##### 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: March 31, 2006
 or
 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
    
    63-1098468(State or other jurisdiction
of incorporation)
    
    (IRS Employer
Identification Number)
 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35203(Address of principal executive offices) (Zip Code)Registrants telephone number, including area code: (205) 250-8700Not applicable(Former name or former address, if changed since last report)
  þ o
  þ o o
  o þ




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##### 



COLONIAL REALTY LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
 PagePART
I:      FINANCIAL INFORMATIONItem 1.      Consolidated
Condensed Financial Statements (Unaudited)Consolidated Condensed Balance Sheets as of
March 31, 2006 and December 31, 2005
    
    
    3Consolidated Condensed Statements of Income and Comprehensive
Income for the Three Months Ended March 31, 2006 and 2005
    
    
    4Consolidated Condensed Statements of Cash Flows
For the Three Months Ended March 31, 2006 and 2005
    
    
    5Notes
to Consolidated Condensed Financial Statements
    
    
    6Report
of Independent Registered Public Accounting Firm *
    
    
    18Item 2.      Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    19Item 3.      Quantitative
and Qualitative Disclosures about Market Risk
    
    
    27Item 4.      Controls
and Procedures
    
    
    27PART
II:      OTHER INFORMATIONItem 2.      Unregistered
Sales of Equity Securities and Use of Proceeds
    
    
    28Item 5.      Other
Information
    
    
    28Item 6.      Exhibits
    
    
    28SIGNATURES
    
    
    29EXHIBIT INDEX
    
    
    30EX-10.1 SUMMARY OF 2006 INCENTIVE PLANEX-12.1 RATIO OF EARNINGS TO FIXED CHARGESEX-15.1 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATIONEX-31.1 SECTION 302, CERTIFICATION OF THE CEOEX-31.2 SECTION 302, CERTIFICAITON OF THE CFOEX-32.1 SECTION 906, CERTIFICAITON OF THE CEOEX-32.2 SECTION 906, CERTIFICATION OF THE CFO
  
 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)March 31, 2006
    
    
    December 31, 2005ASSETSLand, buildings, & equipment
    
    $
    3,972,101
    
    
    $
    3,974,907Undeveloped land and construction in progress
    
    
    237,993
    
    
    
    202,052Less: Accumulated depreciation
    
    
    (486,643
    )
    
    
    (453,352
    )Real estate assets held for sale, net
    
    
    116,556
    
    
    
    367,372Net real estate assets
    
    
    3,840,007
    
    
    
    4,090,979Cash and equivalents
    
    
    37,313
    
    
    
    30,615Restricted cash
    
    
    8,198
    
    
    
    8,142Accounts receivable, net
    
    
    20,041
    
    
    
    25,767Notes receivable
    
    
    51,869
    
    
    
    36,387Prepaid expenses
    
    
    15,995
    
    
    
    19,546Deferred debt and lease costs
    
    
    46,786
    
    
    
    50,436Investment in partially owned entities
    
    
    125,377
    
    
    
    123,700Other assets
    
    
    99,349
    
    
    
    113,655$
    4,244,935
    
    
    $
    4,499,227LIABILITIES AND PARTNERS EQUITYNotes and mortgages payable
    
    $
    2,133,327
    
    
    $
    2,274,620Unsecured credit facility
    
    
    166,600
    
    
    
    210,228Mortgages payable related to real estate assets held for sale
    
    
    
    
    
    
    9,502Total long-term liabilities
    
    
    2,299,927
    
    
    
    2,494,350Accounts payable
    
    
    53,261
    
    
    
    74,455Accrued interest
    
    
    31,907
    
    
    
    29,063Accrued expenses
    
    
    23,244
    
    
    
    17,603Tenant deposits
    
    
    6,742
    
    
    
    7,251Unearned rent
    
    
    3,272
    
    
    
    9,722Other liabilities
    
    
    1,289
    
    
    
