##### 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, 2008
 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 or organization)
    
    (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
  Large accelerated filer  þ
    
    Accelerated filer  oNon-accelerated filer  o
    
    Smaller reporting company  o(Do not check if smaller reporting company)
  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, 2008 and December 31, 2007
    
    
    3Consolidated Condensed Statements of Income and Comprehensive Income for the Three and Six Months ended June 30, 2008 and 2007
    
    
    4Consolidated Condensed Statements of Cash Flows for the Six Months ended June 30, 2008 and 2007
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Report of Independent Registered Public Accounting Firm *
    
    
    26Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    43Item 4.
    
    Controls and Procedures
    
    
    43PART II: OTHER INFORMATIONItem 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 6.
    
    Exhibits
    
    
    44SIGNATURES
    
    
    45EXHIBIT INDEX
    
    
    46EX-12.1 RATIO OF EARNINGS TO FIXED CHARGESEX-15.1 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATIONEX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32.1 SECTION 906 CERTIFICATION OF CEOEX-32.2 SECTION 906 CERTIFICATION OF 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, 2008
    
    
    December 31, 2007ASSETSLand, buildings, & equipment
    
    $
    2,547,630
    
    
    $
    2,431,064Undeveloped land and construction in progress
    
    
    515,356
    
    
    
    531,410Less: Accumulated depreciation
    
    
    (326,979
    )
    
    
    (290,118
    )Real estate assets held for sale, net
    
    
    278,145
    
    
    
    253,641Net real estate assets
    
    
    3,014,152
    
    
    
    2,925,997Cash and equivalents
    
    
    33,957
    
    
    
    92,841Restricted cash
    
    
    34,771
    
    
    
    10,005Accounts receivable, net
    
    
    14,003
    
    
    
    25,534Notes receivable
    
    
    61,879
    
    
    
    30,756Prepaid expenses
    
    
    8,766
    
    
    
    8,845Deferred debt and lease costs
    
    
    15,552
    
    
    
    15,637Investment in partially owned entities
    
    
    49,203
    
    
    
    69,682Deferred tax asset
    
    
    18,204
    
    
    
    19,897Other assets
    
    
    34,350
    
    
    
    30,443Total assets
    
    $
    3,284,837
    
    
    $
    3,229,637LIABILITIES AND PARTNERS EQUITYNotes and mortgages payable
    
    $
    1,564,285
    
    
    $
    1,575,921Unsecured credit facility
    
    
    184,707
    
    
    
    39,316Mortgages payable related to real estate assets held for sale
    
    
    
    
    
    
    26,602Total debt
    
    
    1,748,992
    
    
    
    1,641,839Accounts payable
    
    
    37,166
    
    
    
    68,858Accrued interest
    
    
    22,087
    
    
    
    23,064Accrued expenses
    
    
    24,617
    
    
    
    16,425Other liabilities
    
    
    34,687
    
    
    
    11,966Total liabilities
    
    
    1,867,549
    
    
    
    1,762,152Redeemable units, at redemption value - 9,554,446 and 10,052,778
units outstanding at June 30, 2008 and December 31, 2007,
respectively
    
    
    191,280
    
    
    
    227,494Limited partners minority interest in consolidated partnership
    
    
    2,115
    
    
    
    2,439General partner -Common equity - 47,874,834 and 47,216,549 units outstanding at
June 30, 2008 and December 31, 2007, respectively
    
    
    1,032,983
    
    
    
    1,025,654Preferred equity ($125,000 liquidation preference)
    
    
    99,264
    
    
    
    120,550Limited partners preferred equity ($100,000 liquidation preference)
    
    
    97,406
    
    
    
    97,406Accumulated other comprehensive income (loss)
    
    
    (5,760
    )
    
    
    (6,058
    )Total partners equity
    
    
    1,223,893
    
    
    
    1,237,552Total liabilities and partners equity
    
    $
    3,284,837
    
    
    $
    3,229,637
  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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:Minimum rent
    
    $
    63,974
    
    
    $
    87,826
    
    
    $
    126,545
    
    
    $
    179,180Tenant recoveries
    
    
    1,374
    
    
    
    4,431
    
    
    
    2,241
    
    
    
    9,664Other property related revenue
    
    
    8,294
    
    
    
    8,641
    
    
    
    15,747
    
    
    
    16,076Construction revenues
    
    
    569
    
    
    
    8,068
    
    
    
    8,449
    
    
    
    20,853Other non-property related revenue
    
    
    5,151
    
    
    
    5,312
    
    
    
    10,449
    
    
    
    8,554Total revenue
    
    
    79,362
    
    
    
    114,278
    
    
    
    163,431
    
    
    
    234,327Expenses:Property operating expenses
    
    
    18,688
    
    
    
    24,839
    
    
    
    37,048
    
    
    
    49,549Taxes, licenses, and insurance
    
    
    9,103
    
    
    
    11,859
    
    
    
    18,470
    
    
    
    24,463Construction expenses
    
    
    564
    
    
    
    7,495
    
    
    
    7,830
    
    
    
    19,866Property management expenses
    
    
    2,072
    
    
    
    3,598
    
    
    
    4,313
    
    
    
    7,085General and administrative expenses
    
    
    5,789
    
    
    
    8,040
    
    
    
    11,570
    
    
    
    14,018Management fee and other expense
    
    
    4,346
    
    
    
    4,034
    
    
    
    8,031
    
    
    
    6,977Restructuring charges
    
    
    
    
    
    
    1,528
    
    
    
    
    
    
    
    1,528Investment and development
    
    
    108
    
    
    
    315
    
    
    
    877
    
    
    
    454Depreciation
    
    
    23,038
    
    
    
    28,941
    
    
    
    44,956
    
    
    
    60,105Amortization
    
    
    972
    
    
    
    3,182
    
    
    
    1,743
    
    
    
    8,907Total expenses
    
    
    64,680
    
    
    
    93,831
    
    
    
    134,838
    
    
    
    192,952Income from operations
    
    
    14,682
    
    
    
    20,447
    
    
    
    28,593
    
    
    
    41,375Other income (expense):Interest expense and debt cost amortization
    
    
    (18,280
    )
    
    
    (27,073
    )
    
    
    (36,947
    )
    
    
    (54,205
    )Gains (losses) on retirement of debt
    
    
    2,730
    
    
    
    (9,370
    )
    
    
    8,201
    
    
    
    (9,433
    )Interest income
    
    
    1,184
    
    
    
    1,324
    
    
    
    1,976
    
    
    
    3,455Income (loss) from partially owned entities
    
    
    2,037
    
    
    
    (2,090
    )
    
    
    12,307
    
    
    
    4,723Gains from sales of property, net of income taxes of $1,297 (Q2) and $1,690 (YTD)
in 2008 and $100 (Q2) and $847 (YTD) in 2007
    
    
    3,334
    
    
    
    11,426
    
    
    
    5,277
    
    
    
    12,750Transaction costs
    
    
    
    
    
    
    (11,026
    )
    
    
    
    
    
    
    (11,026
    )Minority interest of limited partners
    
    
    5
    
    
    
    82
    
    
    
    9
    
    
    
    225Income taxes and other
    
    
    (192
    )
    
    
    59
    
    
    
    595
    
    
    
    (174
    )Total other income (expense)
    
    
    (9,182
    )
    
    
    (36,668
    )
    
    
    (8,582
    )
    
    
    (53,685
    )Income from continuing operations
    
    
    5,500
    
    
    
    (16,221
    )
    
    
    20,011
    
    
    
