UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C. 20549

                                  FORM 10-Q

       Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934


For the  Quarterly  Period  Ended:           Commission File Number: 0-20707
September 30,  1998


                     COLONIAL REALTY LIMITED PARTNERSHIP
            (Exact name of registrant as specified in its charter)



                Alabama                               63-1098468
        (State of organization)                      (IRS Employer
                                                Identification Number)

        2101 Sixth Avenue North                          35203
               Suite 750                              (Zip Code)
          Birmingham, Alabama
(Address of principal executive offices)

                                (205) 250-8700
             (Registrant's telephone number, including area code)



      Indicate by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO ___






<PAGE>

                     COLONIAL REALTY LIMITED PARTNERSHIP
                              INDEX TO FORM 10-Q


                                                                            Page

PART I:  FINANCIAL INFORMATION

      Item 1.  Financial Statements (Unaudited)

               Consolidated Condensed Balance Sheets as of
               September 30, 1998 and December 31, 1997                      3

               Consolidated Condensed Statements of Income for the         
               Three Months and for the Nine Months Ended  September  30,    4
               1998 and 1997

               Consolidated Condensed Statements of Cash Flows
               for the Nine Months Ended September 30, 1998 and 1997         5

               Notes to Consolidated Condensed Financial Statements          6

               Report of Independent Accountants                            10

      Item 2.  Management's Discussion and Analysis of Financial            11
            Condition and Results of Operations

PART II:  OTHER INFORMATION


      Item 2.  Changes in Securities                                        14

      Item 6.  Exhibits and Reports on Form 8-K                             14

SIGNATURES                                                                  15

EXHIBITS                                                                    16




                                     Page 2
<PAGE>
<TABLE>
                       COLONIAL REALTY LIMITED PARTNERSHIP
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                 (in thousands)
                              ____________________
<CAPTION>


                                                    September 30, 1998
                                                         (Unaudited)  December 31, 1997
                                                         ------------  -----------
                                     ASSETS

<S>                                                        <C>          <C>       
Land, buildings, and equipment, net ....................   $1,586,098   $1,268,430
Undeveloped land and construction in progress ..........       89,275       98,555
Cash and equivalents ...................................        2,890        4,534
Restricted cash ........................................        2,886        2,665
Accounts receivable, net ...............................        8,282        7,174
Prepaid expenses .......................................        2,671        3,038
Notes receivable .......................................          685          575
Deferred debt and lease costs, net .....................        6,837        7,031
Other assets ...........................................        7,666        4,658
                                                           ----------   ----------

                                                           $1,707,290   $1,396,660
                                                           ==========   ==========


                       LIABILITIES AND PARTNERS' CAPITAL

Notes and mortgages payable ............................   $  855,292   $  702,044
Accounts payable .......................................        6,801       14,233
Accrued interest .......................................       10,379        6,526
Accrued expenses .......................................       15,737        2,700
Tenant deposits ........................................        4,197        3,715
Unearned rent ..........................................        3,567        2,253
                                                           ----------   ----------

     Total liabilities .................................      895,973      731,471
                                                           ----------   ----------

Minority interest in consolidated operating property ...        4,321            0
                                                           ----------   ----------

Redeemable units, at redemption value ..................      298,692      299,492
                                                           ----------   ----------

Partners' capital, excluding redeemable units ..........      508,304      365,697
                                                           ----------   ----------

                                                           $1,707,290   $1,396,660
                                                           ==========   ==========

<FN>                                                                                 
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>


                                     Page 3
<PAGE>
                       COLONIAL REALTY LIMITED PARTNERSHIP
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (Unaudited)
                      (in thousands, except per unit data)
                              _____________________
<CAPTION>


                                                               Three Months Ended      Nine Months Ended
                                                                  September 30,          September 30,
                                                            ------------------------------------------------
                                                                1998         1997         1998         1997
                                                            ------------------------------------------------

Revenue:
<S>                                                         <C>          <C>          <C>          <C>      
     Minimum rent .......................................   $  54,664    $  40,150    $ 150,669    $ 109,910
     Percentage rent ....................................         551          214        1,993          906
     Tenant recoveries ..................................       8,171        4,386       22,409       11,592
     Other ..............................................       4,796        2,729       10,753        7,064
                                                            ---------    ---------    ---------    ---------

        Total revenue ...................................      68,182       47,479      185,824      129,472
                                                            ---------    ---------    ---------    ---------

Property operating expenses:
     General operating expenses .........................       5,838        3,393       14,543        9,010
     Salaries and benefits ..............................       3,191        2,781        9,065        7,468
     Repairs and maintenance ............................       6,837        5,180       17,931       13,204
     Taxes, licenses, and insurance .....................       6,099        4,055       16,035       11,489
General and administrative ..............................       2,207        1,508        6,124        4,272
Depreciation ............................................      11,942        8,372       32,897       22,426
Amortization ............................................         528          162        1,208          888
                                                            ---------    ---------    ---------    ---------

