**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,DC 20549**

 

**FORM 10-K/A**

 

**AmendmentNo. 1**

 

| **ý** |   | **ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                 |
|------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                                                                                                                                                                                                                      |
|       |   | **For the fiscal year ended December 31,  2002 OR**                                                                                                                                                                                                                                                                                                                                  |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                      |
| **o**      |   | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                             |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                      |
|       |   | **For the transition period from                                to                             ** |

 

**Commission File Number 0-20707**

 

| **COLONIAL  REALTY LIMITED PARTNERSHIP**                    |
|-------------------------------------------------------------|
| (Exact name of registrant as specified in  its charter)     |
|                                                        |   |   |
| **Delaware**                                                |   | **63-1098468** |
| (State of organization)                                     |   | (I.R.S. employer  identification no.) |
|                                                        |   |   |
| **2101 Sixth Avenue North  Suite 750  Birmingham, Alabama** |   | **35203** |
| (Address of principal executive  offices)                   |   | (Zip Code) |

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

|   | **Title of each class** |   |   |   | **Name of each exchange on which registered** |   |
|--------|-------------------------|--------|--------|--------|-----------------------------------------------|--------|
|   | **Not applicable**      |   |   |   | **Not applicable**                            |   |

 

Securities registered pursuant to Section 12(g) of the Act:  Class A Units of Limited PartnershipInterest

 

Indicate by check mark whether the Registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Actof 1934 during the preceding 12 months and (2) has been subject to such filingrequirements for the past 90 days. YES ý           NO o

 

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K.  ̈

 

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

 

YES ý          NO o

 

**DocumentsIncorporated by Reference**

 

None.

 

 

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**ExplanatoryNote**

 

This amendment to Colonial Realty Limited Partnership’s (CRLP) annualreport on Form 10-K for the year ended December 31, 2002 is being filed toinclude certain information required by Item 302 of Regulation S-K, revisedrisk factors, information required by Item 305 of Regulation S-K, a revisedbalance sheet and statement of partners’ equity, expanded disclosure related toaccounting policies, disclosures required by APB 25 and SFAS 123 of ColonialProperties Trust, CRLP’s general partner, and various other modifications,corrections and clarifications. Additionally, CRLP has reflected the impact of the classification asdiscontinued operations of assets sold on or after January 1, 2002pursuant to the requirements of Statement of Financial Accounting Standards(SFAS) 144 – *Accounting for the Impairment or Disposal of Long Lived Assets*for the three years ended December 31, 2002, 2001 and 2000, and has madecorresponding modifications to Management’s Discussion and Analysis ofFinancial Condition and Results of Operations, and Selected Financial Datawithin this amendment.

 

This annual report on Form 10-K contains certain “forward-lookingstatements” within the meaning of Section 27A of the Securities Act of1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended. Such forward-looking statements involve known and unknown risks, uncertaintiesand other factors that may cause our, and our affiliates, or the industry’sactual results, performance, achievements or transactions to be materiallydifferent from any future results, performance, achievements or transactionsexpressed or implied by such forward-looking statements. Such factors include,among others, the following:

 

•                  National,regional and local economic and business conditions that will, among otherthings, affect:

•                  Demand formultifamily, office and retail properties,

•                  The ability ofthe general economy to recover timely from the current economic downturn,

•                  Availability andcreditworthiness of tenants,

•                  The level oflease rents, and

•                  The availabilityof financing for both tenants and us;

•                  Adverse changesin the real estate markets, including, among other things:

•                  Competition withother companies, and

•                  Risks of realestate acquisition and development (including the failure of pendingdevelopments to be completed on time and within budget);

•                  Actions,strategies and performance of affiliates that we may not control or companiesin which we have made investments;

•                  Ability toobtain insurance at a reasonable cost;

•                  Ability tomaintain our status as a REIT for federal and state income tax purposes;

•                  Governmentalactions and initiatives; and

•                  Environmental/safetyrequirements.

 

**PART I**

 

**Item 1.****                                                           Business.**

 

*As used herein, the terms “CRLP”, “we”, “us”, “our” and “OperatingPartnership” refer to Colonial Realty Limited Partnership, a Delaware limitedpartnership, and its subsidiaries and other affiliates, including, ColonialProperties Services Limited Partnership and Colonial VRS L.L.C. or, as thecontext may require, Colonial Realty Limited Partnership only.  As used herein, the term “the Trust”includes Colonial Properties Trust, an Alabama real estate investment trust,and one or more of its subsidiaries and other affiliates, including CRLP,Colonial Properties Services Limited Partnership and Colonial PropertiesServices, Inc. or, as the context may require, Colonial Properties Trust only.*

 

We are the Operating Partnership of the Trust, our general partner,which is one of the largest owners, developers and operators of multifamily,office and retail properties in the Sunbelt region of the United States, basedon equity market capitalization.  TheTrust is a fully-integrated real estate company, which means that it is engagedin the acquisition, development, ownership, management and leasing ofcommercial real estate property.  TheTrust’s activities include ownership and operation of a diversified portfolioof 106 properties as of December 31, 2002, consisting of multifamily,office and retail properties located in Alabama, Florida, Georgia, Mississippi,North Carolina, South Carolina, Tennessee, Texas, and Virginia.

 

As of December 31, 2002, we owned 41 multifamily apartmentcommunities containing a total of 14,566 apartment units (the “multifamilyproperties”), 21 office properties containing a total of approximately 5.2million square feet of office space (the “office properties”), 44 retailproperties containing a total of approximately 15.5 million square feet 

 

2

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of retail space (the “retailproperties”), and certain parcels of land adjacent to or near certain of theseproperties (the “land”).  Themultifamily properties, the office properties, the retail properties and theland are referred to collectively as the “properties”.  As of December 31, 2002, themultifamily properties, the office properties, and the retail properties thathad achieved stabilized occupancy were 88%, 91% and 89% leased, respectively.

 

Our executive offices are located at 2101 Sixth Avenue North, Suite750, Birmingham, Alabama, 35203 and our telephone number is(205) 250-8700.  We were formed inDelaware on August 6, 1993.

 

## **Formation of the Trust and the Operating Partnership**

## ** **

The Trust and the Operating Partnership were formed to succeed tosubstantially all of the interests of Colonial Properties, Inc., an Alabamacorporation (“Colonial”), its affiliates and certain other entities in adiversified portfolio of multifamily, office, and retail properties located inAlabama, Florida, and Georgia and to the development, acquisition, management,leasing, and brokerage businesses of Colonial.

 

## **Acquisitions, Developments and Re-developments**

## ** **

The following table summarizes our acquisitions, developments andre-developments that were completed in 2002. For the purposes of the following table and throughout this Form 10-K,the size of a multifamily property is measured by the number of units and thesize of an office property and retail property is measured in square feet.

 
|                                                  |   | **Location**    |   | **Total  Units/Sq. Feet** |   | **Total  Cost** |    |
|-------------------------------------------------------|--------|-----------------|--------|---------------------------|--------|-----------------|---------|
| **Acquisitions:**                                     |   |            |   |                      |   |            |    |
|                                                  |   |            |   |                      |   |            |    |
| *Office Properties*                                   |   |            |   |                      |   |            |    |
| 901 Maitland Center                                   |   | Orlando,  FL    |   | 155,669                   |   | $               | 16,566  |   |
| Colonnade                                             |   | Birmingham,  AL |   | 419,377                   |   | 49,025          |    |
| Heathrow International Business Center                |   | Orlando,  FL    |   | 804,078                   |   | 122,025         |    |
|                                                  |   |            |   | 1,379,124                 |   | 187,616         |    |
|                                                  |   |            |   |                      |   |            |    |
| *Retail Properties*                                   |   |            |   |                      |   |            |    |
| Shops at Colonnade                                    |   | Birmingham,  AL |   | 112,186                   |   | 6,600           |    |
| Total Acquisitions                                    |   |            |   |                      |   | 194,216         |    |
|                                                  |   |            |   |                      |   |            |    |
| **Completed Developments and  Re-developments:**      |   |            |   |                      |   |            |    |
|                                                  |   |            |   |                      |   |            |    |
| *Multifamily Properties*                              |   |            |   |                      |   |            |    |
| Colonial Grand at TownPark - Lake Mary                |   | Orlando,  FL    |   | 456                       |   | 37,737          |    |
| Colonial Village at TownPark - Sarasota               |   | Sarasota,  FL   |   | 272                       |   | 21,666          |    |
|                                                  |   |            |   | 728                       |   | 59,403          |    |
|                                                  |   |            |   |                      |   |            |    |
| *Office Properties*                                   |   |            |   |                      |   |            |    |
| Colonial Center at TownPark 600                       |   | Orlando,  FL    |   | 199,585                   |   | 27,558          |    |
|                                                  |   |            |   |                      |   |            |    |
| *Retail Properties*                                   |   |            |   |                      |   |            |    |
| Colonial Promenade Hoover                             |   | Birmingham,  AL |   | 166,000                   |   | 16,625          |    |
| Parkway Place (1) *(re-development)*                  |   | Huntsville,  AL |   | 630,000                   |   | 34,407          |    |
|                                                  |   |            |   | 796,000                   |   | 51,032          |    |
|                                                  |   |            |   |                      |   |            |    |
| Total Developments and Re-developments                |   |            |   |                      |   | 137,993         |    |
|                                                  |   |            |   |                      |   |            |    |
| Total Acquisitions, Developments and  Re-developments |   |            |   |                      |   | $               | 332,209 |   |

 

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*(1)**      **Property is owned through ajoint venture.  Costs presented are 45%of total project costs, and square footage represents the entire property.*

 

### **Acquisitions**

### ** **

During 2002, we acquired three office properties and one retail propertyas described below.

 

3

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**Office Properties**

 

*901 Maitland Center –*During March 2002,we acquired 901 Maitland Center, a 155,669 square foot office building locatedin Orlando, Florida, within Orlando’s largest suburban office park.  The total purchase price was $16.6 millionand was funded through the sale of Colonial Grand at Palma Sola, a 340-unitmultifamily asset located in Bradenton, Florida.  See disposition activity below for further discussion.

 

*Colonnade –*During May 2002, we acquiredThe Colonnade, which includes five Class A office buildings totaling 419,377square feet, located in the premier suburban office park in Birmingham,Alabama.  The buildings are part of amixed-use development, and adjacent sites include such amenities as hotels,restaurants, banking and financial services, and shopping.  The office buildings were purchased for atotal purchase price of $49.0 million, which was primarily funded through thesale of certain multifamily properties. See disposition activity below for further discussion.

 

*Heathrow International Business Center –*DuringAugust  2002, we acquired Heathrow International Business Center, aseven-building office park totaling 804,078 rentable square feet and 102 acresof land for potential future development, located in the Lake Mary/Heathrowsubmarket of Orlando, Florida.  Currenttenants include national and regional companies like Veritas, Bank One, FiServ,and The United States Government.  Thetotal purchase price of the office park was $122.0 million, which was primarilyfunded through our recent sales of multifamily and retail assets and theassumption of $44.0 million of existing debt. The remaining balance was funded through our unsecured line of credit.

 

**RetailProperty**

 

*Shops at Colonnade –*During May 2002, weacquired the Shops at Colonnade, a 112,186 square foot village style retailcenter, located in Birmingham, Alabama. The property is part of a mixed-use development, and adjacent sitesinclude such amenities as hotels, restaurants, banking and financial services,and office buildings.  The retailproperty was purchased for a total purchase price of $6.6 million, which wasprimarily funded through the sale of certain multifamily properties.  See disposition activity below for furtherdiscussion.

 

### **Completed Multifamily Development Activity**

### ** **

During 2002, we completed the development of two multifamily propertiesas described below.

 

*Colonial Grand at TownPark – Sarasota*—Duringthe first quarter of 2002, we completed the development of Colonial Grand atTownPark – Sarasota, a 272-unit multifamily community located in Sarasota,Florida.  The new apartments  include numerous luxuries, includinghigh-speed Internet access, fitness center, a swimming pool, and a residentbusiness center.  Project developmentcosts, including land acquisition costs totaled $21.7 million and were fundedthrough advances on our unsecured line of credit.

 

*Colonial Grand at TownPark – Lake Mary*—Duringthe second quarter of 2002, we completed the development of Colonial Grand atTownPark – Lake Mary, a 456-unit multifamily community located in Orlando,Florida.  The new apartments includenumerous luxuries, including high-speed Internet access, fitness center, aswimming pool, and a resident business center. Project development costs, including land acquisition costs totaled$37.7 million and were funded through advances on our unsecured line of credit.

 

### **Completed Office Property Development Activity**

### ** **

*Colonial Center TownPark 600*—During the fourthquarter of 2002, we completed the development of Colonial Center TownPark 600,a 199,585 square foot Class A office building in Orlando, Florida, which ispart of a mixed-use development integrating multifamily, office, and retailproducts.  This building is abuild-to-suit development for FiServ, Inc., a financial software company withapproximately 14,000 employees worldwide. Project development costs, including land acquisitions totaled $27.6million and were funded through advances on our unsecured line of credit.

 

### **Completed Retail Development and RedevelopmentActivity**

### ** **

*Colonial Promenade Hoover*—During the thirdquarter of 2002, we completed the development of Colonial Promenade Hoover, a166,000 square foot community shopping center located in Birmingham, Alabama.  The center is anchored by aSuper Wal-Mart Center.  Projectdevelopment costs including land acquisitions costs totaled $16.6 million andwere funded through our unsecured line of credit.

 

*Parkway Place*—During the fourth quarter of2002, we, together with a joint venture partner, completed the re-developmentof Parkway Place, a 630,000 square foot mall located in Huntsville,Alabama.  The mall is anchored byParisian and Dillard’s Department Stores. Total project development costs totaled $76.5 million, of which ourportion was $34.4 million, which was funded through a construction loan securedby the property, which matures in December 2003.

 

4

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### **Continuing Development Activity**

### ** **

The following table summarizes our properties that are underconstruction and undeveloped land at December 31, 2002:

 
|                                    |   | **Total  Units/  Square  Feet** |   | **Estimated  Completion** |   | **Estimated  Total Costs** |   | **Costs  Capitalized  To Date** |   |
|-----------------------------------------|--------|---------------------------------|--------|---------------------------|--------|----------------------------|--------|---------------------------------|--------|
|                                    |   |                            |   |                      |   | **(in  thousands)**        |   | **(in  thousands)**             |   |
| **Office Property:**                    |   |                            |   |                      |   |                       |   |                            |   |
| Colonial Center at TownPark 200         |   | 155,000                         |   | 2003                      |   | $                          | 21,926 |                            | $      | 15,835 |   |
|                                    |   |                            |   |                      |   |                       |   |                            |   |
| **Retail Property:**                    |   |                            |   |                      |   |                       |   |                            |   |
| Colonial Promenade Trussville Phase II  |   | 65,000                          |   | 2003                      |   | 8,400                      |   | 2,084                           |   |
|                                    |   |                            |   |                      |   |                       |   |                            |   |
| **Mixed Use Projects Infrastructure**   |   |                            |   |                      |   |                       |   |                            |   |
| Colonial TownPark - Lake Mary           |   |                            |   |                      |   | 33,168                     |   | 29,458                          |   |
| Colonial TownPark - Sarasota            |   |                            |   |                      |   | 6,410                      |   | 4,969                           |   |
| Colonial Center at Mansell              |   |                            |   |                      |   | 10,794                     |   | 9,863                           |   |
|                                    |   |                            |   |                      |   |                       |   |                            |   |
| **Other Projects and Undeveloped Land** |   |                            |   |                      |   |                       |   | 20,311                          |   |
|                                    |   |                            |   |                      |   |                       |   | $                               | 82,520 |   |
|                                         |        |                                 |        |                           |        |                            |        |                                 |        |  |  |

 

### **Continuing Office Property Development**

### ** **

*Colonial Center TownPark 200*—During the thirdquarter of 2001, we began the development of Colonial Center TownPark 200, a155,000 square foot Class A office building in Orlando, Florida, which is partof a mixed-use development integrating multifamily, office, and retailproducts.  The building will include themost advanced technology systems available in the market, including high-speedinternet access and fiber optic network infrastructure.  Project development costs, including landacquisitions are expected to total $21.9 million and will be funded throughadvances on our unsecured line of credit. We expect to complete the project in the fourth quarter of 2003.

 

### **New Retail Development Activity**

### ** **

*Colonial Promenade Trussville II*—During thefourth quarter of 2002, we began the development of Colonial PromenadeTrussville II, a 65,000 square foot addition to Colonial Promenade Trussville,a community shopping center located in Birmingham, Alabama.  The center will be anchored by a Sam’s andKohl’s.  Project development costsincluding land acquisitions costs are expected to total $8.4 million and willbe funded through our unsecured line of credit.  We expect to complete the project in the fourth quarter of 2003.

 

### **Dispositions**

### ** **

During 2002, we disposed of eight multifamily properties that containedan aggregate of 1,988 units for a total consideration of $94.5 million.  In addition, we disposed of two officeproperties that contained an aggregate of 104,496 square feet and three retailproperties that contained an aggregate of 449,443 square feet for a totalconsideration of $8.7 million and $35.4 million, respectively.  The following table is a summary of ourdisposition activity in 2002:

 

5

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| **Property**                           |   | **Location**   |   | **Total  Units/Sq. Feet** |   | **Sales Price**    |    |
|----------------------------------------|--------|----------------|--------|---------------------------|--------|--------------------|---------|
|                                   |   |           |   |                      |   | **(in thousands)** |    |
|                                   |   |           |   |                      |   |               |    |
| **Multifamily Properties**             |   |           |   |                      |   |               |    |
|                                   |   |           |   |                      |   |               |    |
| Colonial  Grand at Carrollwood         |   | Tampa, FL      |   | 244                       |   | $                  | 15,244  |   |
| Colonial  Grand at Palma Sola          |   | Bradenton, FL  |   | 340                       |   | 19,036             |    |
| Colonial  Village at Cordova           |   | Pensacola, FL  |   | 152                       |   | 5,360              |    |
| Colonial  Village at Hillcrest         |   | Mobile, AL     |   | 104                       |   | 5,178              |    |
| Colonial  Village at McGehee           |   | Montgomery, AL |   | 468                       |   | 18,390             |    |
| Colonial  Village at Monte D’Oro  |   | Birmingham, AL |   | 200                       |   | 11,166             |    |
| Colonial  Village at Oakleigh          |   | Pensacola, FL  |   | 176                       |   | 10,955             |    |
| Ski  Lodge - Tuscaloosa                |   | Tuscaloosa, AL |   | 304                       |   | 9,180              |    |
|                                   |   |           |   | 1,988                     |   | 94,509             |    |
| **Office Properties**                  |   |           |   |                      |   |               |    |
|                                   |   |           |   |                      |   |               |    |
| University  Park                       |   | Orlando, FL    |   | 72,496                    |   | 5,012              |    |
| Colonnade  4100 & 4200             |   | Birmingham, AL |   | 32,000                    |   | 3,680              |    |
|                                   |   |           |   | 104,496                   |   | 8,692              |    |
| **Retail Properties**                  |   |           |   |                      |   |               |    |
|                                   |   |           |   |                      |   |               |    |
| Colonial  Promenade University Park II |   | Orlando, FL    |   | 183,500                   |   | 11,694             |    |
| Colonial  Promenade Madison (1)        |   | Huntsville, AL |   | 110,712                   |   | 3,163              |    |
| Colonial  Promenade Hoover (2)         |   | Birmingham, AL |   | 155,231                   |   | 20,530             |    |
|                                   |   |           |   | 449,443                   |   | 35,387             |    |
|                                   |   |           |   |                      |   |               |    |
| Total                                  |   |           |   |                      |   | $                  | 138,588 |   |

 

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*(1)**      **The Company sold one-half ofits 50% interest in the property.*

*(2)**      **The Company sold 90% of itsinterest in the property.*

 

### **Recent Developments**

### ** **

**OrlandoFashion Square Joint Venture—**In October 1998, we sold a 50% interest in our Orlando Fashion Squareretail property located in Orlando, Florida to a third party. Subsequently, weentered into a joint venture agreement with the third party, and the jointventure entered into an agreement with us relating to the management of theproperty.  The joint venture agreementgives the third party the right, which became effective December 28, 2001,to convert its 50% interest in the property to our common shares if specifiedterms and conditions are met.  Theconversion value of the interest would be determined at the time of conversionin accordance with the procedures set forth in the joint venture agreement, andwould be net of the third party’s pro rata share of any indebtedness secured bythe property.  The terms and conditionsalso include an “accretion threshold”, as defined, which must be met.  At the time of the original transaction, weconsidered the terms of the agreement in their entirety (including theconversion right, the accretion threshold, and the conversion valuedetermination procedures) and assessed whether the third party could compel usto repurchase the 50% interest sold.  Weconcluded that the likelihood of a compelled repurchase was remote, andaccordingly accounted for the transaction as a sale.

 

On May 31, 2002, the 50% joint venture partner elected to exerciseits option to convert its 50% interest in the property to our commonshares.  In accordance with the terms ofthe joint venture agreement, we negotiated with our joint venture partner andwere unable to reach an agreement. Therefore, on September 11, 2002, the joint venture partner electedto withdraw its conversion election.

 

**ThirdParty Development—** During December 2002, weentered into an agreement with an unrelated third party in connection with thethird party’s development of a $23.5 million multi-family property in Tampa,Florida.  We have agreed to loanapproximately $4.0 million, which represents 17.0% of the development costs tothe third party during the development of the property.  Under the agreement, the balance of the loanmatures in December 2007.  AtDecember 31, 2002, no amount had been funded to the unrelated third partyand we have no liability recorded on our books for the potential loanamount.  We have a right of firstrefusal to purchase the property should the third party elect to sell.

 

**Investmentin Partially Owned Entities and Other Arrangements—**During August 2002, in connection with the purchase of HeathrowInternational Business Center, we agreed to acquire one new office buildingthat contains 192,000 square feet.  Theclosing for this acquisition is anticipated to occur upon the earlier ofAugust 2005 or at such time that the seller achieves certain leasingtargets for the property.  The purchaseprice will be determined based upon the percentage of gross leasable areaactually leased and the net operating income generated by the leases at thetime of acquisition.

 

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During December 2002, we sold 90% of our interest in ColonialPromenade Hoover for a total sales price of $20.5 million, and formed theHighway 150, LLC, in which we maintain a 10% ownership and manage the propertyunder contract with the Highway 150 LLC. In connection with the formation of the Highway 150 LLC, we are servingas a guarantor of $1.0 million of the debt related of the joint venture, whichis collateralized by the Colonial Promenade Hoover retail property.  CRLP’s maximum guarantee of $1.0 million maybe requested by the lender, only after all of the rights and remedies availableunder the associated note and security agreements have been exercised andexhausted.  At December 31, 2002,the total outstanding debt of the joint venture was approximately $17.8million, which matures in December 2012. At December 31, 2002, no liability was recorded on our books forthe guarantee.  The proceeds of thejoint venture transaction were used to repay a portion of the amountoutstanding under our unsecured line of credit.

 

Additionally, during December 2002, we sold 25% of our interest inthe Colonial Promenade Madison Joint Venture for $3.2 million.  Under the original joint venture, we held a50% interest in the joint venture. Therefore, we now maintain a 25% ownership of the property and continueto manage the property.     Proceeds from the joint venturetransaction were used to repay a portion of the associated construction loan.

 

### **Financing Activity**

### ** **

We funded a portion of our acquisition, development and re-developmentactivities through the issuance of senior notes, public offerings of commonshares through the Trust, proceeds received from the disposition of assets,proceeds related to the secured financing of three properties, and advances onour bank line of credit.  OnFebruary 28, 2002, we sold 560,380 common units in two transactions at$33.37 per unit, resulting in net proceeds of $17.6 million to us, which wereused to repay outstanding balances under our unsecured line of credit.  Salomon Smith Barney deposited 260,710 unitsinto The Equity Focus Trust REIT Portfolio Series, 2002-A, a newly formed unitinvestment trust, and 299,670 units were deposited into Cohen & SteersQuality Income Realty Fund, Inc.

 

On July 31, 2002, we completed a $100.0 million public debtoffering of unsecured senior notes.  Thenotes, which mature in July 2012, bear a coupon rate of 6.88%, and werepriced to yield an effective rate of 6.99% over the ten-year term.  We used the net proceeds of the offering torepay a $57.5 million medium-term note that matured on August 9, 2002 andthe remaining amount was used to pay down a portion of the outstanding balanceon our unsecured line of credit. Additionally during 2002, we received proceeds of $52.8 million relatedto the financing of three properties, which is collateralized by the relatedproperties.

 

We continued our asset recycling program, which allows us to maximizeour investment returns through the sale of assets that have reached theirmaximum investment potential and reinvest the proceeds into opportunities withmore growth potential.  During 2002, wesold assets for an aggregate sales price of $138.6 million.  See “Dispositions” above for a listing ofthe properties sold during 2002.  Weused the proceeds to repay a portion of the borrowings under our unsecured lineof credit and to support our investment activities.

 

In accordance with SFAS No. 144, *Accounting for the Impairment or Disposal of Long-LivedAssets*, we record individual property sales as discontinuedoperations, unless we maintain a significant continuing involvement with theproperties that have been sold.  During2002, the properties that were sold and classified as discontinued operationswere University Park, Colonial Promenade University Park II, and Colonnade 4100& 4200.  We maintain a significantcontinuing involvement through a management contract or an ownership percentagein the remaining properties.

 

## **Business Strategy**

## ** **

Our business objective is to generate stable and increasing cash flowand portfolio value for our unitholders through a strategy of:

 

•                  realizing growthin income from our existing portfolio of properties;

 

•                  developing,expanding, and selectively acquiring additional multifamily, office and retailproperties in growth markets located in the Sunbelt region of the UnitedStates, where we have first-hand knowledge of growth patterns and localeconomic conditions and believe we have a competitive advantage due to our sizeand access to lower-cost capital;

 

•                  recyclingcapital by selectively disposing of assets that have reached their maximuminvestment potential and reinvesting the proceeds into opportunities with moregrowth potential;

 

•                  managing our ownproperties, which enables us to better control operating expenses and establishlong-term relationships with our office and retail tenants;

 

•                  maintaining ourthird-party property management business, which increases cash flow andestablishes additional relationships with potential tenants; and

 

•                  employing acomprehensive capital maintenance program to maintain properties in first-classcondition.

 

7

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Our business strategy and the implementation of that strategy are determinedby the Trust’s Board of Trustees and may be changed from time to time.

 

## **Financing Strategy**

## ** **

We seek tomaintain a well-balanced, conservative and flexible capital structure by:

 

•                  maintainingconservative debt service and fixed charge coverage ratios in order to sustainour investment grade status;

 

•                  extending andsequencing the maturity dates of our debt;

 

•                  borrowingprimarily at fixed rates; and

 

•                  generallypursuing long-term debt financings and refinancings on an unsecured basis.

 

We believe thatthese strategies have enabled and should continue to enable us to access thedebt and equity capital markets to fund debt refinancings and the acquisitionand development of additional properties.

 

We have an unsecured bank line of credit providing for total borrowingsof up to $320 million.  This line ofcredit agreement bears interest at LIBOR plus a spread calculated from apricing grid based on our unsecured debt ratings.  Based on our debt ratings at December 31, 2002, the spreadwas 105 basis points.  The line ofcredit is renewable in November 2005 and provides for a one-yearextension.  The line of credit agreementincludes a competitive bid feature that will allow us to convert up to $160million under the line of credit to a fixed rate, for a fixed term not toexceed 90 days.  The credit facility isprimarily used to finance property acquisitions and developments and has anoutstanding balance at December 31, 2002, of $208.3 million.  The interest rate of this short-termborrowing facility, including the competitive bid balance, was 2.38% and 3.08%at December 31, 2002 and 2001, respectively.

 

At December 31, 2002, our total outstanding debt balance was $1.3billion.  The outstanding balanceincludes fixed rate debt of $995.0 million, or 78.8%, and floating-rate debt of$267.2 million, or 21.2%.  Our totalmarket capitalization as of December 31, 2002 was $2.7 billion and ourratio of debt to total market capitalization was 47.1%.  We calculate debt to total marketcapitalization as total debt as a percentage of total debt, including preferredunits, plus the market value of our outstanding common units.  Some of our loan agreements containrestrictive covenants, which among other things require maintenance of variousfinancial ratios.  At December 31,2002, we were in compliance with these covenants.

 

We have entered into several different hedging transactions in aneffort to manage exposure to changes in interest rates.  The following table summarizes the notionalvalues, fair values and other characteristics of our derivative financialinstruments at December 31, 2002. The notional value at December 31, 2002 provides an indication ofthe extent of our involvement in these instruments at that time, but does notrepresent exposure to credit, interest rate or market risk.

 

 
| **Product Type**               |   | **Notional  Value** |         | **Interest  Rate** |   | **Maturity** |    | **Fair Value  At December 31, 2002** |   |
|--------------------------------|--------|---------------------|--------------|--------------------|--------|--------------|---------|-------------------------------------------|--------|
|                           |   |                |         |               |   |         |    | **(in thousands)**                        |   |
| Interest Rate SWAP, Cash Flow  |   | $                   | 30.2 - $27.7 | million            | 5.932  | %            | 1/01/06 |                                      | $      | (3,117 | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0         | million       | 2.319  | %            | 1/02/03 |                                      | (38    | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 25.0         | million            | 2.430  | %            | 1/01/03 |                                      | (21    | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0         | million            | 2.113  | %            | 1/02/04 |                                      | (370   | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0         | million            | 1.637  | %            | 1/02/04 |                                      | (131   | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0         | million            | 1.615  | %            | 1/02/04 |                                      | (119   | ) |
| Interest Rate SWAP, Fair Value |   | $                   | 50.0         | million            | 5.015  | %            | 7/26/04 |                                      | 2,633  |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 21.1         | million            | 6.850  | %            | 6/29/04 |                                      | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 17.9         | million            | 6.850  | %            | 7/06/04 |                                      | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 30.4         | million            | 11.200 | %            | 6/30/03 |                                      | — |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 17.1         | million            | 4.840  | %            | 4/1/04  |                                      | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 27.0         | million            | 4.840  | %            | 4/1/04  |                                      | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 8.7          | million            | 4.840  | %            | 4/1/04  |                                      | — |   |
|                                |        |                     |              |                    |        |              |         |                                           |        |  |  |

 

We do not use derivatives for trading or speculative purposes.  Further, we have a policy of only enteringinto contracts with major financial institutions based upon their creditratings and other factors.  When viewedin conjunction with the underlying and offsetting exposure that the derivativesare designed to hedge, we have not sustained a material 

 

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loss from those instruments nordo we anticipate any material adverse effect on our net income or financialposition in the future from the use of derivatives.

 

At December 31, 2002, derivatives with a fair value of $2.6million were included in other assets and derivatives with a fair value of $3.8million were included in other liabilities. The change in net unrealized gains/losses of $3.6 million in 2002 forderivatives designated as cash flow hedges is separately disclosed in thestatement of changes in partners’ equity. Hedge ineffectiveness of $23,000 oncash flow hedges was recognized in other income (expense) during 2002.

 

Amountsreported in accumulated other comprehensive income related to derivatives willbe reclassified to interest expense as interest payments are made on ourvariable-rate debt. The change in net unrealized gains/losses on cash flowhedges reflects a reclassification of $2.2 million of net unrealizedgains/losses from accumulated other comprehensive income (loss) to interestexpense during 2002. During 2003, we estimate that an additional $2.3 millionwill be reclassified to earnings from the current balance held in accumulatedother comprehensive income (loss).

 

We may modify our borrowing policy and may increase or decrease ourratio of debt to total market capitalization. To the extent that the Trust’sBoard of Trustees determines to seek additional capital, we may raise suchcapital through additional equity offerings, debt financings, assetdispositions or retention of cash flow (subject to provisions in the InternalRevenue Code of 1986 requiring the distribution by a REIT of a certainpercentage of taxable income and taking into account taxes that would beimposed on undistributed taxable income) or a combination of these methods.

 

## **Property Management**

## ** **

We are experienced in the management and leasing of multifamily, officeand retail properties and believe that the management and leasing of our ownportfolio has helped maintain consistent income growth and has resulted inreduced operating expenses from the properties.  The third-party management, leasing and brokerage businessesconducted through the Management Corporation have provided us both with asource of cash flow that is relatively stable and with the benefits ofeconomies of scale in conjunction with the management and leasing of our ownproperties.  These businesses also allowus to establish additional relationships with tenants who may requireadditional office or retail space and to identify potential acquisitions.

 

## **Operational Structure**

## ** **

We manage our business with three separateand distinct operating divisions: multifamily, office and retail. We havecentralized functions that are common to each division, including accounting,information technology, due diligence and administrative services.  Decisions regarding acquisitions,developments and dispositions are also centralized.  Each division has an Executive Vice President that overseesgrowth and operations and has a separate management team that is responsiblefor acquiring, developing, and leasing properties within each division. Thisstructure allows us to utilize specialized management personnel for eachoperating division. Although these divisions operate independently from oneanother, constant communication among the Executive Vice Presidents provides uswith unique synergies allowing us to take advantage of a variety of investmentopportunities. In addition, the third-party management, leasing and brokeragebusinesses have provided us both with a source of cash flow that is relativelystable and with the benefits of economies of scale in conjunction with themanagement and leasing of our own properties. These businesses also allow us toestablish additional relations with tenants that may require additional retailor office space and to identify potential acquisitions.  See note 7 – Segment Reporting in our Notesto Consolidated Financial Statements for information on our three segments andthe reconciliation of total segment revenues to total revenues, total segmentnet operating income to income from continuing operations, and total divisionalassets to total assets for the years ended December 31, 2002, 2001 and2000.  Additional information withrespect to each of the operating divisions is set forth below:

 

***Multifamily Division***.  Our multifamily division is responsible forall aspects of multifamily operations, including day-to-day management andleasing of the 41 multifamily properties, as well as the provision ofthird-party management services for apartment communities in which we do nothave an ownership interest or have a non-controlling ownership interest.

 

***Office Division.***  Our office division is responsible for allaspects of our commercial office operations, including the provision ofmanagement and leasing services for the 21 office properties, as well as theprovision of third-party management services for office properties in which wedo not have an ownership interest and for brokerage services in other officeproperty transactions.

 

***Retail Division.***  Our retail division is responsible for allaspects of our retail operations, including the provision of management andleasing services for the 44 retail properties, as well as the provision ofthird-party management services for retail properties in which we do not havean ownership interest and for brokerage services in other retail propertytransactions.

 

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## **Competition**

## ** **

The ownership, development, operation and leasing of multifamily,office and  retail properties are highlycompetitive.  We compete with domesticand foreign financial institutions, other REITs, life insurance companies,pension trusts, trust funds, partnerships and individual investors for theacquisition of properties.  In addition,we compete for tenants in our markets primarily on the basis of propertylocation, rent charged, services provided and the design and condition ofimprovements.  Our diversified businessstrategy of investing in multifamily, office and retail property types that arelocated in high-growth, demographically attractive cities in key Sunbelt statesallows us to shift assets within our portfolio in order to take advantage ofmarket timing and economic cycles, and to maximize investment returns.

 

## **Seasonality**

## ** **

Our multifamily properties and office properties generally are notaffected by seasonality.  However, theretail shopping center industry is seasonal in nature, with shopping centertenant sales peaking during the fourth quarter due to the holiday season.  As a result, a substantial portion of thepercentage rent at our retail properties is not recognized until the fourthquarter. Furthermore, most new lease-up occurs towards the later part of theyear in anticipation of the holiday season and most vacancies occur toward thebeginning of the year. In addition, the majority of the temporary tenants takeoccupancy in the fourth quarter. Accordingly, cash flow and occupancy levelsare generally lowest in the first quarter and highest in the fourth quarter.This seasonality also impacts the quarter-by-quarter results of net operatingincome, although this impact is largely mitigated by recognizing minimum renton a straight-line basis over the term of related leases in accordance withGAAP.

 

## **Environmental Matters**

## ** **

We believe that our properties are in compliance in all materialrespects with all federal, state and local ordinances and regulations regardinghazardous or toxic substances. We are not aware of any environmental conditionwhich we believe would have a material adverse effect on our financialcondition or results of operations (before consideration of any potentialinsurance coverage). Nevertheless, it is possible that there are materialenvironmental liabilities of which we are unaware. Moreover, no assurances canbe given that (i) future laws, ordinances or regulations will not imposeany material environmental liability or (ii) the current environmentalcondition of our properties have not been or will not be affected by tenantsand occupants of our properties, by the condition of properties in the vicinityof our properties or by third parties unrelated to us.  See “Risk Factors—RisksAssociated with Our Operations—*We could incur significant costs related toenvironmental issues*” for a further discussion.

 

## **Insurance**

## ** **

We carry comprehensive liability, fire, extended coverage and rentalloss insurance on all of our properties. We believe the policy specifications and insured limits of thesepolicies are adequate and appropriate. There are, however, certain types of losses, such as lease and othercontract claims that generally are not insured.  We anticipate that we will review our insurance coverage andpolicies from time to time to determine the appropriate level of coverage butwe cannot predict at this time if we will be able to obtain or maintain fullcoverage at a reasonable cost in the future.

 

## **Employees**

## ** **

As of December 31, 2002, CRLP employed approximately 950 persons,including on-site property employees who provide services for the Propertiesthat CRLP owns and/or manages.

 

## **Tax Status**

## ** **

CRLP has no provision for income taxes since all taxable income or lossor tax credits are passed through to the partners.  The Trust has made an election to be taxed as a REIT underSections 856 through 860 of the Code, commencing with its taxable yearending December 31, 1993.  If theTrust qualifies for taxation as a REIT, the Trust generally will not be subjectto Federal income tax to the extent it distributes at least 90% of its REITtaxable income to its shareholders. Even if the Trust qualifies for taxation as a REIT, the Trust may besubject to certain state and local taxes on its income and property and tofederal income and excise taxes on its undistributed income.

 

In addition, our financial statements include the operations of ataxable REIT subsidiary, Colonial Properties Services, Inc. (CPSI), that is notentitled to a dividends paid deduction and is subject to federal, state andlocal income taxes.  CPSI providesproperty development, leasing and management services for third-party ownedproperties and administrative services to us. We generally reimburse CPSI for payroll and other costs incurred inproviding services to us.  Allinter-company transactions are eliminated in the accompanying consolidatedfinancial statements.  We recognized taxexpense of $0.6 million in 2002 related to the taxable income of CPSI.  No federal income taxes were recognized in2001 and 2000.

 

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## **Available Information**

## ** **

Our general partner’s website address is www.colonialprop.com and providesaccess in the “Investor Relations” section, free of charge, to our annualreport on Form 10-K, quarterly reports on Form 10-Q, current reports on Form8-K, and all amendments to these reports as soon as reasonably practicableafter such material is electronically filed with or furnished to the Securitiesand Exchange Commission.

 

## **Risk Factors**

## ** **

Set forth below are the risks that we believe are material to investorswho purchase or own our common or preferred units of limited partnershipinterest or our debt securities.  Ourunits are redeemable for cash or, at the election of the Trust, on aone-for-one basis for the Trust’s common shares of beneficial interest.

 

**RisksAssociated with Real Estate**

 

***Weface risks associated with numerous national, regional and local economicconditions that are not in our control, any or all of which could adverselyaffect our results of operations through decreased revenues.***

 

During the last two years, we have seen adramatic slowdown in the U.S. economy, and the general business climate hasbeen negatively impacted.  The Sunbeltregion has similarly experienced a slowdown in its economy.  The industry slowdowns, higher unemploymentrates, reduced demand for apartment homes and declines in household formationsresulting from the economic slowdown, particularly in the Sunbelt region inwhich we operate, have adversely impacted, and may continue to impact, our *results ofoperations through decreased revenues*.

 

Although the results of operations of each ofour three business segments have been adversely impacted by the decline in theeconomy, our multifamily properties, which rely heavily on short-term leases,have been most affected.  In addition tothe general slowdown in the economy, the low interest rate environment which wehave experienced also impacted our multifamily properties as more peopleconsider buying their homes instead of renting.  Any continuation or worsening of current economic conditionsgenerally and in our principal market areas may continue to have a negativeimpact on our results of operations.

 

***Asa real estate company, we face numerous risks in real estate conditions thatcould adversely affect our results of operations through decreased revenues orincreased costs.***

 

In addition to the economic risks that weface, as a real estate company, we are subject to various changes in realestate conditions, any negative trends of which may adversely affect our *results ofoperations through decreased revenues or increased costs*.  These conditions include:

 

•                                          theexistence and quality of the competition, such as the attractiveness of ourproperty as compared to our competitors’ properties based on considerationssuch as convenience of location, rental rates, amenities and safety record;

 

•                                          increasedoperating costs, including increased real property taxes and utilities costs;

 

•                                          oversupplyof multifamily, office or retail space or a reduction in demand for real estatein the area; and

 

•                                          changingtrends in the demand by consumers for merchandise offered by retailersconducting business at our retail properties.

 

Moreover, other factors may affect ourresults of operations adversely, including changes in government regulationsand other laws, rules and regulations governing real estate, zoning or taxes,changes in interest rate levels, the availability of financing and potentialliability under environmental and other laws and other unforeseen events, mostof which are discussed elsewhere in the following risk factors.  Any or all of these factors could materiallyadversely affect our *results of operations through decreased revenues orincreased costs*.

 

***Becausereal estate investments are illiquid, we may not be able to sell our propertiesin response to economic changes, which could adversely affect our results of operationsor financial condition.***

 

Real estate investments generally arerelatively illiquid and as a result cannot be sold quickly in response tochanges in the economy or other conditions when it may be prudent to doso.  This inability to respond quicklyto changes in the performance of our properties could adversely affect ourresults of operations if we cannot sell an unprofitable property.  As

 

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well, our financial conditioncould also be adversely affected if we were, for example, unable to sell one ormore of our properties in order to meet our debt obligations upon maturity.

 

***We are subject tosignificant regulation that inhibits our activities, which could adverselyaffect our results of operations through increased costs or inability to pursuebusiness opportunities.***

 

Local zoning and use laws, environmental statutes and othergovernmental requirements restrict our development, expansion, rehabilitationand reconstruction activities. These regulations may prevent or delay us fromtaking advantage of economic opportunities. We cannot predict what requirementsmay be enacted and there can be no assurance that such enactment will notincrease our costs of regulatory compliance or prohibit us from pursuingbusiness opportunities that could be profitable to us.

 

**RisksAssociated with Our Operations**

 

***Our properties maynot generate sufficient income to pay our expenses, and we may not be able tocontrol our operating costs, either of which circumstances could adverselyaffect our results of operations.***

 

A number of factors may adversely affect our ability to generatesufficient income.  These factorsinclude:

 

•                                          whetheror not we can attract tenants at favorable rental rates, which will depend onseveral factors, including:

 

•                                          localconditions such as an oversupply of, or reduction in demand for, multifamily,office or retail properties;

•                                          theattractiveness of our properties to residents, shoppers and tenants, and

•                                          decreasesin market rental rates;

 

•                                          ourability to collect rent from our tenants.

 

If we cannot generate sufficient income to pay our expenses, maintainour properties and service our debt as a result of any of these factors, ourresults of operations may be adversely affected.

 

Factors that may adversely affect ouroperating costs include:

 

•                                          theneed to pay for insurance and other operating costs, including real estatetaxes, which could increase over time;

 

•                                          theneed periodically to repair, renovate and re-lease space;

 

•                                          thecost of compliance with governmental regulation, including zoning and tax laws;

 

•                                          thepotential for liability under applicable laws;

 

•                                          interestrate levels; and

 

•                                          theavailability of financing.

 

If our operating costs increase as a result of any of the foregoingfactors, our results of operations may be adversely affected.

 

***Our expenses mayremain constant even if our revenues decrease, causing our results ofoperations to be adversely affected.***

 

The expense of owning and operating a property is not necessarilyreduced when circumstances such as market factors and competition cause areduction in income from the property. As a result, if revenues drop, we may not be able to reduce our expensesaccordingly.  Loan payments are anexample of a cost that will not be reduced if our revenues decrease.  If a property is mortgaged and we are unableto meet the mortgage payments, the lender could foreclose on the mortgage andtake the property, resulting in a further reduction in revenues.

 

***We may be unable tolease our new properties or renew leases or re-lease space at our existingproperties as leases expire, which may adversely affect our operating results.***

 

The tenants at our office properties generally enter into leases withan initial term ranging from three to ten years and tenants at our retailproperties generally enter into leases with an initial term ranging from one toten years.  As leases expire at ourexisting properties, tenants may elect not to renew them.  Even if the tenants do renew or we canre-lease the 

 

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space, the terms of renewal orre-leasing, including the cost of required renovations, may be less favorablethan current lease terms.  In addition,for new properties, we may be unable to attract enough tenants and theoccupancy rates and rents may not be sufficient to make the propertyprofitable.  If we are unable to renewthe leases or re-lease the space at our existing properties promptly or leasethe space at our new properties, or if the rental rates upon renewal orre-leasing at existing properties are significantly lower than expected rates,our operating results will be negatively affected.

 

***Due to our lack ofgeographic diversity, an economic downturn or natural disaster in an area inwhich our properties are concentrated could adversely affect our results ofoperations or financial condition.***

 

While our properties are diversified in three different segments, allof our properties are located in the Sunbelt region of the United States.  In particular, we derived an aggregate ofapproximately 46.9% of our net operating income in 2002 from properties locatedin or near three key cities:  (a)Birmingham, Alabama, which accounted for 19.4% of our 2002 net operatingincome; (b) Orlando, Florida, which accounted for 16.9% of our 2002 netoperating income; and (c) Huntsville/Decatur, Alabama, which accounted for10.6% of our 2002 net operating income. If the Sunbelt region of the United States, and in particular the areasof or near Birmingham, Orlando and Huntsville/Decatur, experiences a slowdownin the economy or a natural disaster, our results of operations may benegatively affected through decreased revenues or increased costs.  Also, our financial condition may benegatively affected through the damage or loss of assets.

 

***We have been and maycontinue to be affected negatively by tenant bankruptcies and downturns intenants’ businesses, which may adversely affect our operating results bydecreasing our revenues.***

 

At any time, a tenant may experience a downturn in its business thatmay weaken its financial condition due to a slowing economy generally or adownturn in the retail sector.  As aresult, our tenants may delay lease commencement, cease or defer making rentalpayments or declare bankruptcy.  If atenant files for bankruptcy, the tenant may have the right to reject andterminate its lease and we cannot be sure that it will affirm its leases andcontinue to make rental payments in a timely manner.  We also cannot be sure that we will be able to lease vacant spacein our properties on economically favorable terms.  During 2002, we were negatively impacted by the bankruptcy ofKmart Corporation, one of our retail tenants that had stores at five of ourproperties.  As recently as the firstquarter 2002, Kmart was our fourth largest retail tenant, based on its annualrent payments as a percentage of our total revenue of 0.6%.  During 2002, Kmart closed three of the fivestores at our properties.  Recently, wewere informed that Kmart will be closing one of its two remaining stores at ourproperties in the near term and we reasonably believe that Kmart will close itslast store in the near future.  Anyother bankruptcy or financial difficulties of our tenants may negatively affectour operating results ***by decreasing our revenues***.

 

***Risks associatedwith the property management, leasing and brokerage businesses could adverselyaffect our results of operations through decreased revenues.***

 

In addition to the risks we face as a result of our ownership of real estate,we face risks relating to the property management, leasing and brokeragebusinesses of CPSI, including risks that:

 

•                                          managementcontracts or service agreements with third-party owners will be lost tocompetitors;

 

•                                          contractswill not be renewed upon expiration or will not be renewed on terms consistentwith current terms; and

 

•                                          leasingand brokerage activity generally may decline.

 

Each of these developments could adversely affect our results ofoperations by decreasing our revenues.

 

***We could incursignificant costs related to environmental issues, which could adversely affectour results of operations through increased compliance costs or our financialcondition if we become subject to a significant liability.***

 

Under federal, state and local laws and regulations relating to theprotection of the environment, a current or previous owner or operator of realproperty, and parties that generate or transport hazardous substances that aredisposed of on real property, may be liable for the costs of investigating andremediating hazardous substances on or under or released from the property andfor damages to natural resources. The federal Comprehensive EnvironmentalResponse, Compensation & Liability Act, and similar state laws, imposeliability on a joint and several basis, regardless of whether the owner,operator or other responsible party knew of or was at fault for the release orpresence of hazardous substances. In connection with the ownership or operationof our properties, we could be liable for costs associated with investigationand remediation in the future. The costs of any required remediation andrelated liability as to any property could be substantial under these laws andcould exceed the value of the property and/or our aggregate assets. Thepresence of hazardous substances, or the failure to properly remediate thosesubstances, also may adversely affect our ability to sell or rent a property orto borrow funds using 

 

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the property as collateral. Inaddition, environmental laws may impose restrictions on the manner in which weuse our properties or operate our business, and these restrictions may requireexpenditures for compliance. We cannot assure you that a material environmentalclaim or compliance obligation will not arise in the future. The costs ofdefending against any claims of liability, of remediating a contaminatedproperty, or of complying with future environmental requirements could besubstantial and affect our operating results. In addition, if a judgment is obtained against us or we otherwise becomesubject to a significant environmental liability, our financial condition maybe adversely affected.

