<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 June 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 (19,592,136 shares of
common stock outstanding as of August 7, 1998)
<PAGE>
 
INDEX                                                                       PAGE
PART I.  FINANCIAL INFORMATION
 
     ITEM 1.  FINANCIAL STATEMENTS
              Consolidated Condensed Balance Sheets
              at June 30, 1998 and December 31, 1997........................  3
 
              Consolidated Condensed Statements of Operations
              for the three and six months ended June 30, 1998 and 1997.....  4
 
              Consolidated Condensed Statements of Cash Flows
              for the six months ended June 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................. 16
 
 
PART II.  OTHER INFORMATION
 
     ITEM 2.  CHANGES IN SECURITIES......................................... 31
 
     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 31
 
     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.............................. 32
 
SIGNATURES.................................................................. 33

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

                               WEEKS CORPORATION
                     CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE> 
<CAPTION> 

---------------------------------------------------------------------------------------------------------------------------
(Unaudited; in thousands, except share data)                                           June 30,             December 31,
                                                                                         1998                   1997
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                    <C> 
ASSETS 
Real estate assets
    Land                                                                             $   148,862            $  106,196
    Buildings and improvements                                                           886,419               627,309
    Accumulated depreciation                                                             (77,470)              (61,548)
---------------------------------------------------------------------------------------------------------------------------
       Operating real estate assets                                                      957,811               671,957
---------------------------------------------------------------------------------------------------------------------------
    Developments in progress                                                             152,633               100,433
    Land held for future development                                                      35,947                22,562
---------------------------------------------------------------------------------------------------------------------------
       Net real estate assets                                                          1,146,391               794,952
---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents                                                                    432                 5,421
Receivables                                                                                9,020                 7,031
Deferred costs, net                                                                       20,872                13,087
Investments in and notes receivable
    from unconsolidated service companies                                                 32,212                 9,257
Investments in unconsolidated real estate entities                                         3,023                 2,525
Other assets                                                                              19,049                20,088
---------------------------------------------------------------------------------------------------------------------------
        TOTAL ASSETS                                                                 $ 1,230,999            $  852,361
---------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt
   Mortgage notes payable                                                            $   264,865            $  192,595
   Unsecured notes                                                                       100,000                    --
   Credit facility borrowings                                                            187,810                82,920
---------------------------------------------------------------------------------------------------------------------------
        Total debt                                                                       552,675               275,515
---------------------------------------------------------------------------------------------------------------------------
Accounts payable and accrued expenses                                                     26,865                14,578
Other liabilities                                                                          7,891                 4,876
---------------------------------------------------------------------------------------------------------------------------
        Total liabilities                                                                587,431               294,969
---------------------------------------------------------------------------------------------------------------------------
Minority interests in Operating Partnership                                              127,883                98,344
---------------------------------------------------------------------------------------------------------------------------   
Commitments and contigencies
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;
        19,522,073 and 17,703,992 shares issued and outstanding
        at June 30, 1998 and December 31, 1997, respectively                                 195                   177
    Common stock warrants                                                                  1,400                    --
    Additional paid-in capital                                                           426,193               370,696
    Deferred compensation                                                                   (750)                 (895)
    Accumulated deficit                                                                  (61,353)              (60,930)
---------------------------------------------------------------------------------------------------------------------------
        Total shareholders' equity                                                       515,685               459,048
---------------------------------------------------------------------------------------------------------------------------
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                   $ 1,230,999            $  852,361
---------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed balance sheets.
</TABLE> 

                                       3
<PAGE>
 
                               WEEKS CORPORATION
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE> 
----------------------------------------------------------------------------------------------------------------------------------
                                                            Three Months     Three Months        Six Months        Six Months
                                                                Ended            Ended             Ended             Ended
(Unaudited; in thousands, except per share data)            June 30, 1998    June 30, 1997     June 30, 1998      June 30, 1997
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                  <C>               <C>              <C> 
REVENUES
   Rental income                                          $  31,698            $  18,879         $  60,043        $  36,279
   Tenant reimbursements                                      4,134                2,259             8,094            4,416
   Other                                                        494                  301               882              643
-----------------------------------------------------------------------------------------------------------------------------------
                                                             36,326               21,439            69,019           41,338
-----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
   Property operating, maintenance
       and management                                         5,334                2,774            10,055            5,289
   Real estate taxes                                          2,992                1,768             5,738            3,467
   Depreciation and amortization                              9,195                5,700            17,556           11,044
   Interest, including amortization of
       deferred financing costs                               7,275                4,714            13,377           10,006
   General and administrative                                 1,334                  875             2,614            1,752
-----------------------------------------------------------------------------------------------------------------------------------
                                                             26,130               15,831            49,340           31,558
-----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EQUITY IN EARNINGS OF
    UNCONSOLIDATED ENTITIES, INTEREST INCOME
    AND GAIN ON SALE OF REAL ESTATE ASSET                    10,196                5,608            19,679            9,780
    Equity in earnings of unconsolidated
        service companies                                       401                  576               889            1,224
    Equity in earnings of unconsolidated
        real estate entities                                     86                   --               154               --
    Interest income                                             247                  305               526              543
    Gain on sale of real estate asset                            --                  209                --              209
-----------------------------------------------------------------------------------------------------------------------------------
Income before minority interests                             10,930                6,698            21,248           11,756
    Minority interests                                       (2,041)              (1,618)           (3,981)          (2,850)
-----------------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                    8,889                5,080            17,267            8,906
    Dividends to preferred shareholders                      (3,000)                  --            (6,000)              --
-----------------------------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS               $   5,889            $   5,080         $  11,267        $   8,906
-----------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
    Basic                                                 $    0.30            $    0.32         $    0.60        $    0.59
    Diluted                                                    0.30            $    0.32         $    0.59        $    0.59
-----------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES
    Basic                                                    19,502               15,906            18,892           14,994
    Diluted                                                  26,450               21,163            25,761           20,008  
-----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed financial statements.
</TABLE> 
      
                                       4

<PAGE>
 
                               WEEKS CORPORATION
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE> 
----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Six Months            Six Months
                                                                                           Ended                Ended
(Unaudited; in thousands)                                                              June 30, 1998         June 30, 1997
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                  <C> 
OPERATING ACTIVITIES
Net income                                                                             $   17,267            $    8,906
Adjustments to reconcile net income to net cash
   provided by operating activities:
   Minority interests                                                                       3,981                 2,850
   Depreciation and amortization                                                           17,556                11,044
   Amortization of deferred financing costs                                                   717                   452
   Amortization of deferred compensation                                                      145                   145
   Straight-line rent revenue                                                                (654)                 (324)
   Undistributed earnings of unconsolidated entities                                         (586)               (1,224)
   Gain on sale of real estate asset                                                           --                  (209)
Net change in:
   Receivable and other assets                                                             (1,436)               (2,386)
   Deferred costs                                                                          (3,460)               (2,414)
   Accounts payable and accrued expenses                                                    5,427                 5,666
   Other Liabilities                                                                        1,137                   910
----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                  40,094                23,416
----------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property acquisition, development and construction                                       (227,407)              (80,647)
Real estate loans                                                                          (5,331)               (6,657)
Investments in and advances to unconsolidated entities                                    (23,051)                   --
Collections of notes receivable and other                                                     451                   437
Proceeds from sale of real estate asset                                                        --                 2,484
----------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                                    (255,338)              (84,383)
----------------------------------------------------------------------------------------------------------------------------------
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                                   4,715                   323
Unsecured note borrowings                                                                 100,000                    --
Line of credit proceeds (repayments), net                                                 104,890                 2,390
Payments of mortgage notes payable                                                        (11,576)              (32,879)
Deferred financing costs                                                                   (6,179)                  (70)
Dividends to shareholders                                                                 (23,283)              (12,105)
Distributions to minority interests                                                        (5,512)               (3,396)
----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                 210,255                60,831
----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS                                            (4,989)                 (136)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                              5,421                   260
----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                               $      432            $      124
----------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

The Company's 1998 property acquisition and development activity was net settlement of real estate loans of $7,898,000, the 
assumption of other liabilities in excess of other assets of $4,224,000, the assumption of indebtedness of $83,846,000 and the 
issuance of Common Units valued at $41,578,000.

