooga, TN
    
    February 2007
    
    
    73,481
  13




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Three Months Ended
    
    Six Months Ended(amounts in thousands)
    
    June 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Property revenues:Base rent
    
    $
    7,873
    
    
    $
    21,538
    
    
    $
    17,447
    
    
    $
    45,904Percentage rent
    
    
    202
    
    
    
    129
    
    
    
    363
    
    
    
    256Tenant recoveries
    
    
    1,399
    
    
    
    1,932
    
    
    
    3,058
    
    
    
    3,836Other revenue
    
    
    744
    
    
    
    2,475
    
    
    
    1,429
    
    
    
    4,689Total revenues
    
    
    10,218
    
    
    
    26,074
    
    
    
    22,297
    
    
    
    54,685Property operating and administrative expenses
    
    
    4,067
    
    
    
    10,061
    
    
    
    9,231
    
    
    
    21,293Depreciation
    
    
    331
    
    
    
    4,775
    
    
    
    1,060
    
    
    
    11,434Amortization
    
    
    1
    
    
    
    563
    
    
    
    64
    
    
    
    2,831Impairment
    
    
    2,500
    
    
    
    
    
    
    
    2,500
    
    
    
    Total expenses
    
    
    6,899
    
    
    
    15,399
    
    
    
    12,855
    
    
    
    35,558Interest expense, net
    
    
    (636
    )
    
    
    (2,430
    )
    
    
    (1,531
    )
    
    
    (5,177
    )Other income (expenses)
    
    
    
    
    
    
    (11
    )
    
    
    (2
    )
    
    
    (562
    )Income from discontinued operations before net gain
on disposition of discontinued operations
    
    
    2,683
    
    
    
    8,234
    
    
    
    7,909
    
    
    
    13,388Net gain on disposition of discontinued operations
    
    
    39,336
    
    
    
    8,537
    
    
    
    74,137
    
    
    
    17,737Minority interest to limited partners
    
    
    (31
    )
    
    
    (1,728
    )
    
    
    (73
    )
    
    
    (2,674
    )Income from discontinued operations
    
    $
    41,988
    
    
    $
    15,043
    
    
    $
    81,973
    
    
    $
    28,451
 For-Sale Residential Activities
  14




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##### Table of Contents



(amounts in thousands)
    
    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Condominium revenues, net
    
    $
    9,675
    
    
    $
    45,291
    
    
    $
    43,754
    
    
    $
    74,895Condominium costs
    
    
    (8,152
    )
    
    
    (34,154
    )
    
    
    (34,285
    )
    
    
    (58,268
    )Gains on condominium sales, before minority interest and income taxes
    
    
    1,523
    
    
    
    11,137
    
    
    
    9,469
    
    
    
    16,627For-sale residential revenues, net
    
    
    6,701
    
    
    
    
    
    
    
    15,960
    
    
    
    For-sale residential costs
    
    
    (6,353
    )
    
    
    
    
    
    
    (13,370
    )
    
    
    Gains on for-sale residential sales, before minority interest and income
taxes
    
    
    348
    
    
    
    
    
    
    
    2,590
    
    
    
    Minority interest
    
    
    82
    
    
    
    (1,505
    )
    
    
    224
    
    
    
    (2,640
    )Provision for income taxes
    
    
    (149
    )
    
    
    (3,332
    )
    
    
    (2,424
    )
    
    
    (5,114
    )Gains on condominium and for-sale residential sales, net of minority
interest and income taxes
    
    $
    1,804
    
    
    $
    6,300
    
    
    $
    9,859
    
    
    $
    8,873
    Note 6  Net Income Per Unit
  15




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##### Table of Contents



Three Months Ended
    
    
    Six Months Ended(amounts in table in thousands)
    
    June 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Income from continiung operations
    
    $
    (17,405
    )
    
    $
    29,568
    
    
    $
    (11,952
    )
    
    $
    31,056Less: Distributions to general partner preferred unitholders
    
    
    (3,870
    )
    
    
    (5,705
    )
    
    
    (8,361
    )
    
    
    (11,804
    )Less: Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (3,625
    )
    
    
    (3,625
    )Less: Preferred unit issuance costs
    
    
    (330
    )
    
    
    (1,924
    )
    
    
    (330
    )
    
    
    (2,083
    )Net income (loss) available to common unitholders
    
    $
    (23,418
    )
    
    $
    20,126
    
    
    $
    (24,268
    )
    
    $
    13,544Denominator:Denominator for basic net income per unit  weighted average units
    
    
    56,706
    
    
    
    56,117
    
    
    
    56,625
    
    
    
    55,981Effect of dilutive securities:Trustee and employee stock options, treasury method
    
    
    
    
    
    
    473
    
    
    
    
    
    
    
    485Denominator for diluted net income per unit 
adjusted weighted average units
    
    
    56,706
    
    
    
    56,590
    
    
    
    56,625
    
    
    
    56,466
  Note 7  Segment Information
  16




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Segment Revenues:Multifamily
    
