##### 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, 2006
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 0-20707
 COLONIAL REALTY LIMITED PARTNERSHIP
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction
of incorporation)
    
    63-1098468(IRS Employer
Identification Number)
 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35203  Address of principal executive offices) (Zip Code)
 (205) 250-8700
 Not applicable  (Former name or former address, if changed since last report)
  þ o
  Large Accelerated Filer  þ
    
    Accelerated Filer  o
    
    Non-Accelerated Filer o
  o þ




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##### 



COLONIAL REALTY LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
 PagePART I: FINANCIAL INFORMATIONItem 1. Consolidated Condensed Financial Statements (Unaudited)Consolidated Condensed Balance Sheets as of June 30, 2006 and December 31, 2005
    
    
    3Consolidated Condensed Statements of Income and Comprehensive
Income for the Three and Six Months ended June 30, 2006 and 2005
    
    
    4Consolidated Condensed Statements of Cash Flows for the Six Months ended June 30, 2006 and 2005
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Report of Independent Registered Public Accounting Firm *
    
    
    20Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31PART II: OTHER INFORMATIONItem 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32Item 6. Exhibits
    
    
    33SIGNATURES
    
    
    34INDEX OF EXHIBITS
    
    
    35EX-12.1 RATIO OF EARNINGS TO FIXED CHARGESEX-15.1 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATIONEX-31.1 CEO CERTIFICATION PURSUANT TO SECTION 302EX-31.2 CFO CERTIFICATION PURSUANT TO SECTION 302EX-32.1 CEO CERTIFICATION PURSUANT TO SECTION 906EX-32.2 CFO CERTIFICATION PURSUANT TO SECTION 906
  Review by Independent Registered Public Accounting Firm *




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##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED CONDENSED BALANCE SHEETS
 (in thousands, except unit data)
 (Unaudited)June 30, 2006
    
    
    December 31, 2005ASSETSLand, buildings, & equipment
    
    $
    3,747,686
    
    
    $
    3,974,907Undeveloped land and construction in progress
    
    
    338,598
    
    
    
    202,052Less: Accumulated depreciation
    
    
    (427,145
    )
    
    
    (453,352
    )Real estate assets held for sale, net
    
    
    254,039
    
    
    
    367,372Net real estate assets
    
    
    3,913,178
    
    
    
    4,090,979Cash and equivalents
    
    
    29,393
    
    
    
    30,615Restricted cash
    
    
    16,695
    
    
    
    8,142Accounts receivable, net
    
    
    22,501
    
    
    
    25,767Notes receivable
    
    
    55,324
    
    
    
    36,387Prepaid expenses
    
    
    18,973
    
    
    
    19,546Deferred debt and lease costs
    
    
    42,499
    
    
    
    50,436Investment in partially owned entities
    
    
    140,321
    
    
    
    123,700Other assets
    
    
    97,562
    
    
    
    113,655$
    4,336,446
    
    
    $
    4,499,227LIABILITIES AND PARTNERS EQUITYNotes and mortgages payable
    
    $
    2,044,625
    
    
    $
    2,274,620Unsecured credit facility
    
    
    323,531
    
    
    
    210,228Mortgages payable related to real estate assets held for sale
    
    
    61,268
    
    
    
    9,502Total long-term liabilities
    
    
    2,429,424
    
    
    
    2,494,350Accounts payable
    
    
    35,582
    
    
    
    74,455Accrued interest
    
    
    29,180
    
    
    
    29,063Accrued expenses
    
    
    34,561
    
    
    
    17,603Tenant deposits
    
    
    6,448
    
    
    
    7,251Unearned rent
    
    
    2,513
    
    
    
    9,722Other liabilities
    
    
    13,483
    
    
    
    736Total liabilities
    
    
    2,551,191
    
    
    
    2,633,180Redeemable units, at redemption value  10,579,261 units outstanding
at June 30, 2006 and 10,872,568 at December 31, 2005
    
    
    522,615
    
    
    
    456,430Limited partners minority interest in consolidated partnership
    
    
    7,419
    
    
    
    8,093General partner Common equity  45,912,153 and 45,014,823 units outstanding at
June 30, 2006 and December 31, 2005, respectively
    
    
    922,483
    
    
    
    1,003,583Preferred equity ($229,760 liquidation preference)
    
    
    225,009
    
    
    
    301,450Limited partners preferred equity ($100,000 liquidation preference)
    
    
    97,406
    
    
    
    97,406Accumulated other comprehensive income (loss)
    
    
    10,323
    
    
    
    (915
    )Total general partners equity
    
    
    1,255,221
    
    
    
    1,401,524$
    4,336,446
    
    
    $
    4,499,227
  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 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue:Minimum rent
    
    $
    106,462
    
    
    $
    102,905
    
    
    $
    212,381
    
    
    $
    169,624Percentage rent
    
    
    322
    
    
    
    434
    
    
    
    736
    
    
    
    1,094Tenant recoveries
    
    
    7,308
    
    
    
    8,932
    
    
    
    15,161
    
    
    
    17,899Construction revenues
    
    
    7,785
    
    
    
    
    
    
    
    19,925
    
    
    
    Other property related revenue
    
    
    9,162
    
    
    
    7,180
    
    
    
    16,448
    
    
    
    10,912Other non-property related revenue
    
    
    4,592
    
    
    
    2,361
    
    
    
    8,700
    
    
    
    3,346Total revenue
    
    
    135,631
    
    
    
    121,812
    
    
    
    273,351
    
    
    
    202,875Operating Expenses:Property operating expenses:General operating expenses
    
    
    10,619
    
    
    
    9,487
    
    
    
    21,241
    
    
    
    15,121Salaries and benefits
    
    
    8,241
    
    
    
    7,422
    
    
    
    16,322
    
    
    
    11,069Repairs and maintenance
    
    
    10,533
    
    
    
    11,101
    
    
    
    20,175
    
    
    
    18,800Taxes, licenses, and insurance
    
    
    13,864
    
    
    
    13,214
    
    
    
    28,003
    
    
    
    21,846General and administrative
    
    
    10,767
    
    
    
    9,707
    
    
    
    22,281
    
    
    
    16,968Construction expenses
    
    
    7,657
    
    
    
    
    
    
    
    19,026
    
    
    
    Depreciation
    
    
    35,517
    
    
    
    30,841
    
    
    
    73,055
    
    
    
    52,725Amortization
    
    
    3,706
    
    
    
    22,316
    
    
    
    11,440
    
    
    
    25,609Total operating expenses
    
    
    100,904
    
    
    