The Company's 1997 property acquisition and development activity included the assumption of indebtedness of $4,360,000 and the 
issuance of Common Units valued at $14,334,000.

The accompanying notes are an integral part of these condensed financial statements.
</TABLE> 
<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 June 30, 1998, the Company had outstanding 19,522,073 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 74.1%.  Common Units held by persons
other than the Company totaled 6,827,961 as of June 30, 1998, and represented a
25.9% minority interest in the Operating Partnership.  Common Units representing
the 25.9% 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 74.3% and 75.9% for the three months ended and
73.9% and 75.8% for the six months ended June 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 June 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
259 industrial properties, 29 suburban office properties and 5 retail properties
comprising 22,343,000 square feet.  The Company's primary markets and the
concentration of the Company's in-service portfolio (based on square footage)
are Atlanta, Georgia (57.9%), Miami, Florida (11.1%), Raleigh-Durham-Chapel
Hill, North Carolina (10.3%), Nashville, Tennessee (9.8%), Dallas/Ft. Worth,
Texas (4.8%), Orlando, Florida (3.3%), Spartanburg, South Carolina (1.7%) and
Jacksonville, Florida (1.1%).  In addition, 44 industrial and suburban office
properties and one property expansion were under development or in lease-up and
ten industrial properties were under agreement to acquire as of June 30, 1998,
comprising an additional 6,966,000 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
June 30, 1998, and December 31, 1997, and their results of operations and cash
flows for the three and six months ended June 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 may 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

UNSECURED NOTES

On March 20, 1998, the Operating Partnership issued $100,000,000 of 6.875%
unsecured notes due March 15, 2005.  A portion of the proceeds from the
unsecured notes totaling $4,566,000 was used to settle a treasury rate guarantee
hedge arrangement which was entered into in September 1997 to effectively fix
the interest rate on the unsecured note borrowing.  The costs to settle the
hedge were included in deferred financing costs and will be amortized over the
life of the unsecured notes as interest expense, resulting in an effective
interest rate of approximately 7.6%.  The unsecured notes are subject to certain
covenants, including those governing interest coverage and total leverage.

On August 4, 1998, the Operating Partnership issued $100,000,000 of 7.375%
unsecured notes due August 1, 2007.  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 interest 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 Partnership 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
new Credit Facility remains 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 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.

In prior periods, 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).

Through June 30, 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.
The weighted average interest rate on Credit Facility borrowings, excluding the
effect of the interest rate swap agreements described below, was 6.7% at June
30, 1998.  Fees on the unused portion of the Credit Facility were 0.15%.
Effective July 1, 1998, interest 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.

Interest paid, net of amounts capitalized, totaled $9,710,000 and $9,250,000 for
the six months ended June 30, 1998 and 1997, respectively.  Interest costs
capitalized totaled $2,697,000 and $1,283,000 for the

                                       8
<PAGE>
 
three months and $4,859,000 and $2,222,000 for the six months ended June 30,
1998 and 1997, respectively.

At June 30, 1998, the Company had in place three interest rate swap agreements
with a commercial bank to effectively change the interest costs on $50,000,000
of Credit Facility borrowings from the variable rates discussed above to fixed
rates.  The agreements, with notional principal amounts of $10,000,000,
$10,000,000 and $30,000,000, mature in July 1998, July 1999 and July 2001 with
effective fixed interest rates of 7.4%, 7.6% and 7.8%, respectively.

MORTGAGE NOTES PAYABLE

Mortgage notes payable at June 30, 1998 and December 31, 1997, specifically
listed for notes with outstanding balances in excess of $10,000,000, consist of
the following (in thousands):
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
                                                           JUNE 30,  DECEMBER 31,
                                                             1998        1997
---------------------------------------------------------------------------------
<S>                                                        <C>       <C>
   Fixed Rate
   Three mortgage notes, principal and interest
   at 8.59%, due in 2010                                   $ 77,553      $     --
   Mortgage note, interest only at 7.13%,
   due in 1999                                               38,000        38,000
   Mortgage note, principal and interest at 9.24%,
   due in 2005                                               15,687        15,800
   Mortgage note, principal and interest at 9.625%,
   due in 2000                                               12,797        12,897
   Mortgage note, principal and interest at 8.10%,
   due in 2006                                               11,875        12,015
   Mortgage note, interest only at 7.625%,
   due in 2000                                               10,300        10,300
   Other mortgage notes, principal and interest
   at 6.00% to 9.80%, due in 1999 to 2012                    92,879        97,786
   VARIABLE RATE
   Industrial revenue bonds, interest at 3.55% to 6.65%
   at June 30, 1998, due in 2004 and 2010                     5,774         5,797
---------------------------------------------------------------------------------
                                                           $264,865      $192,595
---------------------------------------------------------------------------------
</TABLE>

                                       9
<PAGE>
 
At June 30, 1998, fixed rate mortgage notes payable included 33 notes with a
weighted average interest rate of 8.2%.  The weighted average term to maturity
of fixed rate mortgage notes payable was 6.9 years at June 30, 1998.  Fixed rate
mortgage indebtedness increased by $72,270,000 in 1998 due to the assumption of
four mortgage notes totaling $83,847,000 in connection with the Company's
building acquisitions, net of principal repayments and retirements of
$11,577,000.  Certain Company officers and Common Unitholders guarantee a
portion of the fixed rate mortgage notes.

Scheduled maturities of mortgage notes payable at June 30, 1998, are summarized
as follows (in thousands):
<TABLE>
<CAPTION>
      ------------------------------------------------------       
          YEAR                                   AMOUNT
      ------------------------------------------------------       
<S>                              <C>
          Remainder of 1998                    $  1,915
          1999                                   52,401
          2000                                   36,938
          2001                                   12,597
          2002                                    9,562
          2003 and thereafter                   151,452
      ------------------------------------------------------       
                                               $264,865
      ------------------------------------------------------       
</TABLE>

                                       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):
<TABLE>
<CAPTION>
    -------------------------------------------------------------------------- 
                                                     JUNE 30,   DECEMBER 31,
                   Financial Position                  1998         1997
    -------------------------------------------------------------------------- 
<S>                                                  <C>        <C>
        ASSETS
        Real estate assets                            $13,700        $12,403
        Investments in unconsolidated entities         11,737          2,849
        Receivables and other assets                   18,276         20,158
    -------------------------------------------------------------------------- 
                                                      $43,713        $35,410
    -------------------------------------------------------------------------- 
        LIABILITIES AND EQUITY
        Borrowings from the Operating Partnership     $33,523        $10,900
        Credit facility borrowings                         --         16,620
        Other borrowings                                2,000          2,000
        Other liabilities                               9,480          7,513
        Total equity (deficit)                         (1,290)        (1,623)
    -------------------------------------------------------------------------- 
                                                      $43,713        $35,410
    -------------------------------------------------------------------------- 
</TABLE>

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 $10,900,000 of 12% notes
due in 2004.