        Total operating expenses ........................      36,642       25,451       97,803       68,757
                                                            ---------    ---------    ---------    ---------

        Income from operations ..........................      31,540       22,028       88,021       60,715
                                                            ---------    ---------    ---------    ---------

Other income (expense):
     Interest expense ...................................     (13,917)     (10,934)     (38,108)     (28,796)
     Income from unconsolidated subsidiaries ............          24          196           61          556
     Gains (losses) from sales of property ..............         (16)         -0-           17           (1)
     Minority interest in consolidated operating property         (62)         (64)         (62)        (179)
                                                            ---------    ---------    ---------    ---------

        Total other expense .............................     (13,971)     (10,802)     (38,092)     (28,420)
                                                            ---------    ---------    ---------    ---------

        Income before extraordinary item ................      17,569       11,226       49,929       32,295
Extraordinary loss from early extinguishment of debt ....          (1)      (2,927)        (401)      (3,408)
                                                            ---------    ---------    ---------    ---------

        Net income ......................................   $  17,568    $   8,299    $  49,528    $  28,887
Distributions to preferred unitholders ..................      (2,735)         -0-       (8,203)         -0-
                                                            ---------    ---------    ---------    ---------

     Net income available to common unitholders .........   $  14,833    $   8,299    $  41,325    $  28,887
                                                            =========    =========    =========    =========

Net income per common unit - basic and diluted ..........   $    0.41    $    0.28    $    1.20    $    1.03
                                                            =========    =========    =========    =========

Weighted average common units outstanding ...............      36,541       29,327       34,353       28,062
                                                            =========    =========    =========    =========
<FN>
 The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>


                                     Page 4
<PAGE>
                       COLONIAL REALTY LIMITED PARTNERSHIP
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
                               ___________________
<CAPTION>

                                                                    Nine Months Ended
                                                                       September 30,
                                                               ------------------------
                                                                    1998         1997
                                                               ----------    -----------

Cash flows from operating activities:
<S>                                                             <C>          <C>      
     Net  income ............................................   $  49,528    $  28,887
     Adjustments to reconcile net income to net cash provided
        by operating activities:
        Depreciation and amortization .......................      34,105       23,314
        Income from unconsolidated subsidiaries .............         (61)        (556)
        Minority interest in income of property partnership .          62          179
        Other ...............................................         927        3,807
     Decrease (increase) in:
        Restricted cash .....................................        (221)        (381)
        Accounts and notes receivable .......................      (1,789)        (596)
        Prepaid expenses ....................................         370          963
        Other assets ........................................      (3,714)         (69)
     Increase (decrease) in:
        Accounts payable ....................................      (7,432)     (12,158)
        Accrued interest ....................................       3,853          957
        Accrued expenses and other ..........................      10,968        5,522
                                                                ---------    ---------
            Net cash provided by operating activities .......      86,596       49,869
                                                                ---------    ---------

Cash flows from investing activities:
     Acquisition of properties ..............................    (225,627)    (113,400)
     Development expenditures ...............................     (68,547)     (68,450)
     Tenant improvements ....................................      (2,702)      (1,289)
     Capital expenditures ...................................     (12,389)      (8,052)
     Proceeds from sales of property, net of selling costs ..         908          -0-
     Distributions from unconsolidated subsidiaries .........          85          778
     Capital contributions to unconsolidated subsidiaries ...         (21)        (272)
                                                                ---------    ---------
            Net cash used in investing activities ...........    (308,293)    (190,685)
                                                                ---------    ---------

Cash flows from financing activities:
     Principal reductions of debt ...........................     (47,156)    (101,589)
     Proceeds from additional borrowings ....................     198,976      175,246
     Net change in revolving credit balances ................      (6,152)      21,211
     Cash contributions .....................................     139,679       94,651
     Capital distributions ..................................     (64,582)     (44,083)
     Payment of mortgage financing cost .....................        (311)      (1,299)
     Other, net .............................................        (401)      (3,408)
                                                                ---------    ---------
            Net cash provided by financing activities .......     220,053      140,729
                                                                ---------    ---------
            Decrease in cash and equivalents ................      (1,644)         (87)
Cash and equivalents, beginning of period ...................       4,534        3,340
                                                                ---------    ---------
Cash and equivalents, end of period .........................   $   2,890    $   3,253
                                                                =========    =========

<FN>
 The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

                                     Page 5
<PAGE>

                     COLONIAL REALTY LIMITED PARTNERSHIP
                            NOTES TO CONSOLIDATED
                        CONDENSED FINANCIAL STATEMENTS
                              September 30, 1998
                                 (Unaudited)