    104,088
    
    
    
    211,543
    
    
    
    162,138Income from operations
    
    
    34,727
    
    
    
    17,724
    
    
    
    61,808
    
    
    
    40,737Other income (expense):Interest expense and debt cost amortization
    
    
    (31,888
    )
    
    
    (35,068
    )
    
    
    (64,742
    )
    
    
    (58,998
    )Loss on retirement of debt
    
    
    
    
    
    
    
    
    
    
    (791
    )
    
    
    Interest income
    
    
    2,411
    
    
    
    772
    
    
    
    3,947
    
    
    
    982Income (loss) from partially owned entities
    
    
    (2,477
    )
    
    
    183
    
    
    
    (3,139
    )
    
    
    1,008Gain on hedging activities
    
    
    87
    
    
    
    143
    
    
    
    2,551
    
    
    
    422Gains from sales of property, net of income taxes of $808 (QTR) and
$1,320 (YTD) in 2006 and $275 (QTR) and $401 (YTD) in 2005
    
    
    30,770
    
    
    
    1,183
    
    
    
    38,104
    
    
    
    2,082Minority interest of limited partners
    
    
    235
    
    
    
    20
    
    
    
    116
    
    
    
    16Income taxes
    
    
    (350
    )
    
    
    (352
    )
    
    
    (1,146
    )
    
    
    (436
    )Total other income (expense)
    
    
    (1,212
    )
    
    
    (33,119
    )
    
    
    (25,100
    )
    
    
    (54,924
    )Income (loss) from continuing operations
    
    
    33,515
    
    
    
    (15,395
    )
    
    
    36,708
    
    
    
    (14,187
    )Income from discontinued operations
    
    
    3,345
    
    
    
    6,791
    
    
    
    6,589
    
    
    
    15,874Gain on disposal of discontinued operations, net of taxes of $3,321 (QTR)
and $4,590 (YTD) in 2006 and $0 in 2005
    
    
    9,485
    
    
    
    26,893
    
    
    
    18,923
    
    
    
    118,210Minority interest of limited partners
    
    
    (1,734
    )
    
    
    (267
    )
    
    
    (2,714
    )
    
    
    (492
    )Income (loss) from discontinued operations
    
    
    11,096
    
    
    
    33,417
    
    
    
    22,798
    
    
    
    133,592Net income
    
    
    44,611
    
    
    
    18,022
    
    
    
    59,506
    
    
    
    119,405Distributions to general partner preferred unitholders
    
    
    (5,705
    )
    
    
    (6,232
    )
    
    
    (11,804
    )
    
    
    (9,927
    )Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (3,625
    )
    
    
    (3,625
    )Preferred unit issuance costs write-off
    
    
    (1,924
    )
    
    
    
    
    
    
    (2,083
    )
    
    
    Net income available to common unitholders
    
    $
    35,169
    
    
    $
    9,977
    
    
    $
    41,994
    
    
    $
    105,853Net income available to common unitholders allocated to limited partners
    
    
    (6,674
    )
    
    
    (2,154
    )
    
    
    (8,059
    )
    
    
    (25,754
    )Net income available to common unitholders allocated to general partner
    
    $
    28,495
    
    
    $
    7,823
    
    
    $
    33,935
    
    
    $
    80,099Net income per common unit  Basic:Income (loss) from continuing operations
    
    $
    0.42
    
    
    $
    (0.47
    )
    
    $
    0.34
    
    
    $
    (0.63
    )Income from discontinued operations
    
    
    0.20
    
    
    
    0.67
    
    
    
    0.41
    
    
    
    3.01Net income per common unit  Basic
    
    $
    0.62
    
    
    $
    0.20
    
    
    $
    0.75
    
    
    $
    2.38Net income per common unit  Diluted:Income (loss) from continuing operations
    
    $
    0.42
    
    
    $
    (0.47
    )
    
    $
    0.34
    
    
    $
    (0.63
    )Income from discontinued operations
    
    
    0.20
    
    
    
    0.67
    
    
    
    0.40
    
    
    
    3.01Net income per common unit  Diluted
    
    $
    0.62
    
    
    $
    0.20
    
    
    $
    0.74
    
    
    $
    2.38Average units outstanding:Basic
    
    
    56,117
    
    
    
    50,193
    
    
    
    55,981
    
    
    
    44,179Diluted
    
    
    56,590
    
    
    
    50,193
    
    
    
    56,466
    
    
    
    44,179CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOMENet income
    
    $
    44,611
    
    
    $
    18,022
    
    
    $
    59,506
    
    
    $
    119,405Other comprehensive incomeUnrealized income (loss) on cash flow hedging activities
    
    
    4,895
    
    
    
    (24,506
    )
    
    
    11,238
    
    
    
    (14,151
    )Comprehensive income
    
    $
    49,506
    
    
    $
    (6,484
    )
    
    $
    70,744
    
    
    $
    105,254
  4




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##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (amounts in thousands)
 Six Months EndedJune 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    59,506
    
    
    $
    119,405Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    85,774
    
    
    
    88,491Loss (income) from partially owned entities
    
    
    2,304
    
    
    
    (247
    )Gains from sales of property
    
    
    (56,245
    )
    
    
    (120,693
    )Distributions of income from partially owned entities
    
    
    4,792
    
    
    
    2,058Decrease (increase) in:Restricted cash
    
    
    (8,553
    )
    
    
    (4,936
    )Accounts receivable
    
    
    2,274
    
    
    
    (452
    )Prepaid expenses
    
    
    (1,475
    )
    
    
    (1,537
    )Other assets
    
    
    3,283
    
    
    
    (602
    )Increase (decrease) in:Accounts payable
    
    
    (19,221
    )
    
    
    14,756Accrued interest
    
    
    117
    
    
    
    4,566Accrued expenses and other
    
    
    17,861
    
    
    
    5,732Net cash provided by operating activities
    
    
    90,417
    
    
    
    106,541Cash flows from investing activities:Acquisition of properties
    
    
    (149,534
    )
    
    
    (336,212
    )Development expenditures
    
    
    (180,163
    )
    
    
    (69,624
    )Tenant improvements
    
    
    (14,146
    )
    
    
    (12,800
    )Capital expenditures
    
    
    (12,450
    )
    
    
    (9,165
    )Proceeds from sales of property, net of selling costs
    
    
    439,927
    
    
    
    370,906Issuance of notes receivable
    
    
    (16,953
    )
    
    
    205Proceeds from notes receivable
    
    
    3,503
    
    
    
    (26,377
    )Direct costs of cornerstone merger
    
    
    
    
    
