##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For
the quarterly period ended: September 30, 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(State or other jurisdiction 
of incorporation or organization)
    
    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  (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 þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company 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
September 30, 2008 and December 31, 2007
    
    
    3Consolidated Condensed Statements of Income and Comprehensive
Income for the Three and Nine Months ended September 30, 2008 and 2007
    
    
    4Consolidated Condensed Statements of Cash Flows for the Nine Months
ended September 30, 2008 and 2007
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Report of Independent Registered Public Accounting Firm *
    
    
    27Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    28Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    48Item 4.
    
    Controls and Procedures
    
    
    48PART II: OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    49Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50Item 6.
    
    Exhibits
    
    
    50SIGNATURES
    
    
    51EXHIBIT INDEX
    
    
    52EX-12.1EX-15.1EX-31.1EX-31.2EX-32.1EX-32.2
  
 * Review by Independent Registered Public Accounting Firm
  2




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##### Table of Contents



COLONIAL REALTY LIMITED PARTNERSHIP
 
 CONSOLIDATED CONDENSED
BALANCE SHEETS  (in thousands, except unit data)
 (Unaudited)September 30, 2008
    
    December 31, 2007ASSETSLand, buildings, & equipment
    
    $
    2,664,774
    
    
    $
    2,431,064Undeveloped land and construction in progress
    
    
    450,766
    
    
    
    531,410Less: Accumulated depreciation
    
    
    (351,031
    )
    
    
    (290,118
    )Real estate assets held for sale, net
    
    
    296,622
    
    
    
    253,641Net real estate assets
    
    
    3,061,131
    
    
    
    2,925,997Cash and equivalents
    
    
    27,692
    
    
    
    92,841Restricted cash
    
    
    30,568
    
    
    
    10,005Accounts receivable, net
    
    
    16,911
    
    
    
    25,534Notes receivable
    
    
    5,135
    
    
    
    30,756Prepaid expenses
    
    
    6,284
    
    
    
    8,845Deferred debt and lease costs
    
    
    16,743
    
    
    
    15,637Investment in partially owned entities
    
    
    41,929
    
    
    
    69,682Deferred tax asset
    
    
    14,629
    
    
    
    19,897Other assets
    
    
    33,121
    
    
    
    30,443Total assets
    
    $
    3,254,143
    
    
    $
    3,229,637LIABILITIES AND PARTNERS EQUITYNotes and mortgages payable
    
    $
    1,505,866
    
    
    $
    1,575,921Unsecured credit facility
    
    
    205,936
    
    
    
    39,316Mortgages payable related to real estate assets held for sale
    
    
    
    
    
    
    26,602Total debt
    
    
    1,711,802
    
    
    
    1,641,839Accounts payable
    
    
    41,987
    
    
    
    68,858Accrued interest
    
    
    24,991
    
    
    
    23,064Accrued expenses
    
    
    22,581
    
    
    
    16,425Other liabilities
    
    
    32,230
    
    
    
    11,966Total liabilities
    
    
    1,833,591
    
    
    
    1,762,152Redeemable units, at redemption value  9,529,446 and 10,052,778 units
outstanding at September 30, 2008 and December 31, 2007, respectively
    
    
    178,105
    
    
    
    227,494Limited partners minority interest in consolidated partnership
    
    
    1,986
    
    
    
    2,439General partner Common equity  47,909,101 and 47,216,549 units outstanding at
September 30, 2008 and December 31, 2007, respectively
    
    
    1,051,932
    
    
    
    1,025,654Preferred equity ($125,000 liquidation preference)
    
    
    96,733
    
    
    
    120,550Limited partners preferred equity ($100,000 liquidation preference)
    
    
    97,406
    
    
    
    97,406Accumulated other comprehensive income (loss)
    
    
    (5,610
    )
    
    
    (6,058
    )Total partners equity
    
    
    1,240,461
    
    
    
    1,237,552Total liabilities and partners equity
    
    $
    3,254,143
    
    
    $
    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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:Minimum rent
    
    $
    65,003
    
    
    $
    59,474
    
    
    $
    189,637
    
    
    $
    238,401Tenant recoveries
    
    
    962
    
    
    
    1,076
    
    
    
    2,865
    
    
    
    10,603Other property related revenue
    
    
    8,424
    
    
    
    6,740
    
    
    
    24,225
    
    
    
    22,903Construction revenues
    
    
    654
    
    
    
    11,154
    
    
    
    9,102
    
    
    
    32,007Other non-property related revenue
    
    
    5,287
    
    
    
    5,490
    
    
    
    15,737
    
    
    
    14,044Total revenue
    
    
    80,330
    
    
    
    83,934
    
    
    
    241,566
    
    
    
    317,958Expenses:Property operating expenses
    
    
    21,513
    
    
    
    19,178
    
    
    
    58,329
    
    
    
    68,723Taxes, licenses, and insurance
    
    
    9,759
    
    
    
    9,078
    
    
    
    27,630
    
    
    
    33,251Construction expenses
    
    
    672
    
    
    
    9,280
    
    
    
    8,503
    
    
    
    29,146Property management expenses
    
    
    2,088
    
    
    
    2,365
    
    
    
    6,402
    
    
    
    9,450General and administrative expenses
    
    
    5,993
    
    
    
    5,442
    
    
    
    17,564
    
    
    
    19,460Management fee and other expense
    
    
    4,435
    
    
    
    3,980
    
    
    
    12,464
    
    
    
    10,956Restructuring charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,528Investment and development
    
    
    80
    
    
    
    342
    
    
    
    956
    
    
    
    799Depreciation
    
    
    24,303
    
    
    
    20,953
    
    
    
    68,648
    
    
    
    80,982Amortization
    
    
    809
    
    
    
    833
    
    
    
    2,465
    
    
    
    9,734Impairment
    
    
    
    
    
    
    43,679
    
    
    
    
    
    
    
    43,679Total expenses
    
    
    69,652
    
    
    
    115,130
    
    
    
    202,961
    
    
    
    307,708Income (loss) from operations
    
    
    10,678
    
    
    
    (31,196
    )
    
    
    38,605
    
    
    
    10,250Other income (expense):Interest expense and debt cost amortization
    
    
    (18,997
    )
    
    
    (18,988
    )
    
    
    (56,024
    )
    
    
    (73,553
    )Gains (losses) on retirement of debt
    
    
    2,515
    
    
    
    36
    
    
    
    10,716
    
    
    
    (9,669
    )Interest income
    
    
    634
    
    
    
    2,951
    
    
    
    2,608
    
    
    
    6,406Income (loss) from partially owned entities
    
    
    1,190
    
    
    
    6,886
    
    
    
    13,497
    
    
    