    (12,310
    )Income from discontinued operations
    
    
    5,436
    
    
    
    1,501
    
    
    
    9,752
    
    
    
    8,267Gain on disposal of discontinued operations, net of income taxes (benefit) of $0 (Q2)
and ($1) (YTD) in 2008 and $156 (Q2) and $1,684 (YTD) in 2007
    
    
    4,116
    
    
    
    39,335
    
    
    
    7,017
    
    
    
    74,136Minority interest of limited partners
    
    
    
    
    
    
    (32
    )
    
    
    13
    
    
    
    (73
    )Income from discontinued operations
    
    
    9,552
    
    
    
    40,804
    
    
    
    16,782
    
    
    
    82,330Net income
    
    
    15,052
    
    
    
    24,583
    
    
    
    36,793
    
    
    
    70,020Distributions to general partner preferred unitholders
    
    
    (2,180
    )
    
    
    (3,870
    )
    
    
    (4,668
    )
    
    
    (8,361
    )Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (3,639
    )
    
    
    (3,624
    )Preferred unit issuance costs write-off, net of discount
    
    
    (83
    )
    
    
    (330
    )
    
    
    (267
    )
    
    
    (330
    )Net income available to common unitholders
    
    $
    10,976
    
    
    $
    18,570
    
    
    $
    28,219
    
    
    $
    57,705Net income available to common unitholders allocated to limited partners
    
    
    (1,902
    )
    
    
    (3,569
    )
    
    
    (4,913
    )
    
    
    (10,836
    )Net income available to common unitholders allocated to general partner
    
    $
    9,074
    
    
    $
    15,001
    
    
    $
    23,306
    
    
    $
    46,869Net income per common unit  Basic:Income (loss) from continuing operations
    
    $
    0.02
    
    
    $
    (0.39
    )
    
    $
    0.20
    
    
    $
    (0.43
    )Income from discontinued operations
    
    
    0.17
    
    
    
    0.72
    
    
    
    0.30
    
    
    
    1.45Net income per common unit  Basic
    
    $
    0.19
    
    
    $
    0.33
    
    
    $
    0.50
    
    
    $
    1.02Net income per common unit  Diluted:Income (loss) from continuing operations
    
    $
    0.02
    
    
    $
    (0.39
    )
    
    $
    0.20
    
    
    $
    (0.43
    )Income from discontinued operations
    
    
    0.17
    
    
    
    0.72
    
    
    
    0.30
    
    
    
    1.45Net income per common unit  Diluted
    
    $
    0.19
    
    
    $
    0.33
    
    
    $
    0.50
    
    
    $
    1.02Average units outstanding:Basic
    
    
    56,876
    
    
    
    56,706
    
    
    
    56,872
    
    
    
    56,625Diluted
    
    
    57,044
    
    
    
    56,706
    
    
    
    57,041
    
    
    
    56,625CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOMENet income
    
    $
    15,052
    
    
    $
    24,583
    
    
    $
    36,793
    
    
    $
    70,020Other comprehensive incomeUnrealized income (loss) on cash flow hedging activities
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    (138
    )Change in additional minimum pension liability
    
    
    
    
    
    
    1,600
    
    
    
    
    
    
    
    1,600Comprehensive income
    
    $
    15,052
    
    
    $
    26,230
    
    
    $
    36,793
    
    
    $
    71,482
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COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) (in thousands)
 Six Months EndedJune 30,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    36,793
    
    
    $
    70,020Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    49,590
    
    
    
    74,807Loss (income) from partially-owned unconsolidated entities
    
    
    (12,306
    )
    
    
    (4,225
    )Gains from sales of property
    
    
    (13,983
    )
    
    
    (89,674
    )Transaction costs
    
    
    
    
    
    
    11,026Impairment
    
    
    
    
    
    
    2,500(Gain) Loss on retirement of debt
    
    
    (8,201
    )
    
    
    12,556Prepayment penalties
    
    
    
    
    
    
    (29,207
    )Distributions of income from partially-owned unconsolidated entities
    
    
    7,034
    
    
    
    5,253Decrease (increase) in:Restricted cash
    
    
    (766
    )
    
    
    5,389Accounts receivable
    
    
    11,531
    
    
    
    (4,703
    )Prepaid expenses
    
    
    79
    
    
    
    5,414Other assets
    
    
    5,180
    
    
    
    (5,562
    )Increase (decrease) in:Accounts payable
    
    
    (19,739
    )
    
    
    (2,382
    )Accrued interest
    
    
    (977
    )
    
    
    (3,919
    )Accrued expenses and other
    
    
    10,681
    
    
    
    14,590Net cash provided by operating activities
    
    
    64,916
    
    
    
    61,883Cash flows from investing activities:Acquisition of properties
    
    
    (7,369
    )
    
    
    (125,400
    )Development expenditures
    
    
    (193,670
    )
    
    
    (172,056
    )Tenant improvements and leasing commissions
    
    
    (2,581
    )
    
    
    (10,860
    )Capital expenditures
    
    
    (10,876
    )
    
    
    (13,352
    )Proceeds from sales of property, net of selling costs
    
    
    68,636
    
    
    
    329,764Transaction costs
    
    
    
    
    
    
    (11,026
    )Issuance of notes receivable
    
    
    (7,896
    )
    
    
    (15,153
    )Repayments of notes receivable
    
    
    4,573
    
    
    
    40,066Distributions from partially-owned unconsolidated entities
    
    
    29,002
    
    
    
    15,474Capital contributions to partially-owned unconsolidated entities
    
    
    (5,286
    )
    
    
    (9,587
    )Sale of securities
    
    
    3,636
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (121,831
    )
    
    
    27,870Cash flows from financing activities:Proceeds from additional borrowings
    
    
    57,600
    
    
    
    818,813Proceeds from dividend reinvestment plan and exercise of stock options
    
    
    840
    
    
    
    11,804Principal reductions of debt
    
    
    (102,924
    )
    
    
    (432,984
    )Payment of debt issuance costs
    
    
    (1,566
    )
    
    
    -0-Net change in revolving credit balances and overdrafts
    
    
    131,317
    
    
    
    (182,802
    )Dividends paid to common and preferred unitholders
    
    
    (55,932
    )
    
    
    (73,228
    )Special distributions
    
    
    
    
    
    
    (11,999
    )Distributions to minority partners in CRLP
    
    
    (9,992
    )
    
    
    (16,534
    )Repurchase of Preferred Series D Units
    
    
    (21,312
    )
    
    
    Redemption of Preferred Series E Shares
    
    
    
    
    
    
    (104,768
    )Other financing activities, net
    
    
    
    
    
    
    331Net cash provided by (used in) financing activities
    
    
    (1,969
    )
    
    
    8,633Increase (decrease) in cash and cash equivalents
    
    
    (58,884
    )
    
    
    98,386Cash and cash equivalents, beginning of period
    
    
    92,841
    
    
    
    87,647Cash and cash equivalents, end of period
    
    $
    33,957
    
    
    $
    186,033Supplemental disclosure of cash flow information:Cash paid during the period for interest, including amounts capitalized
    
    $
    48,816
    
    
    $
    48,292Cash paid during the period for income taxes
    
    $
    4,881
    
    
    $
    3,408Supplemental disclosure of non-cash transactions:Cash flow hedging activities
    
    $
    
    
    
    $
    (185
    )
  5




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##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP NOTES TO
 CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 2008
 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, 2007 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s 2007
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
  ,
   Federal Income Tax Status
  7




