<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, 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, 1998

                                      OR

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

            For the Transition Period from         to
                                           --------   -------- 

                         Commission File No. 011-13254
                                             ---------

                               WEEKS CORPORATION
            (Exact name of Registrant as specified in its Charter)

               Georgia                                58-1525322
               -------                                ----------
      (State of Incorporation)            (I.R.S. Employer Identification No.)


                   4497 Park Drive, Norcross, Georgia 30093
         (Address of principal executive offices, including zip code)

                                 (770)923-4076
             (Registrant's telephone number, including area code)

                                      N/A
                                      ---
             (Former name, former address and former fiscal year,
                         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 such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past ninety (90) days.    (X) YES  (  ) NO

          Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date (19,671,787 shares of
common stock outstanding as of November 6, 1998)
<PAGE>
 
INDEX                                                                      PAGE
--------------------------------------------------------------------------------
PART I.  FINANCIAL INFORMATION
--------------------------------------------------------------------------------
 
ITEM 1.  FINANCIAL STATEMENTS

         Consolidated Condensed Balance Sheets
         at September 30, 1998 and December 31, 1997......................    3
        
         Consolidated Condensed Statements of Operations
         for the three and nine months ended September 30, 1998 and 1997..    4
        
         Consolidated Condensed Statements of Cash Flows
         for the nine months ended September 30, 1998 and 1997............    5
        
       
         Notes to Consolidated Condensed Financial
         Statements.......................................................    6
        
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................   17

PART II. OTHER INFORMATION
-------------------------------------------------------------------------------
ITEM 2.  CHANGES IN SECURITIES............................................   33
 
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.................................   33


SIGNATURES ...............................................................   34
-------------------------------------------------------------------------------

                                       2
<PAGE>
 
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

                               Weeks Corporation
                     Consolidated Condensed Balance Sheets

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                  September 30,   December 31,
(Unaudited; in thousands, except share data)                                           1998           1997
===================================================================================================================
<S>                                                                               <C>             <C>
ASSETS
Real estate assets
  Land                                                                             $  157,795       $106,196
  Buildings and improvements                                                          944,385        627,309
  Accumulated depreciation                                                            (86,505)       (61,548)
-------------------------------------------------------------------------------------------------------------------
     Operating real estate assets                                                   1,015,675        671,957
-------------------------------------------------------------------------------------------------------------------
  Developments in progress                                                            189,485        100,433
  Land held for future development                                                     37,689         22,562
-------------------------------------------------------------------------------------------------------------------
     Net real estate assets                                                         1,242,849        794,952
-------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents                                                                 299          5,421
Receivables                                                                            10,972          7,031
Deferred costs, net                                                                    23,136         13,087
Investments in and notes receivable
  from unconsolidated service companies                                                38,251          9,257
Investments in unconsolidated real estate entities                                     34,574          2,525
Other assets                                                                           16,688         20,088
-------------------------------------------------------------------------------------------------------------------
     TOTAL ASSETS                                                                  $1,366,769       $852,361
===================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt
  Mortgage notes payable                                                           $  265,544       $192,595
  Unsecured notes                                                                     200,000             --
  Credit facility borrowings                                                          210,720         82,920
-------------------------------------------------------------------------------------------------------------------
     Total debt                                                                       676,264        275,515
-------------------------------------------------------------------------------------------------------------------
Accounts payable and accrued expenses                                                  28,763         14,578
Other liabilities                                                                       8,830          4,876
-------------------------------------------------------------------------------------------------------------------
     Total liabilities                                                                713,857        294,969
-------------------------------------------------------------------------------------------------------------------
Minority interests in Operating Partnership                                           135,082         98,344
-------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Shareholders' equity
  Preferred Stock, at $25.00 liquidation preference; 20,000,000 shares
     authorized; 6,000,000, 8% series A cumulative redeemable
     shares issued and outstanding                                                    150,000        150,000
  Common Stock, $0.01 par value; 100,000,000 shares authorized;
     19,615,969 and 17,703,992 shares issued and outstanding
     at September 30, 1998 and December 31, 1997, respectively                            196            177
  Common stock warrants                                                                 1,400             --
  Additional paid-in capital                                                          428,658        370,696
  Deferred compensation                                                                  (718)          (895)
  Accumulated deficit                                                                 (61,706)       (60,930)
-------------------------------------------------------------------------------------------------------------------
     Total shareholders' equity                                                       517,830        459,048
-------------------------------------------------------------------------------------------------------------------
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                    $1,366,769       $852,361
===================================================================================================================
</TABLE> 
The accompanying notes are an integral part of these condensed balance sheets.

                                       3
<PAGE>
 
                               WEEKS CORPORATION
                Consolidated Condensed Statements Of Operations

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                  Three Months     Three Months      Nine Months      Nine Months
                                                                      Ended            Ended            Ended            Ended
(Unaudited; in thousands, except per share data)                 Sept. 30, 1998   Sept. 30, 1997   Sept. 30, 1998   Sept. 30, 1997
====================================================================================================================================
<S>                                                              <C>              <C>              <C>              <C>
REVENUES
  Rental income                                                  $34,269          $21,047           $ 94,312          $57,326
  Tenant reimbursements                                            4,339            2,903             12,433            7,319
  Other                                                              479              329              1,361              971
------------------------------------------------------------------------------------------------------------------------------------
                                                                  39,087           24,279            108,106           65,616
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
  Property operating, maintenance
  and management                                                   5,729            3,473             15,784            8,762
  Real estate taxes                                                3,395            1,927              9,133            5,394
  Depreciation and amortization                                    9,944            6,300             27,500           17,344
  Interest, including amortization of
     deferred financing costs                                      8,459            5,014             21,836           15,020
  General and administrative                                       1,471              881              4,085            2,633
------------------------------------------------------------------------------------------------------------------------------------
                                                                  28,998           17,595             78,338           49,153
------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EQUITY IN EARNINGS OF
  UNCONSOLIDATED ENTITIES, INTEREST INCOME
  AND GAIN ON SALE OF REAL ESTATE ASSETS                          10,089            6,684             29,768           16,463
  Equity in earnings of unconsolidated
     service companies                                               781              314              1,670            1,538
  Equity in earnings of unconsolidated
     real estate entities                                             66               --                220               --
  Interest income                                                    231              453                757              996
  Gain on sale of real estate assets                                  53               --                 53              209
------------------------------------------------------------------------------------------------------------------------------------
Income before minority interests                                  11,220            7,451             32,468           19,206
  Minority interests                                              (2,149)          (1,683)            (6,130)          (4,533)
------------------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                         9,071            5,768             26,338           14,673
  Dividends to preferred shareholders                             (3,000)              --             (9,000)              --
------------------------------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS                      $ 6,071          $ 5,768           $ 17,338          $14,673
------------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
  Basic                                                          $  0.31            $0.33           $   0.91            $0.92
  Diluted                                                           0.31             0.32               0.90             0.91
------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES
  Basic                                                           19,574           17,693             19,122           15,904
  Diluted                                                         26,654           23,017             26,056           21,018
------------------------------------------------------------------------------------------------------------------------------------

 
The accompanying notes are an integral part of these condensed financial statements.
</TABLE>
                                       4
<PAGE>
 
                               WEEKS CORPORATION
                Consolidated Condensed Statements Of Cash Flows

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                               Nine Months      Nine Months
                                                                                  Ended            Ended
(Unaudited; in thousands)                                                    Sept. 30, 1998   Sept. 30, 1997
===================================================================================================================
<S>                                                                          <C>              <C>
OPERATING ACTIVITIES
Net income                                                                      $  26,338        $  14,673
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Minority interests                                                                6,130            4,533
  Depreciation and amortization                                                    27,500           17,344
  Amortization of deferred financing costs                                          1,184              679
  Amortization of deferred compensation                                               227              216
  Straight-line rent revenue                                                       (1,351)            (500)
  Undistributed earnings of unconsolidated entities                                    --             (227)
  Gain on sale of real estate assets                                                  (53)            (209)
Net change in:
  Receivables and other assets                                                     (4,577)          (2,573)
  Deferred costs                                                                   (5,130)          (4,354)
  Accounts payable and accrued expenses                                             7,635            5,792
  Other liabilities                                                                 2,076            1,164
-------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                          59,979           36,538
-------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property acquisition, development and construction                               (314,885)        (112,349)
Real estate loans                                                                  (5,392)         (18,038)
Investments in and advances to unconsolidated entities                            (60,258)              --
Distributions in excess of earnings of unconsolidated entities                        501               --
Collections of notes receivable and other                                             705              690
Proceeds from sale of real estate assets                                            2,373            2,484
-------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                            (376,956)        (127,213)
-------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Common share offering proceeds                                                     48,600          112,902
Underwriting discount and offering costs                                           (1,400)          (6,334)
Proceeds from issuance of common stock warrants,
  stock option exercises and dividend reinvestment plan                             7,131              698
Unsecured note borrowings                                                         200,000               --
Line of credit proceeds, net                                                      127,800           50,698
Payments of mortgage notes payable                                                (18,188)         (41,667)
Deferred financing costs                                                           (8,071)            (126)
Dividends to shareholders                                                         (35,362)         (19,709)
Distributions to minority interests                                                (8,655)          (5,571)
-------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                         311,855           90,891
-------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   (5,122)             216
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      5,421              260
-------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $     299        $     476
===================================================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
</TABLE>

The Company's 1998 property acquisition and development activity was net of the
settlement of real estate loans of $10,785,000, the assumption of other
liabilities in excess of other assets of $4,224,000, the assumption of
indebtedness of $91,137,000 and the issuance of Common Units valued at
$52,426,000.

The Company's 1997 property acquisition and development activity was net of the
settlement of real estate loans of $2,874,000, the assumption of indebtedness of
$34,779,000 and the issuance of Common Units valued at $16,568,000.

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

                                       5
<PAGE>
 
                               WEEKS CORPORATION
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.  THE COMPANY

Weeks Corporation and its subsidiaries own, operate, develop, construct, acquire
and manage industrial and suburban office buildings in the southeast United
States and Texas.  As used herein, the term "Company" includes Weeks Corporation
and its subsidiaries, including Weeks Realty, L.P. (the "Operating
Partnership"), unless the context indicates otherwise.  The Company, through its
subsidiaries, is the general partner of and owns a majority interest in the
Operating Partnership which, including the operations of its subsidiaries,
conducts substantially all of the on-going operations of the Company.  The
Company has elected to qualify and operate as a self-administered and self-
managed real estate investment trust ("REIT") under the Internal Revenue Code of
1986, as amended (the "Code").  As a REIT, the Company will not generally be
subject to corporate federal income taxes as long as it satisfies certain
technical requirements of the Code relating to the composition of its income and
assets, and including the requirement to distribute 95% of its taxable income to
its shareholders.