    11,609Gains from sales of property, net of income
taxes of $642 (Q3) and $1,308 (YTD)
in 2008 and $628 (Q3) and $1,475 (YTD) in 2007
    
    
    1,232
    
    
    
    4,689
    
    
    
    2,039
    
    
    
    17,698Transaction costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,026
    )Minority interest of limited partners
    
    
    3
    
    
    
    20
    
    
    
    12
    
    
    
    245Income taxes and other
    
    
    169
    
    
    
    16,507
    
    
    
    765
    
    
    
    16,078Total other income (expense)
    
    
    (13,254
    )
    
    
    12,101
    
    
    
    (26,387
    )
    
    
    (42,212
    )Income (loss) from continuing operations
    
    
    (2,576
    )
    
    
    (19,095
    )
    
    
    12,218
    
    
    
    (31,962
    )Income from discontinued operations
    
    
    4,893
    
    
    
    2,641
    
    
    
    15,394
    
    
    
    11,468Gain on disposal of discontinued operations, net of
income taxes of $41 (Q3)
and $1,064 (YTD) in 2008 and $95 (Q3)
and $1,779 (YTD) in 2007
    
    
    33,938
    
    
    
    17,193
    
    
    
    45,425
    
    
    
    91,328Minority interest of limited partners
    
    
    
    
    
    
    (4,079
    )
    
    
    13
    
    
    
    (4,152
    )Income from discontinued operations
    
    
    38,831
    
    
    
    15,755
    
    
    
    60,832
    
    
    
    98,644Net income (loss)
    
    
    36,255
    
    
    
    (3,340
    )
    
    
    73,050
    
    
    
    66,682Distributions to general partner preferred unitholders
    
    
    (2,037
    )
    
    
    (2,539
    )
    
    
    (6,705
    )
    
    
    (10,900
    )Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (5,452
    )
    
    
    (5,437
    )Preferred unit issuance costs write-off, net of discount
    
    
    240
    
    
    
    (29
    )
    
    
    (27
    )
    
    
    (360
    )Net income (loss) available to common unitholders
    
    $
    32,645
    
    
    $
    (7,721
    )
    
    $
    60,866
    
    
    $
    49,985Net income (loss) available to common unitholders
allocated to limited partners
    
    
    (5,429
    )
    
    
    1,380
    
    
    
    (10,439
    )
    
    
    (9,132
    )Net income (loss) available to common
unitholders allocated to general partner
    
    $
    27,216
    
    
    $
    (6,341
    )
    
    $
    50,427
    
    
    $
    40,853Net income (loss) per common unit  Basic:Income (loss) from continuing operations
    
    $
    (0.11
    )
    
    $
    (0.41
    )
    
    $
    
    
    
    $
    (0.86
    )Income from discontinued operations
    
    
    0.69
    
    
    
    0.28
    
    
    
    1.07
    
    
    
    1.74Net income (loss) per common unit  Basic
    
    $
    0.58
    
    
    $
    (0.14
    )
    
    $
    1.07
    
    
    $
    0.88Net income (loss) per common unit  Diluted:Income (loss) from continuing operations
    
    $
    (0.11
    )
    
    $
    (0.41
    )
    
    $
    
    
    
    $
    (0.86
    )Income from discontinued operations
    
    
    0.69
    
    
    
    0.28
    
    
    
    1.07
    
    
    
    1.74Net income (loss) per common unit  Diluted
    
    $
    0.58
    
    
    $
    (0.14
    )
    
    $
    1.07
    
    
    $
    0.88Average units outstanding:Basic
    
    
    56,922
    
    
    
    56,793
    
    
    
    56,888
    
    
    
    56,681Diluted
    
    
    56,922
    
    
    
    56,793
    
    
    
    56,997
    
    
    
    56,681CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE
INCOMENet income (loss)
    
    $
    36,255
    
    
    $
    (3,340
    )
    
    $
    73,050
    
    
    $
    66,682Other comprehensive incomeUnrealized income (loss) on cash flow
hedging activities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (138
    )Change in additional minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,600Comprehensive income (loss)
    
    $
    36,255
    
    
    $
    (3,340
    )
    
    $
    73,050
    
    
    $
    68,144
  4




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COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)  (in thousands)
 Nine Months EndedSeptember 30,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    73,050
    
    
    $
    66,682Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    75,434
    
    
    
    99,729Loss (income) from partially-owned unconsolidated entities
    
    
    (13,497
    )
    
    
    (11,609
    )Gains from sales of property
    
    
    (49,836
    )
    
    
    (112,280
    )Transaction costs
    
    
    
    
    
    
    11,026Impairment
    
    
    
    
    
    
    46,629(Gain) Loss on retirement of debt
    
    
    (10,716
    )
    
    
    12,521Prepayment penalties
    
    
    
    
    
    
    (29,207
    )Distributions of income from partially-owned unconsolidated entities
    
    
    11,397
    
    
    
    8,489Decrease (increase) in:Restricted cash
    
    
    (362
    )
    
    
    5,153Accounts receivable
    
    
    8,217
    
    
    
    (1,015
    )Prepaid expenses
    
    
    2,410
    
    
    
    12,386Other assets
    
    
    5,354
    
    
    
    (33,629
    )Increase (decrease) in:Accounts payable
    
    
    (12,052
    )
    
    
    15,280Accrued interest
    
    
    1,927
    
    
    
    (6,359
    )Accrued expenses and other
    
    
    9,657
    
    
    
    13,123Net cash provided by operating activities
    
    
    100,983
    
    
    
    96,919Cash flows from investing activities:Acquisition of properties
    
    
    (7,369
    )
    
    
    (125,400
    )Development expenditures
    
    
    (264,821
    )
    
    
    (292,115
    )Tenant improvements and leasing commissions
    
    
    (3,104
    )
    
    
    (5,881
    )Capital expenditures
    
    
    (17,929
    )
    
    
    (23,940
    )Proceeds from sales of property, net of selling costs
    
    
    169,946
    
    
    
    590,533Transaction costs
    
    
    
    
    
    
    (11,026
    )Issuance of notes receivable
    
    
    (8,579
    )
    
    
    (19,725
    )Repayments of notes receivable
    
    
    4,662
    
    
    
    49,247Distributions from partially-owned unconsolidated entities
    
    
    31,059
    
    
    
    68,331Capital contributions to partially-owned unconsolidated entities
    
    
    (5,517
    )
    
    
    (13,319
    )Sale of securities
    
    
    4,780
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (96,872
    )
    
    
    216,705Cash flows from financing activities:Proceeds from additional borrowings
    
    
    71,302
    
    
    
    818,748Proceeds from dividend reinvestment plan and exercise of stock options
    
    
    1,140
    
    
    
    12,979Principal reductions of debt
    
    
    (172,852
    )
    