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##### Table of Contents



Use of Estimates
  Unaudited Interim Statements
 .
 Revenue Recognition
 Accounting for Sales of Real Estate
  8




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Impairment
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 Investment and Development
  Notes Receivable
  (1)
    
    a promissory note of approximately $28.9 million that relates to a for-sale
residential project in which CRLP has a 40% interest (see Note 9 for additional
discussion). The note is secured by a first mortgage interest with an original maturity
date of July 1, 2008 and a rate of 8.25%. There are two six-month extension options
available, the first of which has been exercised.
 (2)
    
    short-term seller financing related to the sale of Colonial Grand at Shelby
Farms I & II for approximately $27.8 million with an original maturity date of July 27,
2008 and a rate of 6.50%. There are two 30-day extension options available at a rate
of 8.0% and 12.0%, respectively. As of July 27, 2008, the buyer had exercised the
first extension option.
  9




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##### Table of Contents



Performance Awards
    
    
    risk-free rate,
 
    
    expected standard deviation of returns (i.e., volatility),
 
    
    expected dividend yield, and
 
    
    correlation in stock price movement.
    Assets and Liabilities Measured at Fair Value
 Fair
Value Measurements
  10




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New Accounting Pronouncements
 Fair Value Measurement Accounting for Leases
 The Fair Value Option for Financial Assets and
Financial Liabilities  including an amendment of FASB Statement No. 115
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51.
 Business Combinations
 Disclosures about Derivative Instruments and
Hedging Activities
 11




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##### Table of Contents



Note 4 Capital Structure
    
    
    During the first quarter of 2008, the Trust repurchased 306,750 outstanding Series D
Depositary Shares in privately negotiated transactions for an aggregate purchase price
of $7.7 million, at an average price of $24.86 per depositary share. In connection
with the repurchase of the Series D Preferred Shares, the Trust, as general partner of
CRLP, also repurchased a corresponding number of Series D Preferred Units, all of which
were held by the Trust as general partner of CRLP. The Trust received a discount to
the liquidation preference price of $25.00 per depositary share, of approximately $0.1
million, on the repurchase and wrote off approximately $0.3 million of issuance costs.
 
    
    On June 24, 2008, the Trust repurchased 577,000 outstanding Series D Depositary
Shares in a privately negotiated transaction for a purchase price of $14.0 million, or
$24.24 per depositary share. In connection with the repurchase of the Series D
Preferred Shares, the Trust, as general partner of CRLP, also repurchased a
corresponding number of Series D Preferred Units, all of which were held by the Trust
as general partner of CRLP. The Trust received a discount to the liquidation
preference price of $25.00 per depositary share, of approximately $0.4 million, on the
repurchase and wrote off approximately $0.5 million of issuance costs.
 Note 5  Acquisition and Disposition Activity
 Property Acquisitions
  12




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##### Table of Contents



Property Dispositions
      
    
    On June 25, 2008, CRLP sold the following properties:
 SaleProperty Name
    
    Location
    
    Units
    
    ProceedsColonial Village at Bear Creek
    
    Fort Worth, TX
    
    
    120
    
    
    $
    6.0Colonial Village at Pear Ridge
    
    Dallas, TX
    
    
    242
    
    
    $
    15.5Colonial Village at Bedford
    
    Fort Worth, TX
    
    
    238
    
    
    $
    12.0Cottonwood Crossing
    
    Fort Worth, TX
    
    
    200
    
    
    $
    7.3
 
    
    On June 27, 2008, CRLP disposed of Colonial Grand at Shelby Farms I & II, a 450-unit
multifamily apartment community located in Memphis, Tennessee. CRLP sold this asset
for approximately $41.0 million. Colonial Grand at Shelby Farms II, a newly completed
expansion phase that was developed by CPSI, represented $2.8 million ($1.7 million net
of income taxes), of the total gain. The sale of this asset included short-term seller
financing of $27.8 million (see Note 3 for additional discussion), therefore, CRLP
maintained a continuing interest in this property. The seller-financing provided in
this transaction has been treated as a non-cash investing activity in CRLPs
Consolidated Condensed Statement of Cash Flows for the six months ended June 30, 2008.
   13




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##### Table of Contents



Units/ SquareProperty
    
    Location
    
    Date Sold
    
    FeetMultifamilyColonial Village at Bear Creek
    
    Fort Worth, TX
    
    June 2008
    
    
    120Colonial Village at Pear Ridge
    
    Dallas, TX
    
    June 2008
    
    
    242Colonial Village at Bedford
    
    Fort Worth, TX
    
    June 2008
    
    
    238Cottonwood Crossing
    
    Fort Worth, TX
    
    June 2008
    
    
    200Mayflower 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
    
    
    204Office250 Commerce Center
    
    Montgomery, AL
    
    February 2008
    
    
    37,000RetailVillage on the Parkway
    
    Dallas, TX
    
    July 2007
    
    
    380,500Britt David Shopping Center
    
    Columbus, GA
    
    July 2007
    
    
    102,600Colonial Mall Decatur
    
    Huntsville, AL
    
    July 2007
    
    
    576,100Colonial Mall Lakeshore
    
    Gainesville, GA
    
    July 2007
    
    
    518,300Colonial Mall Staunton
    
    Staunton, VA
    
    July 2007
    
    
    424,000Colonial Mayberry Mall
    
    Mount Airy, NC
    
    July 2007
    
    
    206,900Colonial Promenade Montgomery
    
    Montgomery, AL
    
    July 2007
    
    
    209,100Colonial Promenade Montgomery North
    
    Montgomery, AL
    
    July 2007
    
    
    209,900Colonial Shoppes Bellwood
    
    Montgomery, AL
    
    July 2007
    
    
    87,500Colonial Shoppes McGehee Place
    
    Montgomery, AL
    
    July 2007
    
    
    98,300Colonial Shoppes Quaker Village
    
    Greensboro, NC
    
    July 2007
    
    
    101,900Olde Town Shopping Center
    
    Montgomery, AL
    
    July 2007
    
    
    38,700Colonial Shoppes Wekiva
    
    Orlando, FL
    
    May 2007
    
    
    208,600Colonial Shoppes Bear Lake
    
    Orlando, FL
    
    April 2007
    
    
    131,300Colonial Shoppes Yadkinville
    
    Yadkinville, NC
    
    March 2007
    
    
    90,917Rivermont Shopping Center
    
    Chattanooga, TN
    
    February 2007
    
    
    73,481
   14




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(amounts in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Property revenues:Base rent
    
    $
    8,727
    
    
    $
    17,000
    
    
    $
    17,617
    
    
    $
    35,504Tenant recoveries
    
    
    (3
    )
    
    
    1,399
    
    
    
    2
    
    
    
    3,058Other revenue
    
    
    1,105
    
    
    
    1,755
    
    
    
    2,234
    
    
    
    3,318Total revenues
    
    
    9,829
    
    
    
    20,154
    
    
    
    19,853
    
    
    
    41,880Property operating and administrative expenses
    
    
    3,864
    
    
    
    7,826
    
    
    
    7,799
    
    
    
    16,613Impairment
    
    
    
    
    
    
    2,500
    
    
    
    
    
    
    
    2,500Depreciation and amortization
    
    
    529
    
    
    
    3,201
    
    
    
    2,302
    
    
    
    6,938Total expenses
    
    
    4,393
    
    
    
    13,527
    
    
    
    10,101
    
    
    
    26,051Interest expense, net
    
    
    
    
    
    
    (2,007
    )
    
    
    
    
    