                                       11
<PAGE>
 
At June 30, 1998, the Company's investment in and notes receivable from the
Service Companies and their subsidiaries totaling $32,212,000 includes notes
receivable from the Service Companies and their subsidiaries of $33,523,000 and
the Company's investment in the Subsidiaries of ($1,311,000).
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------- 
                                                  THREE MONTHS    THREE MONTHS     SIX MONTHS      SIX MONTHS
                                                     ENDED           ENDED           ENDED           ENDED
RESULTS OF OPERATIONS                            JUNE 30, 1998   JUNE 30, 1997   JUNE 30, 1998   JUNE 30, 1997
---------------------------------------------------------------------------------------------------------------- 
<S>                                              <C>             <C>             <C>             <C>
   REVENUE
   Construction and development fees                    $  553          $  520        $  1,205         $ 1,057
   Landscape                                             1,524           1,719           2,559           2,871
   Commissions                                             558             284             790             462
   Property management fees and other                       51             139             130             286
---------------------------------------------------------------------------------------------------------------- 
                                                         2,686           2,662           4,684           4,676
---------------------------------------------------------------------------------------------------------------- 
   COSTS AND EXPENSES
   Direct costs                                          1,303           1,569           2,107           2,461
   Interest expense - Operating Partnership                757             328           1,148             655
   Interest expense - other                                 33              87             200             164
   General and administrative                              942             570           1,759           1,039
   Other                                                   117              84             205             282
---------------------------------------------------------------------------------------------------------------- 
                                                         3,152           2,638           5,419           4,601
---------------------------------------------------------------------------------------------------------------- 
   INCOME (LOSS) BEFORE GAINS ON SALE OF
      PROPERTIES AND EQUITY IN EARNINGS
      OF UNCONSOLIDATED ENTITIES                          (466)             24            (735)             75
   Gain on sale of properties - third parties               --             234             377             234
   Gain on sale of properties - Operating
     Partnership                                            --              --             142             580
   Equity in earnings of
     unconsolidated entities                               221              (8)            465             271
---------------------------------------------------------------------------------------------------------------- 
   NET INCOME (LOSS)                                    $ (245)         $  250        $    249         $ 1,160
---------------------------------------------------------------------------------------------------------------- 
   Net income attributable
      to Operating Partnership                          $ (243)         $  248        $    246         $ 1,149
   Interest expense - Operating Partnership                757             328           1,148             655
   Elimination of intercompany
    profits - Operating Partnership                       (113)             --            (505)           (580)
---------------------------------------------------------------------------------------------------------------- 
   Equity in earnings of Service Companies              $  401          $  576        $    889         $ 1,224
---------------------------------------------------------------------------------------------------------------- 
   Distributions and interest paid
      to Operating Partnership                          $  373          $   --        $    373         $    --
----------------------------------------------------------------------------------------------------------------  
---------------------------------------------------------------------------------------------------------------- 
                                                                                    SIX MONTHS      SIX MONTHS
                                                                                       ENDED           ENDED
   CASH FLOWS                                                                      JUNE 30, 1998   JUNE 30, 1997
---------------------------------------------------------------------------------------------------------------- 
   Operating activities                                                               $  1,726         $(3,556)
   Investing activities                                                                (11,845)          1,432
   Financing activities                                                                  5,661             315
---------------------------------------------------------------------------------------------------------------- 
</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

On May 20, 1998, the Board of Directors of the Company adopted a Shareholder
Rights Plan pursuant to a Rights Agreement (the "Rights Agreement") and
authorized and declared a dividend of one Preferred Stock Purchase Right (a
"Right") with respect to each outstanding share of common stock, par value $.01
per share, of the Company. Subject to certain limitations, each Right entitles
the holder thereof to purchase one one-thousandths of one share of Series B
Junior Participating Preferred Stock, par value $.01 per share ("Series B
Preferred Stock"), at a price of $125.00 per one one-thousandths of one share,
subject to adjustment to prevent dilution (the "Series B Purchase Price") under
certain conditions described in the Rights Agreement. The Rights expire on June
30, 2008 unless earlier redeemed by the Company.

The Rights become exercisable generally if any person or group becomes the
beneficial owner of 15% or more of the outstanding common stock of the Company
(an "Acquiring Person"). At such time, each holder of a Right (other than
Rights that are, or were, beneficially owned by an Acquiring Person or any
associate or affiliate thereof, which shall become null and void and not
exercisable) will thereafter have the right (the "Flip-In Right") to receive, in
lieu of shares of Series B Preferred Stock and upon payment of the Series B
Purchase Price, shares of the Company's common stock (or in certain
circumstances, cash, property or other securities of the Company) having a value
equal to two times the Series B Purchase Price. Additionally, upon certain
acquisitions or sales of the Company, each holder of a Right (other than Rights
which have previously been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, in lieu of shares of Series B
Preferred Stock and upon exercise and payment of the Series B Purchase Price,
common shares of the acquiring company having a value equal to two times the
Series B Purchase Price. If a transaction would otherwise result in a holder's
having a Flip-In as well as a Flip-Over right, then only the Flip-Over Right
will be exerisable. If a transaction results in a holder's having a Flip-Over
Right subsequent to a transaction resulting in a holder's having a Flip-In
Right, a holder will have Flip-Over Rights only to the extent such holder's 
Flip-In Rights have not been exercised. Because of the nature of the Series B
Preferred Stock's dividend, liquidation and voting rights, the value of the one
one-thousandths interest in a share of Series B Preferred Stock purchasable upon
exercise of each Right should approximate the value of one share of the
Company's common stock.

The Company declared and paid quarterly common stock dividends relating to the
first quarter of 1998 of $9,050,000 or $0.465 per common share during the three
months ended June 30, 1998.  Additionally, the minority Common Unitholders in
the Operating Partnership received cash distributions totaling $3,025,000 or
$0.465 per Common Unit during the three months ended June 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 June 30, 1998.  In
July 1998, the Company declared and paid quarterly common stock dividends and
made distributions to minority Unitholders relating to the second quarter of
1998 of $9,079,000 or $0.465 per common share and $3,143,000 or $0.465 per
Common Unit, respectively.  Additionally, in July 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 six months ended June 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    SIX MONTHS     SIX MONTHS
                                                        ENDED          ENDED          ENDED          ENDED
                                                    JUNE 30, 1998  JUNE 30, 1997  JUNE 30, 1998  JUNE 30, 1997
----------------------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>            <C>            <C>
COMPUTATION OF NET INCOME PER COMMON SHARE
Net income available to common
 shareholders - basic                                     $ 5,889        $ 5,080        $11,267        $ 8,906
Minority interests in earnings of
 the Operating Partnership                                  2,041          1,618          3,981          2,850
----------------------------------------------------------------------------------------------------------------
Net income available to common
 shareholders - diluted                                   $ 7,930        $ 6,698        $15,248        $11,756
----------------------------------------------------------------------------------------------------------------
Weighted average common shares - basic                     19,502         15,906         18,892         14,994
Dilutive securities -
 Common Units of limited partnership interest in
  the Operating Partnership                                 6,759          5,057          6,676          4,797
 Stock options                                                189            200            193            217
----------------------------------------------------------------------------------------------------------------
Weighted average common shares - diluted                   26,450         21,163         25,761         20,008
----------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
 Basic                                                    $  0.30        $  0.32        $  0.60        $  0.59
 Diluted                                                     0.30           0.32           0.59           0.59
----------------------------------------------------------------------------------------------------------------
</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.
Outstanding common stock warrants were not dilutive in the three and six months
ended June 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

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.  The second phase of this acquisition consisting of four industrial
buildings and total anticipated aggregate acquisition consideration of
approximately $40,200,000 is expected to close in September 1998, and is subject
to customary closing conditions and the updating of due diligence procedures.
The actual acquisition consideration for these four buildings will be based on
actual occupancy levels achieved prior to the expected closing date, with a
minimum aggregate acquisition price of approximately $32,500,000.