    
    (33,298
    )Distributions from partially owned entities
    
    
    1,835
    
    
    
    2,707Capital contributions to partially owned entities
    
    
    (9,564
    )
    
    
    (740
    )Net cash provided by (used in) investing activities
    
    
    62,455
    
    
    
    (114,398
    )Cash flows from financing activities:Proceeds from dividend reinvestment plan and exercise of stock options
    
    
    16,733
    
    
    
    27,249Principal reductions of debt
    
    
    (96,076
    )
    
    
    (592,567
    )Proceeds from additional borrowings
    
    
    
    
    
    
    302,285Net change in revolving credit balances
    
    
    96,094
    
    
    
    382,789Dividends paid to common and preferred shareholders
    
    
    (77,119
    )
    
    
    (58,928
    )Distributions to minority partners in CRLP
    
    
    (14,589
    )
    
    
    (14,293
    )Payment of debt issuance costs
    
    
    (610
    )
    
    
    (5,422
    )Redemption of Preferred Series C Shares
    
    
    (50,083
    )
    
    
    Redemption of Preferred Series E Shares
    
    
    (28,444
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (154,094
    )
    
    
    41,113Increase in cash and equivalents
    
    
    (1,222
    )
    
    
    33,256Cash and equivalents, beginning of period
    
    
    30,615
    
    
    
    10,725Cash and equivalents, end of period
    
    $
    29,393
    
    
    $
    43,981Supplemental disclosure of cash flow information:Cash paid during the period for interest, net of amounts capitalized
    
    
    64,767
    
    
    
    55,250Cash paid during the period for income taxes
    
    
    10,533
    
    
    
    1,119Supplemental disclosure of non-cash transactions:Cash flow hedging activities
    
    
    11,238
    
    
    
    14,151Real estate assets acquired
    
    
    
    
    
    
    1,466,261Assumption of notes and mortgages
    
    
    
    
    
    
    836,985Operating assets acquired
    
    
    
    
    
    
    20,758Operating liabilities acquired
    
    
    
    
    
    
    35,181Fair value of adjustments on notes and mortgages
    
    
    
    
    
    
    58,528Investments in partially owned entities acquired
    
    
    
    
    
    
    13,734Intangible assets acquired
    
    
    
    
    
    
    50,726Issuance of common shares of beneficial interest
    
    
    
    
    
    
    463,838Issuance of preferred shares of beneficial interest
    
    
    
    
    
    
    133,159Issuance of common units of operating partnership
    
    
    
    
    
    
    23,788
  5




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COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO
 
 CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 June 30, 2006
 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 to the December 31, 2005 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 2005
Annual Report on Form 10-K .
 Note 1  Organization and Business
  Merger with Cornerstone Realty Income Trust
   Note 2  Summary of Significant Accounting Policies
 Basis of Presentation
   6




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##### Table of Contents



Consolidation of Variable Interest Entities,
 Federal Income Tax Status
   Use of Estimates
  Unaudited Interim Statements
  Revenue Recognition
   7




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##### Table of Contents



Notes Receivable
  Stock-Based Compensation
 Share Based Payment
  For the Six MonthsEnded(amounts in thousands)
    
    June 30, 2006Balance, December 31, 2005
    
    $
    3,646Amortization of deferred compensation
    
    
    (567
    )Issuance of restricted shares
    
    
    110Balance, March 31, 2006
    
    
    3,189Amortization of deferred compensation
    
    
    (1,222
    )Issuance of restricted shares
    
    
    7,663Balance, June 30, 2006
    
    $
    9,630
  8




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##### Table of Contents



For the Six Months
    
    
    Weighted AverageEnded
    
    
    Grant DateJune 30, 2006
    
    
    Fair ValueNonvested Restricted Stock, December 31, 2005
    
    
    157,499
    
    
    $
    36.36Granted
    
    
    2,401
    
    
    $
    44.42Vested
    
    
    (12,179
    )
    
    $
    32.83Cancelled/Forfeited
    
    
    (2,393
    )
    
    $
    39.94Nonvested Restricted Stock, March 31, 2006
    
    
    145,328
    
    
    $
    36.72Granted
    
    
    179,908
    
    
    $
    46.38Vested
    
    
    (50,864
    )
    
    $
    36.88Cancelled/Forfeited
    
    
    (2,295
    )
    
    $
    38.21Nonvested Restricted Stock, June 30, 2006
    
    
    272,077
    
    
    $
    43.21
     Adoption of Incentive Program
  
    
    the grant of a specified number of restricted shares, totaling approximately
$6.3 million which vest at the end of the five-year service period beginning on
April 26, 2006 (the Vesting Period), and/or
    
    an opportunity to earn a performance bonus, based on absolute and relative total
shareholder return over a three-year period beginning January 1, 2006 and ending
December 31, 2008 (the Performance Period).
  9




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##### Table of Contents



New Accounting Pronouncements
  Reclassifications
  Note 3 Capital Structure
 1 8 5 8 1 4 1 4
    10




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##### Table of Contents



Note 4  Acquisition and Disposition Activity
 Property Acquisitions
         Property Dispositions
      11




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##### Table of Contents



Accounting for the Impairment on Disposal of Long-Lived
Assets
 Property
    
    Location
    
    Date Sold
    
    Units/ Square FeetMultifamilyRancho Viejo (1)
    
    Phoenix, AZ
    
    May 2006
    
    
    266Arbor Trace
    
    Norfolk, VA
    
    April 2006
    
    
    148Colonial Grand at Barrington (1)
    
    Macon, GA
    
    March 2006
    
    
    176Colonial Grand at Inverness Lakes (1)
    
    Mobile, AL
    
    March 2006
    
    
    312Colonial Village at Estrada
    
    Dallas, TX
    
    March 2006
    
    
    248Colonial Village at Hillwood (1)
    
    Montgomery, AL
    
    March 2006
    
    
    160Colonial Village at Stockbridge (1)
    
    Atlanta, GA
    
    March 2006
    
    
    240Copper Crossing
    
    Fort Worth, TX
    
    March 2006
    
    
    400The Meadows I, II & III
    
    Asheville, NC
    
    March 2006
    
    
    392The Trestles
    
    Raleigh, NC
    
    March 2006
    
    
    280Colonial Grand at Caledon Woods
    
    Greenville, SC
    
    January 2006
    
    
    350Colonial Village at Paces Glen
    
    Charlotte, NC
    
    January 2006
    
    
    172Colonial Village at Remington Place
    
    Raleigh, NC
    
    January 2006
    
    
    136Colonial Village at Stone Brook
    
    Atlanta, GA
    
    January 2006
    
    
    188Colonial Village at Whitemarsh
    
    Savannah, GA
    
    January 2006
    
    
    352Summerwalk
    
    Charlotte, NC
    
    January 2006
    
    
    160The Timbers
    
    Raleigh, NC
    
    January 2006
    
    
    176The Landing
    
    Raleigh, NC
    
    December 2005
    
    
    200Cypress Cove at Suntree (1)
    