    $
    78,437
    
    
    $
    77,430
    
    
    $
    154,926
    
    
    $
    155,399Office
    
    
    33,360
    
    
    
    45,502
    
    
    
    71,386
    
    
    
    89,924Retail
    
    
    24,205
    
    
    
    26,830
    
    
    
    49,506
    
    
    
    55,179Total Segment Revenues
    
    
    136,002
    
    
    
    149,762
    
    
    
    275,818
    
    
    
    300,502Partially-owned unconsolidated entities  Mfam
    
    
    (2,659
    )
    
    
    (4,742
    )
    
    
    (5,230
    )
    
    
    (9,509
    )Partially-owned unconsolidated entities  Off
    
    
    (8,352
    )
    
    
    (8,410
    )
    
    
    (16,174
    )
    
    
    (16,941
    )Partially-owned unconsolidated entities  Rtl
    
    
    (3,940
    )
    
    
    (3,529
    )
    
    
    (7,609
    )
    
    
    (6,392
    )Construction revenues
    
    
    8,068
    
    
    
    7,785
    
    
    
    20,853
    
    
    
    19,925Unallocated corporate revenues
    
    
    5,312
    
    
    
    4,592
    
    
    
    8,549
    
    
    
    8,700Discontinued operations property revenues
    
    
    (10,218
    )
    
    
    (26,074
    )
    
    
    (22,297
    )
    
    
    (54,685
    )Total Consolidated Revenues
    
    
    124,213
    
    
    
    119,384
    
    
    
    253,910
    
    
    
    241,600NOI:Segment NOI:Multifamily
    
    
    46,912
    
    
    
    46,614
    
    
    
    92,066
    
    
    
    93,320Office
    
    
    22,065
    
    
    
    29,655
    
    
    
    47,267
    
    
    
    59,013Retail
    
    
    16,647
    
    
    
    19,320
    
    
    
    34,506
    
    
    
    39,925Total Segment NOI
    
    
    85,624
    
    
    
    95,589
    
    
    
    173,839
    
    
    
    192,258Partially-owned unconsolidated entities  Mfam
    
    
    (1,295
    )
    
    
    (2,788
    )
    
    
    (2,360
    )
    
    
    (5,728
    )Partially-owned unconsolidated entities  Off
    
    
    (4,878
    )
    
    
    (4,876
    )
    
    
    (9,512
    )
    
    
    (10,026
    )Partially-owned unconsolidated entities  Rtl
    
    
    (2,676
    )
    
    
    (2,336
    )
    
    
    (5,203
    )
    
    
    (4,285
    )Unallocated corporate revenues
    
    
    5,312
    
    
    
    4,592
    
    
    
    8,549
    
    
    
    8,700Discontinued operations property NOI
    
    
    (3,651
    )
    
    
    (16,013
    )
    
    
    (10,566
    )
    
    
    (33,392
    )Impairment (1)
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )
    
    
    Construction NOI
    
    
    573
    
    
    
    128
    
    
    
    987
    
    
    
    899Property management expenses
    
    
    (3,958
    )
    
    
    (2,831
    )
    
    
    (7,448
    )
    
    
    (6,542
    )General and administrative expenses
    
    
    (7,814
    )
    
    
    (4,483
    )
    
    
    (13,929
    )
    
    
    (9,746
    )Management fee and other expenses
    
    
    (4,218
    )
    
    
    (3,453
    )
    
    
    (7,161
    )
    
    
    (5,993
    )Restructuring charge
    
    
    (1,528
    )
    
    
    
    
    
    
    (1,528
    )
    
    
    Depreciation
    
    
    (31,806
    )
    
    
    (31,789
    )
    
    
    (65,920
    )
    
    
    (64,985
    )Amortization
    
    
    (3,182
    )
    
    
    (3,329
    )
    
    
    (8,906
    )
    
    
    (9,038
    )Other
    
    
    (248
    )
    
    
    (215
    )
    
    
    (583
    )
    
    
    (435
    )Income from operations
    
    
    23,755
    
    
    
    28,196
    
    
    
    47,759
    
    
    
    51,687Total other income (expense), net (2)
    
    
    (41,160
    )
    
    
    1,372
    
    
    
    (59,711
    )
    
    
    (20,631
    )Income (loss) from continuing operations
    
    $
    (17,405
    )
    
    $
    29,568
    
    
    $
    (11,952
    )
    
    $
    31,056
 (in thousands)
    
    June 30,
    
    
    December 31,2007
    
    
    2006AssetsSegment AssetsMultifamily
    
    $
    2,350,847
    
    
    $
    2,539,367Office
    
    
    64,872
    
    
    
    799,089Retail
    
    
    370,049
    
    
    
    663,216Total Segment Assets
    
    
    2,785,768
    
    
    
    4,001,672Unallocated corporate assets (3)
    
    
    717,056
    
    
    
    430,102$
    3,502,824
    
    
    $
    4,431,774
 
 (1)
    
    The $2.5 million impairment charge is 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)
    
    For-sale residential activities are included in gains and managed at the corporate level (see
Note 5 for additional details).(3)
    