 

OnDecember 29, 1998, we acquired Bel Air Mall in Mobile, Alabama.  During the course of our environmental duediligence, we identified several different areas of the property in whichcontamination is present.  One of thoseareas involves drycleaner solvent; the others involve petroleum contamination.  The Alabama Department of EnvironmentalManagement (ADEM) is overseeing the investigation and cleanup of the drycleanercontamination.  Under the terms of thepurchase and sale agreement, the former owner of the property purchased a $10million environmental insurance policy (including paying the $275,000 up frontdeductible) and established an escrow account totaling $1,000,000 to cover anycosts associated with investigation and re-mediation of the contaminated areasnot covered by the insurance policy. Under the agreement the seller will be performing all requiredremediation of the drycleaner contamination until a “no further action” statusis obtained from ADEM.  Inaddition, two locations, which contained petroleum contamination, have nowreceived a “no further action” status from ADEM.

 

***Uninsured lossescould adversely affect our financial condition.***

 

We carry comprehensive liability, fire, extended coverage and rentalloss insurance on all of our properties. We believe the policy specifications and insured limits of these policiesare adequate and appropriate.  Thereare, however, certain types of losses, such as lease and other contract claimsthat generally are not insured.  Shouldan uninsured loss or a loss in excess of insured limits occur, we could loseall or a portion of the capital we have invested in a property, as well as theanticipated future revenue from the property. In such an event, we might nevertheless remain obligated for anymortgage debt or other financial obligations related to the property, whichcould have a materially adverse effect on our financial conditions.

 

***Competition foracquisitions could result in increased prices for properties, which couldadversely affect our return on properties we purchase.***

 

We compete with other major real estate investors with significantcapital for attractive investment opportunities in multifamily, office orretail properties.  These competitorsinclude publicly traded REITs, private REITs, investment banking firms, privateinstitutional investment funds and national, regional and local real estateinvestors.  This competition couldincrease the prices that we have to pay for multifamily, office or retailproperties, in which case our expected return from investment in these propertieswill deteriorate.

 

***We may be unable tosuccessfully integrate and effectively manage the properties we acquire, whichcould adversely affect our results of operations.***

 

So long as we are able to obtain capital on commercially reasonableterms, we intend to continue to selectively acquire multifamily, office orretail properties that meet our criteria for investment opportunities, areconsistent with our business strategies and we believe will be profitable orwill enhance the value of our portfolio. The success of these acquisitions will depend, in part, on our abilityto efficiently integrate the acquired properties into our organization, andapply our business, operating, administrative, financial and accountingstrategies and controls to these acquired properties.  If we are unable to successfully integrate the acquiredproperties into our operations, our results of operations may be adverselyaffected.

 

***We may not be ableto achieve the anticipated financial and operating results from ouracquisitions, which would adversely affect our operating results.***

 

We will continue to acquire multifamily, office or retail propertiesonly if they meet our criteria and we believe that that they will enhance ourfuture financial performance and the value of our portfolio.  Our belief, however, is based on and issubject to risks, uncertainties and other factors, many of which areforward-looking and are uncertain in nature or are beyond our control. Inaddition, some of these properties may have unknown characteristics ordeficiencies or may not complement our portfolio of existing properties. As aresult, some properties may be worth less or may generate less revenue than, orsimply not perform as well as, we believed at the time of the acquisition,negatively affecting our operating results.

 

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***We may be unable todevelop new properties or redevelop existing properties successfully, whichcould adversely affect our results of operations due to unexpected costs,delays and other contingencies.***

 

To complement our acquisition strategy, we will continue to develop newproperties or expand or redevelop existing properties as opportunitiesarise.  However, there are significantrisks associated with our development activities in addition to those generallyassociated with the ownership and operation of developed properties.  These risks include the following:

 

•                                          significantexpenditure of money and time on projects that may be delayed or never becompleted,

 

•                                          higherthan projected construction costs,

 

•                                          lackof availability of debt or equity financing on acceptable terms,

 

•                                          failureto meet anticipated occupancy or rent levels,

 

•                                          failureto obtain zoning, occupancy or other governmental approvals,

 

•                                          changesin applicable zoning and land use laws may require us to abandon projects priorto their completion, resulting in the loss of development costs incurred up tothe time of abandonment, and

 

•                                          latecompletion because of construction delays, delays in the receipt of zoning,occupancy and other approvals or other factors outside of our control.

 

Any one or more of these risks may cause us to incur unexpected costs in connection with our acquisitionstrategy, which would negatively affect our results of operations.

 

**Risks Associated withOur Indebtedness and Financing**

 

***We have substantialindebtedness and  our cash flow may notbe sufficient to make required payments on our indebtedness.***

 

We rely heavily on debt financing for our business.  As of December 31, 2002, we had totaldebt of approximately $1.34 billion**,**including our pro rata share of jointventure debt.  Due to our high level ofdebt our cash flow may be insufficient to meet required payments of principaland interest. If a property were mortgaged to secure payment of indebtednessand we were unable to meet mortgage payments, the mortgagee could forecloseupon that property, appoint a receiver and receive an assignment of rents andleases or pursue other remedies.

 

In addition, if principal payments due at maturity cannot berefinanced, extended or paid with proceeds of other capital transactions, suchas new equity capital, our cash flow will not be sufficient in all years torepay all maturing debt.

 

***Wemay be unable to repay our existing indebtedness as they mature which couldadversely affect our financial condition and results of operations.***

 

Most of our indebtedness does not requiresignificant principal payments prior to maturity. However, we will need toraise additional equity capital, obtain secured or unsecured debt financing,issue private or public debt, or sell some of our assets to either refinance orrepay our indebtedness as it matures. We cannot assure you that these sources of financing or refinancing willbe available to us at reasonable terms or at all.  Our inability to obtain financing or refinancing to repay ourmaturing indebtedness, and our inability to refinance existing indebtedness onreasonable terms, may require us to make higher interest and principalpayments, issue additional equity securities, or sell some of our assets ondisadvantageous terms, all or any of which may result in foreclosure ofproperties, partial or complete loss on our investment and otherwise adverselyaffect our financial conditions and results of operation.

 

***Ourdegree of leverage could limit our ability to obtain additional financing,which would negatively impact our results of operations and financial condition.***

 

As of December 31, 2002, our consolidated borrowings and pro ratashare of unconsolidated borrowings totaled approximately $1.34 billion, whichrepresented approximately 48.6% of our total market capitalization.  Total market capitalization represents thesum of the outstanding indebtedness (including our share of joint ventureindebtedness), the total liquidation preference of all our preferred units andthe total market value of our common units, based on the closing price of ourcommon shares as of December 31, 2002. Our high leverage and any future increases in our leverage couldadversely affect our ability to obtain additional financing in the future forworking capital, capital expenditures, acquisitions,

 

15

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development or other generalcorporate purposes which would negatively impact our  results of operations and financial condition.

 

***Dueto the significant amount of our variable rate debt,******risinginterest rates would adversely affect our results of operation.***

 

As of December 31, 2002, we hadapproximately $297.0 million of variable rate debt outstanding, including ourpro rata share of variable rate unconsolidated joint venture debt.  While we have sought to refinance ourvariable rate debt with fixed rate debt or cap our exposure to interest ratefluctuations by using interest rate swap agreements where appropriate, it isnot possible for us to only have fixed rate debt.  In addition, as opportunities arise, we may borrow additionalmoney with variable interest rates in the future.  As a result, a significant increase in interest rates wouldadversely affect our results of operations.

 

***Wehave entered into debt agreements with covenants that restrict our operatingactivities, which could adversely affect our results of operations, andviolation of these restrictive covenants could adversely affect our financialcondition through debt defaults or acceleration.***

 

Our credit facility contains customary numerous customary restrictions,requirements and other limitations on our ability to incur debt, including:

 

•                                          debtto assets ratios;

 

•                                          secureddebt to total assets ratios;

 

•                                          debtservice coverage ratios; and

 

•                                          minimumratios of unencumbered assets to unsecured debt.

 

In addition, the indenture under which our senior unsecured debt isissued contains financial and operating covenants including coverageratios.  Our indenture also limits ourability to:

 

•                                          incursecured and unsecured indebtedness;

 

•                                          sellall or substantially all or our assets; and

 

•                                          engagein mergers, consolidations and acquisitions.

 

These restrictions will continue to hinderour operational flexibility through limitations on our ability to incuradditional indebtedness or make other changes to our business.  These limitations could adversely affect ourresults of operations.  In addition, violationsof these covenants will result in adverse consequences to our financialcondition, including through the declaration of defaults and any relatedacceleration of indebtedness.

 

***Our senior notes donot have an established trading market. As a result, you may not be able to sell your notes.***

 

Each series of the senior notes are a new issue of securities with noestablished trading market. We do not intend to apply for listing of any seriesof notes on any national securities exchange. The underwriters in an offeringof senior notes may advise us that they intend to make a market in the notes,but they are not obligated to do so and may discontinue market making at anytime without notice. We can give no assurance as to the liquidity of or anytrading market for any series of our notes.

 

**Risks Associated withOur Organization**

 

***Some of our generalpartners’ trustees and officers have conflicts of interest and could exerciseinfluence in a manner inconsistent with holders of interest in CRLP.***

 

As a result of their substantial ownership of common units, Messrs.Thomas Lowder, our Chairman of the Board, Chief Executive Officer andPresident, and James Lowder, Harold Ripps, Herbert Meisler, M. Miller Gorrie,and William Johnson, each of whom is our trustee, might seek to exert influenceover our decisions as to sales or re-financings of particular properties weown.  Any such exercise of influencemight produce decisions that are not in the best interest of all of the holdersof interests in us.

 

16

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The Lowder family and their affiliates hold interests in companies thathave performed construction, management, insurance brokerage and other serviceswith respect to our properties. These companies may perform similar servicesfor us in the future. As a result, the Lowder family may realize benefits fromtransactions between such companies and us that are not realized by otherholders of interests in us.  Inaddition, Thomas and James Lowder, as our trustees, may be in a position toinfluence us to do business with companies in which the Lowder family has afinancial interest.  Our policies maynot be successful in eliminating the influence of conflicts.  Moreover, transactions with companiescontrolled by the Lowder family, if any, may not be on terms as favorable to usas we could obtain in an arms-length transaction with a third party.

 

***Restrictions on theacquisition and change in control of the Trust may have adverse affects on thevalue of our common units.***

 

Various provisions of the Declaration of Trust of the Trust restrictthe possibility for acquisition or change in control of us, even if theacquisition or change in control were in the unitholders’ interest.  As a result, the value of our common unitsmay be less than they would otherwise be in the absence of such restrictions.

 

***We may change ourbusiness policies in the future, which could adversely affect our financialcondition or results of operations.***

 

Our major policies, including our policies with respect to development,acquisitions, financing, growth, operations, debt capitalization anddistributions, are determined by the Board of Trustees of the Trust.  Although it has no present intention to doso, our Board of Trustees may amend or revise these and other policies fromtime to time.  A change in thesepolicies could adversely affect our financial condition or results ofoperations, including our ability to service debt.

 

**Risks Associated withIncome Tax Laws**

 

***The Trust intends toqualify as a REIT, but we cannot guarantee that it will qualify as a REIT, andits failure to qualify as a REIT would adversely affect our results ofoperations.***

 

We believe that  the Trust hasqualified for taxation as a REIT for federal income tax purposes commencingwith our taxable year ended December 31, 1993.  If  the Trust qualifies asa REIT, it generally will not be subject to federal income tax on its  income that it distributes to itsshareholders. The Trust plans to continue to meet the requirements for taxationas a REIT, but it may not qualify. Many of the REIT requirements are highlytechnical and complex. The determination that it is a REIT requires an analysisof various factual matters and circumstances that may not be totally within itscontrol. For example, to qualify as a REIT, at least 95% of its gross incomemust come from sources that are itemized in the REIT tax laws.  The Trust generally is prohibited fromowning more than 10% of the voting securities or more than 10% of the value ofthe outstanding securities of any one issuer, subject to certain exceptions,including an exception with respect to corporations electing to be “taxableREIT subsidiaries,” and it is also required to distribute to shareholders atleast 90% of its REIT taxable income, excluding capital gains. The fact that itholds most of its assets through CRLP further complicates the application ofthe REIT requirements.  Even a technicalor inadvertent mistake could jeopardize its REIT status.  Furthermore, Congress and the Internal RevenueService might make changes to the tax laws and regulations, and the courts mightissue new rulings that make it more difficult, or impossible, for it to remainqualified as a REIT.  We do not believe,however, that any pending or proposed tax law changes would jeopardize its REITstatus.

 

If the Trust failed to qualify as a REIT, it would be subject tofederal income tax at regular corporate rates. Also, unless the InternalRevenue Service granted it relief under certain statutory provisions, it wouldremain disqualified as a REIT for the four years following the year it first failedto qualify. If it failed to qualify as a REIT, it would have to pay significantincome taxes and would therefore have less money available for investments orfor distributions to shareholders. This would likely have a significant adverseaffect on the value of its common units. In addition, it would no longer be required to make any distributions toshareholders, but we would still be required to distribute quarterlysubstantially all of our net cash revenues to our unitholders.

 

**AdditionalTax Considerations**

** **

** **

***Recent changes intaxation of corporate dividends may adversely affect the value of REIT stock.***

** **

The Jobs and Growth Tax Relief Reconciliation Act of 2003 that wasenacted into law on May 28, 2003, among other things, generally reduces to 15%the maximum marginal rate of tax payable by individuals on dividends receivedfrom a regular C corporation.  Thisreduced tax rate, however, will not apply to dividends paid to individuals byREIT on its stock, except for certain limited amounts.  While the earnings of a REIT that aredistributed to its stockholders still generally will be subject to less federalincome taxation that earnings of a non-REIT C corporation that are distributedto its stockholders net corporate-level income tax, this legislation couldcause individual investors to view the stock of regular C corporations as moreattractive relative to the stock of a REIT that was the case prior to theenactment of the legislation. Individual investors could hold this view because the dividends fromregular C corporations will generally be taxed at a lower rate while dividendsfrom REITs will generally be taxed at the same rate as the individual's otherordinary income.  We cannot predict whateffect, if any, the enactment of this legislation may have on the value of thestock of REITs in general or on the value of the Trust's capital stock inparticular, either in terms of price or relative to other investments.

 

17

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**Item 2.****                                                           Properties.**

 

## **General**

## ** **

As of December 31, 2002, our real estate portfolio consisted of106 properties consisting of whole or partial ownership interests, located innine states in the Sunbelt region of the United States.  Additionally, we maintain non-controllingpartial interests of 15% to 50% in 15 operating properties. The 106 propertiesowned by us at December 31, 2002 consisted of the following:

 

**Summary of Properties**

 

| **Type of Property** |   | **Number of  Properties** |   | **Units/  GRA/  NRA (1)** |   | **Total 2002  Property  Revenue (2)** |    | **Percent of  Total 2002  Property  Revenue (2)** |   | **Percentage  Occupancy at  Dec. 31, 2002 (3)** |   |
|----------------------|--------|---------------------------|--------|---------------------------|--------|---------------------------------------|---------|---------------------------------------------------|--------|-------------------------------------------------|--------|
|                 |   |                      |   |                      |   | **(in thousands)**                    |    |                                              |   |                                            |   |
|                 |   |                      |   |                      |   |                                  |    |                                              |   |                                            |   |
| Multifamily          |   | 41                        |   | 14,556                    | (4)    | $                                     | 104,160 |                                              | 31.1   | %                                               | 88.1   | % |
| Office               |   | 21                        |   | 5,185,170                 | (5)    | 75,436                                |    | 22.5                                              | %      | 91.0                                            | %      |
| Retail               |   | 44                        |   | 15,475,196                | (6)    | 155,845                               |    | 46.4                                              | %      | 89.2                                            | %      |
| Total                |   | 106                       |   |                      |   | $                                     | 335,441 | (7)                                          | 100.0  | %(7)                                            |   |   |

 

----

(1)          Units (in this table only) refers tomultifamily units, GRA refers to gross retail area, which includes grossleasable area and space owned by anchor tenants and NRA refers to net rentablearea of office space.  Information ispresented as of December 31, 2002.

(2)          Includes CRLP’s proportionate share ofrevenue from those multifamily, office and retail Properties accounted forunder the equity method, and CRLP’s share of the properties disposed of in2002.

(3)          Excludes the units/square feet of developmentor expansion phases of two multifamily properties, three office properties, andone retail property that had not achieved stabilized occupancy as ofDecember 31, 2002.

(4)          Amount includes 2,833 units at 10 multifamilyproperties, in which we maintain a 15.0% ownership interest.

(5)          Amount includes 29,988 square feet at oneoffice property, in which we maintain a 33.33% ownership interest.

(6)          Amount includes 1,443,400 square feet atthree retail properties, in which we maintain a 10.0% - 50.0% ownershipinterest.

(7)          Amount includes $13,743 of CRLP’sproportionate share of revenue from unconsolidated properties and $5,410 ofrevenue from properties classified as discontinued operations during 2002.  In order to arrive at consolidated propertyrevenues of $316,288, in accordance with generally accepted accountingprinciples, these amounts must be removed from the total property revenue.  Management believes including CRLP’sproportionate share of revenue from unconsolidated properties and revenues fromdiscontinued operations provide investors with a more complete description ofCRLP’s revenue stream.

 

## **Multifamily Properties**

## ** **

The 41 multifamily properties, contain a total of 14,556 garden-styleapartments and range in size from 125 to 1,080 units.  Eighteen multifamily properties (containing a total of 6,812****units)are located in Alabama, 12 multifamily properties (containing a total of 4,778apartment units) are located in Florida, six multifamily properties (containinga total of 1,382 units) are located in Georgia, two multifamily properties(containing a total of 498 units) are located in Mississippi, two multifamilyproperties (containing a total of 764 units) are located in South Carolina, andone multifamily property (containing 322 units) is located in Texas.  Each of the multifamily properties isestablished in its local market and provides residents with numerous amenities,which may include a swimming pool, exercise room, jacuzzi, clubhouse, laundryroom, tennis court(s), and/or a playground. All of the multifamily properties are managed by CRLP.

 

The following table sets forth certain additional information relatingto the multifamily properties as of and for the year ended December 31,2002.

 

18

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**Multifamily Properties**

 
| **Multifamily  Property (1)**      |   | **Location** |   | **Year  Completed  (2)** |   | **Number  of  Units (3)** |   | **Approximate  Rentable Area  (Square Feet)** |   | **Percent  Occupied** |   | **Average  Rental  Rate  Per Unit** |   | **Total Multifamily  Property  Revenue for  2002** |   | **Percent of  Total Multifamily  2002 Property  Revenue (4)** |   |
|------------------------------------|--------|--------------|--------|--------------------------|--------|---------------------------|--------|-----------------------------------------------|--------|-----------------------|--------|-------------------------------------|--------|----------------------------------------------------|--------|---------------------------------------------------------------|--------|
|                               |   |         |   |                     |   |                      |   |                                          |   |                  |   |                                |   |                                               |   |                                                          |   |
| **Alabama:**                       |   |         |   |                     |   |                      |   |                                          |   |                  |   |                                |   |                                               |   |                                                          |   |
| CV  at Cahaba Heights (8)          |   | Birmingham   |   | 1992                     |   | 125                       |   | 131,230                                       |   | 96.8                  | %      | 752                                 |   | 154,164                                            |   | 0.1                                                           | %      |
| CG  at Edgewater                   |   | Huntsville   |   | 1990                     |   | 500                       |   | 541,650                                       |   | 90.7                  | %      | 712                                 |   | 4,159,093                                          |   | 4.0                                                           | %      |
| CG  at Galleria                    |   | Birmingham   |   | 1986/96                  |   | 1,080                     |   | 1,195,186                                     |   | 90.8                  | %      | 677                                 |   | 7,715,537                                          |   | 7.4                                                           | %      |
| CG  at Galleria Woods              |   | Birmingham   |   | 1994                     |   | 244                       |   | 260,720                                       |   | 95.5                  | %      | 705                                 |   | 1,904,960                                          |   | 1.8                                                           | %      |
| CG  at Liberty Park                |   | Birmingham   |   | 2000                     |   | 300                       |   | 338,684                                       |   | 93.3                  | %      | 1,000                               |   | 3,069,775                                          |   | 2.9                                                           | %      |
| CG  at Madison                     |   | Huntsville   |   | 2000                     |   | 336                       |   | 354,592                                       |   | 90.5                  | %      | 771                                 |   | 3,056,591                                          |   | 2.9                                                           | %      |
| CG  at Promenade                   |   | Montgomery   |   | 2000                     |   | 384                       |   | 424,372                                       |   | 88.5                  | %      | 822                                 |   | 3,201,001                                          |   | 3.1                                                           | %      |
| CG  at Riverchase                  |   | Birmingham   |   | 1984/91                  |   | 468                       |   | 745,840                                       |   | 87.9                  | %      | 801                                 |   | 3,757,893                                          |   | 3.6                                                           | %      |
| CV  at Ashford Place               |   | Mobile       |   | 1983                     |   | 168                       |   | 139,128                                       |   | 83.3                  | %      | 559                                 |   | 916,014                                            |   | 0.9                                                           | %      |
| CV  at Hillcrest (9)               |   | Mobile       |   | 1981                     |   |                      |   |                                          |   |                  |   |                                |   | 252,107                                            |   | 0.2                                                           | %      |
| CV  at Huntleigh Woods             |   | Mobile       |   | 1978                     |   | 233                       |   | 199,052                                       |   | 91.0                  | %      | 517                                 |   | 1,258,036                                          |   | 1.2                                                           | %      |
| CV  at Inverness                   |   | Birmingham   |   | 1986/87/90               |   | 586                       |   | 491,072                                       |   | 93.5                  | %      | 619                                 |   | 3,918,394                                          |   | 3.8                                                           | %      |
| CV  at McGehee Place (9)           |   | Montgomery   |   | 1986/95                  |   |                      |   |                                          |   |                  |   |                                |   | 1,059,051                                          |   | 1.0                                                           | %      |
| CV  at Monte D’Oro (9)        |   | Birmingham   |   | 1977                     |   |                      |   |                                          |   |                  |   |                                |   | 532,215                                            |   | 0.5                                                           | %      |
| CV  at Research Park               |   | Huntsville   |   | 1987/94                  |   | 736                       |   | 809,343                                       |   | 86.9                  | %      | 609                                 |   | 5,135,512                                          |   | 4.9                                                           | %      |
| CV  at Trussville                  |   | Birmingham   |   | 1996/97                  |   | 376                       |   | 410,340                                       |   | 92.0                  | %      | 755                                 |   | 3,089,277                                          |   | 3.0                                                           | %      |
| CV  at Hillwood (8)                |   | Montgomery   |   | 1984                     |   | 160                       |   | 150,912                                       |   | 83.8                  | %      | 598                                 |   | 155,792                                            |   | 0.1                                                           | %      |
| CV  at Inverness Lakes  I (8) |   | Mobile       |   | 1983                     |   | 186                       |   | 176,460                                       |   | 91.4                  | %      | 582                                 |   | 169,607                                            |   | 0.2                                                           | %      |
| CG  at Inverness Lakes II (8)      |   | Mobile       |   | 1996                     |   | 312                       |   | 329,926                                       |   | 91.3                  | %      | 683                                 |   | 367,072                                            |   | 0.4                                                           | %      |
| CG  at Mountain Brook (8)          |   | Birmingham   |   | 1987/91                  |   | 392                       |   | 392,700                                       |   | 94.9                  | %      | 721                                 |   | 440,570                                            |   | 0.4                                                           | %      |
| CV  at Rocky Ridge (8)             |   | Birmingham   |   | 1984                     |   | 226                       |   | 258,900                                       |   | 94.2                  | %      | 688                                 |   | 240,092                                            |   | 0.2                                                           | %      |
| Ski  Lodge - Tuscaloosa (9)        |   | Tuscaloosa   |   | 1976/92                  |   |                      |   |                                          |   |                  |   |                                |   | 554,768                                            |   | 0.5                                                           | %      |
| Subtotal  - Alabama                |   |         |   |                     |   | 6,812                     |   | 7,350,107                                     |   | 90.4                  | %      | 700                                 |   | 45,107,521                                         |   | 43.1                                                          | %      |
| **Florida:**                       |   |         |   |                     |   |                      |   |                                          |   |                  |   |                                |   |                                               |   |                                                          |   |
| CG  at Carrollwood (9)             |   | Tampa        |   | 1966                     |   |                      |   |                                          |   |                  |   |                                |   | 1,216,361                                          |   | 1.2                                                           | %      |
| CG  at Citrus Park                 |   | Tampa        |   | 1999                     |   | 176                       |   | 200,288                                       |   | 82.4                  | %      | 932                                 |   | 1,815,237                                          |   | 1.7                                                           | %      |
| CG  at Cypress Crossing            |   | Orlando      |   | 1999                     |   | 250                       |   | 314,596                                       |   | 91.2                  | %      | 1,023                               |   | 2,733,289                                          |   | 2.6                                                           | %      |
| CG  at Gainesville                 |   | Gainesville  |   | 1989/93/94               |   | 560                       |   | 488,624                                       |   | 72.5                  | %      | 812                                 |   | 4,324,724                                          |   | 4.2                                                           | %      |
| CG  at Heather Glen                |   | Orlando      |   | 2000                     |   | 448                       |   | 524,074                                       |   | 90.7                  | %      | 925                                 |   | 4,136,063                                          |   | 4.0                                                           | %      |
| CG  at Heathrow                    |   | Orlando      |   | 1997                     |   | 312                       |   | 370,028                                       |   | 89.7                  | %      | 978                                 |   | 3,137,248                                          |   | 3.0                                                           | %      |
| CG  at Hunter’s Creek         |   | Orlando      |   | 1997                     |   | 496                       |   | 624,464                                       |   | 86.7                  | %      | 946                                 |   | 4,848,377                                          |   | 4.7                                                           | %      |
| CG  at Lakewood Ranch              |   | Sarasota     |   | 1999                     |   | 288                       |   | 301,656                                       |   | 86.4                  | %      | 960                                 |   | 3,259,466                                          |   | 3.1                                                           | %      |
| CG  at Palma Sola (9)              |   | Bradenton    |   | 1992                     |   |                      |   |                                          |   |                  |   |                                |   | 760,333                                            |   | 0.7                                                           | %      |
| CG  at TownPark                    |   | Orlando      |   | 2002                     |   | 456                       |   | 584,664                                       |   |                  | (7)    | 1,035                               |   | 2,272,317                                          | (6)    | 2.2                                                           | %      |
| CV  at TownPark                    |   | Sarasota     |   | 2002                     |   | 272                       |   | 316,370                                       |   |                  | (7)    | 1,018                               |   | 3,530,328                                          | (6)    | 3.4                                                           | %      |
| CV  at Cordova (9)                 |   | Pensacola    |   | 1983                     |   |                      |   |                                          |   |                  |   |                                |   | 332,566                                            |   | 0.3                                                           | %      |
| CV  at Lake Mary                   |   | Orlando      |   | 1991/95                  |   | 504                       |   | 431,396                                       |   | 84.4                  | %      | 752                                 |   | 3,938,808                                          |   | 3.8                                                           | %      |
| CV  at Oakleigh (9)                |   | Pensacola    |   | 1997                     |   |                      |   |                                          |   |                  |   |                                |   | 574,537                                            |   | 0.6                                                           | %      |
| CG  at Ponte Vedra (8)             |   | Jacksonville |   | 1988                     |   | 240                       |   | 211,640                                       |   | 91.9                  | %      | 793                                 |   | 308,333                                            |   | 0.3                                                           | %      |
| CG  at River Hills (8)             |   | Tampa        |   | 1991/97                  |   | 776                       |   | 690,312                                       |   | 91.0                  | %      | 679                                 |   | 857,156                                            |   | 0.8                                                           | %      |
| Subtotal  - Florida                |   |         |   |                     |   | 4,778                     |   | 5,058,112                                     |   | 85.0                  | %      | 876                                 |   | 38,045,143                                         |   | 36.6                                                          | %      |
| **Georgia:**                       |   |         |   |                     |   |                      |   |                                          |   |                  |   |                                |   |                                               |   |                                                          |   |
| CG  at Barrington Club (8)         |   | Macon        |   | 1996                     |   | 176                       |   | 191,940                                       |   | 79.5                  | %      | 743                                 |   | 200,977                                            |   | 0.2                                                           | %      |
| CG  at Wesleyan                    |   | Macon        |   | 1997                     |   | 328                       |   | 382,946                                       |   | 79.3                  | %      | 754                                 |   | 2,480,420                                          |   | 2.4                                                           | %      |
| CV  at Timothy Woods               |   | Athens       |   | 1996                     |   | 204                       |   | 211,444                                       |   | 94.1                  | %      | 806                                 |   | 1,803,807                                          |   | 1.7                                                           | %      |
| CV  at Vernon Marsh                |   | Savannah     |   | 1986/87                  |   | 178                       |   | 151,226                                       |   | 89.3                  | %      | 662                                 |   | 1,339,065                                          |   | 1.3                                                           | %      |
| CV  at Walton Way                  |   | Augusta      |   | 1984                     |   | 256                       |   | 254,264                                       |   | 92.2                  | %      | 638                                 |   | 1,802,247                                          |   | 1.7                                                           | %      |
| CV  at Stockbridge (8)             |   | Stockbridge  |   | 1993/94                  |   | 240                       |   | 253,200                                       |   | 75.8                  | %      | 766                                 |   | 263,519                                            |   | 0.3                                                           | %      |
| Subtotal  - Georgia                |   |         |   |                     |   | 1,382                     |   | 1,445,020                                     |   | 87.1                  | %      | 729                                 |   | 7,890,035                                          |   | 7.6                                                           | %      |
| **Mississippi:**                   |   |         |   |                     |   |                      |   |                                          |   |                  |   |                                |   |                                               |   |                                                          |   |
| CG  at The Reservoir               |   | Jackson      |   | 2000                     |   | 170                       |   | 195,605                                       |   | 95.9                  | %      | 851                                 |   | 1,705,801                                          |   | 1.6                                                           | %      |
| CV  at Natchez Trace               |   | Jackson      |   | 1995/97                  |   | 328                       |   | 342,800                                       |   | 96.9                  | %      | 721                                 |   | 2,709,853                                          |   | 2.6                                                           | %      |
| Subtotal  - Mississippi            |   |         |   |                     |   | 498                       |   | 538,405                                       |   | 96.6                  | %      | 765                                 |   | 4,415,654                                          |   | 4.2                                                           | %      |
| **South Carolina:**                |   |         |   |                     |   |                      |   |                                          |   |                  |   |                                |   |                                               |   |                                                          |   |
| CV  at Ashley Plantation           |   | Bluffton     |   | 1998/2000                |   | 414                       |   | 425,095                                       |   | 78.7                  | %      | 797                                 |   | 2,996,593                                          |   | 2.9                                                           | %      |
| CV  at Caledon Wood                |   | Greenville   |   | 1995/96                  |   | 350                       |   | 348,305                                       |   | 84.3                  | %      | 720                                 |   | 2,619,956                                          |   | 2.5                                                           | %      |
| Subtotal  - South Carolina         |   |         |   |                     |   | 764                       |   | 773,400                                       |   | 81.3                  | %      | 762                                 |   | 5,616,549                                          |   | 5.4                                                           | %      |
| **Texas:**                         |   |         |   |                     |   |                      |   |                                          |   |                  |   |                                |   |                                               |   |                                                          |   |
| CV  at Haverhill                   |   | San Antonio  |   | 1997                     |   | 322                       |   | 326,914                                       |   | 86.5                  | %      | 948                                 |   | 3,085,154                                          |   | 3.0                                                           | %      |
| Subtotal  - Texas                  |   |         |   |                     |   | 322                       |   | 326,914                                       |   | 86.5                  | %      | 948                                 |   | 3,085,154                                          |   | 3.0                                                           | %      |
| TOTAL                              |   |         |   |                     |   | 14,556                    |   | 15,491,958                                    |   | 88.1                  | %      | $                                   | 785    | (5)                                           | $      | 104,160,056                                                   |   | 100.0 | % |
|                                    |        |              |        |                          |        |                           |        |                                               |        |                       |        |                                     |        |                                                    |        |                                                               |        |  |  |

 

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(footnotes on next page)

 

19

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(1)          All multifamily properties are 100% owned byus with the exception of the properties noted in (8) below.  In the listing of multifamily propertynames, CG has been used as an abbreviation for Colonial Grand and CV as anabbreviation for Colonial Village.

(2)          Year initially completed and, whereapplicable, year(s) in which additional phases were completed at the property.

(3)          Units (in this table only) refers tomultifamily apartment units.  Number ofUnits includes all apartment units occupied or available for occupancy atDecember 31, 2002.

(4)          Percent of Total Multifamily 2002 PropertyRevenue represents each property’s proportionate share of revenue from our 41multifamily properties, including the partially owned properties.

(5)          Represents weighted average rental rate perunit of the 41 multifamily properties at December 31, 2002.

(6)          Represents revenues from the date of ourdevelopment of this property in 2002 through December 31, 2002.

(7)          Expanded or newly developed propertycurrently undergoing lease-up.

(8)          These properties were sold by us during 1999or 2000 to a joint venture formed by CRLP and an unrelated party.  CRLP holds a 15% non-controlling interest inthese joint ventures.

(9)          This property was sold during 2002.

 

The following table sets forth the total number of units, percentleased and average base rental rate per unit as of the end of each of the lastfive years for the multifamily properties:

 
| **Year-End**           |   | **Number  of Units (1)** |   | **Percent  Leased (2)** |   | **Average  Base  Rental Rate  Per Unit** |   |
|------------------------|--------|--------------------------|--------|-------------------------|--------|------------------------------------------|--------|
| December 31, 2002 |   | 14,556                   |   | 88.1                    | %      | $                                        | 785    |   |
| December 31, 2001 |   | 16,256                   |   | 92.8                    | %      | $                                        | 752    |   |
| December 31, 2000 |   | 17,189                   |   | 94.0                    | %      | $                                        | 707    |   |
| December 31, 1999 |   | 16,415                   |   | 93.9                    | %      | $                                        | 688    |   |
| December 31, 1998 |   | 15,381                   |   | 93.5                    | %      | $                                        | 642    |   |

 

----

(1)          Units (in this table only) refers tomultifamily units owned at year end, which includes 2,833 units partially ownedby us at December 31, 2002.

(2)          Represents weighted average occupancy of themultifamily properties that had achieved stabilized occupancy at the end of therespective period.

 

## **Office Properties**

## ** **

The 21 office properties, contain a total of approximately 5.2 millionrentable square feet.  Fourteen of theoffice properties are located in Alabama (representing 49% of the officeportfolio’s net rentable square feet), one is located in Atlanta, Georgia andsix are located in Florida.  The officeproperties range in size from approximately 30,000 square feet to 863,000square feet.  All of the office propertiesare managed by CRLP.

 

The following table sets forth certain additional information relatingto the office properties as of and for the year ended December 31, 2002.

 

20

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**Office Properties**

 
| **Office  Property (1)**                     |   | **Location** |   | **Year  Completed  (2)** |   | **Net  Rentable  Area  Square  Feet** |   | **Percent  Leased** |   | **Total  Annualized  Base Rent** |       | **Average  Base  Rent  Per  Leased  Square  Foot** |   | **Total  Office  Property  Revenue for  2002 (3)** |   | **Percent of  Total Office  2002 Property  Revenue (4)** |       |
|----------------------------------------------|--------|--------------|--------|--------------------------|--------|---------------------------------------|--------|---------------------|--------|----------------------------------|------------|----------------------------------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------------|------------|
|                                         |   |         |   |                     |   |                                  |   |                |   |                             |       |                                               |   |                                               |   |                                                     |       |
| **Alabama:**                                 |   |         |   |                     |   |                                  |   |                |   |                             |       |                                               |   |                                               |   |                                                     |       |
| Interstate Park                              |   | Montgomery   |   | 1982-85/89               |   | 226,481                               |   | 84.5                | %      | $                                | 2,881,187  |                                               | 15.06  |                                               | $      | 3,142,239                                                |       | 4.3 | % |
| Riverchase Center                            |   | Birmingham   |   | 1984-88                  |   | 303,766                               |   | 84.3                | %      | 2,862,100                        |       | 11.18                                              |   | 3,818,217                                          |   | 5.1                                                      | %          |
| International Park                           |   | Birmingham   |   | 1987/89/99               |   | 238,983                               |   | 97.8                | %      | 4,933,045                        |       | 21.11                                              |   | 5,023,230                                          |   | 6.7                                                      | %          |
| Colonial Plaza                               |   | Birmingham   |   | 1999                     |   | 170,870                               |   | 100.0               | %      | 3,165,722                        |       | 18.53                                              |   | 3,598,053                                          |   | 4.8                                                      | %          |
| Colonial Center Colonnade  (9)               |   | Birmingham   |   | 1989/99                  |   | 419,377                               |   | 91.9                | %      | 6,671,004                        |       | 17.31                                              |   | 5,391,344                                          | (6)    | 7.1                                                      | %          |
| Progress Center                              |   | Huntsville   |   | 1983-91                  |   | 224,369                               |   | 92.9                | %      | 2,337,732                        |       | 11.22                                              |   | 2,417,569                                          |   | 3.2                                                      | %          |
| Colonial Center Lakeside                     |   | Huntsville   |   | 1989/90                  |   | 121,513                               |   | 92.9                | %      | 1,692,752                        |       | 15.00                                              |   | 1,892,163                                          |   | 2.5                                                      | %          |
| AmSouth Center                               |   | Huntsville   |   | 1990                     |   | 154,521                               |   | 99.6                | %      | 2,979,499                        |       | 19.36                                              |   | 3,323,810                                          |   | 4.4                                                      | %          |
| Colonial Center Research  Park               |   | Huntsville   |   | 1999                     |   | 133,482                               |   | 94.8                | %      | 2,017,131                        |       | 15.94                                              |   | 2,638,502                                          |   | 3.5                                                      | %          |
| 250 Commerce St                              |   | Montgomery   |   | 1904/81                  |   | 37,447                                |   | 100.0               | %      | 648,094                          |       | 17.31                                              |   | 470,238                                            |   | 0.6                                                      | %          |
| Land Title Bldg.                             |   | Birmingham   |   | 1975                     |   | 29,988                                |   | 100.0               | %      | 402,003                          |       | 13.41                                              |   | 169,433                                            |   | 0.2                                                      | %          |
| Independence Plaza                           |   | Birmingham   |   | 1979                     |   | 101,051                               |   | 98.9                | %      | 1,982,860                        |       | 19.84                                              |   | 1,690,039                                          |   | 2.2                                                      | %          |
| Emmett R. Johnson Building                   |   | Birmingham   |   | 1982/95                  |   | 165,144                               |   | 78.7                | %      | 2,559,268                        |       | 19.70                                              |   | 2,282,391                                          |   | 3.0                                                      | %          |
| Perimeter Corporate Park                     |   | Huntsville   |   | 1986/89                  |   | 234,667                               |   | 84.4                | %      | 3,337,977                        |       | 16.86                                              |   | 3,723,044                                          |   | 4.9                                                      | %          |
| Subtotal-Alabama                             |   |         |   |                     |   | 2,561,659                             |   | 91.1                | %      | 38,470,374                       |       | 16.48                                              |   | 39,580,272                                         |   | 52.5                                                     | %          |
| **Florida:**                                 |   |         |   |                     |   |                                  |   |                |   |                             |       |                                               |   |                                               |   |                                                     |       |
| Colonial Center 100 at Town  Park            |   | Orlando      |   | 2001                     |   | 153,569                               |   | 94.9                | %      | 2,946,594                        |       | 20.21                                              |   | 2,773,798                                          |   | 3.7                                                      | %          |
| Colonial Center 200 at Town  Park            |   | Orlando      |   | 2002                     |   | 155,240                               |   |                | (8)    | 71,666                           |       |                                               | (8)    | 35,370                                             | (6)    | 0.0                                                      | %          |
| Colonial Center 600 at Town  Park            |   | Orlando      |   | 2002                     |   | 199,585                               |   |                | (8)    | 3,038,500                        |       |                                               | (8)    | 1,277,234                                          | (6)    | 1.7                                                      | %          |
| Concourse Center                             |   | Tampa        |   | 1981/85                  |   | 292,104                               |   | 94.6                | %      | 3,602,542                        |       | 13.04                                              |   | 4,966,149                                          |   | 6.6                                                      | %          |
| 901 Maitland Center                          |   | Orlando      |   | 1985                     |   | 155,669                               |   | 88.1                | %      | 2,615,579                        |       | 19.07                                              |   | 2,147,748                                          | (6)    | 2.8                                                      | %          |
| Colonial Center Heathrow                     |   | Orlando      |   | 1988/96-00               |   | 804,078                               |   | 95.4                | %      | 16,018,878                       |       | 20.89                                              |   | 6,854,673                                          | (6)    | 9.1                                                      | %          |
| University Park (5)                          |   | Orlando      |   | 1985                     |   |                                  |   |                |   |                             |       |                                               |   | 486,520                                            |   | 0.6                                                      | %          |
| Subtotal-Florida                             |   |         |   |                     |   | 1,760,245                             |   | 94.4                | %      | 28,293,759                       |       | 18.66                                              |   | 18,541,492                                         |   | 24.5                                                     | %          |
| **Georgia:**                                 |   |         |   |                     |   |                                  |   |                |   |                             |       |                                               |   |                                               |   |                                                     |       |
| Colonial Center at Mansell  Overlook         |   | Atlanta      |   | 1987/96/97/00            |   | 700,018                               |   | 84.3                | %      | 11,297,614                       |       | 19.15                                              |   | 15,099,641                                         |   | 20.1                                                     | %          |
| Colonial Center at Mansell  Overlook 500 (7) |   | Atlanta      |   | 2001                     |   | 163,248                               |   |                | (8)    | 2,643,917                        |       |                                               | (8)    | 2,214,783                                          | (6)    | 2.9                                                      | %          |
| Subtotal-Georgia                             |   |         |   |                     |   | 863,266                               |   | 84.3                | %      | 13,941,531                       |       | 23.84                                              |   | 17,314,424                                         |   | 23.0                                                     | %          |
| TOTAL                                        |   |         |   |                     |   | 5,185,170                             |   | 91.0                | %      | $                                | 80,705,664 |                                               | $      | 18.24                                              |   | $                                                        | 75,436,188 |   | 100.0 | % |
|                                              |        |              |        |                          |        |                                       |        |                     |        |                                  |            |                                                    |        |                                                    |        |                                                          |            |  |  |  |  |

 

----

(1)          Alloffice properties are 100% owned by us with the exception of Land TitleBuilding, which is 33.33% owned by us.

(2)          Yearinitially completed and, where applicable, most recent year in which theproperty was substantially renovated or in which an additional phase of theproperty was completed.

(3)          Total2002 office property revenue is our share (based on its percentage ownership ofthe property) of total office property revenue, unless otherwise noted.  However, amounts exclude $1,123,303 ofstraight-line rents reflected in our Consolidated Financial Statements for theperiod ended December 31, 2002.

(4)          Percentof Total Office 2002 Property Revenue represents each property’s proportionateshare of revenue from our 21 office properties, including partially ownedproperties.

(5)          Thisproperty was sold during 2002.

(6)          Representsrevenues from the date of our acquisition or completion of development of thisproperty in 2002 through December 31, 2002.

(7)          Thisproperty is located within an office complex and is included in the total asone office property.

(8)          Thisproperty is currently in lease-up and is not included in the property totals.

(9)          During2002, two of the buildings located within this office complex were sold (4100and 4200 Colonnade).

 

21

----

 

The followingtable sets out a schedule of the lease expirations for leases in place as ofDecember 31, 2002, for the office properties (including all lease expirationsfor partially-owned properties).

 
| **Year of  Lease  Expiration** |   | **Number  of  Tenants with  Expiring Leases** |   | **Net  Rentable  Area Of  Expiring Leases  (Square Feet) (1)** |   | **Annualized  Base Rent of  Expiring  Leases (1)(2)** |       | **Percent  of Total  Annual Base Rent  Represented by  Expiring Leases (1)** |   |
|--------------------------------|--------|-----------------------------------------------|--------|----------------------------------------------------------------|--------|-------------------------------------------------------|------------|------------------------------------------------------------------------------|--------|
|                           |   |                                          |   |                                                           |   |                                                  |       |                                                                         |   |
| 2003                           |   | 146                                           |   | 547,643                                                        |   | $                                                     | 8,676,124  |                                                                         | 10.8   | % |
| 2004                           |   | 109                                           |   | 702,004                                                        |   | 10,880,192                                            |       | 13.5                                                                         | %      |
| 2005                           |   | 168                                           |   | 794,643                                                        |   | 11,556,398                                            |       | 14.3                                                                         | %      |
| 2006                           |   | 112                                           |   | 691,967                                                        |   | 12,198,100                                            |       | 15.1                                                                         | %      |
| 2007                           |   | 89                                            |   | 897,929                                                        |   | 16,816,478                                            |       | 20.8                                                                         | %      |
| 2008                           |   | 36                                            |   | 361,183                                                        |   | 6,414,324                                             |       | 7.9                                                                          | %      |
| 2009                           |   | 17                                            |   | 199,176                                                        |   | 3,686,170                                             |       | 4.6                                                                          | %      |
| 2010                           |   | 11                                            |   | 140,777                                                        |   | 2,647,838                                             |       | 3.3                                                                          | %      |
| 2011                           |   | 8                                             |   | 84,199                                                         |   | 1,657,774                                             |       | 2.1                                                                          | %      |
| 2012                           |   | 8                                             |   | 254,625                                                        |   | 5,164,292                                             |       | 6.4                                                                          | %      |
| Thereafter                     |   | 13                                            |   | 81,121                                                         |   | 1,007,974                                             |       | 1.2                                                                          | %      |
|                           |   | 717                                           |   | 4,755,267                                                      |   | $                                                     | 80,705,664 |                                                                         | 100.0  | % |

 

----

(1)          Excludesapproximately 430,000 square feet of space not leased as of December 31, 2002.

(2)          Annualizedbase rent is calculated using base rents as of December 31, 2002.

 

The followingsets forth the net rentable area, total percent leased and average base rentper leased square foot for each of the last five years for the officeproperties:

 
| **Year-end**      |   | **Rentable  Area  (Square Feet) (2)** |   | **Total  Percent Leased** |   | **Average  Base  Rent Per Leased  Square Foot (1)** |   |
|-------------------|--------|---------------------------------------|--------|---------------------------|--------|-----------------------------------------------------|--------|
| December 31, 2002 |   | 5,185,000                             |   | 91.0                      | %      | $                                                   | 18.24  |   |
| December 31, 2001 |   | 3,518,000                             |   | 92.1                      | %      | $                                                   | 18.02  |   |
| December 31, 2000 |   | 3,244,000                             |   | 94.6                      | %      | $                                                   | 16.43  |   |
| December 31, 1999 |   | 3,138,000                             |   | 93.3                      | %      | $                                                   | 15.29  |   |
| December 31, 1998 |   | 2,707,000                             |   | 92.2                      | %      | $                                                   | 14.58  |   |

 

----

(1)          Averagebase rent per leased square foot is calculated using base rents as ofDecember 31 for each respective year.

(2)          Rentablesquare feet includes 29,988 square feet that is partially owned by us at December31, 2002.

 

**RetailProperties**

 

The 44 retailproperties contain a total of approximately 15.5 million square feet(including space owned by anchor tenants). Seventeen of the retail properties are located in Alabama, ten arelocated in Florida, seven are located in Georgia, six are located in NorthCarolina, one is located in South Carolina, one is located in Tennessee, one islocated in Texas, and one is located in Virginia.  The retail properties consist of 17 enclosed regional malls and27 community shopping centers.  All ofthe retail properties are managed by us.

 

The followingtable sets forth certain information relating to the retail properties as ofand for the year ended December 31, 2002.