As of September 30, 1998, the Company had outstanding 19,615,969 shares of
common  stock and owned the same number of units of common limited partnership
interest in the Operating Partnership ("Common Units"), and the Company's
ownership interest in the Operating Partnership was 73.1%.  Common Units held by
persons other than the Company totaled 7,202,593 as of September 30, 1998, and
represented a 26.9% minority interest in the Operating Partnership.  Common
Units representing the 26.9% minority interest in the Operating Partnership are
convertible by their holders into shares of common stock on a one-for-one basis,
or into cash, at the Company's option.  The Company's weighted average ownership
interest in the Operating Partnership was 73.9% and 77.5% for the three months
ended and 73.9% and 76.4% for the nine months ended September 30, 1998 and 1997,
respectively.

The Company conducts its third-party service businesses through two subsidiary
companies (the "Service Companies"):  Weeks Realty Services, Inc. and Weeks
Construction Services, Inc.  Together the Service Companies and their
subsidiaries conduct third-party development, construction, landscape, property
management and commercial brokerage services.  The Company holds 100% of the
nonvoting and 1% of the voting common stock of the Service Companies.  The
remaining voting common stock is held by three executive officers of the
Company.  The ownership of the common stock of the Service Companies entitles
the Company to substantially all (99%) of the economic benefits from the results
of the Service Companies' operations.

As of September 30, 1998, the Company's in-service property portfolio, including
one property totaling 86,000 square feet held in a 50% owned entity, consisted
of 269 industrial properties, 30 suburban office properties and 5 retail
properties comprising 23,455,000 square feet.  The Company's primary markets and
the concentration of the Company's in-service portfolio (based on square
footage) are Atlanta, Georgia (56.4%), Nashville, Tennessee (11.6%), Miami,
Florida (10.4%), Raleigh-Durham-Chapel Hill, North Carolina (9.8%), Dallas/Ft.
Worth, Texas (4.6%), Orlando, Florida (3.2%), Jacksonville, Florida (2.4%) and
Spartanburg, South Carolina (1.6%).  In addition, 45 industrial and suburban
office properties and one property expansion were under development or in lease-
up and one industrial property was under agreement to acquire as of September
30, 1998, comprising an additional 5,698,000 square feet.

                                       6
<PAGE>
 
2.  BASIS OF PRESENTATION

The accompanying consolidated condensed financial statements include the
consolidated condensed financial position of the Company and its subsidiaries at
September 30, 1998, and December 31, 1997, and their results of operations and
cash flows for the three and nine months ended September 30, 1998 and 1997. The
Service Companies and their subsidiaries are reflected in the accompanying
consolidated condensed financial statements on the equity method of accounting.
All significant intercompany balances and transactions have been eliminated in
the consolidated condensed financial statements.  Certain prior year amounts
have been reclassified to conform to the 1998 presentation.

The accompanying interim unaudited financial statements have been prepared by
the Company's management in accordance with generally accepted accounting
principles for interim financial information and in conformity with the rules
and regulations of the Securities and Exchange Commission.  In the opinion of
management, the interim financial statements presented herein reflect all
adjustments of a normal and recurring nature which are necessary to fairly state
the interim financial statements.  The results of operations for the interim
periods are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998.  These financial statements should be read in
conjunction with the Company's audited financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, SFAS 131, "Disclosures About Segments of an Enterprise and Related
Information" was issued prescribing new guidelines for the reporting of segment
data.  SFAS 131 will apply to all public, for-profit companies and will be
effective for the Company beginning with the fourth quarter and year ending
December 31, 1998.  The Company was not subject to segment reporting under prior
accounting standards, but will be required to provide certain segment
disclosures under SFAS 131.  The Company continues to evaluate the disclosure
provisions of SFAS 131 and plans to adopt SFAS 131 in it financial statements
for the year ending December 31, 1998.

In March 1998, Emerging Issues Task Force Issue No. 97-11, "Accounting for
Internal Costs Relating to Real Estate Property Acquisitions," was issued
prescribing that internal acquisition costs relating to the acquisition of
operating real estate properties should be expensed as incurred.  Effective with
the first quarter of 1998, the Company implemented this new guideline, which did
not have a material impact on the Company's financial position or results of
operations.

In June 1998, SFAS 133, "Accounting for Derivative Instruments and for Hedging
Activities," was issued prescribing new accounting standards for the accounting
and disclosures of derivative instruments and hedging transactions.  SFAS 133
will be effective for the Company beginning January 1, 2000.  The Company is
evaluating the provisions of SFAS 133 and plans to adopt SFAS 133 in its
financial statements beginning in 2000.

                                       7
<PAGE>
 
3.  BORROWINGS

Total borrowings at September 30, 1998 and December 31, 1997 consist of the
following (in thousands):
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------- 
                                                               SEPT. 30,  DEC. 31,
                                                                 1998       1997
----------------------------------------------------------------------------------
<S>                                                            <C>        <C>
     Unsecured Notes
       Due 2005, interest at 6.875%                            $100,000  $       -
       Due 2007, interest at 7.375%                             100,000          -
----------------------------------------------------------------------------------
                                                                200,000          -
----------------------------------------------------------------------------------
     UNSECURED CREDIT FACILITY                                  210,720     82,920
----------------------------------------------------------------------------------
 
     MORTGAGE NOTES
       Fixed rate notes, interest at 6.00% to 9.80%,
          due in 1999 to 2012                                   259,781    186,798
       Variable rate industrial revenue bonds,
          interest at 4.00% to 6.45% at September 30, 1998,
          due in 2004 to 2010                                     5,763      5,797
----------------------------------------------------------------------------------
                                                                265,544    192,595
----------------------------------------------------------------------------------
     TOTAL BORROWINGS                                          $676,264   $275,515
----------------------------------------------------------------------------------
</TABLE>

UNSECURED NOTES

On August 4, 1998, the Operating Partnership issued $100,000,000 of 7.375%
unsecured notes due August 1, 2007.  In the first quarter of 1998, the Operating
Partnership issued $100,000,000 of 6.875% unsecured notes due March 15, 2005.
The proceeds from these unsecured notes were used to reduce borrowings under the
Operating Partnership's revolving credit facility.  These unsecured notes are
subject to certain covenants, including those governing the Operating
Partnership's interest and fixed charge coverage and total leverage.

CREDIT FACILITY

Effective July 1, 1998, the Operating Partnership refinanced its existing
$225,000,000 syndicated revolving line of credit (the "Line of Credit") and
expanded its bank lending group to five banks.  Additionally, effective July 1,
1998, the Operating Partnershp entered into a $20,000,000 swing revolving credit
facility (the "Swing Facility") with one bank.  The combined Line of Credit and
Swing Facility are referred to herein as the "Credit Facility."  The Credit
Facility is unsecured and can be used for development and construction,
acquisitions and general corporate purposes.  The entire Credit Facility is
guaranteed by the Company.  Additionally, the Company and the Operating
Partnership are required to meet certain financial and non-financial covenants
including those governing the Company's and the Operating Partnership's maximum
unsecured borrowings, total leverage, limitations on secured borrowings and a
restriction on the amount of dividends and distributions to not more than 95% of
"funds from operations," a REIT industry measure of operating performance,
unless the additional amounts are necessary to maintain the Company's REIT
status under the Code.  The Line of Credit matures on December 31, 2000, and may
be extended annually through December 31, 2002, subject to annual extension fees
of 0.10%.  The Swing Facility matures on June 30, 1999 and may be extended
annually.

                                       8
<PAGE>
 
In periods prior to March 17, 1998, the Service Companies and Weeks Development
were direct borrowers under the Credit Facility.  In connection with the
issuance of the unsecured notes in March 1998 and the refinancing of the Credit
Facility discussed above, the Service Companies and Weeks Development refinanced
their Credit Facility borrowings with intercompany loans from the Operating
Partnership (see Note 4).

Interest under the Credit Facility accrues at bank prime minus 0.25% or at LIBOR
plus 0.80% at the election of the Operating Partnership.  In addition, the
Operating Partnership pays annual facility fees equal to 0.15% of the total Line
of Credit.  The weighted average interest rate on Credit Facility borrowings,
excluding the effect of the interest rate swap agreements described below, was
6.4% at September 30, 1998.  Prior to July 1, 1998, interest under the Credit
Facility accrued at bank prime minus 0.25% or at LIBOR plus 1.05%, at the
election of the Operating Partnership, and fees on the unused portion of the
Credit Facility were 0.15%.

Interest paid, net of amounts capitalized, totaled $17,373,000 and $14,123,000
for the nine months ended September 30, 1998 and 1997, respectively.  Interest
costs capitalized totaled $3,443,000 and $1,516,000 for the three months and
$8,302,000 and $3,738,000 for the nine months ended September 30, 1998 and 1997,
respectively.

At September 30, 1998, the Company had in place two interest rate swap
agreements with a commercial bank to effectively change the interest costs on
$40,000,000 of Credit Facility borrowings from the variable rates discussed
above to fixed rates.  The agreements, with notional principal amounts of
$10,000,000 and $30,000,000, mature in July 1999 and July 2001 with effective
fixed interest rates of 7.3% and 7.6%, respectively.

MORTGAGE NOTES PAYABLE

At September 30, 1998, fixed rate mortgage notes payable included 34 notes with
a weighted average interest rate of 8.2%.  The weighted average term to maturity
of fixed rate mortgage notes payable was 6.6 years at September 30, 1998.  Total
mortgage indebtedness increased by $72,949,000 in 1998 due to the assumption of
five mortgage notes totaling $91,137,000 in connection with the Company's
building acquisitions, net of principal repayments and retirements of
$18,188,000.  Certain Company officers and Common Unitholders guarantee a
portion of the fixed rate mortgage notes.

                                       9
<PAGE>
 
DEBT MATURITIES
Scheduled maturities of total borrowings at September 30, 1998, are summarized
as follows (in thousands):

               ---------------------------------------------- 
                  YEAR                              AMOUNT 
               ---------------------------------------------- 
                 Remainder of 1998              $  1,026
                 1999                             71,226(a)
                 2000                            229,373(a)
                 2001                             12,885
                 2002                              9,874
                 2003 and thereafter             351,880
               ---------------------------------------------- 
                                                $676,264
               ----------------------------------------------

(a)  Includes $18,570 maturing in 1999 under the Swing Facility and $192,150
     maturing in 2000 under the Line of Credit, assuming that no extensions are
     exercised.