    
    (655,073
    )Payment of debt issuance costs
    
    
    (1,708
    )
    
    
    Net change in revolving credit balances and overdrafts
    
    
    154,953
    
    
    
    (171,544
    )Dividends paid to common and preferred unitholders
    
    
    (83,482
    )
    
    
    (137,104
    )Special distributions
    
    
    
    
    
    
    (11,999
    )Distributions to minority partners in CRLP
    
    
    (14,769
    )
    
    
    Repurchase of Preferred Series D Units
    
    
    (23,844
    )
    
    
    Redemption of Preferred Series E Shares
    
    
    
    
    
    
    (104,437
    )Net cash provided by (used in) financing activities
    
    
    (69,260
    )
    
    
    (248,430
    )Increase (decrease) in cash and cash equivalents
    
    
    (65,149
    )
    
    
    65,194Cash and cash equivalents, beginning of period
    
    
    92,841
    
    
    
    87,647Cash and cash equivalents, end of period
    
    $
    27,692
    
    
    $
    152,841Supplemental disclosure of cash flow information:Cash paid during the period for interest, including amounts capitalized
    
    $
    70,213
    
    
    $
    100,529Cash paid during the period for income taxes
    
    $
    4,881
    
    
    $
    4,463Supplemental disclosure of non-cash transactions:Cash flow hedging activities
    
    $
    
    
    
    $
    (138
    )Consolidation of for sale property development (see Note 9)
    
    $
    30,689
    
    
    $
    
  5




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COLONIAL REALTY LIMITED PARTNERSHIP NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 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
  ,
   Noncontributory Defined Benefit Pension Plan
  7




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Federal Income Tax Status
     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)
    
    CRLP had a promissory note of approximately $28.9 million related to a for-sale
residential project in which CRLP had a 40% interest. As of September 30, 2008, this
note was in default. As a result, CRLP has initiated a plan to convert the outstanding
notes receivable due from the Regents Park Joint Venture (Phase I) to preferred equity
in the same joint venture. Because of these events, CRLP has consolidated this joint
venture in its financial statements as of September 30, 2008 (see Note 9).
 9




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##### Table of Contents



(2)
    
    CRLP had 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 were two 30-day extension options available
at a rate of 8.0% and 12.0%, respectively. During July 2008, the buyer exercised the
first of these extension options. In August 2008, the buyer repaid the note in full.
  Performance Awards
    
    
    risk-free rate,
    
    expected standard deviation of returns (i.e., volatility),
    
    expected dividend yield, and
    
    correlation in stock price movement.
    10




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Assets and Liabilities Measured at Fair Value
 Fair
Value Measurements
   New Accounting Pronouncements
  The Fair Value Option for Financial Assets and
Financial Liabilities  including an amendment of FASB Statement No. 115
  11




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Business Combinations
 Disclosures about Derivative Instruments and
Hedging Activities
 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 (and CRLP
repurchased a number of Series D Preferred Units corresponding to the number of
 12




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Series
D preferred shares of the Trust represented by such repurchased Series D Depositary
Shares). 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.
 
    
    During the second quarter of 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 (and CRLP repurchased a number of Series D
Preferred Units corresponding to the number of Series D preferred shares of the Trust
represented by such repurchased Series D Depositary Shares). 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.
    
    During the third quarter of 2008, the Trust repurchased 105,000 outstanding Series D
Depositary Shares in a privately negotiated transaction for a purchase price of $2.3
million, or $21.75 per depositary share (and CRLP repurchased a number of Series D
Preferred Units corresponding to the number of Series D preferred shares of the Trust
represented by such repurchased Series D Depositary Shares). The Trust received a
discount to the liquidation preference price of $25.00 per depositary share, of
approximately $0.3 million, on the repurchase and wrote off approximately $0.1 million
of issuance costs.
 Note 5  Acquisition and Disposition Activity
 Property Acquisitions
   Property Dispositions
     13




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Units/ SquareProperty
    
    Location
    
    Date Sold
    
    FeetMultifamilyColonial Grand at Hunters Creek
    
    Orlando, FL
    
    September 2008
    
    
    496Colonial Grand at Shelby Farms I & II
    
    Memphis, TN
    
    June 2008
    
    
    450Colonial 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
    
    
    Nine Months Ended(amounts in thousands)
    
    September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Property revenues:Base rent
    
    $
    7,526
    
    
    $
    9,809
    
    
    $
    27,055
    
    
    $
    45,566Tenant recoveries
    
    
    155
    
    
    
    292
    
    
    
    495
    
    
    
    3,487Other revenue
    
    
    891
    
    
    
    1,402
    
    
    
    3,071
    
    
    
    4,633Total revenues
    
    
    8,572
    
    
    
    11,503
    
    
    
    30,621
    
    
    
    53,686Property operating and administrative expenses
    
    
    3,397
    
    
    
    5,334
    
    
    
    12,027
    
    
    
    22,241Impairment
    
    
    
    
    
    
    450
    
    
    
    
    
    
    
    2,950Depreciation and amortization
    
    
    340
    
    
    
    2,909
    
    
    
    3,340
    
    
    
    9,932Total expenses
    
    
    3,737
    
    
    
    8,693
    
    
    
    15,367
    
    
    
    35,123Interest expense, net
    
    
    58
    
    
    
    (169
    )
    
    
    140
    
    
    
    (4,241
    )Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,854
    )Income from discontinued operations before net gain
on disposition of discontinued operations
    
    
    4,893
    
    
    
    2,641
    
    
    
    15,394
    
    
    
    11,468Net gain on disposition of discontinued operations
    
    
    33,938
    
    
    
    17,193
    
    
    
    45,425
    
    
    
    91,328Minority interest to limited partners
    
    
    
    
    
    
    (4,079
    )
    
    
    13
    
    
    
    (4,152
    )Income from discontinued operations
    
    $
    38,831
    
    
    $
    15,755
    
    
    $
    60,832
    
    
    $
    98,644
 Note 6  For-Sale Activities and Impairment
 For-Sale Residential Activities
  15




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(amounts in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Condominium revenues, net
    
    $
    145
    
    
    $
    5,373
    
    
    $
    448
    
    
    $
    49,127Condominium costs
    
    
    (152
    )
    
    
    (4,915
    )
    
    
    (401
    )
    
    
    (39,123
    )Gains (losses) on condominium sales, before minority interest and income taxes
    
    
    (7
    )
    
    
    458
    
    
    
    47
    
    
    
    10,004For-sale residential revenues, net
    
    
    8,678
    
    
    
    5,264
    
    
    
    17,795
    
    
    
    21,224For-sale residential costs
    
    
    (7,667
    )
    
    
    (4,662
    )
    
    
    (16,177
    )
    