Note 1 -- Basis of Presentation
      Colonial Realty Limited Partnership ("CRLP") is the operating  partnership
of Colonial Properties Trust (the "Company"),  an Alabama real estate investment
trust whose shares are traded on the New York Stock Exchange.  The  accompanying
unaudited consolidated condensed financial statements of CRLP have been prepared
by management in accordance with generally  accepted  accounting  principles for
interim financial reporting and in conjunction with the rules and regulations of
the  Securities  and  Exchange  Commission.  In the opinion of  management,  all
adjustments  considered  necessary for a fair  presentation  have been included.
These financial  statements  should be read in conjunction  with the information
included  in CRLP's  Annual  Report as filed with the  Securities  and  Exchange
Commission  on Form 10-K for the year  ended  December  31,  1997,  and with the
information filed with the Securities and Exchange  Commission on Forms 10-Q for
the  quarters  ended March 31, 1998 and June 30,  1998.  The  December  31, 1997
balance  sheet  data  presented  herein  was  derived  from  audited   financial
statements but does not include all disclosures  required by generally  accepted
accounting principles.

      In June 1997, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  131,  Disclosures  about  Segments  of an
Enterprise  and Related  Information  (SFAS 131),  which is effective  for years
beginning after December 15, 1997.  SFAS 131  establishes  standards for the way
that public  enterprises  report  information about operating segments in annual
financial  statements  and  requires  that  those  enterprises  report  selected
information  about  operating  segments in interim  financial  reports.  It also
establishes  standards  for related  disclosures  about  products and  services,
geographic  areas,  and major  customers.  SFAS 131 is effective  for  financial
statements  for  fiscal  years  beginning  after  December  15,  1997,  and,  in
accordance  with the  provisions  of this  Statement  CRLP  will  adopt  the new
requirements retroactively in 1998.

Note 2 -- Acquisitions
      River Hills I--On July 1, 1998,  CRLP  acquired  River Hills I, a 248-unit
phase of the River Hills apartment  complex on approximately 30 acres of land in
Tampa,  Florida.  The  multifamily  community  was developed in 1985 and was 90%
leased at the time of acquisition. The purchase price of $8.5 million was funded
through an advance on CRLP's unsecured line of credit.  The average unit size is
907 square feet with average unit market rent of $549 per month.

      Haverhill  Apartments--On  July 1, 1998, CRLP acquired a 79.8% interest in
Haverhill Apartments,  a 322-unit apartment complex on approximately 19 acres of
land in San Antonio,  Texas. The multifamily community was developed in 1998 and
was 90% leased at the time of  acquisition.  The purchase price of $17.2 million
was funded through an advance on CRLP's  unsecured  line of credit.  The average
unit size is 1,019  square feet with average unit market rent of $857 per month.
The  remaining  20.2%  ownership  in this  property is  reflected  as  "minority
interest  in  consolidated  operating  property"  in  CRLP's  balance  sheet and
statement of income, and is included in "minority interest in income of property
partnership" on CRLP's statement of cash flows.

                                     Page 6
<PAGE>

      Mansell  Overlook  200 and  Shoppes  at  Mansell--On  July 1,  1998,  CRLP
completed  the final  phase of its merger  with  certain  affiliates  of Johnson
Development  Company,  LLC. The final phase  included  Mansell  Overlook  200, a
six-story  office  building  containing  163,000  square feet of space,  and the
Shoppes at Mansell, a 21,000 square foot community shopping center.

      Mansell  Overlook  200 was  developed  in 1997 and was 95% occupied at the
time of the merger. This part of the merger, valued at $27.7 million, was funded
through  the  issuance  of 396,365  limited  partnership  units  valued at $11.7
million, and an advance on CRLP's unsecured line of credit.

      The Shoppes at Mansell was also  developed in 1997 and was 95% occupied at
the time of the  merger.  The  merger  of  Shoppes  at  Mansell,  valued at $3.7
million,  was funded  through the issuance of 76,809 limited  partnership  units
valued at $2.3 million, and an advance on CRLP's unsecured line of credit.

      Shades Brook  Building--On  July 13, 1998,  CRLP acquired the Shades Brook
Building,  a three-story office building  containing 35,000 square feet of space
in Birmingham,  Alabama. Shades Brook was acquired for a total purchase price of
$3.1  million,  which was  financed  through  the  issuance  of  28,492  limited
partnership units valued at $871,000, and an advance on CRLP's unsecured line of
credit.  Shades  Brook  was  built in 1979 and was 93%  occupied  at the time of
acquisition.

      Concourse  Center--On July 23, 1998, CRLP acquired  Concourse  Center,  an
office park comprised of four multi-tenant  buildings in Tampa, Florida totaling
290,000  square feet of leasable  area.  The purchase price of $30.1 million was
financed through an advance on CRLP's unsecured line of credit. Concourse Center
was built between 1981 and 1985 and was 99% occupied at the time of acquisition.