    Melbourne, FL
    
    December 2005
    
    
    326Arbors on Forest Ridge
    
    Fort Worth, TX
    
    October 2005
    
    
    210Cutters Point
    
    Dallas, TX
    
    October 2005
    
    
    196Eagle Crest
    
    Dallas, TX
    
    October 2005
    
    
    484Sierra Ridge
    
    San Antonio, TX
    
    October 2005
    
    
    230Timberglen
    
    Dallas, TX
    
    October 2005
    
    
    304Toscana
    
    Dallas, TX
    
    October 2005
    
    
    192Silverbrook
    
    Fort Worth, TX
    
    October 2005
    
    
    642The Meridian
    
    Austin, TX
    
    October 2005
    
    
    200Ashley Run
    
    Atlanta, GA
    
    June 2005
    
    
    348Mill Crossing
    
    Dallas, TX
    
    June 2005
    
    
    184Colonial Village at Lake Mary
    
    Lake Mary, FL
    
    May 2005
    
    
    504Bridgetown Bay
    
    Charlotte, NC
    
    May 2005
    
    
    120Devonshire
    
    Dallas, TX
    
    May 2005
    
    
    144Dunwoody Springs
    
    Atlanta, GA
    
    May 2005
    
    
    350Carlyle Club
    
    Atlanta, GA
    
    May 2005
    
    
    243Aspen Hills
    
    Dallas, TX
    
    May 2005
    
    
    240Colonial Village at Ashley Plantation
    
    Bluffton, SC
    
    March 2005
    
    
    414Colonial Village at Gainesville
    
    Gainesville, FL
    
    March 2005
    
    
    560Colonial Village at Galleria Woods
    
    Birmingham, AL
    
    March 2005
    
    
    244Colonial Village at TownPark (Sarasota)
    
    Bradenton, FL
    
    March 2005
    
    
    272Colonial Village at Walton Way
    
    Augusta, GA
    
    March 2005
    
    
    256Colonial Village at Wesleyan
    
    Macon, GA
    
    March 2005
    
    
    328Colonial Village at Cahaba Heights (1)
    
    Birmingham, AL
    
    February 2005
    
    
    125Colonial Village at River Hills (1)
    
    Tampa, FL
    
    February 2005
    
    
    776RetailColonial Mall Macon
    
    Macon, GA
    
    July 2005
    
    
    1,446,000Colonial Mall Burlington
    
    Burlington, NC
    
    July 2005
    
    
    419,200Colonial Mall Temple
    
    Temple, TX
    
    April 2005
    
    
    555,600Colonial Mall Gadsden
    
    Gadsden, AL
    
    March 2005
    
    
    517,000
 
 (1)
    
    Properties were partially owned. CRLP sold its interest in these properties.  12




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##### Table of Contents



Three Months Ended
    
    
    Six Months Ended(amounts in thousands)
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Property revenues:Base rent
    
    $
    8,540
    
    
    $
    22,547
    
    
    $
    20,249
    
    
    $
    41,054Percentage rent
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    295Tenant recoveries
    
    
    224
    
    
    
    1,748
    
    
    
    327
    
    
    
    4,265Other revenue
    
    
    1,063
    
    
    
    4,061
    
    
    
    2,358
    
    
    
    7,712Total revenues
    
    
    9,827
    
    
    
    28,407
    
    
    
    22,934
    
    
    
    53,326Property operating and administrative expenses
    
    
    4,450
    
    
    
    12,372
    
    
    
    10,135
    
    
    
    22,142Depreciation
    
    
    1,047
    
    
    
    4,000
    
    
    
    3,364
    
    
    
    7,523Amortization
    
    
    186
    
    
    
    2,359
    
    
    
    429
    
    
    
    2,500Total expenses
    
    
    5,683
    
    
    
    18,731
    
    
    
    13,928
    
    
    
    32,165Interest expense, net
    
    
    (874
    )
    
    
    (2,347
    )
    
    
    (1,953
    )
    
    
    (4,523
    )Income (loss) from investments
    
    
    86
    
    
    
    (538
    )
    
    
    (65
    )
    
    
    (764
    )Other income (expenses)
    
    
    (11
    )
    
    
    
    
    
    
    (399
    )
    
    
    Income from discontinued operations before net gain
on disposition of discontinued operations
    
    
    3,345
    
    
    
    6,791
    
    
    
    6,589
    
    
    
    15,874Net gain on disposition of discontinued operations
    
    
    9,485
    
    
    
    26,893
    
    
    
    18,923
    
    
    
    118,210Minority interest to limited partners
    
    
    (1,734
    )
    
    
    (267
    )
    
    
    (2,714
    )
    
    
    (492
    )Income from discontinued operations
    
    $
    11,096
    
    
    $
    33,417
    
    
    $
    22,798
    
    
    $
    133,592
 For Sale Projects
  (amounts in thousands)
    
    Three Months Ended
    
    
    Six Months EndedJune 30, 2006
    
    
    June 30, 2006Condominium revenues, net
    
    $
    45,291
    
    
    $
    74,895Condominium costs
    
    
    (34,154
    )
    
    
    (58,268
    )Gains on condominium sales, before minority
interest and income taxes
    
    
    11,137
    
    
    
    16,627Minority interest
    
    
    (1,505
    )
    
    
    (2,640
    )Provision for income taxes
    
    
    (3,332
    )
    
    
    (5,114
    )Gains on condominium sales, net of minority
interest and income taxes
    
    $
    6,300
    
    
    $
    8,873
 13




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##### Table of Contents



Note 5  Net Income Per Unit
  Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended(amounts in thousands, except per unit data)
    
    June 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Numerator:Net income
    
    $
    44,611
    
    
    $
    18,022
    
    
    $
    59,506
    
    
    $
    119,405Less: Preferred distributions
    
    
    (7,518
    )
    
    
    (8,045
    )
    
    
    (15,429
    )
    
    
    (13,552
    )Less: Preferred unit issuance costs
    
    
    (1,924
    )
    
    
    
    
    
    
    (2,083
    )
    