    
    (4,433
    )Other expenses
    
    
    
    
    
    
    (3,119
    )
    
    
    
    
    
    
    (3,129
    )Income from discontinued operations before net gain
on disposition of discontinued operations
    
    
    5,436
    
    
    
    1,501
    
    
    
    9,752
    
    
    
    8,267Net gain on disposition of discontinued operations
    
    
    4,116
    
    
    
    39,335
    
    
    
    7,017
    
    
    
    74,136Minority interest to limited partners
    
    
    
    
    
    
    (32
    )
    
    
    13
    
    
    
    (73
    )Income from discontinued operations
    
    $
    9,552
    
    
    $
    40,804
    
    
    $
    16,782
    
    
    $
    82,330
 Note 6  For-Sale Activities and Impairment
 For-Sale Residential Activities
  15




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(amounts in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Condominium revenues, net
    
    $
    303
    
    
    $
    9,675
    
    
    $
    303
    
    
    $
    43,754Condominium costs
    
    
    (249
    )
    
    
    (8,152
    )
    
    
    (249
    )
    
    
    (34,285
    )Gains on condominium sales, before
minority interest and income taxes
    
    
    54
    
    
    
    1,523
    
    
    
    54
    
    
    
    9,469For-sale residential revenues, net
    
    
    6,341
    
    
    
    6,701
    
    
    
    9,117
    
    
    
    15,960For-sale residential costs
    
    
    (5,767
    )
    
    
    (6,353
    )
    
    
    (8,510
    )
    
    
    (13,370
    )Gains on for-sale residential sales,
before minority interest and income taxes
    
    
    574
    
    
    
    348
    
    
    
    607
    
    
    
    2,590Minority interest
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    224Provision for income taxes
    
    
    (186
    )
    
    
    (149
    )
    
    
    (154
    )
    
    
    (2,424
    )Gains on condominium
conversions,
for-sale
residential sales
and developments,
net of minority
interest and income
taxes
    
    $
    442
    
    
    $
    1,804
    
    
    $
    507
    
    
    $
    9,859
    Impairment
   16




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##### Table of Contents



Developments
   Note 7  Net Income Per Unit
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,(amounts in table in thousands)
    
    2008
    
    
    2007
    
    
    2007
    
    
    2006Numerator:Income from continuing operations
    
    $
    5,500
    
    
    $
    (16,221
    )
    
    $
    20,011
    
    
    $
    (12,310
    )Less: Distributions to general partner preferred unitholders
    
    
    (2,180
    )
    
    
    (3,870
    )
    
    
    (4,668
    )
    
    
    (8,361
    )Less: Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (3,639
    )
    
    
    (3,624
    )Less: Preferred unit issuance costs, net of discount
    
    
    (83
    )
    
    
    (330
    )
    
    
    (267
    )
    
    
    (330
    )Net income (loss) available to common unitholders
    
    $
    1,424
    
    
    $
    (22,234
    )
    
    $
    11,437
    
    
    $
    (24,625
    )Denominator:Denominator for basic net income per unit  weighted
average units
    
    
    56,876
    
    
    
    56,706
    
    
    
    56,872
    
    
    
    56,625Effect of dilutive securities:Trustee and employee stock options, treasury method
    
    
    168
    
    
    
    
    
    
    
    169
    
    
    
    Denominator for diluted net income per unit 
adjusted weighted average units
    
    
    57,044
    
    
    
    56,706
    
    
    
    57,041
    
    
    
    56,625
  Note 8  Segment Information
  17




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18




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##### Table of Contents





Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Segment Revenues:Multifamily
    
    $
    80,065
    
    
    $
    78,437
    
    
    $
    158,360
    
    
    $
    154,926Office
    
    
    14,873
    
    
    
    33,356
    
    
    
    29,481
    
    
    
    71,381Retail
    
    
    8,313
    
    
    
    24,204
    
    
    
    17,023
    
    
    
    49,504Total Segment Revenues
    
    
    103,251
    
    
    
    135,997
    
    
    
    204,864
    
    
    
    275,811Partially-owned unconsolidated entities  Mfam
    
    
    (2,131
    )
    
    
    (2,659
    )
    
    
    (4,347
    )
    
    
    (5,230
    )Partially-owned unconsolidated entities  Off
    
    
    (12,902
    )
    
    
    (8,346
    )
    
    
    (26,048
    )
    
    
    (16,172
    )Partially-owned unconsolidated entities  Rtl
    
    
    (4,747
    )
    
    
    (3,940
    )
    
    
    (10,083
    )
    
    
    (7,609
    )Construction revenues
    
    
    569
    
    
    
    8,068
    
    
    
    8,449
    
    
    
    20,853Unallocated corporate revenues
    
    
    5,151
    
    
    
    5,312
    
    
    
    10,449
    
    
    
    8,554Discontinued operations property revenues
    
    
    (9,829
    )
    
    
    (20,154
    )
    
    
    (19,853
    )
    
    
    (41,880
    )Total Consolidated Revenues
    
    
    79,362
    
    
    
    114,278
    
    
    
    163,431
    
    
    
    234,327NOI:Segment NOI:Multifamily
    
    
    49,147
    
    
    
    46,908
    
    
    
    96,412
    
    
    
    92,054Office
    
    
    9,438
    
    
    
    21,817
    
    
    
    18,676
    
    
    
    46,803Retail
    
    
    5,690
    
    
    
    16,645
    
    
    
    11,643
    
    
    
    34,503Total Segment NOI
    
    
    64,275
    
    
    
    85,370
    
    
    
    126,731
    
    
    
    173,360Partially-owned unconsolidated entities  Mfam
    
    
    (1,017
    )
    
    
    (1,295
    )
    
    
    (2,146
    )
    
    
    (2,361
    )Partially-owned unconsolidated entities  Off
    
    
    (8,139
    )
    
    
    (4,871
    )
    
    
    (16,428
    )
    
    
    (9,621
    )Partially-owned unconsolidated entities  Rtl
    
    
    (3,303
    )
    
    
    (2,676
    )
    
    
    (7,088
    )
    
    
    (5,203
    )Unallocated corporate revenues
    
    
    5,151
    
    
    
    5,312
    
    
    
    10,449
    
    
    
    8,554Discontinued operations property NOI
    
    
    (5,965
    )
    
    
    (12,328
    )
    
    
    (12,054
    )
    
    
    (25,267
    )Construction NOI
    
    
    5
    
    
    
    573
    
    
    
    619
    
    
    
    987Property management expenses
    
    
    (2,072
    )
    
    
    (3,598
    )
    
    
    (4,313
    )
    
    
    (7,085
    )General and administrative expenses
    
    
    (5,789
    )
    
    
    (8,040
    )
    
    
    (11,570
    )
    
    
    (14,018
    )Management fee and other expenses
    
    
    (4,346
    )
    
    
    (4,034
    )
    
    
    (8,031
    )
    
    
    (6,977
    )Restructuring charges
    
    
    
    
    
    
    (1,528
    )
    
    
    
    
    
    
    (1,528
    )Investment and development (1)
    
    
    (108
    )
    
    
    (315
    )
    
    
    (877
    )
    
    
    (454
    )Depreciation
    
    
    (23,038
    )
    
    
    (28,941
    )
    
    
    (44,956
    )
    
    
    (60,105
    )Amortization
    
    
    (972
    )
    
    
    (3,182
    )
    
    
    (1,743
    )
    
    
    (8,907
    )Income from operations
    
    
    14,682
    
    
    
    20,447
    
    
    