    
    (18,032
    )Gains on for-sale residential sales, before minority interest and income taxes
    
    
    1,011
    
    
    
    602
    
    
    
    1,618
    
    
    
    3,192Minority interest
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    250Provision for income taxes
    
    
    (396
    )
    
    
    (178
    )
    
    
    (550
    )
    
    
    (2,602
    )Gains on condominium conversions and for-sale residential sales,
net of minority interest and income taxes
    
    $
    608
    
    
    $
    908
    
    
    $
    1,115
    
    
    $
    10,844
    Impairment
  16




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##### Table of Contents



Developments
    Note 7  Net Income Per Unit
  Three Months Ended
    
    
    Nine Months Ended(amounts in table in thousands)
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Income (loss) from continiung operations
    
    $
    (2,576
    )
    
    $
    (19,095
    )
    
    $
    12,218
    
    
    $
    (31,962
    )Less: Distributions to general partner preferred unitholders
    
    
    (2,037
    )
    
    
    (2,539
    )
    
    
    (6,705
    )
    
    
    (10,900
    )Less: Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    (5,452
    )
    
    
    (5,437
    )Less: Preferred unit issuance costs, net of discount
    
    
    240
    
    
    
    (29
    )
    
    
    (27
    )
    
    
    (360
    )Net income (loss) available to common unitholders
    
    $
    (6,186
    )
    
    $
    (23,476
    )
    
    $
    34
    
    
    $
    (48,659
    )Denominator:Denominator for basic net income per unit  weighted
average units
    
    
    56,922
    
    
    
    56,793
    
    
    
    56,888
    
    
    
    56,681Effect of dilutive securities:Trustee and employee stock options, treasury method
    
    
    
    
    
    
    
    
    
    
    109
    
    
    
    Denominator for diluted net income per unit 
adjusted weighted average units
    
    
    56,922
    
    
    
    56,793
    
    
    
    56,997
    
    
    
    56,681
 17




---



##### Table of Contents



Note 8  Segment Information
  18




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Segment Revenues:Multifamily
    
    $
    78,890
    
    
    $
    75,836
    
    
    $
    237,250
    
    
    $
    230,762Office
    
    
    14,047
    
    
    
    12,910
    
    
    
    43,528
    
    
    
    84,291Retail
    
    
    9,440
    
    
    
    10,267
    
    
    
    26,463
    
    
    
    59,771Total Segment Revenues
    
    
    102,377
    
    
    
    99,013
    
    
    
    307,241
    
    
    
    374,824Partially-owned unconsolidated entities  Mfam
    
    
    (2,137
    )
    
    
    (2,587
    )
    
    
    (6,484
    )
    
    
    (7,817
    )Partially-owned unconsolidated entities  Off
    
    
    (12,276
    )
    
    
    (12,091
    )
    
    
    (38,323
    )
    
    
    (28,263
    )Partially-owned unconsolidated entities  Rtl
    
    
    (5,003
    )
    
    
    (5,542
    )
    
    
    (15,086
    )
    
    
    (13,151
    )Construction revenues
    
    
    654
    
    
    
    11,154
    
    
    
    9,102
    
    
    
    32,007Unallocated corporate revenues
    
    
    5,287
    
    
    
    5,490
    
    
    
    15,737
    
    
    
    14,044Discontinued operations property revenues
    
    
    (8,572
    )
    
    
    (11,503
    )
    
    
    (30,621
    )
    
    
    (53,686
    )Total Consolidated Revenues
    
    
    80,330
    
    
    
    83,934
    
    
    
    241,566
    
    
    
    317,958NOI:Segment NOI:Multifamily
    
    
    45,631
    
    
    
    43,628
    
    
    
    142,042
    
    
    
    135,682Office
    
    
    8,340
    
    
    
    7,310
    
    
    
    27,016
    
    
    
    54,113Retail
    
    
    6,528
    
    
    
    6,454
    
    
    
    18,171
    
    
    
    40,957Total Segment NOI
    
    
    60,499
    
    
    
    57,392
    
    
    
    187,229
    
    
    
    230,752Partially-owned unconsolidated entities  Mfam
    
    
    (1,021
    )
    
    
    (1,309
    )
    
    
    (3,165
    )
    
    
    (3,670
    )Partially-owned unconsolidated entities  Off
    
    
    (7,630
    )
    
    
    (7,026
    )
    
    
    (24,058
    )
    
    
    (16,647
    )Partially-owned unconsolidated entities  Rtl
    
    
    (3,556
    )
    
    
    (3,854
    )
    
    
    (10,644
    )
    
    
    (9,057
    )Unallocated corporate revenues
    
    
    5,287
    
    
    
    5,490
    
    
    
    15,737
    
    
    
    14,044Discontinued operations property NOI
    
    
    (5,175
    )
    
    
    (5,719
    )
    
    
    (18,594
    )
    
    
    (28,495
    )Impairment  discontinued operations (1)
    
    
    
    
    
    
    (450
    )
    
    
    
    
    
    
    (2,950
    )Impairment  continuing operations (2)
    
    
    
    
    
    
    (43,679
    )
    
    
    
    
    
    
    (43,679
    )Construction NOI
    
    
    (18
    )
    
    
    1,874
    
    
    
    599
    
    
    
    2,861Property management expenses
    
    
    (2,088
    )
    
    
    (2,365
    )
    
    
    (6,402
    )
    
    
    (9,450
    )General and administrative expenses
    
    
    (5,993
    )
    
    
    (5,442
    )
    
    
    (17,564
    )
    
    
    (19,460
    )Management fee and other expenses
    
    
    (4,435
    )
    
    
    (3,980
    )
    
    
    (12,464
    )
    
    
    (10,956
    )Restructuring charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,528
    )Investment and development (3)
    
    
    (80
    )
    
    
    (342
    )
    
    
    (956
    )
    
    
    (799
    )Depreciation
    
    
    (24,303
    )
    
    
    (20,953
    )
    
    
    (68,648
    )
    
    
    (80,982
    )Amortization
    
    
    (809
    )
    
    
    (833
    )
    
    
    (2,465
    )
    
    
    (9,734
    )Income (loss) from operations
    
    
    10,678
    
    
    
    (31,196
    )
    
    
    38,605
    
    
    
    10,250Total other income (expense), net (4)
    
    
    (13,254
    )
    
    
    12,101
    
    
    
    (26,387
    )
    
    
    (42,212
    )Income (loss) from continuing operations
    
    $
    (2,576
    )
    
    $
    (19,095
    )
    
    $
    12,218
    
    
    $
    (31,962
    )
 September 30,
    
    
    December 31,(in thousands)

    
    2008
    
    
    2007AssetsSegment AssetsMultifamily
    
    $
    2,460,598
    
    
    $
    2,449,558Office
    
    
    128,094
    
    
    
