|UNITED STATES SECURITIES AND
EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-Q


[ X ] QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES          EXCHANGE ACT OF 1934


For
the quarterly period ended: September 30, 2004



or



[    ]  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 35202(Address of
principal executive offices) (Zip Code)






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



Not applicable (Former name or
former address, if changed since last report)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.

YES X     NO


Indicate
by check mark whether the registrant is an accelerated filer (as defined in Exchange Act
Rule 12-b-2).

YES X     NO













COLONIAL REALTY LIMITED PARTNERSHIP INDEX TO FORM 10-Q







Page



PART I: FINANCIAL
INFORMATION
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                 |  |   
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | --
|Item 1.  Financial Statements (Unaudited)                                                                                                        |  |   
|Consolidated Condensed Balance Sheets as of September 30, 2004 and December 31,             2003                                                 |  | 3 
|Consolidated Condensed Statements of Income and Comprehensive Income for the             Three and Nine Months Ended September 30, 2004 and 2003 |  | 4 
|Consolidated Condensed Statements of Cash Flows for the Nine Months Ended              September30, 2004 and 2003                                |  | 5 
|Notes to Consolidated Condensed Financial Statements                                                                                             |  | 6 
|Report of Independent Registered Public Accounting Firm                                                                                          |  | 17
|Item 2.  Management's Discussion and Analysis of Financial Condition and Results of      Operations                                              |  | 18
|Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                                                              |  | 26
|Item 4. Controls and Procedures                                                                                                                  |  | 26

# PART II: OTHER
INFORMATION

|                               |  |   
|------------------------------ |  | --
|Item 2.  Changes in Securities |  | 27
|Item 6.  Exhibits              |  | 27
|SIGNATURES                     |  | 28
|EXHIBITS                       |  | 29

|-2-






COLONIAL REALTY LIMITED
PARTNERSHIPCONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except unit data)
|-------------------------------------------------------------------------------------------------------------------

|                                                                     |  |            
|-------------------------------------------------------------------- |  | -----------
|
|                                                                     |  |            
|ASSETS                                                               |  |            
|Land, buildings, & equipment                                         |  | $ 2,622,526
|Undeveloped land and construction in progress                        |  | 141,179    
|Less: Accumulated depreciation                                       |  | (420,414   
|Real estate assets held for sale, net                                |  | 146,294    
|                                                                     |  |            
|Net real estate assets                                               |  | 2,489,585  
|Cash and equivalents                                                 |  | 7,450      
|Restricted cash                                                      |  | 2,261      
|Accounts receivable, net                                             |  | 16,639     
|Prepaid expenses                                                     |  | 6,654      
|Notes receivable                                                     |  | 645        
|Deferred debt and lease costs                                        |  | 35,514     
|Investment in partially owned entities                               |  | 63,085     
|Other assets                                                         |  | 55,301     
|                                                                     |  |            
|                                                                     |  | $ 2,677,134
|                                                                     |  |            
|LIABILITIES AND PARTNERS' EQUITY                                     | 
|Notes and mortgages payable                                          |  | $ 1,499,531
|Unsecured credit facility                                            |  | 228,021    
|Mortgages payable related to real estate held for sale               |  | 3,400      
|                                                                     |  |            
|Total long-term liabilities                                          |  | 1,730,952  
|Accounts payable                                                     |  | 32,040     
|Accrued interest                                                     |  | 20,113     
|Accrued expenses                                                     |  | 25,793     
|Tenant deposits                                                      |  | 4,356      
|Unearned rent                                                        |  | 2,534      
|Other liabilities                                                    |  | 2,417      
|                                                                     |  |            
|Total liabilities                                                    |  | 1,818,205  
|                                                                     |  |            
|Redeemable units, at redemption value - 10,345,129 units outstanding | 
|at September 30, 2004 and 10,361,034 at December 31, 2003            |  | 416,081    
|Limited partners' minority interest in consolidated partnership      |  | 1,184      
|General partner -                                                    | 
|Common equity - 27,319,082 and 26,394,197 units outstanding at       | 
|September 30, 2004 and December 31, 2003, respectively               |  | 182,357    
|Preferred equity ($175,000 liquidation preference)                   |  | 168,703    
|Limited partners' preferred equity ($100,000 liquidation preference) |  | 97,406     
|Accumulated other comprehensive income (loss)                        |  | (6,802     
|                                                                     |  |            
|Total general partners' equity                                       |  | 441,664    
|                                                                     |  |            
|                                                                     |  | $ 2,677,134
|                                                                     |  |            

|The accompanying notes are an
integral part of these consolidated financial statements.





-3-








COLONIAL REALTY
LIMITED PARTNERSHIPCONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME (Unaudited)(in thousands,
except per unit data)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                              | Three Months EndedSeptember 30, | Nine Months EndedSeptember 30,
|----------------------------------------------------------------------------- | ------------------------------- | ------------------------------
|
|                                                                              |                                 |                               
|Revenue:                                                                      |                                 |                               
|Minimum rent                                                                  |                                 | $ 70,811                      
|Percentage rent                                                               |                                 | 534                           
|Tenant recoveries                                                             |                                 | 7,752                         
|Other property related revenue                                                |                                 | 5,447                         
|Other non-property related revenue                                            |                                 | 1,957                         
|                                                                              |                                 |                               
|Total revenue                                                                 |                                 | 86,501                        
|                                                                              |                                 |                               
|Operating Expenses:                                                           |                                
|Property operating expenses:                                                  |                                
|General operating expenses                                                    |                                 | 6,775                         
|Salaries and benefits                                                         |                                 | 4,496                         
|Repairs and maintenance                                                       |                                 | 7,991                         
|Taxes, licenses, and insurance                                                |                                 | 8,601                         
|General and administrative                                                    |                                 | 6,992                         
|Depreciation                                                                  |                                 | 22,085                        
|Amortization                                                                  |                                 | 3,418                         
|                                                                              |                                 |                               
|Total operating expenses                                                      |                                 | 60,358                        
|                                                                              |                                 |                               
|Income from operations                                                        |                                 | 26,143                        
|                                                                              |                                 |                               
|Other income (expense):                                                       |                                
|Interest expense                                                              |                                 | (21,437                       
|Income from investments                                                       |                                 | 114                           
|Gains (losses) on hedging activities                                          |                                 | 62                            
|Gains from sales of property                                                  |                                 | 902                           
|Minority interest of limited partners                                         |                                 | (25                           
|Other                                                                         |                                 | (168                          
|                                                                              |                                 |                               
|Total other income (expense)                                                  |                                 | (20,552                       
|                                                                              |                                 |                               
|Income from continuing operations                                             |                                 | 5,591                         
|                                                                              |                                 |                               
|Income from discontinued operations                                           |                                 | 5,195                         
|Gain (loss) on disposal of discontinued operations                            |                                 | 1,566                         
|                                                                              |                                 |                               
|Income from discontinued operations                                           |                                 | 6,761                         
|                                                                              |                                 |                               
|Net income                                                                    |                                 | 12,352                        
|                                                                              |                                 |                               
|Distributions to general partner preferred unitholders                        |                                 | (3,695                        
|Distributions to limited partner preferred unitholders                        |                                 | (1,813                        
|Preferred unit issuance costs                                                 |                                 | --                            
|                                                                              |                                 |                               
|Net income available to common unitholders                                    |                                 | $   6,844                     
|                                                                              |                                 |                               
|Net income available to common unitholders allocated to limited partners      |                                 | (1,884                        
|                                                                              |                                 |                               
|Net income available to common unitholders allocated to       general partner |                                 | $   4,960                     
|                                                                              |                                 |                               
|Net income per common unit - Basic:                                           |                                
|Income from continuing operations                                             |                                 | $        --                   
|Income from discontinued operations                                           |                                 | 0.18                          
|                                                                              |                                 |                               
|Net income per common unit - Basic                                            |                                 | $     0.18                    
|                                                                              |                                 |                               
|Net income per common unit - Diluted:                                         |                                
|Income from continuing operations                                             |                                 | $        --                   
|Income from discontinued operations                                           |                                 | 0.18                          
|                                                                              |                                 |                               
|Net income per common unit - Diluted                                          |                                 | $     0.18                    
|                                                                              |                                 |                               
|Average units outstanding:                                                    |                                
|Basic                                                                         |                                 | 37,597                        
|Diluted                                                                       |                                 | 37,960                        
|STATEMENTS OF COMPREHENSIVE INCOME                                            |                                
|Net income                                                                    |                                 | $ 12,352                      
|Other comprehensive income (loss)                                             |                                
|Unrealized income (loss) on cash flow hedging activities                      |                                 | (3,104                        
|                                                                              |                                 |                               
|Comprehensive income                                                          |                                 | $   9,248                     
|                                                                              |                                 |                               

The
accompanying notes are an integral part of these consolidated financial statements.

|-4-









COLONIAL REALTY
LIMITED PARTNERSHIPCONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)(in thousands)
|-------------------------------------------------------------------------------------------------------------------------

|                                                         | Nine Months EndedSeptember 30,
|-------------------------------------------------------- | ------------------------------
|
|                                                         |                               
|Cash flows from operating activities:                    |                               
|Net  income                                              |                               
|Adjustments to reconcile net income to net cash provided |                               
|by operating activities:                                 |                               
|Depreciation and amortization                            |                               
|Income from unconsolidated subsidiaries                  |                               
|Gains from sales of property                             |                               
|Minority interest in income of limited partners          |                               
|Decrease (increase) in:                                  |                               
|Restricted cash                                          |                               
|Accounts receivable                                      |                               
|Prepaid expenses                                         |                               
|Other assets                                             |                               
|Increase in:                                             |                               
|Accounts payable                                         |                               
|Accrued interest                                         |                               
|Accrued expenses and other                               |                               
|                                                         |                               
|Net cash provided by operating activities                |                               
|                                                         |                               
|                                                         |                               
|Cash flows from investing activities:                    |                               
|Acquisition of properties                                |                               
|Development expenditures                                 |                               
|Tenant improvements                                      |                               
|Capital expenditures                                     |                               
|Proceeds from (issuance of) notes receivable, net        |                               
|Proceeds from sales of property, net of selling costs    |                               
|Distributions from unconsolidated subsidiaries           |                               
|Capital contributions to unconsolidated subsidiaries     |                               
|                                                         |                               
|Net cash used in investing activities                    |                               
|                                                         |                               
|                                                         |                               
|Cash flows from financing activities:                    |                               
|Principal reductions of debt                             |                               
|Proceeds from additional borrowings                      |                               
|Net change in revolving credit balances                  |                               
|Cash contributions from the issuance of preferred units  |                               
|Redemption of preferred units                            |                               
|Cash contributions                                       |                               
|Capital distributions                                    |                               
|Other, net                                               |                               
|                                                         |                               
|Net cash provided by (used in) financing activities      |                               
|                                                         |                               
|Decrease in cash and equivalents                         |                               
|Cash and equivalents, beginning of period                |                               
|                                                         |                               
|Cash and equivalents, end of period                      |                               
|                                                         |                               
|                                                         |                               

|The
accompanying notes are an integral part of these consolidated financial statements.