    
    Net income available to common unitholders
    
    $
    35,169
    
    
    $
    9,977
    
    
    $
    41,994
    
    
    $
    105,853Denominator:Denominator for basic net income per unit 
weighted average units
    
    
    56,117
    
    
    
    50,193
    
    
    
    55,981
    
    
    
    44,179Effect of dilutive securities:Trustee and employee stock options, treasury method
    
    
    473
    
    
    
    
    
    
    
    485
    
    
    
    Denominator for diluted net income per unit 
adjusted weighted average units
    
    
    56,590
    
    
    
    50,193
    
    
    
    56,466
    
    
    
    44,179Basic net income per unit
    
    $
    0.63
    
    
    $
    0.20
    
    
    $
    0.75
    
    
    $
    2.38Diluted net income per unit
    
    $
    0.62
    
    
    $
    0.20
    
    
    $
    0.74
    
    
    $
    2.38
  Note 6  Segment Information
  14




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Segment Revenues:Multifamily
    
    $
    77,430
    
    
    $
    80,255
    
    
    $
    155,399
    
    
    $
    118,521Office
    
    
    45,502
    
    
    
    29,888
    
    
    
    89,924
    
    
    
    54,968Retail
    
    
    26,830
    
    
    
    41,121
    
    
    
    55,179
    
    
    
    85,531Total Segment Revenues
    
    
    149,762
    
    
    
    151,264
    
    
    
    300,502
    
    
    
    259,020Partially-owned subsidiaries
    
    
    (16,681
    )
    
    
    (5,071
    )
    
    
    (32,842
    )
    
    
    (10,058
    )Construction revenues
    
    
    7,785
    
    
    
    
    
    
    
    19,925
    
    
    
    Unallocated corporate revenues
    
    
    4,592
    
    
    
    2,361
    
    
    
    8,700
    
    
    
    3,434Discontinued operations property revenues
    
    
    (9,827
    )
    
    
    (26,742
    )
    
    
    (22,934
    )
    
    
    (49,521
    )Total Consolidated Revenues
    
    
    135,631
    
    
    
    121,812
    
    
    
    273,351
    
    
    
    202,875NOI:Segment NOI:Multifamily
    
    
    46,614
    
    
    
    47,885
    
    
    
    93,321
    
    
    
    70,935Office
    
    
    29,655
    
    
    
    20,528
    
    
    
    59,012
    
    
    
    37,787Retail
    
    
    19,320
    
    
    
    28,473
    
    
    
    39,925
    
    
    
    59,720Total Segment NOI
    
    
    95,589
    
    
    
    96,886
    
    
    
    192,258
    
    
    
    168,442Partially-owned subsidiaries
    
    
    (9,996
    )
    
    
    (3,014
    )
    
    
    (20,039
    )
    
    
    (6,092
    )Unallocated corporate revenues
    
    
    4,592
    
    
    
    2,361
    
    
    
    8,700
    
    
    
    3,434Discontinued operations property NOI
    
    
    (5,377
    )
    
    
    (15,626
    )
    
    
    (12,799
    )
    
    
    (29,775
    )Construction NOI
    
    
    128
    
    
    
    
    
    
    
    899
    
    
    
    General and administrative expenses
    
    
    (10,767
    )
    
    
    (9,707
    )
    
    
    (22,281
    )
    
    
    (16,968
    )Depreciation
    
    
    (35,517
    )
    
    
    (30,841
    )
    
    
    (73,055
    )
    
    
    (52,726
    )Amortization
    
    
    (3,706
    )
    
    
    (22,316
    )
    
    
    (11,440
    )
    
    
    (25,608
    )Other
    
    
    (219
    )
    
    
    (19
    )
    
    
    (435
    )
    
    
    30Income from operations
    
    
    34,727
    
    
    
    17,724
    
    
    
    61,808
    
    
    
    40,737Total other expense, net
    
    
    (1,212
    )
    
    
    (33,119
    )
    
    
    (25,100
    )
    
    
    (54,924
    )Income (loss) from continuing operations
    
    $
    33,515
    
    
    $
    (15,395
    )
    
    $
    36,708
    
    
    $
    (14,187
    )(in thousands)
    
    June 30,
    
    December 31,2006
    
    
    
    2005AssetsSegment AssetsMultifamily
    
    $
    2,374,713
    
    
    $
    2,430,752Office
    
    
    841,382
    
    
    
    958,131Retail
    
    
    672,196
    
    
    
    790,827Total Segment Assets
    
    
    3,888,291
    
    
    
    4,179,710Unallocated corporate assets (1)
    
    
    448,155
    
    
    
    319,517$
    4,336,446
    
    
    $
    4,499,227
 
 (1)
    
    Includes CRLPs investment in partially-owned entities of $140,321 as of June 30, 2006 and $123,700 as of December 31, 2005. 15




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##### Table of Contents



Note 7  Investment in Partially Owned Entities
  (in thousands)Percent
    
    
    June 30,
    
    
    December 31,Owned
    
    
    2006
    
    
    2005Multifamily:Arbors at Windsor Lake, Columbia, SC
    
    
    10.00
    %
    
    $
    672
    
    
    $
    716Carter Regents Park, Atlanta, GA
    
    
    40.00
    %
    
    
    6,042
    
    
    
    3,000CG at Research Park, Durham, NC
    
    
    20.00
    %
    
    
    1,305
    
    
    
    1,570CG at Huntcliff Village, Atlanta, GA
    
    
    20.00
    %
    
    
    2,542
    
    
    
    CG at Canyon Creek, Austin, TX
    
    
    25.00
    %
    
    
    1,456
    
    
    
    CMS / Colonial Joint Venture I
    
    
    15.00
    %
    
    
    1,055
    
    
    
    944CMS / Colonial Joint Venture II
    
    
    (1
    )
    
    
    251
    
    
    
    597CMS Florida
    
    
    25.00
    %
    
    
    2,553
    
    
    
    2,721CMS Tennessee
    
    
    25.00
    %
    
    
    2,272
    
    
    
    2,377CV at Matthews Village, Charlotte, NC
    
    
    25.00
    %
    
    
    1,110
    
    
    
    DRA Alabama
    
    
    10.00
    %
    
    
    2,347
    
    
    
    2,403DRA Cunningham, Austin, TX
    
    
    20.00
    %
    
    
    1,079
    
    
    
    1,111DRA Southwest Partnership
    
    
    (2
    )
    
    
    16,730
    
    
    
    18,044DRA The Grove at Riverchase, Birmingham, AL
    
    
    20.00
    %
    
    
    1,669
    
    
    