    82,630Retail
    
    
    274,765
    
    
    
    149,933For-Sale Residential (5)
    
    
    180,572
    
    
    
    211,729Total Segment Assets
    
    
    3,044,029
    
    
    
    2,893,850Unallocated corporate assets (6)
    
    
    210,114
    
    
    
    335,787$
    3,254,143
    
    
    $
    3,229,637
 
 Footnotes on following page 19




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##### Table of Contents



(1)
    
    The $0.5 million impairment charge recorded during the three months ended September 30,
2007 was a result of fire damage sustained at a multifamily apartment community, which is now
classified as held for sale. The impairment charge recorded during the nine months ended
September 30, 2007 also includes $2.5 million related to retail asset that has been sold.(2)
    
    During the three and nine months ended September 30, 2007, CRLP recorded a $43.3 million
non-cash impairment charge ($26.8 million net of income tax) as a result of the deterioration
in the single family housing markets, primarily in Gulf Shores, Alabama and Charlotte, North
Carolina. Additionally, there was $0.4 million recorded as a result of fire damage at a
multifamily apartment community.(3)
    
    Reflects costs incurred related to abandoned pursuits. Abandoned pursuits are volatile
and, therefore, may vary between periods.(4)
    
    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).(5)
    
    Two projects, formerly for-sale residential developments, are now being leased as
multifamily apartment communities. In addition, the Regents Park Joint Venture (Phase I) is
now consolidated by CRLP (see Note 9).(6)
    
    Includes CRLPs investment in partially-owned entities of $41,929 as of September 30, 2008
and $69,682 as of December 31, 2007. For-Sale Residential
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Gains on for-sale residential sales
    
    $
    1,011
    
    
    $
    602
    
    
    $
    1,618
    
    
    $
    3,192Impairment
    
    
    
    
    
    
    (43,300
    )
    
    
    
    
    
    
    (43,300
    )Income tax benefit (expense)
    
    
    (392
    )
    
    
    16,289
    
    
    
    (560
    )
    
    
    15,370Income (loss) from for-sale residential sales
    
    $
    619
    
    
    $
    (26,409
    )
    
    $
    1,058
    
    
    $
    (24,738
    )
 Note 9  Investment in Partially-Owned Entities
  20




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##### Table of Contents



(in thousands)Percent
    
    
    September 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
    %
    
    
    637
    
    
    
    708Regents Park (Phase II), Atlanta, GA
    
    
    40.00
    %(3)
    
    
    3,511
    
    
    
    5,282CG at Huntcliff, Atlanta, GA
    
    
    20.00
    %
    
    
    1,938
    
    
    
    2,138CG at McKinney, Dallas, TX (Development)
    
    
    25.00
    %
    
    
    1,298
    
    
    
    1,003CG at Research Park, Raleigh, NC
    
    
    20.00
    %
    
    
    1,084
    
    
    
    1,197CG at Traditions, Gulf Shores, AL
    
    
    35.00
    %
    
    
    622
    
    
    
    1,591CMS / Colonial Joint Venture I
    
    
    15.00
    %
    
    
    374
    
    
    
    435CMS / Colonial Joint Venture II
    
    
    15.00
    %(4)
    
    
    (442
    )
    
    
    (419
    )CMS Florida
    
    
    25.00
    %
    
    
    (503
    )
    
    
    (338
    )CMS Tennessee
    
    
    25.00
    %
    
    
    171
    
    
    
    258CMS V / CG at Canyon Creek, Austin, TX
    
    
    25.00
    %
    
    
    678
    
    
    
    1,226CV at Matthews, Charlotte, NC
    
    
    25.00
    %(5)
    
    
    
    
    
    
    1,004DRA Alabama
    
    
    10.00
    %
    
    
    2,225
    
    
    
    2,260DRA CV at Cary, Raleigh, NC
    
    
    20.00
    %
    
    
    1,767
    
    
    
    2,026DRA Cunningham, Austin, TX
    
    
    20.00
    %
    
    
    906
    
    
    
    969DRA The Grove at Riverchase, Birmingham, AL
    
    
    20.00
    %
    
    
    1,315
    
    
    
    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)
    
    
    
    
    
    
    451Total Multifamily
    
    
    
    
    
    
    15,581
    
    
    
    23,835Office:600 Building Partnership, Birmingham, AL
    
    
    33.33
    %
    
    
    110
    
    
    
    76Colonial Center Mansell JV
    
    
    15.00
    %
    
    
    878
    
    
    
    1,377DRA / CRT JV
    
    
    15.00
    %(9)
    
    
    17,846
    
    
    
    23,365DRA / CLP JV
    
    
    15.00
    %(10)
    
    
    (10,057
    )
    
    
    (6,603
    )Huntsville TIC, Huntsville , AL
    
    
    10.00
    %(11)
    
    
    (3,570
    )
    
    
    7,922Total Office
    
    
    
    
    
    
    5,207
    
    
    
    26,137Retail:Colonial Promenade Madison, Huntsville, AL
    
    
    25.00
    %
    
    
    2,211
    
    
    
    2,258Colonial Promenade Smyrna, Smyrna, TN (Development)
    
    
    50.00
    %
    
    
    2,202
    
    
    
    2,297GPT / Colonial Retail JV
    
    
    10.00
    %(12)
    
    
    
    
    
    
    (5,021
    )Highway 150, LLC, Birmingham, AL
    
    
    10.00
    %
    
    
    65
    
    
    
    64OZRE JV
    
    
    17.10
    %(13)
    
    
    (7,362
    )
    
    
    (6,204
    )Parkway Place Limited Partnership, Huntsville, AL
    
    
    45.00
    %
    
    
    9,911
    
    
    
    10,342Colonial Promenade Craft Farms, Gulf Shores, AL
    
    
    15.00
    %
    
    
    928
    
    
    
    1,300Parkside Drive LLC I, Knoxville, TN
    
    
    50.00
    %
    
    
    5,034
    
    
    
    6,898Parkside Drive LLC II, Knoxville, TN (Development)
    
    
    50.00
    %
    
    
    6,374
    
    
    
    6,270Colonial Promenade Alabaster II/Tutwiler II, Birmingham, AL
    
    
    5.00
    %
    
    
    (162
    )
    
    
    (107
    )Total Retail
    
    
    
    
    
    
    19,201
    
    
    
    18,097Other:Heathrow, Orlando, FL
    
    
    50.00
    %
    
    
    1,924
    
    
    
    1,585Colonial /
Polar-BEK Management Company, Birmingham, AL
    
    
    50.00
    %
    
    
    16
    
    
    
    281,940
    
    
    
    1,613$
    41,929
    
    
    $
    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)
    