    736Total liabilities
    
    
    2,419,642
    
    
    
    2,633,180Redeemable
units, at redemption value - 10,850,370 units outstanding at
March 31, 2006and 10,872,568 at December 31, 2005
    
    
    543,929
    
    
    
    456,430Limited partners minority interest in consolidated partnership
    
    
    9,141
    
    
    
    8,093General partner -Common equity - 45,299,407 and 45,014,823 units outstanding atMarch 31, 2006 and December 31, 2005, respectively
    
    
    895,508
    
    
    
    1,003,583Preferred equity ($280,504 liquidation preference)
    
    
    273,880
    
    
    
    301,450Limited partners preferred equity ($100,000 liquidation preference)
    
    
    97,406
    
    
    
    97,406Accumulated other comprehensive income (loss)
    
    
    5,429
    
    
    
    (915
    )Total general partners equity
    
    
    1,272,223
    
    
    
    1,401,524$
    4,244,935
    
    
    $
    4,499,227
  3




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COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)  (in thousands, except per unit data)





Three Months EndedMarch 31,2006
    
    
    2005Revenue:Minimum rent
    
    $
    113,760
    
    
    $
    73,077Percentage rent
    
    
    414
    
    
    
    660Tenant recoveries
    
    
    7,933
    
    
    
    8,984Construction revenues
    
    
    12,140
    
    
    
    Other property related revenue
    
    
    8,250
    
    
    
    2,321Other non-property related revenue
    
    
    4,108
    
    
    
    3,126Total revenue
    
    
    146,605
    
    
    
    88,168Operating Expenses:Property operating expenses:General operating expenses
    
    
    11,793
    
    
    
    6,181Salaries and benefits
    
    
    8,885
    
    
    
    3,627Repairs and maintenance
    
    
    10,319
    
    
    
    8,293Taxes, licenses, and insurance
    
    
    15,084
    
    
    
    9,379General and administrative
    
    
    11,514
    
    
    
    8,401Construction expenses
    
    
    11,370
    
    
    
    Depreciation
    
    
    39,529
    
    
    
    23,628Amortization
    
    
    7,967
    
    
    
    3,307Total operating expenses
    
    
    116,461
    
    
    
    62,816Income from operations
    
    
    30,144
    
    
    
    25,352Other income (expense):Interest expense and debt cost amortization
    
    
    (33,811
    )
    
    
    (24,364
    )Loss on retirement of debt
    
    
    (1,179
    )
    
    
    Interest income
    
    
    1,539
    
    
    
    210Income (loss) from investments
    
    
    (662
    )
    
    
    270Gain on hedging activities
    
    
    2,464
    
    
    
    280Gains from sales of property, net of income taxes of $513 (2006) and $0 (2005)
    
    
    6,024
    
    
    
    1,025Minority interest of limited partners
    
    
    (120
    )
    
    
    (4
    )Income taxes
    
    
    (796
    )
    
    
    (210
    )Total other income (expense)
    
    
    (26,541
    )
    
    
    (22,793
    )Income from continuing operations
    
    
    3,603
    
    
    
    2,559Income from discontinued operations
    
    
    1,763
    
    
    
    7,180Gain on disposal of discontinued operations, net of taxes of $1,269 (2006) and $0 (2005)
    
    
    10,508
    
    
    
    91,873Minority interest of limited partners
    
    
    (979
    )
    
    
    (225
    )Income from discontinued operations
    
    
    11,292
    
    
    
    98,828Net income
    
    
    14,895
    
    
    
    101,387Distributions to general partner preferred unitholders
    
    
    (6,099
    )
    
    
    (3,695
    )Distributions to limited partner preferred unitholders
    
    
    (1,813
    )
    
    
    (1,813
    )Preferred unit issuance costs
    
    
    (159
    )
    
    
    Net income available to common unitholders
    
    $
    6,824
    
    
    $
    95,879Net income available to common unitholders allocated to limited partners
    
    
    (1,322
    )
    