 

22

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**Retail Properties**

 
| **Retail****Property  (1)**              |   | **Location**   |   | **Year  Completed****(2)** |   | **Gross  Retail  Area  (Square****Feet (3)** |   | **Number  Of****Stores** |   | **Percent****Leased (3)** |   | **Total  Annualized****Base Rent** |        | **Average  Base  Rent  Per  Leased  Square****Foot (4)** |   | **Total Retail  Property  Revenue for****2002 (9)** |   | **Percent of  Total Retail  2002 Property****Revenue  (5)** |        |
|------------------------------------------|--------|----------------|--------|----------------------------|--------|----------------------------------------------|--------|--------------------------|--------|---------------------------|--------|------------------------------------|-------------|----------------------------------------------------------|--------|-----------------------------------------------------|--------|-------------------------------------------------------------|-------------|
|                                     |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| **Alabama:**                             |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Decatur                   |   | Decatur        |   | 1979/89                    |   | 495,092                                      |   | 52                       |   | 86.9                      | %      | $                                  | 3,389,640   |                                                     | $      | 16.83                                               |   | 5,485,073                                                   |        | 3.5 | % |
| Colonial Mall  Decatur                   |   |           |   |                       |   | 80,866                                       | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial  Brookwood Village              |   | Birmingham     |   | 1973/91                    |   | 450,769                                      |   | 69                       |   | 91.6                      | %      | 6,582,313                          |        | 20.00                                                    |   | 8,289,182                                           |   | 5.3                                                         | %           |
| Colonial  Brookwood Village              |   |           |   |                       |   | 231,953                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Gadsden                   |   | Gadsden        |   | 1974/91                    |   | 532,597                                      |   | 68                       |   | 98.8                      | %      | 3,713,758                          |        | 18.42                                                    |   | 6,314,992                                           |   | 4.1                                                         | %           |
| Colonial Mall  Auburn/Opelika            |   | Auburn         |   | 1973/84/89                 |   | 375,227                                      |   | 59                       |   | 98.8                      | %      | 2,665,999                          |        | 20.36                                                    |   | 4,787,095                                           |   | 3.1                                                         | %           |
| Colonial  Promenade Hoover (10)          |   | Birmingham     |   | 2002                       |   | 155,231                                      |   | 35                       |   | 98.1                      | %      | 1,995,492                          |        | 18.19                                                    |   | 768,434                                             | (7)    | 0.5                                                         | %           |
| Colonial  Promenade Hoover               |   |           |   |                       |   | 215,766                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial  Promenade Montgomery           |   | Montgomery     |   | 1990/97                    |   | 273,196                                      |   | 38                       |   | 96.8                      | %      | 2,968,647                          |        | 13.47                                                    |   | 3,265,054                                           |   | 2.1                                                         | %           |
| Colonial  Promenade Montgomery           |   |           |   |                       |   | 145,830                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Shoppes  McGehee                |   | Montgomery     |   | 1986                       |   | 98,354                                       |   | 14                       |   | 80.1                      | %      | 672,719                            |        | 12.46                                                    |   | 853,133                                             |   | 0.5                                                         | %           |
| Colonial  Promenade Madison (10)         |   | Madison        |   | 2000                       |   | 110,712                                      |   | 14                       |   | 100.0                     | %      | 1,141,597                          |        | 13.82                                                    |   | 671,180                                             |   | 0.4                                                         | %           |
| Colonial Shoppes  Bellwood               |   | Montgomery     |   | 1988                       |   | 88,482                                       |   | 19                       |   | 94.5                      | %      | 692,651                            |        | 12.61                                                    |   | 880,604                                             |   | 0.6                                                         | %           |
| Old Springville                          |   | Birmingham     |   | 1982                       |   | 63,702                                       |   | 10                       |   | 16.5                      | %      | 114,220                            |        | 10.86                                                    |   | 218,180                                             |   | 0.1                                                         | %           |
| Colonial Shoppes  Inverness              |   | Birmingham     |   | 1984                       |   | 28,243                                       |   | 5                        |   | 49.2                      | %      | 230,550                            |        | 14.10                                                    |   | 363,388                                             |   | 0.2                                                         | %           |
| Olde Town                                |   | Montgomery     |   | 1978/90                    |   | 38,814                                       |   | 8                        |   | 48.0                      | %      | 164,718                            |        | 9.67                                                     |   | 329,679                                             |   | 0.2                                                         | %           |
| Colonial  Promenade Trussvile            |   | Birmingham     |   | 2000                       |   | 388,302                                      |   | 26                       |   | 100.0                     | %      | 3,501,539                          |        | 13.15                                                    |   | 4,219,200                                           |   | 2.7                                                         | %           |
| Colonial  Promenade Tutwiler Farm        |   | Birmingham     |   | 2000                       |   | 514,120                                      |   | 22                       |   | 100.0                     | %      | 3,115,223                          |        | 15.05                                                    |   | 3,812,752                                           |   | 2.4                                                         | %           |
| Colonial Mall Bel  Air                   |   | Mobile         |   | 1966/90/97                 |   | 1,062,733                                    |   | 120                      |   | 92.1                      | %      | 9,517,818                          |        | 18.25                                                    |   | 14,602,258                                          |   | 9.4                                                         | %           |
| Colonial Mall Bel  Air                   |   |           |   |                       |   | 357,538                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Parkway City Mall                        |   | Huntsville     |   | 1975                       |   | 393,138                                      |   | 56                       |   | (                         | 8)     | 4,248,378                          |        | (8                                                       | )      | 939,769                                             | (7)    | 0.6                                                         | %           |
| Parkway City Mall                        |   |           |   |                       |   | 236,862                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Shops at  Colonnade                      |   | Birmingham     |   | 1989                       |   | 112,186                                      |   | 33                       |   | 60.5                      | %      | 852,299                            |        | 12.80                                                    |   | 823,605                                             | (7)    | 0.5                                                         | %           |
| Subtotal-Alabama                         |   |           |   |                       |   | 6,449,713                                    |   | 648                      |   | 94.1                      | %      | 45,567,561                         |        | 16.70                                                    |   | 56,623,578                                          |   | 36.3                                                        | %           |
| **Florida:**                             |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial  Promenade University Park (10) |   | Orlando        |   | 1986/89                    |   | 215,590                                      |   | 26                       |   | 94.1                      | %      | 1,740,007                          |        | 13.77                                                    |   | 3,113,183                                           |   | 2.0                                                         | %           |
| Colonial  Promenade Burnt Store          |   | Punta Gorda    |   | 1990                       |   | 198,802                                      |   | 24                       |   | 45.2                      | %      | 840,636                            |        | 11.02                                                    |   | 1,296,404                                           |   | 0.8                                                         | %           |
| Colonial  Promenade Winter Haven         |   | Orlando        |   | 1986                       |   | 197,472                                      |   | 28                       |   | 93.2                      | %      | 1,412,659                          |        | 10.23                                                    |   | 1,808,083                                           |   | 1.2                                                         | %           |
| Colonial  Promenade Northdale            |   | Tampa          |   | 1988                       |   | 175,917                                      |   | 26                       |   | 98.9                      | %      | 1,682,298                          |        | 16.50                                                    |   | 2,397,418                                           |   | 1.5                                                         | %           |
| Colonial  Promenade Northdale            |   |           |   |                       |   | 55,000                                       | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial  Promenade Bear Lake            |   | Orlando        |   | 1990                       |   | 131,552                                      |   | 24                       |   | 97.7                      | %      | 1,294,912                          |        | 11.95                                                    |   | 1,356,214                                           |   | 0.9                                                         | %           |
| Colonial  Promenade Bardmoor Village     |   | St. Petersburg |   | 1981                       |   | 152,667                                      |   | 33                       |   | 87.9                      | %      | 1,397,910                          |        | 16.19                                                    |   | 1,784,476                                           |   | 1.1                                                         | %           |
| Colonial  Promenade Hunter’s Creek  |   | Orlando        |   | 1993/95                    |   | 222,136                                      |   | 29                       |   | 100.0                     | %      | 1,967,157                          |        | 16.48                                                    |   | 2,596,312                                           |   | 1.7                                                         | %           |
| Colonial  Promenade Wekiva               |   | Orlando        |   | 1990                       |   | 208,568                                      |   | 31                       |   | 97.2                      | %      | 2,202,003                          |        | 12.29                                                    |   | 2,762,000                                           |   | 1.8                                                         | %           |
| Colonial  Promenade Lakewood             |   | Jacksonville   |   | 1995                       |   | 195,104                                      |   | 52                       |   | 92.6                      | %      | 1,888,552                          |        | 13.72                                                    |   | 2,540,632                                           |   | 1.6                                                         | %           |
| Orlando Fashion  Square                  |   | Orlando        |   | 1973/89/93                 |   | 710,971                                      |   | 123                      |   | 90.2                      | %      | 9,712,550                          |        | 26.44                                                    |   | 8,798,681                                           |   | 5.6                                                         | %           |
| Orlando Fashion  Square                  |   |           |   |                       |   | 361,432                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Subtotal-Florida                         |   |           |   |                       |   | 2,825,211                                    |   | 396                      |   | 89.6                      | %      | 24,138,684                         |        | 17.60                                                    |   | 28,453,403                                          |   | 18.3                                                        | %           |
| **Georgia:**                             |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Macon                     |   | Macon          |   | 1975/88/97                 |   | 737,259                                      |   | 153                      |   | 93.6                      | %      | 10,429,402                         |        | 24.70                                                    |   | 17,835,015                                          |   | 11.4                                                        | %           |
| Colonial Mall  Macon                     |   |           |   |                       |   | 682,160                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial  Promenade Beechwood            |   | Athens         |   | 1963/92                    |   | 343,569                                      |   | 41                       |   | 76.8                      | %      | 2,321,877                          |        | 10.90                                                    |   | 3,564,130                                           |   | 2.3                                                         | %           |
| Britt David                              |   | Columbus       |   | 1990                       |   | 109,630                                      |   | 8                        |   | 67.6                      | %      | 552,554                            |        | 13.75                                                    |   | 679,315                                             |   | 0.4                                                         | %           |
| Colonial Mall  Lakeshore                 |   | Gainesville    |   | 1984-97                    |   | 518,290                                      |   | 57                       |   | 91.1                      | %      | 3,172,185                          |        | 19.95                                                    |   | 5,189,733                                           |   | 3.3                                                         | %           |
| Colonial Mall  Valdosta                  |   | Valdosta       |   | 1982-85                    |   | 325,076                                      |   | 57                       |   | 94.6                      | %      | 3,277,744                          |        | 17.99                                                    |   | 5,939,473                                           |   | 3.8                                                         | %           |
| Colonial Mall  Valdosta                  |   |           |   |                       |   | 73,723                                       | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Glynn Place               |   | Brunswick      |   | 1986                       |   | 281,989                                      |   | 62                       |   | 63.4                      | %      | 2,360,622                          |        | 17.19                                                    |   | 4,211,425                                           |   | 2.7                                                         | %           |
| Colonial Mall  Glynn Place               |   |           |   |                       |   | 225,558                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Village at  Roswell Summit               |   | Atlanta        |   | 1988                       |   | 25,510                                       |   | 9                        |   | 95.1                      | %      | 474,030                            |        | 15.55                                                    |   | 477,285                                             | (11)   | 0.3                                                         | %           |
| Subtotal-Georgia                         |   |           |   |                       |   | 3,322,764                                    |   | 387                      |   | 85.9                      | %      | 22,588,414                         |        | 19.61                                                    |   | 37,896,376                                          |   | 24.3                                                        | %           |
| **North  Carolina:**                     |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Burlington                |   | Burlington     |   | 1969/86/94                 |   | 416,117                                      |   | 51                       |   | 96.9                      | %      | 3,017,538                          |        | 23.60                                                    |   | 5,199,679                                           |   | 3.3                                                         | %           |
| Colonial Mayberry  Mall                  |   | Mount Airy     |   | 1968/86                    |   | 149,016                                      |   | 21                       |   | 97.5                      | %      | 846,578                            |        | 13.06                                                    |   | 1,270,508                                           |   | 0.8                                                         | %           |
| Colonial Mayberry  Mall                  |   |           |   |                       |   | 57,843                                       | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Greenville                |   | Greenville     |   | 1965/89/99                 |   | 403,621                                      |   | 61                       |   | 95.2                      | %      | 3,634,397                          |        | 19.12                                                    |   | 5,998,676                                           |   | 3.8                                                         | %           |
| Colonial Mall  Greenville                |   |           |   |                       |   | 46,051                                       | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Shoppes  Quaker                 |   | Greensboro     |   | 1968/88/97                 |   | 102,426                                      |   | 29                       |   | 93.6                      | %      | 1,072,705                          |        | 14.94                                                    |   | 1,452,131                                           |   | 0.9                                                         | %           |
| Colonial Shoppes  Yadkinville            |   | Yadkinville    |   | 1971/97                    |   | 90,917                                       |   | 15                       |   | 100.0                     | %      | 718,696                            |        | 7.80                                                     |   | 857,757                                             |   | 0.6                                                         | %           |
| Colonial Shoppes  Stanly                 |   | Locust         |   | 1987/96                    |   | 47,070                                       |   | 7                        |   | 97.3                      | %      | 265,798                            |        | 10.03                                                    |   | 366,792                                             |   | 0.2                                                         | %           |
| Subtotal-North  Carolina                 |   |           |   |                       |   | 1,313,061                                    |   | 184                      |   | 96.4                      | %      | 9,555,712                          |        | 18.33                                                    |   | 15,145,543                                          |   | 9.7                                                         | %           |
| **South  Carolina:**                     |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Myrtle Beach              |   | Myrtle Beach   |   | 1986                       |   | 494,128                                      |   | 69                       |   | 76.9                      | %      | 4,345,257                          |        | 20.45                                                    |   | 8,397,253                                           |   | 5.4                                                         | %           |
| Subtotal-South  Carolina                 |   |           |   |                       |   | 494,128                                      |   | 69                       |   | 76.9                      | %      | 4,345,257                          |        | 20.45                                                    |   | 8,397,253                                           |   | 5.4                                                         | %           |
| **Tennessee:**                           |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Rivermont  Shopping Center               |   | Chattanooga    |   | 1986/97                    |   | 73,539                                       |   | 8                        |   | 81.2                      | %      | 341,516                            |        | 8.39                                                     |   | 462,833                                             |   | 0.3                                                         | %           |
| Subtotal-Tennessee                       |   |           |   |                       |   | 73,539                                       |   | 8                        |   | 81.2                      | %      | 341,516                            |        | 8.39                                                     |   | 462,833                                             |   | 0.3                                                         | %           |
| **Texas**                                |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Temple                    |   | Temple         |   | 1981/96                    |   | 464,765                                      |   | 57                       |   | 82.2                      | %      | 2,900,844                          |        | 20.16                                                    |   | 5,546,392                                           |   | 3.6                                                         | %           |
| Colonial Mall  Temple                    |   |           |   |                       |   | 108,977                                      | (6)    |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Subtotal-Texas                           |   |           |   |                       |   | 573,742                                      |   | 57                       |   | 82.2                      | %      | 2,900,844                          |        | 20.16                                                    |   | 5,546,392                                           |   | 3.6                                                         | %           |
| **Virginia:**                            |   |           |   |                       |   |                                         |   |                     |   |                      |   |                               |        |                                                     |   |                                                |   |                                                        |        |
| Colonial Mall  Staunton                  |   | Staunton       |   | 1969/86/97                 |   | 423,038                                      |   | 51                       |   | 79.1                      | %      | 1,988,302                          |        | 11.38                                                    |   | 3,319,857                                           |   | 2.1                                                         | %           |
| Subtotal-Virginia                        |   |           |   |                       |   | 423,038                                      |   | 51                       |   | 79.1                      | %      | 1,988,302                          |        | 11.38                                                    |   | 3,319,857                                           |   | 2.1                                                         | %           |
| Total                                    |   |           |   |                       |   | 15,475,196                                   |   | 1,800                    |   | 89.2                      | %      | $                                  | 111,426,290 |                                                     | $      | 18.36                                               |   | $                                                           | 155,845,235 |   | 100.0 | % |
|                                          |        |                |        |                            |        |                                              |        |                          |        |                           |        |                                    |             |                                                          |        |                                                     |        |                                                             |             |  |  |  |

 

(footnotes on next page)

 

23

----

 

----

| (1)  |   | All retail  properties are 100% owned by us, with the exception of Orlando Fashion  Square, Parkway City Mall, Colonial Promenade Madison,  and Colonial Promenade Hoover,  which are owned 50%, 45%, 25%, and 10%,  respectively, by us at December 31, 2002.                                                              |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  |   | Year  initially completed and, where applicable, year(s) in which the property was  substantially renovated or an additional phase of the property was completed.                                                                                                                                                                     |
| (3)  |   | Total GRA  refers to gross retail area, which includes gross leasable area and space  owned by anchor tenants, but Percent Leased excludes anchor owned space.                                                                                                                                                                        |
| (4)  |   | Includes  specialty store space only.                                                                                                                                                                                                                                                                                                 |
| (5)  |   | Percent of  Total Retail 2002 Property Revenue represents each property’s proportionate  share of revenue from our 44 retail properties, including partially owned  properties.                                                                                                                                                  |
| (6)  |   | Represents  space owned by anchor tenants.                                                                                                                                                                                                                                                                                            |
| (7)  |   | Represents  revenues from the date of our acquisition or completion of development of the  property in 2002 through December 31, 2002.                                                                                                                                                                                                |
| (8)  |   | This  property is currently under redevelopment or lease-up and is not included in  the property total.                                                                                                                                                                                                                               |
| (9)  |   | Amounts  exclude $990,538 of straight-line rents reflected in our consolidated  financial statements for the year ended December 31, 2002.                                                                                                                                                                                            |
| (10) |   | This  property, or an interest in this property was sold during 2002.                                                                                                                                                                                                                                                                 |
| (11) |   | This  property is located adjacent to Colonial Center Mansell Overlook, an office  property, and is managed by our office management division.  Therefore, in footnote # 7 of CRLP’s Notes  to Consolidated Financial Statements, this property’s revenue and net  operating income is included in the office segment. |

 

 

The followingtable sets out a schedule of the lease expirations for leases in place as ofDecember 31, 2002, for the retail properties:

 
| **Year of  Lease  Expiration** |   | **Number of  Tenants with  Expiring Leases** |   | **Net  Rentable  Area Of  Expiring Leases  (Square Feet) (1)** |   | **Annualized  Base Rent of  Expiring  Leases (1)(2)** |        | **Percent of  Total  Annual Base Rent  Represented by  Expiring Leases (1)** |   |
|--------------------------------|--------|----------------------------------------------|--------|----------------------------------------------------------------|--------|-------------------------------------------------------|-------------|------------------------------------------------------------------------------|--------|
|                           |   |                                         |   |                                                           |   |                                                  |        |                                                                         |   |
| 2003                           |   | 311                                          |   | 942,374                                                        |   | 10,229,741                                            |        | 9.2                                                                          | %      |
| 2004                           |   | 262                                          |   | 1,571,306                                                      |   | 11,588,692                                            |        | 10.4                                                                         | %      |
| 2005                           |   | 273                                          |   | 843,470                                                        |   | 12,466,442                                            |        | 11.2                                                                         | %      |
| 2006                           |   | 193                                          |   | 1,622,781                                                      |   | 12,892,039                                            |        | 11.6                                                                         | %      |
| 2007                           |   | 227                                          |   | 1,618,919                                                      |   | 13,490,797                                            |        | 12.1                                                                         | %      |
| 2008                           |   | 82                                           |   | 706,460                                                        |   | 5,336,155                                             |        | 4.8                                                                          | %      |
| 2009                           |   | 69                                           |   | 571,465                                                        |   | 5,215,498                                             |        | 4.7                                                                          | %      |
| 2010                           |   | 93                                           |   | 947,301                                                        |   | 8,369,126                                             |        | 7.5                                                                          | %      |
| 2011                           |   | 104                                          |   | 726,599                                                        |   | 9,374,541                                             |        | 8.4                                                                          | %      |
| 2012                           |   | 82                                           |   | 893,650                                                        |   | 9,697,265                                             |        | 8.7                                                                          | %      |
| Thereafter                     |   | 104                                          |   | 3,300,765                                                      |   | 12,765,994                                            |        | 11.5                                                                         | %      |
|                           |   | 1,800                                        |   | 13,745,090                                                     |   | $                                                     | 111,426,290 |                                                                         | 100.0  | % |
|                                |        |                                              |        |                                                                |        |                                                       |             |                                                                              |        |  |

 

----

(1)          Excludes1,730,000 square feet of space not leased as of December 31, 2002.

(2)          Annualizedbase rent is calculated using base rents as of December 31, 2002.

 

The followingtable sets forth the total gross leasable area, percent leased and average baserent per leased square foot as of the end of each of the last five years forthe Retail Properties:

 

| **Year-End**      |   | **Gross  Retail Area  (Square Feet) (1)** |   | **Percent  Leased** |   | **Average  Base Rent Per  Leased Square Foot (2)** |   |
|-------------------|--------|-------------------------------------------|--------|---------------------|--------|----------------------------------------------------|--------|
|              |   |                                      |   |                |   |                                               |   |
| December 31, 2002 |   | 15,475,000                                |   | 89.2                | %      | $                                                  | 18.36  |   |
| December 31, 2001 |   | 14,951,000                                |   | 89.6                | %      | $                                                  | 18.03  |   |
| December 31, 2000 |   | 15,184,000                                |   | 90.2                | %      | $                                                  | 17.38  |   |
| December 31, 1999 |   | 13,947,000                                |   | 89.9                | %      | $                                                  | 16.66  |   |
| December 31, 1998 |   | 11,105,000                                |   | 91.9                | %      | $                                                  | 14.48  |   |

 

----

(1)          Includes2,184,112 square feet partially owned by us at December 31, 2002.

(2)          Averagebase rent per leased square foot is calculated using specialty store year-endbase rent figures.

 

24

----

 

**UndevelopedLand**

 

We own various parcels of land, which are held for future development(collectively, the “land”). Land adjacent to multifamily properties typicallywill be considered for potential development of another phase of an existingmultifamily property if we determine that the particular market can absorbadditional apartment units.  For expansionsat office and retail properties, we own parcels both contiguous to theboundaries of the properties, which would accommodate additional officebuildings, expansion of the mall or shopping center, and outparcels which aresuitable for restaurants, financial institutions, hotels, or free standingretailers.

 

**PropertyMarkets**

 

The table below sets forth certain information with respect to thegeographic concentration of the properties as of December 31, 2002.

 

**GeographicConcentration of Properties**

 
| **State**      |   | **Units  (Multifamily)  Total** |   | **NRA  (Office)(3)  Total** |   | **GRA  (Retail) (2)  Total** |   | **Total 2002  Consolidated  Property Revenue** |        | **Total 2002  Unconsolidated  Property Revenue** |   | **Total 2002  Discontinued Operations  Property Revenue** |   | **Total  2002 Property  Revenue** |      | **Percent  Of Total  2002 Property  Revenue** |   |
|----------------|--------|---------------------------------|--------|-----------------------------|--------|------------------------------|--------|------------------------------------------------|-------------|--------------------------------------------------|--------|-----------------------------------------------------------|--------|-----------------------------------|-----------|-----------------------------------------------|--------|
|           |   |                            |   |                        |   |                         |   |                                           |        |                                             |   |                                                      |   |                              |      |                                          |   |
| Alabama        |   | 6,812                           |   | 2,561,659                   |   | 6,449,713                    |   | $                                              | 137,331,870 |                                             | $      | 3,314,669                                                 |   | $                                 | 664,832   |                                          | $      | 141,311,371 |   | 42.1 | % |
| Florida        |   | 4,778                           |   | 1,760,245                   |   | 2,825,211                    |   | 70,331,030                                     |        | 9,964,171                                        |   | 4,744,837                                                 |   | 85,040,038                        |      | 25.4                                          | %      |
| Georgia        |   | 1,382                           |   | 863,266                     |   | 3,322,764                    |   | 62,636,339                                     |        | 464,496                                          |   | -0-                                                       |   | 63,100,835                        |      | 18.8                                          | %      |
| Mississippi    |   | 498                             |   | -0-                         |   | -0-                          |   | 4,415,654                                      |        | -0-                                              |   | -0-                                                       |   | 4,415,654                         |      | 1.3                                           | %      |
| North Carolina |   | -0-                             |   | -0-                         |   | 1,313,061                    |   | 15,145,543                                     |        | -0-                                              |   | -0-                                                       |   | 15,145,543                        |      | 4.5                                           | %      |
| South Carolina |   | 764                             |   | -0-                         |   | 494,128                      |   | 14,013,802                                     |        | -0-                                              |   | -0-                                                       |   | 14,013,802                        |      | 4.2                                           | %      |
| Tennessee      |   | -0-                             |   | -0-                         |   | 73,539                       |   | 462,833                                        |        | -0-                                              |   | -0-                                                       |   | 462,833                           |      | 0.1                                           | %      |
| Texas          |   | 322                             |   | -0-                         |   | 573,742                      |   | 8,631,546                                      |        | -0-                                              |   | -0-                                                       |   | 8,631,546                         |      | 2.6                                           | %      |
| Virginia       |   | -0-                             |   | -0-                         |   | 423,038                      |   | 3,319,857                                      |        | -0-                                              |   | -0-                                                       |   | 3,319,857                         |      | 1.0                                           | %      |
| Total          |   | 14,556                          |   | 5,185,170                   |   | 15,475,196                   |   | $                                              | 316,288,474 |                                             | $      | 13,743,336                                                |   | $                                 | 5,409,669 |                                          | $      | 335,441,479 |   | 100.0 | % |

 

----

(1)          Units (in this table only) refer tomultifamily apartment units.

(2)          GRA refers to gross retail area, whichincludes gross leasable area and space owned by anchor tenants.

(3)          NRA refers to net rentable area of officespace.

 

We believe that the demographic and economic trends and conditions inthe markets where the properties are located indicate a potential for continuedgrowth in property net operating income. The properties are located in a variety of distinct submarkets withinAlabama, Florida, Georgia, Mississippi, North Carolina, South Carolina,Tennessee, Texas and Virginia.  However,Birmingham and Huntsville, Alabama, Orlando, Tampa and Sarasota/Bradenton,Florida, and Macon and Atlanta, Georgia, are our primary markets.  We believe that our markets in these ninestates, which are characterized by stable and increasing population and employmentgrowth, should continue to provide a steady demand for multifamily, office, andretail properties.

 

**MortgageFinancing**

 

As of December 31, 2002, we had approximately $1.26 billion ofsecured and unsecured indebtedness outstanding with a weighted average interestrate of 5.89% and a weighted average maturity of 5.6 years.  Of this amount, approximately $383.2 millionwas secured mortgage financing and $878.9 was unsecured debt.  Our mortgaged indebtedness was secured by 24of our consolidated properties and carried a weighted average interest rate of5.7% and a weighted average maturity of 9.6 years.  The following table sets forth our secured and unsecuredindebtedness in more detail.

 

25

----

 

**Mortgage Debt and Notes Payable**

 
| **Property (1)**                        |   | **Interest  Rate** |   | **Principal  Balance (as of  12/31/02)** |          | **Anticipated  Annual Debt  Service  (1/1/03-  12/31/03)** |   | **Maturity  Date (2)** |   | **Estimated  Balance Due  on Maturity** |   |
|-----------------------------------------|--------|--------------------|--------|------------------------------------------|---------------|------------------------------------------------------------|--------|------------------------|--------|-----------------------------------------|--------|
|                                    |   |               |   |                                     |          |                                                       |   |                   |   |                                    |   |
| **Multifamily Properties:**             |   |               |   |                                     |          |                                                       |   |                   |   |                                    |   |
| CG at Edgewater                         |   | 6.810              | %      | 21,541,461                               |          | 1,722,840                                                  |   | 01/01/11               |   | 18,830,199                              |   |
| CG at Galleria                          |   | 2.560              | %      | 22,400,000                               |          | 447,996                                                    |   | 06/15/26               | (2)    | 22,400,000                              |   |
| CG at Galleria Woods                    |   | 6.910              | %      | 9,375,014                                |          | 771,344                                                    |   | 07/01/09               |   | 8,459,760                               |   |
| CG at Hunters Creek                     |   | 7.980              | %      | 18,999,000                               |          | 1,516,120                                                  |   | 06/30/10               |   | 18,999,000                              |   |
| CG at Hunters Creek                     |   | 6.590              | %      | 11,136,196                               |          | 1,093,709                                                  |   | 06/30/10               | (5)    | 4,373,743                               |   |
| CG at Madison                           |   | 2.191              | %      | 17,396,855                               |          | 980,007                                                    |   | 08/01/11               | (2)    | 4,132,410                               |   |
| CG at Natchez Trace                     |   | 8.300              | %      | 6,692,135                                |          | 611,403                                                    |   | 09/01/35               |   | 47,813                                  |   |
| CG at Natchez Trace                     |   | 8.250              | %      | 3,993,930                                |          | 371,293                                                    |   | 02/01/37               |   | 29,071                                  |   |
| CG at Promenade                         |   | 6.810              | %      | 22,471,660                               |          | 1,797,238                                                  |   | 01/01/11               |   | 19,643,321                              |   |
| CG at Research Park                     |   | 2.160              | %      | 12,775,000                               |          | 255,444                                                    |   | 06/15/26               | (2)    | 12,775,000                              |   |
| CG at Reservoir                         |   | 2.474              | %      | 8,581,363                                |          | 470,921                                                    |   | 04/01/12               |   | 7,192,133                               |   |
| CG at Riverchase                        |   | 2.191              | %      | 20,494,557                               |          | 1,146,373                                                  |   | 07/01/11               | (2)    | 6,240,833                               |   |
| CV at Ashley Plantation                 |   | 7.980              | %      | 15,090,000                               |          | 1,204,182                                                  |   | 06/30/10               |   | 15,090,000                              |   |
| CV at Ashley Plantation                 |   | 6.590              | %      | 9,324,040                                |          | 915,738                                                    |   | 06/30/10               | (5)    | 4,339,741                               |   |
| CV at Gainesville                       |   | 2.474              | %      | 26,602,227                               |          | 1,459,847                                                  |   | 04/01/12               |   | 22,243,422                              |   |
| CV at Inverness                         |   | 2.206              | %      | 9,900,000                                |          | 218,394                                                    |   | 06/15/26               | (2)    | 9,900,000                               |   |
| CV at Lake Mary                         |   | 7.980              | %      | 14,100,000                               |          | 1,125,180                                                  |   | 06/30/10               |   | 14,100,000                              |   |
| CV at Lake Mary                         |   | 6.590              | %      | 8,621,386                                |          | 846,729                                                    |   | 06/30/10               | (5)    | 3,620,835                               |   |
| CV at Timothy Woods                     |   | 7.490              | %      | 9,467,303                                |          | 840,849                                                    |   | 09/01/09               |   | 8,466,599                               |   |
| CV at Trussville                        |   | 2.474              | %      | 16,847,090                               |          | 924,517                                                    |   | 04/01/12               |   | 14,074,930                              |   |
| CV at Vernon Marsh                      |   | 2.096              | %      | 3,400,000                                |          | 71,400                                                     |   | 07/01/26               | (2)    | 3,400,000                               |   |
|                                    |   |               |   |                                     |          |                                                       |   |                   |   |                                    |   |
| **Office Properties:**                  |   |               |   |                                     |          |                                                       |   |                   |   |                                    |   |
| Interstate Park                         |   | 8.500              | %      | 2,852,228                                |          | 2,852,228                                                  |   | 08/01/03               |   | 2,648,144                               |   |
| Colonial Center at Mansell Overlook 100 |   | 8.250              | %      | 16,671,336                               |          | 1,595,699                                                  |   | 01/10/08               |   | 15,313,506                              |   |
| Village at Roswell Summit               |   | 8.930              | %      | 1,510,544                                |          | 170,220                                                    |   | 09/01/05               |   | 1,433,201                               |   |
| Perimeter Corporate Park                |   | 8.680              | %      | 4,822,798                                |          | 4,822,798                                                  |   | 12/01/03               |   | 4,699,141                               |   |
| Heathrow Internation Business Center    |   | 7.390              | %      | 32,669,916                               |          | 3,202,949                                                  |   | 12/01/04               |   | 31,272,508                              |   |
| Heathrow Internation Business Center    |   | 7.840              | %      | 11,000,000                               |          | 862,400                                                    |   | 12/01/04               |   | 11,000,000                              |   |
|                                    |   |               |   |                                     |          |                                                       |   |                   |   |                                    |   |
| **Retail Properties:**                  |   |               |   |                                     |          |                                                       |   |                   |   |                                    |   |
| Colonial Promenade Montgomery           |   | 7.490              | %      | 12,193,529                               |          | 1,085,361                                                  |   | 08/27/09               |   | 10,876,590                              |   |
| Colonial Promenade UPP I                |   | 7.490              | %      | 11,958,595                               |          | 1,063,210                                                  |   | 08/27/09               |   | 10,694,650                              |   |
|                                    |   |               |   |                                     |          |                                                       |   |                   |   |                                    |   |
| **Other debt:**                         |   |               |   |                                     |          |                                                       |   |                   |   |                                    |   |
| Land Loan                               |   | 2.980              | %      | 505,064                                  |          | 22,051                                                     |   | 09/30/04               |   | 493,809                                 |   |
| Line of Credit                          |   | 2.430              | %(3)   | 208,270,000                              |          | 6,736,688                                                  |   | 11/22/05               | (4)    | 208,270,000                             |   |
| Unsecured Senior Notes                  |   | 8.050              | %      | 65,000,000                               |          | 5,202,063                                                  |   | 07/15/06               |   | 65,000,000                              |   |
| Unsecured Senior Notes                  |   | 7.000              | %      | 175,000,000                              |          | 12,138,318                                                 |   | 07/15/07               |   | 175,000,000                             |   |
| Unsecured Senior Notes                  |   | 6.990              | %      | 100,000,000                              |          | 6,844,763                                                  |   | 08/15/12               |   | 100,000,000                             |   |
| Medium Term Notes                       |   | 7.050              | %      | 50,000,000                               |          | 3,525,000                                                  |   | 12/15/03               |   | 50,000,000                              |   |
| Medium Term Notes                       |   | 7.160              | %      | 50,000,000                               |          | 3,580,000                                                  |   | 01/17/03               |   | 50,000,000                              |   |
| Medium Term Notes                       |   | 3.817              | %      | 75,000,000                               |          | 2,862,750                                                  |   | 07/26/04               | (6)    | 75,000,000                              |   |
| Medium Term Notes                       |   | 6.960              | %      | 25,000,000                               |          | 1,740,000                                                  |   | 08/01/05               |   | 25,000,000                              |   |
| Medium Term Notes                       |   | 6.980              | %      | 25,000,000                               |          | 1,745,000                                                  |   | 09/26/05               |   | 25,000,000                              |   |
| Medium Term Notes                       |   | 8.190              | %      | 25,000,000                               |          | 2,047,500                                                  |   | 08/01/04               |   | 25,000,000                              |   |
| Medium Term Notes                       |   | 8.820              | %      | 25,000,000                               |          | 2,205,000                                                  |   | 02/01/05               |   | 25,000,000                              |   |
| Medium Term Notes                       |   | 8.800              | %      | 20,000,000                               |          | 1,760,000                                                  |   | 02/01/10               |   | 20,000,000                              |   |
| Medium Term Notes                       |   | 8.800              | %      | 5,000,000                                |          | 440,000                                                    |   | 03/01/10               |   | 5,000,000                               |   |
| Medium Term Notes                       |   | 8.050              | %      | 10,000,000                               |          | 805,000                                                    |   | 12/01/10               |   | 10,000,000                              |   |
| Medium Term Notes                       |   | 8.080              | %      | 10,000,000                               |          | 808,000                                                    |   | 12/01/10               |   | 10,000,000                              |   |
| Medium Term Notes                       |   | 7.460              | %      | 10,000,000                               |          | 746,000                                                    |   | 12/01/06               |   | 10,000,000                              |   |
| Unamortized Discount on Senior Notes    |   |               |   | (2,024,896                               | )             |                                                       |   |                   |   | (2,024,896                              | )      |
| Fasb 133 FV of Hedging Investments      |   |               |   | 2,554,495                                |          |                                                       |   |                   |   | 2,554,495                               |   |
| **TOTAL CONSOLIDATED DEBT**             |   |               |   | $                                        | 1,262,192,823 |                                                       | $      | 87,654,522             |   |                                    |   | $ | 1,185,589,958 |   |
|                                         |        |                    |        |                                          |               |                                                            |        |                        |        |                                         |        |  |  |  |

 

(footnotes on next page)

 

26

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| (1) |   | As noted in  the table, certain Properties were developed in phases and separate mortgage indebtedness  may encumber each of the various phases.   In the listing of property names, CG has been used as an abbreviation  for Colonial Grand and CV as an abbreviation for Colonial Village.                                                                                                                   |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | The maturity  date noted represents the date on which credit enhancement expires for the  tax-exempt municipal bonds put in place as part of the original financing for  the property.  The stated maturity  date for the loans is August 1, 2022.                                                                                                                                                        |
| (3) |   | This line of  credit facility bears interest at a variable rate, based on LIBOR plus a  spread of 105 basis points.  The  facility also includes a competitive bid feature that allows us to convert up  to $160 million under the line of credit to a fixed rate, for a fixed term  not to exceed 90 days.  At December  31, 2002, we had $130.0 million outstanding under the competitive bid  feature. |
| (4) |   | This credit  facility is renewable in November 2005 and provides for a one-year  extension.  Effective January 2003, we  entered into interest rate swap agreements of $150.0 million on our line of  credit, which fixes the rate on the floating line for one year at a blended  rate of 1.79% plus a spread of 105 basis points.                                                                            |
| (5) |   | Represents  floating rate debt that has been swapped to a fixed rate of 6.59%.                                                                                                                                                                                                                                                                                                                                      |
| (6) |   | $50.0  million of this medium term fixed rate debt has been swapped to a floating  index rate of 3-mo LIBOR.                                                                                                                                                                                                                                                                                                        |

 

 

In addition tothe foregoing mortgage debt, the properties in which we own partial interests(and which therefore are not consolidated in our financial statements) also aresubject to existing mortgage indebtedness. Our pro-rata share of such indebtedness as of December 31,2002  is as follows:

 
| **Subsidiary**          |   | **Company’s  Percentage  Ownership** |   | **Company’s  Share  of Principal  Balance (as of  12/31/02)** |       | **Interest  Rate** |   | **Maturity  Date** |     |
|-------------------------|--------|-------------------------------------------|--------|--------------------------------------------------------------------|------------|--------------------|--------|--------------------|----------|
|                    |   |                                      |   |                                                               |       |               |   |               |     |
| Barrington, LLC         |   | 15.0                                      | %      | $                                                                  | 974,419    |               | 7.60   | %                  | 10/01/09 |   |
| Cahaba Heights, LLC     |   | 15.0                                      | %      | 812,590                                                            |       | 7.60               | %      | 10/01/09           |     |
| Mountain Brook, LLC     |   | 15.0                                      | %      | 2,432,184                                                          |       | 7.60               | %      | 10/01/09           |     |
| Ponte Vedra, LLC        |   | 15.0                                      | %      | 1,355,650                                                          |       | 7.60               | %      | 10/01/09           |     |
| River Hills, LLC        |   | 15.0                                      | %      | 3,860,074                                                          |       | 7.60               | %      | 10/01/09           |     |
| Stockbridge, LLC        |   | 15.0                                      | %      | 1,531,596                                                          |       | 7.60               | %      | 10/01/09           |     |
| Hillwood, LLC           |   | 15.0                                      | %      | 499,500                                                            |       | 2.44               | %      | 12/01/30           |     |
| Hillwood, LLC           |   | 15.0                                      | %      | 309,746                                                            |       | 7.80               | %      | 10/01/20           |     |
| Inverness Lakes I, LLC  |   | 15.0                                      | %      | 600,000                                                            |       | 2.47               | %      | 08/01/22           |     |
| Inverness Lakes I, LLC  |   | 15.0                                      | %      | 344,953                                                            |       | 7.80               | %      | 07/01/20           |     |
| Inverness Lakes II, LLC |   | 15.0                                      | %      | 2,006,504                                                          |       | 8.11               | %      | 05/01/10           |     |
| Rocky Ridge, LLC        |   | 15.0                                      | %      | 900,000                                                            |       | 2.69               | %      | 08/01/07           |     |
| Rocky Ridge, LLC        |   | 15.0                                      | %      | 306,116                                                            |       | 7.74               | %      | 10/01/16           |     |
| Highway 150, LLC        |   | 10.0                                      | %      | 1,777,500                                                          |       | 5.94               | %      | 01/11/13           |     |
| Land Title Building     |   | 33.3                                      | %      | 534,512                                                            |       | 8.10               | %      | 02/01/15           |     |
| Orlando Fashion Square  |   | 50.0                                      | %      | 32,174,740                                                         |       | 7.00               | %      | 12/28/05           |     |
| Parkway Place           |   | 45.0                                      | %      | 27,880,953                                                         |       | 3.07               | %      | 12/20/03           |     |
| TOTAL SUBSIDIARY DEBT   |   |                                      |   | $                                                                  | 78,301,037 |               | 5.59   | %                  |     |   |

 

**Item 3.****                                                           LegalProceedings.**

 

Neither we northe properties are presently subject to any material litigation nor, to ourknowledge, is any material litigation threatened against us or the properties,other than routine litigation arising in the ordinary course of business whichis expected to be covered by liability insurance.

 

**Item 4.****                                                           Submissionof Matters to a Vote of Security Holders.**

 

No matterswere submitted to CRLP’s unitholders during the fourth quarter of 2002.

 

27

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**PART II**

 

**Item 5.****                                                           Marketfor Registrant’s Common Equity and Related Shareholder Matters.**

 

There is noestablished public trading market for the units.  As of February 28, 2003, there were 116 holders of record ofunits.

 

We have madeconsecutive quarterly distributions since its formation in the third quarter of1993.  Our ability to make distributionsdepends on a number of factors, including its net cash provided by operatingactivities, capital commitments and debt repayment schedules.  Holders of units are entitled to receivedistributions when, as and if declared by the Board of Trustees of the Trust,out of any funds legally available for that purpose.

 

The followingtable sets forth the distributions per unit paid by us during the periodsnoted:

 
| **Calendar Period** |   | **Distribution** |   |
|---------------------|--------|------------------|--------|
|                |   |             |   |
| 2002:               |   |             |   |
| First Quarter       |   | $                | .66    |   |
| Second Quarter      |   | $                | .66    |   |
| Third Quarter       |   | $                | .66    |   |
| Fourth Quarter      |   | $                | .66    |   |
|                |   |             |   |
| 2001:               |   |             |   |
| First Quarter       |   | $                | .63    |   |
| Second Quarter      |   | $                | .63    |   |
| Third Quarter       |   | $                | .63    |   |
| Fourth Quarter      |   | $                | .63    |   |

 

**Item 6.****                                                           SelectedFinancial Data.**

 

The followingtable sets forth selected financial and operating information on a historicalbasis for CRLP for each of the five years ended December 31, 2002.  

 
| **Dollar amounts in thousands, except  unit data**    |   | **2002**      |          | **2001**  |   | **2000**  |   | **1999**  |      | **1998**  |   |
|-------------------------------------------------------|--------|---------------|---------------|-----------|--------|-----------|--------|-----------|-----------|-----------|--------|
| **OPERATING DATA**                                    |   |          |          |      |   |      |   |      |      |      |   |
| Total revenue                                         |   | **$**         | **325,718**   |      | $      | 310,304   |   | $         | 295,917   |      | $      | 276,337 |   | $ | 252,438 |   |
| Expenses:                                             |   |          |          |      |   |      |   |      |      |      |   |
| Depreciation and amortization                         |   | **81,550**    |          | 70,824    |   | 62,375    |   | 53,902    |      | 47,830    |   |
| Other operating expenses                              |   | **113,261**   |          | 101,272   |   | 94,748    |   | 92,461    |      | 86,307    |   |
| Income from operations                                |   | **130,907**   |          | 138,208   |   | 138,794   |   | 129,974   |      | 118,301   |   |
| Interest expense                                      |   | **65,265**    |          | 71,397    |   | 71,855    |   | 57,211    |      | 52,063    |   |
| Other income (expense), net                           |   | **36,810**    |          | 17,154    |   | 9,865     |   | 9,489     |      | (62       | )      |
| Extraordinary loss from early  extinguishment of debt |   | **—**    |          | —    |   | (418      | )      | (628      | )         | (401      | )      |
| Income from continuing  operations                    |   | **102,452**   |          | 83,965    |   | 76,386    |   | 81,624    |      | 65,775    |   |
| Income from discontinued  operations                  |   | **8,454**     |          | 2,434     |   | 2,739     |   | 3,051     |      | 2,447     |   |
| Distributions to preferred  unitholders               |   | **24,438**    |          | 22,280    |   | 19,813    |   | 18,531    |      | 10,938    |   |
| Net income available to common  unitholders           |   | **86,468**    |          | 64,119    |   | 59,312    |   | 66,144    |      | 57,284    |   |
| Per unit – basic and diluted:                    |   |          |          |      |   |      |   |      |      |      |   |
| Net income – basic                               |   | **2.61**      |          | 2.00      |   | 1.82      |   | 1.88      |      | 1.64      |   |
| Net income - diluted                                  |   | **2.59**      |          | 2.00      |   | 1.82      |   | 1.88      |      | 1.64      |   |
| Distributions                                         |   | **2.64**      |          | 2.52      |   | 2.40      |   | 2.32      |      | 2.20      |   |
| **BALANCE SHEET DATA**                                |   |          |          |      |   |      |   |      |      |      |   |
| Land, buildings, and equipment,  net                  |   | **$**         | **1,947,072** |      | $      | 1,756,255 |   | $         | 1,769,500 |      | $      | 1,586,332 |   | $ | 1,566,840 |   |
| Total assets                                          |   | **2,129,773** |          | 2,014,383 |   | 1,943,547 |   | 1,864,146 |      | 1,756,548 |   |
| Total debt                                            |   | **1,262,193** |          | 1,191,791 |   | 1,179,095 |   | 1,039,863 |      | 909,322   |   |
| **OTHER DATA**                                        |   |          |          |      |   |      |   |      |      |      |   |
| Total properties (at end of  period)                  |   | **106**       |          | 108       |   | 115       |   | 111       |      | 106       |   |

 

28

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**Item 7.****                                                           Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

 

**GENERAL**

 

CRLP is the operating partnership of the Trust.  The Trust’s shares are listed on the NewYork Stock Exchange.  CRLP is engaged inthe ownership, development, management, and leasing of multifamily communities,office buildings, retail malls and shopping centers. CRLP owns and operatesproperties in nine states in the Sunbelt region of the United States.  As of December 31, 2002, CRLP’sreal estate portfolio consisted of 41 multifamily communities, 21 officeproperties, and 44 retail properties.

 

The followingtable sets forth information regarding CRLP’s real estate portfolio at December31, 2002 and 2001:

 
| **Type of  Property** |     | **Number of  Properties** |     | **Units/Total  Square Feet (1) (2)** |       | **Occupancy  Percentage** |     |
|-----------------------|----------|---------------------------|----------|--------------------------------------|------------|---------------------------|----------|
|                  |     |                      |     |
|                  | **2002** |                      | **2001** |                                 | **2002**   |                      | **2001** |   | **2002** |   | **2001** |   |
|                  |     |                      |     |                                 |       |                      |     |   |   |   |   |   |   |
| Multifamily           |     | **41**                    |     | 49                                   | ** ** | **14,566**                |     | 16,256 | ** ** | **88.1** | **%** | 92.8 | % |
| Office                |     | **21**                    |     | 17                                   | ** ** | **5,185,170**             |     | 3,518,276 | ** ** | **91.0** | **%** | 92.1 | % |
| Retail                |     | **44**                    |     | 42                                   | ** ** | **15,475,196**            |     | 14,950,517 | ** ** | **89.2** | **%** | 89.6 | % |

 

----

*(1)**      **Units (in this table only) refers to Multifamily units.*

*(2)**      **Units and square footage in this table include all of theunits and square footage contained in the properties that the Company maintainsa partially-owned investment.*

 

Consistentwith its diversified strategy, CRLP manages its business with three separateand distinct operating divisions: Multifamily, Office, and Retail.  Each division has an Executive VicePresident that oversees growth and operations and has a separate managementteam that is responsible for acquiring, developing, and leasing propertieswithin each division.  This structureallows CRLP to utilize specialized management personnel for each operatingdivision.  Although these divisionsoperate independently from one another, constant communication among theExecutive Vice Presidents provides CRLP with unique synergy allowing CRLP totake advantage of a variety of investment opportunities.

 

The followingdiscussion should be read in conjunction with the Consolidated FinancialStatements and Notes to Consolidated Financial Statements appearing elsewherein this report.  As used herein, theterms “Colonial” or “the Trust” includes Colonial Properties Trust, and one ormore of its subsidiaries.

 

Any statementcontained in this report which is not a historical fact, or which might beotherwise considered an opinion or projection concerning CRLP or its business,whether express or implied, is meant as, and should be considered, aforward-looking statement as that term is defined in the Private SecuritiesLitigation Reform Act of 1996. Forward-looking statements are based upon assumptions and opinionsconcerning a variety of known and unknown risks, including but not limited tochanges in market conditions, the supply and demand for leasable real estate,interest rates, increased competition, changes in governmental regulations, andnational and local economic conditions generally, as well as other factors andrisks more completely described in CRLP’s filings with the Securities andExchange Commission.  If any of theseassumptions or opinions prove incorrect, any forward-looking statements made onthe basis of such assumptions or opinions may also prove materially incorrectin one or more respects.

 

## **RESULTS OF OPERATIONS—2002 vs. 2001**

 

In 2002, CRLPexperienced growth in revenues and operating expenses, which is primarily theresult of the acquisition and development of nine properties and there-development of three properties during 2002 and 2001, net of the dispositionof 22 properties during 2002 and 2001.    As a result of theacquisitions, developments, and re-developments, net of dispositions, CRLP’sincome from operations decreased by $7.3 million, or 5.3%, for 2002 whencompared to 2001.  On a per unit basis,diluted net income is $2.59 for 2002, a 29.5% increase, compared to $2.00 for2001.  The increase in net incomeavailable to common unitholders, on a per unit basis, is primarily the resultof the gain recognized on the sales of thirteen properties and various parcelsof land in 2002 of $41.6 million, compared to the gain of $15.7 millionrecognized in 2001 on the sale of nine properties.

 

**Revenues**—Totalrevenues from continuing operations increased by $15.4 million, or 4.9%, during2002 when compared to 2001.  Revenuesgenerated by properties that were acquired, developed, or re-developed during2002 and 2001 increased $31.4 million during 2002 when compared to 2001.  However, the increase in revenues generatedby properties that were acquired, developed, or re-developed was offset by adecrease in revenues from properties disposed in which CRLP maintains acontinuing interest, of $19.5 million during 2002 compared to 2001.  Further, CRLP

 

29

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experienced a revenue increaseof $2.8 million related to the September 1, 2001 consolidation of ColonialProperties Services, Inc. (CPSI) a wholly-owned entity that provides propertymanagement services for third-party owned properties and administrativeservices to CRLP, that was previously accounted for under the equity method ofaccounting.  The remaining increaseprimarily relates to increases in rental rates at existing properties, and leasebuyouts during 2002, net of a decrease in occupancy percentages.  The office and retail divisions account forthe majority of the overall revenue increase of $19.3 million and $7.1 million,respectively, net of a decrease in the multifamily division of $15.2million.  The remaining increase of $4.2million is attributable to an increase in non-property related revenues.  The divisional revenue growth is primarilyattributable to the acquisition, development, and re-development of twomultifamily properties, six office properties, and four retail properties, netof the disposition of 14 multifamily properties, three office properties, andfive retail properties during 2002 and 2001.