    CRLP has consolidated the Regents Park Joint Venture (Phase I) in its financial
statements as of September 30, 2008. The Regents Park Joint Venture (Phase II) consists of
undeveloped land.(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 was recorded in the third quarter of 2008.(9)
    
    As of September 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 September 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 $24.6 million, offset by the excess basis difference on the June 2007
joint venture transaction (see Note 2) of approximately $34.7 million, which is being
amortized over the life of the properties.(11)
    
    Amount includes CRLPs investment of approximately $4.1 million, offset by the excess
basis difference on the transaction of approximately $7.7 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 September 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 $9.4
million, offset by the excess basis difference on the June 2007 joint venture transaction
(see Note 2) of approximately $16.8 million, which is being amortized over the life of the
properties.    Total Assets
    
    
    Total Debt
    
    
    Total Equity2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007DRA/CRT
    
    $
    1,172,705
    
    
    $
    1,248,807
    
    
    $
    970,139
    
    
    $
    993,264
    
    
    $
    163,591
    
    
    $
    202,162DRA/CLP
    
    
    925,232
    
    
    
    973,861
    
    
    
    741,907
    
    
    
    741,907
    
    
    
    163,693
    
    
    
    194,210OZRE
    
    
    353,179
    
    
    
    362,734
    
    
    
    292,836
    
    
    
    284,000
    
    
    
    55,234
    
    
    
    74,012GPT (1)
    
    
    
    
    
    
    374,498
    
    
    
    
    
    
    
    322,776
    
    
    
    
    
    
    
    43,982Huntsville TIC (2)
    
    
    229,574
    
    
    
    160,478
    
    
    
    107,540
    
    
    
    107,540
    
    
    
    41,393
    
    
    
    49,980$
    2,680,690
    
    
    $
    3,120,378
    
    
    $
    2,112,422
    
    
    $
    2,449,487
    
    
    $
    423,911
    
    
    $
    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 10.0%. 22




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##### Table of Contents



Total Revenues
    
    
    Net Income
    
    
    Share of Net Income2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007DRA/CRT
    
    $
    44,283
    
    
    $
    42,534
    
    
    $
    (2,647
    )
    
    $
    33,789
    
    
    $
    (194
    )
    
    $
    5,388DRA/CLP
    
    
    30,189
    
    
    
    35,707
    
    
    
    (4,014
    )
    
    
    (2,501
    )
    
    
    (35
    )
    
    
    302OZRE
    
    
    8,625
    
    
    
    8,755
    
    
    
    (2,223
    )
    
    
    (2,292
    )
    
    
    (153
    )
    
    
    (116
    )GPT (1)
    
    
    
    
    
    
    11,998
    
    
    
    
    
    
    
    (3,062
    )
    
    
    
    
    
    
    (195
    )Huntsville TIC (2)
    
    
    6,411
    
    
    
    
    
    
    
    (615
    )
    
    
    
    
    
    
    1,987
    
    
    
    $
    89,508
    
    
    $
    98,994
    
    
    $
    (9,499
    )
    
    $
    25,934
    
    
    $
    1,605
    
    
    $
    5,379
 
 (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 two transactions during
the third quarter of 2008 and recognized a gain of approximately $2.0 million.  Total Revenues
    
    
    Net Income
    
    
    Share of Net Income2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007DRA/CRT
    
    $
    130,140
    
    
    $
    135,357
    
    
    $
    (11,020
    )
    
    $
    17,250
    
    
    $
    (552
    )
    
    $
    3,193DRA/CLP
    
    
    87,840
    
    
    
    42,300
    
    
    
    (12,879
    )
    
    
    (2,557
    )
    
    
    (243
    )
    
    
    380OZRE
    
    
    25,914
    
    
    
    9,920
    
    
    
    (8,306
    )
    
    
    (2,100
    )
    
    
    (543
    )
    
    
    (68
    )GPT (1)
    
    
    8,191
    
    
    
    35,757
    
    
    
    (1,752
    )
    
    
    (8,669
    )
    
    
    11,977
    
    
    
    (533
    )Huntsville TIC (2)
    
    
    18,340
    
    
    
    
    
    
    
    (8,382
    )
    
    
    
    
    
    
    4,236
    
    
    
    $
    270,425
    
    
    $
    223,334
    
    
    $
    (42,339
    )
    
    $
    3,924
    
    
    $
    14,875
    
    
    $
    2,972
 
 (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 10
transactions during 2008 and recognized a gain of approximately $6.0 million. Note 10  Financing Activities
      23




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##### Table of Contents




    
    During the second quarter of 2008, CRLP repurchased $31.8 million of its
outstanding unsecured senior notes in separate transactions at an average 10%
discount to par value, which represents a 7.8% yield to maturity. As a result of
the repurchases, CRLP recognized an aggregate gain of $2.7 million, which is
included in Gains (losses) on retirement of debt on CRLPs Consolidated Condensed
Statements of Income and Comprehensive Income.
    
    During the third quarter of 2008, CRLP repurchased $57.8 million of its
outstanding unsecured senior notes in separate transactions at an average 5%
discount to par value, which represents a 7.4% yield to maturity. As a result of
the repurchases, CRLP recognized an aggregate gain of $2.6 million, which is
included in Gains (losses) on retirement of debt on CRLPs Consolidated Condensed
Statements of Income and Comprehensive Income.
   Note 11  Derivatives and Hedging
   24




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##### Table of Contents



Note 12 Contingencies and Guarantees
 Contingencies
  
    
    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.
       25




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##### Table of Contents



Guarantees
      Note 13  Subsequent Events
 Distribution
  Series D Preferred Share Repurchase Program
  Severance
  26




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
  27




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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;
    
    risks associated with having to perform under various financial guarantees that
we have provided with respect to certain of our joint ventures and retail
developments;
    
    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.
 28




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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.
    Business Strategy
   29




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##### Table of Contents



Executive Summary of Results of Operations
   
    
    We sold one wholly-owned multifamily apartment community for a sales price of $57.7
million, resulting in a net gain on the sale of approximately $33.6 million;
    
    We completed the development of one multifamily property consisting of 368 apartment
homes;
    
    We closed on 27 condominium units, 21 of which were part of our mixed-use Metropolitan
development in Charlotte. In addition, we placed the retail and office portions of our
Metropolitan development into service;
    
    The multifamily portfolio experienced only modest growth during the third quarter of
 2008 compared to the third quarter of 2007 as a result of the downturn in economic conditions,
 which have resulted in higher turnover primarily from financial and job related reasons.
  In addition, we experienced a delay in the implementation of our cable income program at
 approximately 7,000 multifamily apartment communities which resulted in lower than expected
 revenues from the new program in the third quarter of 2008.  Our third quarter 2008 results were
driven by growth in Dallas/Fort Worth, Texas; Raleigh and Charlotte, North Carolina; Birmingham, Alabama
and Atlanta, Georgia.  Late in the third quarter of 2008 and into the fourth quarter of 2008, we have
experienced slower traffic trends, which are expected to continue throughout 2008 and into 2009;
    