    
    (25,974
    )Net income available to common unitholders allocated to general partner
    
    $
    5,502
    
    
    $
    69,905Net income per common unit  Basic:Income (loss) from continuing operations
    
    $
    (0.08
    )
    
    $
    (0.08
    )Income from discontinued operations
    
    
    0.20
    
    
    
    2.59Net income per common unit  Basic
    
    $
    0.12
    
    
    $
    2.51Net income per common unit  Diluted:Income (loss) from continuing operations
    
    $
    (0.08
    )
    
    $
    (0.08
    )Income from discontinued operations
    
    
    0.20
    
    
    
    2.59Net income per common unit  Diluted
    
    $
    0.12
    
    
    $
    2.51Average units outstanding:Basic
    
    
    55,844
    
    
    
    38,162Diluted
    
    
    55,844
    
    
    
    38,162CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOMENet income
    
    $
    14,895
    
    
    $
    101,387Other comprehensive incomeUnrealized income (loss) on cash flow hedging activities
    
    
    6,343
    
    
    
    10,355Comprehensive income
    
    $
    21,238
    
    
    $
    111,742




4




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COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS  (amounts in thousands)


Three Months EndedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    14,895
    
    
    $
    101,387Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    46,518
    
    
    
    29,590Preferred share issuance costs
    
    
    (159
    )
    
    
    Income from partially owned entities
    
    
    870
    
    
    
    (42
    )Gains from sales of property
    
    
    (12,820
    )
    
    
    (92,898
    )Distributions of income from partially owned entities
    
    
    1,915
    
    
    
    Decrease (increase) in:Restricted cash
    
    
    (56
    )
    
    
    (2,280
    )Accounts receivable
    
    
    4,734
    
    
    
    4Prepaid expenses
    
    
    1,502
    
    
    
    2,623Other assets
    
    
    547
    
    
    
    (489
    )Increase (decrease) in:Accounts payable
    
    
    (4,680
    )
    
    
    (672
    )Accrued interest
    
    
    2,844
    
    
    
    4,312Accrued expenses and other
    
    
    3,647
    
    
    
    (2,307
    )Net cash provided by operating activities
    
    
    59,757
    
    
    
    39,228Cash flows from investing activities:Acquisition of properties
    
    
    (8,313
    )
    
    
    (119,343
    )Direct costs of cornerstone merger
    
    
    
    
    
    
    (2,402
    )Development expenditures
    
    
    (65,299
    )
    
    
    (28,673
    )Tenant improvements
    
    
    (7,472
    )
    
    
    (6,264
    )Capital expenditures
    
    
    (3,641
    )
    
    
    (4,121
    )Proceeds from (issuance of) notes receivable
    
    
    (9,995
    )
    
    
    27Proceeds from sales of property, net of selling costs
    
    
    238,821
    
    
    
    205,199Distributions from partially owned entities
    
    
    342
    
    
    
    3,335Capital contributions to partially owned entities
    
    
    (5,651
    )
    
    
    (324
    )Net cash used in investing activities
    
    
    138,792
    
    
    
    47,434Cash flows from financing activities:Principal reductions of debt
    
    
    (69,843
    )
    
    
    (215,065
    )Proceeds from additional borrowings
    
    
    
    
    
    
    275,030Net change in revolving credit balances
    
    
    (58,427
    )
    
    
    13,550Cash contributions
    
    
    10,038
    
    
    
    11,806Redemption of preferred units
    
    
    (27,570
    )
    
    
    -Distributions to common and preferred unitholders
    
    
    (46,049
    )
    
    
    (31,163
    )Payment of mortgage financing costs
    
    
    
    
    
    
    (5,228
    )Net cash provided by (used in) financing activities
    
    
    (191,851
    )
    
    
    48,930Increase in cash and equivalents
    
    
    6,698
    
    
    
    135,592Cash and equivalents, beginning of period
    
    
    30,615
    
    
    