 

Same-propertyrevenue increased by $0.1 million during 2002 when compared to 2001.  Of this increase, $2.8 million isattributable to the retail division, which is primarily a result of an increasein base rents, specialty leasing income and lease buyouts.  The increase in revenues from the retaildivision was offset by a decrease of $2.3 million from the multifamilydivision, which is a function of the continued decline in apartmentfundamentals over the past year as a result of a declining employment growthand a robust single family housing market driven by lower interest rates.  The remaining decrease of $0.4 million isattributable to the office division and the result of an overall slowdown inthe U.S. economy and a decrease in occupancy percentages, offset by leasebuyouts that occurred in 2002.

 

**Operating Expenses**—Totaloperating expenses from continuing operations increased by $22.7 million, or13.2%, during 2002 when compared to 2001. Operating expenses related to properties that were acquired, developed,or re-developed during 2002 and 2001 increased $19.0 million during 2002 whencompared to 2001.  However, the increasein operating expenses related to properties that were acquired, developed, orre-developed was offset by a decrease in operating expenses from propertiesdisposed in which CRLP maintains a continuing interest of $10.3 million during2002 compared to 2001.  Further, anincrease of $3.9 million relates to the consolidation of CPSI, which waseffective September 1, 2002.  The remainingincrease is primarily attributable to an increase in real estate taxes andinsurance rates at our existing properties and general corporate overheadexpenses.  Divisional property operatingexpenses increased by $11.4 million and $9.1 million for the office and retaildivisions, respectively, net of a decrease of $4.9 million for the multifamilydivision during 2002 when compared to 2001. The increase in divisional property operating expenses is primarilyattributable to the acquisition, development, and re-development of twomultifamily properties, six office properties, and four retail properties, netof the disposition of 14 multifamily properties, three office properties, andfive retail properties during 2002 and 2001. The remaining change primarily relates to increases in operatingexpenses at existing properties.

 

Same-propertyoperating expenses increased by $4.9 million or 6.2%, during 2002 when comparedto 2001.  Of this increase, $1.6 millionis related to the multifamily division and $3.3 million is related to theretail division, which is primarily the result of an increase in real estatetaxes and insurance rates in our current markets during 2002 when compared to2001.  The remaining increase isassociated with the increases in general operating expenses, utilities, and repairsand maintenance expenses.

 

**Other Income and Expenses**—Interestexpense decreased by $6.1 million, or 8.6%, during 2002 when compared to2001.  The decrease in interest expensewas primarily attributable to the decrease in the variable interest rateenvironment in 2002 as compared to 2001; CRLP has $267.2 million of floatingrate debt outstanding as of December 31, 2002. Gains from sales of property in which CRLP maintains a continuinginterest increased $19.8 million during 2002 when compared to 2001, as a resultof the sale of ten properties and various parcels of land in 2002 as comparedto nine properties in 2001.  Theincrease in gains from sales of property is primarily the result of CRLPselling more assets in 2002 than in 2001 and selling older assets with lowerrecorded book values in 2002 versus the sales in 2001.

## ** **

## **RESULTS OF OPERATIONS—2001 vs. 2000**

 

In 2001, CRLPexperienced growth in revenues and operating expenses, which is primarily theresult of the acquisition and development of 14 properties and the expansion ofone property during 2001 and 2000, net of the disposition of 15 propertiesduring 2001 and 2000.  Asa result of the acquisitions, developments, expansions, and dispositions,CRLP’s income from continuing operations decreased by $0.6 million, or 0.4%,for 2001 when compared to 2000.  On aper unit basis, diluted net income is $2.00 for 2001, an 9.9% increase,compared to $1.82 for 2000.  Theincrease in net income available to common unitholders, on a per unit basis, isprimarily the result of the gain recognized on the sales of nine properties in2001 of $15.7 million, compared to the gain of $8.2 million recognized in 2000on the sale of six properties.

 

**Revenues**—Totalrevenues increased by $14.4 million, or 4.9%, during 2001 when compared to2000.  Of this increase, $8.1 millionrelates to revenues generated by properties that were acquired, developed, orexpanded during 2001 and 2000, net of properties disposed.  The remaining increase primarily relates toincreases in rental rates at existing properties, lease buyouts, and ancillaryincome during 2001.  The office divisionaccounts for the majority of the overall revenue increase, approximately $6.8million, while the retail and multifamily divisions account for $5.7 millionand $1.5 million,

 

30

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respectively.  The divisional revenue growth is primarilyattributable to the acquisition, development, and expansion of eightmultifamily properties, three office properties, and four retail properties,net of the disposition of 11 multifamily properties, one office property, andthree retail properties during 2001 and 2000. The remaining increase is attributable to an increase in unallocatedcorporate revenues.

 

Same-propertyrevenue increased by $5.1 million or 2.1%, during 2001 when compared to2000.  Of this increase, $1.2 million,$2.6 million and $1.3 million is attributable to the multifamily, office, andretail divisions, respectively.  The increaseis primarily the result of increases in rental rates and lease buyouts, offsetby a reduction in percentage rents at our retail properties.

 

**Operating Expenses**—Totaloperating expenses increased by $15.0 million, or 9.5%, during 2001 whencompared to 2000. Of this increase, $3.5 million relates to additional propertyoperating expenses and additional depreciation and amortization of $3.6 millionassociated with properties that were acquired, developed, or expanded during2001 and 2000, net of operating expenses of properties disposed of during 2001and 2000.  Divisional property operatingexpenses increased by $1.9 million, $3.9 million, and $5.8 million for themultifamily, office, and retail divisions, respectively, during 2001 whencompared to 2000.  The increase indivisional property operating expenses is primarily attributable to theacquisition, development, and expansion of eight multifamily properties, threeoffice properties, and four retail properties, net of the disposition of 11multifamily properties, one office property, and three retail properties during2001 and 2000.  The remaining changeprimarily relates to increases in operating expenses at existing properties.

 

Same-propertyoperating expenses increased by $0.7 million or 1.0%, during 2001 when comparedto 2000.  Of this increase, $0.4 millionis related to the office division and $0.8 million is related to the retaildivision, which is primarily the result of an increase in real estate taxes andinsurance rates in our current markets during 2001 compared to 2000.  The increases within the office and retaildivisions were offset by a decrease in the multifamily division of $0.5million, which was primarily the result of a decrease in repairs andmaintenance expenses.

 

**Other Income and Expenses**—Interestexpense decreased by $0.5 million, or 0.6%, during 2001 when compared to2000.  The decrease in interest expenseis primarily attributable to the decrease in the variable interest rateenvironment in 2001 as compared to 2000, of which CRLP has $264.1 million offloating rate debt outstanding as of December 31, 2001.  Gains from sales of property increased $7.5million during 2001 when compared to 2000, as a result of the sale of 9properties in 2001 as compared to 5 properties in 2000.

 

**SUMMARY OF CRITICAL ACCOUNTING POLICIES**

 

Management ofCRLP considers the following accounting policies to be critical to the reportedoperating results of CRLP:

 

**Real Estate Development**

 

CRLPcapitalizes all costs, including interest and real estate taxes that areassociated with a development, construction, expansion, or leasing of realestate investments as a cost of the property.   Allother expenditures necessary to maintain a property in ordinary operatingcondition are expensed as incurred.

 

CRLP evaluatesits properties, at least annually or upon the occurrence of significant changesin the operations, to assess whether any impairment indications are present,including recurring operating losses and significant adverse changes in legalfactors or business environment that affect the recovery of the recorded value.  If any property is considered impaired, aloss is provided to reduce the carrying value of the property to its estimatedfair value.  The valuation of realestate investments involves many subjective assumptions dependent upon futureeconomic events that affect the ultimate value of the property.

 

**Principles of Consolidation**

 

Theconsolidated financial statements include the accounts of CRLP, ColonialProperties Services, Inc. (CPSI) and Colonial Properties Services LimitedPartnership (CPSLP).  All significantinter-company balances and transactions have been eliminated in theconsolidated financial statements. Investments in entities that CRLP does not control through majorityvoting interest or where the other owner has substantial participating rightsare not consolidated and are reflected as investments in partially ownedentities.

 

**Revenue Recognition**

 

CRLP, as alessor, has retained substantially all of the risks and benefits of ownershipof its properties and accounts for its leases as operating leases.  Rental income attributable to leases isrecognized on a straight-line basis over the terms of the related lease.  Certain leases contain provisions foradditional rent based on a percentage of tenant sales.  Percentage rents are recognized in theperiod in which sales thresholds are met. Recoveries from tenants for taxes, insurance, and other propertyoperating expenses are recognized in the period the applicable costs areincurred in accordance with the terms of the respective leases.

 

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Other incomereceived from long-term contracts signed in the normal course of business arerecognized in accordance with the terms of the specific contract.  Property management and development feeincome is recognized when earned for services provided to third parties.

 

**Valuation of Receivables**

 

CRLP issubject to tenant defaults and bankruptcies at its Office and Retail propertiesthat could affect the collection of outstanding receivables.  In order to mitigate these risks, CRLPperforms credit review and analysis on all commercial tenants and significantleases before they are executed.  CRLPevaluates the collectibility of outstanding receivables and records allowancesas appropriate.  CRLP’s policy is torecord allowances for all outstanding receivables greater than 60 days past dueat its Office and Retail properties.

 

Due to theshort-term nature of the leases at its Multifamily properties, generally sixmonths to one year, CRLP’s exposure to tenant defaults and bankruptcies isminimized.  CRLP’s policy is to recordallowances for all outstanding receivables greater than 30 days past due at itsMultifamily properties.

 

**Accounting Policies for Derivatives**

 

CRLP hascertain involvement with derivative financial instruments but does not use themfor trading or speculative purposes. Interest rate cap agreements and interest rate swaps are used to reducethe potential impact of increases in interest rates on variable-rate debt.  CRLP adjusts its balance sheets on anongoing quarterly basis to reflect current fair market value of itsderivatives.  Changes in the fair valueof derivatives are recorded each period in earnings or comprehensive income, asappropriate.  The ineffective portion ofthe hedge is immediately recognized into earnings to the extent that the changein value of a derivative does not perfectly offset the change in value of theinstrument being hedged.  The unrealizedgains and losses held in accumulated other comprehensive income (loss) will bereclassified to earnings over time and occurs when the hedged items are alsorecognized in earnings.

 

CRLP formallydocuments all relationships between hedging instruments and hedged items, aswell as its risk management objective and strategy for undertaking the hedge.This process includes specific identification of the hedging instrument and thehedge transaction, the nature of the risk being hedged and how the hedginginstrument’s effectiveness in hedging the exposure to the hedged transaction’svariability in cash flows attributable to the hedged risk will be assessed.Both at the inception of the hedge and on an ongoing basis, CRLP assesseswhether the derivatives that are used in hedging transactions are highlyeffective in offsetting changes in cash flows or fair values of hedged items.CRLP is required to discontinue hedge accounting if a derivative is notdetermined to be highly effective as a hedge or has ceased to be a highlyeffective hedge.

# ** **

# **ACQUISITION AND DEVELOPMENTACTIVITY**

 

**MultifamilyProperties**—During 2002, CRLP completed development of288 apartment units in two multifamily communities and acquired land on whichit intends to develop additional multifamily communities.  The aggregate investment in the multifamilydevelopments during 2002 was $9.0 million.

 

**Office Properties**—During2002, CRLP added approximately 1,379,000 square feet of office space andcertain parcels of land to be used for future development with the acquisitionof three office properties at a total cost of $187.6 million.  Additionally, CRLP increased its officeportfolio by 199,585 square feet with the development of an officebuilding.  CRLP also continueddevelopment on one office property in Orlando, Florida.  The aggregate investment in the officedevelopments during 2002 was $32.5 million. Management estimates that it will invest an additional $6.1 million tocomplete this property.

 

**Retail Properties**—During2002, CRLP increased its retail portfolio by approximately 112,186 square feetwith the acquisition of one retail property at a cost of $6.6 million.  Additionally, CRLP completed the developmentof one retail property in Birmingham, Alabama and the re-development of oneretail property in Huntsville, Alabama with a joint venture partner, whichadded approximately 796,000 square feet to the retail portfolio.  The aggregate investment in the developmentand re-development during 2002 was $42.5 million.  CRLP also began the development of one community shopping centerin Birmingham, Alabama.  Managementanticipates that it will invest an additional $6.3 million to complete theretail development.

# ** **

# **LIQUIDITY AND CAPITAL RESOURCES**

 

During 2002,CRLP invested $281.5 million in the acquisition, development, andre-development of properties.  Thisacquisition and development activity increased CRLP’s office and retailproperty holdings.  CRLP financed thegrowth through proceeds from the issuance of $100.0 million of senior notes,public offerings of equity through the Trust totaling $17.6 million during2002, advances on its bank line of credit, proceeds received from thedisposition of assets totaling $138.6 million, proceeds from CRLP’s dividendreinvestment plan, proceeds of $52.8 million related to the secured financingof three properties, and cash from operations.

 

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### **FINANCING ACTIVITIES**

 

On February25, 2002, the Trust entered into a transaction in which 560,380 common sharesof beneficial interest were issued at $33.37 per share, resulting in netproceeds of $17.6 million to the Trust, which proceeds were contributed by theTrust to CRLP in exchange for general partnership units and used to repayoutstanding balances under CRLP’s unsecured line of credit.  Salomon Smith Barney deposited 260,710shares into The Equity Focus Trust REIT Portfolio Series, 2002-A, a newlyformed unit investment trust, and 299,670 shares were deposited into Cohen& Steers Quality Income Realty Fund, Inc. During August 2002, CRLP completed a senior notes debt offering of$100.0 million at 6.88% with a maturity of August 2012.  Additionally during 2002, CRLP receivedproceeds of $52.8 million related to the financing of three properties, whichis collateralized by the related properties.

 

CRLP continuedits asset recycling program, which allows CRLP to maximize its investmentreturns through the sale of assets that have reached their maximum investmentpotential and reinvest the proceeds into opportunities with more growthpotential.  Following are thedispositions that occurred during 2002:

 
| **Property**                           |   | **Location**   |   | **Total  Units/Sq. Feet** |   | **Sales  Price**   |    |
|----------------------------------------|--------|----------------|--------|---------------------------|--------|--------------------|---------|
|                                   |   |           |   |                      |   | **(in thousands)** |    |
|                                   |   |           |   |                      |   |               |    |
| **Multifamily  Properties**            |   |           |   |                      |   |               |    |
|                                   |   |           |   |                      |   |               |    |
| Colonial Grand at  Carrollwood         |   | Tampa, FL      |   | 244                       |   | $                  | 15,244  |   |
| Colonial Grand at Palma  Sola          |   | Bradenton, FL  |   | 340                       |   | 19,036             |    |
| Colonial Village at  Cordova           |   | Pensacola, FL  |   | 152                       |   | 5,360              |    |
| Colonial Village at  Hillcrest         |   | Mobile, AL     |   | 104                       |   | 5,178              |    |
| Colonial Village at  McGehee           |   | Montgomery, AL |   | 468                       |   | 18,390             |    |
| Colonial Village at Monte  D’Oro  |   | Birmingham, AL |   | 200                       |   | 11,166             |    |
| Colonial Village at Oakleigh           |   | Pensacola, FL  |   | 176                       |   | 10,955             |    |
| Ski Lodge – Tuscaloosa            |   | Tuscaloosa, AL |   | 304                       |   | 9,180              |    |
|                                   |   |           |   | 1,988                     |   | 94,509             |    |
| **Office  Properties**                 |   |           |   |                      |   |               |    |
|                                   |   |           |   |                      |   |               |    |
| University Park                        |   | Orlando, FL    |   | 72,496                    |   | 5,012              |    |
| Colonnade 4100 & 4200              |   | Birmingham, AL |   | 32,000                    |   | 3,680              |    |
|                                   |   |           |   | 104,496                   |   | 8,692              |    |
| **Retail  Properties**                 |   |           |   |                      |   |               |    |
|                                   |   |           |   |                      |   |               |    |
| Colonial Promenade  University Park II |   | Orlando, FL    |   | 183,500                   |   | 11,694             |    |
| Colonial Promenade Madison  (1)        |   | Huntsville, AL |   | 110,712                   |   | 3,163              |    |
| Colonial Promenade Hoover  (2)         |   | Birmingham, AL |   | 155,231                   |   | 20,530             |    |
|                                   |   |           |   | 449,443                   |   | 35,387             |    |
|                                   |   |           |   |                      |   |               |    |
| Total                                  |   |           |   |                      |   | $                  | 138,588 |   |

 

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*(1)**      **The Company sold one-half of its 50% interest in theproperty.*

*(2)**      **The Company sold 90% of its interest in the property.*

 

CRLP used theproceeds to repay a portion of the borrowings under CRLP’s unsecured line ofcredit and to support CRLP’s future investment activities.  In accordance with SFAS No. 144, *Accountingfor the Impairment or Disposal of Long-Lived Assets*, CRLP recordsindividual property sales as discontinued operations, unless CRLP maintains asignificant continuing involvement with the properties that have beensold.  During 2002, the above propertiesthat were sold and classified as discontinued operations were University Park,Colonial Promenade University Park II, and Colonnade 4100 & 4200.  CRLP maintains a significant continuinginvolvement through a management contract or an ownership percentage in theremaining properties.

 

At December31, 2002, CRLP had an unsecured bank line of credit providing for totalborrowings of up to $320 million.  Thisline of credit agreement bears interest at LIBOR plus a spread calculated froma pricing grid based on CRLP’s unsecured debt ratings.  Based on CRLP’s debt ratings at December 31,2002, the spread was 105 basis points. The line of credit is renewable in November 2005, and provides for aone-year extension.  The line of creditagreement includes a competitive bid feature that will allow CRLP to convert upto $160 million under the line of credit to a fixed rate,

 

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for a fixed term not to exceed90 days.  The credit facility isprimarily used by CRLP to finance property acquisitions and developments andhad an outstanding balance at December 31, 2002, of $208.3 million.  The interest rate of this short-termborrowing facility, including the competitive bid balance, was 2.38% and 3.08%at December 31, 2002 and 2001, respectively.

 

At December31, 2002, CRLP’s total outstanding debt balance was $1.26 billion.  The outstanding balance includes fixed ratedebt of $995.0 million, or 78.8%, and floating-rate debt of $267.2 million, or21.2%.  CRLP’s total marketcapitalization as of December 31, 2002 was $2.7 billion and its ratio of debtto total market capitalization was 47.1%. Certain loan agreements of CRLP contain restrictive covenants, whichamong other things require maintenance of various financial ratios.  At December 31, 2002, CRLP was in compliancewith these covenants.

### ** **

### **CREDIT RATINGS**

 

CRLP’s creditratings as of December 31, 2002 are as follows:

 
| **Rating Agency**          |   | **Rating (1)** |   | **Last  update**   |   |
|----------------------------|--------|----------------|--------|--------------------|--------|
|                       |   |           |   |               |   |
| Standard & Poor’s |   | BBB-           |   | September 16, 2002 |   |
| Moody’s               |   | Baa3           |   | July 18, 2002      |   |
| Fitch                      |   | BBB-           |   | July 18, 2002      |   |

 

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*(1)**      **Ratings outlook is “stable”.*

 

CRLP’s credit ratingsare investment grade.  If CRLPexperienced a credit downgrade, it may be limited in its access to capital inthe unsecured debt market, which CRLP has historically utilized to fund itsinvestment activities.  In addition,CRLP’s spread on its $320 million unsecured line of credit would increase aspreviously discussed.

 

**CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIALCOMMITMENTS**

 

The followingtables summarize the material aspects of our future contractual obligations andcommercial commitments as of December 31, 2002:

 

**Contractual Obligations**

 
|                          |   | **Payments  Due in Fiscal** |      |
|-------------------------------|--------|-----------------------------|-----------|
| **(in  thousands)**           |   | **Total**                   |      | **2003** |   | **2004** |   | **2005** |   | **2006** |   | **2007** |   | **Thereafter** |   |
|                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |
| **Long-Term  Debt:**          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated (1)              |   | $                           | 1,262,193 |   | $ | 107,675 |   | $ | 129,040 |   | $ | 299,916 |   | $ | 74,891 |   | $ | 174,488 |   | $ | 476,183 |   |
| Partially Owned Entities  (1) |   | 78,335                      |      | 28,402 |   | 490 |   | 31,719 |   | 208 |   | 225 |   | 17,291 |   |
| **Total  Long-Term Debt**     |   | 1,340,528                   |      | 136,077 |   | 129,530 |   | 331,635 |   | 75,099 |   | 174,713 |   | 493,474 |   |
|                          |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Ground lease commitments      |   | 7,781                       |      | 113 |   | 113 |   | 113 |   | 113 |   | 113 |   | 7,216 |   |
| **Total**                     |   | $                           | 1,348,309 |   | $ | 136,190 |   | $ | 129,643 |   | $ | 331,748 |   | $ | 75,212 |   | $ | 174,826 |   | $ | 500,690 |   |

 

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*(1)**      **Represents the Company’s pro rata share of principalmaturities and excludes net premiums and discounts.*

 

**Other Commercial Commitments**

 
| **(in  thousands)**               |   | **Total  Amounts  Committed** |   | **Amounts  expiring in fiscal** |   |
|-----------------------------------|--------|-------------------------------|--------|---------------------------------|--------|
|                              |   | **2003**                      |   | **2004**                        |   | **2005** |   | **2006** |   | **2007** |   | **Thereafter** |   |
|                              |   |                          |   |                            |   |   |   |
|                              |   |                          |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Standby Letters of Credit         |   | $                             | 550    |                            | $      | 550 |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   |
| Guarantees                        |   | 13,743                        |   | 3,300                           |   | — |   | 9,443 |   | — |   | — |   | 1,000 |   |
| Other Commercial  Commitments     |   | 4,000                         |   | —                          |   | — |   | — |   | — |   | 4,000 |   | — |   |
| **Total  Commercial Commitments** |   | $                             | 18,293 |                            | $      | 3,850 |   | $ | — |   | $ | 9,443 |   | $ | — |   | $ | 4,000 |   | $ | 1,000 |   |

 

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# **GUARANTEES AND OTHER ARRANGEMENTS**

 

During January2000, CRLP initiated and completed an Executive Unit Purchase Program (UnitPurchase Program), in which the Board of Trustees and certain members of CRLP’smanagement were able to purchase 425,925 Units of CRLP.  Under the Unit Purchase Program, the Boardof Trustees and the members of management obtained full-recourse personal loansfrom an unrelated financial institution, in order to purchase the Units.  The Units, which have a market value ofapproximately $13.8 million at December 31, 2002, are pledged as collateralagainst the loans.  CRLP has provided aguarantee to the unrelated financial institution for the personal loans, whichmature in January 2005.  The value of theUnits purchased under the Unit Purchase Program was approximately $10.0million.  At December 31, 2002, noliability was recorded on CRLP’s books for the guarantee.

 

In August2001, CRLP entered into an agreement to provide services to an unrelated thirdparty in connection with the third party’s development of a $30.0 millionmultifamily property in North Carolina. CRLP was engaged to serve as development consultant and leasing andmanagement agent for this property.  Inaddition, for a fee, CRLP is serving as a guarantor for a $3.3 million workingcapital loan obtained by the three principals of the third party entity, whichloan is primarily collateralized jointly and severally by the personal assetsof the borrowers, and matures in August 2003. At December 31, 2002, no liability was recorded on CRLP’s books for theguarantee.  CRLP has a right of firstrefusal to purchase the property should the third party elect to sell.  Over the term of the agreement, CRLP expectsto earn market fees for its services.

 

During August2002, in connection with the purchase of Heathrow International BusinessCenter, CRLP entered into an agreement to acquire one new office building thatcontains 192,000 square feet.  Theclosing for this acquisition is anticipated to occur upon the earlier of August2005 or at such time that the seller achieves certain leasing targets for theproperty.  The purchase price will bedetermined based upon the percentage of gross leasable area actually leased andthe net operating income generated by the leases at the time of acquisition.

 

DuringDecember 2002, CRLP entered into an agreement with an unrelated third party inconnection with the third party’s development of a $23.5 million multi-familyproperty in Tampa, Florida.  CRLP hasagreed to loan approximately $4.0 million, which represents 17.0% of thedevelopment costs to the third party during the development of theproperty.  Under the agreement, thebalance of the loan matures in December 2007. At December 31, 2002, no amount had been funded to the unrelated thirdparty and CRLP has no liability recorded on its books for the potential loanamount.  CRLP has a right of firstrefusal to purchase the property should the third party elect to sell.

 

DuringDecember 2002, CRLP sold 90% of its interest in Colonial Promenade Hoover for atotal sales price of $20.5 million, and formed the Highway 150 LLC, in whichCRLP maintains 10% ownership and manages the property.  In connection with the formation of theHighway 150 LLC, CRLP executed a guaranty, pursuant to which CRLP would serveas a guarantor of $1.0 million of the debt related to the joint venture, whichis collateralized by the Colonial Promenade Hoover retail property.  CRLP’s maximum guarantee of $1.0 million maybe requested by the lender, only after all of the rights and remedies availableunder the associated note and security agreements have been exercised andexhausted.  At December 31, 2002, thetotal amount of debt of the joint venture was approximately $17.8 million andmatures in December 2012.  At December31, 2002, no liability was recorded on CRLP’s books for the guarantee.

 

In connectionwith the contribution of certain assets to CRLP, certain partners of CRLP haveguaranteed indebtedness of CRLP totaling $27.3 million at December 31,2002.  The guarantees are held in orderfor the contributing partners to maintain their tax deferred status on thecontributed assets.  These individualshave not been indemnified by CRLP. Additionally, certain unitholders of CRLP and trustees of the Trust haveguaranteed indebtedness of CRLP totaling $0.5 million at December 31,2002.  CRLP has indemnified theseindividuals from their guarantees of this indebtedness.

 

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### **DERIVATIVE INSTRUMENTS**

 

In the normalcourse of business, CRLP is exposed to the effect of interest ratechanges.  CRLP limits these risks byfollowing established risk management policies and procedures including the useof derivatives.  CRLP’s objective inusing derivatives is to add stability to interest expense and to manage itsexposure to interest rate movements or other identified risks.  Toaccomplish this objective, CRLP primarily uses interest rate swaps and caps aspart of its cash flow hedging strategy. Interest rate swaps designated as cash flow hedges involve the receiptof variable-rate amounts in exchange for fixed-rate payments over the life ofthe agreements without exchange of the underlying principal amount. During 2002, such derivatives were used to hedge the variable cash flowsassociated with existing variable-rate debt and existing lines of credit.  Interest rate swaps designated as fair valuehedges involve the receipt of fixed-rate payments for variable-rate paymentsover the life of the agreements without exchange of the underlying principalamount.

 

CRLP hasentered into several different hedging transactions in an effort to manageexposure to changes in interest rates. The following table summarizes the notional values, fair values andother characteristics of CRLP’s derivative financial instruments at December31, 2002.  The notional value atDecember 31, 2002 provides an indication of the extent of CRLP’s involvement inthese instruments at that time, but does not represent exposure to credit, interestrate, or market risk.

 
| **Product Type**               |   | **Notional  Value** |    | **Interest  Rate** |   | **Maturity** |    | **Fair Value  At December 31, 2002** |   |
|--------------------------------|--------|---------------------|---------|--------------------|--------|--------------|---------|--------------------------------------|--------|
|                           |   |                |    |               |   |         |    | **(in thousands)**                   |   |
| Interest Rate SWAP, Cash Flow  |   | $30.2 - $27.7       | million | 5.932              | %      | 1/01/06      |    | $                                    | (3,117 | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0    | million            | 2.319  | %            | 1/02/03 |                                 | (38    | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 25.0    | million            | 2.430  | %            | 1/01/03 |                                 | (21    | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0    | million            | 2.113  | %            | 1/02/04 |                                 | (370   | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0    | million            | 1.637  | %            | 1/02/04 |                                 | (131   | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0    | million            | 1.615  | %            | 1/02/04 |                                 | (119   | ) |
| Interest Rate SWAP, Fair Value |   | $                   | 50.0    | million            | 5.015  | %            | 7/26/04 |                                 | 2,633  |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 21.1    | million            | 6.850  | %            | 6/29/04 |                                 | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 17.9    | million            | 6.850  | %            | 7/06/04 |                                 | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 30.4    | million            | 11.200 | %            | 6/30/03 |                                 | — |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 17.1    | million            | 4.840  | %            | 4/1/04  |                                 | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 27.0    | million            | 4.840  | %            | 4/1/04  |                                 | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 8.7     | million            | 4.840  | %            | 4/1/04  |                                 | — |   |
|                                |        |                     |         |                    |        |              |         |                                      |        |  |  |

 

CRLP does notuse derivatives for trading or speculative purposes.  Further, CRLP has a policy of only entering into contracts withmajor financial institutions based upon their credit ratings and other factors.  When viewed in conjunction with theunderlying and offsetting exposure that the derivatives are designed to hedge,CRLP has not sustained a material loss from those instruments nor does itanticipate any material adverse effect on its net income or financial positionin the future from the use of derivatives.

 

At December31, 2002, derivatives with a fair value of $2.6 million were included in otherassets and derivatives with a fair value of $3.8 million were included in otherliabilities.  The change in net unrealizedgains/losses of $3.6 million in 2002 for derivatives designated as cash flowhedges is separately disclosed in the statement of partners’ capital. Hedgeineffectiveness of $23,000 on cash flow hedges was recognized in other income(expense) during 2002.

 

Amountsreported in accumulated other comprehensive income related to derivatives willbe reclassified to interest expense as interest payments are made on CRLP’svariable-rate debt. The change in net unrealized losses on cash flow hedgesreflects a reclassification of $2.2 million of net unrealized losses fromaccumulated other comprehensive income (loss) to interest expense during 2002.During 2003, CRLP estimates that an additional $2.3 million will bereclassified to earnings of the current balance held in accumulated othercomprehensive income (loss).

 

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**RELATED PARTYTRANSACTIONS**

 

CRLP has used affiliated construction companies to manage and overseecertain of its development, re-development and expansion projects.  The affiliated construction companiesutilized by CRLP are headquartered in Alabama and have completed numerousprojects within the Sunbelt region of the United States.  Through the use of market survey data, CRLPnegotiates the contract price of each development, re-development or expansionproject with the affiliated construction companies and presents each project tothe Trust’s Management Committee for review and approval.  Upon approval by the Management Committee,the Management Committee presents each project to the independent members ofthe Executive Committee of the Board of Trustees for final approval.

 

CRLP paid $1.6 million, $33.6 million, and $46.7 million for propertydevelopment costs to Lowder Construction Company, Inc., a construction companyowned by The Colonial Company (TCC) in which Mr. Thomas H. Lowder (Chairman ofthe Board and Chief Executive Officer) and Mr. James K. Lowder (trustee) eachown a 50% interest, during the years ended December 31, 2002, 2001 and 2000,respectively.  Of these amounts, $1.5million, $30.7 million, and $43.2 million was then paid to unaffiliatedsubcontractors for the construction of these development and expansion projectsduring 2002, 2001 and 2000, respectively. CRLP had outstanding construction invoices and retainage payable toLowder Construction Company, Inc. totaling $0.4 million at December 31,2001.  There were no outstandingconstruction invoices or retainage payable to Lowder Construction Company, Inc.at December 31, 2002.  In each ofthe following transactions, the independent members of the Executive Committeeapproved such transactions unanimously.

 

CRLP also paid $35.3 million, $67.0 million, and $31.3 million forproperty construction costs to Brasfield & Gorrie General Contractors, Inc.(B&G), a construction company partially-owned by Mr. M. Miller Gorrie(trustee) during the years ended December 31, 2002, 2001 and 2000,respectively.  Of these amounts, $32.1million, $60.3 million, and $28.2 million was then paid to unaffiliatedsubcontractors for the construction of these development projects during 2002,2001 and 2000, respectively.  CRLP hadoutstanding construction invoices and retainage payable to this constructioncompany totaling $1.8 million at December 31, 2001.  There were no outstanding constructioninvoices or retainage payable to B&G at December 31, 2002.

 

In March 2002, CPSI acquired a 20% interest in three aircraft fromNRH Enterprises, L.L.C., (NRH) an entity in which Mr. Harold Ripps (trustee)indirectly has an approximate 33% interest, for approximately $1.4million.  Additionally, CPSI enteredinto a joint ownership agreement with the other owners of the aircraft,including NRH, under which CPSI pays NRH, as agent for all of the owners of theaircraft, a monthly fee of $10,000, plus $1,400 per hour of the Trust’s flighttime, to cover the operating expenses of the aircraft.  Further, CPSI entered into an aircraftservices agreement with MEDJET Assistance, L.L.C., (MEDJET) an entity in whichMr. Ripps indirectly has an approximate 40% interest.  Under this agreement, CPSI is obligated to pay a monthly fee of$5,000 to MEDJET for managing the use, maintenance, storage, and supervision ofthe aircraft.  NRH pays this $5,000monthly fee to MEDJET, on behalf of CPSI, from the $10,000 monthly fee referredto above.  During 2002, CPSI paidapproximately $254,000 to NRH for usage and service of the aircraft under theabove agreements.

 

In July 2002, CRLP acquired three single family homes located inMontgomery, Alabama, from Lowder New Homes, Inc., an entity owned by TCC, for atotal purchase price of approximately $0.5 million, which will be operated asrental property.  The homes werepurchased as part of a corporate rental program for an automobile manufacturerthat is building a manufacturing plant near Montgomery, Alabama.  Under the corporate rental program,executives of the automobile manufacturer will rent the homes from CRLP for aninitial term of three years, with the option to extend the lease, and haveagreed to lease additional multifamily units at Colonial Grand at Promenadelocated in Montgomery, Alabama.  Thehomes were funded through CRLP’s unsecured line of credit.

 

During September 2000, CRLP purchased a parcel of land fromColonial Commercial Investments, Inc. (CCI), which is owned by James K. Lowderand Thomas H. Lowder, through the issuance of 12,477 limited partnership unitsin CRLP valued at approximately $0.3 million. Subsequently, the parcel of land was sold in excess of cost by CRLP in June 2001.

 

CRLP and its subsidiaries leased space to certain entities in which Mr.Thomas H. Lowder, Mr. James K. Lowder, and Mr. M. Miller Gorrie have aninterest and received market rent from these entities of approximately $1.0million, $1.1 million, and $1.5 million during the years endedDecember 31, 2002, 2001, and 2000, respectively.  Additionally, CRLP and its subsidiaries provided management andleasing services to certain related entities and received fees from theseentities of approximately $0.3 million during the years ended December 31,2002, 2001, and 2000.

 

Colonial Insurance Agency, a corporation owned by TCC, has providedinsurance brokerage services for CRLP. The aggregate amount paid by CRLP to Colonial Insurance Agency for theseservices during the years ended December 31, 2002, 2001, and 2000 were$5.0 million, $4.4 million, and $3.3 million, respectively.  Of these amounts, $4.7 million, $4.2 millionand $3.1 million was then paid to unaffiliated insurance carriers for insurancepremiums during 2002, 2001 and 2000, respectively.

 

37

----

 

**OUTLOOK**

 

Management intends to maintain CRLP’s strength through continueddiversification, while pursuing acquisitions and developments that meet Colonial’scriteria for property quality, market strength, and investment return.  Management will continue to use its line ofcredit to provide short-term financing for acquisition, development, andre-development activities and plans to continue to replace significantborrowings under the bank line of credit with funds generated from the sale ofadditional debt and equity securities and permanent financing, as marketconditions permit.  Management believesthat these potential sources of funds, along with the possibility of issuinglimited partnership units of CRLP in exchange for properties, will provide CRLPwith the means to finance additional acquisitions, developments, andexpansions.

 

In addition to the issuance of equity and debt, management isinvestigating alternate financing methods and sources to raise futurecapital.  Private placements, jointventures, commercial paper, and non-traditional equity and debt offerings aresome of the alternatives CRLP is contemplating.

 

Management anticipates that its net cash provided by operations and itsexisting cash balances will provide the necessary funds on a short- and long-term basis to cover its operating expenses, interest expense on outstandingindebtedness, recurring capital expenditures, and dividends to shareholders inaccordance with Internal Revenue Code requirements applicable to real estateinvestment trusts.

 

##### **INFLATION**

##### ** **

Leases at the multifamily properties generally provide for an initialterm of six months to one year and allow for rent adjustments at the time ofrenewal.  Leases at the officeproperties typically provide for rent adjustments and the pass-through ofcertain operating expenses during the term of the lease.  Substantially all of the leases at theretail properties provide for the pass-through to tenants of certain operatingcosts, including real estate taxes, common area maintenance expenses, andinsurance. All of these provisions permit CRLP to increase rental rates orother charges to tenants in response to rising prices and, therefore, serve tominimize CRLP’s exposure to the adverse effects of inflation.

 

An increase in general price levels may immediately precede, oraccompany, an increase in interest rates. At December 31, 2002, CRLP’s exposure to rising interest rates wasmitigated by the existing debt level of 47.1% of CRLP’s total marketcapitalization, the high percentage of fixed rate debt (78.8%), and the use ofinterest rate swaps to effectively fix the interest rate on $150.0 millionthrough January 2004, and approximately $30.0 million throughJanuary 2006.  As it relates to theshort-term, increases in interest expense resulting from increasing inflationis anticipated to be less than future increases in income before interest.

 

**Item7a.****                                                     Quantitativeand Qualitative Disclosures about Market Risk**

 

We are exposed to interest rate changes primarily as a result of ourunsecured line of credit and long-term debt used to maintain liquidity and fundcapital expenditures and expansion of our real estate investment portfolio andoperations.  Our interest rate riskmanagement objective is to limit the impact of interest rate changes onearnings and cash flows and to lower our overall borrowing costs.  To achieve our objectives, we borrowprimarily at fixed rates and may enter into derivative financial instrumentssuch as interest rate swaps, caps and treasury locks in order to mitigate theinterest rate risk on a related financial instrument.  CRLP does not enter into derivative or interest rate transactionsfor speculative purposes.

 

The table below presents the principal amounts, weighted averageinterest rates, fair values and other terms required by year of expectedmaturity to evaluate the expected cash flows and sensitivity to interest ratechanges.  Alsoincluded is a summary of our swap contracts and rate caps at December 31,2002.

 

38

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| **(amounts in thousands)**                      |   | **2003** |    | **2004** |    | **2005** |    | **2006** |   | **2007** |    | **Thereafter** |    | **Total** |    | **Estimated  Fair  Value** |    |
|-------------------------------------------------|--------|----------|---------|----------|---------|----------|---------|----------|--------|----------|---------|----------------|---------|-----------|---------|----------------------------|---------|
|                                            |   |     |    |     |    |     |    |     |   |     |    |           |    |      |    |                       |    |
| Fixed Rate Debt                                 |   | $        | 102,852 |     | 65,823  |     | 184,180 |     | 75,000 |     | 175,000 |           | 337,165 |      | 940,020 |                       | 982,861 |   |
| Average interest rate at December 31, 2002 |   | 7.1      | %       | 7.7      | %       | 5.4      | %       | 8.0      | %      | 7.0      | %       | 7.4            | %       | 7.0       | %       | —                     |    |
|                                            |   |     |    |     |    |     |    |     |   |     |    |           |    |      |    |                       |    |
| Variable Debt                                   |   | $        | 505     |     | 50,000  |     | 133,270 |     | — |     | —  |           | 138,397 |      | 322,172 |                       | 322,172 |   |
| Average interest rate at December 31, 2002 |   | 2.9      | %       | 3.8      | %       | 2.4      | %       | —   |   | —   |    | 2.6            | %       | 2.7       | %       | —                     |    |
|                                            |   |     |    |     |    |     |    |     |   |     |    |           |    |      |    |                       |    |
| Interest Rate SWAPs                             |   |     |    |     |    |     |    |     |   |     |    |           |    |      |    |                       |    |
|                                            |   |     |    |     |    |     |    |     |   |     |    |           |    |      |    |                       |    |
| Variable to fixed                               |   | $        | 75,000  |     | 150,000 |     | —  |     | 29,082 |     | —  |           | —  |      | 254,082 |                       | (3,797  | ) |
| Average pay rate                                |   | 2.4      | %       | 1.8      | %       | —   |    | 6.6      | %      | —   |    | —         |    | 2.5       | %       | —                     |    |
|                                            |   |     |    |     |    |     |    |     |   |     |    |           |    |      |    |                       |    |
| Fixed to variable                               |   | $        | —  |     | 50,000  |     | —  |     | — |     | —  |           | —  |      | 50,000  |                       | 2,633   |   |
| Average pay rate                                |   | —   |    | 5.0      | %       | —   |    | —   |   | —   |    | —         |    | 5.0       | %       | —                     |    |
|                                            |   |     |    |     |    |     |    |     |   |     |    |           |    |      |    |                       |    |
| Interest Rate Caps                              |   | $        | 30,379  |     | 91,738  |     | —  |     | — |     | —  |           | —  |      | 122,117 |                       | 5       |   |
| Interest Rate                                   |   | 11.2     | %       | 5.7      | %       | —   |    | —   |   | —   |    | —         |    | 7.1       | %       | —                     |    |
|                                                 |        |          |         |          |         |          |         |          |        |          |         |                |         |           |         |                            |         |  |  |  |

 

The table incorporates only those exposures that exist as ofDecember 31, 2002; it does not consider those exposures or positions,which could arise after that date. Moreover, because firm commitments are not presented in the table above,the information presented therein has limited predictive value.  As a result, our ultimate realized gain orloss with respect to interest rate fluctuations will depend on the exposuresthat arise during the period, our hedging strategies at that time, and interestrates.

 

**Item8.****                                                           FinancialStatements and Supplementary Data.**

 
| The following are filed as a part of this report:                                                                       |
|-------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                    |
| Report of Independent Accountants                                                                                       |
|                                                                                                                    |
| Financial Statements:                                                                                                   |
|                                                                                                                    |
| Consolidated Balance Sheets as of December 31, 2002 and 2001                                                       |
|                                                                                                                    |
| Consolidated Statements of Income and  Comprehensive Income for the years ended December 31, 2002, 2001, and  2000 |
|                                                                                                                    |
| Consolidated Statements of Partners’ Equity  for the years ended December 31, 2002, 2001, and 2000            |
|                                                                                                                    |
| Consolidated Statements of Cash Flows for  the years ended December 31, 2002, 2001, and 2000                       |
|                                                                                                                    |
| Notes to Consolidated Financial Statements                                                                              |

 

39

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**COLONIAL REALTY LIMITED PARTNERSHIP**

***CONSOLIDATED BALANCESHEETS***

*(Amounts in Thousands)*

 

December 31, 2002 and 2001

 
|                                                                                                                                        |   | **2002**      |          | **2001**   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------------|------------|--------|
| **ASSETS**                                                                                                                                  |   |          | ** **    |       |   |
| Land, buildings, & equipment, net                                                                                                       |   | **$**         | **1,947,072** | ** ** | $      | 1,756,255 |   |
| Undeveloped land and construction in progress                                                                                               |   | **82,520**    | ** **    | 152,084    |   |
| Cash and equivalents                                                                                                                        |   | **6,236**     | ** **    | 10,127     |   |
| Restricted cash                                                                                                                             |   | **1,481**     | ** **    | 2,255      |   |
| Accounts receivable, net                                                                                                                    |   | **10,395**    | ** **    | 12,309     |   |
| Prepaid expenses                                                                                                                            |   | **7,560**     | ** **    | 7,072      |   |
| Notes receivable                                                                                                                            |   | **1,307**     | ** **    | 12,253     |   |
| Deferred debt and lease costs                                                                                                               |   | **23,157**    | ** **    | 18,568     |   |
| Investment in partially owned entities                                                                                                      |   | **36,265**    | ** **    | 31,594     |   |
| Other assets                                                                                                                                |   | **13,780**    | ** **    | 11,866     |   |
|                                                                                                                                        |   | **$**         | **2,129,773** |       | $      | 2,014,383 | ** ** |
|                                                                                                                                        |   |          | ** **    |       |   |
| **LIABILITIES AND PARTNERS’ EQUITY**                                                                                                   |   |          | ** **    |       |   |
| Notes and mortgages payable                                                                                                                 |   | **$**         | **1,262,193** | ** ** | $      | 1,191,791 |   |
| Accounts payable                                                                                                                            |   | **15,646**    | ** **    | 18,430     |   |
| Accounts payable to affiliates                                                                                                              |   | **1,103**     | ** **    | 2,271      |   |
| Accrued interest                                                                                                                            |   | **13,974**    | ** **    | 11,485     |   |
| Accrued expenses                                                                                                                            |   | **6,516**     | ** **    | 4,520      |   |
| Tenant deposits                                                                                                                             |   | **3,201**     | ** **    | 3,607      |   |
| Unearned rent                                                                                                                               |   | **7,736**     | ** **    | 8,343      |   |
| Other liabilities                                                                                                                           |   | **4,497**     | ** **    | 1,296      |   |
| Total liabilities                                                                                                                           |   | **1,314,866** | ** **    | 1,241,743  |   |
|                                                                                                                                        |   |          | ** **    |       |   |
| Redeemable units, at redemption value – 10,788,341  and 11,159,027 units outstanding at December 31, 2002 and 2001,  respectively |   | **366,156**   | ** **    | 347,604    |   |
|                                                                                                                                        |   |          | ** **    |       |   |
| General partner -                                                                                                                           |   |          | ** **    |       |   |
| Common equity – 22,850,480 and 20,976,629 units  outstanding at December 31, 2002 and 2001, respectively                          |   | **186,263**   | ** **    | 160,364    |   |
| Preferred equity ($175,000 liquidation preference)                                                                                          |   | **168,669**   | ** **    | 168,669    |   |
|                                                                                                                                        |   |          | ** **    |       |   |
| Limited partners’ preferred equity ($100,000  liquidation preference)                                                                  |   | **97,406**    | ** **    | 97,406     |   |
| Accumulated other comprehensive income (loss)                                                                                               |   | **(3,587**    | **)**         | (1,403     | )      |
| Total partners’ equity                                                                                                                 |   | **448,751**   | ** **    | 425,036    |   |
|                                                                                                                                        |   |          | ** **    |       |   |
|                                                                                                                                        |   | **$**         | **2,129,773** |       | $      | 2,014,383 | ** ** |

 

Theaccompanying notes are an integral part of these financial statements.