                                       10
<PAGE>
 
4. INVESTMENTS IN AND NOTES RECEIVABLE
   FROM UNCONSOLIDATED SERVICE COMPANIES

The Company conducts its third-party development, construction, landscape,
property management and commercial brokerage businesses through the Service
Companies and their subsidiaries.  Additionally, the Service Companies and their
subsidiaries also own land in various business parks, either directly or through
ownership interests in real estate partnerships and joint ventures.  The Company
intends, based on market conditions, to acquire land from the Service Companies
and their subsidiaries for the development of future properties.  As discussed
in Note 2, the Service Companies and their subsidiaries are accounted for on the
equity method of accounting.  Under the equity method, the Company recognizes,
in its consolidated statements of operations, its economic share (99%) of the
earnings or losses of the Service Companies and their subsidiaries.

The following information summarizes the financial position, results of
operations and cash flows of the Service Companies and their subsidiaries on a
combined basis (in thousands):

   ------------------------------------------------------------------------- 
                                                SEPTEMBER 30,   DECEMBER 31,
   Financial Position                               1998           1997
   ========================================================================= 
   Assets
   Real estate assets                              $13,874         $12,403
   Investments in unconsolidated entities           11,820           2,849
   Receivables and other assets                     30,488          20,158
   -------------------------------------------------------------------------
                                                   $56,182         $35,410
   =========================================================================
   LIABILITIES AND EQUITY
   Borrowings from the Operating Partnership       $39,106         $10,900
   Credit facility borrowings                           --          16,620
   Other borrowings                                  2,309           2,000
   Other liabilities                                15,597           7,513
   Total equity (deficit)                             (830)         (1,623)
   -------------------------------------------------------------------------
                                                   $56,182         $35,410
   =========================================================================

As discussed in Note 3 and effective March 17, 1998, the operations of the
Service Companies and their subsidiaries are financed through line of credit
borrowings from the Operating Partnership.  These line of credit borrowings
accrue interest at bank prime plus 1%, payable monthly, and are due on demand.
Previously, these entities were financed through direct borrowings under the
Credit Facility.  As part of these financing arrangements, the Service Companies
and their subsidiaries have agreed not to incur any additional unsecured
borrowings other than through borrowings from the Operating Partnership.
Borrowings from the Operating Partnership also include $10,876,000 of 12% notes
due in 2004.

                                       11
<PAGE>
 
At September 30, 1998, the Company's investment in and notes receivable from the
Service Companies and their subsidiaries totaling $38,251,000 includes notes
receivable from the Service Companies and their subsidiaries of $39,106,000 and
the Company's investment in the Subsidiaries of ($856,000).
<TABLE>
<CAPTION>
   --------------------------------------------------------------------------------------------------------------- 
                                                  THREE MONTHS     THREE MONTHS      NINE MONTHS      NINE MONTHS
                                                      ENDED            ENDED            ENDED            ENDED
   Results of Operations                         Sept. 30, 1998   Sept. 30, 1997   Sept. 30, 1998   Sept. 30, 1997
   =============================================================================================================== 
   <S>                                              <C>              <C>              <C>              <C>
   Revenue
   Construction and development fees                 $1,277           $  724         $  2,482          $ 1,781
   Landscape                                          1,729            1,442            4,288            4,313
   Commissions                                          177              150              967              612
   Property management fees and other                    43              118              173              404
   --------------------------------------------------------------------------------------------------------------- 
                                                      3,226            2,434            7,910            7,110
   --------------------------------------------------------------------------------------------------------------- 
   COSTS AND EXPENSES                           
   Direct costs                                       1,339            1,440            3,446            3,901
   Interest expense  Operating Partnership              719              326            1,867              981
   Interest expense - other                              38               14              109              178
   General and administrative                           783              642            2,542            1,681
   Other                                                218              103              552              385
   --------------------------------------------------------------------------------------------------------------- 
                                                      3,097            2,525            8,516            7,126
   --------------------------------------------------------------------------------------------------------------- 
   INCOME (LOSS) BEFORE GAINS ON SALE OF        
        properties and equity in earnings         
        of unconsolidated entities                      129              (91)            (606)             (16)
   Gain on sale of properties - third parties             -               79              377              313
   Gain on sale of properties  Operating        
        Partnership                                     148                -              290              580
   Equity in earnings of                        
        unconsolidated entities                         184                -              649              271
   ---------------------------------------------------------------------------------------------------------------
   NET INCOME (LOSS)                                 $  461           $  (12)        $    710          $ 1,148
   --------------------------------------------------------------------------------------------------------------- 
   Net income attributable                      
        to Operating Partnership                     $  456           $  (12)        $    702          $ 1,137
   Interest expense  Operating Partnership              719              326            1,867              981
   Elimination of intercompany                  
        profits  Operating Partnership                 (394)               -             (899)            (580)
   --------------------------------------------------------------------------------------------------------------- 
   Equity in earnings of Service Companies           $  781           $  314         $  1,670          $ 1,538
   =============================================================================================================== 
   Distributions and interest paid              
        to Operating Partnership                     $1,818           $1,311         $  2,191          $ 1,311
   =============================================================================================================== 
</TABLE> 
<TABLE> 
<CAPTION> 
   --------------------------------------------------------------------------------------------------------------- 
                                                                                    Nine Months      Nine Months
                                                                                       Ended            Ended
   Cash Flows                                                                      Sept. 30, 1998   Sept. 30, 1997
   =============================================================================================================== 
  <S>                                                                                 <C>              <C>
   Operating activities                                                             $ (2,582)         $(7,229)
   Investing activities                                                              (11,964)          (5,206)
   Financing activities                                                                9,895           10,593
   --------------------------------------------------------------------------------------------------------------- 
</TABLE>

                                       12
<PAGE>
 
In connection with the Company's January 1998 acquisition of a real estate
portfolio in Miami, Florida (see Note 7), the Service Companies acquired a one-
third interest in Codina Group, Inc. ("Codina"), a Miami-based real estate
services company, for aggregate consideration of approximately $9,600,000.

5.  SHAREHOLDERS' EQUITY

The Company declared and paid quarterly common stock dividends relating to the
second quarter of 1998 of $9,079,000 or $0.465 per common share during the three
months ended September 30, 1998.  Additionally, the minority Common Unitholders
in the Operating Partnership received cash distributions totaling $3,143,000 or
$0.465 per Common Unit during the three months ended September 30, 1998.  The
Company also declared and paid a quarterly Series A preferred stock dividend of
$3,000,000 or $0.50 per share during the three months ended September 30, 1998.
In October 1998, the Company declared and paid quarterly common stock dividends
and made distributions to minority Unitholders relating to the third quarter of
1998 of $9,122,000 or $0.465 per common share and $3,223,000 or $0.465 per
Common Unit, respectively.  Additionally, in October 1998, the Company declared
and paid a quarterly Series A preferred stock dividend of $3,000,000 or $0.50
per share.

In the first quarter of 1998, the Company completed two common stock offerings
consisting of 1,072,797 and 468,750 shares and received net proceeds of
approximately $33,100,000 and $14,100,000, respectively. The proceeds were used
to reduce the Company's outstanding Credit Facility borrowings.

In February 1998, the Company sold 350,000 common stock warrants to certain
executive officers and employees of Codina for an aggregate price of $1,400,000.
The common stock warrants entitle their holders to purchase 350,000 shares of
the Company's common stock at a price of $32.75 per share through February 2008.

                                       13
<PAGE>
 
6.  NET INCOME PER COMMON SHARE

The Company adopted the provisions of SFAS 128 for the year ended December 31,
1997.  For the three and nine months ended September 30, 1998 and 1997,
reconciliations of income available to common shareholders and weighted average
common shares used in the Company's basic and diluted net income per common
share computations are detailed below (in thousands, except per share data):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------  
                                                     THREE MONTHS    THREE MONTHS    NINE MONTHS     NINE MONTHS
                                                        ENDED           ENDED           ENDED           ENDED
                                                    Sept. 30, 1998  Sept. 30, 1997  Sept. 30, 1998  Sept. 30, 1997
------------------------------------------------------------------------------------------------------------------ 
<S>                                                 <C>             <C>             <C>             <C>
Computation of Net Income per Common Share
Net income available to common
 shareholders - basic                                 $ 6,071         $ 5,768         $17,338         $14,673
Minority interests in earnings of                  
 the Operating Partnership                              2,149           1,683           6,130           4,533
------------------------------------------------------------------------------------------------------------------ 
Net income available to common                     
  shareholders - diluted                              $ 8,220         $ 7,451         $23,468         $19,206
------------------------------------------------------------------------------------------------------------------ 
Weighted average common shares - basic                 19,574          17,693          19,122          15,904
 Dilutive securities -                             
  Common Units of limited partnership interest in  
  the Operating Partnership                             6,932           5,141           6,762           4,912
 Stock options                                            148             183             172             202
------------------------------------------------------------------------------------------------------------------ 
 Weighted average common shares - diluted              26,654          23,017          26,056          21,018
------------------------------------------------------------------------------------------------------------------ 
 NET INCOME PER COMMON SHARE                       
  Basic                                               $  0.31         $  0.33         $  0.91         $  0.92
 Diluted                                                 0.31            0.32            0.90            0.91
------------------------------------------------------------------------------------------------------------------ 
 </TABLE>
 
Basic net income per common share for the periods presented was computed by
dividing income available to common shareholders by the weighted average number
of shares of common stock outstanding during the period.  Diluted net income per
common share was computed assuming that Common Units were converted into common
stock on the later of the beginning of the period presented or upon their actual
issuance and based on the dilutive effect of stock options outstanding.  The
Company has 662,000 outstanding stock options and 350,000 outstanding stock
warrants that were not dilutive in the three and nine months ended September 30,
1998.

Previously reported net income per common share under prior accounting standards
was equal to basic net income per common share under SFAS 128.

                                       14
<PAGE>
 
7.  ACQUISITIONS/DISPOSITIONS

In the third quarter of 1998, the Operating Partnership acquired nine industrial
buildings totaling approximately 835,000 square feet for approximately
$42,489,000.  The aggregate acquisition consideration was comprised of the
issuance of $10,848,000 of Common Units, the assumption of mortgage indebtedness
of $3,290,000 and $28,351,000 of cash, used to fund the assumption and repayment
of indebtedness, closing costs and acquisition expenses, funded through Credit
Facility borrowings.  The acquired properties are located in Tennessee, Florida
and Georgia.Two of the buildings, under development prior to their acquisition,
were acquired from NWI Warehouse Group, L.P. ("NWI"), a related entity, for
total acquisition consideration of approximately $13,957,000.