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 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.

                                       15
<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.

                                       16
<PAGE>
 
RESULTS OF OPERATIONS
Operating information relating to the Company's properties for the three and six
months ended June 30, 1998 and 1997, is summarized below (in thousands):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------ 
                                    THREE MONTHS   THREE MONTHS             SIX MONTHS     SIX MONTHS
                                        ENDED          ENDED         %         ENDED          ENDED         %
                                    JUNE 30, 1998  JUNE 30, 1997  CHANGE   JUNE 30, 1998  JUNE 30, 1997  CHANGE
------------------------------------------------------------------------------------------------------------------ 
<S>                                 <C>            <C>            <C>      <C>            <C>            <C>
Rental revenues                           $31,698        $18,879    67.9%        $60,043        $36,279    65.5%
Tenant reimbursements                       4,134          2,259    83.0%          8,094          4,416    83.3%
------------------------------------------------------------------------------------------------------------------ 
Property operating revenues                35,832         21,138    69.5%         68,137         40,695    67.4%
------------------------------------------------------------------------------------------------------------------ 
Operating, maintenance and
 management expenses                        5,334          2,774    92.3%         10,055          5,289    90.1%
Real estate taxes                           2,992          1,768    69.2%          5,738          3,467    65.5%
Depreciation and amortization               9,195          5,700    61.3%         17,556         11,044    59.0%
------------------------------------------------------------------------------------------------------------------ 
Property operating expenses                17,521         10,242    71.1%         33,349         19,800    68.4%
------------------------------------------------------------------------------------------------------------------ 
Property operating revenues less
 property operating expenses              $18,311        $10,896    68.1%        $34,788        $20,895    66.5%
------------------------------------------------------------------------------------------------------------------ 
</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 six months ended June 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               SIX MONTHS      SIX MONTHS
                                        ENDED           ENDED          %          ENDED           ENDED          %
                                    JUNE 30, 1998   JUNE 30, 1997    CHANGE   JUNE 30, 1998   JUNE 30, 1997   CHANGE
----------------------------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>             <C>       <C>             <C>             <C>
Rental revenues                           $18,233         $17,903      1.8%         $36,024         $35,155      2.5%
Tenant reimbursements                       2,228           2,120      5.1%           4,451           4,253      4.7%
----------------------------------------------------------------------------------------------------------------------
Property operating revenues                20,461          20,023      2.2%          40,475          39,408      2.7%
----------------------------------------------------------------------------------------------------------------------
Operating, maintenance and
 management expenses                        2,845           2,648      7.4%           5,441           5,105      6.6%
Real estate taxes                           1,655           1,669     (0.8%)          3,341           3,319      0.7%
Depreciation and amortization               5,483           5,377      2.0%          10,954          10,652      2.8%
----------------------------------------------------------------------------------------------------------------------
Property operating expenses                 9,983           9,694      3.0%          19,736          19,076      3.5%
----------------------------------------------------------------------------------------------------------------------
Property operating revenues less
 property operating expenses              $10,478         $10,329      1.4%         $20,739         $20,332      2.0%
----------------------------------------------------------------------------------------------------------------------
Average occupancy                            95.5%           96.7%                     95.4%           96.4%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       17
<PAGE>
 
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 1998, TO THE
THREE MONTHS ENDED JUNE 30, 1997

Property operating revenues (rental revenue plus tenant reimbursements)
increased $14,694,000 or 69.5% between periods.  Of this increase, $10,503,000,
$3,753,000 and $438,000 were attributable to acquisition, development and core
properties, respectively.  The increases relating to acquisition and development
properties were due to the acquisition of 76 properties (37 in 1997 and 39 in
1998) totaling approximately 6,152,000 square feet and the stabilization of 25
development properties (14 in 1997 and 11 in 1998) and two property expansions
(both in 1997) totaling approximately 2,630,000 square feet.  Property operating
expenses increased $7,279,000 or 71.1% 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 2.2% despite a
decrease in overall average occupancy of approximately 1.2%.  This increase was
due to both rental rate and reimbursement increases between periods.  Property
operating expenses increased 3.0% due primarily to increased maintenance
expenses in 1998.  Property operating revenues less property operating expenses
from core properties increased 1.6%, exclusive of depreciation and amortization
expense.

Interest expense increased by $2,561,000 or 54.3% from $4,714,000 for the three
months ended June 30, 1997, to $7,275,000 for the three months ended June 30,
1998, due to increased mortgage interest of $1,764,000 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
note borrowings due primarily to higher average borrowings in 1998 compared to
1997.

Company general and administrative expenses increased by $459,000 or 52.5% from
$875,000 for the three months ended June 30, 1997, to $1,334,000 for the three
months ended June 30, 1998, due primarily to increased personnel and related
costs associated with the Company's geographic expansion.  As a percentage of
total revenue, general and administrative expenses decreased from 4.1% in the
second quarter of 1997 to 3.7% in the second quarter of 1998.

Interest income decreased $58,000 or 19.0% from $305,000 for the three months
ended June 30, 1997 to $247,000 for the three months ended June 30, 1998, due
primarily to the settlement of approximately $7,900,000 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 decreased by
$175,000 or 30.4% from $576,000 for the three months ended June 30, 1997, to
$401,000 for the three months ended June 30, 1998, due primarily to lower
profits from land and property sales in 1998.  Equity in earnings of
unconsolidated real estate entities of $86,000 in 1998 represents the Company's
50% share of earnings from a single building equity investment.

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

Property operating revenues (rental revenue plus tenant reimbursements)
increased $27,442,000 or 67.4% between periods.  Of this increase, $19,033,000,
$7,342,000 and $1,067,000 were attributable to acquisition, development and core
properties, respectively.  The increases relating to acquisition and development
properties were due to the acquisition of 76 properties (37 in 1997 and 39 in
1998) totaling approximately 6,152,000 square feet and the stabilization of 25
development properties (14 in 1997 and 11 in 1998) and two property expansions
(both in 1997) totaling approximately 2,630,000 square feet.  Property operating
expenses increased $13,549,000 or 68.4% 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 2.7% despite the
impact of lost property operating revenues of approximately $73,000 from the
sale of a 96,000 square foot building in April 1997 and a decrease in overall
average occupancy of approximately 1.0%.  Adjusted for the building sale
discussed above, property operating revenues from core properties increased
approximately 2.9%.  This increase was due to both rental rate and reimbursement
increases between periods.  Property operating expenses increased 3.5% due
primarily to increased utilities and maintenance expenses in 1998.  Property
operating revenues less property operating expenses from core properties
increased 2.5%, exclusive of depreciation and amortization expense and after
adjusting for the building sale discussed above.

Interest expense increased by $3,371,000 or 33.7% from $10,006,000 for the six
months ended June 30, 1997, to $13,377,000 for the six months ended June 30,
1998, due primarily to increased mortgage interest of $3,188,000 related to
mortgage debt assumed in connection with certain of the Company's 1997 and 1998
property acquisitions.