 

40

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**COLONIALREALTY LIMITED PARTNERSHIP**

***CONSOLIDATEDSTATEMENTS OF INCOME AND COMPREHENSIVE INCOME***

*(Amountsin Thousands, Except Per Unit Data)*

 

For the YearsEnded December 31, 2002, 2001 and 2000

 
|                                                                            |   | **2002**    |        | **2001**   |   | **2000** |   |
|---------------------------------------------------------------------------------|--------|-------------|-------------|------------|--------|----------|--------|
| **Revenue:**                                                                    |   |        | ** **  |       |   |     |   |
| Base  rent                                                                      |   | **$**       | **254,321** | ** ** | $      | 246,522  |   | $ | 234,190 |   |
| Base  rent from affiliates                                                      |   | **969**     | ** **  | 1,135      |   | 1,478    |   |
| Percentage  rent                                                                |   | **3,450**   | ** **  | 3,527      |   | 5,589    |   |
| Tenant  recoveries                                                              |   | **41,054**  | ** **  | 36,852     |   | 36,309   |   |
| Other  property related revenue                                                 |   | **18,896**  | ** **  | 18,366     |   | 17,399   |   |
| Other  non-property related revenue                                             |   | **7,028**   | ** **  | 3,902      |   | 952      |   |
| Total  revenue                                                                  |   | **325,718** | ** **  | 310,304    |   | 295,917  |   |
| Property  operating expenses:                                                   |   |        | ** **  |       |   |     |   |
| General  operating expenses                                                     |   | **22,931**  | ** **  | 21,069     |   | 20,570   |   |
| Salaries  and benefits                                                          |   | **14,244**  | ** **  | 15,319     |   | 15,485   |   |
| Repairs  and maintenance                                                        |   | **32,160**  | ** **  | 28,651     |   | 28,159   |   |
| Taxes,  licenses, and insurance                                                 |   | **28,430**  | ** **  | 25,375     |   | 22,142   |   |
| General  and administrative                                                     |   | **15,496**  | ** **  | 10,858     |   | 8,392    |   |
| Depreciation                                                                    |   | **72,375**  | ** **  | 63,296     |   | 58,153   |   |
| Amortization                                                                    |   | **9,175**   | ** **  | 7,528      |   | 4,222    |   |
| Total  operating expenses                                                       |   | **194,811** | ** **  | 172,096    |   | 157,123  |   |
| Income  from operations                                                         |   | **130,907** | ** **  | 138,208    |   | 138,794  |   |
| Other  income (expense):                                                        |   |        | ** **  |       |   |     |   |
| Interest  expense                                                               |   | **(65,265** | **)**       | (71,397    | )      | (71,855  | )      |
| Income  from partially owned entities                                           |   | **1,968**   | ** **  | 1,510      |   | 1,700    |   |
| Other                                                                           |   | **(618**    | **)**       | (15        | )      | —   |   |
| Ineffectiveness  of hedging activities                                          |   | **(23**     | **)**       | (15        | )      | —   |   |
| Gains  from sales of property                                                   |   | **35,483**  | ** **  | 15,674     |   | 8,165    |   |
| Total  other expense                                                            |   | **(28,455** | **)**       | (54,243    | )      | (61,990  | )      |
| **Income before extraordinary items and discontinued  operations**              |   | **102,452** | ** **  | 83,965     |   | 76,804   |   |
| Extraordinary  loss from early extinguishment of debt                           |   | **—**  | ** **  | —     |   | (418     | )      |
| **Income from continuing operations**                                           |   | **102,452** | ** **  | 83,965     |   | 76,386   |   |
|                                                                            |   |        | ** **  |       |   |     |   |
| Income  from discontinued operations                                            |   | **2,385**   | ** **  | 2,434      |   | 2,739    |   |
| Gain  on disposal of discontinued operations                                    |   | **6,069**   | ** **  | —     |   | —   |   |
| **Income from discontinued operations**                                         |   | **8,454**   | ** **  | 2,434      |   | 2,739    |   |
| **Net income**                                                                  |   | **110,906** | ** **  | 86,399     |   | 79,125   |   |
|                                                                            |   |        | ** **  |       |   |     |   |
| Dividends  to preferred unitholders                                             |   | **(24,438** | **)**       | (22,280    | )      | (19,813  | )      |
| **Net income available to common unitholders**                                  |   | **86,468**  | ** **  | 64,119     |   | 59,312   |   |
|                                                                            |   |        | ** **  |       |   |     |   |
| Net  income available to common unitholders allocated to general partner        |   | **(865**    | **)**       | (641       | )      | (593     | )      |
| **Net income available to common unitholders allocated to  limited partners**   |   | **$**       | **85,603**  | ** ** | $      | 63,478   |   | $ | 58,719 |   |
|                                                                            |   |        | ** **  |       |   |     |   |
| **Net income available to common unitholders per common unit  – basic:**   |   |        | ** **  |       |   |     |   |
| Income  from continuing operations                                              |   | **$**       | **2.35**    | ** ** | $      | 1.93     |   | $ | 1.74 |   |
| Income  from discontinued operations                                            |   | **0.25**    | ** **  | 0.08       |   | 0.08     |   |
| Extraordinary  loss from early extinguishment of debt                           |   | **—**  | ** **  | —     |   | (0.01    | )      |
| **Net income available to common unitholders per common unit  – basic**    |   | **$**       | **2.60**    | ** ** | $      | 2.01     |   | $ | 1.81 |   |
|                                                                            |   |        | ** **  |       |   |     |   |
| **Net income available to common unitholders per common unit  – diluted:** |   |        | ** **  |       |   |     |   |
| Income  from continuing operations                                              |   | **$**       | **2.33**    | ** ** | $      | 1.92     |   | $ | 1.74 |   |
| Income  from discontinued operations                                            |   | **0.25**    | ** **  | 0.08       |   | 0.08     |   |
| Extraordinary  loss from early extinguishment of debt                           |   | **—**  | ** **  | —     |   | (0.01    | )      |
| **Net income available to common unitholders per common unit  – diluted**  |   | **$**       | **2.58**    | ** ** | $      | 2.00     |   | $ | 1.81 |   |
|                                                                            |   |        | ** **  |       |   |     |   |
| Weighted  average common units outstanding - basic                              |   | **33,170**  | ** **  | 32,003     |   | 32,611   |   |
| Weighted  average common units outstanding - diluted                            |   | **33,424**  | ** **  | 32,114     |   | 32,639   |   |
|                                                                            |   |        | ** **  |       |   |     |   |
| Net  income available to common unitholders                                     |   | **$**       | **86,468**  | ** ** | $      | 64,119   |   | $ | 59,312 |   |
| Other  comprehensive income (loss)                                              |   |        | ** **  |       |   |     |   |
| Unrealized  income (loss) on cash flow hedging activities                       |   | **(2,184**  | **)**       | (1,403     | )      | —   |   |
| Comprehensive  income                                                           |   | **$**       | **84,284**  | ** ** | $      | 62,716   |   | $ | 59,312 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

41

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**COLONIALREALTY LIMITED PARTNERSHIP**

***CONSOLIDATEDSTATEMENTS OF PARTNERS’ EQUITY***

*(Amountsin Thousands)*

 

For the YearsEnded December 31, 2002, 2001 and 2000

 
|                                            |                |    |                  | **Limited  Partners’  Preferred  Equity** |   | **Accumulated  Other  Comprehensive  Income (Loss)** |   | **Total** |   |
|-------------------------------------------------|---------------------|---------|-----------------------|------------------------------------------------|--------|------------------------------------------------------|--------|-----------|--------|
|                                            | **General Partner** |    |                  |                                           |   |
|                                            | **Common  Equity**  |    | **Preferred  Equity** |                                           |   |                                                 |   |
|                                            |                |    |                  |                                           |   |
|                                            |                |    |                  |                                           |   |                                                 |   |      |   |   |   |
| Balance, December 31, 1999                 |                | $       | 312,129               |                                           | $      | 120,549                                              |   | $         | 97,406 |   | $ | — |   | $ | 530,084 |   |
|                                            |                |    |                  |                                           |   |                                                 |   |      |   |   |   |
| Net income                                      |                | 59,312  |                  | 10,938                                         |   | 8,875                                                |   | —    |   | 79,125 |   |
| Cash contributions                              |                | 10,120  |                  | —                                         |   | —                                               |   | —    |   | 10,120 |   |
| Distributions                                   |                | (79,435 | )                     | (10,938                                        | )      | (8,875                                               | )      | —    |   | (99,248 | ) |
| Redemption of partnership units                 |                | (37,937 | )                     | —                                         |   | —                                               |   | —    |   | (37,937 | ) |
| Issuance of limited partnership units           |                | 337     |                  | —                                         |   | —                                               |   | —    |   | 337 |   |
| Allocations to redeemable units                 |                | (37,559 | )                     | —                                         |   | —                                               |   | —    |   | (37,559 | ) |
| Balance, December 31, 2000                 |                | 226,967 |                  | 120,549                                        |   | 97,406                                               |   | —    |   | 444,922 |   |
|                                            |                |    |                  |                                           |   |                                                 |   |      |   |   |   |
| Net income                                      |                | 64,119  |                  | 13,405                                         |   | 8,875                                                |   | —    |   | 86,399 |   |
| Cash contributions                              |                | 4,947   |                  | —                                         |   | —                                               |   | —    |   | 4,947 |   |
| Issuance of preferred units                     |                |    |                  | 48,120                                         |   | —                                               |   | —    |   | 48,120 |   |
| Distributions                                   |                | (80,636 | )                     | (13,405                                        | )      | (8,875                                               | )      | —    |   | (102,916 | ) |
| Change in fair value of hedging activity        |                | —  |                  | —                                         |   | —                                               |   | (1,403    | )      | (1,403 | ) |
| Allocations to redeemable units                 |                | (55,033 | )                     | —                                         |   | —                                               |   | —    |   | (55,033 | ) |
| Balance, December 31, 2001                 |                | 160,364 |                  | 168,669                                        |   | 97,406                                               |   | (1,403    | )      | 425,036 |   |
|                                            |                |    |                  |                                           |   |                                                 |   |      |   |   |   |
| Net income                                      |                | 86,468  |                  | 15,563                                         |   | 8,875                                                |   | —    |   | 110,906 |   |
| Cash contributions                              |                | 27,717  |                  | —                                         |   | —                                               |   | —    |   | 27,717 |   |
| Issuance of common units of beneficial interest |                | 17,551  |                  | —                                         |   | —                                               |   | —    |   | 17,551 |   |
| Distributions                                   |                | (87,285 | )                     | (15,563                                        | )      | (8,875                                               | )      | —    |   | (111,723 | ) |
| Change in fair value of hedging activity        |                | —  |                  | —                                         |   | —                                               |   | (2,184    | )      | (2,184 | ) |
| Allocations to redeemable units                 |                | (18,552 | )                     | —                                         |   | —                                               |   | —    |   | (18,552 | ) |
| Balance, December 31, 2002                 |                | $       | 186,263               |                                           | $      | 168,669                                              |   | $         | 97,406 |   | $ | (3,587 | ) | $ | 448,751 |   |

 

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**COLONIALREALTY LIMITED PARTNERSHIP**

***CONSOLIDATEDSTATEMENTS OF CASH FLOWS***

*(Amountsin Thousands)*

 

For the YearsEnded December 31, 2002, 2001 and 2000

 
|                                                                               |   | **2002**     |        | **2001** |   | **2000** |   |
|------------------------------------------------------------------------------------|--------|--------------|-------------|----------|--------|----------|--------|
| **Cash flows from operating activities:**                                          |   |         |        |     |   |     |   |
| Net income                                                                         |   | **$**        | **110,906** |     | $      | 86,399   |   | $ | 79,125 |   |
| Adjustments to reconcile net income to net cash provided by operating  activities: |   |         |        |     |   |     |   |
| Depreciation and amortization                                                      |   | **82,835**   |        | 72,357   |   | 63,884   |   |
| Income from partially owned entities                                               |   | **(1,968**   | **)**       | (1,510   | )      | (1,700   | )      |
| Gains from sales of property                                                       |   | **(41,552**  | **)**       | (15,674  | )      | (8,165   | )      |
| Other, net                                                                         |   | **83**       |        | 1,064    |   | 1,932    |   |
| Decrease (increase) in:                                                            |   |         |        |     |   |     |   |
| Restricted cash                                                                    |   | **774**      |        | 224      |   | 155      |   |
| Accounts receivable                                                                |   | **1,871**    |        | 425      |   | (4,621   | )      |
| Prepaid expenses                                                                   |   | **(87**      | **)**       | (2,986   | )      | (1,327   | )      |
| Other assets                                                                       |   | **(8,666**   | **)**       | (6,874   | )      | (11,567  | )      |
| Increase (decrease) in:                                                            |   |         |        |     |   |     |   |
| Accounts payable                                                                   |   | **(3,952**   | **)**       | (1,840   | )      | (13,059  | )      |
| Accrued interest                                                                   |   | **2,489**    |        | (3,051   | )      | 1,635    |   |
| Accrued expenses and other                                                         |   | **(1,143**   | **)**       | 7,346    |   | (1,622   | )      |
| **Net cash provided by operating activities**                                      |   | **141,590**  |        | 135,880  |   | 104,670  |   |
| **Cash flows from investing activities:**                                          |   |         |        |     |   |     |   |
| Acquisition of properties                                                          |   | **(150,808** | **)**       | -0-      |   | (25,535  | )      |
| Development expenditures                                                           |   | **(13,088**  | **)**       | (48,744  | )      | (21,693  | )      |
| Development expenditures paid to an affiliate                                      |   | **(36,908**  | **)**       | (89,047  | )      | (78,066  | )      |
| Tenant improvements                                                                |   | **(25,556**  | **)**       | (21,278  | )      | (24,592  | )      |
| Proceeds from (issuance of) notes receivable                                       |   | **10,946**   |        | 9,859    |   | (2,679   | )      |
| Capital expenditures                                                               |   | **(13,984**  | **)**       | (13,582  | )      | (16,194  | )      |
| Proceeds from sales of property, net of selling costs                              |   | **132,241**  |        | 76,190   |   | 57,771   |   |
| Distributions from partnerships                                                    |   | **5,420**    |        | 2,695    |   | 3,968    |   |
| Capital contributions to partnerships                                              |   | **(8,123**   | **)**       | (4,764   | )      | (5,775   | )      |
| **Net cash used in investing activities**                                          |   | **(99,860**  | **)**       | (88,671  | )      | (112,795 | )      |
| **Cash flows from financing activities:**                                          |   |         |        |     |   |     |   |
| Principal reductions of debt                                                       |   | **(73,248**  | **)**       | (84,553  | )      | (40,346  | )      |
| Proceeds from additional borrowings                                                |   | **151,285**  |        | 48,988   |   | 193,518  |   |
| Net change in revolving credit balances                                            |   | **(52,989**  | **)**       | 46,968   |   | (13,940  | )      |
| Proceeds from preferred unit issuance, net of expenses paid                        |   | **-0-**      |        | 48,122   |   | -0-      |   |
| Proceeds from issuance of limited partnership units, net of expenses  paid         |   | **17,551**   |        |     |   |     |   |
| Cash contributions                                                                 |   | **27,717**   |        | 4,172    |   | 10,120   |   |
| Redemption of partnership units                                                    |   | **-0-**      |        | -0-      |   | (37,937  | )      |
| Distributions to common and preferred unitholders                                  |   | **(111,723** | **)**       | (102,916 | )      | (99,248  | )      |
| Payment of mortgage financing cost                                                 |   | **(4,214**   | **)**       | (1,794   | )      | (3,979   | )      |
| Other, net                                                                         |   | **-0-**      |        | (344     | )      | (418     | )      |
| **Net cash provided by (used in) financing  activities**                           |   | **(45,621**  | **)**       | (41,357  | )      | 7,770    |   |
| Increase (decrease) in cash and equivalents                                        |   | **(3,891**   | **)**       | 5,852    |   | (355     | )      |
| Cash and equivalents, beginning of period                                          |   | **10,127**   |        | 4,275    |   | 4,630    |   |
| Cash and equivalents, end of period                                                |   | **$**        | **6,236**   |     | $      | 10,127   |   | $ | 4,275 |   |
|                                                                               |   |         |        |     |   |     |   |
| Supplemental disclosures of cash flow information:                                 |   |         |        |     |   |     |   |
| Cash paid during the year for interest, net of amounts capitalized                 |   | **$**        | **62,776**  |     | $      | 74,448   |   | $ | 70,210 |   |

 

The accompanying notes arean integral part of these financial statements.

 

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**1.Organization and Basis of Presentation**

 

***Organization –***Colonial Realty Limited Partnership (the “Operating Partnership” or “CRLP”), aDelaware limited partnership, is the operating partnership of ColonialProperties Trust (the “Trust”), an Alabama real estate investment trust(“REIT”) whose shares are listed on the New York Stock Exchange (“NYSE”).  CRLP is engaged in the ownership, development,management, and leasing of multifamily housing communities, office buildings,and retail malls and centers.  CRLP alsoowns certain parcels of land.

 

***Federal Income TaxStatus –*** The Trust, which is considered acorporation for federal income tax purposes, qualifies as a REIT for federalincome tax purposes and generally will not be subject to federal income tax tothe extent it distributes its REIT taxable income to its shareholders.  REITs are subject to a number oforganizational and operational requirements. If the Trust fails to qualify as a REIT in any taxable year, the Trustwill be subject to federal income tax on its taxable income at regularcorporate rates.  The Trust may besubject to certain state and local taxes on its income and property.

 

In addition, CRLP’s financial statements include the operations of ataxable REIT subsidiary, Colonial Properties Services, Inc. (CPSI), that is notentitled to a dividends paid deduction and is subject to federal, state andlocal income taxes.  CPSI providesproperty development, leasing and management services for third-party ownedproperties and administrative services to CRLP.  CRLP generally reimburses CPSI for payroll and other costsincurred in providing services to CRLP. All inter-company transactions are eliminated in the accompanyingconsolidated financial statements.  CRLPrecognized tax expense of $0.6 million in 2002 related to the taxable income ofCPSI.  No federal income taxes wererecognized in 2001 and 2000.

 

***Principles ofConsolidation –*** The consolidated financialstatements include the Operating Partnership, CPSI and Colonial PropertiesServices Limited Partnership (in which CRLP holds 99% general and limitedpartner interests).

 

***Investments inPartially Owned Entities –*** Entities in which CRLPowns, directly or indirectly, a 50% or less interest and does not control arereflected in the consolidated financial statements as investments accounted forunder the equity method. Under this method the investment is carried at costplus or minus equity in undistributed earnings or losses since the date ofacquisition.

 

**2.Summary of Significant Accounting Policies**

 

***Land, Buildings, andEquipment***—Land, buildings, and equipment is statedat the lower of cost, less accumulated depreciation, or fair value.  CRLP reviews its long-lived assets andcertain intangible assets for impairment whenever events or changes incircumstances indicate that the carrying amount of an asset may not berecoverable.  Recoverability of assetsto be held and used is measured by a comparison of the carrying amount of theasset to future net cash flows expected to be generated by the asset.  If an asset is considered to be impaired,the impairment to be recognized is measured by the amount by which the carryingamount of the asset exceeds the asset’s fair value.  Assets to be disposed of are reported at the lower of theircarrying amount or fair value less cost to sell.  Depreciation is computed using the straight-line method over theestimated useful lives of the assets, which range from 3 to 40 years.  Repairs and maintenance are charged toexpense as incurred.  Replacements andimprovements are capitalized and depreciated over the estimated remaininguseful lives of the assets.

 

When items of land, buildings, or equipment are sold or retired, therelated cost and accumulated depreciation are removed from the accounts and anygain or loss is recorded in accordance with Statement of Financial AccountingStandard (SFAS) No. 144,*Accounting for the Impairment or Disposal on Long-LivedAssets*.  CRLP recognizessales of real estate properties only upon the closing of a transaction.  Payments received from purchasers prior toclosing are recorded as deposits. Profit on real estate sold is recognized using the full accrual methodupon closing when the collectibility of the sales price is reasonably assuredand CRLP is not obligated to perform significant activities after thesale.  Profit may be deferred in wholeor part until the sale meets the requirements of profit recognition on sales ofreal estate under SFAS 66, *Accounting for Sales of Real Estate*.  For properties sold to a joint venture inwhich CRLP retains an ownership percentage, CRLP limits the profit recognizedfrom the sale to the portion sold to the outside party.  Further, the profit is limited by the amountof cash received for which CRLP has no commitment to reinvest pursuant to thepartial sale provisions found in paragraph 30 of Statement of Position (SOP)78-9.  As of December 31, 2002, inaccordance with SFAS 66, all sales of real estate properties have been recordedas sales transactions, as the risk and rewards of ownership have beentransferred to the purchaser.

 

***Acquired Real EstateAssets***— CRLP accounts for its acquisitions ofinvestments in real estate in accordance with Statement of Financial AccountingStandards (SFAS) No. 141, *Business Combinations*, which requires thefair value of the real estate acquired to be allocated to the acquired tangibleassets, consisting of land, building and tenant improvements, and identifiedintangible assets and liabilities, consisting of the value of above-market andbelow-market leases, other value of in-place leases and value of other tenantrelationships, based in each case on their fair values.  CRLP considers acquisitions of operatingreal estate assets to be “businesses” as that term is contemplated in Emerging

 

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Issues Task Force Issue No.98-3, *Determining Whether a NonmonetaryTransaction Involves Receipt of Productive Assets or of a Business*.

 

CRLP allocates purchase price to the fair value of the tangible assetsof an acquired property (which includes the land and building) determined byvaluing the property as if it were vacant. The “as-if-vacant” value isallocated to land and buildings based on management’s determination of therelative fair values of these assets. CRLP also allocates value to tenant improvements based on the estimatedcosts of similar tenants with similar terms.

 

Above-market and below-market in-place lease values for acquiredproperties are recorded based on the present value (using an interest ratewhich reflects the risks associated with the leases acquired) of the differencebetween (i) the contractual amounts to be paid pursuant to the in-placeleases and (ii) management’s estimate of fair market lease rates for thecorresponding in-place leases, measured over a period equal to the remainingnon-cancellable term of the lease. The capitalized above-market lease valuesare amortized as a reduction of rental income over the remainingnon-cancellable terms of the respective leases. The capitalized below-marketlease values are amortized as an increase to rental income over the initialterm and any fixed-rate renewal periods in the respective leases.

 

Management may engage independent third-party appraisers to performthese valuations and those appraisals use commonly employed valuationtechniques, such as discounted cash flow analyses. Factors considered in theseanalyses include an estimate of carrying costs during hypothetical expectedlease-up periods considering current market conditions, and costs to executesimilar leases. CRLP also considers information obtained about each property asa result of its pre-acquisition due diligence, marketing and leasing activitiesin estimating the fair value of the tangible and intangible assets acquired. Inestimating carrying costs, management also includes real estate taxes,insurance and other operating expenses and estimates of lost rentals at marketrates during the expected lease-up periods depending on specific local marketconditions and depending on the type of property acquired. Management alsoestimates costs to execute similar leases including leasing commissions, legaland other related expenses to the extent that such costs are not alreadyincurred in connection with a new lease origination as part of the transaction.

 

The total amount of other intangible assets acquired is furtherallocated to in-place leases, which includes other tenant relationshipintangible values based on management’s evaluation of the specificcharacteristics of each tenant’s lease and CRLP’s overall relationship withthat respective tenant. Characteristics considered by management in allocatingthese values include the nature and extent of CRLP’s existing businessrelationships with the tenant, growth prospects for developing new businesswith the tenant, the tenant’s credit quality and expectations of lease renewals(including those existing under the terms of the lease agreement ormanagement’s expectation for renewal), among other factors.

 

The value of in-place leases and tenant relationships related toacquisitions since July 1, 2001 are amortized as a leasing cost expenseover the initial term of the respective leases and any expected renewalperiods, which are primarily expected to range from 11 to 28 years andwhich have a current weighted-average composite life of approximately 19 years.In no event does the amortization period for intangible assets exceed the remainingdepreciable life of the building. Should a tenant terminate its lease, theunamortized portion of the in-place lease value and customer relationshipintangibles would be charged to expense.

 

***Undeveloped Land andConstruction in Progress***—Undeveloped land andconstruction in progress is stated at the lower of cost or net realizablevalue.  CRLP capitalizes all costsassociated with land development and construction.

 

***Capitalization ofInterest***—CRLP capitalizes interest during periodsin which property is undergoing development activities necessary to prepare theasset for its intended use.

 

***Cash and Equivalents***—CRLPincludes highly liquid marketable securities and debt instruments purchasedwith a maturity of three months or less in cash equivalents.

 

***Restricted Cash***—Cashwhich is legally restricted as to use consists primarily of tenant deposits.

 

***Valuation ofReceivables***—CRLP is subject to tenant defaults andbankruptcies at its Office and Retail properties that could affect thecollection of outstanding receivables. In order to mitigate these risks, CRLP performs credit review andanalysis on all commercial tenants and significant leases before they areexecuted.  CRLP evaluates thecollectibility of outstanding receivables and records allowances as appropriate.  CRLP’s policy is to record allowances forall outstanding invoices greater than 60 days past due at its Office and Retailproperties.

 

Due to the short-term nature of the leases at its Multifamilyproperties, generally six months to one year, CRLP’s exposure to tenantdefaults and bankruptcies is minimized. CRLP’s policy is to record allowances for all outstanding receivablesgreater than 30 days past due at its Multifamily properties.

 

***Deferred Debt andLease Costs***—Amortization of debt costs is recordedusing the straight-line method, which approximates the effective interestmethod, over the terms of the related debt. Direct leasing costs are amortized using the straight-line method overthe terms of the related leases.

 

45

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***DerivativeInstruments—***All derivative instruments arerecognized on the balance sheet and measured at fair value. Derivatives that donot qualify for hedge treatment under SFAS No. 133 (subsequently amended bySFAS Nos. 137 and 138), *Accounting for Derivative Instruments and HedgingActivities*, must be recorded at fair value with gains or lossesrecognized in earnings in the period of change.  CRLP has certain involvement with derivative financialinstruments but does not use them for trading or speculative purposes.  Interest rate cap agreements and interestrate swaps are used to reduce the potential impact of increases in interestrates on variable-rate debt.

 

CRLP formally documents all relationships between hedging instrumentsand hedged items, as well as its risk management objective and strategy forundertaking the hedge. This process includes specific identification of thehedging instrument and the hedge transaction, the nature of the risk beinghedged and how the hedging instrument’s effectiveness in hedging the exposureto the hedged transaction’s variability in cash flows attributable to thehedged risk will be assessed. Both at the inception of the hedge and on anongoing basis, CRLP assesses whether the derivatives that are used in hedgingtransactions are highly effective in offsetting changes in cash flows or fairvalues of hedged items. CRLP discontinues hedge accounting if a derivative isnot determined to be highly effective as a hedge or has ceased to be a highly effectivehedge.

 

***Revenue Recognition***—Rentalincome attributable to leases is recognized on a straight-line basis over theterms of the leases.  Certain leasescontain provisions for additional rent based on a percentage of tenant sales.  Percentage rents are recognized in theperiod in which sales thresholds are met. Recoveries from tenants for taxes, insurance, and other propertyoperating expenses are recognized in the period the applicable costs areincurred in accordance with the terms of the related lease.

 

Other income received from long-term contracts signed in the normalcourse of business are recognized in accordance with the terms of the specificcontract.  Property management anddevelopment fee income is recognized when earned for services provided to thirdparties.

 

***Net Income Per Unit***—Basicnet income per unit is computed by dividing the net income available to commonunitholders by the weighted average number of common units outstanding duringthe period.  Diluted net income per unitis computed by dividing the net income available to common unitholders by theweighted average number of common units outstanding during the period, adjustedfor the assumed conversion of all potentially dilutive outstanding unitoptions.

 

***Use of Estimates***—Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the amounts reported in the consolidatedfinancial statements and accompanying notes. Actual results could differ from those estimates.

 

***Segment Reporting***—Reportablesegments are identified based upon management’s approach for making operatingdecisions and assessing performance of CRLP.

 

***Software Development***—CRLPcapitalizes certain internally developed software costs.  Capitalized internal software developmentcosts are amortized using the straight-line method over the estimated usefullives of the software.

 

***RecentPronouncements of the Financial Accounting Standards Board (FASB)***—InAugust 2001, the FASB issued SFAS No. 144, *Accounting for the Impairment ofDisposal on Long-Lived Assets* that supersedes SFAS No. 121, *Accountingfor the Impairment of Long-Lived Assets and for Long-Lived Assets to BeDisposed of*.  SFAS No. 144provides additional guidance on the accounting for impairments of long-livedassets and updates the accounting and reporting requirements for discontinuedoperations.  CRLP adopted SFAS No. 144on January 1, 2002.  In accordancewith the provisions of SFAS No. 144, CRLP records individual property sales asdiscontinued operations, unless CRLP maintains significant continuinginvolvement with properties that have been sold.  CRLP does not expect the adoption of this standard to have amaterial impact on CRLP’s financial position, results of operations or cashflows.  However, CRLP expects theadoption of this standard to impact the presentation of its financialstatements by requiring CRLP to classify the disposals of properties withoperations that can be distinguished from the rest of the entity asdiscontinued operations.  (See Note 3)

 

In April 2002, FASB issued SFAS 145, *Rescission of FASB Statements No. 4,44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections*.SFAS 145 rescinds SFAS 4, which required all gains and losses fromextinguishment of debt to be aggregated and, if material, classified as anextraordinary item, net of related income tax effect. As a result, the criteriain Accounting Principles Board Opinion 30, will now be used to classify thosegains and losses. SFAS 64 amended SFAS 4, and is no longer necessary becauseSFAS 4 has been rescinded. SFAS 44 and the amended sections of SFAS 13 are notapplicable to CRLP and therefore have no effect on CRLP’s financial statements.SFAS 145 is effective for fiscal years beginning after May 15, 2002 withearly application encouraged. The adoption of SFAS 145 will likely not have amaterial effect on CRLP as the gains and losses on the extinguishment of debtare generally not material to CRLP’s financial statements.

 

In December 2002, the FASB issued SFAS No. 148, *Accountingfor Stock-Based Compensation—Transition and Disclosure—an amendment of SFAS No.123*.  SFAS No. 148 providesadditional guidance for entities that elect to voluntarily adopt the accountingprovisions of SFAS No. 123, *Accounting for Stock-Based Compensation*.  SFAS No. 148 is effective for fiscal yearsending after December 15, 2002. CRLP has elected to adopt the accounting provisions of SFAS

 

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No. 123 under theprospective method, which allows CRLP to apply the recognition provisions ofSFAS No. 123 to all employee awards granted, modified, or settled after thebeginning of the fiscal year in which the recognition provisions are firstapplied.  CRLP adopted SFAS No. 123effective January 1, 2003.

 

On November 25, 2002, the FASB issued FASB Interpretation No. 45(FIN 45), *Guarantor’sAccounting and Disclosure Requirements for Guarantees, Including IndirectGuarantees of Indebtedness of Others, an Interpretation of FASB Statements No.5, 57 and 107 and Rescission of FASB Interpretation No. 34*.  FIN 45 clarifies the requirements of SFASno. 5, *Accountingfor Contingencies*, relating to the guarantor’s accounting for, anddisclosure of, the issuance of certain types of guarantees.  The disclosure provisions of theInterpretation are effective for financial statements that end afterDecember 15, 2002.  However, theprovisions for initial recognition and measurement are effective on aprospective basis for guarantees that are issued or modified afterDecember 31, 2002, irrespective of a guarantor’s year end.  See Note 15, Guarantees and OtherArrangements, for additional discussion of CRLP’s financial guarantees as ofDecember 31, 2002.  The initialadoption of this standard did not have an impact on the financial condition orresults of operations.  Management doesnot believe the provisions of this standard will have a material impact onfuture operations of CRLP.

 

On January 15, 2003, FASB completed its redeliberations of theproject related to the consolidation of variable interest entities whichculminated with the issuance of FASB Interpretation No. 46 (FIN 46), *Consolidationof Variable Interest Entities*. FIN 46 states that if a business enterprise has a controlling financialinterest in a variable interest entity (VIE), the assets, liabilities andresults of the activities of the VIE should be included in the consolidatedfinancial statements of the business enterprise.  This Interpretation explains how to identify VIEs and how anenterprise assesses its interests in a VIE to decide whether to consolidatethat entity.  FIN 46 also requiresexisting unconsolidated VIEs to be consolidated by their primary beneficiariesif the entities do not effectively disperse risks among parties involved.  Variable interest entities that effectivelydisperse risks will not be consolidated unless a single party holds an interestor combination of interests that effectively recombines risks that werepreviously dispersed.  ThisInterpretation applies immediately to VIEs created after January 31, 2003,and to VIEs in which an enterprise obtains an interest after that date.  It applies in the first fiscal year orinterim period beginning after June 15, 2003, to VIEs in which anenterprise holds a variable interest that it acquired before February 1,2003.

 

CRLP has identified certain relationships that it deems reasonablypossible are VIEs in which it holds a significant variable interest.  CRLP deems that it is reasonably possiblethat its investments in partially owned entities are VIEs.  As disclosed in Note 6, relative to theseentities, CRLP’s maximum exposure to loss is limited to the carrying value ofCRLP’s investments in those entities, which is $36.3 million as ofDecember 31, 2002.  In addition tothese VIEs, CRLP considers its relationship with three other entities to bepotential VIEs.  These other entitiesare more fully discussed in Note 15, and primarily relate to the commitment tofund development through a mezzanine financing commitment and otherguarantees.  The maximum exposurerelated to these other entities is limited to the amount of the fundingcommitment and other guarantees and is $8.3 million as of December 31,2002, which results in a total maximum exposure to CRLP attributable to allpotential VIEs in the aggregate amount of $44.6 million.  CRLP is currently evaluating theconsolidation provisions of FIN 46 and does not anticipate consolidation of itspotential VIEs will be required.

 

***Reclassifications***—Certainreclassifications have been made to the 2000 and 2001 financial statements inorder to conform them to the 2002 financial statement presentation.  These reclassifications have no impact onpartners’ equity or net income.

 

**3.  Property Acquisitions and Dispositions**

 

CRLP acquired three office properties during 2002 at an aggregate costof $150.8 million, no operating properties in 2001, and one retail propertyduring 2000 at an aggregate cost $25.5 million.  CRLP funded these acquisitions with cash proceeds from itsdispositions of assets, public offerings of debt and issuance of limitedpartnership units (see Notes 8 and 11), advances on bank lines of credit, andcash from operations.

 

The properties acquired during 2002 and 2000 are listed below:

 
|                                   |   | **Location**   |   | **Effective  Acquisition Date** |   |
|----------------------------------------|--------|----------------|--------|---------------------------------|--------|
| **Office Properties:**                 |   |           |   |                            |   |
| 901 Maitland Center                    |   | Orlando, FL    |   | March 1, 2002              |   |
| Colonnade                              |   | Birmingham, AL |   | May 1, 2002                |   |
| Heathrow International Business Center |   | Orlando, FL    |   | August 1, 2002             |   |
|                                   |   |           |   |                            |   |
| **Retail Properties:**                 |   |           |   |                            |   |
| Temple Mall                            |   | Temple, TX     |   | July 1, 2000               |   |

 

Results of operations of these properties, subsequent to theirrespective acquisition dates, are included in the consolidated financialstatements of CRLP.  The cash paid toacquire these properties is included in the statements of cash flows.  The acquisitions during 2002 and 2000 arecomprised of the following:

 

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| **(in thousands)**                                                            |   | **2002**    |        | **2001** |   | **2000** |   |
|-------------------------------------------------------------------------------|--------|-------------|-------------|----------|--------|----------|--------|
| Assets  purchased:                                                            |   |        |        |     |   |     |   |
| Land,  buildings, and equipment                                               |   | **$**       | **196,009** |     | $      | —   |   | $ | 26,218 |   |
| Other  assets                                                                 |   | **465**     | ** **  | —   |   | 472      |   |
|                                                                          |   | **196,474** |        | —   |   | 26,690   |   |
| Notes  and mortgages assumed                                                  |   | **(43,993** | **)**       | —   |   | —   |   |
| Other  liabilities assumed or recorded                                        |   | **(1,673**  | **)**       | —   |   | (818     | )      |
| Issuance  of limited partnership units of Colonial Realty Limited Partnership |   | **—**  |        | —   |   | (337     | )      |
|                                                                          |   |        |        |     |   |     |   |
| Cash  paid                                                                    |   | **$**       | **150,808** |     | $      | —   |   | $ | 25,535 |   |

 

In addition to the acquisition of the operating mentioned above, CRLPacquired certain parcels of land to be utilized for future developmentopportunities.

 

During 2002, CRLP disposed of eight multifamily properties representing1,988 units, two office properties representing 104,496 square feet, and threeretail properties representing 449,443 square feet.  The multifamily, office, and retail properties were sold for atotal sales price of $138.6 million, which was used to repay a portion of theborrowings under CRLP’s unsecured line of credit and to support CRLP’sinvestment activities.

 

During 2002, CRLP sold interests in two retail properties to jointventures formed by CRLP and unrelated parties. CRLP continues manage the properties and accounts for its interest inthese joint ventures as equity investments (see Note 6).

 

During 2001, CRLP disposed of six multifamily properties representing1,373 units, one office property representing 34,357 square feet, and tworetail properties representing 304,168 square feet.  The multifamily, office, and retail properties were sold for atotal sales price of $83.5 million, of which $4.5 million was used to repay asecured loan, $11.6 million was issued as a note receivable, and the remainingproceeds were used to repay a portion of the borrowings under CRLP’s unsecuredline of credit and to support CRLP’s investment activities.

 

During 2000, CRLP disposed of five multifamily properties representing1,132 units and one retail property representing 165,684 square feet.  The multifamily and retail properties weresold for a total sales price of $67.6 million, of which $17.3 million was usedto repay four secured loans, $7.2 million was issued as a note receivable, andremaining proceeds were used to repay a portion of the borrowings under CRLP’sunsecured line of credit, fund additional acquisitions, and to support CRLP’sinvestment activities.

 

During 2000, CRLP sold four of the multifamily properties to a jointventure formed by CRLP and an unrelated party. CRLP retained a 15% interest inthe joint venture and continued to manage the properties.  CRLP accounts for its 15% interest in thisjoint venture as an equity investment (see Note 6).

 

In accordance with SFAS No. 144, net income and gain (loss) ondisposition of real estate for properties sold through June 30, 2003, inwhich CRLP does not maintain continuing involvement, are reflected in our consolidatedstatements of income as “discontinued operations” for all periodspresented.  During 2002, we disposed oftwo office properties and one retail property that are classified asdiscontinued operations.

 

Included in discontinued operations for the years endedDecember 31, 2002, 2001 and 2000, are two properties that were sold in thefirst quarter of 2003 and one property sold in the third quarter of 2003.  The Company sold two properties in the firstquarter of 2003, a 152,667 square foot retail asset located in St. Petersburg,Florida and a 176-unit multifamily apartment complex located in Tampa, Floridaand one property in the third quarter of 2003, a 28,250 office asset locatedwithin the International Park office complex located in Birmingham, Alabama.  The operations of these properties have beenreflected on a comparative basis as discontinued operations for the years endedDecember 31, 2002, 2001 and 2000.

 

Below is a summary of the operations of the properties sold during 2002and through September 30, 2003 that are classified as discontinuedoperations:

 

48

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|                                                                                            |   | **Year Ended December 31,** |   |
|-------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
| **(amounts in thousands)**                                                                      |   | **2002**                         |   | **2001** |   | **2000** |   |
|                                                                                            |   |                             |   |   |   |   |   |
| Property  revenues:                                                                             |   |                             |   |   |   |   |   |
| Base  rent                                                                                      |   | $                                | 4,499  |   | $ | 5,029 |   | $ | 5,169 |   |
| Percentage  rent                                                                                |   | 92                               |   | 110 |   | 110 |   |
| Tenant  recoveries                                                                              |   | 612                              |   | 662 |   | 742 |   |
| Other  property revenue                                                                         |   | 207                              |   | 220 |   | 372 |   |
| Total  property revenues                                                                        |   | 5,410                            |   | 6,021 |   | 6,393 |   |
|                                                                                            |   |                             |   |   |   |   |   |
| Property  operating and maintenance expense                                                     |   | 1,740                            |   | 2,054 |   | 2,145 |   |
| Depreciation                                                                                    |   | 1,228                            |   | 1,404 |   | 1,396 |   |
| Amortization                                                                                    |   | 57                               |   | 129 |   | 113 |   |
| Total  operating expenses                                                                       |   | 3,025                            |   | 3,587 |   | 3,654 |   |
| Income  from discontinued operations before net gain on disposition of discontinued  operations |   | 2,385                            |   | 2,434 |   | 2,739 |   |
| Net  gain on disposition of discontinued operations                                             |   | 6,069                            |   | — |   | — |   |
|                                                                                            |   |                             |   |   |   |   |   |
| Income  from discontinued operations                                                            |   | $                                | 8,454  |   | $ | 2,434 |   | $ | 2,739 |   |

 

**4.  Land, Buildings, and Equipment**

 

Land, buildings, and equipment consists of the following atDecember 31, 2002 and 2001:

 
|                     |   |              |   | **(in  thousands)** |      |
|--------------------------|--------|-------------------|--------|---------------------|-----------|
|                     |   | **Useful  Lives** |   | **2002**            |      | **2001** |   |
| Buildings                |   | 40 years          |   | $                   | 1,793,284 |   | $ | 1,635,898 |   |
| Furniture and fixtures   |   | 7 years           |   | 56,973              |      | 49,965 |   |
| Equipment                |   | 3 or 5 years      |   | 31,864              |      | 25,706 |   |
| Land improvements        |   | 10 or 15 years    |   | 55,668              |      | 47,659 |   |
| Tenant improvements      |   | Life of lease     |   | 107,041             |      | 76,919 |   |
|                     |   |              |   | 2,044,830           |      | 1,836,147 |   |
| Accumulated depreciation |   |              |   | (351,164            | )         | (310,447 | ) |
|                     |   |              |   | 1,693,666           |      | 1,525,700 |   |
| Land                     |   |              |   | 253,406             |      | 230,555 |   |
|                     |   |              |   | $                   | 1,947,072 |   | $ | 1,756,255 |   |

 

**5.  Undeveloped Land and Construction inProgress**

 

            During 2002, CRLPcompleted the construction of two multifamily development projects, one officedevelopment project, one retail development project, and one retailre-development project at a combined total cost of $138.0 million.  The completed development and re-developmentprojects are as follows:

 

49

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| **Completed Developments and Re-developments:** |   | **Location**   |   | **Total  Units/Sq. Feet** |   | **Total  Cost** |    |
|-------------------------------------------------|--------|----------------|--------|---------------------------|--------|-----------------|---------|
| *Multifamily Properties*                        |   |           |   |                      |   |            |    |
| Colonial  Grand at TownPark – Lake Mary    |   | Orlando, FL    |   | 456                       |   | $               | 37,737  |   |
| Colonial  Village at TownPark – Sarasota   |   | Sarasota, FL   |   | 272                       |   | 21,666          |    |
|                                            |   |           |   | 728                       |   | 59,403          |    |
|                                            |   |           |   |                      |   |            |    |
| *Office Properties*                             |   |           |   |                      |   |            |    |
| Colonial  Center at TownPark 600                |   | Orlando, FL    |   | 199,585                   |   | 27,558          |    |
|                                            |   |           |   |                      |   |            |    |
| *Retail Properties*                             |   |           |   |                      |   |            |    |
| Colonial  Promenade Hoover                      |   | Birmingham, AL |   | 166,000                   |   | 16,625          |    |
| Parkway  Place (1)*(re-development)*            |   | Huntsville, AL |   | 630,000                   |   | 34,407          |    |
|                                            |   |           |   | 796,000                   |   | 51,032          |    |
|                                            |   |           |   |                      |   |            |    |
| Total                                           |   |           |   |                      |   | $               | 137,993 |   |

 

----

(1)           *Property is owned through ajoint venture.  Costs presented are 45%of total project costs, and square footage represents the entire property.*

 

CRLP currently has two active development projects and three mixed-useprojects in progress, and various parcels of land available for expansion andconstruction.  Undeveloped land andconstruction in progress is comprised of the following at December 31,2002:

 
|                                    |   | **Total  Units/  Square  Feet** |   | **Estimated  Completion** |   | **Estimated  Total Costs** |   | **Costs  Capitalized  To Date** |   |
|-----------------------------------------|--------|---------------------------------|--------|---------------------------|--------|----------------------------|--------|---------------------------------|--------|
|                                    |   |                            |   |                      |   | **(in  thousands)**        |   | **(in  thousands)**             |   |
| **Office Projects:**                    |   |                            |   |                      |   |                       |   |                            |   |
| Colonial Center at TownPark 200         |   | 155,000                         |   | 2003                      |   | $                          | 21,926 |                            | $      | 15,835 |   |
|                                    |   |                            |   |                      |   |                       |   |                            |   |
| **Retail Projects:**                    |   |                            |   |                      |   |                       |   |                            |   |
| Colonial Promenade Trussville Phase II  |   | 65,000                          |   | 2003                      |   | 8,400                      |   | 2,084                           |   |
|                                    |   |                            |   |                      |   |                       |   |                            |   |
| **Mixed Use Projects Infrastructure**   |   |                            |   |                      |   |                       |   |                            |   |
| Colonial TownPark – Lake Mary      |   |                            |   |                      |   | 33,168                     |   | 29,458                          |   |
| Colonial TownPark – Sarasota       |   |                            |   |                      |   | 6,410                      |   | 4,969                           |   |
| Colonial Center at Mansell              |   |                            |   |                      |   | 10,794                     |   | 9,863                           |   |
|                                    |   |                            |   |                      |   |                       |   |                            |   |
| **Other Projects and Undeveloped Land** |   |                            |   |                      |   |                       |   | 20,311                          |   |
|                                    |   |                            |   |                      |   |                       |   | $                               | 82,520 |   |
|                                         |        |                                 |        |                           |        |                            |        |                                 |        |  |  |

 

Interest capitalized on construction in progress during 2002, 2001, and2000 was $8.1 million, $10.6 million, and $9.6 million, respectively.

 

50

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**6.  Investment in Partially Owned Entities**

Investment in partially owned entities at December 31, 2002 and2001 consists of the following:

 
|                                                   |   | **Percent  Owned** |   | **(in  thousands)** |       |
|--------------------------------------------------------|--------|--------------------|--------|---------------------|------------|
|                                                   |   | **2002**           |   | **2001**            |       |
| **Multifamily:**                                       |   |               |   |                |       |   |   |
| CMS/Colonial Joint Venture I                           |   | 15.00              | %      | **$**               | **2,142**  |   | $ | 2,195 |   |
| CMS/Colonial Joint Venture II                          |   | 15.00              | %      | **735**             |       | 745 |   |
|                                                   |   |               |   | **2,877**           |       | 2,940 |   |
|                                                   |   |               |   |                |       |   |   |
| **Office**:                                            |   |               |   |                |       |   |   |
| 600 Building Partnership, Birmingham, AL               |   | 33.33              | %      | **(23**             | **)**      | (26 | ) |
|                                                   |   |               |   |                |       |   |   |
| **Retail:**                                            |   |               |   |                |       |   |   |
| Orlando Fashion Square Joint Venture,  Orlando, FL     |   | 50.00              | %      | **19,465**          |       | 20,783 |   |
| Parkway Place Limited Partnership,  Huntsville, AL     |   | 45.00              | %      | **11,375**          |       | 8,052 |   |
| Colonial Promenade Madison, Huntsville, AL             |   | 25.00              | %(1)   | **2,464**           |       | (154 | ) |
| Highway 150, LLC, Birmingham, AL                       |   | 10.00              | %      | **85**              |       | 0 |   |
|                                                   |   |               |   | **33,389**          |       | 28,681 |   |
|                                                   |   |               |   |                |       |   |   |
| **Other**:                                             |   |               |   |                |       |   |   |
| Colonial/Polar-BEK Management Company,  Birmingham, AL |   | 50.00              | %      | **41**              |       | 39 |   |
| NRH Enterprises, LLC, Birmingham, AL                   |   | 20.00              | %      | **26**              |       | 0 |   |
| E-2 Data Technology, Birmingham, AL                    |   | 50.00              | %      | **(45**             | **)**      | (40 | ) |
|                                                   |   |               |   | **22**              |       | (1 | ) |
|                                                   |   |               |   | **$**               | **36,265** |   | $ | 31,594 |   |

 

----

(1)*          CRLPmaintained a 50% ownership at December 31, 2001.*

 

During December 2002, CRLP sold 90% of its interest in ColonialPromenade Hoover for a total sales price of $20.5 million, and formed theHighway 150, LLC, in which CRLP maintains 10% ownership and manages theproperty under contract with the Highway 150 LLC.  Additionally during December 2002, CRLP sold 25% of itsinterest in the Colonial Promenade Madison Joint Venture for $3.2 million.  Prior to the sale of this interest, CRLPheld a 50% interest in the joint venture. Therefore, CRLP now maintains 25% ownership of the property andcontinues to manage the property.  Theproceeds from both of the joint venture transactions were used to repay aportion of the amount outstanding under CRLP’s unsecured line of credit.

 

In October 1998, CRLP sold a 50% interest in our Orlando FashionSquare retail property located in Orlando, Florida to a third party.Subsequently, CRLP entered into a joint venture agreement with the third party,and the joint venture entered into an agreement with CRLP relating to themanagement of the property.  The jointventure agreement gives the third party the right, which became effectiveDecember 28, 2001, to convert its 50% interest in the property to CRLP’scommon units if specified terms and conditions are met.  The conversion value of the interest wouldbe determined at the time of conversion in accordance with the procedures setforth in the joint venture agreement, and would be net of the third party’s prorata share of any indebtedness secured by the property.  The terms and conditions also include an“accretion threshold”, as defined, which must be met.  At the time of the original transaction, CRLP considered theterms of the agreement in their entirety (including the conversion right, theaccretion threshold, and the conversion value determination procedures) andassessed whether the third party could compel CRLP to repurchase the 50%interest sold.  CRLP concluded that thelikelihood of a compelled repurchase was remote, and accordingly accounted forthe transaction as a sale.

 

On May 31, 2002, the 50% joint venture partner elected to exerciseits option to convert its 50% interest in the property to CRLP’s commonunits.  In accordance with the terms ofthe joint venture agreement, CRLP negotiated with its joint venture partner andwere unable to reach an agreement. Therefore, on September 11, 2002, the joint venture partner electedto withdraw its conversion election and it continues to own its 50% interest.

 

51

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Combined financial information for CRLP’s investments in partiallyowned entities for 2002 and 2001 follows:

 

|                                          |   | **December 31,** |        |
|-----------------------------------------------|--------|-----------------------|-------------|
|                                          |   | **2002**              |        | **2001** |   |
| **Balance Sheet**                             |   |                  | ** **  |   | ** ** |
| Assets                                        |   |                  | ** **  |   | ** ** |
| Land,  building, & equipment, net         |   | **$**                 | **347,436** | ** ** | **$** | **243,733** | ** ** |
| Construction  in progress                     |   | **193**               | ** **  | **54,907** | ** ** |
| Other  assets                                 |   | **11,028**            | ** **  | **9,878** | ** ** |
| Total  assets                                 |   | **$**                 | **358,657** | ** ** | **$** | **308,518** | ** ** |
|                                          |   |                  | ** **  |   | ** ** |
| Liabilities  and Partners’ Equity        |   |                  | ** **  |   | ** ** |
| Notes payable (1)                             |   | **$**                 | **251,908** | ** ** | **$** | **213,056** | ** ** |
| Other liabilities                             |   | **3,950**             | ** **  | **7,647** | ** ** |
| Partners’ Equity                         |   | **102,799**           | ** **  | **87,815** | ** ** |
| Total  liabilities and partners’ capital |   | **$**                 | **358,657** | ** ** | **$** | **308,518** | ** ** |
|                                          |   |                  | ** **  |   | ** ** |
| **Statement of Operations**                   |   |                  | ** **  |   | ** ** |
| *(for the year ended)*                        |   |                  | ** **  |   | ** ** |
| Revenues                                      |   | **$**                 | **42,943**  | ** ** | **$** | **44,124** | ** ** |
| Operating  expenses                           |   | **(17,960**           | **)**       | **(18,304** | **)** |
| Interest  expense                             |   | **(13,011**           | **)**       | **(12,969** | **)** |
| Depreciation,  amortization and other         |   | **(7,689**            | **)**       | **(8,787** | **)** |
| Net  income                                   |   | **$**                 | **4,283**   | ** ** | **$** | **4,064** | ** ** |

 

----

(1)          CRLP’s portion of indebtedness, as calculatedbased on ownership percentage, at December 31, 2002 and 2001 is $78.3million and $67.3 million, respectively.