    28,593
    
    
    
    41,375Total other income (expense), net (2)
    
    
    (9,182
    )
    
    
    (36,668
    )
    
    
    (8,582
    )
    
    
    (53,685
    )Income (loss) from continuing operations
    
    $
    5,500
    
    
    $
    (16,221
    )
    
    $
    20,011
    
    
    $
    (12,310
    )
 June 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007AssetsSegment AssetsMultifamily
    
    $
    2,467,689
    
    
    $
    2,449,558Office
    
    
    126,458
    
    
    
    82,630Retail
    
    
    256,894
    
    
    
    149,933For-Sale Residential (3)
    
    
    144,192
    
    
    
    211,729Total Segment Assets
    
    
    2,995,233
    
    
    
    2,893,850Unallocated corporate assets (4)
    
    
    289,604
    
    
    
    335,787$
    3,284,837
    
    
    $
    3,229,637
 
 (1)
    
    Reflects costs incurred related to abandoned pursuits. Abandoned pursuits are volatile
and, therefore, may vary between periods.(2)
    
    For-sale residential activities including net gain on sales and income tax expense
(benefit) are included in other income (See table below for additional details on for-sale
residential activities and also Note 6 related to for-sale activities).(3)
    
    Two projects, formerly for-sale residential developments, are now being developed / leased
as multifamily apartment communities.(4)
    
    Includes CRLPs investment in partially-owned entities of $49,203 as of June 30, 2008 and
$69,682 as of December 31, 2007, and notes receivable of $61,879 as of June 30, 2008 and
$30,756 as of December 31, 2007. 19




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##### Table of Contents



For-Sale Residential
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Gains on for-sale residential sales
    
    $
    574
    
    
    $
    348
    
    
    $
    607
    
    
    $
    2,590Income tax expense
    
    
    (186
    )
    
    
    (85
    )
    
    
    (168
    )
    
    
    (920
    )Income from for-sale residential sales
    
    $
    388
    
    
    $
    263
    
    
    $
    439
    
    
    $
    1,670
 Note 9  Investment in Partially-Owned Entities
  20




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##### Table of Contents



(in thousands)Percent
    
    
    June 30,
    
    
    December 31,Owned
    
    
    2008
    
    
    2007Multifamily:Arbors at Windsor Lake, Columbia, SC
    
    
    10.00
    %(1)
    
    $
    
    
    
    $
    569Auberry at Twin Creeks, Dallas, TX
    
    
    15.00
    %(2)
    
    
    
    
    
    
    702Belterra, Ft. Worth, TX
    
    
    10.00
    %
    
    
    669
    
    
    
    708Carter Regents Park, Atlanta, GA
    
    
    40.00
    %(3)
    
    
    5,150
    
    
    
    5,282CG at Huntcliff, Atlanta, GA
    
    
    20.00
    %
    
    
    2,010
    
    
    
    2,138CG at McKinney, Dallas, TX (Development)
    
    
    25.00
    %
    
    
    1,274
    
    
    
    1,003CG at Research Park, Raleigh, NC
    
    
    20.00
    %
    
    
    1,117
    
    
    
    1,197CG at Traditions, Gulf Shores, AL
    
    
    35.00
    %
    
    
    1,543
    
    
    
    1,591CMS / Colonial Joint Venture I
    
    
    15.00
    %
    
    
    418
    
    
    
    435CMS / Colonial Joint Venture II
    
    
    15.00
    %(4)
    
    
    (427
    )
    
    
    (419
    )CMS Florida
    
    
    25.00
    %
    
    
    (448
    )
    
    
    (338
    )CMS Tennessee
    
    
    25.00
    %
    
    
    239
    
    
    
    258CMS V / CG at Canyon Creek, Austin, TX
    
    
    25.00
    %
    
    
    771
    
    
    
    1,226CV at Matthews, Charlotte, NC
    
    
    25.00
    %(5)
    
    
    
    
    
    
    1,004DRA Alabama
    
    
    10.00
    %
    
    
    2,248
    
    
    
    2,260DRA CV at Cary, Raleigh, NC
    
    
    20.00
    %
    
    
    1,773
    
    
    
    2,026DRA Cunningham, Austin, TX
    
    
    20.00
    %
    
    
    930
    
    
    
    969DRA The Grove at Riverchase, Birmingham, AL
    
    
    20.00
    %
    
    
    1,389
    
    
    
    1,409Fairmont at Fossil Creek, Fort Worth, TX
    
    
    15.00
    %(6)
    
    
    
    
    
    
    567Park Crossing, Fairfield, CA
    
    
    10.00
    %(7)
    
    
    
    
    
    
    797Stone Ridge, Columbia, SC
    
    
    10.00
    %(8)
    
    
    454
    
    
    
    451Total Multifamily
    
    
    
    
    
    
    19,110
    
    
    
    23,835Office:600 Building Partnership, Birmingham, AL
    
    
    33.33
    %
    
    
    103
    
    
    
    76Colonial Center Mansell JV
    
    
    15.00
    %
    
    
    1,049
    
    
    
    1,377DRA / CRT JV
    
    
    15.00
    %(9)
    
    
    19,445
    
    
    
    23,365DRA / CLP JV
    
    
    15.00
    %(10)
    
    
    (9,038
    )
    
    
    (6,603
    )Huntsville TIC, Huntsville , AL
    
    
    13.80
    %(11)
    
    
    (3,587
    )
    
    
    7,922Total Office
    
    
    
    
    
    
    7,972
    
    
    
    26,137Retail:Colonial Promenade Madison, Huntsville, AL
    
    
    25.00
    %
    
    
    2,234
    
    
    
    2,258Colonial Promenade Smyrna, Smyrna, TN (Development)
    
    
    50.00
    %
    
    
    2,148
    
    
    
    2,297GPT / Colonial Retail JV
    
    
    10.00
    %(12)
    
    
    
    
    
    
    (5,021
    )Highway 150, LLC, Birmingham, AL
    
    
    10.00
    %
    
    
    64
    
    
    
    64OZRE JV
    
    
    17.10
    %(13)
    
    
    (7,094
    )
    
    
    (6,204
    )Parkway Place Limited Partnership, Huntsville, AL
    
    
    45.00
    %
    
    
    10,218
    
    
    
    10,342Colonial Promenade Craft Farms, Gulf Shores, AL
    
    
    15.00
    %
    
    
    990
    
    
    
    1,300Parkside Drive LLC I, Knoxville, TN
    
    
    50.00
    %
    
    
    5,421
    
    
    
    6,898Parkside Drive LLC II, Knoxville, TN (Development)
    
    
    50.00
    %
    
    
    6,431
    
    
    
    6,270Colonial Promenade Alabaster II/Tutwiler II, Birmingham, AL
    
    
    5.00
    %
    
    
    (134
    )
    
    
    (107
    )20,278
    
    
    
    18,097Other:Heathrow, Orlando, FL
    
    
    50.00
    %
    
    
    1,809
    
    
    
    1,585Colonial /
Polar-BEK Management Company, Birmingham, AL
    
    
    50.00
    %
    
    
    34
    
    
    
    281,843
    
    
    
    1,613$
    49,203
    
    
    $
    69,682
 
 Footnotes on following page 21




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##### Table of Contents



(1)
    
    CRLP sold its 10% interest in Arbors at Windsor Lake during January 2008.(2)
    
    CRLP sold its 15% interest in Auberry at Twin Creeks during January 2008.(3)
    