In July 1998, the Operating Partnership sold a 30,381 square foot building
located in Miami, Florida to one of the building's tenants for approximately
$2,373,000, resulting in a gain of $53,000.  This building was originally
acquired in January 1998 as part of the Miami, Florida portfolio acquisition
discussed below.

In June 1998, the Operating Partnership acquired five industrial buildings
totaling approximately 1,074,000 square feet and 67.9 acres of undeveloped land
located in Dallas/Ft. Worth, Texas.  The aggregate acquisition consideration of
approximately $48,300,000 was paid in cash, funded through Credit Facility
borrowings.  In addition to these five buildings, the Operating Partnership
entered into arrangements to acquire four additional industrial buildings in
Dallas, Texas.  On September 30, 1998, the Operating Partnership assigned its
acquisition rights to acquire the four buildings to NWI, and NWI acquired the
buildings for aggregate consideration of approximately $34,645,000.
Simultaneously, the Operating Partnership advanced $31,600,000 under a
$33,600,000 adjustable rate loan agreement with NWI and entered into a 17 month
option arrangement enabling the Operating Partnership to acquire the buildings
from NWI.  The adjustable rate loan is secured by the four buildings, bears
interest at LIBOR plus 1.30% and matures on the earlier of the acquisition of
buildings by the Operating Partnership or September 30, 2003.  The Operating
Partnership has accounted for this transaction with NWI as an investment in real
estate under the equity method of accounting.

Additionally, in the second quarter of 1998, the Operating Partnership acquired
ten industrial and suburban office buildings totaling approximately 467,000
square feet for approximately $29,550,000.  The aggregate acquisition
consideration was comprised of the issuance of $3,264,000 of Common Units, the
assumption of mortgage indebtedness of $2,949,000 and $23,337,000 of cash,
funded through Credit Facility borrowings.  The acquired properties are located
in Tennessee, Florida, North Carolina and Georgia.

On January 9, 1998, the Operating Partnership acquired a 2,477,000 square foot,
24-building portfolio and approximately five acres of land subject to ground
leases in Miami, Florida.  Aggregate acquisition consideration of approximately
$175,200,000, including closing costs and acquisition expenses, consisted of the
issuance of $28,310,000 of Common Units, the assumption of $78,033,000 of
mortgage indebtedness (see Note 3), the assumption of certain other liabilities
in excess of certain other assets of approximately $4,224,000, and cash of
approximately $64,633,000 funded through Credit Facility borrowings.  In
connection with the acquisition, the Operating Partnership has also agreed,
subject to customary closing conditions and the completion of due diligence
procedures, to acquire a 90,000 square foot building under development for
approximately $5,100,000 and approximately nine acres of adjacent, undeveloped
land for approximately $4,000,000.  Additionally, in the first quarter of 1998,
the Operating Partnership acquired two industrial buildings under development
totaling approximately

                                       15
<PAGE>
 
102,800 square feet for approximately $4,400,000.   The aggregate acquisition
consideration was comprised of the issuance of $1,514,000 of Common Units and
$2,886,000 of cash, used to fund the assumption and repayment of indebtedness,
closing costs and acquisition expenses, funded through Credit Facility
borrowings.

8.  SUBSEQUENT EVENT

On November 6, 1998, the Operating Partnership sold 1,400,000, 8% Series C
Cumulative Redeemable Preferred Partnership Units (the "Series C Preferred
Units"). The Series C Preferred Units have a liquidation preference of $25.00
per unit and are redeemable by the Operating Partnership after five years. In
combination with the issuance of the Series C Preferred Units, the Company
issued a warrant that entitles its holder to purchase 1,046,729 shares of
Company common stock at a price of $33.4375 per share. The Series C Preferred
Units are automatically redeemed upon the exercise of the common stock warrant.
The warrant has a perpetual term unless the Series C Preferred Units are
redeemed by the Operating Partnership, in which case the warrant expires within
30 days of redempton. The Operating Partnership received net proceeds of
approximately $34,400,000 from this transaction. The proceeds were used to
reduce outstanding Credit Facility borrowings.

                                       16
<PAGE>
 
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS


The following discussion should be read in conjunction with the accompanying
consolidated condensed financial statements and notes thereto, included
elsewhere herein.  In addition to historical information, management's
discussion and analysis and other statements issued or made from time to time by
the Company or its representatives contain statements which may constitute
"Forward-looking Statements" within the meaning of the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, each as amended
by the Private Securities Litigation Reform Act of 1995, 15 U.S.C.A. Sections
77z-2 and 78u-5 (Supp. 1996).  Those statements include statements regarding the
intent, belief or current expectations of the Company and members of its
management team as well as the assumptions on which such statements are based.
Any such Forward-looking Statements are not guarantees of future performance and
the Company's actual results could differ materially from those set forth in
such Forward-looking Statements.  Factors currently known to management that
could cause actual results to differ materially from those set forth in such
Forward-looking Statements include general economic conditions, local real
estate conditions, timely re-leasing of occupied square footage upon expiration,
interest rates, availability of equity and debt financing, current construction
schedules, the status of lease negotiations with potential tenants, the
satisfactory completion of due diligence procedures and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission, including Quarterly Reports on Form 10-Q, Current Reports on Form 8-
K and Annual Reports on Form 10-K.  The Company undertakes no obligation to
update or revise Forward-looking Statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over
time.

GENERAL BACKGROUND

The Company was founded in 1965 and operated as a private real estate company
until August 1994, when it completed an initial public offering and elected to
be taxed as a REIT.  As a self-administered and self-managed REIT, the Company
owns, develops, acquires and manages primarily high-quality industrial and
suburban office properties in the southeast United States and Texas.  For a
further description of the Company, see Note 1 to the consolidated condensed
financial statements.

                                       17
<PAGE>
 
RESULTS OF OPERATIONS

Operating information relating to the Company's properties for the three and
nine months ended September 30, 1998 and 1997, is summarized below (in
thousands):
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------- 
                                     THREE MONTHS    THREE MONTHS             NINE MONTHS     NINE MONTHS
                                        Ended           Ended          %         Ended           Ended          %
                                    SEPT. 30, 1998  SEPT. 30, 1997  CHANGE   SEPT. 30, 1998  SEPT. 30, 1997  CHANGE
-------------------------------------------------------------------------------------------------------------------- 
<S>                                 <C>             <C>             <C>      <C>             <C>             <C>
Rental revenues                         $34,269         $21,047      62.8%      $ 94,312       $57,326       64.5%
Tenant reimbursements                     4,339           2,903      49.5%        12,433         7,319       69.9%
-------------------------------------------------------------------------------------------------------------------- 
Property operating revenues              38,608          23,950      61.2%       106,745        64,645       65.1%
-------------------------------------------------------------------------------------------------------------------- 
Operating, maintenance and
 management expenses                      5,729           3,473      65.0%        15,784         8,762       80.1%
Real estate taxes                         3,395           1,927      76.2%         9,133         5,394       69.3%
Depreciation and amortization             9,944           6,300      57.8%        27,500        17,344       58.6%
-------------------------------------------------------------------------------------------------------------------- 
Property operating expenses              19,068          11,700      63.0%        52,417        31,500       66.4%
-------------------------------------------------------------------------------------------------------------------- 
Property operating revenues less
 property operating expenses            $19,540         $12,250      59.5%      $ 54,328       $33,145       63.9%
-------------------------------------------------------------------------------------------------------------------- 
</TABLE>

Period to period comparisons of property operating revenues and expenses for
1998 and 1997 are discussed herein using the categories "core properties,"
"development properties" and "acquisition properties."  Core properties are
defined as properties which were stabilized and operating as of January 1, 1997.
The Company defines a property as stabilized upon the earlier of substantial
lease-up or one year from building shell completion.  Development properties
reflect properties completed and stabilized, and acquisition properties are
properties acquired, subsequent to January 1, 1997.

For the comparable three and nine months ended September 30, 1998 and 1997,
operating results of the core properties, representing 191 properties totaling
approximately 13,474,000 square feet, are summarized below (in thousands):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------  
                                     THREE MONTHS     THREE MONTHS               NINE MONTHS      NINE MONTHS
                                         Ended            Ended          %          Ended            Ended          %
                                    Sept. 30, 1998   Sept. 30, 1997   Change   Sept. 30, 1998   Sept. 30, 1997   Change
------------------------------------------------------------------------------------------------------------------------  
<S>                                 <C>              <C>              <C>      <C>              <C>              <C>
Rental revenues                        $18,252          $17,835        2.3%         $54,276          $52,990      2.4%
Tenant reimbursements                    1,990            2,005      (0.7)%           6,441            6,257      2.9%
------------------------------------------------------------------------------------------------------------------------  
Property operating revenues             20,242           19,840        2.0%          60,717           59,247      2.5%
------------------------------------------------------------------------------------------------------------------------  
Operating, maintenance and
 management expenses                     2,820            2,682        5.1%           8,261            7,787      6.1%
Real estate taxes                        1,619            1,685      (3.9)%           4,960            5,004    (0.9)%
Depreciation and amortization            5,587            5,388        3.7%          16,541           16,040      3.1%
------------------------------------------------------------------------------------------------------------------------  
Property operating expenses             10,026            9,755        2.8%          29,762           28,831      3.2%
------------------------------------------------------------------------------------------------------------------------  
Property operating revenues less
 property operating expenses           $10,216          $10,085        1.3%         $30,955          $30,416      1.8%
------------------------------------------------------------------------------------------------------------------------  
Average occupancy                         95.6%            96.5%                       95.5%           96.4%
------------------------------------------------------------------------------------------------------------------------  
</TABLE>

                                       18
<PAGE>
 
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998,
TO THE THREE MONTHS ENDED SEPTEMBER 30, 1997

Property operating revenues (rental revenue plus tenant reimbursements)
increased $14,658,000 or 61.2% between periods.  Of this increase, $10,510,000,
$3,746,000 and $402,000 were attributable to acquisition, development and core
properties, respectively.  The increases relating to acquisition and development
properties were due to the acquisition of 84 properties (37 in 1997 and 47 in
1998) totaling approximately 6,960,000 square feet and the stabilization of 28
development properties (14 in 1997 and 14 in 1998) and two property expansions
(both in 1997) totaling approximately 2,935,000 square feet.  Property operating
expenses increased $7,368,000 or 63.0% between periods due primarily to the
growth in the property portfolio resulting from the acquisition and development
properties discussed above.