      In The Pines  Apartments--On  July 30, 1998, CRLP acquired In The Pines, a
256-unit  multifamily  apartment  community on approximately 22 acres of land in
Augusta,  Georgia.  The community  was  developed in 1970 and 1988,  and was 98%
leased at the time of acquisition. The purchase price of $8.8 million was funded
through an advance on CRLP's unsecured line of credit.  The average unit size is
993 square feet with average unit market rent of $671 per month.

Note 3 -- Increase in Revolving Credit Agreement
      On July  10,  1998,  CRLP  increased  the  borrowing  capacity  under  its
unsecured line of credit from $200 million to $250 million. The credit facility,
which is used by CRLP  primarily  to finance  additional  property  investments,
bears  interest at a rate  ranging  between 80 and 135 basis points above LIBOR.
The credit  facility  is  renewable  in July 2000 with  approval  of all parties
involved and provides for a two-year amortization in the event of non-renewal.

Note 4 -- Debt Offering
      On July 14,  1998,  CRLP  completed  a $175  million  public  offering  of
unsecured senior notes. The securities, which mature in July 2007, bear a coupon
rate of 7.0%,  and were  priced  to yield an  effective  rate of 7.09%  over the
nine-year term. CRLP used the net proceeds of the offering to repay a portion of
the outstanding balance on its unsecured line of credit.


                                     Page 7
<PAGE>

Note 5 -- Net Income Per Unit
      The  following  table  sets  forth the  computation  of basic and  diluted
earnings per unit:

                                         (Amounts in thousands,
                                         except per unit data)
                                -----------------------------------------
                                  Three     Three       Nine      Nine
                                  Months    Months                
                                   Ended     Ended     Months    Months
                                  September September   Ended     Ended
                                    30,       30,      September September
                                                         30,       30,
                                   1998      1997       1998      1997
                                  --------  --------   --------  --------
      Numerator:
      Numerator  for  basic and
      diluted  net  income  per
      unit    -   net    income $  14,833 $   8,299  $  41,325 $  28,887
      available    to    common
      unitholders
                                  ========  ========   ========  ========

     Denominator:
      Denominator   for   basic
      net  income  per  unit  -    36,541    29,327     34,353    28,062
      weighted  average  common
      units
      Effect    of     dilutive
      securities:
      Trustee   and    employee        44        46         44        46
      stock options
                                  --------  --------   --------  --------
      Denominator  for  diluted
      net  income  per  unit  -
      adjusted         weighted    36,585    29,373     34,397    28,108
      average common units
                                  ========  ========   ========  ========

      Basic  and   diluted  net $     .41 $     .28  $    1.20 $    1.03
      income per unit
                                  ========  ========   ========  ========

Options to purchase  55,000 of Colonial  Properties  Trust's  common shares at a
weighted average exercise price of $29.45 per share were outstanding during 1998
but were not included in the  computation of diluted net income per unit because
the options'  exercise  price was greater  than the average  market price of the
common shares and, therefore, the effect would be antidilutive.











                                     Page 8
<PAGE>

Note 6 -- Pro Forma Information (Unaudited)
      The  following  unaudited pro forma  operating  results for CRLP have been
presented  as if the 1997 and 1998  equity and debt  offerings  and the 1997 and
1998 property  acquisitions  and  dispositions  had occurred on January 1, 1997.
Unaudited  pro  forma  financial  information  is  presented  for  informational
purposes only and may not be indicative of what the actual results of operations
of CRLP would have been had the events  occurred as of January 1, 1997, nor does
it purport to represent the results of operations for future periods.

                                               (Amounts in
                                                thousands,
                                             except per unit
                                                  data)
                                           ---------------------
                                             Nine Months Ended
                                               September 30,
                                              1998       1997
                                             --------  ---------

      Revenues                             $ 199,162 $  177,526
                                             ========  =========

      Income       before        preferred $  52,448 $   53,292
      distributions
                                             ========  =========

      Net  income   available   to  common $  44,245 $   45,089
      unitholders
                                             ========  =========

      Net  income  per  unit -  basic  and $    1.21 $     1.23
      diluted
                                             ========  =========

The pro forma information includes the operations of the properties acquired and
disposed in 1997, as discussed in CRLP's 1997 Form 10-K, the properties acquired
in 1998 through September 30, as discussed in CRLP's Forms 10-Q for the quarters
ended March 31, 1998 and June 30, 1998, and the properties acquired in the third
quarter 1998, as discussed in Note 2 above.

Note 7 -- Subsequent Event
      Quarterly Distribution
On October 22, 1998, a cash distribution was declared to partners of CRLP in the
amount of $0.55 per unit, totaling $20.1 million.  The distribution was declared
to partners of record as of November 2, 1998, and was paid on November 9, 1998.