    Carter at Regents Park includes a $1.2 million non-cash impairment charge that was
recorded during the three months ended September 30, 2007. CRLP also has a first mortgage
on this property of $28.9 million at June 30, 2008 (see Note 3).(4)
    
    The CMS/Colonial Joint Venture II holds one property in which CRLP has a 15%
partnership interest.(5)
    
    CRLP acquired the remaining 75% interest in Colonial Village at Matthews during January
2008 (see Note 5).(6)
    
    CRLP sold its 15% interest in Fairmont at Fossil Creek during January 2008.(7)
    
    CRLP sold its 10% interest in Park Crossing during February 2008.(8)
    
    CRLP sold its 10% interest in Stone Ridge during June 2008. Final distribution from
the sale of this asset is expected in the third quarter of 2008.(9)
    
    As of June 30, 2008, this joint venture included 17 properties located in Ft.
Lauderdale, Jacksonville and Orlando, Florida; Atlanta, Georgia; Charlotte, North Carolina;
Memphis, Tennessee and Houston, Texas. CRLP sold its 15% interest in Decoverly, located in
Rockville, Maryland, during May 2008.(10)
    
    As of June 30, 2008, this joint venture included 16 office properties and 2 retail
properties located in Birmingham, Alabama; Orlando and Tampa, Florida; Atlanta, Georgia;
Charlotte, North Carolina and Austin, Texas. Amount includes the value of CRLPs investment
of approximately $26.0 million, offset by the excess basis difference on the June 2007
joint venture transaction (see Note 2) of approximately $35.1 million, which is being
amortized over the life of the properties.(11)
    
    Amount includes CRLPs investment of approximately $5.3 million, offset by the excess
basis difference on the transaction of approximately $8.9 million, which is being amortized
over the life of the properties.(12)
    
    CRLP sold its 10% interest in GPT/ Colonial Retail JV during February 2008.(13)
    
    As of June 30, 2008, this joint venture included 11 retail properties located in
Birmingham, Alabama; Jacksonville, Orlando, Punta Gorda and Tampa, Florida; Athens, Georgia
and Houston, Texas. Amount includes the value of CRLPs investment of approximately $9.9
million, offset by the excess basis difference on the June 2007 joint venture transaction
(see Note 2) of approximately $17.0 million, which is being amortized over the life of the
properties.     Total Assets
    
    
    Total Debt
    
    
    Total Equity2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007DRA/CRT
    
    $
    1,177,949
    
    
    $
    1,248,807
    
    
    $
    968,114
    
    
    $
    993,264
    
    
    $
    174,142
    
    
    $
    202,162DRA/CLP
    
    
    930,781
    
    
    
    973,861
    
    
    
    741,907
    
    
    
    741,907
    
    
    
    172,864
    
    
    
    194,210OZRE
    
    
    355,334
    
    
    
    362,734
    
    
    
    293,139
    
    
    
    284,000
    
    
    
    57,814
    
    
    
    74,012GPT (1)
    
    
    
    
    
    
    374,498
    
    
    
    
    
    
    
    322,776
    
    
    
    
    
    
    
    43,982Huntsville TIC (2)
    
    
    228,591
    
    
    
    160,478
    
    
    
    107,540
    
    
    
    107,540
    
    
    
    40,571
    
    
    
    49,980$
    2,692,655
    
    
    $
    3,120,378
    
    
    $
    2,110,700
    
    
    $
    2,449,487
    
    
    $
    445,391
    
    
    $
    564,346
 
 (1)
    
    CRLP sold its interest in this joint venture in February 2008.(2)
    
    During 2008, CRLP has reduced its interest in this joint venture from 40.0% to 13.8% as
part of the overall plan to reduce CRLPs interest down to 10%. 22




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##### Table of Contents



Total Revenues
    
    
    Net Income
    
    
    Share of Net Income2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007DRA/CRT
    
    $
    43,363
    
    
    $
    45,085
    
    
    $
    (3,705
    )
    
    $
    (8,767
    )
    
    $
    173
    
    
    $
    (1,226
    )DRA/CLP
    
    
    29,254
    
    
    
    6,594
    
    
    
    (4,505
    )
    
    
    (57
    )
    
    
    (103
    )
    
    
    83OZRE
    
    
    8,706
    
    
    
    1,165
    
    
    
    (3,590
    )
    
    
    192
    
    
    
    (314
    )
    
    
    49GPT (1)
    
    
    
    
    
    
    11,855
    
    
    
    
    
    
    
    (2,983
    )
    
    
    
    
    
    
    (199
    )Huntsville TIC (2)
    
    
    6,166
    
    
    
    
    
    
    
    (5,148
    )
    
    
    
    
    
    
    3,021
    
    
    
    $
    87,489
    
    
    $
    64,699
    
    
    $
    (16,948
    )
    
    $
    (11,615
    )
    
    $
    2,777
    
    
    $
    (1,293
    )
 
 (1)
    
    CRLP sold its interest in this joint venture in February 2008 and recognized a gain of
approximately $12.2 million.(2)
    
    CRLP sold a portion of its interest in this joint venture in a series of five
transactions during the second quarter of 2008 and recognized a gain of approximately $4.0
million.  Total Revenues
    
    
    Net Income
    
    
    Share of Net Income2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007DRA/CRT
    
    $
    85,857
    
    
    $
    92,823
    
    
    $
    (8,373
    )
    
    $
    (16,539
    )
    
    $
    (358
    )
    
    $
    (2,076
    )DRA/CLP
    
    
    57,651
    
    
    
    6,594
    
    
    
    (8,865
    )
    
    
    (57
    )
    
    
    (199
    )
    
    
    83OZRE
    
    
    17,289
    
    
    
    1,165
    
    
    
    (6,083
    )
    
    
    192
    
    
    
    (351
    )
    
    
    49GPT (1)
    
    
    8,191
    
    
    
    23,759
    
    
    
    (1,752
    )
    
    
    (5,607
    )
    
    
    11,977
    
    
    
    (336
    )Huntsville TIC (2)
    
    
    11,929
    
    
    
    
    
    
    
    (7,766
    )
    
    
    
    
    
    
    2,229
    
    
    
    $
    180,917
    
    
    $
    124,341
    
    
    $
    (32,839
    )
    
    $
    (22,011
    )
    
    $
    13,298
    
    
    $
    (2,280
    )
 
 (1)
    
    CRLP sold its interest in this joint venture in February 2008 and recognized a gain of
approximately $12.2 million.(2)
    
    CRLP sold a portion of its interest in this joint venture in a series of eight
transactions during 2008 and recognized a gain of approximately $4.0 million. Note 10  Financing Activities
    23




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##### Table of Contents



Note 11  Derivatives and Hedging
    Note 12 Contingencies
  24




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##### Table of Contents




    
    In connection with the dispute, in January 2008, the contractor filed a lawsuit
against CRLP alleging, among other things, breach of contract, enforcement of a lien
against real property, misrepresentation, conversion, declaratory judgment and an
accounting of costs, and is seeking $10.3 million in damages, plus consequential and
punitive damages.
 