Company general and administrative expenses increased by $862,000 or 49.2% from
$1,752,000 for the six months ended June 30, 1997, to $2,614,000 for the six
months ended June 30, 1998, due primarily to increased personnel and related
costs associated with the Company's geographic expansion.  As a percentage of
total revenue, general and administrative expenses decreased from 4.2% in the
first half of 1997 to 3.8% in the first half of 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 decreased by
$335,000 or 27.4% from $1,224,000 for the six months ended June 30, 1997, to
$889,000 for the six months ended June 30, 1998, due primarily to lower net
profits from the Company's third-party service businesses resulting from higher
overhead expenses in 1998.  The Service Companies incurred higher overhead as
they expanded their businesses in the Company's markets outside Atlanta,
Georgia.  Equity in earnings of unconsolidated real estate entities of $154,000
in 1998 represents the Company's 50% share of earnings from a single building
equity investment.

LIQUIDITY AND CAPITAL RESOURCES

The Company continues to generate increasing cash flows from operations.  Cash
provided by operating activities increased from $23,416,000 for the six months
ended June 30, 1997, to $40,094,000 for the six months ended June 30, 1998, due
primarily to the growth in the Company's operating income resulting

                                       19
<PAGE>
 
from 25 development properties (14 in 1997 and 11 in 1998) and two property
expansions (both in 1997) stabilized and from 76 buildings acquired (37 in 1997
and 39 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 in 1998.  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.

In the six months ended June 30, 1998, the Company invested $227,407,000 of cash
in property acquisition, development and construction activities.  This compares
to $80,647,000 for the same six month period in 1997.  This increased cash
investment activity primarily reflects the increased cash component of the
Company's building acquisition activity in 1998 compared to 1997 of
approximately $97,011,000 with the remaining increase due to increased
development and land acquisition activity.

Financing for the Company's property investment activities primarily consisted
of $94,141,000 of net proceeds from unsecured note borrowings, $47,200,000 from
common equity offerings and $104,890,000 from Credit Facility borrowings in the
first half of 1998 compared primarily to $106,568,000 from a common equity
offering in the first half of 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.  On August 4, 1998, subsequent to the reduction of Credit
Facility borrowings from the net proceeds of approximately $98,300,000 from an
unsecured note issuance, the Company had available capacity under the Credit
Facility of approximately $108,400,000.

The Company believes it has adequate liquidity, borrowing capacity and sources
of capital, including available capacity under its existing Credit Facility and
remaining capacity of approximately $650,000,000 under a universal shelf
registration statement, 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 and
other forms of debt and equity financing, in both public and private markets.
The Company has unsecured investment grade corporate debt ratings which may
assist it in accessing the corporate debt market 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

                                       20
<PAGE>
 
transactions, respectively.  If market conditions warrant, the Company may
adjust staffing levels to avoid a negative impact on the Company's results of
operations.

Total consolidated debt amounted to $552,675,000 at June 30, 1998, including
borrowings under the Credit Facility of $187,810,000, mortgage notes payable of
$264,865,000 and unsecured notes of $100,000,000.  Of the $264,865,000 of
mortgage indebtedness, $259,091,000 is fixed rate and $5,774,000 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 3.9% at June 30, 1998.
The weighted average interest rate under the Credit Facility at June 30, 1998,
(excluding the effect of the interest rate swap agreements described below) was
6.7%.  The weighted average effective interest rate on the Company's fixed rate
unsecured notes was 7.6% at June 30, 1998, (see Note 3).  At June 30, 1998, the
Company had in place interest rate swap agreements to fix the Company's interest
costs on $50,000,000 of the Company's Credit Facility borrowings.   The weighted
average effective interest rate under the fixed swap arrangements was
approximately 7.7%.  If interest rates under the Credit Facility, in excess of
the $50,000,000 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 June 30, 1998, would
increase or decrease by approximately $1,400,000 on an annualized basis.  As
discussed earlier, in August 1998, the Company reduced its Credit Facility
borrowings by approximately $98,300,000, thus reducing its exposure to interest
rate changes.

Based on the outstanding balance of mortgage notes payable at June 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 June 30, 1998, including total consolidated debt of $552,675,000 and
$2,000,000 of other notes payable of unconsolidated entities, the total debt
obligations of the Company and its unconsolidated entities were $554,675,000 or
36% of total market capitalization (assuming the exchange of all Common Units
for shares of common stock).  At June 30, 1998 (based on the closing price of
the common stock of $31.625 on June 30, 1998, and assuming the exchange of all
Common Units for shares of common stock), there would be 26,350,034 shares of
common stock outstanding with a total market value of $833,320,000, 6,000,000
shares of preferred stock outstanding with a total liquidation value of
$150,000,000 and 350,000 common stock warrants outstanding with an estimated
market value of $1,400,000, resulting in a total equity value of $984,720,000.

                                       21
<PAGE>
 
CURRENT DEVELOPMENT AND ACQUISITION ACTIVITY

At June 30, 1998, the Company had committed development and acquisitions
totaling approximately $362,306,000, representing 54 buildings and one property
expansion totaling 6,966,000 square feet.  Including new acquisition and
development activity, net of closed acquisitions and the stabilization of
development properties, between July 1, 1998 and August 11, 1998, the Company
had, at August 11, 1998, committed development and acquisitions totaling
approximately $368,390,000, representing 54 buildings and one property expansion
totaling 7,005,000 square feet.   Properties under agreement to acquire  as of
August 11, 1998, consisted of seven buildings, totaling 1,206,000 square feet,
with a total expected cost of approximately $57,495,000.  Development properties
as of August 11, 1998, consisted of 47 buildings and one property expansion,
totaling 5,799,000 square feet, with a total expected cost of approximately
$310,895,000.

It is expected that such development and acquisition properties will stabilize
or be acquired as detailed below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- 
                                                          Square         Estimated
 Year                               Buildings              Feet            Cost(a)
------------------------------------------------------------------------------------- 
<S>                                  <C>                 <C>            <C>
1998                                    21              3,242,000       $167,690,000
1999                                    25              2,781,000        158,441,000
2000                                     8                982,000         42,259,000
------------------------------------------------------------------------------------- 
                                        54              7,005,000       $368,390,000
------------------------------------------------------------------------------------- 
</TABLE>
(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 and the
completion of due diligence procedures, to acquire development land totaling
$29,510,000 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, and
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.

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

                                       22
<PAGE>
 
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
$403,000 and $174,000 for the three months ended and $654,000 and $324,000 for
the six months ended June 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 $59,000 and $158,000 for the three months
ended and $478,000 and $448,000 for the six months ended June 30, 1998 and 1997,
respectively.