                                     Page 9
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors
Colonial Properties Holding Company, Inc.:

      We have reviewed the accompanying  consolidated condensed balance sheet of
Colonial  Realty Limited  Partnership  (the  "Partnership")  as of September 30,
1998,  and the  related  consolidated  condensed  statements  of income  for the
three-month  and nine-month  periods ended  September 30, 1998 and 1997, and the
consolidated condensed statements of cash flows for the nine-month periods ended
September 30, 1998 and 1997. These financial  statements are the  responsibility
of the Partnership's management.

      We conducted our review in accordance  with  standards  established by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole. Accordingly, we do not express such an opinion.

      Based on our review, we are not aware of any material  modifications  that
should be made to the accompanying  condensed  consolidated financial statements
for them to be in conformity with generally accepted accounting principles.

      We have previously audited, in accordance with generally accepted auditing
standards,  the  consolidated  balance  sheet as of December 31,  1997,  and the
related consolidated statements of income, partners' capital, and cash flows for
the year then ended (not presented herein);  and in our report dated January 19,
1998,  except  for  Note 13,  as to which  the date is  February  17,  1998,  we
expressed an unqualified opinion on those consolidated financial statements.  In
our  opinion,  the  information  set  forth  in  the  accompanying  consolidated
condensed  balance  sheet as of  December  31,  1997,  is  fairly  stated in all
material  respects in relation to the  consolidated  balance sheet from which it
has been derived.



                                            /s/ PricewaterhouseCoopers LLP
                                             PRICEWATERHOUSECOOPERS LLP

Birmingham, Alabama
October 19, 1998



                                    Page 10
<PAGE>

                     COLONIAL REALTY LIMITED PARTNERSHIP


Item 2.     Management's  Discussion  and Analysis of Financial  Condition and
            Results of Operations


General
      Colonial  Realty  Limited   Partnership   ("CRLP"),   a  Delaware  limited
partnership,  is the operating  partnership  of Colonial  Properties  Trust,  an
Alabama real estate  investment trust (the "Company") whose shares are listed on
the  New  York  Stock  Exchange.  The  Company  is  engaged  in  the  ownership,
development,  management,  and leasing of multifamily communities,  retail malls
and shopping centers,  and office buildings.  The Company is organized as a real
estate  investment trust (REIT) and owns and operates  properties in nine states
in the Sunbelt  region of the United  States.  As of September 30, 1998,  CRLP's
real  estate  portfolio  consisted  of 47  multifamily  communities,  38  retail
properties, and 17 office properties.

      CRLP manages its  business  with three  separate  and  distinct  operating
divisions:  Multifamily, Retail, and Office. Each division has an Executive Vice
President that oversees growth and operations and has a separate management team
that is responsible for acquiring,  developing,  and leasing  properties  within
each division.  This  structure  allows CRLP to utilize  specialized  management
personnel  for  each  operating  division.   Although  these  divisions  operate
independently from one another,  constant communication among the Executive Vice
Presidents provides CRLP with synergy allowing it to take advantage of a variety
of investment opportunities.

      The following  discussion  should be read in conjunction with management's
discussion and analysis of financial condition and results of operations and all
of the other information  appearing in CRLP's 1997 Financial Statements as filed
with the Securities and Exchange  Commission on Form 10-K and with the financial
statements included therein and the notes thereto.

      Any statement  contained in this report which is not a historical fact, or
which might be otherwise considered an opinion or projection  concerning CRLP or
its business, whether express or implied, is meant as, and should be considered,
a  forward-looking  statement as that term is defined in the Private  Securities
Litigation Reform Act of 1996.  Examples of  forward-looking  statements include
the Company's  anticipated sources and amounts of financing and the timing, cost
and  expected   results  of  the  Company's   Year  2000   compliance   program.
Forward-looking  statements are based upon assumptions and opinions concerning a
variety of known and  unknown  risks,  including  but not  limited to changes in
market  conditions,  the supply and demand for leasable  real  estate,  interest
rates, increased competition,  changes in governmental regulations, and national
and local economic conditions generally,  as well as other risks more completely
described in CRLP's  prospectuses  and annual  reports filed with the Securities
and  Exchange  Commission.  If  any  of  these  assumptions  or  opinions  prove
incorrect, any forward-looking  statements made on the basis of such assumptions
or opinions may also prove materially incorrect in one or more respects.

                                    Page 11
<PAGE>

Results of Operations -- Three Months Ended  September 30, 1998 and 1997 
     Revenue -- Total  revenue  increased by $20.7  million,  or 43.6%,  for the
third quarter of 1998 when  compared to the third quarter of 1997.  The majority
of this increase,  $18.0 million,  represents  revenues  generated by properties
acquired or developed  during 1998 and the second half of 1997,  net of revenues
from properties disposed of in 1997. The remaining increase primarily relates to
increases in rental rates at existing properties.