    
    Certain of the subcontractors, vendors and other parties, involved in the
projects, including purchasers of units, have also made claims in the form of lien
claims, general claims or lawsuits. CRLP has been sued by purchasers of certain
condominium units alleging breach of contract, fraud, construction deficiencies and
misleading sales practices. Both compensatory and punitive damages are sought in
these actions. Some of these claims may be resolved by mediation or arbitration.
       Note 13  Subsequent Events
 Financing Activities
  Distribution
  25




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
  26




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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, and our ability to
reinvest sales proceeds in a manner that generates favorable terms;
 
    
    increased exposure, as a multifamily focused real estate investment trust
(REIT), to risks inherent in investments in a single industry;
 
    
    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;
 
    
    risks of development or conversion of for-sale projects including, but not
limited to, delays in obtaining required governmental permits and authorizations,
cost overruns, and operating deficits;
 
    
    uncertainties associated with the condominium and for-sale residential business,
including the timing and volume of sales;
 
    
    uncertainties associated with the timing and amount of real estate dispositions
and the resulting gains/losses associated with such dispositions;
 
    
    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 REIT for federal income
tax purposes, our ability to maintain our status as a partnership for federal income
tax purposes, the ability of certain of our subsidiaries to maintain their status as
taxable REIT subsidiaries for federal income tax purposes, and our ability and the
ability of our subsidiaries to operate effectively within the limitations imposed by
these rules;
 
    
    effect of any rating agency actions on the cost and availability of new debt
financing;
 
    
    level and volatility of interest rates or capital market conditions;
 
    
    effect of any terrorist activity or other heightened geopolitical crisis;
 
    
    other factors affecting the real estate industry generally; and
 
    
    other risks identified in our 2007 Annual Report on Form 10-K and, from time to
time, in other reports we file with the Securities and Exchange Commission (the
SEC) or in other documents that we publicly disseminate.
 27




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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 the Company or the Trust includes Colonial
Properties Trust, an Alabama real estate investment trust, and one or more of its subsidiaries and
other affiliates, including CRLP, Colonial Properties Services Limited Partnership, Colonial
Properties Services, Inc. and CLNL Acquisition Sub, LLC or, as the context may require, Colonial
Properties Trust only or Colonial Realty Limited Partnership only.
     28




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##### Table of Contents



Business Strategy
       Executive Summary of Results of Operations
  29




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##### Table of Contents




    
    We sold five wholly-owned multifamily apartment communities and one partially-owned
apartment community for an aggregate sales price of $82.6 million and gross proceeds of
$54.8 million;
    
    We sold one partially-owned office asset for gross proceeds of $1.6 million;
    
    We completed the development of one multifamily property consisting of 85 apartment
homes;
    
    The multifamily portfolio experienced modest growth during the second quarter of 2008
compared to the second quarter of 2007 as a result of current economic conditions.
Results were driven by growth in Dallas/Fort Worth, Texas; Raleigh, North Carolina and
Atlanta, Georgia;
    
    Operating revenues and expenses associated with our office and retail assets decreased primarily due to:
 
    
    the office and retail joint venture transactions that were consummated during June 2007; and
    
    the outright sale of 16 retail assets during 2007;
 
    
    We repurchased $31.8 million of unsecured senior notes in separate transactions at an
average discount of 10% to par value;
 
    
    The Trust repurchased 577,000 of its outstanding 8 1/8%
Series D Preferred depositary shares for an aggregate purchase price of $14.0 million at a 3% discount;
 
    
    We recognized net gains from repurchases of unsecured senior notes and Series D
preferred depositary shares of $2.6 million; and
 
    
    We recognized an $8.8 million reduction in interest expense.
  
    
    We sold five wholly-owned multifamily apartment communities and five partially-owned
multifamily apartment communities for an aggregate sales price of $93.8 million and gross
proceeds of $66.0 million;
 
    
    We sold one wholly-owned office asset and one partially-owned office asset for gross
proceeds of $4.7 million;
 
    
    We completed the development of five multifamily properties consisting of 909 apartment
homes;
 
    
    The multifamily portfolio experienced modest growth during the first six months of
2008 compared to the first six months of 2007 as a result of current economic
conditions. Results were driven by growth in Austin and Dallas/Fort Worth, Texas;
Raleigh, North Carolina; Richmond, Virginia; and Huntsville and Birmingham, Alabama;
 
    
    Operating revenues and expenses associated with our office and retail assets decreased primarily due to:
 
    
    the office and retail joint venture transactions that were consummated during June 2007; and
    
    the outright sale of 16 retail assets during 2007;
 
    
    We repurchased $81.8 million of unsecured senior notes in separate transactions at an
average of discount of 11% to par value;
 
    
    The Trust repurchased 883,750 of our outstanding 8 1/8%
Series D Preferred depositary shares for an aggregate purchase price of $21.6 million at a 2% discount;
 
    
    We recognized net gains from repurchases of unsecured senior notes and Series D
preferred depositary shares of $7.9 million; and
 
    
    We recognized a $17.3 million reduction in interest expense.
 30




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##### Table of Contents



Operating Results Summary
  (amounts in thousands)Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    Variance
    
    
    2008
    
    
    2007
    
    
    VarianceRevenues:Minimum rent
    
    $
    63,974
    
    
    $
    87,826
    
    
    $
    (23,852
    )
    
    $
    126,545
    
    
    $
    179,180
    
    
    $
    (52,635
    )Tenant recoveries
    
    
    1,374
    
    
    
    4,431
    
    
    
    (3,057
    )
    
    
    2,241
    
    
    
    9,664
    
    
    
    (7,423
    )Other property related revenue
    
    
    8,294
    
    
    
    8,641
    
    
    
    (347
    )
    
    
    15,747
    
    
    
    16,076
    
    
    
    (329
    )Construction revenues
    
    
    569
    
    
    
    8,068
    
    
    
    (7,499
    )
    
    
    8,449
    
    
    
    20,853
    
    
    
    (12,404
    )Other non-property related revenues
    
    
    5,151
    
    
    
    5,312
    
    
    
    (161
    )
    
    
    10,449
    
    
    
    8,554
    
    
    
    1,895Total revenue
    
    
    79,362
    
    
    
    114,278
    
    
    
    (34,916
    )
    
    
    163,431
    
    
    
    234,327
    
    
    
    (70,896
    )Expenses:Property operating expenses
    
    
    18,688
    
    
    
    24,839
    
    
    
    (6,151
    )
    
    
    37,048
    
    
    
    49,549
    
    
    
    (12,501
    )Taxes, licenses and insurance
    
    
    9,103
    
    
    
    11,859
    
    
    
    (2,756
    )
    
    
    18,470
    
    
    
    24,463
    
    
    
    (5,993
    )Construction expenses
    
    
    564
    
    
    
    7,495
    
    
    
    (6,931
    )
    
    
    7,830
    
    
    
    19,866
    
    
    
    (12,036
    )Property management expenses
    
    
    2,072
    
    
    
    3,598
    
    
    
    (1,526
    )
    
    
    4,313
    
    
    
    7,085
    
    
    
    (2,772
    )General and administrative expenses
    
    
    5,789
    
    
    
    8,040
    
    
    
    (2,251
    )
    
    
    11,570
    
    
    
    14,018
    
    
    
    (2,448
    )Management fee and other expense
    
    
    4,346
    
    
    
    4,034
    
    
    
    312
    
    
    
    8,031
    
    
    
    6,977
    
    
    
    1,054Restructuring charges
    
    
    
    
    
    
    1,528
    
    
    
    (1,528
    )
    
    
    
    
    
    
    1,528
    
    
    
    (1,528
    )Investment and development
    
    
    108
    
    
    
    315
    
    
    
    (207
    )
    
    
    877
    
    
    
    454
    
    
    
    423Depreciation & amortization
    
    
    24,010
    
    
    
    32,123
    
    
    
    (8,113
    )
    
    
    46,699
    
    
    
    69,012
    
    
    
    (22,313
    )Total operating expenses
    
    
    64,680
    
    
    