                                       23
<PAGE>
 
For the three months ended June 30, 1998, funds from operations increased by
$3,548,000 or 38.6% to $12,737,000 compared to funds from operations of
$9,189,000 for the three months ended June 30, 1997.  For the six months ended
June 30, 1998, funds from operations increased by $7,206,000 or 42.2% to
$24,271,000 compared to funds from operations of $17,065,000 for the six months
ended June 30, 1997.  Funds from operations for the three and six months ended
June 30, 1998 and 1997 are detailed below (in thousands):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------ 
                                                   THREE MONTHS    THREE MONTHS      SIX MONTHS      SIX MONTHS
                                                      ENDED            ENDED           ENDED           ENDED
                                                  JUNE 30, 1998   JUNE 30,  1997   JUNE 30, 1998   JUNE 30, 1997
------------------------------------------------------------------------------------------------------------------ 
<S>                                               <C>             <C>              <C>             <C>
Net income available to
common shareholders                                     $ 5,889          $ 5,080         $11,267         $ 8,906
Minority interests                                        2,041            1,618           3,981           2,850
Depreciation and amortization                             9,195            5,700          17,556          11,044
Depreciation and amortization -
unconsolidated entities                                      29               --              44              10
Gain on sale of operating real estate asset                  --             (209)             --            (209)
Gain on sale of operating real estate asset --
      unconsolidated entities                                --              (76)             --             (76)
------------------------------------------------------------------------------------------------------------------ 
Funds from operations available to
common shareholders
(Common Units fully converted)                          $17,154          $12,113         $32,848         $22,525
Percentage attributable to common
shareholders(1)                                            74.3%            75.9%           73.9%           75.8%
------------------------------------------------------------------------------------------------------------------ 
Funds from operations attributable to
 common shareholders                                    $12,737          $ 9,189         $24,271         $17,065
------------------------------------------------------------------------------------------------------------------ 
Weighted average common shares
  Basic                                                  19,502           15,906          18,892          14,994
  Diluted(2)                                             26,450           21,163          25,761          20,008
------------------------------------------------------------------------------------------------------------------ 
</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 6,759,000 and
     5,057,000 for the three months ended and 6,676,000 and 4,797,000 for the
     six months ended June 30, 1998 and 1997, respectively.  Common stock
     equivalents related to outstanding stock options totaled 189,000 and
     200,000 for the three months ended and 193,000 and 217,000 for the six
     months ended June 30, 1998 and 1997, respectively. Outstanding common stock
     warrants were not dilutive for the three and six months ended June 30,
     1998.

                                       24
<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 six months ended June 30, 1998 and 1997 (in thousands):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------- 
                                                   THREE MONTHS   THREE MONTHS    SIX MONTHS     SIX MONTHS
                                                       ENDED          ENDED          ENDED          ENDED
                                                   JUNE 30, 1998  JUNE 30, 1997  JUNE 30, 1998  JUNE 30, 1997
--------------------------------------------------------------------------------------------------------------- 
<S>                                                <C>            <C>            <C>            <C>
Building acquisitions(1)(2)                             $ 70,650        $32,060       $250,231       $ 49,758
Development and land acquisition activity(3)(4)           56,284         27,236        116,664         47,827
Non-revenue-producing building
 improvements                                                414            266            792            362
Tenant improvement and leasing costs
 on second-generation leases(5)                            1,366          1,161          3,193          2,094
--------------------------------------------------------------------------------------------------------------- 
                                                        $128,714        $60,723       $370,880       $100,041
--------------------------------------------------------------------------------------------------------------- 
</TABLE>
(1)  Building acquisitions in 1998 included two buildings acquired while still
     under development. Both of these buildings were stabilized at June 30,
     1998.
(2)  Reflects aggregate acquisition costs including the assumption of
     indebtedness of $2,949,000 and the issuance of $3,264,000 of Common Units
     in the three months ended June 30, 1998, and the assumption of indebtedness
     of $83,846,000, the issuance of $33,088,000 of Common Units and other
     assumed liabilities, net of other assets, of $4,224,000 in the six months
     ended June 30, 1998.  Reflects aggregate acquisition costs including the
     assumption of indebtedness of $3,750,000 and the issuance of $13,946,000 of
     Common Units in the six months ended June 30, 1997.
(3)  Includes first-generation leasing costs on stabilized development
     properties totaling $1,480,000 and $249,000 in the three months ended and
     $2,023,000 and $1,346,000 in the six months ended June 30, 1998 and 1997,
     respectively.
(4)  Reflects aggregate development and leasing costs including the issuance of
     $2,191,000 of Common Units and exclusive of the decrease in construction
     payables of $1,260,000 in the three months ended June 30, 1998, and net of
     the settlement of real estate loans of $7,898,000, the issuance of
     $8,490,000 of Common Units and exclusive of the increase in construction
     payables of $2,467,000 in the six months ended June 30, 1998. Reflects
     aggregate development and leasing costs exclusive of the decrease in
     construction payables of $1,119,000 in the three months ended June 30,
     1997, and including the assumption of indebtedness of $610,000, the
     issuance of Common Units of $388,000 and exclusive of the decrease in
     construction payables of $1,714,000 in the six months ended June 30, 1997.
(5)  Includes second-generation leasing costs totaling $630,000 and $510,000 in
     the three months ended and $1,437,000 and $1,067,000 in the six months
     ended June 30, 1998 and 1997, respectively.

                                       25
<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 six months ended June 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.
 
CAPITALIZED TENANT IMPROVEMENTS AND LEASING COSTS
<TABLE> 
<CAPTION> 
--------------------------------------------------------------------------------------------
                                                               SIX MONTHS        YEAR
                                                                  ENDED          ENDED
(In thousands, except per square foot information)            JUNE 30, 1998  DEC. 31, 1997
--------------------------------------------------------------------------------------------
<S>                                                           <C>            <C>
INDUSTRIAL PROPERTIES
 RE-LEASING
   Square feet re-leased                                                945          1,073
   Capitalized tenant improvements and leasing commissions           $1,973         $2,276
   Capitalized tenant improvements and leasing commissions
    per square foot                                                  $ 2.09         $ 2.12
 RENEWAL
   Square feet renewed                                                1,039          2,358
   Capitalized tenant improvements and leasing commissions           $  794         $1,392
   Capitalized tenant improvements and leasing commissions
    per square foot                                                  $ 0.76         $ 0.59
 TOTAL
   Square feet                                                        1,984          3,431
   Capitalized tenant improvements and leasing commissions           $2,767         $3,668
   Capitalized tenant improvements and leasing commissions
    per square foot                                                  $ 1.40         $ 1.07
--------------------------------------------------------------------------------------------
SUBURBAN OFFICE PROPERTIES
 RE-LEASING
   Square feet re-leased                                                 32             69
   Capitalized tenant improvements and leasing commissions           $  109         $  493
   Capitalized tenant improvements and leasing commissions
    per square foot                                                  $ 3.43         $ 7.11
 RENEWAL
   Square feet renewed                                                   65            134
   Capitalized tenant improvements and leasing commissions           $   22         $  267
   Capitalized tenant improvements and leasing commissions
    per square foot                                                  $ 0.34         $ 1.99
 TOTAL
   Square feet                                                           97            203
   Capitalized tenant improvements and leasing commissions           $  131         $  760
   Capitalized tenant improvements and leasing commissions
    per square foot                                                  $ 1.34         $ 3.74
--------------------------------------------------------------------------------------------
</TABLE>