    Includes CRLPs investment in partially-owned entities of $123,308 as of June 30, 2007 and
$92,892 as of December 31, 2006. 17




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##### Table of Contents



Note 8  Investment in Partially-Owned Entities
  (in thousands)Percent
    
    
    June 30,
    
    
    December 31,Owned
    
    
    2007
    
    
    2006Multifamily:Arbors at Windsor Lake, Columbia, SC
    
    
    10.00
    %
    
    $
    581
    
    
    $
    614Auberry at Twin Creeks, Dallas, TX
    
    
    15.00
    %
    
    
    792
    
    
    
    Belterra, Ft. Worth, TX
    
    
    10.00
    %
    
    
    861
    
    
    
    944Carter Regents Park, Atlanta, GA
    
    
    40.00
    %
    
    
    6,366
    
    
    
    6,231CG at Canyon Creek, Austin, TX
    
    
    25.00
    %
    
    
    1,294
    
    
    
    1,416CG at Huntcliff, Atlanta, GA
    
    
    20.00
    %
    
    
    2,211
    
    
    
    2,327CG at Research Park, Raleigh, NC
    
    
    20.00
    %
    
    
    1,234
    
    
    
    1,247CG at Traditions, Gulf Shores, AL
    
    
    35.00
    %
    
    
    2,748
    
    
    
    CMS / Colonial Joint Venture I
    
    
    15.00
    %
    
    
    469
    
    
    
    498CMS / Colonial Joint Venture II
    
    
    15.00
    %(1)
    
    
    (363
    )
    
    
    (252
    )CMS Florida
    
    
    25.00
    %(2)
    
    
    (231
    )
    
    
    1,072CMS Tennessee
    
    
    25.00
    %
    
    
    1,130
    
    
    
    1,234CV at Matthews, Charlotte, NC
    
    
    25.00
    %
    
    
    1,003
    
    
    
    1,059DRA Alabama
    
    
    10.00
    %
    
    
    2,286
    
    
    
    2,311DRA CV at Cary, Raleigh, NC
    
    
    20.00
    %
    
    
    2,153
    
    
    
    DRA Cunningham, Austin, TX
    
    
    20.00
    %
    
    
    1,008
    
    
    
    1,053DRA Southwest Partnership
    
    
    23.00
    %(3)
    
    
    
    
    
    
    495DRA The Grove at Riverchase, Birmingham, AL
    
    
    20.00
    %
    
    
    1,500
    
    
    
    1,552Fairmont at Fossil Creek, Fort Worth, TX
    
    
    15.00
    %
    
    
    660
    
    
    
    Heritage at Deerwood, Jacksonville, FL
    
    
    47.00
    %(4)
    
    
    
    
    
    
    4,765Merritt at Godley Station, Savannah, GA
    
    
    35.00
    %(5)
    
    
    
    
    
    
    3,169Park Crossing, Fairfield, CA
    
    
    10.00
    %
    
    
    894
    
    
    
    1,000Stone Ridge, Columbia, SC
    
    
    10.00
    %
    
    
    459
    
    
    
    492Total Multifamily
    
    
    
    
    
    
    27,055
    
    
    
    31,227Office:600 Building Partnership, Birmingham, AL
    
    
    33.33
    %
    
    
    56
    
    
    
    50Colonial Center Mansell JV
    
    
    15.00
    %
    
    
    1,844
    
    
    
    2,513DRA / CRT JV
    
    
    15.00
    %(6)
    
    
    33,657
    
    
    
    38,069DRA / CLP JV
    
    
    15.00
    %(7)
    
    
    32,281
    
    
    
    Total Office
    
    
    
    
    
    
    67,838
    
    
    
    40,632Retail:Colonial Promenade Madison, Huntsville, AL
    
    
    25.00
    %
    
    
    2,280
    
    
    
    2,308Colonial Promenade Smyrna, Smyrna, TN (Development)
    
    
    50.00
    %
    
    
    2,353
    
    
    
    2,393GPT / Colonial Retail JV
    
    
    10.00
    %(8)
    
    
    (4,419
    )
    
    
    (3,068
    )Highway 150, LLC, Birmingham, AL
    
    
    10.00
    %
    
    
    65
    
    
    
    70OZRE JV
    
    
    15.00
    %(9)
    
    
    8,279
    
    
    
    Parkway Place Limited Partnership, Huntsville, AL
    
    
    45.00
    %
    
    
    10,676
    
    
    
    11,012Parkside Drive LLC, Knoxville, TN
    
    
    50.00
    %
    
    
    7,857
    
    
    
    7,17827,091
    
    
    
    19,893Other:Heathrow, Orlando, FL
    
    
    50.00
    %
    
    
    1,309
    
    
    
    1,106Colonial / Polar-BEK Management Company,
    
    
    50.00
    %
    
    
    15
    
    
    
    34Birmingham, AL
    
    
    
    
    
    
    1,324
    
    
    
    1,140$
    123,308
    
    
    $
    92,892
 
 Footnotes on following page 18




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##### Table of Contents



(1)
    
    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.(2)
    