-5-













COLONIAL REALTY
LIMITED PARTNERSHIPNOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS September 30, 2004(Unaudited)



The consolidated
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, 2003 audited consolidated financial
statements of Colonial Realty Limited Partnership and should be read together with the
financial statements and notes thereto included in the Form 10-K filed on March 15, 2004.



Note 1 
Organization and Business


Colonial
Realty Limited Partnership (CRLP) is the operating partnership of Colonial
Properties Trust (the Trust), an Alabama real estate investment trust whose
shares are traded on the New York Stock Exchange. The Trust was originally formed as a
Maryland real estate investment trust on July 9, 1993 and reorganized as an Alabama real
estate investment trust under a new Alabama REIT statute on August 21, 1995. The Trust is
is a fully integrated, self-administered and self-managed REIT, which means that it is
engaged in the acquisition, development, ownership, management and leasing of commercial
real estate property. The Trusts activities include ownership or partial ownership
and operation of a diversified portfolio of properties located in the Sunbelt region of
the United States, consisting of 59 multifamily apartment communities (including 42
wholly-owned consolidated properties and 17 properties partially-owned through
unconsolidated joint venture entities), 26 office properties (including 25 wholly-owned
consolidated properties and one property partially-owned through an unconsolidated joint
venture entity) and 49 retail properties (including 45 consolidated properties and four
properties partially-owned through unconsolidated joint venture entities), as of September
30, 2004.



Note 2  Summary of
Significant Accounting Policies



Basis of Presentation


The
consolidated financial statements include CRLP, Colonial Properties Services Limited
Partnership (in which CRLP holds 99% general and limited partner interests), and Colonial
Properties Services, Inc. (CPSI). CPSI is a taxable REIT subisidiary of the
Trust that is not entitled to a dividends paid deduction and is subject to federal, state
and local income taxes. CPSI provides property development, leasing and management for
third-party owned properties and administrative services to CRLP. CRLP generally
reimburses CPSI for payroll and other costs incurred in providing services to CRLP. All
inter-company transactions are eliminated in the accompanying consolidated financial
statements. Entities in which CRLP owns, directly or indirectly, a fifty percent or less
interest and does not control are reflected in the consolidated financial statements as
investments accounted for under the equity method, except as discussed below. Under this
method the investment is carried at cost plus or minus equity in undistributed earnings or
losses since the date of acquisition. For those entities in which we own less than 100% of
the equity interest, we consolidate the property if we have the direct or indirect ability
to make major decisions about the entities activities based on the terms of the
respective joint venture agreements which specify the sharing of participating and
protective rights such as decisions regarding major leases, encumbering the entities with
debt and whether to dispose of entities. We would also consolidate certain partially-owned
entities and other subsidiaries if we own less than 100% equity interest and are deemed
to be the primary beneficiary as defined by FASB
Interpretation 46 Consolidation of Variable Interest Entities,an Interpretation of
ARB No. 51, as revised (FIN 46(R)).



Use of Estimates


The
preparation of consolidated condensed financial statements in conformity with accounting
principles generally accepted in the United States (GAAP) requires management
to make estimates and assumptions that effect the reported amounts of assets and
liablities and disclosure of contingent assets and liablities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.



Unaudited Interim
Statements


The consolidated
financial statements as of and for the three and nine months ended September 30, 2004 and
2003 and related footnote disclosures are unaudited. In the opinion of management, such
financial statements reflect all adjustments necessary for a fair presentation of the
results of the interim periods. All such adjustments are of a normal, recurring nature.



-6-







Reclassifications


Certain
reclassifications have been made to the previously reported 2003 statements in order to
provide comparability with the 2004 statements reported herein. These reclassifications
have no impact on partners equity or net income.



Recent Pronouncements
of the Financial Accounting Standards Board (FASB)


On
January 15, 2003, FASB completed its redeliberations of the project related to the
consolidation of variable interest entities which culminated with the issuance of FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. FIN 46 states
that if a business enterprise has a controlling financial interest in a variable interest
entity, the assets, liabilities and results of the activities of the variable interest
entity should be included in the consolidated financial statements of the business
enterprise. This Interpretation explains how to identify variable interest entities and
how an enterprise assesses its interests in a variable interest entity to decide whether
to consolidate that entity. FIN 46 also requires existing unconsolidated variable interest
entities to be consolidated by their primary beneficiaries if the entities do not
effectively disperse risks among parties involved. Variable interest entities that
effectively disperse risks will not be consolidated unless a single party holds an
interest or combination of interests that effectively recombines risks that were
previously dispersed. This Interpretation applied immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in which an
enterprise obtains an interest after that date. In December 2003, the FASB revised FIN 46
through the release of FIN 46R, which clarified certain aspects of FIN 46 and contained
certain provisions that deferred the effective date of FIN 46 to periods ending after
March 15, 2004 for variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003.


The
Company has identified certain relationships that it deems to be variable interest
entities in which it holds a significant variable interest. As disclosed in Note 8,
relative to these entities, the Companys maximum exposure to loss is limited to the
carrying value of the Companys investments in those entities, which is $63.1 million
as of September 30, 2004. In addition to these variable interest entities, the Company
considers its relationship with another entity to also be a variable interest entity. The
maximum exposure related to this entity is limited to the amount of a guarantee and is
$1.0 million as of September 30, 2004, which results in a total maximum exposure to the
Company attributable to all variable interest entities in the aggregate amount of $64.1
million. The adoption of FIN 46 and FIN 46R did not have a material effect on the
Companys consolidated financial statements.




Note 3  Capital
Structure


At
September 30, 2004, the Trust controlled CRLP as the sole general partner and as the
holder of 72.5% of the common units of CRLP and 63.6% of the preferred units (the
Series C Preferred Units and Series D Preferred Units). The
limited partners of CRLP who hold common units or redeemable units, are those
persons (including certain officers and directors) who, at the time of the Initial Public
Offering, elected to hold all or a portion of their interest in the form of units rather
than receiving shares of common stock of the Trust, or individuals from whom CRLP acquired
certain properties, who elected to receive units in exchange for the properties.
Redeemable units represent the number of outstanding limited partnership units as of the
date of the applicable balance sheet, valued at the closing market value of the
Trusts common shares. Each redeemable unit may be redeemed by the holder thereof for
either one share of common stock of the Trust or cash equal to the fair market value
thereof at the time of such redemption, at the option of the Trust. Additionally, CRLP has
issued and outstanding $100 million of Series B Cumulative Redeemable Perpetual Preferred
Units (Series B Units) in a private placement, that are exchangeable for
Series B Preferred Shares of the Trust on or after February 24, 2009 at the option of the
holders of the Series B Units.


The
Board of Trustees of the Trust manages CRLP by directing the affairs of the Trust. The
Trusts interests in CRLP entitle it to share in cash distributions from, and in the
profits and losses of, CRLP in proportion to the Trusts percentage interest therein
and entitle the Trust to vote on all matters requiring a vote of the limited partners.



-7-







Note 4 
Acquisition and Disposition Activity


On
July 15, 2004, CRLP disposed of a 47,100 square foot retail asset, Colonial Shoppes at
Stanley, located in Locust, North Carolina. The asset was sold for $2.4 million and the
proceeds were used to fund other investment activities.


On
July 27, 2004, CRLP disposed of a 25,500 square foot office asset, Village at Roswell
Summit, located in Atlanta, Georgia. The asset was sold for $4.0 million and the proceeds
were used to fund other investment activities.


On
August 2, 2004, CRLP acquired three retail assets totaling approximately 526,000 square
feet in South Florida. The 379,000 square foot Deerfield Mall is located in Deerfield
Beach, Florida, south of Boca Raton. With a current occupancy of 98.0%, the property is
anchored by Publix, Walgreens, Marshalls, Sports Authority, TJ Maxx and OfficeMax.
With 100.0% occupancy, the 79,000 square foot College Parkway property is located in Fort
Myers, Florida and includes such tenants as Office Depot and the Blue Pepper Market. Pines
Plaza, which is 100.0% occupied, is a 68,000 square foot center and is anchored by Comp
USA, Office Depot and Sound Advice. The assets were acquired for a total purchase price of
$81.7 million, which consisted of approximately $32.8 million of cash and the assumption
of approximately $48.9 million of existing mortgage debt. The cash portion of the
acquisition was funded through borrowings under CRLPs unsecured line of credit.


On
August 19, 2004, CRLP acquired a 25% partnership interest and the management of 618
multifamily units in two communities in Nashville, Tennessee. Brentwood Gables apartments,
which will be renamed Colonial Grand at Brentwood, is located in the Brentwood submarket.
The complex consists of 254 units and is 94 % occupied. The 364-unit Gables at Henderson
Apartments is located in the Hendersonville submarket and is 85 % occupied; the property
will be renamed Colonial Village at Hendersonville. The assets were acquired for a total
purchase price of $10.3 million, which consisted of approximately $2.9 million of cash and
the assumption of approximately $7.4 million of existing mortgage debt. The cash portion
of the acquisition was funded through borrowings under CRLPs unsecured line of
credit.


On
September 9, 2004, CRLP announced the development of Colonial Pinnacle at Craft Farms, a
285,000 square foot lifestyle center in Gulf Shores, Alabama. Cobb Theaters, LLC will open
a 17-screen megaplex stadium seating theatre in the development. Scheduled to open in May
2005, the 54,000 square-foot cinema will be joined by upscale specialty stores that will
offer fashion apparel, home décor, a book store and a music store, as well as
upscale restaurants. Additionally, CRLP expects to include a department store and a
grocery store. Total project costs, including land costs, are expected to be approximately
$45 million.