    1,788Merritt at Godley Station, Pooler, GA
    
    
    35.00
    %
    
    
    3,104
    
    
    
    3,188Stone Ridge, Columbia, SC
    
    
    10.00
    %
    
    
    554
    
    
    
    49744,741
    
    
    
    38,956Office:600 Building Partnership, Birmingham, AL
    
    
    33.33
    %
    
    
    19
    
    
    
    11Douglas HCI, Coral Gables, FL
    
    
    25.00
    %(3)
    
    
    
    
    
    
    5,807Colonial Center Mansell JV
    
    
    15.00
    %
    
    
    16,873
    
    
    
    DRA / Colonial Office Joint Venture
    
    
    15.00
    %
    
    
    42,915
    
    
    
    46,89659,807
    
    
    
    52,714Retail:Colonial Promenade Madison, Huntsville, AL
    
    
    25.00
    %
    
    
    2,309
    
    
    
    2,255South Florida Retail Joint Venture
    
    
    10.00
    %
    
    
    5,016
    
    
    
    GPT/Colonial Retail Joint Venture
    
    
    10.00
    %(4)
    
    
    (2,855
    )
    
    
    (2,311
    )Highway 150, LLC, Birmingham, AL
    
    
    10.00
    %
    
    
    80
    
    
    
    80Parkway Place Limited Partnership, Huntsville, AL
    
    
    45.00
    %
    
    
    12,011
    
    
    
    12,984Turkey Creek, Parkside Drive LLC Partnership
    
    
    50.00
    %
    
    
    19,183
    
    
    
    18,98735,744
    
    
    
    31,995Other:Colonial / Polar-BEK Management Company,
Birmingham, AL
    
    
    50.00
    %
    
    
    27
    
    
    
    30Other
    
    
    
    
    
    
    2
    
    
    
    5$
    140,321
    
    
    $
    123,700
 
 (1)
    
    The CMS / Colonial Joint Venture II holds one property in which CRLP has a 15%
partnership interest and one in which CRLP has a 5% partnership interest.(2)
    
    The DRA Southwest Partnership holds 15 properties, 13 in which CRLP has a 24%
partnership interest and two in which CRLP has a 20% partnership interest.(3)
    
    CRLPs interest in Douglas HCI was sold in connection with the disposal of
CRLPs interest in Colonnade Properties, LLC (see Note 4).(4)
    
    Amount includes the value of CRLPs investment of approximately $8.0 million,
offset by the excess basis difference on the transaction of approximately $10.3
million, which will be amortized over the life of the investment.  16




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Note 8  Financing Activities
      17




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Note 9  Derivatives and Hedging
        18




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Fair ValueAt June 30, 2006Interest
    
    
    
    
    
    Asset (Liability)Product Type
    
    Notional Value
    
    Rate
    
    Maturity
    
    (in thousands)Interest Rate CAP, Cash Flow
    
    $19.7 million
    
    
    6.850
    %
    
    
    6/29/07
    
    
    $
    Interest Rate CAP, Cash Flow
    
    $16.7 million
    
    
    6.850
    %
    
    
    7/3/07
    
    
    
    Interest Rate CAP, Cash Flow
    
    $12.8 million
    
    
    6.000
    %
    
    
    7/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $22.4 million
    
    
    6.000
    %
    
    
    7/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $9.9 million
    
    
    6.000
    %
    
    
    7/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $10.0 million
    
    
    8.373
    %
    
    
    8/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $14.9 million
    
    
    7.543
    %
    
    
    8/1/08
    
    
    
    2Interest Rate CAP, Cash Flow
    
    $7.4 million
    
    
    6.983
    %
    
    
    8/1/08
    
    
    
    2Interest Rate CAP, Cash Flow
    
    $6.2 million
    
    
    8.373
    %
    
    
    8/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $13.3 million
    
    
    6.786
    %
    
    
    9/1/08
    
    
    
    6Interest Rate CAP, Cash Flow
    
    $5.5 million
    
    
    7.900
    %
    
    
    2/1/09
    
    
    
    1Interest Rate CAP, Cash Flow
    
    $17.6 million
    
    
    8.100
    %
    
    
    2/1/09
    
    
    
    2Interest Rate CAP, Cash Flow
    
    $10.2 million
    
    
    11.200
    %
    
    
    7/1/10
    
    
    
    Interest Rate SWAP, Cash Flow
    
    $100.0 million
    
    
    4.573
    %
    
    
    3/24/08
    
    
    
    1,519Interest Rate SWAP, Cash Flow
    
    $200.0 million
    
    
    5.689
    %
    
    
    11/15/16
    
    
    
    493Interest Rate SWAP, Cash Flow
    
    $175.0 million
    
    
    4.877
    %
    
    
    7/13/17
    
    
    
    10,722
   Note 10  Subsequent Events
 Property Acquisitions
   Property Dispositions
  Financing Activities
  Distribution
  19




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Report of Independent Registered Public Accounting Firm
 
     
 20




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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
 Overview
  
    
    national and local economic, business and real estate conditions including, but
not limited to, the effect of demand for multifamily units, office and retail rental
space, the extent, strength and duration of any economic recovery, such as the
effects on demand for units and rental space and the creation of new multifamily,
office and retail developments, availability and creditworthiness of tenants, the
level of lease rents, and the availability of financing for both tenants and us;
    
    adverse changes in real estate markets, including, but not limited to, the extent
of tenant bankruptcies, financial difficulties and defaults, the extent of future
demand for multifamily units and office and retail space in our core markets and
barriers of entry into new markets which we may seek to enter in the future, the
extent of decreases in rental rates, competition, our ability to identify and
consummate attractive acquisitions on favorable terms, our ability to consummate any
planned dispositions in a timely manner on acceptable terms;
    
    actions, strategies and performance of affiliates that we may not control or
companies, including joint ventures, in which we have made investments;
    
    changes in operating costs, including real estate taxes, utilities, and insurance;
    
    higher than expected construction costs;
    
    development or conversion of for sale projects could adversely affect our results of operations;
    
    legislative or other regulatory decisions, including government approvals,
actions and initiatives, including the need for compliance with environmental and
safety requirements, and changes in laws and regulations or the interpretation
thereof;
    
    effects of tax legislative action;
    
    our general partners ability to maintain its status as a Real Estate Investment
Trust (REIT) for federal income tax purposes, our ability to maintain our status
as a partnership for federal income tax purposes, the ability of certain of our
subsidiaries to maintain their status as taxable REIT subsidiaries for federal
income tax purposes, and our ability and the ability of our subsidiaries to operate
effectively within the limitations imposed by these rules;
    