    We repurchased $57.8 million of unsecured senior notes in separate transactions at an
average discount of 5% to par value. We recognized an aggregate gain of approximately $2.6
million from these transactions, net of issuance costs; and
    
    The Trust repurchased 105,000 of its outstanding 8 1/8% Series D Preferred depositary
shares, each representing 1/10 of a share of the Trusts 8 1/8% Series D Cumulative
Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share (Series D
Depositary Shares) for an aggregate purchase price of $2.3 million at a 13% discount to
the liquidation preference price, and recognized a gain of $0.2 million on this
transaction, net of issuance costs (and we repurchased a number of Series D Cumulative
Redeemable Preferred Units of CRLP (Series D Preferred Units) corresponding to the number
of Series D preferred shares of the Trust represented by such repurchased Series D
Depositary Shares).
  
    
    We sold six wholly-owned multifamily apartment communities and five partially-owned
multifamily apartment communities for an aggregate sales price of $151.5 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 six multifamily properties consisting of 1,277 apartment
homes;
 30




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##### Table of Contents




    
    The multifamily portfolio experienced only modest growth during the first nine months of 2008
 compared to the first nine months of 2007.  As a result of the downturn in economic conditions
 and slower job growth in our markets, we have experienced greater pricing pressure, which in turn,
 has slowed our rental rate growth.  Results for the first nine months of 2008 were driven by growth
in Austin and Dallas/Fort Worth, Texas; Raleigh and Charlotte, North Carolina; Richmond, Virginia; and
 Huntsville and Birmingham, Alabama.  Late in the third quarter of 2008 and into the fourth quarter of
2008, we have experienced slower traffic trends, which are expected to continue throughout 2008 and into
2009;
    
    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 $139.6 million of unsecured senior notes in separate transactions at an
average of discount of 8% to par value. We recognized an aggregate gain of approximately
$10.8 million from these transactions, net of issuance costs;
    
    The Trust repurchased 988,750 of its outstanding Series D Depositary Shares for an
aggregate purchase price of $24.0 million at a 3% discount to the liquidation preference
price (and we repurchased a number of Series D Preferred Units corresponding to the number
of Series D preferred shares of the Trust represented by such repurchased Series D
Depositary Shares). Net of non-cash issuance costs written off, the impact of these
transactions on net income was minimal; and
    
    We recognized a $17.5 million reduction in interest expense primarily as a result of
property dispositions.
 Operating Results Summary
  31




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##### Table of Contents



(amounts in thousands)
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    
    
    
    
    September 30,2008
    
    
    2007
    
    
    Variance
    
    
    2008
    
    
    2007
    
    
    VarianceRevenues:Minimum rent
    
    $
    65,003
    
    
    $
    59,474
    
    
    $
    5,529
    
    
    $
    189,637
    
    
    $
    238,401
    
    
    $
    (48,764
    )Tenant recoveries
    
    
    962
    
    
    
    1,076
    
    
    
    (114
    )
    
    
    2,865
    
    
    
    10,603
    
    
    
    (7,738
    )Other property related revenue
    
    
    8,424
    
    
    
    6,740
    
    
    
    1,684
    
    
    
    24,225
    
    
    
    22,903
    
    
    
    1,322Construction revenues
    
    
    654
    
    
    
    11,154
    
    
    
    (10,500
    )
    
    
    9,102
    
    
    
    32,007
    
    
    
    (22,905
    )Other non-property related revenues
    
    
    5,287
    
    
    
    5,490
    
    
    
    (203
    )
    
    
    15,737
    
    
    
    14,044
    
    
    
    1,693Total revenue
    
    
    80,330
    
    
    
    83,934
    
    
    
    (3,604
    )
    
    
    241,566
    
    
    
    317,958
    
    
    
    (76,392
    )Expenses:Property operating expenses
    
    
    21,513
    
    
    
    19,178
    
    
    
    2,335
    
    
    
    58,329
    
    
    
    68,723
    
    
    
    (10,394
    )Taxes, licenses and insurance
    
    
    9,759
    
    
    
    9,078
    
    
    
    681
    
    
    
    27,630
    
    
    
    33,251
    
    
    
    (5,621
    )Construction expenses
    
    
    672
    
    
    
    9,280
    
    
    
    (8,608
    )
    
    
    8,503
    
    
    
    29,146
    
    
    
    (20,643
    )Property management expenses
    
    
    2,088
    
    
    
    2,365
    
    
    
    (277
    )
    
    
    6,402
    
    
    
    9,450
    
    
    
    (3,048
    )General and administrative expenses
    
    
    5,993
    
    
    
    5,442
    
    
    
    551
    
    
    
    17,564
    
    
    
    19,460
    
    
    
    (1,896
    )Management fee and other expense
    
    
    4,435
    
    
    
    3,980
    
    
    
    455
    
    
    
    12,464
    
    
    
    10,956
    
    
    
    1,508Restructuring charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,528
    
    
    
    (1,528
    )Investment and development
    
    
    80
    
    
    
    342
    
    
    
    (262
    )
    
    
    956
    
    
    
    799
    
    
    
    157Depreciation & amortization
    
    
    25,112
    
    
    
    21,786
    
    
    
    3,326
    
    
    
    71,113
    
    
    
    90,716
    
    
    
    (19,603
    )Impairment
    
    
    
    
    
    
    43,679
    
    
    
    (43,679
    )
    
    
    
    
    
    
    43,679
    
    
    
    (43,679
    )Total operating expenses
    
    
    69,652
    
    
    
    115,130
    
    
    
    (45,478
    )
    
    
    202,961
    
    
    
    307,708
    
    
    
    (104,747
    )Income (loss) from operations
    
    
    10,678
    
    
    
    (31,196
    )
    
    
    41,874
    
    
    
    38,605
    
    
    
    10,250
    
    
    
    28,355Other income (expense):Interest expense and debt cost
amortization
    
    
    (18,997
    )
    
    
    (18,988
    )
    
    
    (9
    )
    
    
    (56,024
    )
    
    
    (73,553
    )
    
    
    17,529Gains (losses) on retirement of debt
    
    
    2,515
    
    
    
    36
    
    
    
    2,479
    
    
    
    10,716
    
    
    
    (9,669
    )
    
    
    20,385Interest income
    
    
    634
    
    
    
    2,951
    
    
    
    (2,317
    )
    
    
    2,608
    
    
    
    6,406
    
    
    
    (3,798
    )Income from partially-owned
unconsolidated entities
    
    
    1,190
    
    
    