On
September 10, 2004, CRLP acquired a 232-unit multifamily property, Villas on South Creek,
which is 94 % occupied. The class-A property is located in the Round Rock sub-market in
Austin, Texas and will be renamed Colonial Village at Sierra Vista. The asset was acquired
for a total price of $14.0 million, which was funded through borrowings under CRLPs
line of credit.


On
September 10, 2004, CRLP acquired Boulevard Square, a 221,000 square foot retail shopping
center in Pembroke Pines, Florida. The center is anchored by Office Max, Ross Dress for
Less, Sports Authority and TJ Maxx. The asset was acquired for a total purchase price of
$43.4 million, which consisted of approximately $16.2 million of cash and the assumption
of approximately $27.2 million of existing mortgage debt. This acquisition was funded
through borrowings under CRLPs line of credit.


On
September 22, 2004, CRLP made a $9.0 million investment in the acquisition of a majority
interest in Colonnade Properties LLC, a New York based real estate investment company that
has focused on the acquisition, management, redevelopment and stabilization of 11 million
square feet of office assets and is a direct owner of Douglas Entrance, a five-building
complex in Coral Gables, Florida. The investment was funded through borrowings under
CRLPs unsecured line of credit.


On
September 28, 2004, CRLP disposed of a 28,243 square foot retail asset, Colonial Shoppes
at Inverness, located in Birmingham, Alabama. The asset was sold for $3.4 million and the
proceeds were used to fund other investment activities.



-8-






On
September 30, 2004, CRLP acquired a 318-unit multifamily property, Seven Oaks, which was
in lease-up upon acquisition. The property is located in Tampa, Florida and will be
renamed Colonial Grand at Seven Oaks. The asset was acquired for a total price of $23.6
million, which was funded through borrowings under CRLPs unsecured line of credit.


The
results of operations of the above mentioned acquisitions have been included in the
consolidated financial statements since their respective dates of acquisition. The
following table summarizes the estimated fair values of the assets acquired and liablities
assumed as of the respective acquisition dates during the quarter ended September 30,
2004.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Assets Acquired and Liabilities Assumed: | For the Quarter EndedSeptember 30, 2004
|---------------------------------------- | ---------------------------------------
|                                         |                                        
|
|Land, buildings and equipment            |                                        
|Prepaid expenses                         |                                        
|Below-market leases                      |                                        
|In-place lease assets                    |                                        
|Other assets                             |                                        
|                                         |                                        
|                                         |                                        
|Total assets                             |                                        
|Notes and morgages payable               |                                        
|Other liabilities and minority interest  |                                        
|                                         |                                        
|                                         |                                        
|Net assets acquired                      |                                        
|                                         |                                        
|                                         |                                        

|Note 5  Net Income
Per Unit


The
following table sets forth the computation of basic and diluted earnings per unit:
|---------------------------------------------------------------------------------------------------------------------

|                                               |  |            |   |           
|---------------------------------------------- |  | ---------- | - | ----------
|
|                                               |  |            |   |           
|Numerator:                                     |  |            |   |           
|Net income                                     |  | $   12,352 |   | $ 15,481  
|Less: Preferred distributions                  |  | (5,508     | ) | (5,942    
|Less: Preferred unit issuance costs            | 
|issuance costs                                 |  | --         |   | --        
|                                               |  |            |   |           
|                                               |  |            |  
|Income available to common shareholders        |  | $   6,844  |   | $   9,539 
|                                               |  |            |   |           
|Denominator:                                   | 
|Denominator for basic net income per share -  
|weighted average units                         |  | 37,597     |   | 36,422    
|Effect of dilutive securities:                 | 
|Trustee and employee stock options,            | 
|treasury method                                |  | 363        |   | 273       
|                                               |  |            |   |           
|Denominator for diluted net income per share - | 
|adjusted weighted average units                |  | 37,960     |   | 36,695    
|                                               |  |            |   |           
|Basic net income per share                     |  | $     0.18 |   | $     0.26
|                                               |  |            |   |           
|Diluted net income per share                   |  | $     0.18 |   | $     0.26
|                                               |  |            |   |           

|All options
to purchase the Trusts comon shares were included in the computation of diluted net
income per unit.



-9-







Note 6  Income
from Discontinued Operations


During
the quarter ended September 30, 2004, CRLP sold two retail assets for proceeds of
approximately $5.9 million and one office asset for proceeds of approximately $4.0
million. During the quarter ended June 30, 2004, CRLP sold its interest in one multifamily
asset for proceeds of approximately $2.4 million. During the quarter ended March 31, 2004,
CRLP sold one retail asset for proceeds of approximately $21.3 million. In accordance with
SFAS No. 144 Accounting for the Impairment on Disposal of Long-Lived Assets, net
income and gain (loss) on disposition of real estate for properties sold, in which CRLP
does not maintain continuing involvement, are reflected in the consolidated statements of
income as discontinued operations for all periods presented.



Additionally,
CRLP classifies real estate assets as held for sale, only after CRLP has received approval
by its internal investment committee, has commenced an active program to sell the assets,
and in the opinion of CRLPs management it is probable the assets will sell within
the next 12 months. At September 30, 2004, CRLP had classified one multifamily asset
containing 178 units and 8 retail assets containing approximately 3.7 million square feet
as held for sale. These real estate assets are reflected in the accompanying consolidated
balance sheet at $146.3 million at September 30, 2004, which represents the lower of
depreciated cost or fair value less costs to sell. CRLP has also classified one partially
owned retail entity as held for sale containing approximately 1.1 million square feet and
has a net equity investment balance of $19.2 million at September 30, 2004. Following is a
listing of the properties CRLP disposed of in 2004 and 2003 that are classified as
discontinued operations:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                   |  |                    | 
|---------------------------------- |  | ------------------ | 
|
|Multifamily                        |  |                    | 
|Colonial Grand at Citrus Park      |  | Tampa, FL          | 
|Colonial Grand at Ponte Vedra (1)  |  | Jacksonville, FL   | 
|Office                             | 
|2100 International Park            |  | Birmingham, AL     | 
|Village at Roswell Summit          |  | Atlanta, GA        | 
|Retail                             | 
|Colonial Promenade Bardmoor        |  | St. Petersburg, FL | 
|Colonial Promenade University Park |  | Orlando, FL        | 
|Colonial Shoppes Stanley           |  | Locust, NC         | 
|Colonial Shoppes Inverness         |  | Birmingham, AL     | 

|(1)   CRLP sold its 15% interest in this property.


Also
under the provisions of SFAS No. 144, the reserves, if any, to write down the carrying
value of the real estate assets designated and classified as held for sale are also
included in discontinued operations. All subsequent gains and or additional losses on the
sale of these assets are also included in discontinued operations. Additionally, under
SFAS No. 144, any impairment losses on assets held for continuing use are included in
continuing operations. Below is a summary of the operations of the properties sold or
classified as held for sale during 2004 and 2003 that are classified as discontinued
operations:



-10-
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                    | Three Months Ended September 30, | Nine Months EndedSeptember 30,
|--------------------------------------------------- | -------------------------------- | ------------------------------
|                                                    |                                  |                               
|
|                                                    |                                  |                               
|Property revenues:                                  |                                  |                               
|Base rent                                           |                                  | $   7,370                     
|Percentage rent                                     |                                  | 288                           
|Tenant recoveries                                   |                                  | 2,793                         
|Other property revenue                              |                                  | 487                           
|                                                    |                                  |                               
|Total property revenues                             |                                  | 10,938                        
|Property operating and maintenance expense          |                                  | 3,948                         
|Depreciation                                        |                                  | 2,147                         
|Amortization                                        |                                  | 99                            
|(Income) loss from investments                      |                                  | (469                          
|Interest expense                                    |                                  | 18                            
|                                                    |                                  |                               
|                                                    |                                  | 5,743                         
|Income from discontinued operations before net gain |                                 
|on disposition of discontinued operations           |                                  | 5,195                         
|Net gain on disposition of discontinued operations  |                                  | 1,566                         
|                                                    |                                  |                               
|Income from discontinued operations                 |                                  | $   6,761                     
|                                                    |                                  |                               

|Note 7  Segment
Information


CRLP
is organized into, and manages its business based on the performance of three separate and
distinct operating divisions: Multifamily, Office, and Retail. Each division has a
separate management team that is responsible for acquiring, developing, managing, and
leasing properties within each division. The applicable accounting policies of the
segments are the same as those described in the Summary of Significant Accounting
Policies in CRLPs 2003 Annual Report. The pro rata portion of the revenues,
net operating income (NOI), and assets of the partially-owned entities and joint ventures
that CRLP has entered into are included in the applicable segment information.
Additionally, the revenues and NOI of properties sold that are classified as discontinued
operations are also included in the applicable segment information. In reconciling the
segment information presented below to total revenues, income from continuing operations,
and total assets, investments in partially-owned entities and joint ventures are
eliminated as equity investments and their related activity are reflected in the
consolidated financial statements as investments accounted for under the equity method and
discontinued operations are reported separately. Management evaluates the performance of
its segments and allocates resources to them based on divisional NOI. Divisional NOI is
defined as total property revenues, including unconsolidated partnerships and joint
ventures, less total property operating expenses (such items as repairs and maintenance,
payroll, utilities, property taxes, insurance, advertising). Divisional information and
the reconciliation of total divisional revenues to total revenues, total divisional NOI to
income from continuing, and total divisional assets to total assets, for the three and
nine months ended September 30, 2004 and 2003, and for the periods ended September 30,
2004 and December 31, 2003 is presented below:



-11-
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    | Three Months Ended September 30, | Nine Months EndedSeptember 30,
|----------------------------------- | -------------------------------- | ------------------------------
|                                    |                                  |                               
|
|                                    |                                  |                               
|Revenues:                           |                                  |                               
|Divisional Revenues                 |                                 
|Multifamily                         |                                  | $   31,831                    
|Office                              |                                  | 25,186                        
|Retail                              |                                  | 42,986                        
|                                    |                                  |                               
|Total Divisional Revenues:          |                                  | 100,003                       
|Partially-owned subsidiaries        |                                  | (4,509                        
|Unallocated corporate revenues      |                                  | 1,945                         
|Discontinued operations revenues    |                                  | (10,938                       
|                                    |                                  |                               
|Total Consolidated Revenues:        |                                  | $   86,501                    
|                                    |                                  |                               
|NOI:                                |                                 
|Divisional NOI                      |                                 
|Multifamily                         |                                  | $   19,009                    
|Office                              |                                  | 17,871                        
|Retail                              |                                  | 29,401                        
|                                    |                                  |                               
|Total Divisional NOI:               |                                  | 66,281                        
|Partially-owned subsidiaries        |                                  | (2,591                        
|Unallocated corporate revenues      |                                  | 1,945                         
|Discontinued operations NOI         |                                  | (6,991                        
|General and administrative expenses |                                  | (6,992                        
|Depreciation                        |                                  | (22,085                       
|Amortization                        |                                  | (3,418                        
|Other                               |                                  | (6                            
|                                    |                                  |                               
|Income from operations              |                                  | 26,143                        
|                                    |                                  |                               
|Total other expense                 |                                  | (20,527                       
|                                    |                                  |                               
|Income before minority interest     |                                  | $     5,616                   
|                                    |                                  |                               

|                                 |  |             
|-------------------------------- |  | ------------
|
|                                 |  |             
|Assets:                          |  |             
|Divisional Assets                | 
|Multifamily                      |  | $    877,580
|Office                           |  | 617,428     
|Retail                           |  | 1,187,154   
|                                 |  |             
|Total Divisional Assets:         |  | 2,682,162   
|Partially-owned subsidiaries     |  | (124,300    
|Unallocated corporate assets (1) |  | 119,272     
|                                 |  |             
|                                 |  | $ 2,677,134 
|                                 |  |             

| | (1) | Includes CRLPs investment in partially-owned entities of $63,085 as
               of September 30, 2004, and $37,496 as of December 31,
               2003.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|-12-







Note 8  Investment
in Partially Owned Entities


At
September 30, 2004, CRLP had investments in fifteen partially-owned entities. CRLP
accounts for these investments in partially-owned entities using the equity method. The
following table summarizes the investments in partially-owned entities as of September 30,
2004 and December 31, 2003:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  |  | (in thousands)
|------------------------------------------------- |  | --------------
|
|Multifamily:                                      |  |               
|CMS/Colonial Joint Venture I                      |  | 15            
|CMS/Colonial Joint Venture II                     |  | 15            
|CMS/Colonial Florida Joint Venture                |  | 25            
|CMS/Colonial Tennessee Joint Venture              |  | 25            
|G&I IV Cunningham GP LLC                          |  | 20            
|DRA Partnership                                   |  | 10            
|                                                  |  |               
|                                                  |  |               
|Office:                                           | 
|600 Building Partnership, Birmingham, AL          |  | 33            
|HCI Colonnade Douglas L.P., Coral Gables, FL      |  | 25            
|                                                  |  |               
|                                                  |  |               
|Retail:                                           | 
|Orlando Fashion Square Joint Venture, Orlando, FL |  | 50            
|Parkway Place Limited Partnership, Huntsville, AL |  | 45            
|Turkey Creek Joint Venture, Knoxville, TN         |  | 50            
|Colonial Promenade Madison, Huntsville, AL        |  | 25            
|Highway 150, LLC, Birmingham, AL                  |  | 10            
|                                                  |  |               
|                                                  |  |               
|Other:                                            | 
|Colonial/Polar-BEK Management Company,            | 
|Birmingham, AL                                    |  | 50            
|NRH Enterprises, LLC, Birmingham, AL              |  | 20            
|                                                  |  |               
|                                                  |  |               
|                                                  |  |               
|                                                  |  |               
|                                                  |  |               

|Note 9  Financial
Instruments: Derivatives and Hedging


Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities (SFAS 133), as amended and interpreted, establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities. As
required by SFAS 133, CRLP records all derivatives on the balance sheet at fair
value.  The accounting for changes in the fair value of derivatives depends on the
intended use of the derivative and the resulting designation. Derivatives used to hedge
the exposure to changes in the fair value of an asset, liability, or firm commitment
attributable to a particular risk, such as interest rate risk, are considered fair value
hedges. Derivatives used to hedge the exposure to variability in expected future cash
flows, or other types of forecasted transactions, are considered cash flow hedges.



For
derivatives designated as fair value hedges, changes in the fair value of the derivative
and the hedged item related to the hedged risk are recognized in earnings. For derivatives
designated as cash flow hedges, the effective portion of changes in the fair value of the
derivative is initially reported in other comprehensive income and subsequently
reclassified to earnings when the hedged transaction affects earnings, and the ineffective
portion of changes in the fair value of the derivative is recognized directly in earnings.
CRLP assesses the effectiveness of each hedging relationship by comparing the changes in
fair value or cash flows of the derivative hedging instrument with the changes in fair
value or cash flows of the designated hedged item or transaction. For derivatives not
designated as hedges, changes in fair value are recognized in earnings.




-13-






CRLPs
objective in using derivatives is to add stability to interest expense and to manage its
exposure to interest rate movements or other identified risks.  To accomplish this
objective, CRLP primarily uses interest rate swaps and caps as part of its cash flow
hedging strategy. Interest rate swaps designated as cash flow hedges involve the receipt
of variable-rate amounts in exchange for fixed-rate payments over the life of the
agreements without exchange of the underlying principal amount.  During the quarter
ended September 30, 2004, such derivatives were used to hedge the variable cash flows
associated with existing variable-rate debt and forecasted issuances of debt. CRLP
primarily uses interest rate swaps as part of its fair value hedging strategy. These swaps
involve the receipt of fixed rate amounts in exchange for variable rate amounts over the
life of the agreements without exchange of the underlying principal amount. During the
quarter ended September 30, 2004, such swaps were used to hedge the change in fair value
of fixed rate debt.


As
of September 30, 2004, no derivatives were designated as hedges of net investments in
foreign operations. Additionally, CRLP does not use derivatives for trading or speculative
purposes. Derivatives not designated as hedges are not speculative and are used to manage
CRLPs exposure to interest rate movements and other identified risks, but do not
meet the strict hedge accounting requirements of SFAS 133. The only swap that CRLP has
that is not designated as a hedge for SFAS 133 was acquired through the purchase of a
property and its corresponding debt.



CRLP
has entered into several different hedging transactions in an effort to manage its
exposure to changes in interest rates. The following table summarizes the notional values,
fair values and other characteristics of CRLPs derivative financial instruments at
September 30, 2004. The notional value at September 30, 2004 provides an indication of the
extent of CRLPs involvement in these instruments at that time, but does not
represent exposure to credit, interest rate, or market risk.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               |  |                       |  |       
|------------------------------ |  | --------------------- |  | ------
|
|                               | 
|Interest Rate SWAP, Cash Flow  |  | $30.2 - $27.7 million |  | 5.932 
|Interest Rate SWAP, Cash Flow  |  | $17.0 million         |  | 7.380 
|Interest Rate SWAP, Fair Value |  | $100.0 million        |  | 4.803 
|Interest Rate CAP, Cash Flow   |  | $19.7 million         |  | 6.850 
|Interest Rate CAP, Cash Flow   |  | $16.7 million         |  | 6.850 
|Interest Rate CAP, Cash Flow   |  | $30.4 million         |  | 11.200
|Interest Rate CAP, Cash Flow   |  | $16.4 million         |  | 4.840 
|Interest Rate CAP, Cash Flow   |  | $25.9 million         |  | 4.840 
|Interest Rate CAP, Cash Flow   |  | $8.4 million          |  | 4.840 

|Further,
CRLP has a policy of only entering into contracts with major financial institutions based
upon their credit ratings and other factors. When viewed in conjunction with the
underlying and offsetting exposure that the derivatives are designed to hedge, CRLP has
not sustained a material loss from those instruments nor does it anticipate any material
adverse effect on its net income or financial position in the future from the use of
derivatives.


At
September 30, 2004, derivatives with a fair value of $2.0 million were included in other
liabilities and $38,000 were included in other assets. Additionally, the fair value of our
fair value interest rate swap of $4.0 million was included in notes and mortgages payable.
The change in unrealized gain (losses) of $1.1 million for derivatives designated as cash
flow hedges and $4.0 million for derivatives designated as fair value hedges for the nine
months ended September 30, 2004 is a component of partners equity. The change in
fair value of derivatives not designated as hedges of $0.1 million is included in gains
(losses) on hedging activities in the quarter ended September 30, 2004.  No hedge
ineffectiveness on fair value hedges was recognized during the quarter ended September 30,
2004. Hedge ineffectiveness of approximately $4,000 on cash flow hedges due to index
mismatches was recognized in gains (losses) on hedging activities during the quarter ended
September 30, 2004.



-14-







Note 10 
Subsequent Events



Acquisitions


On
October 22, 2004, CRLP acquired Research Park Office Center, comprising 176,570 square
feet of office space in Huntsville, Alabama. The asset was acquired for a total purchase
price of $16.8 million, which was funded through borrowings under CRLPs unsecured
line of credit.


On
October 25, 2004, CRLP and Dreyfuss Real Estate Advisors (DRA) entered into a
partnership agreement, in which CRLP maintains a 20% interest and manages sixteen
multifamily properties located in Arizona, New Mexico and Nevada containing a combined
4,223 units. CRLPs total investment in the DRA partnership was $64.5 million, which
consisted of $45.4 million of newly issued mortgage debt and $19.1 million of cash, which
was funded through borrowings under CRLPs unsecured line of credit.


On
October 29, 2004, CRLP acquired two multifamily assets for a total purchase price of $44.7
million. North Creek, a 252 unit complex, is located in Durham, North Carolina and
Montclair Parc, a 300 unit complex, is located in Charlotte, North Carolina. The
acquisition was funded through borrowings under CRLPs bridge credit facility.



Merger Agreement


On
October 25, 2004, the Trust and Cornerstone Realty Income Trust, Inc. (NYSE: TCR)
(Cornerstone), a Richmond, Virginia-based REIT focused on multifamily
communities, entered into a definitive merger agreement under which Cornerstone will merge
into the Trust. The total transaction value, including the assumption or repayment of
Cornerstone debt, is approximately $1.5 billion, or $10.80 per share, based on the
Trusts closing price as of October 22, 2004. The transaction is expected to close
during the first quarter of 2005.