                                       26
<PAGE>
 
SUPPLEMENTAL DISCLOSURE OF TENANT AND LEASE EXPIRATION INFORMATION

TENANTS
As of June 30, 1998, the Company's properties were leased to 958 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 June 30, 1998) occupy a total of approximately
4,583,000 square feet and represent 23.4% 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           2.2%   NC,TN
   2  Scientific Atlanta, Inc.               573,951         11    2,616,594           2.0%     GA
   3  IKON Office Solutions, Inc.            177,000          4    1,468,400           1.1%     GA
   4  Interpath Communications, Inc.          89,630          2    1,416,842           1.1%     NC
   5  GTE Mobilnet Service Corporation       126,124          3    1,351,146           1.0%   GA,NC
   6  360/o/ Communications                  114,476          7    1,299,767           1.0%     NC
   7  Radian International LLC                90,159          2    1,173,802           0.9%     NC
   8  Anixter, Inc.                          178,822          4    1,098,144           0.8%     GA
   9  Tech Data Corporation                  138,996          1    1,009,111           0.7%     FL
  10  Square D Company                       102,262          2      992,016           0.7%   TN,FL
  11  Honeywell, Inc.                         70,016          3      963,953           0.7%     GA
  12  PPD Pharmaco, Inc.                      89,130          5      934,271           0.7%     NC
  13  DeVry Inc.                              64,981          1      928,269           0.7%     GA
  14  The Athlete's Foot Group, Inc.         162,651          1      924,069           0.7%     GA
  15  Merisel, Inc.                          142,487          2      900,147           0.7%     FL
  16  Ingram-Micro, Inc.                     193,973          4      887,002           0.7%   GA,FL
  17  Fisher Scientific Company              223,219          1      875,019           0.7%     GA
  18  Moore U.S.A., Inc.                     200,515          1      812,086           0.6%     TX
  19  National Data Corporation               50,283          4      786,777           0.6%     GA
  20  Data General Corporation                86,000          1      775,720           0.6%     GA
  21  Saab Cars U.S.A., Inc.                  63,625          3      749,509           0.6%     GA
  22  Vanstar Corporation                     86,880          5      740,449           0.6%     GA
  23  Reckitt & Colman, Inc.                 313,900          2      733,120           0.5%     GA
  24  AT&T Corp.                              62,271          4      721,880           0.5%  NC,GA,TN
  25  Quadram Corp./Intelligent Systems      137,100          1      719,775           0.5%     GA
  26  Best Buy Stores, L.P.                  222,643          1      703,552           0.5%     GA
  27  United Healthcare Services, Inc.        72,991          2      699,856           0.5%   GA,SC
  28  Tridom Corporation                      87,017          3      690,045           0.5%     GA
  29  Ahlstrom Recovery, Inc.                 62,893          2      681,698           0.5%     GA
  30  Sally Foster, Inc.                     197,200          2      673,233           0.5%     SC
------------------------------------------------------------------------------------------------------
                                           4,582,544         92  $31,329,105          23.4%
------------------------------------------------------------------------------------------------------
</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 June 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.

                                       27
<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 June 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                           2,424          11.1%       $ 13,455           9.6%
                1999                           2,396          10.9%         15,149          10.8%
                2000                           3,530          16.1%         21,525          15.4%
                2001                           2,546          11.6%         15,595          11.2%
                2002                           2,969          13.6%         23,986          17.2%
                2003                           2,344          10.7%         17,809          12.7%
                2004                           1,262           5.8%          7,871           5.6%
                2005                           1,027           4.7%          3,667           2.6%
                2006                             769           3.5%          3,977           2.8%
                2007                           1,318           6.0%          7,917           5.7%
                2008                             563           2.6%          3,586           2.6%
                2009                              20           0.1%            157           0.1%
                2010                              65           0.3%             90           0.1%
                2011                             350           1.6%          1,784           1.3%
           2012 and later                        319           1.4%          3,233           2.3%
---------------------------------------------------------------------------------------------------- 
                                            21,902(2)        100.0%       $139,801         100.0%
---------------------------------------------------------------------------------------------------- 
INDUSTRIAL PROPERTIES
                1998                           2,181          11.0%       $ 10,043           9.2%
                1999                           2,209          11.2%         12,970          11.8%
                2000                           3,288          16.6%         18,134          16.5%
                2010                           2,433          12.3%         13,954          12.7%
                2002                           2,550          12.9%         16,920          15.4%
                2003                           2,052          10.4%         12,928          11.8%
                2004                           1,150           5.8%          5,995           5.5%
                2005                             996           5.0%          3,207           2.9%
                2006                             748           3.8%          3,608           3.3%
                2007                           1,262           6.4%          7,327           6.7%
                2008                             477           2.4%          2,056           1.9%
                2009                              20           0.1%            157           0.1%
                2010                               0           0.0%              0           0.0%
                2011                             293           1.5%          1,704           1.6%
           2012 and later                        104           0.6%            701           0.6%
---------------------------------------------------------------------------------------------------- 
                                              19,763         100.0%       $109,704         100.0%
---------------------------------------------------------------------------------------------------- 
                                                                (Table continued on following page)
</TABLE>

                                       28
<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>
SUBURBAN
OFFICE PROPERTIES
               1998                           230          13.4%        $ 3,216          12.0%
               1999                           140           8.1%          1,757           6.6%
               2000                           190          11.1%          2,833          10.6%
               2001                           110           6.4%          1,587           5.9%
               2002                           416          24.2%          7,007          26.2%
               2003                           284          16.5%          4,687          17.5%
               2004                           104           6.1%          1,700           6.4%
               2005                            26           1.5%            382           1.4%
               2006                            17           1.0%            310           1.2%
               2007                            56           3.3%            590           2.2%
               2008                            79           4.6%          1,530           5.7%
               2009                             0           0.0%              0           0.0%
               2010                             0           0.0%              0           0.0%
               2011                             0           0.0%              0           0.0%
          2012 and later                       65           3.8%          1,164           4.3%
---------------------------------------------------------------------------------------------------- 
                                            1,717         100.0%        $26,763         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 June 30, 1998, is comprised of
        approximately 21,388,000 square feet of leases in in-service properties,
        and approximately 514,000 square feet of leases in properties under
        development or in lease-up where tenants are paying rent as of June 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 is reporting under prior accounting standards,
but may 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.  Previously,
the Company capitalized such costs to its acquisition properties.  The
implementation of this new guidance will not have a material impact on the
Company's financial statements.

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.

                                       29
<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.

OTHER MATTERS

The Company continues to assess the potential impact of the year 2000 on the
processing of date-sensitive information by the Company's hardware and software
information systems.  The year 2000 issue is the result of many computer
programs recognizing a date ending with "00" as the year 1900 rather than the
year 2000, causing potential system failures or miscalculations which could
result in disruptions of normal business operations.  The Company's primary
financial and operating systems are supplied by third-party suppliers.  Based on
communications with these third-party suppliers, evaluations of third-party
systems and internal assessments of in-house information systems, the costs of
addressing potential year 2000 issues are not expected to have a material
adverse impact on the Company's financial position, results of operations or
cash flows in future periods.  In fact, most of the Company's software systems
are either currently year 2000 compliant or will be compliant well in advance of
January 1, 2000.  However, such conclusions are based upon communications,
evaluations and assessments to date, and if future negative events occur which
can not be resolved in a timely manner, it could results in material financial
risk to the Company. To date, the Company has not incurred any material 
incremental costs relating to the matter.

Additionally, the Company is assessing the potential impact of the year 2000
issue resulting from the potential failure of its key building mechanical
systems and the failure of its major vendors, suppliers and tenants to be year
2000 compliant.  Any significant failures in these areas could result in a
material disruption of the Company's business.  The Company anticipates the
completion of its assessments and evaluations in these areas by early 1999.  The
Company plans to allocate the time and resources necessary to timely resolve any
significant year 2000 issues.

                                       30
<PAGE>
 
PART II - OTHER INFORMATION
ITEM 2 - CHANGE IN SECURITIES

       On May 20, 1998, the Board of Directors of the Company adopted a
       Shareholder Rights Plan pursuant to a Rights Agreement (the "Rights
       Agreement") and authorized and declared a dividend of one Preferred Stock
       Purchase Right (a "Right") with respect to each outstanding share of
       common stock, par value $.01 per share ("Common Stock"), of the Company.
       On June 26, 1998, the Company filed a registration statement of Form 8-A
       with the Securities and Exchange Commission to register the Rights under
       the Securities Exchange Act of 1934, as amended.  For additional
       information, reference is made to the Form 8-A, including the exhibits
       thereto.