    10,725Cash and equivalents, end of period
    
    $
    37,313
    
    
    $
    146,317Non-cash transactions:Cash flow hedging activities
    
    
    6,343
    
    
    
    10,355




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COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 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
   In thousands, except per unit data
    
    ***** Pro Forma (Unaudited) *****Three MonthsEnded March 31,2005 (1)Total revenue
    
    $
    120,949Net income available to common unitholders
    
    $
    65,912Net income per common unit  dilutive
    
    $
    1.47
 
 (1)
    
    One time merger costs of $9.1 million expensed by Cornerstone, have been excluded from the pro forma net income
to common unitholders for the three months ended March 31, 2005.  6




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Note 2  Summary of Significant Accounting Policies
 Basis of Presentation
  Consolidation of Variable Interest Entities,
 Use of Estimates
  Unaudited Interim Statements
  Revenue Recognition
   Notes Receivable
  7




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##### Table of Contents



Stock-Based Compensation
 Share Based Payment
  For the Quarter EndedMarch 31, 2006(amounts in thousands)Balance, December 31, 2005
    
    $
    3,646Amortization of deferred compensation
    
    
    (567
    )Issuance of restricted shares
    
    
    110Balance, March 31, 2006
    
    $
    3,189
  Weighted AverageGrant DateShares
    
    Fair ValueNonvested Restricted Stock, December 31, 2005
    
    
    157,499
    
    
    $
    36.36Granted
    
    
    2,401
    
    
    $
    44.09Vested
    
    
    (12,179
    )
    
    $
    32.83Cancelled/Forfeited
    
    
    (2,393
    )
    
    $
    39.94Nonvested Restricted Stock, March 31, 2006
    
    
    145,328
    
    
    $
    36.72
   Reclassifications
  Note 3 Capital Structure
   8




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##### Table of Contents



Note 4  Acquisition and Disposition Activity
 Property Acquisitions
   Property Dispositions
  Sales PriceProperty Name
    
    Location
    
    Units
    
    
    (in millions)The Timbers
    
    Raleigh, NC
    
    
    176
    
    
    $
    7.6Colonial Village at Remington Place
    
    Raleigh, NC
    
    
    136
    
    
    
    7.9Summerwalk
    
    Charlotte, NC
    
    
    160
    
    
    
    8.2Colonial Village at Paces Glen
    
    Charlotte, NC
    
    
    172
    
    
    
    6.0Colonial Village at Stone Brook
    
    Atlanta, GA
    
    
    188
    
    
    
    9.4Colonial Grand at Whitemarsh
    
    Savannah, GA
    
    
    352
    
    
    
    39.0Colonial Village at Caledon Woods
    
    Greenville, SC
    
    
    350
    
    
    
    22.9$
    101.0
     9




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##### Table of Contents



Sales PriceProperty Name
    
    Location
    
    Units
    
    
    (in millions)The Meadows I, II & III
    
    Asheville, NC
    
    
    392
    
    
    $
    28.4Colonial Village at Estrada
    
    Dallas, TX
    
    
    248
    
    
    
    9.6Copper Crossing
    
    Fort Worth, TX
    
    
    400
    
    
    
    14.2The Trestles
    
    Raleigh, NC
    
    
    280
    
    
    
    11.6$
    63.8
   Accounting for the Impairment on Disposal of Long-Lived
Assets
 Units/SquareProperty
    
    Location
    
    Date Sold
    
    FeetMultifamilyColonial 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
    
    
    272
 10




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Units/SquareProperty
    
    Location
    
    Date Sold
    
    FeetColonial 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.   Three Months Ended(amounts in thousands)
    
    March 31,2006
    
    
    2005Property revenues:Base rent
    
    $
    3,868
    
    
    $
    12,149Percentage rent
    
    
    
    
    
    
    244Tenant recoveries
    
    
    23
    
    
    
    2,500Other property revenue
    
    
    331
    
    
    