    CRLP sold its interest in Colonial Grand at Bayshore during January 2007.(3)
    
    The DRA Southwest Partnership, comprised of fifteen multifamily properties totaling
3,957 units, sold the properties held in the joint venture on December 21, 2006.(4)
    
    CRLP sold its interest in Heritage at Deerwood during March 2007.(5)
    
    CRLP acquired the remaining 65% interest in Merritt at Godley Station during May
2007.(6)
    
    As of June 30, 2007, this joint venture included 19 properties located in Ft.
Lauderdale, Jacksonville and Orlando, Florida; Atlanta, Georgia; Rockville, Maryland;
Charlotte, North Carolina; Memphis, Tennessee and Houston, Texas.(7)
    
    As of June 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.(8)
    
    Amount includes the value of CRLPs investment of approximately $6.4 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.(9)
    
    As of June 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.      Total Assets
    
    
    Total Debt
    
    
    Total Equity2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006DRA/CRT
    
    $
    1,412,915
    
    
    $
    1,523,349
    
    
    $
    1,081,904
    
    
    $
    1,163,968
    
    
    $
    302,830
    
    
    $
    327,902DRA/CLP
    
    
    1,160,768
    
    
    
    
    
    
    
    588,223
    
    
    
    
    
    
    
    542,917
    
    
    
    OZRE
    
    
    368,224
    
    
    
    
    
    
    
    187,200
    
    
    
    
    
    
    
    172,974
    
    
    
    $
    2,941,907
    
    
    $
    1,523,349
    
    
    $
    1,857,327
    
    
    $
    1,163,968
    
    
    $
    1,018,721
    
    
    $
    327,902
  Total Revenues
    
    
    Net Income
    
    
    Share of Net Income2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006DRA/CRT
    
    $
    45,085
    
    
    $
    55,572
    
    
    $
    (8,767
    )
    
    $
    (13,131
    )
    
    $
    (1,226
    )
    
    $
    (1,970
    )DRA/CLP
    
    
    6,594
    
    
    
    
    
    
    
    (57
    )
    
    
    
    
    
    
    83
    
    
    
    OZRE
    
    
    1,165
    
    
    
    
    
    
    
    192
    
    
    
    
    
    
    
    49
    
    
    
    $
    52,844
    
    
    $
    55,572
    
    
    $
    (8,632
    )
    
    $
    (13,131
    )
    
    $
    (1,094
    )
    
    $
    (1,970
    )
 19




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##### Table of Contents



Total Revenues
    
    
    Net Income
    
    
    Share of Net Income2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006DRA/CRT
    
    $
    92,823
    
    
    $
    112,093
    
    
    $
    (16,539
    )
    
    $
    (21,655
    )
    
    $
    (2,076
    )
    
    $
    (3,248
    )DRA/CLP
    
    
    6,594
    
    
    
    
    
    
    
    (57
    )
    
    
    
    
    
    
    83
    
    
    
    OZRE
    
    
    1,165
    
    
    
    
    
    
    
    192
    
    
    
    
    
    
    
    49
    
    
    
    $
    100,582
    
    
    $
    112,093
    
    
    $
    (16,404
    )
    
    $
    (21,655
    )
    
    $
    (1,944
    )
    
    $
    (3,248
    )
 Note 9  Financing Activities
      Note 10  Derivatives and Hedging
  20




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##### Table of Contents



Note 11  Subsequent Events
 Property Disposition
  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
     21




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##### Table of Contents



Financing Activities
    Distribution
  22




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
  23




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##### 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;
    
    our ability to successfully implement our strategic shift to a predominately multifamily focused REIT;
    
    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.
  24




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##### 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 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.
     Business Strategy
   25




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##### Table of Contents



Executive Summary
  26




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##### Table of Contents




    
    Multifamily Net Operating Income (NOI) increased primarily due to improved operations
in certain markets in our same property portfolio, which had an overall 5.0% increase in
NOI.
    
    Multifamily revenues increased 5.2% primarily as a result of rental rate increases. In
addition, our ancillary income increased as a result of our cable income program and
water/sewer recovery efforts.
    
    Rental revenues and NOI associated with our commercial assets decreased due to the
office and retail joint venture transactions that were consummated during June of 2007 as a
part of our strategic initiative discussed above. Rental revenues and NOI associated with
our commercial 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 six retail assets since June 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.
    
    Operations for the three months ended June 30, 2007 included approximately $18.2 million
of net expenses associated with CRLPs strategic shift (see below for detailed discussion).
  
    
    Multifamily NOI increased primarily due to improved operations in certain markets in our
same-property portfolio, which had an overall 5.1% increase in NOI.
    