    effect of any rating agency actions on the cost and availability of new debt financing;
    
    level and volatility of interest rates or capital market conditions;
    
    effect of any terrorist activity or other heightened geopolitical crisis; and
    
    other factors affecting the real estate industry generally.
  General
 As used herein, the terms CRLP, we, us, our and Operating Partnership refer to
Colonial Realty Limited Partnership, a Delaware limited partnership, and its subsidiaries and other
affiliates, including, Colonial Properties Services Limited Partnership, Colonial Property
Services, Inc., and CLNL Acquisition Sub, LLC or, as the context may require, Colonial Realty
Limited Partnership only. As used herein, the term Company or the Trust includes Colonial
Properties Trust, an Alabama real estate investment trust, and one or more of its subsidiaries and
other affiliates, including CRLP, Colonial Properties Services Limited Partnership, Colonial
Properties Services, Inc. and CLNL Acquisition Sub, LLC or, as the context may require, Colonial
Properties Trust only or Colonial Realty Limited Partnership only.
 21




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22




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##### Table of Contents



Consolidated Properties
    
    
    Unconsolidated Properties
    
    
    Total PropertiesAs of and for the Quarter
    
    
    As of and for the Quarter
    
    
    As of and for the QuarterEnded June 30,
    
    
    Ended June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Multifamily PropertiesPhysical Occupancy
    
    
    95.9
    %
    
    
    96.3
    %
    
    
    96.7
    %
    
    
    96.7
    %
    
    
    95.9
    %
    
    
    96.3
    %Same-Property Economic Occupancy (1)
    
    
    82.8
    %
    
    
    80.9
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    82.8
    %
    
    
    80.9
    %End of Month Effective
Rent per Unit per Month
    
    $
    688
    
    
    $
    660
    
    
    $
    743
    
    
    $
    690
    
    
    $
    691
    
    
    $
    666Capital Expenditures per Unit
    
    $
    206
    
    
    $
    128
    
    
    $
    161
    
    
    $
    289
    
    
    $
    203
    
    
    $
    137Office Properties (2)Physical Occupancy
    
    
    93.4
    %
    
    
    92.6
    %
    
    
    87.7
    %
    
    
    100.0
    %
    
    
    92.3
    %
    
    
    92.6
    %Base Rent per Square Foot
    
    $
    19.55
    
    
    $
    18.52
    
    
    $
    21.65
    
    
    $
    17.44
    
    
    $
    19.91
    
    
    $
    18.51Capital Expenditures per Square Foot
    
    $
    1.00
    
    
    $
    0.92
    
    
    $
    0.41
    
    
    
    
    
    
    $
    0.88
    
    
    $
    0.92Retail Properties (3)Physical Occupancy
    
    
    92.0
    %
    
    
    91.7
    %
    
    
    91.2
    %
    
    
    91.2
    %
    
    
    91.9
    %
    
    
    91.6
    %Base Rent per Square Foot
    
    $
    18.00
    
    
    $
    19.75
    
    
    $
    23.18
    
    
    $
    24.68
    
    
    $
    20.23
    
    
    $
    20.19Tenant Gross Sales per Square Foot
    
    $
    262.13
    
    
    $
    275.22
    
    
    $
    308.66
    
    
    $
    253.68
    
    
    $
    292.58
    
    
    $
    273.08
 
 (1)
    
    Economic Occupancy represents scheduled base rents, less vacancy loss, all concessions adjusted for straightline (including but not limited to:
renewals, move-ins, models, employee units), and bad debts divided by scheduled base rents.(2)
    
    Physical occupancy percentages for 2006 include the DRA/Colonial Office Joint Venture properties. All other statistics exclude
these properties.(3)
    
    Ten retail operating properties were sold into joint ventures during the three months ended December 31, 2005 and the three months ended March 31,
2006, and as such were moved from consolidated to unconsolidated.  
    
    changes in job growth, household formation and population growth in our markets;
    
    changes in interest rates and lending availability;
    
    changes in insurance rates;
    
    supply and demand for apartment properties in our current markets; and
    
    competition, which could limit our ability to secure attractive investment
opportunities, lease apartment properties, or increase or maintain rents.
  23




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##### Table of Contents



Results of Operations  Three Months Ended June 30, 2006 and 2005
 Minimum rent
 Tenant recoveries
 Construction revenues and construction expenses
 Other property related revenue
 Other non-property related revenue
 Total property operating expenses
 General and administrative expenses
 Depreciation and amortization expenses
 24




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##### Table of Contents



Interest expense and debt cost amortization
 Interest income
 Income (loss) from partially owned entities
 Gains from sales of property, net of income taxes
 Income from discontinued operations
 Results of Operations  Six Months Ended June 30, 2006 and 2005
 Minimum rent
 Tenant recoveries
 Construction revenues and construction expenses
 Other property related revenue
 Other non-property related revenue
 Total property operating expenses
 25




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##### Table of Contents



General and administrative expenses
 Depreciation and amortization expenses
 Interest expense and debt cost amortization
 Loss on retirement of debt
 Interest income
 Income (loss) from partially owned entities
 Gains on hedging activities
 Gains from sales of property, net of income taxes
 Income from discontinued operations
 Liquidity and Capital Resources
    26




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##### Table of Contents



Short-Term Liquidity Needs
       Long-Term Liquidity Needs
  27




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##### Table of Contents



Unsecured Revolving Credit Facilities
     28




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##### Table of Contents



Investing Activities
    Distribution
  Critical Accounting Policies and Estimates
  Derivatives and Hedging
  29




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##### Table of Contents



Fair ValueAt June 30, 2006Interest
    
    
    
    
    
    
    Asset (Liability)Product Type
    
    Notional Value
    
    Rate
    
    
    Maturity
    
    
    (in thousands)Interest Rate CAP, Cash Flow
    
    $19.7 million
    
    
    6.850
    %
    
    
    6/29/07
    
    
    $
    Interest Rate CAP, Cash Flow
    
    $16.7 million
    
    
    6.850
    %
    
    
    7/3/07
    
    
    
    Interest Rate CAP, Cash Flow
    
    $12.8 million
    
    
    6.000
    %
    
    
    7/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $22.4 million
    
    
    6.000
    %
    
    
    7/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $9.9 million
    
    
    6.000
    %
    
    
    7/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $10.0 million
    
    
    8.373
    %
    
    
    8/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $14.9 million
    
    
    7.543
    %
    
    
    8/1/08
    
    
    
    2Interest Rate CAP, Cash Flow
    
    $7.4 million
    
    
    6.983
    %
    
    
    8/1/08
    
    
    