    6,886
    
    
    
    (5,696
    )
    
    
    13,497
    
    
    
    11,609
    
    
    
    1,888Gains from sales of property, net of
income taxes
    
    
    1,232
    
    
    
    4,689
    
    
    
    (3,457
    )
    
    
    2,039
    
    
    
    17,698
    
    
    
    (15,659
    )Transaction costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,026
    )
    
    
    11,026Minority interest of limited partners
    
    
    3
    
    
    
    20
    
    
    
    (17
    )
    
    
    12
    
    
    
    245
    
    
    
    (233
    )Income taxes and other
    
    
    169
    
    
    
    16,507
    
    
    
    (16,338
    )
    
    
    765
    
    
    
    16,078
    
    
    
    (15,313
    )Total other income (expense)
    
    
    (13,254
    )
    
    
    12,101
    
    
    
    (25,355
    )
    
    
    (26,387
    )
    
    
    (42,212
    )
    
    
    15,825Income (loss) from continuing
operations
    
    
    (2,576
    )
    
    
    (19,095
    )
    
    
    16,519
    
    
    
    12,218
    
    
    
    (31,962
    )
    
    
    44,180Income from discontinued operations
    
    
    38,831
    
    
    
    15,755
    
    
    
    23,076
    
    
    
    60,832
    
    
    
    98,644
    
    
    
    (37,812
    )Net income (loss)
    
    
    36,255
    
    
    
    (3,340
    )
    
    
    39,595
    
    
    
    73,050
    
    
    
    66,682
    
    
    
    6,368Distributions to general partner
preferred unitholders
    
    
    (2,037
    )
    
    
    (2,539
    )
    
    
    502
    
    
    
    (6,705
    )
    
    
    (10,900
    )
    
    
    4,195Distributions to limited partner
preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )
    
    
    
    
    
    
    (5,452
    )
    
    
    (5,437
    )
    
    
    (15
    )Preferred unit issuance costs
write-off, net of discount
    
    
    240
    
    
    
    (29
    )
    
    
    269
    
    
    
    (27
    )
    
    
    (360
    )
    
    
    333Net income (loss) available to common unitholders
    
    $
    32,645
    
    
    $
    (7,721
    )
    
    $
    (40,366
    )
    
    $
    60,866
    
    
    $
    49,985
    
    
    $
    (10,881
    )
 32




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##### Table of Contents



Results of Operations  Three Months Ended September 30, 2008 and 2007
 Minimum rent
  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
  Management fee and other expenses
  33




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Investment and development expenses
  Depreciation and amortization expenses
  Impairment
   Interest expense and debt cost amortization
  Gains (losses) on retirement of debt
  Interest income
  Income from partially-owned unconsolidated entities
  Gains from sales of property
  34




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Income taxes and other
  Income from discontinued operations
  Distributions to general partner preferred unitholders
  Results of Operations  Nine Months Ended September 30, 2008 and 2007
 Minimum rent
  Tenant recoveries
  Other property related revenue
  Construction activities
  35




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Other non-property related revenues
  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
  36




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Depreciation and amortization expenses
  Impairment
    Interest expense and debt cost amortization
  Gains (losses) on retirement of debt
  Interest income
  Income from partially-owned unconsolidated entities
  Gains from sales of property
  37




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Transaction costs
  Income taxes and other
  Income from discontinued operations
  Distributions to general partner preferred unitholders
  Market Outlook
 Capital and Credit Market Crisis
  38




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Liquidity
   For Sale Real Estate Valuation
    39




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##### Table of Contents



Development
  Liquidity and Capital Resources
 Overview
    Credit Ratings
  Rating Agency
    
    Rating
    
    Last updateFitch
    
    BBB-        (1)
    
    April 1, 2008Moodys
    
    Baa3        (2)
    
    September 27, 2007Standard & Poors
    
    BBB-        (2)
    
    January 18, 2008
 
 (1)
    
    Ratings outlook is stable.(2)
    
    Ratings outlook is negative. 40




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Short-Term Liquidity Needs
      Long-Term Liquidity Needs
  41




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Unsecured Revolving Credit Facility
  42




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Mortgage Financing
   Equity Repurchases
   43




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##### Table of Contents



Note Repurchases
   
    
    During the second quarter of 2008, we repurchased $31.8 million of outstanding
unsecured senior notes in separate transactions at an average 10% discount to par
value, which represents a 7.8% yield to maturity. As a result of the
repurchases, we recognized an aggregate gain of $2.7 million, which is included
in Gains (losses) on retirement of debt on our Consolidated Condensed Statements
of Income and Comprehensive Income.
    
    During the third quarter of 2008, we repurchased $57.8 million of outstanding
unsecured senior notes in separate transactions at an average 5% discount to par
value, which represents a 7.4% yield to maturity. As a result of the
repurchases, we recognized an aggregate gain of $2.6 million, which is included
in Gains (losses) on retirement of debt on our Consolidated Condensed Statements
of Income and Comprehensive Income.
  Investing and Development Activities
  44




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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.
  45




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Guarantees
      46




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Off-Balance Sheet Arrangements
  (in millions)2008
    
    $
    6.82009
    
    
    137.72010
    
    
    66.9Thereafter
    
    
    265.1$
    476.5
  Critical Accounting Policies and Estimates
  Investment and Development
  Assets and Liabilities Measured at Fair Value
  47




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Derivatives and Hedging
    Inflation
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4. Controls and Procedures
    48




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PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors
  Recent disruptions in the financial markets could affect our ability to obtain financing for
development of our properties and other purposes on reasonable terms and could have other adverse
effects on us and the market price of the Trusts common shares.
  Our results of operations could be adversely affected if we are required to perform under various
financial guarantees that we have provided with respect to certain of our joint ventures and retail
developments.
  49




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 6. Exhibits
  50




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SIGNATURES
  COLONIAL REALTY LIMITED PARTNERSHIP,
A Delaware limited partnershipBy:
    Colonial Properties TrustIts General Partner Date:  November 7, 2008
    By:
    /s/   Weston M. AndressWeston M. AndressPresident and Chief Financial Officer Date:  November 7, 2008
    By:
    /s/   John E. TomlinsonJohn E. TomlinsonExecutive Vice President &
Chief Accounting Officer
(Principal Accounting Officer) 51




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##### Table of Contents



Index of Exhibits
 12.1
    
    Ratio of Earnings to Fixed Charges
    
    Filed herewith
    
    Page 5315.1
    
    Letter re: Unaudited Interim Financial Information
    
    Filed herewith
    
    Page 5431.1
    
    CEO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 5531.2
    
    CFO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 5632.1
    
    CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 5732.2
    
    CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
    
    Page 58
 52