    Multifamily revenues increased 5.0% primarily as a result of rental rate increases. In
addition, our ancillary income increased as a result of our cable income program and
water/sewer recovery efforts.
  Reconciliation of Operating Results Summary to Consolidated Condensed Statements of Income
  27




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Three Months Ended June 30, 2007
    
    
    Three Months Ended June 30 , 2006Continuing
    
    
    Discontinued
    
    
    
    
    
    
    Continuing
    
    
    DiscontinuedOperations
    
    
    Operations
    
    
    Total
    
    
    Operations
    
    
    Operations
    
    
    TotalRental revenues
    
    $
    110,833
    
    
    $
    10,218
    
    
    $
    121,051
    
    
    $
    107,007
    
    
    $
    26,074
    
    
    $
    133,081Construction revenues
    
    
    8,068
    
    
    
    
    
    
    
    8,068
    
    
    
    7,785
    
    
    
    
    
    
    
    7,785Non property related revenues
    
    
    5,312
    
    
    
    
    
    
    
    5,312
    
    
    
    4,592
    
    
    
    
    
    
    
    4,592Property operating expenses
(rental expense and real estate taxes)
    
    
    (40,457
    )
    
    
    (4,067
    )
    
    
    (44,524
    )
    
    
    (37,646
    )
    
    
    (10,061
    )
    
    
    (47,707
    )Construction expenses
    
    
    (7,495
    )
    
    
    
    
    
    
    (7,495
    )
    
    
    (7,657
    )
    
    
    
    
    
    
    (7,657
    )Property management expenses
    
    
    (3,958
    )
    
    
    
    
    
    
    (3,958
    )
    
    
    (2,831
    )
    
    
    
    
    
    
    (2,831
    )General and adminstrative expenses
    
    
    (7,814
    )
    
    
    
    
    
    
    (7,814
    )
    
    
    (4,483
    )
    
    
    
    
    
    
    (4,483
    )Management fee and other expenses
    
    
    (4,218
    )
    
    
    
    
    
    
    (4,218
    )
    
    
    (3,453
    )
    
    
    
    
    
    
    (3,453
    )Restructuring charges
    
    
    (1,528
    )
    
    
    
    
    
    
    (1,528
    )
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    (34,988
    )
    
    
    (332
    )
    
    
    (35,320
    )
    
    
    (35,118
    )
    
    
    (5,338
    )
    
    
    (40,456
    )Impairment charge
    
    
    
    
    
    
    (2,500
    )
    
    
    (2,500
    )
    
    
    
    
    
    
    
    
    
    
    Interest expense and debt cost
amortization
    
    
    (28,445
    )
    
    
    (638
    )
    
    
    (29,083
    )
    
    
    (30,326
    )
    
    
    (2,437
    )
    
    
    (32,763
    )Loss on retirement of debt
    
    
    (12,490
    )
    
    
    
    
    
    
    (12,490
    )
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )Other expense
    
    
    61
    
    
    
    
    
    
    
    61
    
    
    
    (263
    )
    
    
    
    
    
    
    (263
    )Interest income
    
    
    1,325
    
    
    
    2
    
    
    
    1,327
    
    
    
    2,405
    
    
    
    7
    
    
    
    2,412Income (loss) from unconsolidated
entities
    
    
    (2,090
    )
    
    
    
    
    
    
    (2,090
    )
    
    
    (1,433
    )
    
    
    
    
    
    
    (1,433
    )Gains, net of taxes
    
    
    11,424
    
    
    
    39,336
    
    
    
    50,760
    
    
    
    30,760
    
    
    
    8,537
    
    
    
    39,297Transaction costs
    
    
    (11,026
    )
    
    
    
    
    
    
    (11,026
    )
    
    
    
    
    
    
    
    
    
    
    Minority interest of limited partners
    
    
    81
    
    
    
    (31
    )
    
    
    50
    
    
    
    229
    
    
    
    (1,728
    )
    
    
    (1,499
    )Net income
    
    
    (17,405
    )
    
    
    41,988
    
    
    
    24,583
    
    
    
    29,568
    
    
    
    15,043
    
    
    
    44,611Dividends to preferred unitholders
    
    
    (5,683
    )
    
    
    
    
    
    
    (5,683
    )
    
    
    (7,518
    )
    
    
    
    
    
    
    (7,518
    )Preferred unit issuance costs write-off
    
    
    (330
    )
    
    
    
    
    
    
    (330
    )
    
    
    (1,924
    )
    
    
    
    
    
    
    (1,924
    )Net income (loss) available to common
unitholders
    
    $
    (23,418
    )
    
    $
    41,988
    
    
    $
    18,570
    
    
    $
    20,126
    
    
    $
    15,043
    
    
    $
    35,169
 Six Months Ended June 30, 2007
    
    
    Six Months Ended June 30 , 2006Continuing
    
    
    Discontinued
    
    
    
    
    
    
    Continuing
    
    
    DiscontinuedOperations
    
    
    Operations
    
    
    Total
    
    
    Operations
    
    
    Operations
    
    
    TotalRental revenues
    
    $
    224,508
    
    
    $
    22,297
    
    
    $
    246,805
    
    
    $
    212,975
    
    
    $
    54,685
    
    
    $
    267,660Construction revenues
    
    
    20,853
    
    
    
    
    
    
    
    20,853
    
    
    
    19,925
    
    
    
    
    
    
    
    19,925Non property related revenues
    
    
    8,549
    
    
    
    
    
    
    
    8,549
    
    
    