      Operating Expenses -- Total operating expenses increased by $11.2 million,
or 44.0%,  for the third  quarter of 1998 when  compared to the third quarter of
1997.  The  majority  of this  increase,  $9.2  million,  relates to  additional
operating  expenses  associated  with properties that were acquired or developed
during 1998 and the second half of 1997,  net of operating  expenses  associated
with properties disposed of in 1997. The remaining increase primarily relates to
increases in operating expenses at existing  properties and overall increases in
corporate  overhead and personnel costs associated with the Company's  continued
growth.

      Other Income and Expense -- Interest expense increased by $3.0 million, or
27.3%, for the third quarter of 1998 when compared to the third quarter of 1997.
The increase in interest expense is primarily  attributable to the assumption of
acquisition-related  debt, and the increased  usage of CRLP's  revolving  credit
agreement in conjunction with the financing of acquisitions and developments.

Results of Operations  -- Nine Months Ended  September 30, 1998 and 1997 
     Revenue -- Total revenue increased by $56.4 million, or 43.5%, for the nine
months ended September 30, 1998 when compared to the nine months ended September
30, 1997. The majority of this  increase,  $50.0  million,  represents  revenues
generated  by  properties  acquired or  developed  during 1998 and 1997,  net of
revenues from properties  disposed of in 1997. The remaining  increase primarily
relates to increases in rental rates at existing properties.

      Operating Expenses -- Total operating expenses increased by $29.0 million,
or 42.2%, for the nine months ended September 30, 1998 when compared to the nine
months ended  September 30, 1997. The majority of this increase,  $24.1 million,
relates to additional  operating  expenses  associated with properties that were
acquired or developed during 1998 and 1997, net of operating expenses associated
with properties disposed of in 1997. The remaining increase primarily relates to
increases in operating expenses at existing  properties and overall increases in
corporate  overhead and personnel costs associated with the Company's  continued
growth.

      Other Income and Expense -- Interest expense increased by $9.3 million, or
32.3%,  for the nine months ended  September  30, 1998 when compared to the nine
months ended  September 30, 1997. The increase in interest  expense is primarily
attributable  to the assumption of  acquisition-related  debt, and the increased
usage of CRLP's  revolving credit agreement in conjunction with the financing of
acquisitions and developments.

Liquidity and Capital Resources
      During the third  quarter of 1998,  CRLP  invested  $134.3  million in the
acquisition and development of properties. CRLP financed this growth through net
proceeds from public  offerings of debt totaling $172.5 million during the third
quarter (as discussed below), advances on its bank line of credit, and cash from
operations.  As of September  30, 1998,  CRLP had one bank line of credit with a
balance outstanding of $110.9 million. On July 10, 1998, CRLP increased its line
of credit to provide for total  borrowings of up to $250 million.  The increased
line,  which is used by CRLP  primarily  to finance  property  acquisitions  and
development,  bears  interest at a rate ranging  between  LIBOR plus 80 to LIBOR
plus 135 basis  points,  expires  in July  2000,  and  provides  for a  two-year
amortization in the event of non-renewal.

                                    Page 12
<PAGE>
      On July 14,  1998,  CRLP  completed  a $175  million  public  offering  of
unsecured senior notes. The securities, which mature in July 2007, bear a coupon
rate of 7.0%,  and were  priced  to yield an  effective  rate of 7.09%  over the
nine-year  term. CRLP used the net proceeds of the offering of $172.5 million to
repay a portion of the outstanding balance on its unsecured line of credit.

      Management intends to replace  significant  borrowings that may accumulate
under the bank line of credit with funds  generated  from the sale of additional
limited partnership units to Colonial Properties Trust in connection with public
offerings of securities by the Company,  and/or permanent  financing,  as market
conditions  permit.  Management  believes that these potential sources of funds,
along with the possibility of issuing limited  partnership units in exchange for
properties, will provide CRLP with the means to finance additional acquisitions.
Management anticipates that its net cash provided by operations and its existing
cash balances will provide the necessary  funds on a short- and long-term  basis
to cover its operating expenses,  interest expense on outstanding  indebtedness,
recurring capital expenditures,  distributions to unitholders,  and dividends to
shareholders in accordance with Internal Revenue Code requirements applicable to
real estate investment trusts.

Year 2000 Issue
      CRLP utilizes management  information systems and software technology that
may be affected by Year 2000 issues  throughout its businesses.  The "Year 2000"
problem relates to computer systems that have time and  date-sensitive  programs
that were  designed  to read years  beginning  with  "19," but may not  properly
recognize the year 2000. If a computer  system or software  application  used by
CRLP or a third party  dealing with CRLP fails  because of the  inability of the
system or  application  to properly  read the year  "2000,"  the  results  could
conceivably have a material adverse effect on CRLP.