Property operating revenues from core properties increased 2.0% despite a
decrease in overall average occupancy of approximately 0.9%.  This increase in
property operating revenues was due primarily to rental rate increases between
periods.  Property operating expenses increased 2.8% due primarily to increased
maintenance and security expenses offset somewhat by decreased real estate tax
expense in 1998.  Real estate taxes and tenant reimbursement revenues decreased
somewhat between periods reflecting the annual reconciliation of actual and
estimated real estate taxes on certain core properties.  Property operating
revenues less property operating expenses from core properties increased 2.1%,
exclusive of depreciation and amortization expense.

Interest expense increased by $3,445,000 or 68.7% from $5,014,000 for the three
months ended September 30, 1997, to $8,459,000 for the three months ended
September 30, 1998, due to increased mortgage interest of $1,587,000 related to
mortgage debt assumed in connection with certain of the Company's 1997 and 1998
property acquisitions and increased net interest expense on unsecured Credit
Facility and unsecured note borrowings due primarily to higher average
borrowings used to finance the Company's growth in 1998 compared to 1997.

Company general and administrative expenses increased by $590,000 or 67.0% from
$881,000 for the three months ended September 30, 1997, to $1,471,000 for the
three months ended September 30, 1998, due primarily to increased personnel and
related costs associated with the Company's geographic expansion, including the
opening of an office in Dallas, Texas during the third quarter of 1998.  As a
percentage of total revenue, general and administrative expenses remained
comparable between periods at 3.6% in the third quarter of 1997 versus 3.8% in
the third quarter of 1998.

Interest income decreased $222,000 or 49.0% from $453,000 for the three months
ended September 30, 1997, to $231,000 for the three months ended September 30,
1998, due primarily to the settlement of approximately $10,785,000 of real
estate loans in 1998.

Equity in earnings of unconsolidated service companies represents the Company's
99% economic interest in the earnings of the Service Companies and their
subsidiaries after the elimination of interest expense and intercompany profits
to the Company (see Note 4 to the consolidated condensed financial statements).
Equity in earnings of the Service Companies and their subsidiaries increased by
$467,000 or 148.7% from $314,000 for the three months ended September 30, 1997,
to $781,000 for the three months ended September 30, 1998, due primarily to
higher net profits from the Atlanta, Georgia based construction and landscape
service businesses between periods.  Equity in earnings of unconsolidated real
estate entities of $66,000 in 1998 represents the Company's 50% share of
earnings from a single building equity investment.

                                       19
<PAGE>
 
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998, TO
THE NINE MONTHS ENDED SEPTEMBER 30, 1997

Property operating revenues (rental revenue plus tenant reimbursements)
increased $42,100,000 or 65.1% between periods.  Of this increase, $29,544,000,
$11,086,000 and $1,470,000 were attributable to acquisition, development and
core properties, respectively.  The increases relating to acquisition and
development properties were due to the acquisition of 84 properties (37 in 1997
and 47 in 1998) totaling approximately 6,960,000 square feet and the
stabilization of 28 development properties (14 in 1997 and 14 in 1998) and two
property expansions (both in 1997) totaling approximately 2,935,000 square feet.
Property operating expenses increased $20,917,000 or 66.4% between periods due
primarily to the growth in the property portfolio resulting from the acquisition
and development properties discussed above.

Property operating revenues from core properties increased 2.5% despite a
decrease in overall average occupancy of approximately 0.9%.  This increase in
property operating revenues was due to both rental rate and reimbursement
increases between periods.  Property operating expenses increased 3.2% due
primarily to increased utilities, maintenance and security expenses in 1998.
Property operating revenues less property operating expenses from core
properties increased 2.2%, exclusive of depreciation and amortization expense.

Interest expense increased by $6,816,000 or 45.4% from $15,020,000 for the nine
months ended September 30, 1997, to $21,836,000 for the nine months ended
September 30, 1998, due primarily to increased mortgage interest of $4,775,000
related to mortgage debt assumed in connection with certain of the Company's
1997 and 1998 property acquisitions and increased net interest expense on
unsecured Credit Facility and unsecured note borrowings due primarily to higher
average borrowings used to finance the Company's growth in 1998 compared to
1997.

Company general and administrative expenses increased by $1,452,000 or 55.1%
from $2,633,000 for the nine months ended September 30, 1997, to $4,085,000 for
the nine months ended September 30, 1998, due primarily to increased personnel
and related costs associated with the Company's geographic expansion, including
the opening of an office in Dallas, Texas during the third quarter of 1998.  As
a percentage of total revenue, general and administrative expenses remained
comparable between periods at 4.0% in 1997 versus 3.8% in 1998.

Interest income decreased $239,000 or 24.0% from $996,000 for the nine months
ended September 30, 1997, to $757,000 for the nine months ended September 30,
1998, due primarily to the settlement of approximately $10,785,000 of real
estate loans in 1998.

Equity in earnings of unconsolidated service companies represents the Company's
99% economic interest in the earnings of the Service Companies and their
subsidiaries after the elimination of interest expense and intercompany profits
to the Company (see Note 4 to the consolidated condensed financial statements).
Equity in earnings of the Service Companies and their subsidiaries increased by
$132,000 or 8.6% from $1,538,000 for the nine months ended September 30, 1997,
to $1,670,000 for the nine months ended September 30, 1998, due to higher net
profits from the Atlanta, Georgia based construction and landscape service
businesses, offset somewhat by increased land carrying costs in 1998 associated
with increased investment in development land.  Equity in earnings of
unconsolidated real estate entities of $220,000 in 1998 represents the Company's
50% share of earnings from a single building equity investment.

                                       20
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES

The Company continues to generate increasing cash flows from operations.  Cash
provided by operating activities increased 64.2% from $36,538,000 for the nine
months ended September 30, 1997, to $59,979,000 for the nine months ended
September 30, 1998, due primarily to the growth in the Company's operating
income resulting from 28 development properties (14 in 1997 and 14 in 1998) and
two property expansions (both in 1997) stabilized and from 84 buildings acquired
(37 in 1997 and 47 in 1998).

The Company's net cash flow from operations is currently sufficient to meet the
Company's current operational needs and to satisfy the Company's current
quarterly dividends on both its common and preferred stock.  Management believes
that operating cash flows will continue to be adequate to fund these
requirements for the remainder of 1998 and for 1999.  The Company operates as
and intends to maintain its qualification as a REIT under the Code.  As a REIT,
the Company will generally not be subject to corporate federal income taxes as
long as it satisfies certain technical requirements of the Code, including the
requirement to distribute 95% of its taxable income to its shareholders.

During the nine months ended September 30, 1998, the Company invested
$314,885,000 of cash in property acquisition, development and construction
activities.  This compares to $112,349,000 for the same nine month period in
1997.  This increased cash investment activity reflects primarily the increased
cash component of the Company's building acquisition activity in 1998 compared
to 1997 of approximately $120,137,000 with the remaining increase due to
increased development and land acquisition activity.

Financing for the Company's property investment activities consisted primarily
of $192,465,000 of net proceeds from unsecured note borrowings, $47,200,000 from
common equity offerings and $127,800,000 from Credit Facility borrowings in the
nine months ended September 30, 1998 compared to $106,568,000 from a common
equity offering and $50,698,000 from Credit Facility borrowings in the nine
months ended September 30, 1997.  The debt and equity components of the
Company's ongoing financing strategy may differ from period-to-period based upon
market conditions.

In addition to its operating cash flow, the Company has aggregate borrowing
capacity of $245,000,000 under the Credit Facility (see Note 3 to the
consolidated condensed financial statements), which may be used, among other
things, to meet its operational obligations and annual REIT dividend
requirements.  The Company currently intends to finance its development,
construction and acquisition activities primarily through borrowings under the
Credit Facility, and to periodically refinance such borrowings with longer term
debt or equity.  As of November 6, 1998, subsequent to issuance of the Operating
Partnership's Series C Preferred Units for net proceeds of approximately
$34,400,000 (see Note 8 to the consolidated condensed financial statements), the
Company had available capacity under the Credit Facility of approximately
$32,900,000.

The Company believes it has adequate liquidity, borrowing capacity and sources
of capital and cash flow, including available capacity under its existing Credit
Facility, remaining capacity of approximately $650,000,000 under a universal
shelf registration statement and cash flow generated from selective real estate
asset sales and other joint venture arrangements, to meet its current
operational requirements, to fund annual principal repayments under existing
mortgage notes payable, and to fund its current development and acquisition
activity.  It is management's expectation that the Company will continue to have
access to the additional capital resources necessary to further expand and
develop its business and to refinance mortgage notes payable as they mature.
These resources include the expansion of the available borrowing capacity under
the Credit Facility, other forms of debt and equity financing, in both

                                       21
<PAGE>
 
public and private markets and funds generated from selective real estate asset
sales and other joint venture arrangements.  The Company has unsecured
investment grade corporate debt ratings which may assist it in accessing the
corporate debt and preferred equity markets in future periods.  Future
development and acquisition activities will be undertaken by the Company only as
suitable opportunities arise.  Such activities are not expected to be undertaken
unless adequate sources of financing are available and a satisfactory budget
with an appropriate return on investment has been internally approved.  The
Company maintains staffing levels sufficient to meet its existing construction
and leasing activities and capitalizes a portion of the costs relating to these
activities to development projects and leasing transactions, respectively.  If
market conditions warrant, the Company may adjust staffing levels to avoid a
negative impact on the Company's results of operations.

The information provided above regarding the Company's future financing
availability includes Forward-looking Statements based upon management's current
assessment of capital availability in both the public and private debt and
equity markets, the suitable pricing of such debt and equity capital, the
anticipation of available third-party real estate investment and markets for
real estate asset sales and other relevant factors currently available to the
Company.  Should the availability and cost of expected future financings be
negatively impacted based on changes in the above factors, the shortage of
available capital could result in the curtailment of the Company's committed and
planned development and acquisition activity.  There can be assurance that any
of these factors will not change and that any change will not affect the
accuracy of the Company's Forward-looking Statements.