The
transaction will be structured as a common and preferred stock election merger, with
Cornerstone shareholders having the right to elect to receive the merger consideration in
the Trusts common or preferred depositary shares, subject to the restriction that
the preferred depositary shares issued shall not exceed 25 percent of the total merger
consideration. The merger agreement provides that Cornerstone shareholders who elect to
receive common stock will receive 0.2584 Trust shares for each Cornerstone share.
Cornerstone shareholders who elect to receive redeemable preferred depositary shares will
receive 0.4200 shares of $25 liquidation preference redeemable Series E Preferred
Depositary Shares with a dividend rate of 7.62 percent which will be listed on the NYSE.
The exchange ratios are subject to adjustments related to certain tax matters. Depending
upon the shareholder elections, the Trusts expects to issue approximately 11 to 14 million
new common shares and up to approximately $150 million of new preferred securities and
refinance or assume approximately $850 million of Cornerstones existing secured
debt. The transaction, which remains subject to approval by the common shareholders of the
Trust and Cornerstone, has been unanimously approved by both boards.


Cornerstone
will have the right to terminate the transaction if the Trusts average share price
for the 20 days preceding 10 days prior to the close of the transaction is below $31.00.
However, in the event the Trusts share price is below such level, the Trust has the
right to continue the transaction through the payment, at its sole option, of additional
Trust common shares or cash to provide Cornerstone shareholders value equivalent to that
which they would have received had the Trust share price been $31.00 for such measurement
period. The Trust will have the right to terminate if the average of its share price
exceeds $49.00 for 20 consecutive days preceding 10 days prior to the close of the
transaction.



Dispositions


On
October 15, 2004, CRLP sold Colonial Village at Vernon Marsh, a 178 unit multifamily
complex located in Savannah, Georgia. The total sales price was $10.0 million, of which
$3.4 million was used to repay a secured loan, and the remaining proceeds were used to
support CRLPs investment activities.



-15-







Investments held for sale


On
October 19, 2004, CRLP and its third party partner signed a binding agreement with
Pennsylvania Real Estate Trust (NYSE: PEI) to sell Orlando Fashion Square, a 1,080,535
square-foot retail asset located in Orlando, Florida. CRLPs investment in the
partially-owned entity is $19.2 million as of September 30, 2004, which is reflected
within investment in partially-owned entities on CRLPs balance sheet. The sell of
this mall is expected to close in the fourth quarter of 2004.



Distribution


On
October 19, 2004, a cash distribution was declared to partners of CRLP in the amount of
$0.67 per share and per unit, totaling $25.3 million. The distribution was declared to
partners of record as of October 29, 2004, and was paid on November 5, 2004.



Bridge Credit Agreement


On
October 28, 2004, CRLP entered into an additional $200.0 million bridge credit facility
with certain participants of its current $320.0 million unsecured bank line of credit. Base rate  loans and  euro-dollar  loans are  available  under the  Bridge  Facility.  Generally,  base rate  loans  bear  interest  at
SouthTrust ́s  designated  base rate,  plus a base rate margin ranging from 0.00% to 1.00% based on our unsecured debt ratings from time
to time.  Euro-dollar  loans bear interest at LIBOR plus a margin  ranging from 0.70% to 1.35% based on our unsecured debt ratings from
time to time. The bridge credit facility matures in November
of 2005.



-16-







Report of Independent
Registered Public Accounting Firm



To the Board of Trustees
ofColonial Properties Trust:


We have reviewed the accompanying
condensed consolidated balance sheet of Colonial Realty Limited Partnership (the
Partnership) as of September 30, 2004, and the related condensed consolidated statements
of income for each of the three-month and nine-month periods ended September 30, 2004 and
2003 and the condensed consolidated statement of cash flows for the nine-month periods
ended September 30, 2004 and 2003. These interim financial statements are the
responsibility of the Partnerships management.


We conducted our review in accordance
with the standards of the Public Company Accounting Oversight Board (United States). A
review of interim financial information consists principally of applying analytical
procedures and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.


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


We previously audited in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheet as of December 31, 2003, and the related consolidated
statements of income, partners equity, and of cash flows for the year then ended
(not presented herein), and in our report dated March 1, 2004 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of December 31, 2003, is
fairly stated in all material respects in relation to the consolidated balance sheet from
which it has been derived.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                           | 
|---------------------------------------------------------------------------------------------------------- | 
|/s/ PricewaterhouseCoopers LLP     PricewaterhouseCoopers LLP     Birmingham, Alabama     November 5, 2004 | 

-17-

---



|COLONIAL REALTY
LIMITED PARTNERSHIP

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



Overview


The
following discussion and analysis of the consolidated financial condition and consolidated
results of operations should be read together with the consolidated financial statements
of Colonial Realty Limited Partnership and notes thereto contained in this Form 10-Q. This
report on Form 10-Q contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause our, and our affiliates,
or the industrys actual results, performance, achievements or transactions to be
materially different from any future results, performance, achievements or transactions
expressed or implied by such forward-looking statements. A number of important factors
could cause actual results to differ materially from those indicated by the
forward-looking statements, including, but not limited to, the risks described in our 2003
Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15,
2004. Such factors include, among others, the following:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|  |                                                                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                        
| | National, regional and local economic and business conditions that will, among other things, affect:                                                                                   
|  | -     Demand for multifamily, office and retail properties,                                                                                                                            
|  | -     The ability of the general economy to recover timely from the current economic downturn,                                                                                         
|  | -     Availability and creditworthiness of tenants,                                                                                                                                    
|  | -     The level of lease rents, and                                                                                                                                                    
|  | -     The availability of financing for both tenants and us;                                                                                                                           
| | Adverse changes in the real estate markets, including, among other things:                                                                                                             
|  | -     Competition with other companies, and                                                                                                                                            
|  | -     Risks of real estate acquisition and development (including the failure of pending developments      to be
                  completed on time and within budget);               
| | Our ability to successfully complete and integrate our real estate acquisitions, including our
         acquisition by merger of Cornerstone Realty Income Trust, Inc. ("Cornerstone");
| | Actions, strategies and performance of affiliates that we may not control or companies in which we have
         made investments;                                                     
| | Our ability to obtain insurance at a reasonable cost;                                                                                                                                  
| | Our ability to maintain our status as a REIT for federal and state income tax purposes;                                                                                                
| | Environmental/safety requirements.                                                                                                                                                     

|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 and Colonial VRS L.L.C. 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 and Colonial
Properties Services, Inc. or, as the context may require, Colonial Properties Trust only.


We
are the operating partnership of the Trust, which is a self-administered equity real
estate investment trust (a REIT) that owns, develops and operates multifamily,
office and retail properties in the Sunbelt region of the United States. The Trust is a
fully-integrated real estate company, which means that it is engaged in the acquisition,
development, ownership, management and leasing of commercial real estate property. The
Trusts activities include full or partial ownership of a diversified portfolio of
134 properties as of September 30, 2004, located in Alabama, Florida, Georgia,
Mississippi, North Carolina, South Carolina, Tennessee, Texas, and Virginia, development
of new properties, acquisition of existing properties, build-to-suit development, and the
provision of management, leasing, and brokerage services for commercial real estate.



-18-






As
of September 30, 2004, we owned or maintained a partial ownership in 59 multifamily
apartment communities containing a total of 19,695 apartment units (including 42
wholly-owned consolidated properties and 17 properties partially-owned through
unconsolidated joint venture entities aggregating 14,398 and 5,297 units, respectively)
(the multifamily properties), 26 office properties containing a total of
approximately 5.7 million square feet of office space (including 25 wholly-owned
consolidated properties and one property partially-owned through an unconsolidated
joint-venture entity aggregating 5,658,900 and 30,000 square feet, respectively )(the
office properties), 49 retail properties containing a total of approximately
16.3 million square feet of retail space (including 45 consolidated properties and
four properties partially-owned through unconsolidated joint venture entities aggregating
14.1 million and 2.2 million square feet, respectively) (the retail
properties), and certain parcels of land adjacent to or near certain of these
properties (the land). The multifamily properties, the office properties, the
retail properties and the land are referred to collectively as the properties.
As of September 30, 2004, the multifamily properties that had achieved stabilized
occupancy were 95.4% leased (95.5% for consolidated properties and 94.4% for
unconsolidated properties), the office properties that had achieved stabilized occupancy
were 92.2% leased (92.2% for consolidated properties and 100.0% for unconsolidated
properties), and the retail properties that had achieved stabilized occupancy were 89.9%
leased (89.8% for consolidated properties and 90.6% for unconsolidated properties).



As
a lessor, the majority of our revenue is derived from tenants under existing leases at our
properties. Therefore, our operating cash flow is dependent upon the rents that we are
able to charge to our tenants, and the ability of these tenants to make their rental
payments. We believe that the diversified nature of the properties in which we typically
invest  multifamily, office and retail  provides a more stable revenue flow in
uncertain economic times, in that our diversified property types generally do not have the
same economic cycles and while one property type may be experiencing difficulty, the other
property types may be maintaining their strength.



The
following table summarizes certain key operating performance measures for our properties
as of and for the quarters ended September 30, 2004 and 2003:



-19-
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     | Consolidated Properties | Unconsolidated Properties | Total Properties
|------------------------------------ | ----------------------- | ------------------------- | ----------------
|
|
|Multifamily Properties               |                         |                           |                 
|Physical Occupancy                   |                         | 95.5                      | %               
|Same-Property Economic Occupancy (1) |                         | 81.6                      | %               
|Same-Property NOI Growth (2)         |                         | 2.7                       | %               
|End of Month Scheduled Base          |                        
|Rent per Unit per Month              |                         | $      807                |                 
|Capital Expenditures per Unit        |                         | $      191                |                 
|Office Properties                    |                        
|Physical Occupancy                   |                         | 92.2                      | %               
|Same-Property NOI Growth (2)         |                         | 4.2                       | %               
|Base Rent per Square Foot            |                         | $  18.12                  |                 
|Capital Expenditures per Square Foot |                         | $    0.61                 |                 
|Retail Properties                    |                        
|Same-Property NOI Growth (2)         |                         | 0.4                       | %               
|Regional Malls:                      |                        
|Physical Occupancy                   |                         | 92.2                      | %               
|Base Rent per Square Foot            |                         | $  22.24                  |                 
|Tenant Gross Sales per Square Foot   |                         | $273.66                   |                 
|Shopping Centers:                    |                        
|Physical Occupancy                   |                         | 86.6                      | %               
|Base Rent per Square Foot            |                         | $  16.47                  |                 
|Tenant Gross Sales per Square Foot   |                         | $213.32                   |                 

| | (1) | Economic Occupancy represents scheduled base rents, less vacancy loss and
                    concessions, divided by scheduled base rents.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | NOI amounts are based on our segment data. See Note 8  Segment Information
                    in our Notes to Consolidated Condensed Financial Statements.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|As a result of the recent economic
downturn in the United States, our operations have been negatively impacted. Our
multifamily properties have been impacted by a liberal supply of new apartments and a
robust single-family housing market, driven by low interest rates and weak job growth.
However, our multifamily divisions physical occupancy percentage rose to 95.4% as of
September 30, 2004, and our economic occupancy remained stable at 80.7%, as a result of
the move-in concessions being offered to our new residents. During the third quarter of
2004, we acquired one multifamily asset located in Austin, Texas consisting of 232 units
for $14.0 million, one multifamily asset located in Tampa, Florida consisting of 316 units
for $23.6 million, and a 25% interest in two properties located in Nashville, Tennessee
consisting of 364 units for $10.3 million. During the current year, our consolidated
multifamily properties have experienced an increase in capital expenditures, as compared
to the prior year, in connection with enhancing the newly acquired assets to the quality
level of the Companys existing multifamily properties. We believe there are signs of
current job growth and rising interest rates and believe these factors should allow our
multifamily division to improve its fundamentals in the quarters ahead. We remain
cautiously optimistic regarding that sustained job growth will occur in the near term.