 

**7.  Segment Information**

 

CRLP is organized into, and manages its business based on theperformance of three separate and distinct operating divisions:  Multifamily, Office, and Retail.  Each division has a separate management teamthat is responsible for acquiring, developing, managing, and leasing propertieswithin each division. The applicable accounting policies of the segments arethe same as those described in the “Summary of Significant AccountingPolicies.”  The pro rata portion of therevenues, net operating income (NOI), and assets of the partially-ownedentities and joint ventures that CRLP has entered into are included in theapplicable segment information. Additionally, the revenues and NOI of properties sold that areclassified as discontinued operations are also included in the applicablesegment information.  In reconciling thesegment information presented below to total revenues, income from continuingoperations, and total assets, investments in partially-owned entities and jointventures are eliminated as equity investments and their related activity arereflected in the consolidated financial statements as investments accounted forunder the equity method and discontinued operations are reportedseparately.  Management evaluates theperformance of its segments and allocates resources to them based on netoperating income (NOI).  NOI consists ofrevenues in excess of general operating expenses, salaries and wages, repairsand maintenance, taxes, licenses, and insurance.  Segment information and the reconciliation of total segmentrevenues to total revenues, total segment NOI to income from continuingoperations, and total divisional assets to total assets, for the years endedDecember 31, 2002, 2001, and 2000, is presented below:

 

52

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| **(in thousands)**                                   |     | **For the Year Ended** |        |
|------------------------------------------------------|----------|------------------------|-------------|
|                                                 | **2002** |                   | **2001**    |   | **2000** |   |
| **Revenues:**                                        |     |                   | ** **  |   |   |   |   |
| Divisional Revenues                                  |     |                   | ** **  |   |   |   |   |
| Multifamily                                          |     | **$**                  | **104,160** | ** ** | $ | 119,309 |   | $ | 118,807 |   |
| Office                                               |     | **75,913**             | ** **  | 57,348 |   | 50,225 |   |
| Retail                                               |     | **155,368**            | ** **  | 147,634 |   | 143,330 |   |
| Total Divisional Revenues:                           |     | **335,441**            | ** **  | 324,291 |   | 312,362 |   |
|                                                 |     |                   | ** **  |   |   |   |   |
| Partially-owned subsidiaries                         |     | **(13,743**            | **)**       | (13,061 | ) | (12,656 | ) |
| Unallocated corporate revenues                       |     | **9,430**              | ** **  | 5,095 |   | 2,604 |   |
| Discontinued operations revenues                     |     | **(5,410**             | **)**       | (6,021 | ) | (6,393 | ) |
| Total Consolidated Revenues:                         |     | **$**                  | **325,718** | ** ** | $ | 310,304 |   | $ | 295,917 |   |
|                                                 |     |                   | ** **  |   |   |   |   |
| **NOI:**                                             |     |                   | ** **  |   |   |   |   |
| Divisional NOI                                       |     |                   | ** **  |   |   |   |   |
| Multifamily                                          |     | **$**                  | **68,145**  | ** ** | $ | 80,478 |   | $ | 79,756 |   |
| Office                                               |     | **53,806**             | ** **  | 40,893 |   | 35,346 |   |
| Retail                                               |     | **108,335**            | ** **  | 105,043 |   | 103,583 |   |
| Total Divisional NOI:                                |     | **230,286**            | ** **  | 226,414 |   | 218,685 |   |
|                                                 |     |                   | ** **  |   |   |   |   |
| Partially-owned subsidiaries                         |     | **(7,956**             | **)**       | (7,802 | ) | (7,478 | ) |
| Unallocated corporate revenues                       |     | **9,430**              | ** **  | 5,095 |   | 2,604 |   |
| Discontinued operations NOI                          |     | **(3,670**             | **)**       | (3,967 | ) | (4,248 | ) |
| General and administrative expenses                  |     | **(15,496**            | **)**       | (10,858 | ) | (8,392 | ) |
| Depreciation                                         |     | **(72,375**            | **)**       | (63,296 | ) | (58,153 | ) |
| Amortization                                         |     | **(9,175**             | **)**       | (7,528 | ) | (4,222 | ) |
| Other                                                |     | **(137**               | **)**       | 150 |   | (2 | ) |
| Income from operations                               |     | **130,907**            | ** **  | 138,208 |   | 138,794 |   |
| Total other expense                                  |     | **(28,455**            | **)**       | (54,243 | ) | (61,990 | ) |
| Extraordinary loss from early extinguishment of debt |     | **—**             | ** **  | — |   | (418 | ) |
| Income from continuing operations                    |     | **$**                  | **102,452** | ** ** | $ | 83,965 |   | $ | 76,386 |   |

 
| **(in thousands)**               |   |          | ** **    |       |   |      |   |
|----------------------------------|--------|---------------|---------------|------------|--------|-----------|--------|
| **Assets:**                      |   |          | ** **    |       |   |      |   |
| Divisional Assets                |   |          | ** **    |       |   |      |   |
| Multifamily                      |   | **$**         | **645,840**   | ** ** | $      | 723,447   |   | $ | 752,249 |   |
| Office                           |   | **594,795**   | ** **    | 377,255    |   | 329,315   |   |
| Retail                           |   | **906,555**   | ** **    | 905,964    |   | 869,351   |   |
| Total Divisional Assets:         |   | **2,147,190** | ** **    | 2,006,666  |   | 1,950,915 |   |
|                             |   |          | ** **    |       |   |      |   |
| Partially-owned subsidiaries     |   | **(116,375**  | **)**         | (106,191   | )      | (94,228   | )      |
| Unallocated corporate assets (1) |   | **98,958**    | ** **    | 113,908    |   | 86,860    |   |
|                             |   | **$**         | **2,129,773** |       | $      | 2,014,383 |   | $ | 1,943,547 |   |

 

----

(1)          IncludesCRLP’s investment in joint ventures of $36,265, $31,594, and $28,129 as ofDecember 31, 2002, 2001, and 2000, respectively. (see Note 6)

 

53

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**8.  Notes and Mortgages Payable**

 

Notes andmortgages payable at December 31, 2002 and 2001 consist of the following:

 
|                       |   | **(in  thousands)** |          |
|----------------------------|--------|---------------------|---------------|
|                       |   | **2002**            |          | **2001** |   |
|                       |   |                |          |   |   |
| Revolving credit agreement |   | **$**               | **208,270**   |   | $ | 261,365 |   |
| Mortgages and other notes: |   |                |          |   |   |
| 2.00% to 4.00%             |   | **213,877**         |          | 0 |   |
| 4.01% to 6.00%             |   | **0**               |          | 162,153 |   |
| 6.01% to 7.50%             |   | **584,423**         |          | 463,390 |   |
| 7.51% to 9.00%             |   | **255,623**         |          | 303,542 |   |
| 9.01% to 10.25%            |   | **0**               |          | 1,341 |   |
|                       |   | **$**               | **1,262,193** |   | $ | 1,191,791 |   |

 

As ofDecember 31, 2002, CRLP has an unsecured bank line of credit providing fortotal borrowings of up to $320 million. This line of credit agreement bears interest at LIBOR plus a spreadcalculated from a pricing grid based on CRLP’s unsecured debt ratings.  Based on CRLP’s debt ratings atDecember 31, 2002, the spread was 105 basis points.  The line of credit is renewable in November 2005,and provides for a one-year extension. The line of credit agreement includes a competitive bid feature thatwill allow CRLP to convert up to $160 million under the line of credit to afixed rate, for a fixed term not to exceed 90 days.  The credit facility is primarily used by CRLP to finance propertyacquisitions and developments and has an outstanding balance atDecember 31, 2002, of $208.3 million. The interest rate of this short-term borrowing facility, including thecompetitive bid balance, is 2.38% and 3.08% at December 31, 2002 and 2001,respectively.

 

During 2002and 2001, CRLP, completed a public offering of unsecured medium-term debtsecurities and a public offering of senior notes collectively totaling $110.0million. The proceeds of the offerings were used to fund acquisitions,development expenditures, repay balances outstanding on CRLP’s revolving creditfacility, repay certain notes and mortgages payable, and for general corporatepurposes.  Details relating to thesedebt offerings are as follows:

 

| **Issue Date** |   | **Type of  Note** |   | **Maturity**    |   | **Rate** |   | **Gross  Proceeds** |    |
|----------------|--------|-------------------|--------|-----------------|--------|----------|--------|---------------------|---------|
|           |   |              |   |            |   |     |   | **(in thousands)**  |    |
| December, 2001 |   | Medium-term       |   | December,  2006 |   | 7.46     | %      | $                   | 10,000  |   |
| August, 2002   |   | Senior            |   | August, 2012    |   | 6.88     | %      | 100,000             |    |
|           |   |              |   |            |   |     |   | $                   | 110,000 |   |

 

Additionallyduring 2002, CRLP secured mortgage financing on three properties, from whichCRLP received proceeds of $52.8 million. At December 31, 2002, CRLP had $878.9 million in unsecuredindebtedness including balances outstanding on its bank line of credit andcertain other notes payable.  Theremainder of CRLP’s notes and mortgages payable are collateralized by theassignment of rents and leases of certain properties and assets with anaggregate net book value of $472.8 million at December 31, 2002.

 

The aggregatematurities of notes and mortgages payable, including CRLP’s line of credit atDecember 31, 2002, are as follows:

 
|       |   | **(in  thousands)** |      |
|------------|--------|---------------------|-----------|
| 2003       |   | $                   | 107,675   |   |
| 2004       |   | 129,040             |      |
| 2005       |   | 299,916             |      |
| 2006       |   | 74,891              |      |
| 2007       |   | 174,488             |      |
| Thereafter |   | 476,183             |      |
|       |   | $                   | 1,262,193 |   |

 

Based onborrowing rates available to CRLP for notes and mortgages payable with similarterms, the estimated fair value of CRLP’s notes and mortgages payable atDecember 31, 2002 and 2001 was approximately $1.26 billion and $1.16billion, respectively.

 

Certain loanagreements of CRLP contain restrictive covenants, which, among other things,require maintenance of various financial ratios.  At December 31, 2002, CRLP was in compliance with thosecovenants.

 

54

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**9.  Derivative Instruments**

 

SFAS No. 133, *Accountingfor Derivative Instruments and Hedging Activities*, as amended andinterpreted, establishes accounting and reporting standards for derivativeinstruments, including certain derivative instruments embedded in othercontracts, and for hedging activities. As required by SFAS No. 133, CRLP records all derivatives on the balancesheet at fair value.  The accounting for changes in the fair value ofderivatives depends on the intended use of the derivative and the resultingdesignation. Derivatives used to hedge the exposure to changes in the fairvalue of an asset, liability, or firm commitment attributable to a particularrisk, such as interest rate risk, are considered fair value hedges. Derivativesused to hedge the exposure to variability in expected future cash flows, orother types of forecasted transactions, are considered cash flow hedges.

 

Forderivatives designated as fair value hedges, changes in the fair value of thederivative and the hedged item related to the hedged risk are recognized inearnings. For derivatives designated as cash flow hedges, the effective portionof changes in the fair value of the derivative is initially reported in othercomprehensive income and subsequently reclassified to earnings when the hedgedtransaction affects earnings, and the ineffective portion of changes in thefair value of the derivative is recognized directly in earnings.  CRLP assesses the effectiveness of eachhedging relationship by comparing the changes in fair value or cash flows ofthe derivative hedging instrument with the changes in fair value or cash flowsof the designated hedged item or transaction.

 

CRLP’sobjective in using derivatives is to add stability to interest expense and tomanage its exposure to interest rate movements or other identified risks. To accomplish this objective, CRLP primarily uses interest rate swaps and capsas part of its cash flow hedging strategy. Interest rate swaps designated as cash flow hedges involve the receiptof variable-rate amounts in exchange for fixed-rate payments over the life ofthe agreements without exchange of the underlying principal amount. During 2002, such derivatives were used to hedge the variable cash flowsassociated with existing variable-rate debt and existing lines of credit.

 

CRLP hasentered into several different hedging transactions in an effort to manage itsexposure to changes in interest rates. The following table summarizes the notional values, fair values andother characteristics of CRLP’s derivative financial instruments atDecember 31, 2002.  The notionalvalue at December 31, 2002 provides an indication of the extent of CRLP’sinvolvement in these instruments at that time, but does not represent exposureto credit, interest rate, or market risk.

 
| **Product  Type**              |   | **Notional  Value** |         | **Interest  Rate** |   | **Maturity** |    | **Fair Value  At December 31, 2002** |   |
|--------------------------------|--------|---------------------|--------------|--------------------|--------|--------------|---------|-------------------------------------------|--------|
|                           |   |                |         |               |   |         |    | **(in thousands)**                        |   |
| Interest Rate SWAP, Cash Flow  |   | $                   | 30.2 - $27.7 | million            | 5.932  | %            | 1/01/06 |                                      | $      | (3,117 | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0         | million            | 2.319  | %            | 1/02/03 |                                      | (38    | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 25.0         | million            | 2.430  | %            | 1/01/03 |                                      | (21    | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0         | million            | 2.113  | %            | 1/02/04 |                                      | (370   | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0         | million            | 1.637  | %            | 1/02/04 |                                      | (131   | ) |
| Interest Rate SWAP, Cash Flow  |   | $                   | 50.0         | million            | 1.615  | %            | 1/02/04 |                                      | (119   | ) |
| Interest Rate SWAP, Fair Value |   | $                   | 50.0         | million            | 5.015  | %            | 7/26/04 |                                      | 2,633  |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 21.1         | million            | 6.850  | %            | 6/29/04 |                                      | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 17.9         | million            | 6.850  | %            | 7/06/04 |                                      | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 30.4         | million            | 11.200 | %            | 6/30/03 |                                      | — |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 17.1         | million            | 4.840  | %            | 4/1/04  |                                      | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 27.0         | million            | 4.840  | %            | 4/1/04  |                                      | 1      |   |
| Interest Rate CAP, Cash Flow   |   | $                   | 8.7          | million       | 4.840  | %            | 4/1/04  |                                      | — |   |
|                                |        |                     |              |                    |        |              |         |                                           |        |  |  |

 

CRLP does notuse derivatives for trading or speculative purposes.  Further, CRLP has a policy of only entering into contracts withmajor financial institutions based upon their credit ratings and otherfactors.  When viewed in conjunctionwith the underlying and offsetting exposure that the derivatives are designedto hedge, CRLP has not sustained a material loss from those instruments nordoes it anticipate any material adverse effect on its net income or financialposition in the future from the use of derivatives.

 

AtDecember 31, 2002, derivatives with a fair value of $2.6 million wereincluded in other assets and derivatives with a fair value of $3.8 million wereincluded in other liabilities.  Thechange in net unrealized gains/losses of $3.6 million in 2002 for derivativesdesignated as cash flow hedges is separately disclosed in the statement ofchanges in partners’ equity.  Hedgeineffectiveness of $23,000 on cash flow hedges was recognized in other income(expense) during 2002.

 

Amountsreported in accumulated other comprehensive income related to derivatives willbe reclassified to interest expense as interest payments are made on CRLP’svariable-rate debt. The change in net unrealized losses on cash flow hedgesreflects a reclassification of $2.2 million of net unrealized losses fromaccumulated other comprehensive

 

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income (loss) to interestexpense during 2002. During 2003, CRLP estimates that an additional $2.3million will be reclassified to earnings of the current balance held inaccumulated other comprehensive income (loss).

 

**10.  Capital Structure**

 

AtDecember 31, 2002 the Trust controlled CRLP as the sole general partnerand as the holder of 67.9% of the common units of CRLP and 63.6% of thepreferred units (Series A Preferred Units and Series C Preferred Units).  The limited partners of CRLP who hold commonunits or “redeemable units”, are those persons (including certain officers anddirectors) who, at the time of the Initial Public Offering, elected to hold allor a portion of their interest in the form of units rather than receiving unitsof common stock of the Trust, or individuals from whom CRLP acquired certainproperties, who elected to receive units in exchange for the properties.  Redeemable units represent the number ofoutstanding limited partnership units as of the date of the applicable balancesheet, valued at the closing market value of the Trust’s common shares.  Each redeemable unit may be redeemed by theholder thereof for either one share of Common Stock or cash equal to the fairmarket value thereof at the time of such redemption, at the option of theTrust.  Additionally, in 1999, CRLPissued $100 million of Series B Cumulative Redeemable Perpetual Preferred Units(Series B Units) in a private placement, that are exchangeable for Series BPreferred Shares of the Trust after ten years at the option of the holders ofthe Series B Units. (See Note 11)

 

The Board ofTrustees of the Trust manages CRLP by directing the affairs of CRLP.  The Trust’s interests in CRLP entitle it to sharein cash distributions from, and in the profits and losses of, CRLP inproportion to the Trust’s percentage interest therein and entitle the Trust tovote on all matters requiring a vote of the limited partners.

 

In 1999, theTrust’s Board of Trustees authorized a common unit repurchase program underwhich the Trust could repurchase up to $150 million of its currentlyoutstanding common shares from time to time at the discretion of management inopen market and negotiated transactions. The Trust repurchased 5,623,150 shares at an all-in cost ofapproximately $150 million, which represents an average purchase price of$26.70.  These shares are included as areduction of partners’ equity.

 

**11.  Cash Contributions**

 

OnFebruary 28, 2002, the Trust entered into a transaction in which 560,380common shares of beneficial interest of the Trust’s common shares were issuedat $33.37 per share, resulting in net proceeds of $17.6 million to theTrust.  Related to this offering,Salomon Smith Barney deposited 260,710 shares into The Equity Focus Trust REITPortfolio Series, 2002-A, a newly formed unit investment trust, and 299,670shares were deposited into Cohen & Steers Quality Income Realty Fund,Inc.  Pursuant to the partnershipagreement, the Trust contributed the net proceeds of the foregoing transactionsto CRLP in exchange for units of general partnership interest in CRLP.  Subsequently, CRLP used the net proceeds torepay a portion of the outstanding balance on CRLP’s unsecured line of credit.

 

DuringJune 2001, CRLP issued 2,000,000 preferred units of beneficial interest(Series C Preferred Units).  The SeriesC Preferred Units pay a quarterly dividend at 9.25% per annum and may beredeemed by CRLP on or after June 19, 2006.  The Series C Preferred Units have no stated maturity, sinkingfund or mandatory redemption and are not convertible into any other securitiesof CRLP.  The Series C Preferred Unitshave a liquidation preference of $25.00 per unit.  The net proceeds of the offering were approximately $48.1 millionand were used to repay outstanding balances under CRLP’s unsecured line ofcredit.

 

DuringJanuary 2000, CRLP initiated and completed an Executive Unit PurchaseProgram (Unit Purchase Program), in which the Board of Trustees and certainmembers of the Trust’s management were able to purchase 425,925 units ofCRLP.  Under the Unit Purchase Program,the Board of Trustees and the members of management obtained full-recoursepersonal loans from an unrelated financial institution, in order to purchase theUnits.  The Units are pledged ascollateral against the loans.  Inaddition, CRLP has provided a guarantee to the unrelated financial institutionfor the personal loans.  The value ofthe Units purchased under the Unit Purchase Program was approximately $10million.

 

**12.  Share Option and Restricted Share Plans**

 

InSeptember 1993, the Trust adopted an Employee Share Option and RestrictedShare Plan (the Employee Plan) designed to attract, retain, and motivateexecutive officers of the Trust and other key employees.  The Employee Plan, as amended inApril 1998, authorizes the issuance of up to 3,200,000 common shares ofbeneficial interest (as increased from time to time to equal 10% of the numberof common shares and CRLP units outstanding) pursuant to options or restrictedshares granted or issued under this plan, provided that no more than 750,000restricted shares may be issued.  Inconnection with the grant of options under the Employee Plan, the ExecutiveCompensation Committee of the Board of Trustees of the Trust determines theoption exercise period and any vesting requirements.  The Trust issued 62,595, 16,559, and 25,395 restricted sharesunder the Employee Plan during 2002, 2001, and 2002, respectively.  The value of outstanding restricted

 

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shares is being charged tocompensation expense based upon the earlier of satisfying the vesting period(2-8 years) or satisfying certain performance targets.

 

InSeptember 1993, the Trust also adopted a Trustee Share Option Plan (theTrustee Plan).  The Trustee Plan, asamended in April 1997, authorizes the issuance of up to 500,000 options topurchase common shares of beneficial interest. In April 1997, the Trust also adopted a Non-Employee Trustee SharePlan (Share Plan).  The Share Planpermits non-employee trustees of the Trust to elect to receive common shares inlieu of all or a portion of their annual trustee fees, board fees and committeefees.  The Share Plan authorizes theissuance of 50,000 common shares under the Plan.  The Trust issued 4,323 common shares pursuant to the Share Planduring 2002.  In October 1997 theTrust adopted an Employee Share Purchase Plan (Purchase Plan).  The Purchase Plan permits eligible employeesof the Trust, through payroll deductions, to purchase common shares at a 5%discount to the market price.  ThePurchase Plan has no limit on the number of common shares that may be issuedunder the plan.  The Trust issued 1,415common shares pursuant to the Purchase Plan during 2002.

 

The Trustapplies Accounting Principles Board Opinion 25 (APB 25) and relatedInterpretations in accounting for its plans. In accordance with APB 25, no compensation expense has been recognizedfor its stock option plans.  Hadcompensation expense for the Trust’s stock option plans been determined basedon the fair value at the grant dates for awards under those plans consistentwith the methods prescribed in SFAS No. 123, *Accounting for Stock-Based Compensation*,CRLP’s net income and earnings per share would have been reduced to the proforma amounts indicated below:

 
|                                        |   | **For the  Year Ending December 31,** |   |
|---------------------------------------------|--------|--------------------------------------------|--------|
|                                        |   | **(in  thousands, except per share data)** |   |
|                                        |   | **2002**                                   |   | **2001** |   | **2000** |   |
| Net income available to common unitholders: |   |                                       |   |   |   |   |   |
| As reported                                 |   | $                                          | 86,468 |   | $ | 64,119 |   | $ | 59,312 |   |
| Pro forma                                   |   | $                                          | 86,008 |   | $ | 63,850 |   | $ | 59,098 |   |
| Net income per share – basic:          |   |                                       |   |   |   |   |   |
| As reported                                 |   | $                                          | 2.61   |   | $ | 2.00 |   | $ | 1.82 |   |
| Pro forma                                   |   | $                                          | 2.59   |   | $ | 2.00 |   | $ | 1.81 |   |
|                                        |   |                                       |   |   |   |   |   |
| Net income per share – diluted:        |   |                                       |   |   |   |   |   |
| As reported                                 |   | $                                          | 2.59   |   | $ | 2.00 |   | $ | 1.82 |   |
| Pro forma                                   |   | $                                          | 2.57   |   | $ | 1.99 |   | $ | 1.81 |   |

 

The Trust usesthe Black-Scholes pricing model to calculate the fair values of the optionsawarded, which are included in the pro forma results above.  The following assumptions were used to derivethe fair values: a 10-year option term; an annualized volatility rate of19.59%, 13.84%, and 14.56% for 2002, 2001, and 2000, respectively; a risk-freerate of return of 4.33%, 5.38%, and 5.09% for 2002, 2001, and 2000,respectively; and a dividend yield of 7.63%, 8.67%, and 8.19% for 2002, 2001,and 2000, respectively.

 

For allemployee stock options granted on or after January 1, 2003, in accordancewith SFAS No. 148, *Accounting for Stock-Based Compensation – Transitionand Disclosure – an amendment of SFAS No. 123*, the Trust has electedto adopt the accounting provisions of SFAS No. 123 under the prospectivemethod.  The prospective method allowsthe Trust to apply the recognition provisions of SFAS No. 123 to all employee awardsgranted, modified, or settled after the beginning of the fiscal year in whichthe recognition provisions are first applied.

 

 

 

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Optionactivity under both the Employee Plan and the Trustee Plan combined ispresented in the table below:

 
|                            |   |                                            |   | **Options  Outstanding** |   |
|---------------------------------|--------|-------------------------------------------------|--------|--------------------------|--------|
|                            |   | **Shares  Available  for future  Option Grant** |   | **Shares**               |   | **Weighted-  average  Price per  Share** |   |
|                            |   |                                            |   |                     |   |   |   |
| Balance, December 31, 1999 |   | 3,046,609                                       |   | 610,961                  |   | $ | 27.046 |   |
| Options granted                 |   | (226,460                                        | )      | 226,460                  |   | $ | 24.242 |   |
| Options terminated              |   | 35,992                                          |   | (35,992                  | )      | $ | 26.944 |   |
| Options exercised               |   |                                            |   | (3,333                   | )      | $ | 24.625 |   |
|                            |   |                                            |   |                     |   |   |   |
| Balance, December 31, 2000 |   | 2,856,141                                       |   | 798,096                  |   | $ | 26.261 |   |
| Options granted                 |   | (482,118                                        | )      | 482,118                  |   | $ | 26.880 |   |
| Options terminated              |   | 16,065                                          |   | (16,065                  | )      | $ | 26.552 |   |
| Options exercised               |   |                                            |   | (45,185                  | )      | $ | 24.654 |   |
|                            |   |                                            |   |                     |   |   |   |
| Balance, December 31, 2001 |   | 2,390,088                                       |   | 1,218,964                |   | $ | 26.604 |   |
| Options granted                 |   | (585,620                                        | )      | 585,620                  |   | $ | 32.617 |   |
| Options terminated              |   | 32,076                                          |   | (32,076                  | )      | $ | 29.121 |   |
| Options exercised               |   |                                            |   | (231,238                 | )      | $ | 26.283 |   |
|                            |   |                                            |   |                     |   |   |   |
| Balance, December 31, 2002 |   | 1,836,544                                       |   | 1,541,270                |   | $ | 28.882 |   |

 

All optionsgranted to date have a term of ten years and may be exercised in equalinstallments, based on a 3-5 year vesting schedule, of the total number ofoptions issued to any individual on each of the applicable 3-5 year anniversarydates of the grant of the option.  Thebalance of options that are exercisable total 396,052, 492,980, and 385,931 atDecember 31, 2002, 2001, and 2000, respectively.

 

**13.  Employee Benefits**

 

Employees ofCRLP hired prior to January 1, 2002 participate in a noncontributorydefined benefit pension plan designed to cover substantially allemployees.  Pension expense includesservice and interest costs adjusted by actual earnings on plan assets andamortization of prior service cost and the transition amount.  The benefits provided by this plan are basedon years of service and the employee’s final average compensation.  CRLP’s policy is to fund the minimumrequired contribution under ERISA and the Internal Revenue Code.

 

The tablebelow presents a summary of pension plan status as of December 31, 2002and 2001, as it relates to the employees of CRLP.

 
| **(amounts in thousands)**                                                                                                                                  |   | **2002** |      | **2001** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|----------|--------|
| Actuarial present value of accumulated benefit obligation including  vested benefits of $4,677 and $3,101 at December 31, 2002 and 2001,  respectively |   | **$**    | **5,589** |     | $      | 3,826 |   |
| Actuarial present value of projected benefit obligations at year end                                                                                        |   | **$**    | **7,605** |     | $      | 6,062 |   |
| Fair value of assets at year end                                                                                                                            |   | **$**    | **3,970** |     | $      | 4,063 |   |
| Accrued pension cost                                                                                                                                        |   | **$**    | **2,385** |     | $      | 2,077 |   |
| Net pension cost for the year                                                                                                                               |   | **$**    | **724**   |     | $      | 829 |   |

 

Actuarialassumptions used in determining the actuarial present value of accumulatedbenefit obligations at January 1, 2002, are as follows:

 
|                                   |   | **2002** |   | **2001** |   |
|----------------------------------------|--------|----------|--------|----------|--------|
| Weighted-average interest rate         |   | **6.50** | **%**  | 7.25     | %      |
| Increase in future compensation levels |   | **4.00** | **%**  | 4.00     | %      |

 

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CRLPparticipates in a salary reduction profit sharing plan covering substantiallyall employees.  This plan provides, withcertain restrictions, that employees may contribute a portion of their earningswith CRLP matching one-half of such contributions, solely at CRLPdiscretion.  Contributions by CRLP wereapproximately $415,000, $321,000, and $313,000 for the years endedDecember 31, 2002, 2001 and 2000, respectively.

 

**14.  Leasing Operations**

 

CRLP is in thebusiness of leasing and managing multifamily, office, and retail property.  For properties owned by CRLP, minimumrentals due in future periods under noncancelable operating leases extendingbeyond one year at December 31, 2002, are as follows:

 
|       |   | **(in  thousands)** |    |
|------------|--------|---------------------|---------|
| 2003       |   | $                   | 180,796 |   |
| 2004       |   | 166,039             |    |
| 2005       |   | 141,920             |    |
| 2006       |   | 116,623             |    |
| 2007       |   | 89,163              |    |
| Thereafter |   | 285,586             |    |
|       |   | $                   | 980,127 |   |

 

The noncancelableleases are with tenants engaged in retail and office operations in Alabama,Georgia, Florida, North Carolina, South Carolina, Tennessee, Texas, andVirginia.  Performance in accordancewith the lease terms is in part dependent upon the economic conditions of therespective areas.  No additional creditrisk exposure relating to the leasing arrangements exists beyond the accountsreceivable amounts shown in the December 31, 2002 balance sheet.  Leases with tenants in multifamilyproperties are generally for one year or less and are thus excluded from theabove table.  Substantially all ofCRLP’s land, buildings, and equipment represent property leased under the aboveand other short-term leasing arrangements.

 

Rental incomefor 2002, 2001, and 2000 includes percentage rent of $3.5 million, $3.6million, and $5.7 million, respectively. This rental income was earned when certain retail tenants attained salesvolumes specified in their respective lease agreements.

 

**15. Guarantees and Other Arrangements**

 

DuringJanuary 2000, CRLP initiated and completed an Executive Unit PurchaseProgram (Unit Purchase Program), in which the Board of Trustees and certainmembers of CRLP’s management were able to purchase 425,925 Units of CRLP.  Under the Unit Purchase Program, the Boardof Trustees and the members of management obtained full-recourse personal loansfrom an unrelated financial institution, in order to purchase the Units.  The Units, which have a market value ofapproximately $13.8 million at December 31, 2002, are pledged ascollateral against the loans.  CRLP hasprovided a guarantee to the unrelated financial institution for the personalloans, which mature in January 2005. The value of the Units purchased under the Unit Purchase Program wasapproximately $10.0 million.  AtDecember 31, 2002, no liability was recorded on CRLP’s books for theguarantee.

 

InAugust 2001, CRLP entered into an agreement to provide services to anunrelated third party in connection with the third party’s development of a$30.0 million multi-family property in North Carolina.  CRLP was engaged to serve as developmentconsultant and leasing and management agent for this property.  In addition, for a fee, CRLP is serving as aguarantor for a $3.3 million working capital loan obtained by the threeprincipals of the third party entity, which loan is primarily collateralizedjointly and severally by the personal assets of the borrowers, and matures inAugust 2003.  At December 31,2002, no liability was recorded on CRLP’s books for the guarantee.  CRLP has a right of first refusal topurchase the property should the third party elect to sell.  Over the term of the agreement, CRLP expectsto earn market fees for its services.

 

DuringAugust 2002, in connection with the purchase of Heathrow InternationalBusiness Center, CRLP entered into an agreement to acquire one new officebuilding that contains 192,000 square feet. The closing for this acquisition is anticipated to occur upon theearlier of August 2005 or at such time that the seller achieves certainleasing targets for the property.  Thepurchase price will be determined based upon the percentage of gross leasablearea actually leased and the net operating income generated by the leases atthe time of acquisition.

 

DuringDecember 2002, CRLP entered into an agreement with an unrelated thirdparty in connection with the third party’s development of a $23.5 millionmulti-family property in Tampa, Florida. CRLP has agreed to loan approximately $4.0 million, which represents17.0% of the development costs to the third party during the development of theproperty.  Under the agreement, thebalance of the loan matures in December 2007.  At December 31, 2002, no amount had been

 

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funded to the unrelated thirdparty and CRLP has no liability recorded on its books for the potential loanamount.  CRLP has a right of firstrefusal to purchase the property should the third party elect to sell.

 

DuringDecember 2002, CRLP sold 90% of its interest in Colonial Promenade Hooverfor a total sales price of $20.5 million, and formed the Highway 150 LLC, inwhich CRLP maintains 10% ownership and manages the property.  In connection with the formation of theHighway 150 LLC, CRLP executed a guaranty, pursuant to which CRLP would serveas a guarantor of $1.0 million of the debt related to the joint venture, whichis collateralized by the Colonial Promenade Hoover retail property.  CRLP’s maximum guarantee of $1.0 million maybe requested by the lender, only after all of the rights and remedies availableunder the associated note and security agreements have been exercised andexhausted.  At December 31, 2002,the total amount of debt of the joint venture was approximately $17.8 millionand matures in December 2012.  AtDecember 31, 2002, no liability was recorded on CRLP’s books for theguarantee.

 

In connectionwith the contribution of certain assets to CRLP, certain partners of CRLP haveguaranteed indebtedness of CRLP totaling $27.3 million at December 31, 2002.  The guarantees are held in order for thecontributing partners to maintain their tax deferred status on the contributedassets.  These individuals have not beenindemnified by CRLP.  Additionally,certain unitholders of CRLP and trustees of the Trust have guaranteedindebtedness of CRLP totaling $0.5 million at December 31, 2002.  CRLP has indemnified these individuals fromtheir guarantees of this indebtedness.

 

**16.  Related Party Transactions**

 

CRLP has usedaffiliated construction companies to manage and oversee certain of itsdevelopment, re-development and expansion projects.  The affiliated construction companies utilized by CRLP areheadquartered in Alabama and have completed numerous projects within the Sunbeltregion of the United States.  Throughthe use of market survey data, CRLP negotiates the contract price of eachdevelopment, re-development or expansion project with the affiliatedconstruction companies and presents each project to the Trust’s ManagementCommittee for review and approval.  Uponapproval by the Management Committee, the Management Committee presents eachproject to the independent members of the Executive Committee of the Board ofTrustees for final approval.

 

CRLP paid $1.6million, $33.6 million, and $46.7 million for property development costs toLowder Construction Company, Inc., a construction company owned by The ColonialCompany (TCC) in which Mr. Thomas H. Lowder (Chairman of the Board and ChiefExecutive Officer) and Mr. James K. Lowder (trustee) each own a 50% interest,during the years ended December 31, 2002, 2001 and 2000,respectively.  Of these amounts, $1.5million, $30.7 million, and $43.2 million was then paid to unaffiliatedsubcontractors for the construction of these development and expansion projectsduring 2002, 2001 and 2000, respectively. CRLP had outstanding construction invoices and retainage payable toLowder Construction Company, Inc. totaling $0.4 million at December 31,2001.  There were no outstandingconstruction invoices or retainage payable to Lowder Construction Company, Inc.at December 31, 2002.  In each ofthe following transactions, the independent members of the Executive Committeeapproved such transactions unanimously.

 

CRLP also paid$35.3 million, $67.0 million, and $31.3 million for property construction coststo Brasfield & Gorrie General Contractors, Inc. (B&G), a constructioncompany partially-owned by Mr. M. Miller Gorrie (trustee) during the yearsended December 31, 2002, 2001 and 2000, respectively.  Of these amounts, $32.1 million, $60.3million, and $28.2 million was then paid to unaffiliated subcontractors for theconstruction of these development projects during 2002, 2001 and 2000,respectively.  CRLP had outstandingconstruction invoices and retainage payable to this construction companytotaling $1.8 million at December 31, 2001.  There were no outstanding construction invoices or retainagepayable to B&G at December 31, 2002.

 

InMarch 2002, CPSI acquired a 20% interest in three aircraft from NRHEnterprises, L.L.C., (NRH) an entity in which Mr. Harold Ripps (trustee)indirectly has an approximate 33% interest, for approximately $1.4million.  Additionally, CPSI enteredinto a joint ownership agreement with the other owners of the aircraft,including NRH, under which CPSI pays NRH, as agent for all of the owners of theaircraft, a monthly fee of $10,000, plus $1,400 per hour of the Trust’s  flight time, to cover the operating expensesof the aircraft.  Further, CPSI enteredinto an aircraft services agreement with MEDJET Assistance, L.L.C., (MEDJET) anentity in which Mr. Ripps indirectly has an approximate 40% interest.  Under this agreement, CPSI is obligated topay a monthly fee of $5,000 to MEDJET for managing the use, maintenance,storage, and supervision of the aircraft. NRH pays this $5,000 monthly fee to MEDJET, on behalf of CPSI, from the$10,000 monthly fee referred to above. During 2002, CPSI paid approximately $254,000 to NRH for usage andservice of the aircraft under the above agreements.

 

InJuly 2002, CRLP acquired three single family homes located in Montgomery,Alabama, from Lowder New Homes, Inc., an entity owned by TCC, for a totalpurchase price of approximately $0.5 million, which will be operated as rentalproperty.  The homes were purchased aspart of a corporate rental program for an automobile manufacturer that isbuilding a manufacturing plant near Montgomery, Alabama.  Under the corporate rental program,executives of the automobile manufacturer will rent the homes from CRLP for aninitial term of three years, with the option to extend the lease, and haveagreed to lease additional multifamily units at Colonial Grand at Promenadelocated in Montgomery, Alabama.  Thehomes were funded through CRLP’s unsecured line of credit.

 

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DuringSeptember 2000, CRLP purchased a parcel of land from Colonial CommercialInvestments, Inc. (CCI), which is owned by James K. Lowder and Thomas H.Lowder, through the issuance of 12,477 limited partnership units in CRLP valuedat approximately $0.3 million. Subsequently, the parcel of land was sold in excess of cost by CRLP inJune 2001.

 

CRLP and itssubsidiaries leased space to certain entities in which Mr. Thomas H. Lowder,Mr. James K. Lowder, and Mr. M. Miller Gorrie have an interest and receivedmarket rent from these entities of approximately $1.0 million, $1.1 million,and $1.5 million during the years ended December 31, 2002, 2001, and 2000,respectively.  Additionally, CRLP andits subsidiaries provided management and leasing services to certain relatedentities and received fees from these entities of approximately $0.3 millionduring the years ended December 31, 2002, 2001, and 2000.

 

ColonialInsurance Agency, a corporation owned by TCC, has provided insurance brokerageservices for CRLP.  The aggregate amountpaid by CRLP to Colonial Insurance Agency for these services during the yearsended December 31, 2002, 2001, and 2000 were $5.0 million, $4.4 million,and $3.3 million, respectively.  Ofthese amounts, $4.7 million, $4.2 million and $3.1 million was then paid tounaffiliated insurance carriers for insurance premiums during 2002, 2001 and2000, respectively.

 

**17.  Subsequent Events**

 

**Distribution**

 

OnJanuary 18, 2003, the Board of Trustees declared a cash distribution topartners of CRLP in the amount of $.665 per partnership unit, totaling $22.4million.  The distribution was made topartners of record as of January 31, 2003, and was paid onFebruary 7, 2003.

 

**Dispositions**

 

OnFebruary 28, 2003, CRLP sold Colonial Promenade Bardmoor, a 152,667 squarefoot retail asset located in St. Petersburg, Florida.  The total sales price was $17.1 million, which was used to repaya portion of the borrowings under CRLP’s unsecured line of credit and tosupport CRLP’s investment activities.

 

Additionally,CRLP sold a 176-unit multifamily apartment complex located in Tampa, Floridafor a total sales price of $13.8 million during the first quarter of 2003 andone property in the third quarter of 2003, a 28,250 office asset located withinthe International Park office complex located in Birmingham, Alabama for atotal sales price of $3.0 million.  SeeNote 3 for further discussion.

 

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**18.  Quarterly Financial Information (Unaudited)**

 

The followingis a summary of the unaudited quarterly financial information for the yearsended December 31, 2002 and 2001:

 
| **(in thousands, except per share  data)** |   | **First  Quarter** |       | **Second  Quarter** |       | **Third  Quarter** |       | **Fourth  Quarter** |       |
|--------------------------------------------|--------|--------------------|------------|---------------------|------------|--------------------|------------|---------------------|------------|
|                                       |   |               |       |                |       |               |       |                |       |
| **2002**                                   |   |               |       |                |       |               |       |                |       |
| Revenues                                   |   | $                  | 77,750     |                | $          | 79,109             |       | $                   | 81,121     |   | $ | 87,738 |   |
| Income from continuing operations          |   | 25,124             |       | 38,222              |       | 17,399             |       | 21,707              |       |
| Income from discontinued operations        |   | 615                |       | 680                 |       | 6,583              |       | 576                 |       |
| Net income                                 |   | 25,739             |       | 38,902              |       | 23,982             |       | 22,283              |       |
| Preferred dividends                        |   | (6,109             | )          | (6,109              | )          | (6,109             | )          | (6,109              | )          |
| Net income available to common unitholders |   | 19,630             |       | 32,793              |       | 17,873             |       | 16,172              |       |
|                                       |   |               |       |                |       |               |       |                |       |
| Net income per share:                      |   |               |       |                |       |               |       |                |       |
| Basic                                      |   | $                  | 0.60       |                | $          | 0.99               |       | $                   | 0.53       |   | $ | 0.48 |   |
| Diluted                                    |   | $                  | 0.60       |                | $          | 0.98               |       | $                   | 0.53       |   | $ | 0.48 |   |
|                                       |   |               |       |                |       |               |       |                |       |
| Weighted average common units outstanding: |   |               |       |                |       |               |       |                |       |
| Basic                                      |   | 32,526             |       | 33,169              |       | 33,426             |       | 33,544              |       |
| Diluted                                    |   | 32,744             |       | 33,488              |       | 33,709             |       | 33,771              |       |
|                                       |   |               |       |                |       |               |       |                |       |
| **2001**                                   |   |               | ** ** |                | ** ** |               | ** ** |                | ** ** |
|                                       |   |               |       |                |       |               |       |                |       |
| Revenues                                   |   | $                  | 74,134     |                | $          | 75,965             |       | $                   | 77,444     |   | $ | 82,761 |   |
| Income from continuing operations          |   | 12,993             |       | 15,186              |       | 23,399             |       | 32,387              |       |
| Income from discontinued operations        |   | 515                |       | 601                 |       | 575                |       | 743                 |       |
| Net income                                 |   | 13,508             |       | 15,787              |       | 23,974             |       | 33,130              |       |
| Distributions to preferred unitholders     |   | (4,953             | )          | (5,094              | )          | (6,109             | )          | (6,124              | )          |
| Net income available to common unitholders |   | 8,555              |       | 10,693              |       | 17,865             |       | 27,006              |       |
|                                       |   |               |       |                |       |               |       |                |       |
| Net income per share:                      |   |               |       |                |       |               |       |                |       |
| Basic                                      |   | $                  | 0.27       |                | $          | 0.33               |       | $                   | 0.56       |   | $ | 0.84 |   |
| Diluted                                    |   | $                  | 0.27       |                | $          | 0.33               |       | $                   | 0.56       |   | $ | 0.84 |   |
|                                       |   |               |       |                |       |               |       |                |       |
| Weighted average common units outstanding: |   |               |       |                |       |               |       |                |       |
| Basic                                      |   | 31,981             |       | 31,984              |       | 31,994             |       | 32,062              |       |
| Diluted                                    |   | 32,022             |       | 32,106              |       | 32,139             |       | 32,214              |       |

 

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**Report of Independent****Accountants**

 

To the Board of Trusteesof Colonial Properties Trust:

 

In our opinion, the consolidated financial statements listed in theaccompanying index present fairly, in all material respects, the financialposition of Colonial Realty Limited Partnership (the “Company”) at December 31,2002 and 2001, and the results of its operations and its cash flows for each ofthe three years in the period ended December 31, 2002 in conformity withaccounting principles generally accepted in the United States of America. Inaddition, in our opinion, the financial statement schedules listed in theaccompanying index present fairly, in all material respects, the informationset forth therein when read in conjunction with the related consolidatedfinancial statements. These financial statements and financial statementschedules are the responsibility of the Company’s management; ourresponsibility is to express an opinion on these financial statements andfinancial statement schedules based on our audits. We conducted our audits ofthese statements in accordance with auditing standards generally accepted inthe United States of America, which require that we plan and perform the auditto obtain reasonable assurance about whether the financial statements are freeof material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statement presentation. Webelieve that our audits provide a reasonable basis for our opinion.

 

As discussed in Note 2 to the financial statements, effectiveJanuary 1, 2002, the Company adopted Statement of Financial AccountingStandards No. 144*, “Accounting for the Impairment of Long-Lived Assets.”*

 

 
| /s/ PricewaterhouseCoopers LLP                       |   |
|------------------------------------------------------|--------|
|                                                 |
| Birmingham, Alabama                                  |
| January 17, 2003, except for Notes 3 and 17, as |
| to which the date is September 13, 2003         |

 

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**Item 9.****                                   Changesin and Disagreements with Accountants on Accounting and Financial Disclosure.**

 

None.

 

**PART III**

 

**Item 10.****                            Directorsand Executive Officers of the Registrant.**

 

We are managedby the Trust, the general partner of CRLP. The trustees of the Trust are as follows:

 

***Thomas H. Lowder***,53, has been a trustee of the Trust since 1993.  He has served as the Trust’s chairman of the board, president andchief executive officer since July 1993. Mr. Lowder became President ofColonial Properties, Inc., the Trust’s predecessor, in 1976, and since thattime has been actively engaged in the acquisition, development, management,leasing and sale of multifamily, office and retail properties for theTrust.  Mr. Lowder’s most recent boardappointment was his election to the National Association of Real EstateInvestment Trust (NAREIT) Board in June 1999.  He presently serves on the board of directors of CommunityFoundation of Greater Birmingham, United Way of Central Alabama, Children’sHospital, Birmingham Southern College, and Crippled Children’s Foundation.  Mr. Lowder is a member of the executivecommittee of the Board of Trustees.  Mr.Lowder is the brother of James K. Lowder, one of our trustees.

 

***Carl F. Bailey***,72, has been a trustee of the Trust since 1993.  From 1995 to 2002, Mr. Bailey served as President of BDI, amarketing and distribution company. Prior to 1995, Mr. Bailey was co-chairman of BellSouthTelecommunications, Inc., a telecommunication company, and chairman and chiefexecutive officer of South Central Bell Telephone Company, a telecommunicationcompany.  From 1952 to 1992, he workedfor Southern Bell and South Central Bell in a number of capacities, includingas president and a member of the board of directors from 1982 until 1992.  Mr. Bailey is chairman of TekQuest, Inc., amanufacturing company, and a member of the board of directors of SouthTrustCorporation, a financial services corporation. Mr. Bailey also serves on the board of trustees of Birmingham SouthernCollege.  Mr. Bailey is chairman of theaudit committee, and is a member of the executive committee and nominating andcorporate governance committee of the board of trustees.

 

***M. Miller Gorrie***,67, has been a trustee of the Trust since 1993.  Since 1995, Mr. Gorrie has served as chairman of the board andchief executive officer of Brasfield & Gorrie, L.L.C., a regional generalcontracting firm located in Birmingham, Alabama that is ranked 24thin the ENR’s “Top 50 Domestic General Contractors”.  He currently serves on the boards of ACIPCO, the MetropolitanDevelopment Board, Economic Development Partnership of Alabama, the AlabamaSymphony Orchestra and the University of Alabama at Birmingham Civil EngineerAdvisory Board.  In the past he hasserved as a director of AmSouth Bank, Baptist Hospital Foundation, the SouthernResearch Institute, United Way of Central Alabama, the Associated GeneralContractors, Alabama Chamber of Commerce, the Building Science Advisory Boardof Auburn University, and the Business Council of Alabama.  Mr. Gorrie is chairman of the executivecommittee and is a member of the executive compensation committee of the boardof trustees.

 

***William M. Johnson***,56, has been a trustee of the Trust since 1997.  Since 1978, Mr. Johnson has been chief executive officer andfounder of Johnson Development Company, a real estate development, constructionand management firm in the Atlanta, Georgia area.  Mr. Johnson directed the development, leasing and management of1.2 million square feet of office, warehouse, retail and hotel space having avalue in excess of $117 million, including seven office buildings and retailproperties that we acquired from Mr. Johnson in 1997.  Mr. Johnson is a member of the board of trustees of AsburyTheological Seminary, a member of the Board of Directors of Reach Out YouthSolutions, and is International Director of the World ParishMinistries.  Mr. Johnson also serves asa strategic planning advisor for several para-church ministries.  In 1999, Mr. Johnson established a familyfoundation that provides financial assistance to twenty-eight local, nationaland international ministries.  Mr.Johnson is a member of the executive compensation committee and executivecommittee of the board of trustees.