    8,700
    
    
    
    
    
    
    
    8,700Property operating expenses
(rental expense and real estate taxes)
    
    
    (81,393
    )
    
    
    (9,231
    )
    
    
    (90,624
    )
    
    
    (74,583
    )
    
    
    (21,293
    )
    
    
    (95,876
    )Construction expenses
    
    
    (19,866
    )
    
    
    
    
    
    
    (19,866
    )
    
    
    (19,026
    )
    
    
    
    
    
    
    (19,026
    )Property management expenses
    
    
    (7,448
    )
    
    
    
    
    
    
    (7,448
    )
    
    
    (6,542
    )
    
    
    
    
    
    
    (6,542
    )General and adminstrative expenses
    
    
    (13,929
    )
    
    
    
    
    
    
    (13,929
    )
    
    
    (9,746
    )
    
    
    
    
    
    
    (9,746
    )Management fee and other expenses
    
    
    (7,161
    )
    
    
    
    
    
    
    (7,161
    )
    
    
    (5,993
    )
    
    
    
    
    
    
    (5,993
    )Restructuring charges
    
    
    (1,528
    )
    
    
    
    
    
    
    (1,528
    )
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    (74,826
    )
    
    
    (1,124
    )
    
    
    (75,950
    )
    
    
    (74,023
    )
    
    
    (14,267
    )
    
    
    (88,290
    )Impairment charge
    
    
    
    
    
    
    (2,500
    )
    
    
    (2,500
    )
    
    
    
    
    
    
    
    
    
    
    Interest expense and debt cost
amortization
    
    
    (57,109
    )
    
    
    (1,535
    )
    
    
    (58,644
    )
    
    
    (61,507
    )
    
    
    (5,192
    )
    
    
    (66,699
    )Loss on retirement of debt
    
    
    (12,556
    )
    
    
    (2
    )
    
    
    (12,558
    )
    
    
    (628
    )
    
    
    (562
    )
    
    
    (1,190
    )Other expense
    
    
    (174
    )
    
    
    
    
    
    
    (174
    )
    
    
    1,405
    
    
    
    
    
    
    
    1,405Interest income
    
    
    3,457
    
    
    
    4
    
    
    
    3,461
    
    
    
    3,936
    
    
    
    15
    
    
    
    3,951Income (loss) from unconsolidated
entities
    
    
    4,723
    
    
    
    
    
    
    
    4,723
    
    
    
    (2,005
    )
    
    
    
    
    
    
    (2,005
    )Gains, net of taxes
    
    
    12,749
    
    
    
    74,137
    
    
    
    86,886
    
    
    
    38,092
    
    
    
    17,737
    
    
    
    55,829Transaction costs
    
    
    (11,026
    )
    
    
    
    
    
    
    (11,026
    )
    
    
    
    
    
    
    
    
    
    
    Minority interest of limited partners
    
    
    225
    
    
    
    (73
    )
    
    
    152
    
    
    
    76
    
    
    
    (2,672
    )
    
    
    (2,596
    )Net income
    
    
    (11,952
    )
    
    
    81,973
    
    
    
    70,021
    
    
    
    31,056
    
    
    
    28,451
    
    
    
    59,507Dividends to preferred unitholders
    
    
    (11,986
    )
    
    
    
    
    
    
    (11,986
    )
    
    
    (15,429
    )
    
    
    
    
    
    
    (15,429
    )Preferred unit issuance costs write-off
    
    
    (330
    )
    
    
    
    
    
    
    (330
    )
    
    
    (2,083
    )
    
    
    
    
    
    
    (2,083
    )Net income (loss) available to common
unitholders
    
    $
    (24,268
    )
    
    $
    81,973
    
    
    $
    57,705
    
    
    $
    13,544
    
    
    $
    28,451
    
    
    $
    41,995
 28




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##### Table of Contents



Operating Results Summary
  (amounts in thousands)Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    Variance
    
    
    2007
    
    
    2006
    
    
    VarianceRental revenues:Multifamily Same Property (1)
    
    $
    59,809
    
    
    $
    56,833
    
    
    $
    2,976
    
    
    $
    117,838
    
    
    $
    112,274
    
    
    $
    5,564Multifamily Non-Same Property & Other
    
    
    15,969
    
    
    
    15,855
    
    
    
    114
    
    
    
    31,858
    
    
    
    33,616
    
    
    
    (1,758
    )Office
    
    
    25,008
    
    
    
    37,092
    
    
    
    (12,084
    )
    
    
    55,212
    
    
    
    72,983
    
    
    
    (17,771
    )Retail
    
    
    20,265
    
    
    
    23,301
    
    
    
    (3,036
    )
    
    
    41,897
    
    
    
    48,787
    
    
    
    (6,890
    )Total rental revenues
    
    
    121,051
    
    
    
    133,081
    
    
    
    (12,030
    )
    
    
    246,805
    
    
    
    267,660
    
    
    
    (20,855
    )Property operating expenses (rental expenses and real estate taxes):Multifamily Same Property (1)
    
    
    (22,835
    )
    