Total consolidated debt amounted to $676,264,000 at September 30, 1998,
including borrowings under the Credit Facility of $210,720,000, mortgage notes
payable of  $265,544,000 and unsecured notes of $200,000,000.  Of the
$265,544,000 of mortgage indebtedness, $259,781,000 is fixed rate and $5,763,000
is variable rate.  The weighted average interest rate on the Company's fixed
rate mortgage debt was 8.2% and on its variable rate mortgage debt was 4.3% at
September 30, 1998.  The weighted average interest rate under the Credit
Facility at September 30, 1998, (excluding the effect of the interest rate swap
agreements described below) was 6.4%.  The weighted average effective interest
rate, including underwriting costs and expenses, on the Company's fixed rate
unsecured notes was 7.6% at September 30, 1998.  At September 30, 1998, the
Company had in place interest rate swap agreements to fix the Company's interest
costs on $40,000,000 of the Company's Credit Facility borrowings.   The weighted
average effective interest rate under the fixed swap arrangements was
approximately 7.5%.  If interest rates under the Credit Facility, in excess of
the $40,000,000 discussed herein, and under the Company's variable rate mortgage
debt, fluctuated by 1%, interest costs to the Company, before capitalization of
interest, if any, based on outstanding borrowings at September 30, 1998, would
increase or decrease by approximately $1,800,000 on an annualized basis.

Based on the outstanding balance of mortgage notes payable at September 30,
1998, the weighted average interest rates on the mortgage notes with a final
maturity in each of the next five years were 7.4% in 1999, 8.7% in 2000, 7.4% in
2001, 8.2% in 2002 and 8.3% in 2003.

At September 30, 1998, including total consolidated debt of $676,264,000 and
$2,309,000 of other notes payable of unconsolidated entities, the total debt
obligations of the Company and its unconsolidated entities were $678,573,000 or
approximately 42% of total market capitalization (assuming the exchange of all
Common Units for shares of common stock).  At September 30, 1998 (based on the
closing price of the common stock of $29.875 on September 30, 1998, and assuming
the exchange of all Common Units for shares of common stock), there would be
26,818,562 shares of common stock outstanding with a total market value of
$801,205,000, 6,000,000 shares of preferred stock outstanding with a total
liquidation

                                       22
<PAGE>
 
value of $150,000,000 and 350,000 common stock warrants outstanding with a book
value of $1,400,000, resulting in an approximate total equity value of
$952,605,000.

CURRENT DEVELOPMENT AND ACQUISITION ACTIVITY

At September 30, 1998, the Company had committed developments and acquisitions
totaling approximately $301,756,000, representing 46 buildings and one property
expansion totaling 5,698,000 square feet.  Including new development activity,
net of the stabilization of development properties, between September 30, 1998
and November 10, 1998, the Company had, at November 10, 1998, committed
developments and acquisitions totaling approximately $288,670,000, representing
48 buildings totaling 5,472,000 square feet.   Properties under agreement to
acquire  as of November 10, 1998, consisted of one building, totaling 90,000
square feet, with a total expected cost of approximately $5,100,000.
Development properties as of November 10, 1998, consisted of 47 buildings
totaling 5,382,000 square feet, with a total expected cost of approximately
$283,570,000.

It is expected that such development and acquisition properties will stabilize
or be acquired as detailed below:
------------------------------------------------------------------------------- 
                                                 Square            Estimated
Year                     Buildings                Feet              Cost(a)
------------------------------------------------------------------------------- 
1998                        5                     459,000          $ 15,396,000
1999                       27                   3,128,000           191,903,000
2000                       15                   1,705,000            77,471,000
2001                        1                     180,000             3,900,000
------------------------------------------------------------------------------- 
                           48                   5,472,000          $288,670,000
------------------------------------------------------------------------------- 
(a)  For development properties represents the entire estimated cost of the
     property at the estimated stabilization date.

In addition, the Company has committed, subject to closing conditions, the
completion of due diligence procedures and other contingencies, to acquire
development land totaling approximately $22,955,000 over various periods ranging
up to five years.

It is expected that future development and land acquisition expenditures will be
funded primarily through Credit Facility borrowings, refinanced as required
through new debt or equity offerings in both private and public markets or
otherwise reduced by cash generated from selective real estate asset sales and
other joint venture arrangements.  Future acquisitions will be consummated
primarily through a combination of cash funded through borrowings under the
Credit Facility, the issuance of Common Units and the assumption of
indebtedness, some of which will also be repaid through borrowings under the
Credit Facility.

The information provided above includes Forward-looking Statements about
expected property acquisitions or stabilizations that is based on current
construction schedules, the status of lease negotiations with potential tenants,
the successful completion of due diligence procedures and other relevant factors
currently available to the Company.  There can be no assurance that any of these
factors will not change or that any change will not affect the accuracy of such
Forward-looking Statements.

                                       23
<PAGE>
 
SUPPLEMENTAL DISCLOSURE OF FUNDS FROM OPERATIONS

The Company believes that funds from operations provides an additional indicator
of the financial performance of the Company. Funds from operations is defined by
the National Association of Real Estate Investment Trusts ("NAREIT") to mean net
income (loss) determined in accordance with generally accepted accounting
principles ("GAAP") excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization of real property, and
after adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operations on the same basis. Funds from
operations is influenced not only by the operations of the properties, but also
by the capital structure of the Company. Accordingly, the Company expects that
funds from operations will be one of the factors considered by its Board of
Directors in determining the amount of cash dividends the Company will pay to
its shareholders. The Company computes funds from operations under the current
NAREIT definition by subtracting from net income the dividends to preferred
shareholders before making an adjustment for the non-cash items described above.
Funds from operations does not represent cash flow from operating, investing and
financing activities as defined by GAAP, which are discussed under "Liquidity
and Capital Resources." Additionally, funds from operations does not measure
whether cash flow is sufficient to fund all cash flow needs, including principal
amortization, capital expenditures and dividends to shareholders, and should not
be considered as an alternative to net income for purposes of evaluating the
Company's operating performance or as an alternative to cash flow, as defined by
GAAP, as a measure of liquidity. Funds from operations presented herein is not
necessarily comparable to funds from operations presented by other real estate
companies due to the fact that not all real estate companies calculate funds
from operations in the same manner. However, the Company's funds from operations
is comparable to the funds from operations of real estate companies that use the
current NAREIT definition.

The Company's calculation of funds from operations follows the guidelines issued
by NAREIT, including the recognition of rental income on the "straight-line"
basis consistent with its treatment in the Company's statement of operations
under GAAP.  The "straight-line" rental adjustment increased rental revenues by
$697,000 and $176,000 for the three months ended and $1,351,000 and $500,000 for
the nine months ended September 30, 1998 and 1997, respectively.  In accordance
with the NAREIT guidelines, the Company excludes gains or losses on sales of
operating (previously depreciated) real estate assets in calculating funds from
operations, but includes gains or losses on sales of undepreciated assets (land)
that are of a recurring nature.  Pre-tax gains on land sales are included in
funds from operations in the amount of $46,000 and $79,000 for the three months
ended and $524,000 and $527,000 for the nine months ended September 30, 1998 and
1997, respectively.

                                       24
<PAGE>
 
For the three months ended September 30, 1998, funds from operations increased
by $2,746,000 or 25.8% to $13,395,000 compared to funds from operations of
$10,649,000 for the three months ended September 30, 1997.  For the nine months
ended September 30, 1998, funds from operations increased by $9,952,000 or 35.9%
to $37,666,000 compared to funds from operations of $27,714,000 for the nine
months ended September 30, 1997.  Funds from operations for the three and nine
months ended September 30, 1998 and 1997 are detailed below (in thousands):

<TABLE>
<CAPTION>
 
------------------------------------------------------------------------------------------------------------------------
                                                   THREE MONTHS      THREE MONTHS      NINE MONTHS      NINE MONTHS
                                                       Ended            Ended             Ended            Ended
                                                  Sept. 30, 1998   SEPT. 30,  1997   SEPT. 30, 1998   SEPT. 30, 1997
========================================================================================================================
<S>                                               <C>              <C>               <C>              <C>
Net income available to
common shareholders                                  $ 6,071           $ 5,768          $17,338          $14,673
Minority interests                                     2,149             1,683            6,130            4,533
Depreciation and amortization                          9,944             6,300           27,500           17,344
Depreciation and amortization -
unconsolidated entities                                   24                --               68               10
Gain on sale of operating real estate asset              (53)               --              (53)            (209)
Gain on sale of operating real estate asset --
 unconsolidated entities                                  --                --               --              (76)
-----------------------------------------------------------------------------------------------------------------------
Funds from operations available to
common shareholders
(Common Units fully converted)                       $18,135           $13,751          $50,983          $36,275
Percentage attributable to common
 shareholders(1)                                        73.9%             77.5%            73.9%            76.4%
-----------------------------------------------------------------------------------------------------------------------
Funds from operations attributable to
 common shareholders                                 $13,395           $10,649          $37,666          $27,714
-----------------------------------------------------------------------------------------------------------------------
Weighted average common shares
  Basic                                               19,574            17,693           19,122           15,904
  Diluted(2)                                          26,654            23,017           26,056           21,018
=======================================================================================================================
</TABLE>
(1)  Represents the Company's weighted average ownership percentage of the
     Operating Partnership for the period.
(2)  Represents the weighted average shares of common stock outstanding plus the
     weighted average Common Units of limited partnership interest in the
     Operating Partnership outstanding (Common Units are convertible into common
     stock on a one-for-one basis) and the dilutive effect of outstanding stock
     options.  Weighted average Common Units outstanding totaled 6,932,000 and
     5,141,000 for the three months ended and 6,762,000 and 4,912,000 for the
     nine months ended September 30, 1998 and 1997, respectively.  Common stock
     equivalents related to outstanding stock options totaled 148,000 and
     183,000 for the three months ended and 172,000 and 202,000 for the nine
     months ended September 30, 1998 and 1997, respectively.  Outstanding common
     stock warrants were not dilutive for the three and nine months ended
     September 30, 1998.