      As a real estate owner,  developer and manager,  CRLP's major exposure for
Year 2000 problems is the inability of automated systems (e.g., elevators,  HVAC
systems,  and security  access  systems) at properties  to function  properly on
January 1, 2000. CRLP has no internally  generated programmed software coding to
correct,  as substantially  all of the software utilized by CRLP is purchased or
licensed from external providers.

      CRLP has authorized  the use of internal and external  resources to ensure
that all  automated  systems  are Year  2000  compliant.  CRLP has  developed  a
cross-functional  task force,  comprised of senior  management,  MIS  personnel,
internal  audit  personnel,  and all lines of  business to address the Year 2000
issue.  Weekly meetings are held to ensure the commitments set forth by the task
force are met.  The task force has been charged  with  minimizing  the impact of
Year 2000 problems on internal  operations and transactions  that involve CRLP's
customers,  suppliers,  or strategic business  partners.  This is being achieved
through a four-step process:

I.    Awareness
II.   Assessment
III.  Validation
IV.   Implementation

The Awareness  Phase was the first step in addressing  the Year 2000 issue.  The
Awareness  Phase  included a  definition  of the  problem,  notification  of key
personnel,  implementation  of the plan,  and  development  of the task force to
address the issues.

The Assessment  Phase was an evaluation of the size and complexity of the issues
surrounding  Year  2000.  This  included   communications  with  all  divisional
management  teams,  who conducted  inventories  of potential  internal Year 2000
compliance  problems.  A  second  component  of the  Assessment  Phase  was  the
evaluation  of the effect that  customers',  vendors',  and  strategic  business
partners' compliance problems would have on CRLP.

                                    Page 13
<PAGE>

The Validation Phase includes the testing of the systems and components for Year
2000 compliance.  CRLP, along with external  resources,  have jointly tested and
identified all hardware and software  applications that will need to be upgraded
to ensure Year 2000  compliancy.  Based on the results of the evaluations in the
Awareness Phase, CRLP decided to obtain written  confirmation of compliance from
vendors of the previously  identified  potential problems.  CRLP also decided to
confirm  compliance  with  vendors of other key products and services as well as
compliance of certain customers' ability to comply with leases.

The  Implementation  Phase  includes  performing  upgrades  on  all  information
technology   systems   (e.g.,   personal   computers,   printers   and  software
applications) to ensure Year 2000 compliancy.

      CRLP has  completed  the  first two  phases  of the plan and is  currently
working  internally  and with  external  vendors  on the final two  phases.  The
hardware and software  testing and upgrades that are part of the  Implementation
Phase are expected to be completed by year-end 1998.

      The Year 2000 costs incurred by CRLP through  September 30, 1998,  totaled
approximately  $727,000,  the  majority  of which was  related to  hardware  and
software costs.  This amount does not include the implicit costs associated with
the  reallocation of internal staff hours to Year 2000 project related  efforts.
At this time,  management  currently  estimates  additional Year 2000 compliance
costs at between  $75,000 and $100,000.  This estimate is based on  management's
current  assessment of CRLP's state of Year 2000 readiness,  and there can be no
assurance that  management's  assessment of its compliance  requirements and the
cost of corrective measures will not change as CRLP proceeds with the Validation
and  Implementation  Phases.  CRLP anticipates all phases of the plan to address
the Year 2000 problem to be implemented by mid-year 1999.

      CRLP's  assessment  of its  readiness  for the Year  2000 and the cost and
timing of bringing  its systems into  compliance  has not caused CRLP to believe
that the Year  2000  problem  will  have a  material  adverse  effect  on CRLP's
financial condition or results of operations.  CRLP is continually assessing the
extent of Year 2000 compliance,  by CRLP and third parties on whose systems CRLP
may depend, and CRLP plans to address  compliance issues as they arise.  Because
CRLP has not, at this time,  identified  any  significant  problems  that do not
appear remediable through current compliance  efforts,  CRLP has not developed a
comprehensive  contingency plan. However,  if CRLP identifies  significant risks
related to its Year 2000  compliance  or if CRLP's  progress  deviates  from the
anticipated timeline, CRLP will develop contingency plans as deemed necessary at
that time.








                                    Page 14
<PAGE>
                     COLONIAL REALTY LIMITED PARTNERSHIP
                         PART II -- OTHER INFORMATION



Item 2.     Changes in Securities.