    
    (21,613
    )
    
    
    (1,222
    )
    
    
    (45,182
    )
    
    
    (43,125
    )
    
    
    (2,057
    )Multifamily Non-Same Property & Other
    
    
    (7,326
    )
    
    
    (7,249
    )
    
    
    (77
    )
    
    
    (14,808
    )
    
    
    (15,173
    )
    
    
    365Office
    
    
    (7,821
    )
    
    
    (12,313
    )
    
    
    4,492
    
    
    
    (17,457
    )
    
    
    (23,996
    )
    
    
    6,539Retail
    
    
    (6,294
    )
    
    
    (6,317
    )
    
    
    23
    
    
    
    (12,594
    )
    
    
    (13,147
    )
    
    
    553Total property operating expenses
    
    
    (44,276
    )
    
    
    (47,492
    )
    
    
    3,216
    
    
    
    (90,041
    )
    
    
    (95,441
    )
    
    
    5,400Net operating income (rental revenues less property operating
expenses)
    
    $
    76,775
    
    
    $
    85,589
    
    
    
    (8,814
    )
    
    $
    156,764
    
    
    $
    172,219
    
    
    
    (15,455
    )Multifamily Margin (NOI/rental revenues) (2):
    
    
    60.2
    %
    
    
    60.3
    %
    
    
    (0.1
    %)
    
    
    59.9
    %
    
    
    60.0
    %
    
    
    (0.1
    %)Multifamily occupancy at end of period:
    
    
    95.9
    %
    
    
    95.7
    %
    
    
    0.2
    %
    
    
    95.9
    %
    
    
    95.7
    %
    
    
    0.2
    %Net operating income from construction activities
    
    
    573
    
    
    
    128
    
    
    
    445
    
    
    
    987
    
    
    
    899
    
    
    
    88Non property related revenues
    
    
    5,312
    
    
    
    4,592
    
    
    
    720
    
    
    
    8,549
    
    
    
    8,700
    
    
    
    (151
    )Depreciation & amortization
    
    
    (35,320
    )
    
    
    (40,456
    )
    
    
    5,136
    
    
    
    (75,950
    )
    
    
    (88,290
    )
    
    
    12,340Property management expenses
    
    
    (3,958
    )
    
    
    (2,831
    )
    
    
    (1,127
    )
    
    
    (7,448
    )
    
    
    (6,542
    )
    
    
    (906
    )General and administrative expenses
    
    
    (7,814
    )
    
    
    (4,483
    )
    
    
    (3,331
    )
    
    
    (13,929
    )
    
    
    (9,746
    )
    
    
    (4,183
    )Management fee and other expense
    
    
    (4,218
    )
    
    
    (3,453
    )
    
    
    (765
    )
    
    
    (7,161
    )
    
    
    (5,993
    )
    
    
    (1,168
    )Restructuring charges
    
    
    (1,528
    )
    
    
    
    
    
    
    (1,528
    )
    
    
    (1,528
    )
    
    
    
    
    
    
    (1,528
    )Impairment charge
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )Interest expense & debt cost amortization
    
    
    (29,083
    )
    
    
    (32,763
    )
    
    
    3,680
    
    
    
    (58,644
    )
    
    
    (66,699
    )
    
    
    8,055Loss on retirement of debt
    
    
    (12,490
    )
    
    
    (11
    )
    
    
    (12,479
    )
    
    
    (12,558
    )
    
    
    (1,190
    )
    
    
    (11,368
    )Interest income
    
    
    1,327
    
    
    
    2,412
    
    
    
    (1,085
    )
    
    
    3,461
    
    
    
    3,951
    
    
    
    (490
    )Other expense
    
    
    (187
    )
    
    
    (478
    )
    
    
    291
    
    
    
    (757
    )
    
    
    970
    
    
    
    (1,727
    )Earnings from continuing and discontinued operations
    
    
    (13,111
    )
    
    
    8,246
    
    
    
    (21,357
    )
    
    
    (10,714
    )
    
    
    8,279
    
    
    
    (18,993
    )Equity in earnings from unconsolidated entities
    
    
    (2,090
    )
    
    
    (1,433
    )
    
    
    (657
    )
    
    
    4,723
    
    
    
    (2,005
    )
    
    
    6,728Gains from sale of property, net of income taxes
    
    
    50,760
    
    
    
    39,297
    
    
    
    11,463
    
    
    
    86,886
    
    
    
    55,829
    
    
    
    31,057Transaction costs
    
    
    (11,026
    )
    
    
    
    
    
    
    (11,026
    )
    
    
    (11,026
    )
    
    
    
    
    
    
    (11,026
    )Minority interest of limited partners
    
    
    50
    
    
    
    (1,499
    )
    
    
    1,549
    
    
    
    152
    
    
    
    (2,596
    )
    
    
    2,748Net income
    
    
    24,583
    
    
    
    44,611
    
    
    
    (20,028
    )
    
    
    70,021
    
    
    
    59,507
    
    
    
    10,514Dividends to preferred unitholders
    
    
    (5,683
    )
    