 

***James K. Lowder***,53, has been a trustee of the Trust since 1993.  Since 1995, Mr. Lowder has served as chairman of the board of TheColonial Company, chairman of the board of Lowder Construction Company, Inc.,Lowder New Homes, Inc., Colonial Insurance Agency, Inc., Lowder Realty Company,Inc., Colonial Commercial Development, Inc., Colonial Homes, Inc., AmericanColonial Insurance Company, Colonial Commercial Realty, Inc. and ColonialCommercial Investments, Inc.  He is amember of the Home Builders Association of Alabama, the Greater Montgomery HomeBuilders Association and the board of directors of Alabama Power Company.  Mr. Lowder is a member of the executivecompensation committee of the board of trustees.  Mr. Lowder is the brother of Thomas H. Lowder, the Trust’schairman of the board, president and chief executive officer.

 

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***Herbert A. Meisler***,75, has been a trustee of the Trust since 1995.  Since 1964, Mr. Meisler has been President of The Rime Companies,a real estate development, construction and management firm specializing in thedevelopment of multifamily properties that he formed with Mr. Ripps.  While with The Rime Companies,Mr. Meisler oversaw the development and construction of approximately15,000 multifamily apartment units in the Southeastern United States.  He currently serves on the board ofdirectors of the Community Foundation of South Alabama and the Mobile AirportAuthority and was Philanthropist of the Year in Mobile, Alabama.  He is a past director of the Alabama Eye andTissue Bank and past president of the Mobile Jewish Welfare Fund.  Mr. Meisler is a member of the executivecompensation committee and the audit committee of the board of trustees.  Mr. Meisler is the brother-in-law of Mr.Ripps.

 

***Claude B. Nielsen***,52, has been a trustee of the Trust since 1993.  Since 1990, Mr. Nielsen has been president of Coca-Cola BottlingCompany United, Inc., headquartered in Birmingham, Alabama.  He also has served as chief executiveofficer of Coca-Cola Bottling Company United, Inc. since 1991 and served as chiefoperating officer from 1990 to 1991. Prior to 1990, Mr. Nielsen served as president of Birmingham Coca-ColaBottling Company.  Mr. Nielsen is on theboard of directors of AmSouth Bank Corporation and also serves as a boardmember of the Birmingham Airport Authority. Mr. Nielsen is chairman of the executive compensation committee, and amember of the executive committee, and nominating and corporate governancecommittee of the board of trustees.

 

***Harold W. Ripps***,64, has been a trustee of the Trust since 1995.  Since 1969, he has been Chief Executive Officer of The RimeCompanies, a real estate development, construction and management firmspecializing in the development of multifamily properties that he formed withHerbert A. Meisler, another member of our board of trustees.  While with The Rime Companies, Mr. Rippsoversaw the development and construction of approximately 15,000 multifamilyapartment units in the southeastern United States.  He is a member of the executive committee of the Birmingham Councilof Boy Scouts of America, the board of trustees of The Bank, a commercial bank,Birmingham Southern College and the President’s Council of the University ofAlabama in Birmingham.  Mr. Ripps is amember of the executive committee of the board of trustees.  Mr. Ripps is the brother-in-law of Mr.Herbert A. Meisler, one of our trustees.

 

***Donald T. Senterfitt***,83, has been a trustee of the Trust since 1993.  Since May 2000, Mr.Senterfitt has served as chairman of the board of directors of Colonial Bank,Central Florida.  From 1991 to 2000, Mr. Senterfitt served as presidentand chief executive officer of the Pilot Group, LC, a consulting company.  He is a former director and vice chairman ofSunTrust Banks, Inc., a multi-state bank holding company.  From 1985 to1986, he served as president of the American Bankers Association, and from 1958to 1980 he served as general counsel to the Florida Bankers Association. Mr. Senterfitt is a member and a 1997 Laureate of the Mid-FloridaBusiness Hall of Fame and a member of the President’s Council of the Universityof Florida.  He is the recipient of the Distinguished Alumnus Award fromboth his undergraduate school, Carson-Newman College and his graduate school,the University of Florida.  Mr.Senterfitt is a member of the board of directors of CITE, Inc., the Center forIndependence, Technology and Education, a non-profit organization which servesthe needs of blind, visually handicapped and multi-handicapped children andadults, and served as its president for three years.  Mr. Senterfitt ischairman of the nominating and corporate governance committee and is a memberof the audit committee of the board of trustees.

 

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**ExecutiveOfficers of the Trust**

 

The followingis a biographical summary of the executive officers of the Trust:

 

**Thomas H. Lowder**,53, has been a trustee of the Trust since 1993.  He has served as the Trust’s Chairman of the Board, President andChief Executive Officer since July 1993. Mr. Lowder became president ofColonial Properties, Inc., the Trust’s predecessor, in 1976, and since thattime has been actively engaged in the acquisition, development, management,leasing and sale of multifamily, office and retail properties for the Trust.  Mr. Lowder’s most recent board appointmentwas his election to the National Association of Real Estate Investment Trust(NAREIT) Board in June 1999.  Hepresently serves on the board of directors of Community Foundation of GreaterBirmingham, United Way of Central Alabama, Children’s Hospital, BirminghamSouthern College, and Crippled Children’s Foundation.  Mr. Lowder is a member of the executive committee of the board oftrustees.  Mr. Lowder is the brother ofJames K. Lowder, one of the Trust’s trustees.

 

**C. Reynolds Thompson,III**, 40, has been the Trust’s Chief Operating Officersince September 1999, and is responsible for the Multifamily, Office,Retail and Mixed-Use divisions. Mr. Thompson oversees the management,acquisition, leasing and development of properties within its three operatingdivisions and development in the mixed-use division. Prior to his appointmentas Chief Operating Officer, Mr. Thompson was Chief Investment Officer,responsible for investment strategies, market research, due diligence, mergersand acquisitions, joint venture development and cross-divisional acquisitions.Prior to his position as Chief Investment Officer, Thompson served as ExecutiveVice President—Office Division, with responsibility for management of alloffice properties owned and/or managed by us, from May 1997 toMay 1998. Mr. Thompson joined the Trust in February 1997 as SeniorVice President—Office Acquisitions, with responsibility for all acquisitions ofoffice properties. Prior to joining the Trust, Thompson worked for CarrAmericaRealty Corporation in office building acquisitions and due diligence. Hisfourteen-year real estate background includes acquisitions, development,leasing, and management of office properties in the south. Mr. Thompson is amember of the Executive Committee of the Metropolitan Development Board, anactive member of the National Association of Industrial and Office Parks, andhe serves on the Board of Trustees for the Alabama Real Estate Research andEducation Center. Thompson holds a Bachelor of Science Degree from Washingtonand Lee University.

 

**Howard B. Nelson,Jr.,** 55, has been the Trust’s Chief Financial Officersince May 1997 and is responsible for financing matters. Mr. Nelson wasthe Trust’s Senior Vice President and Chief Operating Officer, withresponsibility for the day-to-day management, from September 1993 toMay 1997. He joined the Trust in 1984 as Vice President and became SeniorVice President - Finance in 1987. Nelson presently serves on theBirmingham-Southern College Edward Lee Norton Board of Advisors for Managementand Professional Education, the College of Business Advisory Council of AuburnUniversity and the Business Council of Alabama’s Progress PAC Board ofDirectors. Mr. Nelson has served in the past on the Accounting and Technologycommittee of the Real Estate Roundtable, as treasurer, vice president,president and board member of the Birmingham Chapter of the NationalAssociation of Industrial and Office Parks (NAIOP) and on the Board ofDirectors of the Children’s Harbor Family Center.  Mr. Nelson holds a Bachelor of Science Degree from AuburnUniversity.

 

**John P. Rigrish**,54, has been the Trust’s Chief Administrative Officer since 1998, and isresponsible for the supervision of Accounting Operations, Information Technology,Human Resources and Employee Services. Prior to joining the Trust,Mr. Rigrish worked for BellSouth Corporation in Corporate Administrationand Services. Mr. Rigrish holds a Bachelor of Science degree from SamfordUniversity and did his postgraduate study at Birmingham-Southern College. Heserved on the Edward Lee Norton Board of Advisors for Management andProfessional Education at Birmingham-Southern College and the Board ofDirectors of Senior Citizens, Inc. in Nashville, Tennessee.

 

**Paul F. Earle**,44, has been the Trust’s Executive Vice-President–Multifamily Division sinceMay 1997, and is responsible for management of all multifamily propertieswe own and/or manage.  He joined theTrust in 1991 and has served as Vice President – Acquisitions, as well asSenior Vice President – Multifamily Division. Mr. Earle serves as Chairman ofthe Alabama Multifamily Council and is an active member of the NationalApartment Association. He also serves as President of the Board of Directors ofBig Brother/Big Sisters and is a Board member of the National MultifamilyHousing Council. Before joining the Trust, Mr. Earle was the President andChief Operating Officer of American Residential Management, Inc., ExecutiveVice President of Great Atlantic Management, Inc. and Senior Vice President ofBalcor Property Management, Inc.

 

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**Daryl K. Mangan**,59, has been the Trust’s Executive Vice President – Retail Division sinceDecember 2001 and is responsible for all aspects of the Trust’s retailportfolio. His thirty-year real estate background includes acquisitions,dispositions, development, leasing, and management of retail propertiesincluding his position as Executive Vice President at Equitable Real EstateInvestment Management, Inc where he was responsible for the management of a $6billion retail portfolio consisting of 75 regional malls and 40 other retailproperties. Prior to joining the Trust, Mr. Mangan worked for Cole National asVice President responsible for new store development for their 2,200-storeoptical division. Mr. Mangan also worked for Safeco Properties, Inc. as SeniorVice President responsible for its’ national shopping center portfolio and forFederated Department Stores, Inc as Senior Vice President responsible for allnew store development for 15 retail divisions. Mr. Mangan is an active memberof The International Council of Shopping Centers where he serves as chairman ofthe Design and Development Awards Program. Mr. Mangan holds a Bachelor of ArtsDegree in Design and Industry as well as a Masters Degree in BusinessAdministration from California State University at San Francisco.

 

**John N. Hughey**,43, has been the Trust’s Executive Vice President–Retail Development Divisionsince December 2001 and is responsible for all retail development.  He joined the Trust  in 1982 and assumed managementresponsibility for an increasing number of shopping centers until being namedSenior Vice President – Retail Division in 1991 and was named Executive Vice Presidentin May 1997.  Mr. Hughey served asthe Alabama/Mississippi State Operations Chairman for the International Councilof Shopping Centers from 1993-1995. He holds a Bachelor of Science Degree fromAuburn University.

 

**Charles A. McGehee**,56, has been the Trust’s Executive Vice President – Mixed-Use DevelopmentDivision since September 1999 and is responsible for the Trust’sdevelopment of properties with mixed-use product types.  Mr. McGehee also oversees land acquisitionsand dispositions.  From September 1993to September 1999 Mr. McGehee was responsible for Land Acquisitions andDevelopment, Brokerage and Dispositions for the Trust. From January 1990to September 1993 Mr. McGehee was Senior Vice President – Office Division.He joined the Trust in 1976 as Vice President of Retail Leasing and wasresponsible for leasing all retail space owned and/or managed. Mr. McGehee hasserved as president and as a board member of the National Association ofIndustrial and Office Parks (NAIOP) and is a member of the Board of Directorsof the Birmingham Area Board of Realtors. Mr. McGehee is currently on the Boardof Trustees for the Birmingham Chamber of Commerce.  He holds a Bachelor of Science Degree from Auburn University.

 

**Robert A. “Bo”Jackson**, 48, has been the Trust’s Executive VicePresident–-Office Division, and is responsible for management of all officeproperties we own and manage. Prior to joining the Trust, Mr. Jackson workedfor Beacon Properties as a Vice President responsible for leasing performance, newoffice development and acquisitions throughout the Southeast. He has beeninvolved in over 10 million square feet of Atlanta urban and suburban officedevelopment.  Mr. Jackson has receivedprofessional accolades from The Atlanta Board of Realtors, The DowntownDevelopers Group and The National Association of Industrial and Office Parks(NAIOP). Mr. Jackson is active member of NAIOP and an active member of theUrban Land Institute.  He is also amember of the Board of Directors of the Greater North Fulton Chamber ofCommerce.  Mr. Jackson holds a Bachelorof Science Degree in Business Administration from the University of Delaware.

 

**Kenneth E. Howell**,53, has been the Trust’s Senior Vice President-ChiefAccounting Officer since August 1998 and is responsible for thesupervision of accounting for all of the properties the Trust owns and/ormanages.  Mr. Howell joined the Trust in1981, and served as Controller for the Trust from 1986 through 1998.  From 1981 to 1986 he held the position ofAssistant Controller of the Colonial Company, parent company of the thenprivate Colonial Properties, Inc.  Heserves on the Auburn University School of Accountancy Advisory Board.  Mr. Howell holds a Bachelor of ScienceDegree in Accounting and a minor in Finance from Auburn University.

 

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**Item 11.****                            ExecutiveCompensation.**

 

The followingtable sets forth certain information concerning the annual and long-termcompensation for the Trust’s chief executive officer and the Trust’s four othermost highly compensated executive officers, whom we refer to as the namedexecutive officers:

 

Summary of Compensation Table

 
|                                                                     |   |     |    | **Annual Compensation** |    | **Long-Term Compensation** |   |                            |    |
|--------------------------------------------------------------------------|--------|----------|---------|-------------------------|---------|----------------------------|--------|---------------------------------|---------|
|                                                                     |   |     |    |                    |    |                       |   |                            |    | **Awards** |   | **Payouts** |   |   |   |
| **Name and Principal Position**                                          |   | **Year** |    | **Salary ($)**          |    | **Bonus ($)  (1)**         |   | **Other  Annual  Compensation** |    | **Restricted  Share Awards  ($) (1)** |   | **Securities  Underlying  Options (#) (+)** |   | **LTIP  Payouts** |   | **All Other  Compensation  ($) (2)** |   |
|                                                                     |   |     |    |                    |    |                       |   |                            |    |   |   |   |   |   |   |   |   |
| **Thomas H. Lowder**Chairman of the Board  President and Chief Executive |   | 2002     |    | $                       | 340,000 |                       | $      | —                          |    | $ | — |   | $ | 215,790 |   | 75,500 |   | — |   | $ | 6,598 |   |
|                                                                     | 2001   |     | 328,269 |                    | —  |                       | — |                            | 474,586 |   | 81,060 |   | — |   | 5,100 |   |
|                                                                     | 2000   |     | 315,000 |                    | —  |                       | — |                            | 119,000 |   | 37,500 |   | — |   | 5,062 |   |
|                                                                     |   |     |    |                    |    |                       |   |                            |    |   |   |   |   |   |   |   |   |
| **C. Reynolds Thompson, III**Chief Operating Officer                     |   | 2002     |    | $                       | 300,000 |                       | $      | 23,800                          |    | $ | — |   | $ | 167,350 |   | 44,700 |   | — |   | $ | 6,338 |   |
|                                                                     | 2001   |     | 271,884 |                    | 111,720 |                       | — |                            | 214,988 |   | 47,988 |   | — |   | 5,100 |   |
|                                                                     | 2000   |     | 248,000 |                    | 40,000  |                       | — |                            | —  |   | 20,000 |   | — |   | 5,100 |   |
|                                                                     |   |     |    |                    |    |                       |   |                            |    |   |   |   |   |   |   |   |   |
| **Howard B. Nelson, Jr.**Chief Financial Officer and  Secretary          |   | 2002     |    | $                       | 250,000 |                       | $      | —                          |    | $ | — |   | $ | 98,505 |   | 33,200 |   | — |   | $ | 6,651 |   |
|                                                                     | 2001   |     | 228,269 |                    | —  |                       | — |                            | 247,448 |   | 35,666 |   | — |   | 5,100 |   |
|                                                                     | 2000   |     | 215,000 |                    | 15,190  |                       | — |                            | 22,134  |   | 12,500 |   | — |   | 5,100 |   |
|                                                                     |   |     |    |                    |    |                       |   |                            |    |   |   |   |   |   |   |   |   |
| **John N. Hughey**Executive Vice President -  Retail Development         |   | 2002     |    | $                       | 210,000 |                       | $      | —                          |    | $ | — |   | $ | 158,748 |   | 22,400 |   | — |   | $ | 6,388 |   |
|                                                                     | 2001   |     | 200,000 |                    | —  |                       | — |                            | 103,114 |   | 23,994 |   | — |   | 3,803 |   |
|                                                                     | 2000   |     | 200,000 |                    | —  |                       | — |                            | 17,024  |   | 22,520 |   | — |   | 5,100 |   |
|                                                                     |   |     |    |                    |    |                       |   |                            |    |   |   |   |   |   |   |   |   |
| **Daryl K. Mangan (*)**Executive Vice President -  Retail Division       |   | 2002     |    | $                       | 210,000 |                       | $      | —                          |    | $ | — |   | $ | 158,748 |   | 22,400 |   | — |   | $ | 6,388 |   |
|                                                                     | 2002   |     | $       | 225,000                 |    | $                          | — |                            | $       | — |   | $ | 84,505 |   | 22,400 |   | — |   | $ | 563 |   |
|                                                                     | 2001   |     | 17,308  |                    | —  |                       | — |                            | —  |   | — |   | — |   | — |   |

 

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+                 Options represent rights to purchase commonshares of the Trust and are reported for the year in which they arereceived.  Options are granted after theend of the fiscal year in which they are earned.

*                 Mr.Mangan became the Trust’s Executive Vice President of the Retail Division onDecember 1, 2001.

 

(1)          TheTrust’s incentive compensation plan permits officers to elect to receive all orpart of their annual bonus in the form of restricted common shares of the Trustinstead of cash.  Officers who elect toreceive up to 50% of their bonus in restricted shares of the Trust receiveshares having a market value on the issue date equal to 125% of the electedamount.  Officers who elect to receivemore than 50% of their annual bonus in restricted shares receive shares havinga market value on the issue date equal to 140% of the elected amount.  The value of the restricted share grantsshown under the column titled “Restricted Share Awards” includes these restrictedshares issued instead of cash bonus and other performance-based restrictedshare awards.  The following tableshows, for each of 2002, 2001 and 2000 (a) the annual bonus that each of theTrust’s named executive officers was entitled to, (b) the percentage of annualbonus that each named executive officer elected to receive in the form ofrestricted common shares instead of cash, (c) the portion of the annual bonusthat each named executive officer received in cash, and (d) the value ofrestricted common shares received instead of cash.  These restricted shares typically vest over 3 years, with 50%vesting on the first anniversary of the issue date and the remaining sharesvesting in two equal installments on each of the second and third anniversariesof the issue date.

 
| **Name**                  |   | **Year** |    | **Bonus  Amount** |   | **Percentage  Deferred** |    | **Amount  Paid in  Cash** |    | **Value of  Restricted Shares** |   |
|---------------------------|--------|----------|---------|-------------------|--------|--------------------------|---------|---------------------------|---------|---------------------------------|--------|
| Thomas H. Lowder          |   | 2002     |    | $                 | 94,600 |                     | 100     | %                         | $       | —                          |   | $ | 132,440 |   |
|                      | 2001   |     | 275,000 |              | 100    |                     | —  |                      | 385,000 |                            |
|                      | 2000   |     | 85,000  |              | 100    |                     | —  |                      | 119,000 |                            |
|                      |   |     |    |              |   |                     |    |                      |    |                            |   |
| C. Reynolds Thompson, III |   | 2002     |    | $                 | 83,800 |                     | 72      | %                         | $       | 23,800                          |   | $ | 84,000 |   |
|                      | 2001   |     | 228,000 |              | 51     |                     | 111,720 |                      | 162,792 |                            |
|                      | 2000   |     | 40,000  |              | — |                     | 40,000  |                      | —  |                            |
|                      |   |     |    |              |   |                     |    |                      |    |                            |   |
| Howard B. Nelson, Jr.     |   | 2002     |    | $                 | 52,500 |                     | 100     | %                         | $       | —                          |   | $ | 73,500 |   |
|                      | 2001   |     | 149,000 |              | 100    |                     | —  |                      | 208,600 |                            |
|                      | 2000   |     | 31,000  |              | 51     |                     | 15,190  |                      | 22,134  |                            |
|                      |   |     |    |              |   |                     |    |                      |    |                            |   |
| John N. Hughey            |   | 2002     |    | $                 | 61,000 |                     | 100     | %                         | $       | —                          |   | $ | 85,400 |   |
|                      | 2001   |     | 55,000  |              | 100    |                     | —  |                      | 77,000  |                            |
|                      | 2000   |     | 12,160  |              | 100    |                     | —  |                      | 17,024  |                            |
|                      |   |     |    |              |   |                     |    |                      |    |                            |   |
| Daryl K. Mangan           |   | 2002     |    | $                 | 42,500 |                     | 100     | %                         | $       | —                          |   | $ | 59,500 |   |
|                      | 2001   |     | N/A     |              | N/A    |                     | N/A     |                      | N/A     |                            |
|                      | 2000   |     | N/A     |              | N/A    |                     | N/A     |                      | N/A     |                            |

 

68

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In addition tothe restricted shares of the Trust that each of the Trust’s named executiveofficers received instead of cash bonus, each of the Trust’s named executiveofficers received discretionary awards of restricted shares of the Trust in2002 and 2001.  The following tableshows the number and value of these restricted shares awarded for each of 2002,2001 and 2000 for each of the Trust’s named executive officers.  The 2002 restricted shares, granted in 2003,vest over three years in equal installments and the 2001 performance-basedrestricted shares, granted in 2002, vest in 8 years but are subject toaccelerated vesting based on the Trust’s performance.

 
| **Name**                  |   | **Year** |   | **Number of  Restricted  Shares** |   | **Value of  Restricted  Share Awards** |   |
|---------------------------|--------|----------|--------|-----------------------------------|--------|----------------------------------------|--------|
| Thomas H. Lowder          |   | 2002     |   | 2,500                             |   | $                                      | 83,350 |   |
|                      | 2001   |     | 2,765  |                              | 89,586 |                                   |
|                      | 2000   |     | — |                              | — |                                   |
|                      |   |     |   |                              |   |                                   |   |
| C. Reynolds Thompson, III |   | 2002     |   | 2,500                             |   | $                                      | 83,350 |   |
|                      | 2001   |     | 1,611  |                              | 52,196 |                                   |
|                      | 2000   |     | — |                              | — |                                   |
|                      |   |     |   |                              |   |                                   |   |
| Howard B. Nelson, Jr.     |   | 2002     |   | 750                               |   | $                                      | 25,005 |   |
|                      | 2001   |     | 1,199  |                              | 38,848 |                                   |
|                      | 2000   |     | — |                              | — |                                   |
|                      |   |     |   |                              |   |                                   |   |
| John N. Hughey            |   | 2002     |   | 2,200                             |   | $                                      | 73,348 |   |
|                      | 2001   |     | 806    |                              | 26,114 |                                   |
|                      | 2000   |     | — |                              | — |                                   |
|                      |   |     |   |                              |   |                                   |   |
| Daryl K.  Mangan          |   | 2002     |   | 750                               |   | $                                      | 25,005 |   |
|                      | 2001   |     | N/A    |                              | N/A    |                                   |
|                      | 2000   |     | N/A    |                              | N/A    |                                   |

 

The number andvalue of the aggregate restricted share holdings of each of the Trust’s namedexecutive officers at December 31, 2002 were as follows:

 
| **Name**                  |   | **Number of  Restricted Shares** |   | **Value of  Restricted  Share Awards** |    |
|---------------------------|--------|----------------------------------|--------|----------------------------------------|---------|
| Thomas H. Lowder          |   | 18,650                           |   | $                                      | 632,981 |   |
| C. Reynolds Thompson, III |   | 7,147                            |   | 242,569                                |    |
| Howard B. Nelson, Jr.     |   | 9,183                            |   | 306,161                                |    |
| John N. Hughey            |   | 3,776                            |   | 128,157                                |    |
| Daryl K. Mangan           |   | —                           |   | —                                 |    |
|                           |        |                                  |        |                                        |         |  |

 

Dividends are paidon restricted shares at the same rate paid to all other holders of commonshares.

 

----

(2)     OtherCompensation consists of the Trust’s contributions to the 401(k) plan on behalf of each of the Trust’s namedexecutive officers and the Trust’s payment of premiums for long-term care polices as follows:

 

69

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| **Name**                  |   | **Year** |   | **401(k)  Contribution** |   | **Long-term  Care  Insurance** |   | **Total All  Other  Compensation** |   |
|---------------------------|--------|----------|--------|--------------------------|--------|--------------------------------|--------|------------------------------------|--------|
| Thomas H. Lowder          |   | 2002     |   | $                        | 5,500  |                           | $      | 1,098                              |   | $ | 6,598 |   |
|                      | 2001   |     | 5,100  |                     | — |                           | 5,100  |                               |
|                      | 2000   |     | 5,062  |                     | — |                           | 5,062  |                               |
|                      |   |     |   |                     |   |                           |   |                               |   |
| C. Reynolds Thompson, III |   | 2002     |   | $                        | 5,500  |                           | $      | 838                                |   | $ | 6,338 |   |
|                      | 2001   |     | 5,100  |                     | — |                           | 5,100  |                               |
|                      | 2000   |     | 5,100  |                     | — |                           | 5,100  |                               |
|                      |   |     |   |                     |   |                           |   |                               |   |
| Howard B. Nelson, Jr.     |   | 2002     |   | $                        | 5,500  |                           | $      | 1,150                              |   | $ | 6,651 |   |
|                      | 2001   |     | 5,100  |                     | — |                           | 5,100  |                               |
|                      | 2000   |     | 5,00   |                     | — |                           | 5,100  |                               |
|                      |   |     |   |                     |   |                           |   |                               |   |
| John N. Hughey            |   | 2002     |   | $                        | 5,500  |                           | $      | 888                                |   | $ | 6,388 |   |
|                      | 2001   |     | 3,803  |                     | — |                           | 3,808  |                               |
|                      | 2000   |     | 5,100  |                     | — |                           | 5,100  |                               |
|                      |   |     |   |                     |   |                           |   |                               |   |
| Daryl K.  Mangan          |   | 2002     |   | $                        | 563    |                           | $      | —                             |   | $ | 563 |   |
|                      | 2001   |     | N/A    |                     | N/A    |                           | N/A    |                               |
|                      | 2000   |     | N/A    |                     | N/A    |                           | N/A    |                               |

 

The followingtable sets forth certain information relating to options to purchase commonshares of the Trust granted to the Trust’s named executive officers during2002.

 

**Option Grants in Last Fiscal Year**

 
|                      |   | **Individual  Grants**                                         |   |
|---------------------------|--------|----------------------------------------------------------------|--------|
| **Name**                  |   | **Number  of Securities  Underlying Options  Granted (#) (1)** |   | **Percent  of Total  Options Granted  to Employees in  Fiscal Year** |   | **Exercise  or  Base Price  ($/Sh)** |   | **Expiration  Date** |   | **Grant  Date  Present Value  ($) (2)** |   |
|                      |   |                                                           |   |   |   |   |   |   |   |   |   |
| Thomas H. Lowder          |   | 81,060                                                         |   | 18.3 | % | $ | 32.40 |   | 1/18/2012 |   | $ | 132,938 |   |
|                      |   |                                                           |   |   |   |   |   |   |   |   |   |
| C. Reynolds Thompson, III |   | 47,988                                                         |   | 10.9 | % | 32.40 |   | 1/18/2012 |   | 78,700 |   |
|                      |   |                                                           |   |   |   |   |   |   |   |   |   |
| Howard B. Nelson, Jr.     |   | 35,666                                                         |   | 8.1 | % | 32.40 |   | 1/18/2012 |   | 58,492 |   |
|                      |   |                                                           |   |   |   |   |   |   |   |   |   |
| John N. Hughey            |   | 23,994                                                         |   | 5.4 | % | 32.40 |   | 1/18/2012 |   | 39,350 |   |
|                      |   |                                                           |   |   |   |   |   |   |   |   |   |
| Daryl K. Mangan           |   | —                                                         |   | — |   | — |   | — |   | — |   |
|                           |        |                                                                |        |  |  |  |  |  |  |  |  |  |  |

 

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(1)          Alloptions granted in 2002 become exercisable in five equal annual installmentsbeginning on the first anniversary of the date of grant and have a term of tenyears.  This table does not includeoptions granted in 2003 based on 2002 performance.

(2)          TheBlack-Scholes option-pricing model was chosen to estimate the value of theoptions set forth in this table.  Theuse of this model should not be construed as an endorsement of its accuracy ofvaluing options.  All option valuationmodels, including the Black-Scholes model, require a prediction about thefuture movement of the share price.  Thefollowing assumptions were made for the purposes of calculating the optionvalue:  an option term of 10 years,volatility of 16.50%, dividend yield at 7.70%, and interest rate of 1.23%.  The real value of the options to purchasecommon shares in this table depends upon the actual performance of theTrust’s  common shares, the optionholder’s continued employment throughout the option period, and the date onwhich the options are exercised.

 

The followingtable sets forth certain information concerning option exercises during 2002and unexercised options to purchase common shares of the Trust held by theTrust’s named executive officers at December 31, 2002:

 

70

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**Aggregated Option Exercises in Last Fiscal Year and FiscalYear-End Option Values**

 
| **Name**                  |   | **Shares Acquired  on Exercise(#)** |   | **Value  Realized($)** |   | **Number of Securities Underlying  Unexercised Options at December 31,  2002(#)** |    | **Value of Unexercised In-the-Money  Options at December 31, 2002($)(1)** |    |
|---------------------------|--------|-------------------------------------|--------|------------------------|--------|----------------------------------------------------------------------------------------|---------|--------------------------------------------------------------------------------|---------|
|                      |   |                                |   |                   |   | **Exercisable**                                                                        |    | **Unexercisable**                                                              |    | **Exercisable** |   | **Unexercisable** |   |
|                      |   |                                |   |                   |   |                                                                                   |    |                                                                           |    |   |   |   |   |
| Thomas H. Lowder          |   | —                              |   | $                      | — |                                                                                   | 139,725 |                                                                           | 183,620 |   | $ | 846,419 |   | $ | 559,433 |   |
|                      |   |                                |   |                   |   |                                                                                   |    |                                                                           |    |   |   |   |   |
| C. Reynolds Thompson, III |   | 26,862                              |   | 189,738                |   | 2,520                                                                                  |    | 102,183                                                                        |    | 5,304 |   | 487,769 |   |
|                      |   |                                |   |                   |   |                                                                                   |    |                                                                           |    |   |   |   |   |
| Howard B. Nelson, Jr.     |   | 24,130                              |   | 182,825                |   | 15,000                                                                                 |    | 72,353                                                                         |    | 53,475 |   | 332,236 |   |
|                      |   |                                |   |                   |   |                                                                                   |    |                                                                           |    |   |   |   |   |
| John N. Hughey            |   | 9,535                               |   | 82,662                 |   | 20,003                                                                                 |    | 53,294                                                                         |    | 131,299 |   | 258,724 |   |
|                      |   |                                |   |                   |   |                                                                                   |    |                                                                           |    |   |   |   |   |
| Daryl K. Mangan           |   | —                              |   | —                 |   | —                                                                                 |    | —                                                                         |    | — |   | — |   |
|                           |        |                                     |        |                        |        |                                                                                        |         |                                                                                |         |  |  |  |  |  |  |  |

 

----

(1)          Basedon the closing price of $33.94****percommon share of the Trust on December 31, 2002.  An option is “in-the-money” if the fair market value of thecommon shares subject to the option exceeds the option exercise price.

 

**EquityCompensation Plans**

 

The following table summarizesinformation, as of December 31, 2002, relating to the Trust’s equitycompensation plans pursuant to which options to purchase the Trust’s commonshares and the Trust’s restricted common shares may be granted from time totime.

 
| **Plan Category**                                                 |   | **Number of securitieis to be  issued upon exercise of  outstanding options,  warrants and rights (a)** |   | **Weighted-average exercise  price of outstanding options,  warrants and rights (b)** |   | **Number of securities remaining  available for future issuance under  equity compensation plans  (excluding securities reflected in  column (a))** |      |
|-------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
| Equity  compensation plans approved by security holders  (1) |   | 1,621,786                                                                                               | (2)    | $                                                                                     | 28.88  | (3)                                                                                                                                                 | 1,756,028 |   |
|                                                              |   |                                                                                                    |   |                                                                                  |   |                                                                                                                                                |      |
| Equity  compensation plans not approved by security holders       |   | —                                                                                                  |   | —                                                                                |   | —                                                                                                                                              |      |
|                                                              |   |                                                                                                    |   |                                                                                  |   |                                                                                                                                                |      |
| Total                                                             |   | 1,621,786                                                                                               |   | $                                                                                     | 28.88  |                                                                                                                                                | 1,756,028 |   |
|                                                                   |        |                                                                                                         |        |                                                                                       |        |                                                                                                                                                     |           |  |  |

 

----

(1)          Theseplans include the Trust’s Employee Share Option and Restricted Share Plan, asamended in 1998, the Trust’s Non-Employee Trustee Share Plan, as amended in1997, and the Trust’s Trustee Share Option Plan, as amended in 1997.

(2)          Includes80,516 restricted units and performance-based restricted units to be exercisedat December 31, 2002.

(3)          Weighted-averageexercise price of outstanding options; excludes value of outstanding restrictedshares of the Trust.

 

**Defined BenefitPlan**

 

The Trust maintains a retirementplan for all of CRLP’s employees hired before January 1, 2002.  An employee becomes eligible to participatein the plan on January 1 or July 1 following the first anniversary ofhis or her employment or when the person reaches age 21, whichever islater.  Benefits are based upon thenumber of years of service (maximum 25 years) and the average earnings of theparticipant’s during the five highest years of compensation during the final 10years of employment.  Each participant accruesa benefit at a specified percentage of compensation up to the Social Securitycovered compensation level, and at a higher percentage of compensation abovethe social security covered compensation level.  A participant receives credit for a year of service for everyyear in which 1,000 hours are completed in employment.

 

The following table reflectsestimated annual benefits payable upon retirement under the retirement plan asa single life annuity commencing at age 65.

 

71

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**Pension Plan Table**

 
| **Remuneration** |   | **Years of Service** |   |
|------------------|--------|----------------------|--------|
|             | **5**  |                 | **10** |   | **15** |   | **20** |   | **25** |   |
|             |   |                 |   |   |   |   |   |   |   |   |   |
| $100,000         |   | $                    | 7,600  |   | $ | 15,200 |   | $ | 22,800 |   | $ | 30,400 |   | $ | 38,000 |   |
| $125,000         |   | $                    | 9,500  |   | $ | 19,000 |   | $ | 28,500 |   | $ | 38,000 |   | $ | 47,500 |   |
| $150,000         |   | $                    | 11,400 |   | $ | 22,800 |   | $ | 34,200 |   | $ | 45,600 |   | $ | 57,000 |   |
| $200,000 or over |   | $                    | 15,200 |   | $ | 30,400 |   | $ | 45,600 |   | $ | 60,800 |   | $ | 76,000 |   |

 

The benefits shown are limited bythe current statutory limitations that restrict the amount of benefits that canbe paid from a qualified retirement plan. The statutory limit on compensation that may be recognized incalculating benefits is $200,000 for 2002 in accordance withSection 401(a)(7) of the Internal Revenue Code.  This limit is subject of cost-of living adjustments.

 

Covered compensation under the planincludes the employees’ base salary and other earnings received from CRLP.  Thomas H. Lowder has 28****years of covered service under the plan,Howard B. Nelson, Jr. has 18 years of service, C. Reynolds Thompson, III has 6****years of service, John N. Hughey has 20years of service, and Daryl Mangan has 1****yearof service.

 

**EmploymentAgreement**

 

Thomas H. Lowder, the Trust’spresident and chief executive officer, entered into an employment agreementwith the Trust in September 1993. This agreement provides for an initial term of three years, withautomatic renewals for successive one-year terms if neither party deliversnotice of non-renewal at least six months prior to the next scheduledexpiration date.  The agreement providesfor annual compensation of at least $275,000 and incentive compensation onsubstantially the same terms as set forth in the description of the AnnualIncentive Plan.  See “Report onExecutive Compensation – Annual Incentive Plan.”  The agreement includes provisions restricting Mr. Lowder fromcompeting with the Trust during employment and, except in certaincircumstances, for two years after termination of employment.  In addition, in the event of disability ortermination by the Trust without cause or by the employee with cause, theagreement provides that the Trust must pay Mr. Lowder the greater of (i) hisbase compensation and benefits for the remainder of the employment term or (ii)six months’ base compensation and benefits.

 

None of the Trust’s other namedexecutive officers, or any of the Trust’s other executive officers, has anemployment agreement with the Trust.

 

**EXECUTIVECOMPENSATION COMMITTEE INTERLOCKS AND****INSIDER PARTICIPATION**

 

The executive compensationcommittee was comprised of Messrs. Claude B. Nielsen, M. Miller Gorrie,William M. Johnson, James K. Lowder and Herbert A. Meisler during2002.  None of these five members wasour employee during 2002.  In addition,no interlocking relationship existed between these members and any member ofany other company’s board of directors, board of trustees or compensationcommittee during that period.

 

However, Mr. J. Lowder is thebrother of Mr. T. Lowder, the Trust’s chairman of the board, president andchief executive officer.  As describedbelow, Messrs. Gorrie and J. Lowder, who are members of the executivecompensation committee, own interests in certain entities that engaged intransactions with us during 2002.  Thesetransactions were approved by a majority of the Trust’s independent trustees.

 

Weengaged Lowder Construction Company, Inc., of which Mr. J. Lowder serves as thechairman of the board and in which each of Messrs. J. Lowder and T. Lowderindirectly owns a 50% interest, to serve as construction manager for twomultifamily development projects during 2002. We paid a total of $1.6 million during 2002, of which $1.5 million ofwhich was then paid to unaffiliated subcontractors for the construction ofthese development projects.  We had nooutstanding construction invoices and retainage payable to Lowder ConstructionCompany, Inc. at December 31, 2002.

 

Brasfield& Gorrie General Contractors, Inc. (“B&G”), a corporation of which Mr.Gorrie is a shareholder and chairman of the board, was engaged to serve asconstruction manager for six office and retail development projects during2002.  We paid B&G a total of $35.3million during 2002, of which $32.1 million was then paid to unaffiliatedsubcontractors.  We had no outstandingconstruction invoices and retainage payable to B&G at December 31,2002.

 

72

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B&Ginvested $1.5 million through the Trust’s dividend reinvestment plan.  The dividend reinvestment plan allows foroptional cash purchase once a month with a 5% discount.  A waiver is required for purchases over$25,000 per year.  We granted B & Ga waiver for this investment.

 

We leased space to certain entitiesin which Mr. T. Lowder, Mr. J. Lowder, and Mr. Gorrie have an interest andreceived market rent from these entities of approximately $1.0 million, during2002.  Additionally, we providedmanagement and leasing services to certain related entities and received feesfrom these entities of approximately $0.3 million during 2002.

 

Colonial Insurance Agency, acorporation indirectly owned by Messrs. J. Lowder and T. Lowder and theirfamily members, has provided insurance brokerage services for us.  The aggregate amount we paid to ColonialInsurance Agency for these services during 2002 was $5.0 million.  Of this amount, $4.7 million was then paidto unaffiliated insurance carriers for insurance premiums during 2002.

 

In July 2002, we acquiredthree single-family homes located in Montgomery, Alabama from Lowder New Homes,Inc., an entity owned by The Colonial Company, in which Mr. T. Lowder and Mr.J. Lowder each indirectly own 50%, for a total purchase price of approximately$0.5 million.

 

**Item 12.****                                                   ****Security Ownership of Certain Beneficial Owners andManagement**

 

The following table sets forthinformation regarding the beneficial ownership of Units as of February 28,2003 for:

 

(1) each person known by CRLP to bethe beneficial owner of more than five percent of the CRLP’s outstanding Units,

 

(2) each trustee of the Trust andeach Named Executive Officer and

 

(3) the trustees and executiveofficers of the Trust as a group.

 

Each person named in the table hassole voting and investment power with respect to all Units shown asbeneficially owned by such person, except as otherwise set forth in the notesto the table.  References in the tableto “Units” are to units of limited partnership interest in the OperatingPartnership.  The extent to which aperson held common units of Beneficial interest of Colonial Properties Trust asof February 28, 2003, under the caption “Voting Securities and PrincipalHolders Thereof”, and is incorporated by reference in this Annual Report andshall be deemed a part hereof.  Unlessotherwise provided in the table, the address of each beneficial owner isColonial Plaza, Suite 750, 2101 Sixth Avenue North, Birmingham, Alabama 35203.

 

73

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| **Name and  Business Address  of Beneficial Owner**          |   | **Number of  Units** | ** ** | **Percent of  Units (1)** |   |
|--------------------------------------------------------------|--------|----------------------|------------|---------------------------|--------|
|                                                         |   |                 |       |                      |   |
| Colonial Properties Trust                                    |   | 23,431,052           |       | 69.2                      | %      |
|                                                         |   |                 |       |                      |   |
| Thomas H. Lowder                                             |   | 2,938,373            | (2)        | 8.7                       | %      |
|                                                         |   |                 |       |                      |   |
| James K. Lowder                                              |   | 1,925,397            | (3)        | 5.7                       | %      |
| 2000 Interstate Parkway                                      |   |                 |       |                      |   |
| Suite 400                                                    |   |                 |       |                      |   |
| Montgomery, Alabama 36104                                    |   |                 |       |                      |   |
|                                                         |   |                 |       |                      |   |
| Carl F. Bailey                                               |   | 17,595               |       | *                         |   |
|                                                         |   |                 |       |                      |   |
| M. Miller Gorrie                                             |   | 266,523              | (4)        | *                         |   |
|                                                         |   |                 |       |                      |   |
| William M. Johnson                                           |   | 628,786              | (5)        | 1.9                       | %      |
|                                                         |   |                 |       |                      |   |
| Herbert A. Meisler                                           |   | 619,034              | (6)        | 1.8                       | %      |
|                                                         |   |                 |       |                      |   |
| Claude B. Nielsen                                            |   | 17,595               |       |                      | *      |
|                                                         |   |                 |       |                      |   |
| Harold W. Ripps                                              |   | 1,925,975            |       | 5.7                       | %      |
|                                                         |   |                 |       |                      |   |
| Donald T. Senterfitt                                         |   | 2,159                |       |                      | *      |
|                                                         |   |                 |       |                      |   |
| C. Reynolds Thompson, III                                    |   | 17,595               |       |                      | *      |
|                                                         |   |                 |       |                      |   |
| Howard B. Nelson, Jr.                                        |   | 17,595               |       |                      | *      |
|                                                         |   |                 |       |                      |   |
| John H. Hughey                                               |   | 17,595               |       |                      | *      |
|                                                         |   |                 |       |                      |   |
| Daryl K. Mangan                                              |   | —               |       |                      | *      |
|                                                         |   |                 |       |                      |   |
| All executive officers and  trustees as a group (19 persons) |   | 7,106,936            | (7)        | 21.0                      | %      |

 

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*                      Lessthan 1%

(1)               Thenumber of units outstanding as of February 28, 2003 was 33,881,893.

(2)               Includes466,521 Units owned by Thomas Lowder, 89,285 Units owned by Thomas LowderInvestments, LLC, 1,369,396 Units owned by CCI, 1,012,976 Units owned by EPJVand 195 Units held in trust for the benefit of Thomas Lowder’s children.  Units owned by CCI are reported twice in thistable, once as beneficially owned by Thomas Lowder and again as beneficiallyowned by James Lowder.

(3)               Includes466,521 Units owned by James Lowder, 89,285 Units owned by James LowderInvestments, LLC, 1,369,396 Units owned by CCI and 195 Units held in trust forthe benefit of James Lowder’s children.

(4)               Includes157,140 Units owned by MJE, LLC., and 109,383 Units owned by Mr. Gorrie.

(5)               Includes554,281 Units owned by Mr. Johnson and 74,505 Units owned by William M. JohnsonInvestments I, LLP, an entity controlled by Mr. Johnson.

(6)               Includes471,872 Units owned by Meisler Enterprises L.P., a limited partnership of whichMr. Meisler and his wife are sole partners, and 72,657 Units directly owned byMr. Meisler.

(7)               Unitsheld by CCI and EPJV have been counted only once for this purpose.

 

74

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**Item 13.****                                                   ****Certain Relationships and Related Transactions.**

 

During fiscal year 2002, we engagedin certain transactions with entities in which some of the Trust’s trustees andexecutive officers had a financial interest. All but one of these transactions involved members of the executivecompensation committee and are described above under the caption “CompensationCommittee Interlocks and Insider Participation.” The additional transaction wasapproved by a majority of the Trust’s independent trustees and is describedbelow.

 

In 2002, one of our subsidiariesacquired a 20% interest in three aircraft from NRH Enterprises, LLC (NRH) anentity in which Mr. Harold Ripps, one of the Trust’s trustees, owns a 33%interest, for approximately $1.4 million. Additionally, the subsidiary entered into a joint ownership agreementwith the other owners of the aircraft, including NRH, under which thesubsidiary pays NRH, as agent for all of the owners of the aircraft, a monthlyfee of $10,000, plus $1,400 per hour of our flight time to cover the operatingexpenses of the aircraft.  Further, thesubsidiary entered into an aircraft services agreement with MEDJET Assistance,LLC (MEDJET), an entity in which Mr. Ripps owns a 40% interest.  Under this agreement, the subsidiary isobligated to pay a monthly fee of $5,000 to MEDJET for managing the use,maintenance, storage, and supervision of the aircraft.  NRH pays this $5,000 to MEDJET, on behalf ofthe subsidiary, from the $10,000 monthly fee referred to above.  During 2002, the subsidiary paidapproximately $254,000 to NRH for usage and service of the aircraft under theabove agreements.

 

**Item 14.****                                                   ****Controls and Procedures.**

 

We carried out an evaluation, underthe supervision and with the participation of our management, including theChief Executive Officer and the Chief Financial Officer of the Trust, of thedesign and operation of our disclosure controls and procedures as of December31, 2002.  Based on this evaluation, theChief Executive Officer and Chief Financial Officer of the Trust concluded thatour disclosure controls and procedures were effective as of December 31, 2002for gathering, analyzing and disclosing the information we are required todisclose in the reports we file under the Securities Exchange Act of 1934,within the time periods specified in the Securities and Exchange Commission’srules and forms.  There have been nochanges in our internal controls over financial reporting that occurred duringthe quarter ended December 31, 2002 that may have materially affected, or arereasonably likely to materially affect, our internal controls over financialreporting.

 

**Part IV**

 

**Item 15.****                                                   ****Exhibits, Financial Schedules, and Reports on Form 8-K.**

 

**15(a)(1) and (2)****            *****Financial Statements and Schedules***

 

**Index to Financial Statements and Financial StatementSchedule**

 

**FinancialStatements:**

 

The following financial statementsof CRLP are included in Part II, Item 8 of this report:

 

Consolidated Balance Sheetsas of December 31, 2002 and 2001

 

ConsolidatedStatements of Income and Comprehensive Income for the years endedDecember 31, 2002, 2001, and 2000

 

ConsolidatedStatements of Partner’s Equity for the years ended December 31, 2002, 2001and 2000

 

ConsolidatedStatements of Cash Flows for the years ended December 31, 2002, 2001, and2000

 

Notesto Consolidated Financial Statements

 

Reportof Independent Accountants

 

75

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**FinancialStatement Schedule:**

 

Schedule III                                                  RealEstate and Accumulated Depreciation

 

Report of Independent Accountants

 

All other schedules have beenomitted because the required information of such other schedules is not presentin amounts sufficient to require submission of the schedule or because therequired information is included in the consolidated financial statements.