    2,921Total property revenues
    
    
    4,222
    
    
    
    17,814Property operating and maintenance expense
    
    
    2,088
    
    
    
    6,763Depreciation
    
    
    326
    
    
    
    1,779Amortization
    
    
    9
    
    
    
    126Total operating expenses
    
    
    2,423
    
    
    
    8,668Interest expense, net
    
    
    (125
    )
    
    
    (1,743
    )Income (loss) from partially owned entities
    
    
    89
    
    
    
    (223
    )Income from discontinued operations before net gain
on disposition of discontinued operations
    
    
    1,763
    
    
    
    7,180Net gain on disposition of discontinued operations
    
    
    10,508
    
    
    
    91,873Minority interest to limited partners
    
    
    (979
    )
    
    
    (225
    )Income from discontinued operations
    
    $
    11,292
    
    
    $
    98,828
 For Sale / Projects
  11




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Note 5  Net Income Per Unit
  Three Months
    
    
    Three MonthsEnded
    
    
    Ended(amounts in thousands, except per unit data)
    
    March 31,
    
    
    March 31,2006
    
    
    2005Numerator:Net income
    
    $
    14,895
    
    
    $
    101,387Less: Preferred distributions
    
    
    (7,912
    )
    
    
    (5,508
    )Less: Preferred unit issuance costs
    
    
    (159
    )
    
    
    Net income available to common unitholders
    
    $
    6,824
    
    
    $
    95,879Denominator:Denominator for basic net income per unit  weighted average units
    
    
    55,844
    
    
    
    38,162Effect of dilutive securities:Trustee and employee stock options, treasury method
    
    
    
    
    
    
    Denominator
for diluted net income per unit  adjusted weighted average units
    
    
    55,844
    
    
    
    38,162Basic net income per unit
    
    $
    0.12
    
    
    $
    2.51Diluted net income per unit
    
    $
    0.12
    
    
    $
    2.51
  Note 6  Segment Information
  12




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##### Table of Contents



Three Months EndedMarch 31,(in thousands)
    
    2006
    
    
    2005Revenues:Divisional Revenues:Multifamily
    
    $
    77,969
    
    
    $
    38,266Office
    
    
    44,422
    
    
    
    25,080Retail
    
    
    28,349
    
    
    
    44,410Total Divisional Revenues
    
    
    150,740
    
    
    
    107,756Partially-owned subsidiaries
    
    
    (16,161
    )
    
    
    (4,900
    )Construction revenues
    
    
    12,140
    
    
    
    Unallocated corporate revenues
    
    
    4,108
    
    
    
    3,126Discontinued operations revenues
    
    
    (4,222
    )
    
    
    (17,814
    )Total Consolidated Revenues
    
    
    146,605
    
    
    
    88,168NOI:Divisional NOI:Multifamily
    
    
    46,706
    
    
    
    23,050Office
    
    
    29,356
    
    
    
    17,259Retail
    
    
    20,605
    
    
    
    31,246Total Divisional NOI
    
    
    96,667
    
    
    
    71,555Partially-owned subsidiaries
    
    
    (10,052
    )
    
    
    (2,940
    )Unallocated corporate revenues
    
    
    4,108
    
    
    
    3,126Discontinued operations NOI
    
    
    (2,134
    )
    
    
    (11,051
    )Construction NOI
    
    
    770
    
    
    
    General and administrative expenses
    
    
    (11,514
    )
    
    
    (8,401
    )Depreciation
    
    
    (39,529
    )
    
    
    (23,628
    )Amortization
    
    
    (7,967
    )
    
    
    (3,307
    )Other
    
    
    (205
    )
    
    
    (2
    )Income from operations
    
    
    30,144
    
    
    
    25,352Total other expense
    
    
    (26,541
    )
    
    
    (22,793
    )Income (loss) before minority interest
and discontinued operations
    
    $
    3,603
    
    
    $
    2,559(in thousands)
    