    93,831
    
    
    
    (29,151
    )
    
    
    134,838
    
    
    
    192,952
    
    
    
    (58,114
    )Income from operations
    
    
    14,682
    
    
    
    20,447
    
    
    
    (5,765
    )
    
    
    28,593
    
    
    
    41,375
    
    
    
    (12,782
    )Other income (expense):Interest expense and debt cost amortization
    
    
    (18,280
    )
    
    
    (27,073
    )
    
    
    8,793
    
    
    
    (36,947
    )
    
    
    (54,205
    )
    
    
    17,258Gains (losses) on retirement of debt
    
    
    2,730
    
    
    
    (9,370
    )
    
    
    12,100
    
    
    
    8,201
    
    
    
    (9,433
    )
    
    
    17,634Interest income
    
    
    1,184
    
    
    
    1,324
    
    
    
    (140
    )
    
    
    1,976
    
    
    
    3,455
    
    
    
    (1,479
    )Income from partially-owned unconsolidated entities
    
    
    2,037
    
    
    
    (2,090
    )
    
    
    4,127
    
    
    
    12,307
    
    
    
    4,723
    
    
    
    7,584Gains from sales of property, net of income taxes
    
    
    3,334
    
    
    
    11,426
    
    
    
    (8,092
    )
    
    
    5,277
    
    
    
    12,750
    
    
    
    (7,473
    )Transaction costs
    
    
    
    
    
    
    (11,026
    )
    
    
    11,026
    
    
    
    
    
    
    
    (11,026
    )
    
    
    11,026Minority interest of limited partners
    
    
    5
    
    
    
    82
    
    
    
    (77
    )
    
    
    9
    
    
    
    225
    
    
    
    (216
    )Income taxes and other
    
    
    (192
    )
    
    
    59
    
    
    
    (251
    )
    
    
    595
    
    
    
    (174
    )
    
    
    769Total other income (expense)
    
    
    (9,182
    )
    
    
    (36,668
    )
    
    
    27,486
    
    
    
    (8,582
    )
    
    
    (53,685
    )
    
    
    45,103Income from continuing operations
    
    
    5,500
    
    
    
    (16,221
    )
    
    
    21,721
    
    
    
    20,011
    
    
    
    (12,310
    )
    
    
    32,321Income from discontinued operations
    
    
    9,552
    
    
    
    40,804
    
    
    
    (31,252
    )
    
    
    16,782
    
    
    
    82,330
    
    
    
    (65,548
    )Net income
    
    
    15,052
    
    
    
    24,583
    
    
    
    (9,531
    )
    
    
    36,793
    
    
    
    70,020
    
    
    
    (33,227
    )Distributions to general partner
preferred unitholders
    
    
    (2,180
    )
    
    
    (3,870
    )
    
    
    1,690
    
    
    
    (4,668
    )
    
    
    (8,361
    )
    
    
    3,693Distributions to limited partner
preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    -0-
    
    
    
    (3,639
    )
    
    
    (3,624
    )
    
    
    (15
    )Preferred
unit issuance costs write-off, net of discount
    
    
    (83
    )
    
    
    (330
    )
    
    
    247
    
    
    
    (267
    )
    
    
    (330
    )
    
    
    63Net
income available to common unitholders
    
    $
    10,976
    
    
    $
    18,570
    
    
    $
    7,594
    
    
    $
    28,219
    
    
    $
    57,705
    
    
    $
    29,486
 Results of Operations  Three Months Ended June 30, 2008 and 2007
 Minimum rent
  31




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##### Table of Contents



Tenant recoveries
  Other property related revenue
  Construction activities
  Other non-property related revenues
  Property operating expenses
  Taxes, licenses and insurance expenses
  Property management expenses
  General and administrative expenses
  32




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##### Table of Contents



Management fee and other expenses
  Restructuring charges
  Investment and development expenses
  Depreciation and amortization expenses
  Interest expense and debt cost amortization
  Gains (losses) on retirement of debt
  Income from partially-owned unconsolidated entities
  Gains from sales of property
  Transaction costs
  33




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##### Table of Contents



Income from discontinued operations
  Distributions to general partner preferred unitholders
  Results of Operations  Six Months Ended June 30, 2008 and 2007
 Minimum rent
  Tenant recoveries
  Other property related revenue
  Construction activities
  Other non-property related revenues
  34




---



##### Table of Contents



Property operating expenses
  Taxes, licenses and insurance expenses
  Property management expenses
  General and administrative expenses
  Management fee and other expenses
  Restructuring charges
  Investment and development expenses
  Depreciation and amortization expenses
  35




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##### Table of Contents



Interest expense and debt cost amortization
  Gains (losses) on retirement of debt
  Income from partially-owned unconsolidated entities
  Gains from sales of property
  Transaction costs
  Income from discontinued operations
  Distributions to general partner preferred unitholders
  36




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##### Table of Contents



Liquidity and Capital Resources
 Overview
    Strategic Initiative
  Credit Ratings
  Rating Agency
    
    Rating
    
    Last updateStandard & Poors
    
    BBB-      (1)
    
    January 18, 2008Moodys
    
    Baa3      (2)
    
    September 27, 2007Fitch
    
    BBB-      (1)
    
    April 1, 2008
 
 (1)
    
    Ratings outlook is stable.(2)
    
    Ratings outlook is negative.   Short-Term Liquidity Needs
  37




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##### Table of Contents



Long-Term Liquidity Needs
  38




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##### Table of Contents



Unsecured Revolving Credit Facility
     39




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##### Table of Contents



Investing Activities
     40




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##### Table of Contents



Distributions
  Contingencies
  
    
    In connection with the dispute, in January 2008, the contractor filed a lawsuit
against us alleging, among other things, breach of contract, enforcement of a lien
against real property, misrepresentation, conversion, declaratory judgment and an
accounting of costs, and is seeking $10.3 million in damages, plus consequential and
punitive damages.
    
    Certain of the subcontractors, vendors and other parties, involved in the
projects, including purchasers of units, have also made claims in the form of lien
claims, general claims or lawsuits. We have been sued by purchasers of certain
condominium units alleging breach of contract, fraud, construction deficiencies and
misleading sales practices. Both compensatory and punitive damages are sought in
these actions. Some of these claims may be resolved by mediation or arbitration.
    41




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##### Table of Contents



Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  Investment and Development
  Assets and Liabilities Measured at Fair Value
 Fair Value
Measurements
   42




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##### Table of Contents



Derivatives and Hedging
    Inflation
   
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4.
    
    Controls and Procedures
  43




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 6.
    
    Exhibits
  44




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##### Table of Contents



SIGNATURES
  COLONIAL REALTY LIMITED
PARTNERSHIP,
A Delaware limited partnershipBy:

Colonial Properties Trust,Its General PartnerDate: August 8, 2008
    By:

/s/ Weston M. AndressWeston M. AndressPresident and Chief Financial OfficerDate: August 8, 2008
    By:

/s/ John E. TomlinsonJohn E. TomlinsonExecutive Vice President &
Chief Accounting Officer
(Principal Accounting Officer) 45




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##### Table of Contents



Index of Exhibits
 12.1
    
    
    Ratio of Earnings to Fixed Charges
    
    Filed herewith
    
    Page 4715.1
    
    
    Letter re: Unaudited Interim Financial Information
    
    Filed herewith
    
    Page 4831.1
    
    
    CEO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 4931.2
    
    
    CFO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 5032.1
    
    
    CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 5132.2
    
    
    CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 52
 46