                                       25
<PAGE>
 
SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES AND LEASING COSTS

The following table details the Company's capital expenditures and leasing costs
for the three and nine months ended September 30, 1998 and 1997 (in thousands):
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------- 
                                                    THREE MONTHS    THREE MONTHS    NINE MONTHS     NINE MONTHS
                                                       Ended           Ended           Ended           Ended
                                                   Sept. 30, 1998  SEPT. 30, 1997  SEPT. 30, 1998  SEPT. 30, 1997
=======================================================================================================================
<S>                                                <C>             <C>             <C>             <C>
Building acquisitions(1)(2)                           $ 42,489         $31,594        $292,436        $ 81,352
Development and land acquisition activity(3)(4)         64,728          40,297         181,676          88,124
Non-revenue-producing building
 improvements                                              611             249           1,403             611
Tenant improvement and leasing costs
 on second-generation leases(5)                          1,708           1,140           4,901           3,234
-----------------------------------------------------------------------------------------------------------------------
                                                      $109,536         $73,280        $480,416        $173,321
=======================================================================================================================
</TABLE>
(1)  Building acquisitions in 1998 included two buildings acquired while still
     under development. Both of these buildings were stabilized at September 30,
     1998.
(2)  Reflects aggregate acquisition costs including the assumption of
     indebtedness of $7,291,000 and the issuance of $10,848,000 of Common Units
     in the three months ended September 30, 1998, and the assumption of
     indebtedness of $91,137,000, the issuance of $43,936,000 of Common Units
     and other assumed liabilities, net of other assets, of $4,224,000 in the
     nine months ended September 30, 1998.  Reflects aggregate acquisition costs
     including the assumption of indebtedness of $28,420,000 and the issuance of
     $2,234,000 of Common Units in the three months ended September 30, 1997 and
     the assumption of indebtedness of $32,170,000 and the issuance of
     $16,180,000 of Common Units in the nine months ended September 30, 1997.
(3)  Includes first-generation leasing costs on stabilized development
     properties totaling $1,042,000 and $1,470,000 in the three months ended and
     $3,065,000 and $2,816,000 in the nine months ended September 30, 1998 and
     1997, respectively.
(4) Reflects aggregate development and leasing costs net of the settlement of
    real estate loans of $2,887,000 and exclusive of the decrease in
    construction payables of $638,000 in the three months ended September 30,
    1998, and net of the settlement of real estate loans of $10,785,000, the
    issuance of $8,490,000 of Common Units and exclusive of the increase in
    construction payables of $1,829,000 in the nine months ended September 30,
    1998. Reflects aggregate development and leasing costs including the
    assumption of indebtedness of $1,999,000 and exclusive of the increase in
    construction payables of $4,111,000 in the three months ended September 30,
    1997, and including the assumption of indebtedness of $2,609,000, the
    issuance of Common Units of $388,000 and exclusive of the increase in
    construction payables of $2,397,000 in the nine months ended September 30,
    1997.
(5) Includes second-generation leasing costs totaling $628,000 and $471,000 in
    the three months ended and $2,065,000 and $1,538,000 in the nine months
    ended September 30, 1998 and 1997, respectively.

                                       26
<PAGE>
 
The following table summarizes by period the Company's capitalized tenant
improvement and leasing costs incurred in the renewal or re-leasing of
previously occupied space for the nine months ended September 30, 1998, and the
year ended December 31, 1997, respectively.  The information detailed below is
presented based on the date the tenants occupy the leased space.

<TABLE>
<CAPTION>
 
CAPITALIZED TENANT IMPROVEMENTS AND LEASING COSTS
-----------------------------------------------------------------------------------------------------------------------
                                                                   Nine MONTHS        YEAR
                                                                      ENDED           ENDED
(In thousands, except per square foot information)                SEPT. 30, 1998  DEC. 31, 1997
=======================================================================================================================
<S>                                                               <C>             <C>
Industrial Properties
 Re-leasing
   Square feet re-leased                                               1,289          1,073
   Capitalized tenant improvements and leasing commissions            $2,617         $2,276
   Capitalized tenant improvements and leasing commissions
    per square foot                                                   $ 2.03         $ 2.12
 RENEWAL
   Square feet renewed                                                 1,414          2,358
   Capitalized tenant improvements and leasing commissions            $1,196         $1,392
   Capitalized tenant improvements and leasing commissions
    per square foot                                                   $ 0.85         $ 0.59
 TOTAL
   Square feet                                                         2,703          3,431
   Capitalized tenant improvements and leasing commissions            $3,813         $3,668
   Capitalized tenant improvements and leasing commissions
    per square foot                                                   $ 1.41         $ 1.07
=======================================================================================================================
SUBURBAN OFFICE PROPERTIES
 Re-leasing
   Square feet re-leased                                                  63             69
   Capitalized tenant improvements and leasing commissions            $  252         $  493
   Capitalized tenant improvements and leasing commissions
    per square foot                                                   $ 4.01         $ 7.11
 RENEWAL
   Square feet renewed                                                    77            134
   Capitalized tenant improvements and leasing commissions            $   73         $  267
   Capitalized tenant improvements and leasing commissions
    per square foot                                                   $ 0.94         $ 1.99
 TOTAL
   Square feet                                                           140            203
   Capitalized tenant improvements and leasing commissions            $  325         $  760
   Capitalized tenant improvements and leasing commissions
    per square foot                                                   $ 2.32         $ 3.74
=======================================================================================================================
</TABLE>

                                       27
<PAGE>
 
SUPPLEMENTAL DISCLOSURE OF TENANT AND LEASE EXPIRATION INFORMATION

TENANTS

As of September 30, 1998, the Company's properties were leased to 1,016 tenants
including local, regional, national and international companies.  The Company's
30 largest tenants (measured by annualized base rent for leases in place in
stabilized properties and in properties under development or in lease-up where
tenants were paying rent at September 30, 1998) occupy a total of approximately
4,894,000 square feet and represent 24.0% of the annualized base rent as shown
in the table below.

30 LARGEST TENANTS MEASURED BY ANNUALIZED BASE RENT
<TABLE>
<CAPTION>
=============================================================================================================
                                                                                      % of Total
                                                  Square     Number     Annualized    Annualized
Rank Tenant                                        Feet     of Leases  Base Rent(1)  BASE RENT(1)   STATE
=============================================================================================================
<C>  <S>                                         <C>        <C>        <C>           <C>           <C>
  1  Northern Telecom, Inc.(2)                   401,349       8       $3,002,853       2.1%       NC,TN
  2  Scientific Atlanta, Inc.                    573,951      11        2,616,594       1.8%         GA
  3  Interpath Communications, Inc.              178,456       3        1,774,842       1.2%         NC
  4  Radiant Systems, Inc.                       106,631       1        1,609,789       1.1%         GA
  5  360 Communications                          114,476       7        1,539,758       1.1%         NC
  6  Honeywell, Inc.                             119,961       4        1,501,052       1.0%         GA
  7  United States Postal Service                254,026       4        1,484,893       1.0%         FL
  8  IKON Office Solutions, Inc.                 177,000       4        1,468,400       1.0%         GA
  9  GTE Mobilnet Service Corporation            126,124       3        1,351,146       0.9%       NC,GA
 10  Radian International LLC                     90,159       2        1,173,802       0.8%         NC
 11  PPD Pharmaco, Inc.                          107,722       6        1,087,655       0.7%         NC
 12  Moore U.S.A., Inc.                          274,951       2        1,085,266       0.7%       TX,FL
 13  AIG Claim Services, Inc.                     52,372       1        1,050,059       0.7%         GA
 14  Tech Data Corporation                       138,996       1        1,049,492       0.7%         FL
 15  Square D Company                            102,262       2          999,309       0.7%       TN,FL
 16  DeVry Inc.                                   64,981       1          928,269       0.7%         GA
 17  The Athlete's Foot Group, Inc.              162,651       1          924,069       0.7%         GA
 18  Anixter, Inc.                               167,460       2          913,150       0.7%         GA
 19  Merisel, Inc.                               142,487       2          900,147       0.6%         FL
 20  Ingram-Micro, Inc.                          193,973       4          887,002       0.6%       GA,FL
 21  Fisher Scientific Company                   223,219       1          875,019       0.6%         GA
 22  Tekelec                                      98,210       3          842,303       0.6%         NC
 23  National Data Corporation                    50,283       4          786,777       0.5%         GA
 24  Data General Corporation                     86,000       1          775,720       0.5%         GA
 25  Saab Cars U.S.A., Inc.                       63,625       3          749,509       0.5%         GA
 26  Vanstar Corporation                          86,880       4          740,449       0.5%         GA
 27  Reckitt & Colman, Inc.                      313,900       2          733,120       0.5%         GA
 28  AT&T Corp.                                   62,271       4          721,880       0.5%      NC,GA,TN
 29  Quadram Corp./Intelligent Systems           137,100       1          719,775       0.5%         GA
 30  Best Buy Stores, L.P.                       222,643       1          703,548       0.5%         GA
=============================================================================================================
                                               4,894,119      93      $34,995,647      24.0%
=============================================================================================================
</TABLE>
(1)  Annualized cash base rent net of rental concessions, if any, based on
     leases in place for stabilized properties and in properties under
     development or in lease-up where tenants were paying rent as of September
     30, 1998.
(2)  Leases with Northern Telecom totaling 370,824 square feet expire on June
     30, 2005, but are subject to an early-termination right that permits
     Northern Telecom to terminate any of the leases on June 30, 2000, by
     delivering an early-termination notice to the Company on or before June 30,
     1999.  In the event it exercises its early-termination option, Northern
     Telecom will be obligated to make certain termination payments to the
     Company.

                                       28
<PAGE>
 
LEASE EXPIRATIONS

The following tables show scheduled lease expirations for the Company's total
property portfolio, for its industrial property portfolio and for its suburban
office portfolio, respectively, based on leases under which tenants were paying
rent in both stabilized and pre-stabilized properties as of September 30, 1998,
assuming no exercise of renewal options or termination rights, if any:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------- 
                                           SQUARE                      ANNUALIZED     % OF TOTAL
               Year of                      Feet        % of Total    Base Rent(1)    ANNUALIZED
             Expiration                (In thousands)  Square Feet   (In thousands)  Base Rent(1)
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>           <C>             <C>
Total Portfolio
                1998                       1,597           6.9%       $  9,227           6.1%
                1999                       3,007          12.9%         18,579          12.2%
                2000                       3,574          15.4%         21,658          14.3%
                2001                       2,846          12.2%         17,271          11.4%
                2002                       3,044          13.1%         24,467          16.1%
                2003                       2,949          12.7%         23,717          15.6%
                2004                       1,262           5.4%          7,871           5.2%
                2005                       1,288           5.5%          4,341           2.9%
                2006                         769           3.3%          3,977           2.6%
                2007                       1,322           5.7%          8,495           5.6%
                2008                         790           3.4%          6,576           4.3%
                2009                          20           0.1%            157           0.1%
                2010                          65           0.3%             90           0.1%
                2011                         405           1.7%          2,201           1.4%
           2012 and later                    322           1.4%          3,284           2.1%
-------------------------------------------------------------------------------------------------------------
                                          23,260(2)      100.0%       $151,915         100.0%
=============================================================================================================
Industrial Properties
                1998                       1,487           7.1%       $  7,602           6.4%
                1999                       2,762          13.2%         15,574          13.1%
                2000                       3,336          15.9%         18,297          15.4%
                2010                       2,735          13.0%         15,771          13.3%
                2002                       2,623          12.5%         17,375          14.6%
                2003                       2,535          12.1%         16,518          13.9%
                2004                       1,150           5.5%          5,995           5.0%
                2005                       1,257           6.0%          3,881           3.3%
                2006                         748           3.6%          3,608           3.0%
                2007                       1,266           6.0%          7,903           6.7%
                2008                         589           2.8%          3,243           2.7%
                2009                          20           0.1%            157           0.1%
                2010                          --            --              --            --
                2011                         349           1.7%          2,121           1.8%
           2012 and later                    107           0.5%            754           0.7%
-------------------------------------------------------------------------------------------------------------
                                          20,964         100.0%       $118,799         100.0%
=============================================================================================================
                                                                      (Table continued on following page)
</TABLE>