Our
office properties continue to be negatively impacted by the absence of corporate hiring
and a buyers market for office space in which increased tenant leverage puts
pressure on current rental rates. As a result, our office divisions base rent per
square foot decreased from $19.08 in the third quarter of 2003 to $18.12 in the third
quarter of 2004, or a -5.0% change. Rental rate reductions and concessions continue to
pressure performance, but despite the difficult fundamentals, we believe our occupancy
remains stong. Total occupancy for the quarter ended September 30, 2004 was 92% versus 91%
for the second quarter of 2004. On a same-property basis, occupancy was 91% for the third
quarter of 2004, an increase of 140 basis points from second quarter of 2004. Future
rental income from our office properties may be affected by future lease terminations
because we may be unable to collect the full amount that was due under the lease and may
incur additional cost in re-leasing the space. We presently believe the office sector will
remain challenged thoughout 2004 and 2005.



-20-






For
the third quarter of 2004, our retail same property net operating income increased 1.1%
over the same period in 2003. During the third quarter of 2004 our retail properties
recognized lease termination fees of $0.1 million as compared to $0.2 million in the third
quarter of 2003. Excluding the effects of lease termination fees, our retail same property
net operating income for the third quarter of 2004 would have been an increase of 1.6%
over the third quarter of 2003. During the third quarter of 2004, we acquired four retail
assets totaling approximately 742,000 square feet in South Florida for $125.1 million and
continued the redevelopment of two retail malls with total estimated costs of
approximately $47.7 million. Additionally, the Company began the construction of one
retail development and continued the development of another which combined total
approximately 520,000 square feet. One development is located in Birmingham, Alabama and
the other is located in Gulf Shores, Alabama. The total costs, including land, are
projected to be approximately $75.8 million. As with any development, future rental income
will be affected by the timing of completion of the redevelopment projects and the ability
to timely lease the space at market rental rates. Throughout the recent economic downturn,
consumer confidence has remained strong. As a result, we currently expect our retail
division to show continued improved operating performance throughout 2004 and 2005.



Cornerstone Merger
Agreement


On
October 25, 2004, the Trust and Cornerstone Realty Income Trust, Inc. (NYSE: TCR)
(Cornerstone), a Richmond, Virginia-based REIT focused on multifamily
communities, entered into a definitive merger agreement under which Cornerstone will merge
into the Trust. The total transaction value, including the assumption or repayment of
Cornerstone debt, is approximately $1.5 billion, or $10.80 per share, based on the
Trusts closing price as of October 22, 2004. The transaction is expected to close
during the first quarter of 2005.


The
transaction will be structured as a common and preferred stock election merger, with
Cornerstone shareholders having the right to elect to receive the merger consideration in
the Trusts common or preferred depositary shares, subject to the restriction that
the preferred depositary shares issued shall not exceed 25 percent of the total merger
consideration. The merger agreement provides that Cornerstone shareholders who elect to
receive common stock will receive 0.2584 Trust shares for each Cornerstone share.
Cornerstone shareholders who elect to receive redeemable preferred depositary shares will
receive 0.4200 shares of $25 liquidation preference redeemable Series E Preferred
Depositary Shares with a dividend rate of 7.62 percent which will be listed on the NYSE.
The exchange ratios are subject to adjustments related to certain tax matters. Depending
upon the shareholder elections, the Trusts expects to issue approximately 11 to 14 million
new common shares and up to approximately $150 million of new preferred securities and
refinance or assume approximately $850 million of Cornerstones existing secured
debt. The transaction, which remains subject to approval by the common shareholders of the
Trust and Cornerstone, has been unanimously approved by both boards.


Cornerstone
will have the right to terminate the transaction if the Trusts average share price
for the 20 days preceding 10 days prior to the close of the transaction is below $31.00.
However, in the event the Trusts share price is below such level, the Trust has the
right to continue the transaction through the payment, at its sole option, of additional
Trust common shares or cash to provide Cornerstone shareholders value equivalent to that
which they would have received had the Trust share price been $31.00 for such measurement
period. The Trust will have the right to terminate if the average of its share price
exceeds $49.00 for 20 consecutive days preceding 10 days prior to the close of the
transaction.



Results of Operations
 Three Months Ended September 30, 2004 and 2003



Minimum
rent for the quarter ended September 30, 2004 increased $11.9 million or 20.2% as
compared with the quarter ended September 30, 2003. Minimum rent increased $11.3 million
as a result of the acquisitions that have occurred since Setpember 30, 2003, coupled with
the completion of TownPark 200, the retail portion of Colonial TownPark and Colonial
Promenade Trussville II, which became completed developments in 2003 and 2004. The
remaining increase is primarily a result of an increase in leasing activity in our
multifamily and retail divisions.



-21-






Other
property related revenue for the quarter ended September 30, 2004 increased $1.5
million or 38.9% as compared with the quarter ended September 30, 2003. This increase is
primarily attributable to an increase of $0.9 million in early lease terminations
primarily within our office division in the third quarter of 2004 as compared to 2003.
Additionally, other income attributable to the properties acquired or developed during the
last quarter of 2003 and the first three quarters of 2004 increased $0.5 million during
the third quarter of 2004 as compared to the same period in 2003.


Total
operating expenses for the quarter ended September 30, 2004 increased $12.3 million or
25.6% as compared to the quarter ended September 30, 2003. Of this increase, $8.7 million
is attributable to the properties acquired or developed in the last quarter of 2003 and
the first three quarters of 2004. The remaining increase is a result of an increase of
approximately $2.1 million in our corporate overhead expenses as a result of the continued
growth of the Company and an increase in insurance costs incurred in the third quarter as
a result of the four hurricanes that hit Florida and the southern panhandle.



Interest
expense for the quarter ended September 30, 2004 increased $4.7 million or 28.2% as
compared to the quarter ended September 30, 2003. This increase is primarily attributable
to the issuance of $100 million of senior notes in April 2004, $300 million of senior
notes in June 2004 through CRLP, and the assumption of $181.9 million of mortgage debt
related to properties acquired during the nine months ended September 30, 2004.
Additionally, our consolidated debt balance increased from $1.2 billion at September 30,
2003 to $1.7 billion at September 30, 2004.



Gains
from sales of property included in continuing operations for the quarter ended
September 30, 2004 decreased $3.0 million as compared to the quarter ended September 30,
2003. The decrease is a result of the sale of three parcels of land in the third quarter
of 2004 as compared to the sale of seven parcels of land in the third quarter of 2003,
resulting in less gains recognized in 2004. The operating property sales that occurred in
the third quarter of 2004 and 2003 are classified as discontinued operations.




Results of Operations
 Nine Months Ended September 30, 2004 and 2003



Minimum
rent for the nine months ended September 30, 2004 increased $23.6 million or 13.5% as
compared with the nine months ended September 30, 2003. Minimum rent increased $21.4
million as a result of the acquisitions that have occurred since September 30, 2003
coupled with the completion of TownPark 200, the retail portion of Colonial TownPark and
Colonial Promenade Trussville II, which became completed developments in 2003 and 2004.
The remaining increase is primarily a result of an increase in leasing activity in our
multifamily and retail divisions.


Other
property related revenue for the nine months ended September 30, 2004 increased
approximately $0.3 or 2.3% as compared with the nine months ended September 30, 2004. The
increase is primarily due to an increase of $0.8 million attributable to the properties
acquired or developed during the fourth quarter of 2003 and the first three quarters of
2004. This increase is offset by a decrease of $1.2 million in early lease terminations
within our office division in 2004 as compared to 2003.


Total
operating expenses for the nine months ended September 30, 2004 increased $21.5
million or 15.1% as compared to the nine months ended September 30, 2003. Of this
increase, $15.5 million is attributable to the properties acquired or developed in the
fourth quarter of 2003 and the first three quarters of 2004, and $3.2 million is
attributable to an increase in our corporate overhead expenses as a result of the
continued growth of the Company and an increase in recruiting and hiring costs related to
the replacement of our Chief Financial Officer who retired in the first quarter of 2004
and other new employees. The remaining increase is a result of an overall increase in
property operating expenses at our existing properties.



Interest
expense for the nine months ended September 30, 2004 increased $6.1 million or 12.2%
as compared to the nine months ended September 30, 2003. This increase is primarily
attributable to the issuance of $100 million of senior notes in April 2004, $300 million
of senior notes in June 2004 through CRLP, and the assumption of $181.9 million of
mortgage debt related to properties acquired during the nine months ended September 30,
2004. Additionally, our consolidated debt balance increased from $1.2 billion at September
30, 2003 to $1.7 billion at September 30, 2004.



Gains
from sales of property included in continuing operations for the nine months ended
September 30, 2004 decreased $3.0 million as compared to the nine months ended September
30, 2003. The decrease is a result of the sale of seven parcels of land in the first nine
months of 2004 as compared to the sale of twelve parcels of land in the first nine months
of 2003, resulting in less gains recognized in 2004. The operating property sales that
occurred in the first nine months of 2004 and 2003 are classified as discontinued
operations.