      The Company from time to time issues common shares of beneficial  interest
("Common Shares") pursuant to its Dividend Reinvestment and Share Purchase Plan,
its Non-Employee Trustee Share Option Plan, its Non-Employee Trustee Share Plan,
and its Employee Share Option and Restricted  Share Plan, in  transactions  that
are  registered  under the  Securities  Act of 1933,  as  amended  (the  "Act").
Pursuant to CRLP's Second Amended and Restated Agreement of Limited Partnership,
each time the Company issues Common Shares pursuant to the foregoing plans, CRLP
issues to Colonial  Properties  Holding Company,  Inc., its general partner,  an
equal  number of Units for the same price at which the Common  Shares were sold,
in  transactions  that are not  registered  under the Act in reliance on Section
4(2) of the Act.  During the  quarter  ended  September  30,  1998,  CRLP issued
113,298 Units in such transactions for an aggregate of $2.5 million.

      On July 1,  1998,  CRLP  issued a total of  473,174  Units to  William  M.
Johnson and related  affiliates to complete  CRLP's merger of selected assets of
Johnson Development  Company (see Note 2 to the Notes to Consolidated  Condensed
Financial  Statements).  The Units were valued at an aggregate of $14.0  million
for  purposes of the  transaction.  Mr.  Johnson is on the Board of Directors of
Colonial Properties Holding Company, Inc., CRLP's general partner.

      On July 1, 1998,  CRLP issued 28,492 Units to Campco  Investments II, Fred
W. Rock,  Robin K. Conner,  and Pei-Cheng Chi in exchange for their interests in
an office property (see Note 2 to the Notes to Consolidated  Condensed Financial
Statements).  The Units were valued at an  aggregate of $871,000 for purposes of
the transaction.

Item 6.     Exhibits and Reports on Form 8-K.

(a)   Exhibits

12.       Ratio of Earnings to Fixed Charges

15.       Letter re:  Unaudited Interim Financial Information

          27.  Financial Data Schedule (EDGAR Version Only)

(b)   Reports on Form 8-K

            Form 8-K dated July 8, 1998, reported certain property  acquisitions
            during 1998 up to July 8, 1998,  under Item 5, "Other  Events,"  and
            Form 8-K dated July 20, 1998,  filed  certain  documents  related to
            CRLP's debt offering under Item 5, "Other Events."



                                    Page 15
<PAGE>
                                  SIGNATURES


      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  amendment  to be signed on its behalf by the
undersigned hereunto duly authorized.


                                 COLONIAL REALTY LIMITED PARTNERSHIP,
                                      a Delaware limited partnership

                               By: Colonial  Properties  Holding  Company, Inc.,
                                         its general partner




Date:  November 13, 1998            By:  /s/ Howard B. Nelson, Jr.            
                                         -------------------------------------
                                         Howard B. Nelson, Jr.
                                         Chief Financial Officer
                                         (Duly Authorized Officer
                                         and Principal Financial Officer)



Date:  November 13, 1998                 /s/ Kenneth E. Howell                
                                         -------------------------------------
                                         Kenneth E. Howell
                                         Senior Vice President and Chief
                                         Accounting Officer
                                         (Principal Accounting Officer)










                                    Page 16
<PAGE>

                  COLONIAL REALTY LIMITED PARTNERSHIP
            EXHIBIT 12 - Ratio of Earnings to Fixed Charges



      CRLP's  ratio of earnings  to fixed  charges  for the three  months  ended
September 30, 1998 and 1997,  was 1.98 and 1.88,  respectively.  CRLP's ratio of
earnings to fixed charges for the nine months ended September 30, 1998 and 1997,
was 2.01 and 1.97, respectively.

      The ratios of earnings to fixed charges were computed by dividing earnings
by fixed  charges.  For this purpose,  earnings  consist of income (loss) before
gains from sales of property and extraordinary  items plus fixed charges.  Fixed
charges  consist of interest  expense  (including  interest costs  capitalized),
distributions  to preferred  unitholders,  and the amortization of debt issuance
costs.


















                                    Page 17
<PAGE>



Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549



                                        Re: Colonial Realty Limited Partnership
                                           (File No. 0-20707)
                                            Registration on Form S-3


We are aware that our report  dated  October  19,  1998 on our review of interim
financial information of Colonial Realty Limited Partnership for the three-month
and  nine-month  periods  ended  September 30, 1998 and 1997 and included in the
Partnership's  quarterly  report on Form 10-Q for the  periods  then  ended,  is
incorporated by reference in the  registration  statement on Form S-3 related to
the Shelf Registration filed on December 11, 1997 (File No. 333-42049). Pursuant
to Rule 436(c)  under the  Securities  Act of 1933,  this  report  should not be
considered  a part of the  registration  statement  prepared or  certified by us
within the meaning of Sections 7 and 11 of that Act.




                                           /s/ PricewaterhouseCoopers LLP
                                             PRICEWATERHOUSECOOPERS LLP

Birmingham, Alabama
November 13, 1998







                                    Page 18