                                       29
<PAGE>
 
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------- 
                                        Square                      Annualized     % of Total
             Year of                     Feet        % of Total    Base Rent(1)    ANNUALIZED
            Expiration              (In thousands)  Square Feet   (In thousands)  Base Rent(1)
<S>                                 <C>             <C>           <C>             <C>
=============================================================================================================
Surburban
OFFICE PROPERTIES
               1998                           98           5.2%        $ 1,444           4.8%
               1999                          197          10.6%          2,589           8.7%
               2000                          187          10.0%          2,817           9.4%
               2001                          107           5.7%          1,445           4.8%
               2002                          418          22.4%          7,033          23.6%
               2003                          405          21.7%          7,006          23.5%
               2004                          104           5.6%          1,700           5.7%
               2005                           26           1.4%            382           1.3%
               2006                           17           0.9%            309           1.0%
               2007                           56           3.0%            592           2.0%
               2008                          185           9.9%          3,333          11.2%
               2009                           --            --              --            --
               2010                           --            --              --            --
               2011                           --            --              --            --
          2012 and later                      66           3.6%          1,166           4.0%
-------------------------------------------------------------------------------------------------------------
                                           1,866         100.0%        $29,816         100.0%
=============================================================================================================
</TABLE>
   (1)  Annualized base rent represents the annualized monthly base rental at
       the time of lease expiration.
   (2)  The total square footage as of September 30, 1998, is comprised of
       approximately 22,437,298 square feet of leases in in-service properties,
       and approximately 823,046 square feet of leases in properties under
       development or in lease-up where tenants are paying rent as of September
       30, 1998.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, SFAS 131, "Disclosures About Segments of an Enterprise and Related
Information" was issued prescribing new guidelines for the reporting of segment
data.  SFAS 131 will apply to all public, for-profit companies and will be
effective for the Company beginning with the fourth quarter and year ending
December 31, 1998.  The Company was not subject to segment reporting under prior
accounting standards, but will be required to provide certain segment
disclosures under SFAS 131.  The Company continues to evaluate the disclosure
provisions of SFAS 131 and plans to adopt SFAS 131 in it financial statements
for the year ending December 31, 1998.

In March 1998, Emerging Issues Task Force Issue No. 97-11, "Accounting for
Internal Costs Relating to Real Estate Property Acquisition," was issued
prescribing that internal acquisition costs relating to the acquisition of
operating real estate properties should be expensed as incurred.  Effective with
the first quarter of 1998, the Company implemented this new guideline, which did
not have a material impact on the Company's financial position or results of
operations.

In June 1998, SFAS 133, "Accounting for Derivative Instruments and for Hedging
Activities," was issued prescribing new accounting standards for the accounting
and disclosures of derivative instruments and hedging transactions.  SFAS 133
will be effective for the Company beginning January 1, 2000.  The Company is
evaluating the provisions of SFAS 133 and plans to adopt SFAS 133 in its
financial statements beginning in 2000.

                                       30
<PAGE>
 
IMPACT OF INFLATION

In the last three years, inflation has not had a significant impact on the
Company because of the relatively low inflation rate.  Substantially all tenant
leases do, however, contain provisions designed to protect the Company from the
impact of inflation.  Most of the leases require tenants to pay their share of
operating expenses, including common area maintenance, real estate taxes and
insurance, thereby reducing the Company's exposure to increases in costs and
operating expenses resulting from inflation.  In addition, many of the leases
are for terms of less than seven years, which may enable the Company to replace
existing leases with new leases at higher base rentals if rents under the
existing leases are below the then-existing market rate.  However, there can be
no assurance that the Company would be able to replace existing leases with new
leases at higher base rentals.

YEAR 2000

General.  The term "year 2000 issue" is a general term used to describe the
various problems that may result from the improper processing of dates and date-
sensitive calculations by computers and other machinery and equipment as the
year 2000 is approached and reached.  The year 2000 issue is the result of many
computer programs recognizing a date ending with "00" as the year 1900 rather
than 2000, causing potential system failures or miscalculations which could
result in disruptions of normal business operations.

State of Readiness.  The Company's primary financial and operating systems are
supplied by third-party suppliers.  Based on communications with these third-
party suppliers, internal evaluations of the third-party systems and internal
assessments of in-house information systems, the Company expects these systems
to be year 2000 compliant by the end of the first quarter of 1999.
Additionally, the Company has evaluated its telephone systems and such systems
are expected to be fully year 2000 compliant before the end of 1999.

The Company is also assessing the potential impact of the year 2000 issue
resulting from the potential failure of its key building mechanical systems or
the failure of its major vendors, suppliers and tenants to be year 2000
compliant.  Key building mechanical systems include, but are not limited to,
HVAC systems, elevators and security systems.  Major vendors and suppliers
include providers of utility services and suppliers of raw materials utilized in
the development and construction of buildings.  The Company's assessments
include the use of questionnaires and direct discussions with such vendors,
suppliers and tenants.  The Company anticipates the completion of its
assessments and evaluations in these areas by early 1999.

Cost to Address Year 2000 Issues.  To date, the Company has not incurred
material incremental costs relating to year 2000 issues.  The Company does not
expect additional costs relating to year 2000 compliance to be material to the
Company's financial condition or results of operations taken as a whole.  The
Company plans to allocate the time and resources necessary to timely resolve any
significant year 2000 issues.


                                       31

<PAGE>
 
Risks Presented by Year 2000 Issues.  The Company's major and most reasonably
likely worse case risks associated with the year 2000 issue relate to the
failure of key vendors, suppliers and tenants to be fully year 2000 compliant.
Failures of critical utility systems or other building mechanical systems could
lead to significant business disruptions for tenants.  Failures of tenants'
businesses that rely heavily on information technology or that are involved in
the information technology business could also lead to significant business
disruptions or failures.  These occurrences could impact the Company's cash flow
and results of operations should these disruptions lead to a tenants' inability
to continue to meet their rental obligations to the Company.

Failures of major suppliers to deliver building raw materials to the Company due
to year 2000 issues could result in the Company being unable to complete
buildings in a timely manner or at the costs budgeted by the Company.  This
could result in slower overall business growth and increased costs of
constructing new buildings, both of which could impact the Company's future
financial condition and results of operations.

Based on information obtained from such third parties to date, the Company does
not believe that the impact of the year 2000 issue will have a material adverse
impact on the Company's financial condition or results of operations.  However,
such conclusions are based upon communications, evaluations, and assessments to
date, and if future negative events occur which cannot be resolved in a timely
manner, it could result in material financial risk to the Company.

Contingency Plans.  To date, the Company has not established any contingency
plan for possible year 2000 issues.  After its assessments are completed, the
Company anticipates evaluating contingency plans, to the extent such plans are
feasible, to address identified risks.  It is anticipated that any such plans
will be developed in 1999.

The information provided above regarding the Company's year 2000 preparedness
includes Forward-looking Statements based upon management's current assessment
of year 2000 issues impacting the Company.  Such assessments are, in part, based
on representations of other third parties regarding their year 2000
preparedness.  Such Forward-looking Statements involve risks and uncertainties
and there can be no assurance that any of the factors or statements regarding
the year 2000 issue will not change and that any change will not affect the
accuracy of the Company's Forward-looking Statements.

                                       32
<PAGE>
 
PART II - OTHER INFORMATION
ITEM 2 - CHANGE IN SECURITIES

       During the three months ended September 30, 1998, the Company caused the
       Operating Partnership to issue a total of 374,632 Common Units in the
       Operating Partnership, in full or partial consideration for the
       acquisition of real estate properties.  The aggregate value of the
       properties acquired by the Company in exchange for such Common Units was
       approximately $10,848,000.  Common Units are convertible by their holders
       into shares of common stock on a one-for-one basis, or into cash, at the
       Company's option.  The Common Units were issued pursuant to an exemption
       from registration under Section 4(2) of the Securities Act in reliance,
       in part, upon the representations and warranties set forth in the
       acquisition agreements.  Certain of these Common Units are subject to
       registration rights and lock-up agreements which generally restrict the
       disposition of the Common Units until the designated lock-up periods
       expire.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits
            10.1 - Thirteenth Amendment to Second Amended and Restated Agreement
                   of Limited Partnership of Weeks Realty, L.P., dated August 7,
                   1998.
                
            10.2 - Registration Rights and Lock-Up Agreement dated August 7,
                   1998, by and among Weeks Corporation and Ackerman & Co.
          
            27.1 - Financial data schedule.

       (b)  Reports on Form 8-K
 
            None
 

                                       33
<PAGE>
 
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 thereunto duly authorized.


                                   WEEKS CORPORATION
                                   ------------------------------------
                                   (Registrant)
 
 
 
November 13, 1998                  /s/ A.R. Weeks, Jr.
                                   ------------------------------------
                                   A.R. Weeks, Jr.
                                   Chairman of the Board and
                                   Chief Executive Officer
 
 
 
November 13, 1998                  /s/ David P. Stockert
                                   ------------------------------------
                                   David P. Stockert
                                   Senior Vice President and
                                   Chief Financial Officer

                                       34
<PAGE>
 
                                 EXHIBIT INDEX

  Exhibit No.            Description
-------------------------------------------------------------------------------
     10.1                Thirteenth Amendment to Second Amended and Restated 
                         Agreement of Limited Partnership of Weeks
                         Realty, L.P., dated August 7, 1998.

     10.2                Registration Rights and Lock-Up Agreement dated 
                         August 7, 1998, by and among Weeks Corporation and
                         Ackerman & Co.

     27.1                Financial data schedule.