    March 31,
    
    December 31,Assets
    
    
    2006
    
    
    
    2005Divisional AssetsMultifamily
    
    $
    2,177,679
    
    
    $
    2,374,650Office
    
    
    955,721
    
    
    
    958,131Retail
    
    
    661,918
    
    
    
    790,827Total Divisional Assets
    
    
    3,795,318
    
    
    
    4,123,608Unallocated corporate assets (1)
    
    
    449,617
    
    
    
    375,619$
    4,244,935
    
    
    $
    4,499,227
 
 (1)
    
    Includes CRLPs investment in partially-owned entities of $125,377 as of
March 31, 2006 and $123,700 as of December 31, 2005. Note 7  Investment in Partially Owned Entities
  13




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##### Table of Contents



(in thousands)Percent
    
    
    March 31,
    
    
    December 31,Owned
    
    
    2006
    
    
    2005Multifamily:Arbors at Windsor Lake, Columbia, SC
    
    
    10.00
    %
    
    $
    730
    
    
    $
    716Carter Regents Park, Atlanta, GA
    
    
    40.00
    %
    
    
    3,042
    
    
    
    3,000CG at Research Park, Durham, NC
    
    
    20.00
    %
    
    
    1,415
    
    
    
    1,570CG at Huntcliff Village, Atlanta, GA
    
    
    20.00
    %
    
    
    2,756
    
    
    
    CG at Canyon Creek, Austin, TX
    
    
    25.00
    %
    
    
    1,457
    
    
    
    CMS / Colonial Joint Venture I
    
    
    15.00
    %
    
    
    1,061
    
    
    
    944CMS / Colonial Joint Venture II
    
    
    (1
    )
    
    
    241
    
    
    
    597CMS Florida
    
    
    25.00
    %
    
    
    2,744
    
    
    
    2,721CMS Tennessee
    
    
    25.00
    %
    
    
    2,347
    
    
    
    2,377CV at Matthews Village, Charlotte, NC
    
    
    25.00
    %
    
    
    1,165
    
    
    
    DRA Alabama
    
    
    10.00
    %
    
    
    2,419
    
    
    
    2,403DRA Cunningham, Austin, TX
    
    
    20.00
    %
    
    
    1,108
    
    
    
    1,111DRA Southwest Partnership
    
    
    (2
    )
    
    
    17,997
    
    
    
    18,044DRA The Grove at Riverchase, Birmingham, AL
    
    
    20.00
    %
    
    
    1,770
    
    
    
    1,788Merritt at Godley Station, Pooler, GA
    
    
    35.00
    %
    
    
    3,176
    
    
    
    3,188Stone Ridge, Columbia, SC
    
    
    10.00
    %
    
    
    498
    
    
    
    49743,926
    
    
    
    38,956Office:600 Building Partnership, Birmingham, AL
    
    
    33.33
    %
    
    
    4
    
    
    
    11Douglas HCI, Coral Gables, FL
    
    
    25.00
    %(3)
    
    
    
    
    
    
    5,807DRA / Colonial Office Joint Venture
    
    
    15.00
    %
    
    
    44,672
    
    
    
    46,89644,676
    
    
    
    52,714Retail:Colonial Promenade Madison, Huntsville, AL
    
    
    25.00
    %
    
    
    2,227
    
    
    
    2,255South Florida Retail Joint Venture
    
    
    10.00
    %
    
    
    4,989
    
    
    
    GPT/Colonial Retail Joint Venture
    
    
    10.00
    %(4)
    
    
    (2,490
    )
    
    
    (2,311
    )Highway 150, LLC, Birmingham, AL
    
    
    10.00
    %
    
    
    85
    
    
    
    80Parkway Place Limited Partnership, Huntsville, AL
    
    
    45.00
    %
    
    
    12,883
    
    
    
    12,984Turkey Creek, Parkside Drive LLC Partnership
    
    
    50.00
    %
    
    
    19,068
    
    
    