    
    (7,518
    )
    
    
    1,835
    
    
    
    (11,986
    )
    
    
    (15,429
    )
    
    
    3,443Preferred unit issuance costs write-off
    
    
    (330
    )
    
    
    (1,924
    )
    
    
    1,594
    
    
    
    (330
    )
    
    
    (2,083
    )
    
    
    1,753Net income available to common unitholders
    
    $
    18,570
    
    
    $
    35,169
    
    
    $
    (16,599
    )
    
    $
    57,705
    
    
    $
    41,995
    
    
    $
    15,710
 
 (1)
    
    Same property communities 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. 29




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##### Table of Contents



(2)
    
    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). Multifamily same property analysis
   Multifamily non-same property and other
  Commercial property analysis
  Depreciation and amortization expenses
  General and administrative expenses
   Property management expenses
  Restructuring charges
  30




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##### Table of Contents



Impairment charge
  Interest expense and debt cost amortization
   Loss on retirement of debt
  Other expense
   Equity in earnings from unconsolidated entities
  Gains from sale of property
  Transaction costs
  Distributions to preferred unitholders
  Discontinued Operations
  Liquidity and Capital Resources
 31




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##### Table of Contents



Strategic Initiative
  Short-Term Liquidity Needs
     32




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##### Table of Contents



Long-Term Liquidity Needs
      Unsecured Revolving Credit Facilities
 33
    Table of Contents         Investing Activities
     34




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##### Table of Contents



Distributions
   Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  Revenue Recognition
   35




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##### Table of Contents



Impairment
  Derivatives and Hedging
     Inflation
  36




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4. Controls and Procedures
     37




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 6. Exhibits
  38




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##### Table of Contents



SIGNATURES
  COLONIAL REALTY LIMITED PARTNERSHIP,A Delaware limited partnershipBy:
    
    Colonial Properties Trust,Its General PartnerDate: August 8, 2007
    
    By:
    
    /s/ Weston M. AndressWeston M. AndressPresident and Chief Financial OfficerDate: August 8, 2007
    
    By:
    
    /s/ John E. TomlinsonJohn E. TomlinsonExecutive Vice President &
Chief Accounting Officer
(Principal Accounting Officer)
 39




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##### Table of Contents



Index of Exhibits
 2.1
    
    Membership Interests Purchase Agreement (Office
Joint Venture), dated as of April 25, 2007,
between DRA G&I Fund IV Real Estate Investment
Trust and Colonial Properties Trust
    
    Incorporated by reference to Exhibit
2.1 to the Trusts Current Report on
Form
8-K filed with the SEC on May 1, 20072.2
    
    Membership Interests Purchase Agreement (Retail
Joint Venture), dated as of April 25, 2007,
between OZRE Retail, LLC and Colonial Properties
Trust
    
    Incorporated by reference to Exhibit
2.2 to the Trusts Current Report on
Form
8-K filed with the SEC on May 1, 20072.3
    
    First Amendment to Membership Interests Purchase
Agreement (Retail Joint Venture), dated as of June
15, 2007, between OZRE Retail LLC and Colonial
Properties Trust
    
    Incorporated by reference to Exhibit
2.3 to the Trusts Current Report on
Form
8-K filed with the SEC on June 21, 20073.1
    
    Third Amended and Restated Agreement of Limited
Partnership of CRLP, as amended
    
    Incorporated by reference to Exhibit
10.1 to the Trusts Quarterly Report
on Form 10-Q filed with the SEC on
August 8, 20073.2
    
    Declaration of Trust of the Trust, as amended
    
    Incorporated by reference to Exhibit
3.1 to the Trusts Quarterly Report on
Form 10-Q filed with the SEC on August
8, 20073.3
    
    Bylaws of the Trust, as amended
    
    Incorporated by reference to Exhibit
3.1 to the Trusts Current Report on
Form
8-K filed with the SEC on April 30,
200710.1
    
    Third Amended and Restated Agreement of Limited
Partnership of CRLP, as amended
    
    Incorporated by reference to Exhibit
10.1 to the Trusts Quarterly Report
on Form 10-Q filed with the SEC on
August 8, 200710.2
    
    First Amendment to Credit Agreement, dated June 2,
2006, among CRLP, the Trust, Wachovia Bank,
National Association as Agent for the Lenders and
the Lenders named therein
    
    Incorporated by reference to Exhibit
10.2 to the Trusts Quarterly Report
on Form 10-Q filed with the SEC on
August 8, 200710.3
    
    Second Amendment to Credit Agreement, dated June
21, 2007, among CRLP, the Trust, Wachovia Bank,
National Association as Agent for the Lenders and
the Lenders named therein]
    
    Incorporated by reference to Exhibit
10.1 to the Trusts Current Report on
Form
8-K filed with the SEC on July 24, 200712.1
    
    Ratio of Earnings to Fixed Charges
    
    Filed herewith15.1
    
    Letter re: Unaudited Interim Financial Information
    
    Filed herewith31.1
    
    CEO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    CFO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith32.1
    
    CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith32.2
    
    CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
 40