       During the three months ended June 30, 1998, the Company caused the
       Operating Partnership to issue a total of 171,142 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 $5,455,000.  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 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       The Company held its annual shareholders meeting on May 20, 1998.  The
       following directors were elected.
<TABLE>
<CAPTION>
 
                                              Votes      Votes
                               Board Term      For      Against  Abstain
       -----------------------------------------------------------------
<S>                           <C>           <C>         <C>      <C>
       Forrest W. Robinson    Through 2001  14,631,680       --  228,914
       Charles R. Eitel       Through 2001  14,631,870       --  228,724
       Harold S. Lichtin      Through 2001  14,629,782       --  230,813
</TABLE>

       Seven additional directors, Thomas D. Senkbeil, John W. Nelley, Jr.,
       Barrington H. Branch, William Cavanaugh III, A. Ray Weeks, Jr., George D.
       Busbee and William O. McCoy continue to serve their existing terms
       through 1999 or 2000, as applicable.  Effective June 1, 1998, Armando
       Codina, CEO of Codina Group, Inc., was appointed to the Board of
       Directors to fill an existing vacancy, with a term through 2001, subject
       to the approval of shareholders at the Company's 1999 annual meeting.

       Additionally, the shareholders of the Company approved at the annual
       meeting the adoption of the Company's 1998 Incentive Stock Plan (the
       "Plan").  The Plan was approved with 11,226,031 votes for the Plan,
       1,484,492 votes against the Plan with 44,096 shares abstaining.

       No other matters were submitted to a vote of the shareholders at the
       annual meeting held on May 20, 1998.

                                       31
<PAGE>
 
ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits
        4.1*  - Form of Rights Agreements

       10.1   - Syndicated Credit Agreement dated July 1, 1998, by and among
                Weeks Realty, L.P., as borrower, Weeks Corporation, Weeks GP
                Holdings, Inc., and Weeks LP Holdings, Inc., as guarantors, and
                Wachovia Bank, N.A., as agent bank for syndicated bank group.

       10.2   - Swing Credit Agreement dated July 1, 1998, by and among Weeks
                Realty, L.P., as borrower, Weeks Corporation, Weeks GP Holdings,
                Inc., and Weeks LP Holdings, Inc., as guarantors, and Wachovia
                Bank, N.A., as lender.

       10.3** - Asset Purchase Agreement dated April 23, 1998, among MEPC PLC
                and Weeks Realty, L.P., and certain other purchases as described
                therein.

       10.4   - Tenth Amendment to Second Amended and Restated Agreement of 
                Limited Partnership of Weeks Realty, L.P., dated April 3, 1998.

       10.5   - Eleventh Amendment to Seconded Amended and Restated Agreement
                of Limited Partnership of Weeks Realty, L.P., dated May 26,
                1998.

       10.6   - Twelfth Amendment to Second Amended and Restated Agreement of
                Limited Partnership of Weeks Realty, L.P., dated June 3, 1998.
 
       10.7   - Registration Rights and Lock-Up Agreement dated April 3, 1998,
                by and among Weeks Corporation and Sanford H. Orkin and Barbara
                H. Orkin.

       10.8   - Registration Rights and Lock-Up Agreement dated May 26, 1998
                by and among Weeks Corporation and The Futrell Properties
                Limited Partnership No.1.

       10.9   - Registration Rights and Lock-Up Agreement dated June 3, 1998,
                by and among Weeks Corporation and Thomas M. Beckman and Thomas
                B. Fowler, Jr.

       10.10  - Weeks Corporation 1998 Incentive Stock Plan

       10.11  - Amendment No. 1 to the Weeks Corporation 1998 Incentive Stock
                Plan.

       10.12  - Weeks Corporation Amended and Restated 1998 Deferred 
                Compensation Plan.

       27.1   - Financial data schedule.

  (b)  Reports on Form 8-K

       Form 8-K dated May 20, 1998 and filed on June 1, 1998, reporting the
       adoption of a shareholders rights plan.
 
       Form 8-K dated June 16, 1998 and filed on June 16, 1998, reporting the
       acquisition of real estate properties on June 1, 1998.
 
*   Filed as an exhibit to the Company's Current Report on Form 8-K dated
    May 20, 1998
**  Filed as an exhibit to the Company's Current Report on Form 8-K dated June
    16, 1998

                                       32
<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)
 
 
August 14, 1998                         /s/ A. R. Weeks, Jr.
                                        ---------------------------
                                        A. R. Weeks, Jr.
                                        Chairman of the Board and
                                        Chief Executive Officer
 
 
 
August 14, 1998                         /s/ David P. Stockert
                                        ---------------------------
                                        David P. Stockert
                                        Senior Vice President and
                                        Chief Financial Officer

                                       33
<PAGE>
 
                                 EXHIBIT INDEX
                                        
 Exhibit No.      Description
--------------------------------------------------------------------------------
     4.1*      Form of Rights Agreements

     10.1      Syndicated Credit Agreement dated July 1, 1998, by and among
               Weeks Realty, L.P., as borrower, Weeks Corporation, Weeks GP
               Holdings, Inc., and Weeks LP Holdings, Inc., as guarantors, and
               Wachovia Bank, N.A., as agent bank for syndicated bank group.

     10.2      Swing Credit Agreement dated July 1, 1998, by and among Weeks
               Realty, L.P., as borrower, Weeks Corporation, Weeks GP Holdings,
               Inc., and Weeks LP Holdings, Inc., as guarantors, and Wachovia
               Bank, N.A., as lender.

     10.3**    Asset Purchase Agreement dated April 23, 1998, among MEPC PLC and
               Weeks Realty, L.P., and certain other purchases as described
               therein.

     10.4      Tenth Amendment to Second Amended and Restated Agreement of
               Limited Partnership of Weeks Realty, L.P., dated April 3, 1998.

     10.5      Eleventh Amendment to Seconded Amended and Restated Agreement of
               Limited Partnership of Weeks Realty, L.P., dated May 26, 1998.

     10.6      Twelfth Amendment to Second Amended and Restated Agreement of
               Limited Partnership of Weeks Realty, L.P., dated June 3, 1998.

     10.7      Registration Rights and Lock-Up Agreement dated April 3, 1998, by
               and among Weeks Corporation and Sanford H. Orkin and Barbara H.
               Orkin.

     10.8      Registration Rights and Lock-Up Agreement dated May 26, 1998 by
               and among Weeks Corporation and The Futrell Properties Limited
               Partnership No.1.

     10.9      Registration Rights and Lock-Up Agreement dated June 3, 1998, by
               and among Weeks Corporation and Thomas M. Beckman and Thomas B.
               Fowler, Jr.

     10.10     Weeks Corporation 1998 Incentive Stock Plan

     10.11     Amendment No. 1 to the Weeks Corporation 1998 Incentive Stock
               Plan.

     10.12     Weeks Corporation Amended and Restated 1998 Deferred Compensation
               Plan.
 
     27.1      Financial data schedule.


*   Filed as an exhibit to the Company's Current Report on Form 8-K dated May
    20, 1998
**  Filed as an exhibit to the Company's Current Report on Form 8-K dated June
    16, 1998

                                       34