    18,98736,762
    
    
    
    31,995Other:Colonial / Polar-BEK Management Company,
Birmingham, AL
    
    
    50.00
    %
    
    
    13
    
    
    
    30Other
    
    
    
    
    
    
    
    
    
    
    5$
    125,377
    
    
    $
    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 16 properties, 13 in which CRLP has a 24%
partnership interest and three 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 3).(4)
    
    Amount represents 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.    14




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Note 8  Financing Activities
     Note 9  Derivatives and Hedging
 Accounting for Derivative Instruments and Hedging Activities
 15




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##### Table of Contents



Fair ValueAt March 31, 2006Interest
    
    
    
    
    
    
    Asset (Liability)Product Type
    
    Notional Value
    
    
    Rate
    
    
    Maturity
    
    
    (in thousands)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
    
    $30.4 million
    
    
    11.200
    %
    
    
    7/3/06
    
    
    
    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
    
    
    
    5Interest 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
    
    
    
    3Interest Rate CAP, Cash Flow
    
    $25.9 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    Interest Rate CAP, Cash Flow
    
    $16.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    Interest Rate CAP, Cash Flow
    
    $8.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    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 SWAP, Cash Flow
    
    $175.0 million
    
    
    4.877
    %
    
    
    7/13/17
    
    
    
    6,715Interest Rate SWAP, Cash Flow
    
    $100.0 million
    
    
    4.573
    %
    
    
    3/24/08
    
    
    
    1,041
 16




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##### Table of Contents



Note 10  Subsequent Events
 Distribution
  Preferred Share Buyback
  Property Dispositions
   Management Changes
  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).
  17




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Report of Independent Registered Public Accounting Firm
 
     
 18




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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;
    
    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.
 19




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20




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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 March 31,
    
    
    Ended March 31,
    
    
    Ended March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Multifamily Properties (1)Physical Occupancy
    
    
    96.2
    %
    
    
    95.2
    %
    
    
    96.0
    %
    
    
    95.0
    %
    
    
    96.2
    %
    
    
    95.2
    %Same-Property Economic Occupancy (2)
    
    
    83.0
    %
    
    
    81.6
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    83.0
    %
    
    
    81.6
    %End of Month Effective
Rent per Unit per Month
    
    $
    675
    
    
    $
    682
    
    
    $
    751
    
    
    $
    721
    
    
    $
    697
    
    
    $
    686Capital Expenditures per Unit
    
    $
    61
    
    
    $
    137
    
    
    $
    126
    
    
    $
    183
    
    
    $
    62
    
    
    $
    142Office Properties (3)Physical Occupancy
    
    
    93.2
    %
    
    
    89.5
    %
    
    
    86.9
    %
    
    
    100.0
    %
    
    
    92.0
    %
    
    
    89.5
    %Base Rent per Square Foot
    
    $
    19.15
    
    
    $
    17.86
    
    
    $
    21.41
    
    
    $
    17.24
    
    
    $
    19.54
    
    
    $
    17.84Capital Expenditures per Square Foot
    
    $
    0.79
    
    
    $
    0.90
    
    
    $
    1.11
    
    
    
    
    
    
    $
    0.85
    
    
    $
    0.90Retail PropertiesPhysical Occupancy
    
    
    90.1
    %
    
    
    91.0
    %
    
    
    91.3
    %
    
    
    90.9
    %
    
    
    90.2
    %
    
    
    91.0
    %Base Rent per Square Foot
    
    $
    17.76
    
    
    $
    19.87
    
    
    $
    23.20
    
    
    $
    24.56
    
    
    $
    19.99
    
    
    $
    20.26Tenant Gross Sales per Square Foot
    
    $
    261.10
    
    
    $
    272.95
    
    
    $
    303.86
    
    
    $
    249.48
    
    
    $
    288.69
    
    
    $
    270.80
 
 (1)
    
    Prior year performance metrics exclude Cornerstone performance.(2)
    