    2Interest Rate CAP, Cash Flow
    
    $6.2 million
    
    
    8.373
    %
    
    
    8/1/08
    
    
    
    Interest Rate CAP, Cash Flow
    
    $13.3 million
    
    
    6.786
    %
    
    
    9/1/08
    
    
    
    6Interest Rate CAP, Cash Flow
    
    $5.5 million
    
    
    7.900
    %
    
    
    2/1/09
    
    
    
    1Interest Rate CAP, Cash Flow
    
    $17.6 million
    
    
    8.100
    %
    
    
    2/1/09
    
    
    
    2Interest Rate CAP, Cash Flow
    
    $10.2 million
    
    
    11.200
    %
    
    
    7/1/10
    
    
    
    Interest Rate SWAP, Cash Flow
    
    $100.0 million
    
    
    4.573
    %
    
    
    3/24/08
    
    
    
    1,519Interest Rate SWAP, Cash Flow
    
    $200.0 million
    
    
    5.689
    %
    
    
    11/15/16
    
    
    
    493Interest Rate SWAP, Cash Flow
    
    $175.0 million
    
    
    4.877
    %
    
    
    7/13/17
    
    
    
    10,722
     Inflation
   30




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4. Controls and Procedures
     31




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors
  The development or conversion of for sale projects could adversely affect our results of operations.
  
    
    we may be unable to obtain, or face delays in obtaining, necessary zoning, land-use,
building, occupancy, and other required governmental permits and authorizations, which
could result in increased development costs and/or slow sales;
    
    local real estate market conditions, such as oversupply or reduction in demand may
result in slowed or unpredictable sales;
    
    we may incur development or conversion costs for a property that exceed original
estimates due to increased materials, labor or other costs or unforeseen environmental
conditions, which could make completion of the property uneconomical causing CRLP to fail
to meet its profitability goals;
 
    
    land, insurance and construction costs have been increasing in our markets, and may
continue to increase in the future and we may be unable to charge rents, or sales prices
with respect to for-sale product, that would compensate for these increases in costs;
    
    for sale properties under development or acquired for development usually generate
little or no cash flow until completion of development and sale of a significant number of
homes or condominium units and may experience operating deficits after the date of
completion and until such homes or condominium units are sold; and we may abandon
development or conversion opportunities that we have already begun to explore, and we may
fail to recover expenses already incurred in connection with exploring those opportunities.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   32




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##### Table of Contents



Issuer Purchases of Equity Securities(1)
 Total Number ofShares Purchased
    
    
    Approximate Dollaras Part of Publicly
    
    
    Value of Shares thatTotal Number of
    
    
    Average Price
    
    
    Announced Plans
    
    
    May Yet Be PurchasedPeriod
    
    Shares Purchased
    
    
    Paid per Share
    
    
    or Programs
    
    
    Under the ProgramApril 1, 2006 
April 30, 2006
    
    
    29,700
    
    
    $
    25.01
    
    
    
    29,700
    
    
    $
    36,555,000May 1, 2006 
May 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1, 2006 
June 30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    29,700
    
    
    $
    25.01
    
    
    
    29,700
    
    
    $
    36,555,000
 (1)
    
    On February 2, 2006, the Board of Trustees of the Trust authorized the repurchase of up to
$65 million Series E Depositary Shares. This repurchase program was effective immediately and
extends through January 27, 2007. Under the repurchase program, the Trust is authorized to
make purchases in the open market or in privately negotiated transactions from time to time,
subject to market conditions, applicable legal requirements and other factors. The repurchase
program does not obligate the Trust to repurchase any specific number of shares, and
repurchases pursuant to the program may be suspended or resumed at any time or from time to
time without further notice or announcement.
  
 Item 6. Exhibits
  33




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##### Table of Contents



SIGNATURES
  COLONIAL REALTY LIMITED PARTNERSHIP,
A Delaware limited partnershipBy:
    Colonial Properties Trust,Its General Partner Date: August 9, 2006
    By:
    /s/                Weston M. AndressWeston M. AndressPresident and Chief Financial Officer Date: August 9, 2006
    By:
    /s/                John E. TomlinsonJohn E. TomlinsonExecutive Vice President &
Chief                     Accounting Officer
                    (Principal Accounting Officer) 34




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##### Table of Contents



Index of Exhibits
 10.1
    
    Colonial Properties Trust Third Amended and Restated
    
    Incorporated by reference to Exhibit 10.1 to theEmployee Share Option and Restricted Share Plan, as
    
    Trust's Current Report on Form 10-Q filedamended 
    
    with the Securities and Exchange Commissionon August 9, 200610.2
    
    Form of Colonial Properties Trust Third Amended and
    
    Incorporated by reference to Exhibit 10.2 to theRestated Employee Share Option and Restricted Share
    
    Trust's Current Report on Form 10-Q filedPlan Restricted Share Agreement 
    
    with the Securities and Exchange Commissionon August 9, 200610.3
    
    Form of Colonial Properties Trust Third Amended and
    
    Incorporated by reference to Exhibit 10.3 to theRestated Employee Share Option and Restricted
    
    Trust's Current Report on Form 10-Q filedShare Plan Performance Share Agreement 
    
    with the Securities and Exchange Commissionon August 9, 200610.4
    
    Form of Restricted Share Agreement 
    
    Incorporated by reference to Exhibit 10.4 to theTrust's Current Report on Form 10-Q filedwith the Securities and Exchange Commissionon August 9, 200610.5
    
    Form of Share Option Agreement 
    
    Incorporated by reference to Exhibit 10.5 to theTrust's Current Report on Form 10-Q filedwith the Securities and Exchange Commissionon August 9, 200610.6
    
    Summary of Incentive Program
    
    Incorporated by reference to Exhibit 10.6 to theTrust's Current Report on Form 10-Q filedwith the Securities and Exchange Commissionon August 9, 200612.1
    
    Ratio of Earnings to Fixed Charges
    
    Filed herewith15.1
    
    Letter re:  Unaudited Interim Financial Information
    
    Filed herewith31.1
    
    CEO Certification pursuant to Section 302 of the
    
    Filed herewithSarbanes-Oxley Act of 200231.2
    
    CFO Certification pursuant to Section 302 of the
    
    Filed herewithSarbanes-Oxley Act of 200232.1
    
    CEO Certification pursuant to Section 906 of the
    
    Filed herewithSarbanes-Oxley Act of 200232.2
    
    CFO Certification pursuant to Section 906 of the
    
    Filed herewithSarbanes-Oxley Act of 2002
  35