-22-








Liquidity and Capital
Resources



Short-Term Liquidity
Needs


Our
short-term liquidity requirements consist primarily of funds necessary to pay for
operating expenses directly associated with our portfolio of properties (including regular
maintenance items), capital expenditures incurred to lease our space (e.g., tenant
improvements and leasing commissions), interest expense and scheduled principal payments
on our outstanding debt, and quarterly distributions that we pay to our common and
preferred unitholders. In the past, we have primarily satisfied these requirements through
cash generated from operations. We believe that cash generated from operations and
borrowings under our unsecured line of credit will be sufficient to meet our short-term
liquidity requirements. However, factors described below and elsewhere herein may have a
material adverse effect on our cash flow.


The
majority of our revenue is derived from tenants under existing leases at our properties.
Therefore, our operating cash flow is dependent upon the rents that we are able to charge
to our tenants, and the ability of these tenants to make their rental payments. We believe
that the diversified nature of the properties in which we typically invest 
multifamily, office and retail  provides a more stable revenue flow in uncertain
economic times, in that our diversified property types generally do not have the same
economic cycles and while one property type may be experiencing difficulty, the other
property types may be maintaining their strength.



Long-Term Liquidity
Needs


Our
long-term liquidity requirements consist primarily of funds necessary to pay for the
principal amount of our long-term debt as it matures, significant non-recurring capital
expenditures that need to be made periodically at our properties, development projects
that we undertake and costs associated with acquisitions of properties that we pursue. As
a result of our merger agreement with Cornerstone Realty Income Trust, we will have
additional long-term liquidity requirements, consisting of the planned conversion of
approximately $350.0 million of secured financing to unsecured financing and payment of
transactional costs incurred with the merger. Historically, we have satisfied these
requirements principally through the most advantageous source of capital at that time,
which has included the incurrence of new debt through borrowings (through public offerings
of unsecured debt and private incurrence of secured and unsecured debt), sales of common
and preferred stock, capital raised through the disposition of assets, and joint venture
capital transactions. We believe these sources of capital will continue to be available in
the future to fund our long-term capital needs. However, factors described below and
elsewhere herein may have a material adverse effect on our access to these capital
sources.


Our
ability to incur additional debt is dependent upon a number of factors, including our
credit ratings, the value of our unencumbered assets, our degree of leverage and borrowing
restrictions imposed by our current lenders. We currently have investment grade ratings
for prospective unsecured debt offerings from three major rating agencies. If we
experienced a credit downgrade, we may be limited in our access to capital in the
unsecured debt market, which we have historically utilized to fund investment activities,
and the interest rate we are paying under our existing credit facility would increase.


Our
general partners ability to raise funds through sales of common stock and preferred
stock is dependent on, among other things, general market conditions for REITs, market
perceptions about the Trust and the current trading price of the Trusts stock. We
will continue to analyze which source of capital is most advantageous to us at any
particular point in time, but the equity markets may not be consistently available on
terms that are attractive.


Over
the last few years, we have maintained our asset recycling program, which allows us to
maximize our investment returns through the sale of assets that have reached their maximum
investment potential and reinvest the proceeds into opportunities with more growth
potential. During the first nine months of 2004, we sold three retail properties
representing 290,933 square feet, one office property with 25,500 square feet and our 15%
ownership interest in one multifamily property consisting of 240 units. The aggregate
sales price was $33.5 million, which was used to repay a portion of the borrowings under
our unsecured line of credit and the mortgages associated with the properties. Our ability
to generate cash from asset sales is limited by market conditions and certain rules
applicable to REITs. Our ability to sell properties in the future to raise cash will be
limited if market conditions make such sales unattractive.



-23-






As
of September 30, 2004, we have an unsecured bank line of credit providing for total
borrowings of up to $320 million. This line of credit agreement bears interest at LIBOR
plus a spread calculated based on our unsecured debt ratings from time to time. Based on
our current debt ratings, the spread is 105 basis points. The line of credit is renewable
in November 2005, and provides for a one-year extension. The line of credit agreement
includes a competitive bid feature that will allow us to convert up to $160 million under
the line of credit to a fixed rate, for a fixed term not to exceed 90 days. The credit
facility had a balance of $228.0 million outstanding at September 30, 2004.


At
September 30, 2004, our total outstanding debt balance was $1.7 billion. The outstanding
balance includes fixed-rate debt of $1.3 billion, or 73.3% of the total debt balance, and
floating-rate debt of $463.0 million, or 26.7% of the total debt balance. Our total market
capitalization, calculated as a sum of our consolidated debt, preferred shares and units
and market equity of our outstanding common shares and units, as of September 30, 2004 was
$3.5 billion and our ratio of debt to market capitalization was 49.2%. We have certain
loan agreements that contain restrictive covenants, which among other things require
maintenance of various financial ratios. At September 30, 2004, we were in compliance with
these covenants.



On
October 28, 2004, we entered into an additional $200.0 million bridge credit facility with
certain participants of our current $320.0 million unsecured bank line of credit. The
bridge credit facility bears interest at LIBOR plus a spread calculated based on our
unsecured debt ratings from time to time. The bridge credit facility matures in November
of 2005.




Investing Activities



During
the third quarter of 2004, we acquired two wholly-owned multifamily properties containing
548 units at a cost of approximately $37.6 million, a partial ownership interest in two
multifamily assets containing 364 units for approximately $10.3 million, four wholly-owned
retail assets containing 742,645 square feet at a total cost of $125.1 million and a
majority interest in a real estate investment company that focuses on the acquisition,
management, redevelopment and stabilization of 11 million square feet of office assets for
approximately $9.0 million.



During
the third quarter of 2004, we continued the development of three multifamily apartment
communities. These communities, if developed as expected, will contain 950 units, and the
total investment, including land acquisition costs, is projected to be approximately $75.0
million. We began the development of one retail property and continued with the
development of one retail property and the redevelopment of two retail properties. Upon
completion of the retail developments and redevelopments, we expect to have invested
approximately $123.5 million, including land acquisition costs. Additionally, we have one
ongoing mixed-use project that integrates multifamily, office and/or retail products. If
developed as expected, this investment is projected to be approximately $66.5 million.
During the nine months ended September 30, 2004, we invested an aggregate of $85.9 million
of these aforementioned development projects and certain parcels of land that were
acquired for future development.


We
regularly incur significant expenditures in connection with the re-leasing of our office
and retail space, principally in the form of tenant improvements and leasing commissions.
The amounts of these expenditures can vary significantly, depending on negotiations with
tenants and the willingness of tenants to pay higher base rents over the life of the
leases. We also incur expenditures for certain recurring capital expenses. During the nine
months ended September 30, 2004, we incurred approximately $20.6 million related to tenant
improvements and leasing commissions, and approximately $11.9 million of recurring capital
expenditures. We expect to pay for future re-leasing and recurring capital expenditures
out of cash from operations.




Distribution



The
distribution on our common units of partnership interest was $0.67 per unit for the third
quarter of 2004. We also pay regular quarterly distributions on our preferred units. The
maintenance of these distributions is subject to various factors, including the discretion
of our general partners Board of Trustees, our ability to pay dividends under
Delaware law, the availability of cash to make the necessary dividend payments and the
effect of REIT distribution requirements, which require at least 90% of the Trusts
taxable income to be distributed to shareholders.




-24-







Critical Accounting
Policies and Estimates


Refer
to our 2003 Annual Report on Form 10-K for a discussion of our critical accounting
policies, which include real estate development, principles of consolidation, revenue
recognition, valuation of receivables, and accounting policies for derivatives. During the
nine months ended September 30, 2004, there were no material changes to these policies.



Financial Instruments:
Derivatives and Hedging


Our
objective in using derivatives is to add stability to interest expense and to manage our
exposure to interest rate movements or other identified risks.  To accomplish this
objective, we primarily use interest rate swaps and caps as part of our cash flow hedging
strategy. Interest rate swaps designated as cash flow hedges involve the receipt of
variable-rate amounts in exchange for fixed-rate payments over the life of the agreements
without exchange of the underlying principal amount.  During the quarter ended
September 30, 2004, such derivatives were used to hedge the variable cash flows associated
with existing variable-rate debt and forecasted issuances of debt. We primarily use
interest rate swaps as part of our fair value hedging strategy. These swaps involve the
receipt of fixed rate amounts in exchange for variable rate amounts over the life of the
agreements without exchange of the underlying principal amount. During the quarter ended
September 30, 2004, such swaps were used to hedge the change in fair value of fixed rate
debt.


As
of September 30, 2004, no derivatives were designated as hedges of net investments in
foreign operations. Additionally, we do not use derivatives for trading or speculative
purposes. Derivatives not designated as hedges are not speculative and are used to manage
our exposure to interest rate movements and other identified risks, but do not meet the
strict hedge accounting requirements of SFAS 133. The only swap that we have that is not
designated as a hedge for SFAS 133 was acquired through the purchase of a property and its
corresponding debt.



We
have entered into several different hedging transactions in an effort to manage its
exposure to changes in interest rates. The following table summarizes the notional values,
fair values and other characteristics of our derivative financial instruments at September
30, 2004. The notional value at September 30, 2004 provides an indication of the extent of
our involvement in these instruments at that time, but does not represent exposure to
credit, interest rate, or market risk.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               |  |                       |  |       
|------------------------------ |  | --------------------- |  | ------
|
|                               | 
|Interest Rate SWAP, Cash Flow  |  | $30.2 - $27.7 million |  | 5.932 
|Interest Rate SWAP, Cash Flow  |  | $17.0 million         |  | 7.380 
|Interest Rate SWAP, Fair Value |  | $100.0 million        |  | 4.803 
|Interest Rate CAP, Cash Flow   |  | $19.7 million         |  | 6.850 
|Interest Rate CAP, Cash Flow   |  | $16.7 million         |  | 6.850 
|Interest Rate CAP, Cash Flow   |  | $30.4 million         |  | 11.200
|Interest Rate CAP, Cash Flow   |  | $16.4 million         |  | 4.840 
|Interest Rate CAP, Cash Flow   |  | $25.9 million         |  | 4.840 
|Interest Rate CAP, Cash Flow   |  | $8.4 million          |  | 4.840 

|Further,
we have a policy of only entering into contracts with major financial institutions based
upon their credit ratings and other factors. When viewed in conjunction with the
underlying and offsetting exposure that the derivatives are designed to hedge, we have not
sustained a material loss from those instruments nor do we anticipate any material adverse
effect on its net income or financial position in the future from the use of derivatives.