    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.(3)
    
    Physical occupancy percentages include the DRA / Colonial Office Joint Venture
properties. All other exclude these properties.  
    
    changes in job growth, household formation and population growth in our markets;
    
    changes in interest 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.
  21




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##### Table of Contents



Results of Operations  Three Months Ended March 31, 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
 22




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##### Table of Contents



Interest expense and debt cost amortization
 Loss on retirement of debt
 Interest income
 Gain on hedging activities
 Gains from sales of property
 Income from discontinued operations
 Liquidity and Capital Resources
 Short-Term Liquidity Needs
     23




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##### Table of Contents



Long-Term Liquidity Needs
      Unsecured Revolving Credit Facilities
   24




---



##### Table of Contents



Investing Activities
    Distribution
  Critical Accounting Policies and Estimates
  25




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##### Table of Contents



Derivatives and Hedging
  Fair ValueAt March 31, 2006Interest
    
    
    
    
    
    
    Asset (Liability)Product Type
    
    Notional Value
    
    
    Rate
    
    
    Maturity
    
    
    (in thousands)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
    
    $30.4 million
    
    
    11.200
    %
    
    
    7/3/06
    
    
    
    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
    
    
    
    5Interest 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
    
    
    
    3Interest Rate CAP, Cash Flow
    
    $25.9 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    Interest Rate CAP, Cash Flow
    
    $16.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    Interest Rate CAP, Cash Flow
    
    $8.4 million
    
    
    4.840
    %
    
    
    4/1/06
    
    
    
    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 SWAP, Cash Flow
    
    $175.0 million
    
    
    4.877
    %
    
    
    7/13/17
    
    
    
    6,715Interest Rate SWAP, Cash Flow
    
    $100.0 million
    
    
    4.573
    %
    
    
    3/24/08
    
    
    
    1,041
    Inflation
  26




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##### Table of Contents



Item 3.      Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4.      Controls and Procedures
   (b)
    
    Changes in internal control over financial reporting.
  27




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds
   Issuer Purchases of Equity Securities(1)
 Total Number of
    
    
    ApproximateShares Purchased
    
    
    Dollar Value ofas Part of Publicly
    
    
    Shares that MayTotal Number of
    
    
    Average Price
    
    
    Announced Plans
    
    
    Yet Be PurchasedPeriod
    
    Shares Purchased
    
    
    Paid per Share
    
    
    or Programs
    
    
    Under the ProgramFebruary 1, 2006  February 28, 2006
    
    
    96,356
    
    
    $
    24.91
    
    
    
    96,356
    
    
    $
    62,600,000March 1,
2006  March 31, 2006
    
    
    1,009,879
    
    
    $
    25.05
    
    
    
    1,009,879
    
    
    $
    37,300,000Total
    
    
    1,106,235
    
    
    $
    25.04
    
    
    
    1,106,235
    
    
    $
    37,300,000
 
 (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 5. Other Information
  
 Item 6. Exhibits.
  28




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##### Table of Contents



SIGNATURES
  COLONIAL REALTY LIMITED PARTNERSHIP,A Delaware limited partnershipBy:
    
    Colonial Properties Trust,Its General PartnerDate: May 10, 2006
    
    By:
    
    /s/
    
    
    
    Weston M. AndressWeston M. AndressPresident and Chief Financial OfficerDate: May 10, 2006
    
    By:
    
    /s/
    
    
    
    John E. TomlinsonJohn E. TomlinsonChief Accounting Officer(Principal Accounting Officer)
 29




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##### Table of Contents



Index of Exhibits
 10.1
    
    Summary of 2006 Incentive Plan
    
    Filed herewith12.1
    
    Ratio of Earnings to Fixed Charges
    
    Filed herewith15.1
    
    Letter re: Unaudited Interim Financial Information
    
    Filed herewith31.1
    
    CEO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    CFO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith32.1
    
    CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith32.2
    
    CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith
 30