Inflation


Leases
at our multifamily properties generally provide for an initial term of six months to one
year and allow for rent adjustments at the time of renewal. Leases at the office
properties typically provide for rent adjustments and the pass-through of certain
operating expenses during the term of the lease. Leases at the retail properties typically
provide for the pass-through to tenants of certain operating costs, including real estate
taxes, common area maintenance expenses, and insurance. All of these provisions permit us
to increase rental rates or other charges to tenants in response to rising prices and,
therefore, serve to minimize our exposure to the adverse effects of inflation.



-25-






An
increase in general price levels may immediately preceed, or accompany, an increase in
interest rates. At September 30, 2004, our exposure to rising interest rates was mitigated
by the existing debt level of 49.2% of our total market capitalization, the high
percentage of fixed rate debt (73.3%), and the use of interest rate swaps to effectively
fix the interest rate on approximately $30.2 million through January 2006 and $17.0
million through May 2006. As it relates to the short-term, increases in interest expense
resulting from increasing inflation is anticipated to be less than future increases in
income before interest.



Item 3. Quantitative and
Qualitative Disclosures about Market Risk


As
of September 30, 2004, we had approximately $463.0 million of outstanding floating rate
debt. We do not believe that the interest rate risk represented by our floating rate debt
is material as of September 30, 2004, in relation to our $1.7 billion of outstanding total
debt, our $2.7 billion of total assets and $3.5 billion total market capitalization as of
that date.


If
market rates of interest on our variable rate debt increase by 1%, the increase in annual
interest expense on our variable rate debt would decrease future earnings and cash flows
by approximately $4.6 million. If market rates of interest on our variable rate debt
decrease by 1%, the decrease in interest expense on our variable rate debt would increase
future earnings and cash flows by approximately $4.6 million. This assumes that the amount
outstanding under our variable rate debt remains approximately $463.0 million, the balance
as of September 30, 2004. If market rates of interest increase by 1%, the fair value of
our total outstanding debt would decrease by approximately $85.7 million. If market rates
of interest decreased by 1%, the fair value of our total outstanding debt would increase
by approximately $85.7 million. This assumes our total outstanding debt remains at $1.7
billion, the balance as of September 30, 2004.


As
of September 30, 2004, we had no material exposure to market risk (including foreign
currency exchange risk, commodity price risk or equity price risk).



Item 4. Controls and
Procedures.


As
of the end of the period covered by this report, our management, including the Chief
Executive Officer and the Chief Financial Officer of the Trust, carried out an evaluation
of the design and operation of our disclosure controls and procedures as defined in Rule
13a-15 of the rules promulgated under the Securities and Exchange Act of 1934, as amended.
Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer of
the Trust concluded that the design and operation of these disclosure controls and
procedures are effective. There have been no changes in our internal controls over
financial reporting identified in connection with such evaluation that have materially
affected, or are reasonably likely to materially affect, our internal controls over
financial reporting.



-26-







COLONIAL REALTY
LIMITED PARTNERSHIPPART II  OTHER INFORMATION



Item 2. Changes in
Securities.


The
Trust from time to time issues common shares of beneficial interest (Common
Shares) pursuant to its Dividend Reinvestment and Share Purchase Plan, its
Non-Employee Trustee Share Option Plan, its Non-Employee Trustee Share Plan, and its
Employee Share Option and Restricted Share Plan, in transactions that are registered under
the Securities Act of 1933, as amended (the Act). Pursuant to CRLPs
Third Amended and Restated Agreement of Limited Partnership, each time the Trust issues
Common Shares pursuant to the foregoing plans, CRLP issues to the Trust, its general
partner, an equal number of Units for the same price at which the Common Shares were sold,
in transactions that are not registered under the Act in reliance on Section 4(2) of the
Act. During the quarter ended September 30, 2004, CRLP issued 127,835 Units in such
transactions for an aggregate of approximately $6.4 million.



Item 6. Exhibits
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     | 
|---- | 
|
|12.  | 
|15.  | 
|31.1 | 
|31.2 | 
|32.1 | 
|32.2 | 

|-27-









SIGNATURES


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


COLONIAL REALTY LIMITED PARTNERSHIP,a Delaware limited partnershipBy: Colonial Properties Trust,    Its General Partner
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |                                                                              
|---------------------- | -----------------------------------------------------------------------------
|Date: November 8, 2004 | /s/ Weston M. Andress  
    
Weston M. Andress        Chief Financial Officer

|                       |                                                                                                                                                          
|---------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|Date: November 8, 2004 | /s/ Kenneth E. Howell         Kenneth E. Howell
         Senior Vice President and        
Chief Accounting Officer        (Principal Accounting Officer)

|-28-









Exhibit 12



COLONIAL REALTY
LIMITED PARTNERSHIPRATIO OF EARNINGS TO FIXED CHARGES


CRLPs
ratio of earnings to fixed charges for the three months ended September 30, 2004 and 2003,
was 1.39 and 1.60, respectively. CRLPs ratio of earnings to fixed charges for the
nine months ended September 30, 2004 and 2003, was 1.59 and 1.68, respectively.


The
ratios of earnings to fixed charges were computed by dividing earnings by fixed charges.
For this purpose, earnings consist of pre-tax income from continuing operations before
income, loss from equity investees, extraordinary gain or loss, gains on sales of
properties, distributed income of equity investees, excluding interest costs capitalized
plus fixed charges. Fixed charges consist of interest expense (including interest costs
capitalized) and amortization of debt issuance costs.



-29-







Exhibit 15
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|We are aware that our report dated
November 5, 2004 on our review of interim financial information of Colonial Realty Limited
Partnership for the three and nine-month periods ended September 30, 2004 and 2003 and
included in the Partnerships quarterly report on Form 10-Q for the periods then
ended, is incorporated by reference in the registration statement on Form S-3/A related to
the Shelf Registration filed on October 10, 2003 (File No. 333-105329). Pursuant to Rule
436(c) under the Securities Act of 1933, this report should not be considered a part of
the registration statement prepared or certified by us within the meaning of Sections 7
and 11 of that Act.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                           | 
|---------------------------------------------------------------------------------------------------------- | 
|/s/ PricewaterhouseCoopers LLP     PricewaterhouseCoopers LLP     Birmingham, Alabama     November 8, 2004 | 

|-30-







Exhibit 31.1



CERTIFICATION UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT


I, Thomas H. Lowder, certify that:
|--------------------------------------------------------------------------------------------------------------------------

| | 1. | I have reviewed this report on Form 10-Q of Colonial Realty Limited Partnership;
| | -- | --------------------------------------------------------------------------------

| | 2. | Based on my knowledge, this report does not contain any untrue statement of a
               material fact or omit to state a material fact necessary to make the statements
               made, in light of the circumstances under which such statements were made, not
               misleading with respect to the period covered by this report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information
               included in this report, fairly present in all material respects the financial
               condition, results of operations and cash flows of the registrant as of, and
               for, the periods presented in this report;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The registrants other certifying officer and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | Designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made known to us by others within those entities, particularly
               during the period in which this report is being prepared;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | Disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The registrants other certifying officer and I have disclosed, based on
               our most recent evaluation of internal control over financial reporting, to the
               registrants auditors and the audit committee of the registrants
               board of directors (or persons performing the equivalent functions):
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | All significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 8, 2004

|                                                               | 
|-------------------------------------------------------------- | 
|By:/s/ Thomas H. LowderThomas H. LowderChief Executive Officer | 

|-31-











Exhibit 31.2



CERTIFICATION UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT


I, Weston M. Andress, certify that:
|-------------------------------------------------------------------------------------------------------------------------------

| | 1. | I have reviewed this report on Form 10-Q of Colonial Realty Limited Partnership;
| | -- | --------------------------------------------------------------------------------

| | 2. | Based on my knowledge, this report does not contain any untrue statement of a
               material fact or omit to state a material fact necessary to make the statements
               made, in light of the circumstances under which such statements were made, not
               misleading with respect to the period covered by this report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information
               included in this report, fairly present in all material respects the financial
               condition, results of operations and cash flows of the registrant as of, and
               for, the periods presented in this report;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The registrants other certifying officer and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | Designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made known to us by others within those entities, particularly
               during the period in which this report is being prepared;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | Disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The registrants other certifying officer and I have disclosed, based on
               our most recent evaluation of internal control over financial reporting, to the
               registrants auditors and the audit committee of the registrants
               board of directors (or persons performing the equivalent functions):
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | All significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 8, 2004

|                                                                  | 
|----------------------------------------------------------------- | 
|By:/s/ Weston M. Andress
Weston M. AndressChief Financial Officer | 

|-32-







Exhibit 32.1



Written Statement of
Chief Executive Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002



The undersigned, the Chief Executive
Officer of Colonial Properties Trust, our general partner, hereby certifies that, to his
knowledge on the date hereof:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | the Form 10-Q of Colonial Realty Limited Partnership for the period ended
               September 30, 2004 filed on the date hereof with the Securities and Exchange
               Commission (the Report) fully complies with the requirements of Section
               13(a) or 15(d) of the Securities Exchange Act of 1934; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | information contained in the Report fairly presents, in all material respects,
               the financial condition and results of operations of Colonial Realty Limited
               Partnership.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                 
| | --------------------------------------------------------------------------------
| | /s/   Thomas  H.  Lowder
Thomas H. LowderChief Executive OfficerNovember 8, 2004

|-33-







Exhibit 32.2



Written Statement of
Chief Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002


The undersigned, the Chief Financial
Officer of Colonial Properties Trust, our general partner, hereby certifies that, to his
knowledge on the date hereof:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | the Form 10-Q of Colonial Realty Limited Partnership for the period ended
               September 30, 2004 filed on the date hereof with the Securities and Exchange
               Commission (the Report) fully complies with the requirements of Section
               13(a) or 15(d) of the Securities Exchange Act of 1934; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | information contained in the Report fairly presents, in all material respects,
               the financial condition and results of operations of Colonial Realty Limited
               Partnership.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                               
| | ------------------------------------------------------------------------------
| | /s/ Weston M. Andress
Weston M. AndressChief Financial OfficerNovember 8, 2004

-34-