 

**15(a)(3)****    *****Exhibits***

 
| (1) 3.1                      |   | Declaration of Trust of the Trust.                                                                                                                                                                                                                                                                                                       |
|------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) 3.2                      |   | Bylaws of the Trust.                                                                                                                                                                                                                                                                                                                     |
|      4.1 |   | Indenture dated as of July 22, 1996, by and between  Colonial Realty Limited Partnership and Deutsche Bank Trust Company Americas  (formerly Bankers Trust Company).                                                                                                                                                                |
| (7) 4.2                      |   | First Supplemental Indenture dated as of  December 31, 1998, by and between Colonial Realty Limited Partnership  and Deutsche Bank Trust Company Americas (formerly Bankers Trust Company).                                                                                                                                         |
| (8) 10.1                     |   | Third Amended and Restated Agreement of Limited  Partnership of CRLP, as amended.                                                                                                                                                                                                                                                        |
| (4) 10.2.1                   |   | Registration Rights and Lock-Up Agreement dated  September 29, 1993, among the Trust and the persons named therein.                                                                                                                                                                                                                 |
| (3) 10.2.2                   |   | Registration Rights and Lock-Up Agreement dated  March 25, 1997, among the Trust and the persons named therein.                                                                                                                                                                                                                     |
| (3) 10.2.3                   |   | Registration Rights and Lock-Up Agreement dated  November 4, 1994, among the Trust and the persons named therein.                                                                                                                                                                                                                   |
| (3) 10.2.4                   |   | Registration Rights and Lock-Up Agreement dated  August 20, 1997, among the Trust and the persons named therein.                                                                                                                                                                                                                    |
| (3) 10.2.5                   |   | Registration Rights and Lock-Up Agreement dated  November 1, 1997, among the Trust and the persons named therein.                                                                                                                                                                                                                   |
| (3) 10.2.6                   |   | Registration Rights and Lock-Up Agreement dated  July 1, 1997, among the Trust and the persons named therein.                                                                                                                                                                                                                       |
| (3) 10.2.7                   |   | Registration Rights and Lock-Up Agreement dated  July 1, 1996, among the Trust   and the persons named therein.                                                                                                                                                                                                                |
| (7) 10.2.8                   |   | Registration Rights Agreement dated February 23,  1999, among the Trust, Belcrest Realty Corporation, and Belair Real Estate  Corporation.                                                                                                                                                                                          |
| (7) 10.2.9                   |   | Registration Rights and Lock-Up Agreement dated  July 1, 1998, among the Trust and the persons named therein.                                                                                                                                                                                                                       |
| (7) 10.2.10                  |   | Registration Rights and Lock-Up Agreement dated  July 31, 1997, among the Trust and the persons named therein.                                                                                                                                                                                                                      |
| (7) 10.2.11                  |   | Registration Rights and Lock-Up Agreement dated  November 18, 1998, among the Trust and the persons named therein.                                                                                                                                                                                                                  |
| (7) 10.2.12                  |   | Registration Rights and Lock-Up Agreement dated  December 29, 1994, among the Trust and the persons named therein.                                                                                                                                                                                                                  |
| (8) 10.2.13                  |   | Registration Rights and Lock-Up Agreement dated  April 30, 1999, among the Trust and the persons named therein.                                                                                                                                                                                                                     |
| (4) (5) 10.6                 |   | Officers and Trustees Indemnification Agreement.                                                                                                                                                                                                                                                                                         |
| (4) 10.7                     |   | Partnership Agreement of the Management Partnership.                                                                                                                                                                                                                                                                                     |
| (2) 10.8                     |   | Articles of Incorporation of the Management Corporation,  as amended.                                                                                                                                                                                                                                                                    |
| (4) 10.9                     |   | Bylaws of the Management Corporation.                                                                                                                                                                                                                                                                                                    |
| (6) 10.10                    |   | Credit Agreement between the Colonial Realty Limited  Partnership and SouthTrust Bank, National Association, AmSouth Bank, Wells  Fargo Bank, National Association, Wachovia Bank, N.A., First National Bank of  Commerce, N.A., and PNC Bank, Ohio, National Association dated July 10,  1997, and related promissory notes.  |
| (7) 10.11.1                  |   | Amendment to Credit Agreement dated July 10, 1998.                                                                                                                                                                                                                                                                                  |
| (7) 10.11.2                  |   | Second Amendment to Credit Agreement dated  August 21, 1998.                                                                                                                                                                                                                                                                        |
| (4) (5) 10.12                |   | Annual Incentive Plan.                                                                                                                                                                                                                                                                                                                   |
| (8) 10.15                    |   | Executive Unit Purchase Program – Program Summary.                                                                                                                                                                                                                                                                                  |
| (8) 10.16                    |   | Form of Promissory Note.                                                                                                                                                                                                                                                                                                                 |
| (8) 10.17                    |   | Reimbursement Agreement dated January 25, 2000  between Colonial Realty                                                                                                                                                                                                                                                             |

 

76

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|   |   | Limited Partnership and Employee Unit Purchase Plan  participants.                 |
|--------|--------|------------------------------------------------------------------------------------|
| 12.1   |   | Ratio of Earnings to Fixed Charges.                                                |
| 23.1   |   | Consent of PricewaterhouseCoopers LLP.                                             |
| 31.1   |   | CEO Certification pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002. |
| 31.2   |   | CFO Certification pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002. |
| 32.1   |   | CEO Certification pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |
| 32.2   |   | CFO Certification pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |

 

----

(1)               Incorporatedby reference to the Trust’s Form 8-K dated November 5, 1997.

(2)               Incorporatedby reference to the same titled and number exhibit in the Trust’s Annual Reporton Form 10-K dated December 31, 1994.

(3)               Incorporatedby reference to the same titled and number exhibit in the Trust’s Annual Reporton Form 10-K dated December 31, 1997.

(4)               Incorporatedby reference to the same titled and numbered exhibit in the Trust’sRegistration Statement on Form S-11, No. 33-65954.

(5)               Managementcontract or compensatory plan required to be filed pursuant to Item 15(c) ofForm 10-K.

(6)               Incorporatedby reference to the same titled and number exhibit in the Trust’s QuarterlyReport on Form 10-Q dated June 30, 1997.

(7)               Incorporatedby reference to (i) Exhibit 10.13.1 as to the First Supplemental Indenture, and(ii) as to the remaining exhibits, the same titled and numbered exhibit in theTrust’s Annual Report on Form 10-K dated December 31, 1998.

(8)               Incorporatedby reference to the same titled and numbered exhibit in the Trust’s AnnualReport on Form 10-K dated December 31, 1999.

 

**15(b)**                                            **Reports on Form 8-K**

 

Reportson Form 8-K filed during the last quarter of 2002: None

 

**15(c)**                                            **Exhibits**

Thelist of Exhibits filed with this report is set forth in response to Item 15(a)(3).

 

**15(d)**                                            **Financial Statements**

None.

 

77

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**SIGNATURES**

 

Pursuant to the requirements ofSection 13 or 15(d) of the Securities Exchange Act of 1934, as amended,the Registrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized, on October 10, 2003.

 
|   | COLONIAL REALTY LIMITED PARTNERSHIP                |
|--------|----------------------------------------------------|
|   | a Delaware limited partnership                     |
|   | By: Colonial Properties Trust, its general partner |
|   |                                               |
|   |                                               |
|   |                                               | By: |  /s/ Howard B. Nelson Jr. |   |
|   |                                               | Howard B. Nelson, Jr. |
|   |                                               | Chief Financial Officer |
|        |                                                    |  |  |  |  |

 

78

----

 

**SCHEDULE IIICOLONIAL REALTY LIMITED PARTNERSHIPREAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATIONDecember 31, 2002**

 
|                                 |   |             |   | **Initial Cost to  Company** |   | **Cost  Capitalized  Subsequent to  Acquisition** |   | **Gross Amount at Which  Carried at Close of Period** |     |
|--------------------------------------|--------|------------------|--------|------------------------------|--------|---------------------------------------------------|--------|-------------------------------------------------------|----------|
| **Description**                      |   | **Encumbrances** |   | **Land**                     |   | **Buildings and  Improvements**                   |   |                                                  | **Land** |   | **Buildings and  Improvements** |   | **Total** |   |
|                                 |   |             |   |                         |   |                                              |   |                                                  |     |   |   |   |   |   |   |
| Multifamily:                         |   |             |   |                         |   |                                              |   |                                                  |     |   |   |   |   |   |   |
| CG at Citrus Park                    |   | -0-              |   | 1,323,593                    |   | -0-                                               |   | 11,314,187                                            |     | 1,328,323 |   | 11,309,456 |   | $ | 12,637,780 |   |
| CG at Cypress Crossing               |   | -0-              |   | 8,781,859                    |   | -0-                                               |   | 12,741,309                                            |     | 2,125,136 |   | 19,398,032 |   | $ | 21,523,168 |   |
| CG  at Edgewater                     |   | 21,541,461       |   | 1,540,000                    |   | 12,671,606                                        |   | 13,668,719                                            |     | 2,602,325 |   | 25,278,000 |   | $ | 27,880,325 |   |
| CG  at Galleria                      |   | 22,400,000       |   | 4,600,000                    |   | 39,078,925                                        |   | 5,297,592                                             |     | 4,600,000 |   | 44,376,517 |   | $ | 48,976,517 |   |
| CG  at Galleria II                   |   | -0-              |   | 758,439                      |   | 7,902,382                                         |   | 134,307                                               |     | 758,439 |   | 8,036,689 |   | $ | 8,795,128 |   |
| CG  at Galleria Woods                |   | 9,375,014        |   | 1,220,000                    |   | 12,480,949                                        |   | 669,222                                               |     | 1,220,000 |   | 13,150,171 |   | $ | 14,370,171 |   |
| CG  at Heather Glen                  |   | -0-              |   | 3,800,000                    |   | -0-                                               |   | 30,874,797                                            |     | 4,134,235 |   | 30,540,563 |   | $ | 34,674,797 |   |
| CG  at Heathrow                      |   | -0-              |   | 2,560,661                    |   | 17,612,990                                        |   | 751,562                                               |     | 2,560,661 |   | 18,364,552 |   | $ | 20,925,213 |   |
| CG  at Hunter’s Creek           |   | 30,135,196       |   | 33,264,022                   |   | -0-                                               |   | 1,080,626                                             |     | 5,308,112 |   | 29,036,536 |   | $ | 34,344,648 |   |
| CG  at Lakewood Ranch                |   | -0-              |   | 2,320,442                    |   | -0-                                               |   | 19,927,999                                            |     | 2,148,814 |   | 20,099,627 |   | $ | 22,248,441 |   |
| CG  at Liberty Park                  |   | -0-              |   | 2,296,019                    |   | -0-                                               |   | 25,030,078                                            |     | 2,296,019 |   | 25,030,078 |   | $ | 27,326,096 |   |
| CG  at Madison                       |   | 17,396,855       |   | 1,689,400                    |   | -0-                                               |   | 22,115,057                                            |     | 2,284,794 |   | 21,519,663 |   | $ | 23,804,457 |   |
| CG  at Natchez Trace                 |   | 10,686,065       |   | 1,312,000                    |   | 16,568,050                                        |   | 603,159                                               |     | 1,317,995 |   | 17,165,215 |   | $ | 18,483,209 |   |
| CG  at Promenade                     |   | 22,471,660       |   | 1,479,352                    |   | -0-                                               |   | 27,074,508                                            |     | 1,748,879 |   | 26,804,981 |   | $ | 28,553,860 |   |
| CG  at Research Park                 |   | 12,775,000       |   | 3,680,000                    |   | 29,322,067                                        |   | 3,068,180                                             |     | 3,680,000 |   | 32,390,247 |   | $ | 36,070,247 |   |
| CG  at Reservoir                     |   | 8,581,363        |   | 1,020,000                    |   | -0-                                               |   | 13,281,949                                            |     | 1,122,893 |   | 13,179,056 |   | $ | 14,301,949 |   |
| CG  at Riverchase                    |   | 20,494,557       |   | 2,340,000                    |   | 25,248,548                                        |   | 2,700,423                                             |     | 2,340,000 |   | 27,948,971 |   | $ | 30,288,971 |   |
| Colonial  Center Town Park           |   | -0-              |   | 1,391,500                    |   | -0-                                               |   | 35,590,903                                            |     | 2,647,374 |   | 34,335,029 |   | $ | 36,982,403 |   |
| CG  at Wesleyan                      |   | -0-              |   | 720,000                      |   | 12,760,587                                        |   | 6,987,021                                             |     | 1,404,780 |   | 19,062,828 |   | $ | 20,467,608 |   |
| CV  at Ashford Place                 |   | -0-              |   | 537,600                      |   | 5,839,838                                         |   | 437,367                                               |     | 537,600 |   | 6,277,205 |   | $ | 6,814,805 |   |
| CV  at Ashley Plantation             |   | 24,414,040       |   | 1,160,000                    |   | 11,284,785                                        |   | 14,805,254                                            |     | 2,215,490 |   | 25,034,549 |   | $ | 27,250,039 |   |
| CV  at Caledon Wood                  |   | -0-              |   | 2,100,000                    |   | 19,482,210                                        |   | 838,787                                               |     | 2,108,949 |   | 20,312,049 |   | $ | 22,420,997 |   |
| CV  at Gainesville                   |   | 26,602,227       |   | 3,360,000                    |   | 24,173,649                                        |   | 5,035,688                                             |     | 3,361,850 |   | 29,207,487 |   | $ | 32,569,337 |   |
| CV  at Haverhill                     |   | -0-              |   | 1,771,000                    |   | 17,869,452                                        |   | 2,660,945                                             |     | 1,771,000 |   | 20,530,397 |   | $ | 22,301,397 |   |
| CV  at Huntleigh Woods               |   | -0-              |   | 745,600                      |   | 4,908,990                                         |   | 1,246,240                                             |     | 745,600 |   | 6,155,230 |   | $ | 6,900,830 |   |
| CV  at Inverness                     |   | 9,900,000        |   | 1,713,668                    |   | 10,352,151                                        |   | 837,537                                               |     | 1,077,849 |   | 11,825,507 |   | $ | 12,903,356 |   |
| CV  at Inverness II/III/IV           |   | -0-              |   | 635,819                      |   | 5,927,265                                         |   | 8,803,608                                             |     | 1,859,142 |   | 13,507,550 |   | $ | 15,366,692 |   |
| CV  at Lake Mary                     |   | 22,721,386       |   | 2,145,480                    |   | -0-                                               |   | 20,022,703                                            |     | 3,634,094 |   | 18,534,089 |   | $ | 22,168,183 |   |
| CV  at Timothy Woods                 |   | 9,467,303        |   | 1,020,000                    |   | 11,910,546                                        |   | 319,534                                               |     | 1,024,347 |   | 12,225,734 |   | $ | 13,250,080 |   |
| CV  at Town Park (Sarasota)          |   | -0-              |   | 1,566,765                    |   | -0-                                               |   | 19,732,717                                            |     | 1,640,763 |   | 19,658,720 |   | $ | 21,299,482 |   |
| CV  at Trussville                    |   | 16,847,090       |   | 1,504,000                    |   | 18,800,253                                        |   | 1,451,857                                             |     | 1,510,409 |   | 20,245,701 |   | $ | 21,756,110 |   |
| CV  at Vernon Marsh                  |   | 3,400,000        |   | 960,984                      |   | 3,511,596                                         |   | 3,683,129                                             |     | 960,984 |   | 7,194,725 |   | $ | 8,155,709 |   |
| CV  at Walton Way                    |   | -0-              |   | 1,024,000                    |   | 7,877,766                                         |   | 3,604,880                                             |     | 1,024,000 |   | 11,482,646 |   | $ | 12,506,646 |   |
|                                 |   |             |   |                         |   |                                              |   |                                                  |     |   |   |   |   |   |   |
| Office:                              |   |             |   |                         |   |                                              |   |                                                  |     |   |   |   |   |   |   |
| 250  Commerce Street                 |   | -0-              |   | 25,000                       |   | 200,200                                           |   | 2,477,004                                             |     | 25,000 |   | 2,677,204 |   | $ | 2,702,204 |   |
| 901  Maitland  Center           |   | -0-              |   | 2,335,035                    |   | 14,398,193                                        |   | 130,978                                               |     | 2,335,035 |   | 14,529,171 |   | $ | 16,864,206 |   |
| AmSouth  Center                      |   | -0-              |   | 764,961                      |   | -0-                                               |   | 20,215,623                                            |     | 764,961 |   | 20,215,623 |   | $ | 20,980,584 |   |
| Colonial  Center 100 at Town Park    |   | -0-              |   | 1,391,500                    |   | -0-                                               |   | 18,343,674                                            |     | 1,515,878 |   | 18,219,296 |   | $ | 19,735,174 |   |
| Colonial  Center 600 at Town Park    |   | -0-              |   | -0-                          |   | -0-                                               |   | 25,628,259                                            |     | 1,915,200 |   | 23,713,059 |   | $ | 25,628,259 |   |
| Colonial  Center at Mansell Overlook |   | 16,671,336       |   | 4,540,000                    |   | 44,012,971                                        |   | 78,289,528                                            |     | 2,016,812 |   | 124,825,687 |   | $ | 126,842,499 |   |
| Colonial  Center Colonnade           |   | -0-              |   | 6,299,310                    |   |                                              |   | 40,773,192                                            |     | 6,299,310 |   | 40,773,192 |   | $ | 47,072,502 |   |
| Colonial  Center Heathrow            |   | 43,669,916       |   | 13,548,715                   |   | 97,256,123                                        |   | 152,195                                               |     | 13,548,715 |   | 97,408,318 |   | $ | 110,957,033 |   |
| Colonial  Center Lakeside            |   | -0-              |   | 423,451                      |   | 8,313,291                                         |   | 1,875,795                                             |     | 425,255 |   | 10,187,282 |   | $ | 10,612,537 |   |
| Colonial  Center Research Park       |   | -0-              |   | 1,003,865                    |   | -0-                                               |   | 12,438,799                                            |     | 1,003,865 |   | 12,438,798 |   | $ | 13,442,664 |   |
| Colonial  Plaza                      |   | -0-              |   | 1,001,375                    |   | 12,381,023                                        |   | 5,882,978                                             |     | 1,005,642 |   | 18,259,734 |   | $ | 19,265,376 |   |
| Concourse  Center                    |   | -0-              |   | 4,875,000                    |   | 25,702,552                                        |   | 1,493,134                                             |     | 4,875,000 |   | 27,195,686 |   | $ | 32,070,686 |   |
| Emmett  R. Johnson Building          |   | -0-              |   | 1,794,672                    |   | 14,801,258                                        |   | 1,595,930                                             |     | 1,794,672 |   | 16,397,189 |   | $ | 18,191,861 |   |
| Independence  Plaza                  |   | -0-              |   | 1,505,000                    |   | 6,018,476                                         |   | 3,486,149                                             |     | 1,505,000 |   | 9,504,625 |   | $ | 11,009,625 |   |
| International  Park                  |   | -0-              |   | 1,279,355                    |   | 5,668,186                                         |   | 19,633,644                                            |     | 3,087,151 |   | 23,494,034 |   | $ | 26,581,185 |   |
| Interstate  Park                     |   | 2,852,228        |   | 1,125,990                    |   | 7,113,558                                         |   | 11,941,730                                            |     | 1,125,988 |   | 19,055,290 |   | $ | 20,181,278 |   |
| Perimeter  Corporate Park            |   | 4,822,798        |   | 1,422,169                    |   | 18,377,648                                        |   | 3,411,302                                             |     | 1,422,169 |   | 21,788,950 |   | $ | 23,211,119 |   |
| Progress  Center                     |   | -0-              |   | 521,037                      |   | 14,710,851                                        |   | 3,383,192                                             |     | 523,258 |   | 18,091,822 |   | $ | 18,615,080 |   |
| Riverchase  Center                   |   | -0-              |   | 1,916,727                    |   | 22,091,651                                        |   | 3,419,299                                             |     | 1,924,895 |   | 25,502,782 |   | $ | 27,427,677 |   |
| Shoppes  at Mansell                  |   | -0-              |   | 600,000                      |   | 3,089,565                                         |   | 50,741                                                |     | 600,000 |   | 3,140,306 |   | $ | 3,740,306 |   |
|                                 |   |             |   |                         |   |                                              |   |                                                  |     |   |   |   |   |   |   |
| Retail:                              |   |             |   |                         |   |                                              |   |                                                  |     |   |   |   |   |   |   |
| Britt  David Shopping Center         |   | -0-              |   | 1,755,000                    |   | 4,951,852                                         |   | 499,611                                               |     | 1,755,000 |   | 5,451,463 |   | $ | 7,206,463 |   |
| Colonial  Brookwood Village          |   | -0-              |   | 8,136,700                    |   | 24,435,002                                        |   | 64,865,084                                            |     | 8,171,373 |   | 89,265,413 |   | $ | 97,436,786 |   |
| Colonial  Mall Auburn-Opelika        |   | -0-              |   | 103,480                      |   | -0-                                               |   | 18,405,485                                            |     | 698,153 |   | 17,810,813 |   | $ | 18,508,965 |   |
| Colonial  Mall Bel Air               |   | -0-              |   | 7,517,000                    |   | 80,151,190                                        |   | 7,538,350                                             |     | 7,517,000 |   | 87,689,540 |   | $ | 95,206,540 |   |
| Colonial  Mall Burlington            |   | -0-              |   | 4,120,000                    |   | 25,632,587                                        |   | 3,084,307                                             |     | 4,137,557 |   | 28,699,338 |   | $ | 32,836,894 |   |
| Colonial  Mall Decatur               |   | -0-              |   | 3,262,800                    |   | 23,636,229                                        |   | 3,958,019                                             |     | 3,262,800 |   | 27,594,248 |   | $ | 30,857,048 |   |
| Colonial  Mall Gadsden               |   | -0-              |   | 639,577                      |   | -0-                                               |   | 22,818,413                                            |     | 639,577 |   | 22,818,413 |   | $ | 23,457,990 |   |
| Colonial  Mall Glynn Place           |   | -0-              |   | 3,588,178                    |   | 22,514,121                                        |   | 2,674,305                                             |     | 3,603,469 |   | 25,173,135 |   | $ | 28,776,604 |   |
| Colonial  Mall Greenville            |   | -0-              |   | 4,433,000                    |   | 24,812,243                                        |   | 6,705,733                                             |     | 4,433,000 |   | 31,517,976 |   | $ | 35,950,976 |   |
| Colonial  Mall Lakeshore             |   | -0-              |   | 4,646,300                    |   | 30,973,239                                        |   | 3,431,412                                             |     | 4,666,100 |   | 34,384,851 |   | $ | 39,050,951 |   |
| Colonial  Mall Mrytle Beach          |   | -0-              |   | 9,099,972                    |   | 33,663,654                                        |   | 5,925,080                                             |     | 9,163,149 |   | 39,525,558 |   | $ | 48,688,706 |   |
| Colonial  Mall Staunton              |   | -0-              |   | 2,895,000                    |   | 15,083,542                                        |   | 4,486,671                                             |     | 2,907,337 |   | 19,557,876 |   | $ | 22,465,213 |   |
| Colonial  Mall Temple                |   | -0-              |   | 2,981,736                    |   | 23,503,930                                        |   | 6,306,683                                             |     | 2,981,736 |   | 29,810,613 |   | $ | 32,792,349 |   |
| Colonial  Mall Valdosta              |   | -0-              |   | 5,377,000                    |   | 30,239,796                                        |   | 4,182,494                                             |     | 4,478,413 |   | 35,320,876 |   | $ | 39,799,290 |   |
| Colonial  Mall Macon                 |   | -0-              |   | 1,684,875                    |   | -0-                                               |   | 95,831,980                                            |     | 5,508,562 |   | 92,008,293 |   | $ | 97,516,855 |   |
| Colonial  Mayberry Mall              |   | -0-              |   | 862,500                      |   | 3,778,590                                         |   | 710,721                                               |     | 866,175 |   | 4,485,636 |   | $ | 5,351,811 |   |

 
| **Description**                      |   | **Accumulated  Depreciation** |   | **Date  Completed** |   | **Date  Acquired/  Placed in  Service** |   | **Depreciable  Lives-Years** |   |
|--------------------------------------|--------|-------------------------------|--------|---------------------|--------|-----------------------------------------|--------|------------------------------|--------|
|                                 |   |                          |   |                |   |                                    |   |                         |   |
| Multifamily:                         |   |                          |   |                |   |                                    |   |                         |   |
| CG at Citrus Park                    |   | 2,102,857                     |   | 1999                |   | 1997                                    |   | 7-40 Years                   |   |
| CG at Cypress Crossing               |   | 3,377,231                     |   | 1999                |   | 1998                                    |   | 7-40 Years                   |   |
| CG  at Edgewater                     |   | 6,498,478                     |   | 1990                |   | 1994                                    |   | 7-40 Years                   |   |
| CG  at Galleria                      |   | 10,258,618                    |   | 1986                |   | 1994                                    |   | 7-40 Years                   |   |
| CG  at Galleria II                   |   | 1,837,595                     |   | 1996                |   | 1996                                    |   | 7-40 Years                   |   |
| CG  at Galleria Woods                |   | 3,255,641                     |   | 1994                |   | 1996                                    |   | 7-40 Years                   |   |
| CG  at Heather Glen                  |   | 3,852,115                     |   | 2000                |   | 1998                                    |   | 7-40 Years                   |   |
| CG  at Heathrow                      |   | 4,420,089                     |   | 1997                |   | 1994/97                                 |   | 7-40 Years                   |   |
| CG  at Hunter’s Creek           |   | 6,829,306                     |   | 1996                |   | 1996                                    |   | 7-40 Years                   |   |
| CG  at Lakewood Ranch                |   | 3,200,044                     |   | 1999                |   | 1997                                    |   | 7-40 Years                   |   |
| CG  at Liberty Park                  |   | 2,803,449                     |   | 2000                |   | 1998                                    |   | 7-40 Years                   |   |
| CG  at Madison                       |   | 2,722,469                     |   | 2000                |   | 1998                                    |   | 7-40 Years                   |   |
| CG  at Natchez Trace                 |   | 3,345,739                     |   | 1995/97             |   | 1997                                    |   | 7-40 Years                   |   |
| CG  at Promenade                     |   | 3,240,093                     |   | 1992                |   | 1992                                    |   | 7-40 Years                   |   |
| CG  at Research Park                 |   | 8,435,537                     |   | 1987/94             |   | 1994                                    |   | 7-40 Years                   |   |
| CG  at Reservoir                     |   | 1,533,767                     |   | 2000                |   | 1998                                    |   | 7-40 Years                   |   |
| CG  at Riverchase                    |   | 6,726,512                     |   | 1984/91             |   | 1994                                    |   | 7-40 Years                   |   |
| Colonial  Center Town Park           |   | 1,793,468                     |   | 2002                |   | 2000                                    |   | 7-40 Years                   |   |
| CG  at Wesleyan                      |   | 3,846,366                     |   | 1997                |   | 1996/97                                 |   | 7-40 Years                   |   |
| CV  at Ashford Place                 |   | 1,170,438                     |   | 1983                |   | 1996                                    |   | 7-40 Years                   |   |
| CV  at Ashley Plantation             |   | 3,981,565                     |   | 1997                |   | 1998                                    |   | 7-40 Years                   |   |
| CV  at Caledon Wood                  |   | 3,796,594                     |   | 1995/96             |   | 1997                                    |   | 7-40 Years                   |   |
| CV  at Gainesville                   |   | 8,653,500                     |   | 1989/93/94          |   | 1994                                    |   | 7-40 Years                   |   |
| CV  at Haverhill                     |   | 3,132,739                     |   | 1998                |   | 1998                                    |   | 7-40 Years                   |   |
| CV  at Huntleigh Woods               |   | 1,701,092                     |   | 1978                |   | 1994                                    |   | 7-40 Years                   |   |
| CV  at Inverness                     |   | 3,169,232                     |   | 1986/87/90          |   | 1986/87/90                              |   | 7-40 Years                   |   |
| CV  at Inverness II/III/IV           |   | 5,088,884                     |   | 1997                |   | 1997                                    |   | 7-40 Years                   |   |
| CV  at Lake Mary                     |   | 6,768,047                     |   | 1991/95             |   | 1991/95                                 |   | 7-40 Years                   |   |
| CV  at Timothy Woods                 |   | 2,405,321                     |   | 1996                |   | 1997                                    |   | 7-40 Years                   |   |
| CV  at Town Park (Sarasota)          |   | 1,290,772                     |   | 2002                |   | 2000                                    |   | 7-40 Years                   |   |
| CV  at Trussville                    |   | 4,189,662                     |   | 1996/97             |   | 1997                                    |   | 7-40 Years                   |   |
| CV  at Vernon Marsh                  |   | 2,547,600                     |   | 1986/87             |   | 1986/93                                 |   | 7-40 Years                   |   |
| CV  at Walton Way                    |   | 1,393,285                     |   | 1970/88             |   | 1998                                    |   | 7-40 Years                   |   |
|                                 |   |                          |   |                |   |                                    |   |                         |   |
| Office:                              |   |                          |   |                |   |                                    |   |                         |   |
| 250  Commerce Street                 |   | 2,463,667                     |   | 1904/81             |   | 1980                                    |   | 7-40 Years                   |   |
| 901  Maitland  Center           |   | 273,296                       |   | 1985                |   | 2002                                    |   | 7-40 Years                   |   |
| AmSouth  Center                      |   | 8,773,278                     |   | 1990                |   | 1990                                    |   | 7-40 Years                   |   |
| Colonial  Center 100 at Town Park    |   | 1,215,513                     |   | 2001                |   | 2000                                    |   | 7-40 Years                   |   |
| Colonial  Center 600 at Town Park    |   | 307,955                       |   | 2002                |   | 2000                                    |   | 7-40 Years                   |   |
| Colonial  Center at Mansell Overlook |   | 11,636,161                    |   | 1987/96/97/00       |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Center Colonnade           |   | 589,720                       |   | 1989/99             |   | 2002                                    |   | 7-40  Years                  |   |
| Colonial  Center Heathrow            |   | 811,951                       |   | 1988/96-00          |   | 2002                                    |   | 7-40 Years                   |   |
| Colonial  Center Lakeside            |   | 1,493,642                     |   | 1989/90             |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Center Research Park       |   | 1,583,578                     |   | 1999                |   | 1998                                    |   | 7-40 Years                   |   |
| Colonial  Plaza                      |   | 2,588,364                     |   | 1982                |   | 1997                                    |   | 7-40 Years                   |   |
| Concourse  Center                    |   | 3,073,410                     |   | 1981/85             |   | 1998                                    |   | 7-40 Years                   |   |
| Emmett  R. Johnson Building          |   | 1,447,050                     |   | 1982/95             |   | 1999                                    |   | 7-40 Years                   |   |
| Independence  Plaza                  |   | 1,020,849                     |   | 1981/92             |   | 1998                                    |   | 7-40 Years                   |   |
| International  Park                  |   | 2,891,446                     |   | 1987/89             |   | 1997                                    |   | 7-40 Years                   |   |
| Interstate  Park                     |   | 7,483,848                     |   | 1982-85/89          |   | 1982-85/89                              |   | 7-40 Years                   |   |
| Perimeter  Corporate Park            |   | 2,867,238                     |   | 1986/89             |   | 1998                                    |   | 7-40 Years                   |   |
| Progress  Center                     |   | 2,758,686                     |   | 1983-91             |   | 1997                                    |   | 7-40 Years                   |   |
| Riverchase  Center                   |   | 4,047,656                     |   | 1984-88             |   | 1997                                    |   | 7-40 Years                   |   |
| Shoppes  at Mansell                  |   | 349,790                       |   | 1996/97             |   | 1998                                    |   | 7-40 Years                   |   |
|                                 |   |                          |   |                |   |                                    |   |                         |   |
| Retail:                              |   |                          |   |                |   |                                    |   |                         |   |
| Britt  David Shopping Center         |   | 1,084,769                     |   | 1990                |   | 1994                                    |   | 7-40 Years                   |   |
| Colonial  Brookwood Village          |   | 7,401,520                     |   | 1973/91/00          |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Mall Auburn-Opelika        |   | 11,249,030                    |   | 1973/84/89          |   | 1973/84/89                              |   | 7-40 Years                   |   |
| Colonial  Mall Bel Air               |   | 10,468,603                    |   | 1966/90/97          |   | 1998                                    |   | 7-40 Years                   |   |
| Colonial  Mall Burlington            |   | 4,197,378                     |   | 1969/86/94          |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Mall Decatur               |   | 6,128,088                     |   | 1979/89             |   | 1993                                    |   | 7-40 Years                   |   |
| Colonial  Mall Gadsden               |   | 13,316,043                    |   | 1974/91             |   | 1974                                    |   | 7-40 Years                   |   |
| Colonial  Mall Glynn Place           |   | 4,200,172                     |   | 1986                |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Mall Greenville            |   | 3,805,265                     |   | 1965/89/99          |   | 1999                                    |   | 7-40 Years                   |   |
| Colonial  Mall Lakeshore             |   | 5,551,016                     |   | 1984-87             |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Mall Mrytle Beach          |   | 6,915,370                     |   | 1986                |   | 1996                                    |   | 7-40 Years                   |   |
| Colonial  Mall Staunton              |   | 3,131,979                     |   | 1969/86/97          |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Mall Temple                |   | 2,322,794                     |   |                |   | 2000                                    |   | 7-40 Years                   |   |
| Colonial  Mall Valdosta              |   | 5,416,888                     |   | 1982-85             |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Mall Macon                 |   | 29,982,448                    |   | 1975/88/97          |   | 1975/88                                 |   | 7-40 Years                   |   |
| Colonial  Mayberry Mall              |   | 734,421                       |   | 1968/86             |   | 1997                                    |   | 7-40 Years                   |   |

 

S-1

----

 
|                                    |   |             |        | **Initial Cost to  Company** |   | **Cost  Capitalized  Subsequent to  Acquisition** |   | **Gross Amount at Which  Carried at Close of Period** |          |
|-----------------------------------------|--------|------------------|-------------|------------------------------|--------|---------------------------------------------------|--------|-------------------------------------------------------|---------------|
| **Description**                         |   | **Encumbrances** |        | **Land**                     |   | **Buildings and  Improvements**                   |   |                                                  | **Land**      |   | **Buildings and  Improvements** |   | **Total** |   |
|                                    |   |             |        |                         |   |                                              |   |                                                  |          |   |   |   |   |   |   |
| Colonial  Promenade Bardmoor            |   | -0-              |        | 1,989,019                    |   | 9,047,663                                         |   | 770,284                                               |          | 1,989,019 |   | 9,817,947 |   | $ | 11,806,966 |   |
| Colonial  Promenade Beechwood           |   | -0-              |        | 2,565,550                    |   | 19,647,875                                        |   | 3,480,385                                             |          | 2,576,483 |   | 23,117,327 |   | $ | 25,693,810 |   |
| Colonial  Promenade Burnt Store         |   | -0-              |        | 3,750,000                    |   | 8,198,677                                         |   | 242,605                                               |          | 3,750,000 |   | 8,441,282 |   | $ | 12,191,282 |   |
| Colonial  Promenade Hunter’s Creek |   | -0-              |        | 4,181,760                    |   | 13,023,401                                        |   | 386,625                                               |          | 4,181,760 |   | 13,410,026 |   | $ | 17,591,786 |   |
| Colonial  Promenade Lakewood            |   | -0-              |        | 2,984,522                    |   | 11,482,512                                        |   | 2,944,731                                             |          | 2,997,240 |   | 14,414,525 |   | $ | 17,411,765 |   |
| Colonial  Promenade Montgomery          |   | 12,193,529       |        | 3,788,913                    |   | 11,346,754                                        |   | 1,566,049                                             |          | 4,332,432 |   | 12,369,284 |   | $ | 16,701,716 |   |
| Colonial  Promenade Montgomery N        |   | -0-              |        | 2,400,000                    |   | 5,664,858                                         |   | 588,167                                               |          | 2,401,182 |   | 6,251,843 |   | $ | 8,653,025 |   |
| Colonial  Promenade Northdale           |   | -0-              |        | 3,059,760                    |   | 8,054,090                                         |   | 7,130,766                                             |          | 3,059,760 |   | 15,184,856 |   | $ | 18,244,616 |   |
| Colonial  Promenade Trussville          |   | -0-              |        | 4,201,186                    |   | -0-                                               |   | 28,309,788                                            |          | 4,213,537 |   | 28,297,437 |   | $ | 32,510,974 |   |
| Colonial  Promenade Tutwiler Farm       |   | -0-              |        | 10,287,026                   |   | -0-                                               |   | 17,826,572                                            |          | 10,288,138 |   | 17,825,461 |   | $ | 28,113,599 |   |
| Colonial  Promenade University Park     |   | 11,958,595       |        | 6,946,785                    |   | 20,104,517                                        |   | (9,766,068                                            | )             | 5,001,467 |   | 12,283,767 |   | $ | 17,285,234 |   |
| Colonial  Promenade Wekiva              |   | -0-              |        | 2,817,788                    |   | 15,302,375                                        |   | 493,709                                               |          | 2,817,788 |   | 15,796,084 |   | $ | 18,613,872 |   |
| Colonial  Promenade Winter Haven        |   | -0-              |        | 1,768,586                    |   | 3,928,903                                         |   | 4,923,825                                             |          | 4,045,045 |   | 6,576,270 |   | $ | 10,621,314 |   |
| Colonial  Shoppes at Inverness          |   | -0-              |        | 1,680,000                    |   | 1,387,055                                         |   | 99,257                                                |          | 1,687,159 |   | 1,479,152 |   | $ | 3,166,312 |   |
| Colonial  Shoppes Bear Lake             |   | -0-              |        | 2,134,440                    |   | 6,551,683                                         |   | 526,280                                               |          | 2,134,440 |   | 7,077,963 |   | $ | 9,212,403 |   |
| Colonial  Shoppes Bellwood              |   | -0-              |        | 330,000                      |   | -0-                                               |   | 5,225,990                                             |          | 330,000 |   | 5,225,990 |   | $ | 5,555,990 |   |
| Colonial  Shoppes McGehee               |   | -0-              |        | 197,152                      |   | -0-                                               |   | 5,939,024                                             |          | 197,152 |   | 5,939,024 |   | $ | 6,136,176 |   |
| Colonial  Shoppes Quaker Village        |   | -0-              |        | 931,000                      |   | 7,901,874                                         |   | 877,768                                               |          | 934,967 |   | 8,775,674 |   | $ | 9,710,642 |   |
| Colonial  Shoppes Stanley               |   | -0-              |        | 450,000                      |   | 1,657,870                                         |   | 117,217                                               |          | 433,906 |   | 1,791,181 |   | $ | 2,225,087 |   |
| Colonial  Shoppes Yadkinville           |   | -0-              |        | 1,080,000                    |   | 1,224,136                                         |   | 3,393,242                                             |          | 1,084,602 |   | 4,612,776 |   | $ | 5,697,378 |   |
| Old  Springville Shopping Center        |   | -0-              |        | 272,594                      |   | -0-                                               |   | 3,411,101                                             |          | 277,975 |   | 3,405,720 |   | $ | 3,683,695 |   |
| Olde  Town Shopping Center              |   | -0-              |        | 343,325                      |   | -0-                                               |   | 2,842,835                                             |          | 343,325 |   | 2,842,835 |   | $ | 3,186,160 |   |
| P&S  Building                       |   | -0-              |        | 104,089                      |   | 558,646                                           |   | 274,623                                               |          | 104,089 |   | 833,269 |   | $ | 937,358 |   |
| Rivermont  Shopping Center              |   | -0-              |        | 515,250                      |   | 2,332,486                                         |   | 364,777                                               |          | 517,446 |   | 2,695,067 |   | $ | 3,212,513 |   |
| Shops  at Colonnade                     |   | -0-              |        | 2,468,092                    |   | 4,034,205                                         |   | 27,971                                                |          | 2,468,092 |   | 4,062,176 |   | $ | 6,530,268 |   |
| Village  at Roswell Summit              |   | 1,510,544        |        | 450,000                      |   | 2,563,642                                         |   | 224,119                                               |          | 451,918 |   | 2,785,843 |   | $ | 3,237,761 |   |
|                                    |   |             |        |                         |   |                                              |   |                                                  |          |   |   |   |   |   |   |
| Active  Development Projects:           |   |             |        |                         |   |                                              |   |                                                  |          |   |   |   |   |   |   |
|                                    |   |             |        |                         |   |                                              |   |                                                  |          |   |   |   |   |   |   |
| CG  at North Heathrow  Phase II    |   | -0-              |        | 3,363,141                    |   | -0-                                               |   | 1,282,742                                             |          | 4,645,883 |   |   |   | $ | 4,645,883 |   |
| Colonial  TownPark Mixed Use            |   | -0-              |        | -0-                          |   | -0-                                               |   | 1,792,375                                             |          |   |   | 1,792,375 |   | $ | 1,792,375 |   |
| Colonial  Center 200 at Town Park       |   | -0-              |        | -0-                          |   | -0-                                               |   | 15,833,616                                            |          | 1,492,318 |   | 14,341,298 |   | $ | 15,833,616 |   |
| Colonial  Promenade Trussville  II |   | -0-              |        | 1,476,871                    |   | -0-                                               |   | 607,237                                               |          | 2,084,108 |   |   |   | $ | 2,084,108 |   |
| Other  Miscellaneous Projects           |   | -0-              |        | -0-                          |   | -0-                                               |   | 5,469,947                                             |          |   |   | 5,469,947 |   | $ | 5,469,947 |   |
|                                    |   |             |        |                         |   |                                              |   |                                                  |          |   |   |   |   |   |   |
| Unimproved  Land:                       |   |             |        |                         |   |                                              |   |                                                  |          |   |   |   |   |   |   |
| Colonial  Center Mansell Overlook       |   | -0-              |        | 2,664,265                    |   | -0-                                               |   | 6,419,014                                             |          | 9,083,279 |   |   |   | $ | 9,083,279 |   |
| Colonial  TownPark Infrastructure       |   | -0-              |        | 25,933,612                   |   | -0-                                               |   | (4,219,910                                            | )             | 21,713,702 |   |   |   | $ | 21,713,702 |   |
| Colonial  Center Heathrow               |   | -0-              |        | 12,250,568                   |   | -0-                                               |   | 983,387                                               |          | 13,233,955 |   |   |   | $ | 13,233,955 |   |
| CV  at Town Park Infrastructure         |   | -0-              |        | 1,184,919                    |   | -0-                                               |   | 3,784,017                                             |          | 4,968,936 |   |   |   | $ | 4,968,936 |   |
| CG  at Wesleyan III                     |   | -0-              |        | 230,643                      |   | -0-                                               |   | 8,691                                                 |          | 239,334 |   |   |   | $ | 239,334 |   |
| Lakewood  Ranch                         |   | -0-              |        | 47,990                       |   | -0-                                               |   | 2,370,313                                             |          | 1,479,297 |   | 939,006 |   | $ | 2,418,303 |   |
| Twin  Lakes                             |   | -0-              |        | 10,117,524                   |   | -0-                                               |   | 3,280,431                                             |          | 13,397,955 |   |   |   | $ | 13,397,955 |   |
| Corporate  Assets                       |   | -0-              |        | -0-                          |   | -0-                                               |   | 8,295,841                                             |          | -0- |   | 8,295,841 |   | $ | 8,295,841 |   |
| Other  Land                             |   | -0-              |        | 1,143,896                    |   | -0-                                               |   | (858,307                                              | )             | 285,589 |   |   |   | $ | 285,589 |   |
|                                    |   |             |        |                         |   |                                              |   |                                                  |          |   |   |   |   |   |   |
|                                    |   | $                | 382,888,161 |                         | $      | 323,928,749                                       |   | $                                                     | 1,107,109,349 |   | $ | 949,710,374 |   | $ | 316,847,337 |   | $ | 2,063,901,135 |   | $ | 2,380,748,472 |   |
|                                         |        |                  |             |                              |        |                                                   |        |                                                       |               |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| **Description**                         |   | **Accumulated  Depreciation** |        | **Date  Completed** |   | **Date  Acquired/  Placed in  Service** |   | **Depreciable  Lives-Years** |   |
|-----------------------------------------|--------|-------------------------------|-------------|---------------------|--------|-----------------------------------------|--------|------------------------------|--------|
|                                    |   |                          |        |                |   |                                    |   |                         |   |
| Colonial  Promenade Bardmoor            |   | 1,699,273                     |        | 1981                |   | 1996                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Beechwood           |   | 3,714,517                     |        | 1963/92             |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Burnt Store         |   | 1,861,529                     |        | 1990                |   | 1994                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Hunter’s Creek |   | 2,297,568                     |        | 1993/95             |   | 1996                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Lakewood            |   | 2,141,556                     |        | 1995                |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Montgomery          |   | 3,943,667                     |        | 1990                |   | 1993                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Montgomery N        |   | 800,826                       |        | 1997                |   | 1995                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Northdale           |   | 1,860,270                     |        | 1988/00             |   | 1995                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Trussville          |   | 1,854,071                     |        | 2000                |   | 1998                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Tutwiler Farm       |   | 929,261                       |        | 2000                |   | 1999                                    |   | 7-40 Years                   |   |
| Colonial  Promenade University Park     |   | 5,249,535                     |        | 1986/89             |   | 1993                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Wekiva              |   | 2,634,674                     |        | 1990                |   | 1996                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Winter Haven        |   | 1,358,098                     |        | 1986                |   | 1995                                    |   | 7-40 Years                   |   |
| Colonial  Shoppes at Inverness          |   | 236,726                       |        | 1984                |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Shoppes Bear Lake             |   | 1,429,432                     |        | 1990                |   | 1995                                    |   | 7-40 Years                   |   |
| Colonial  Shoppes Bellwood              |   | 1,743,713                     |        | 1988                |   | 1988                                    |   | 7-40 Years                   |   |
| Colonial  Shoppes McGehee               |   | 2,039,993                     |        | 1986                |   | 1986                                    |   | 7-40 Years                   |   |
| Colonial  Shoppes Quaker Village        |   | 1,216,063                     |        | 1968/88/97          |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Shoppes Stanley               |   | 304,599                       |        | 1987/96             |   | 1997                                    |   | 7-40 Years                   |   |
| Colonial  Shoppes Yadkinville           |   | 622,689                       |        | 1971/97             |   | 1997                                    |   | 7-40 Years                   |   |
| Old  Springville Shopping Center        |   | 2,905,191                     |        | 1982                |   | 1982                                    |   | 7-40 Years                   |   |
| Olde  Town Shopping Center              |   | 1,108,691                     |        | 1978/90             |   | 1978/90                                 |   | 7-40 Years                   |   |
| P&S  Building                       |   | 624,702                       |        | 1946/76/91          |   | 1974                                    |   | 7-40 Years                   |   |
| Rivermont  Shopping Center              |   | 426,654                       |        | 1986/97             |   | 1997                                    |   | 7-40 Years                   |   |
| Shops  at Colonnade                     |   | -0-                           |        | 1989                |   | 2002                                    |   | 7-40 Years                   |   |
| Village  at Roswell Summit              |   | 389,212                       |        | 1988                |   | 1997                                    |   | 7-40 Years                   |   |
|                                    |   |                          |        |                |   |                                    |   |                         |   |
| Active  Development Projects:           |   |                          |        |                |   |                                    |   |                         |   |
|                                    |   |                          |        |                |   |                                    |   |                         |   |
| CG  at North Heathrow  Phase II    |   |                          |        | N/A                 |   | 1997                                    |   | N/A                          |   |
| Colonial  TownPark Mixed Use            |   |                          |        | N/A                 |   | 2000                                    |   | N/A                          |   |
| Colonial  Center 200 at Town Park       |   | 246,973                       |        | 2002                |   | 2000                                    |   | 7-40 Years                   |   |
| Colonial  Promenade Trussville  II |   |                          |        | N/A                 |   | 2002                                    |   | N/A                          |   |
| Other  Miscellaneous Projects           |   |                          |        | N/A                 |   | 2002                                    |   | N/A                          |   |
|                                    |   |                          |        |                |   |                                    |   |                         |   |
| Unimproved  Land:                       |   |                          |        |                |   |                                    |   |                         |   |
| Colonial  Center Mansell Overlook       |   |                          |        | N/A                 |   | 1997                                    |   | N/A                          |   |
| Colonial  TownPark Infrastructure       |   |                          |        | N/A                 |   | 1999                                    |   | N/A                          |   |
| Colonial  Center Heathrow               |   |                          |        | N/A                 |   | 2002                                    |   | N/A                          |   |
| CV  at Town Park Infrastructure         |   |                          |        | N/A                 |   | 2000                                    |   | N/A                          |   |
| CG  at Wesleyan III                     |   |                          |        | N/A                 |   | 1996                                    |   | N/A                          |   |
| Lakewood  Ranch                         |   |                          |        | N/A                 |   | 1999                                    |   | N/A                          |   |
| Twin  Lakes                             |   |                          |        | N/A                 |   | 2000                                    |   | N/A                          |   |
| Corporate  Assets                       |   | 4,573,440                     |        | N/A                 |   | N/A                                     |   | N/A                          |   |
| Other  Land                             |   |                          |        | N/A                 |   | N/A                                     |   | N/A                          |   |
|                                    |   |                          |        |                |   |                                    |   |                         |   |
|                                    |   | $                             | 351,163,908 |                |   |                                    |   |                         |   |   |
|                                         |        |                               |             |                     |        |                                         |        |                              |        |  |

 

S-2

----

 

**NOTES TO SCHEDULE IIICOLONIAL REALTY LIMITED PARTNERSHIPDecember 31, 2002**

 

(1)                                  The aggregate cost for Federal Income Taxpurposes was approximately $1.9 billion at December 31, 2002.

 

(2)                                  See description of mortgage notes payable inNote 8 of Notes to Consolidated Financial Statements.

 

(3)                                  The following is a reconciliation of realestate to balances reported at the beginning of the year:

 

 

**Reconciliation of Real Estate**

 
|                          |   | **2002**     |          | **2001**    |   | **2000**      |   |
|-------------------------------|--------|--------------|---------------|-------------|--------|---------------|--------|
| Real estate investments:      |   |         |          |        |   |          |   |
| Balance  at beginning of year |   | $            | 2,218,778,048 |        | $      | 2,106,563,153 |   | $ | 2,006,823,011 |   |
| Acquisitions  of new property |   | 196,009,181  |          | -0-         |   | 29,608,188    |   |
| Improvements  and development |   | 93,660,958   |          | 194,303,821 |   | 138,186,127   |   |
| Dispositions  of property     |   | (127,699,715 | )             | (82,088,926 | )      | (68,054,173   | )      |
|                          |   |         |          |        |   |          |   |
| Balance  at end of year       |   | $            | 2,380,748,472 |        | $      | 2,218,778,048 |   | $ | 2,106,563,153 |   |

 

**Reconciliation of Accumulated Depreciation**

 
|                                     |   | **2002**    |        | **2001**   |   | **2000**    |   |
|------------------------------------------|--------|-------------|-------------|------------|--------|-------------|--------|
| Accumulated  depreciation:               |   |        |        |       |   |        |   |
| Balance  at beginning of year            |   | $           | 310,439,292 |       | $      | 255,730,341 |   | $ | 206,448,061 |   |
| Depreciation                             |   | 73,602,948  |        | 64,692,784 |   | 59,548,811  |   |
| Depreciation  of disposition of property |   | (32,886,016 | )           | (9,983,833 | )      | (10,266,531 | )      |
|                                     |   |        |        |       |   |        |   |
| Balance  at end of year                  |   | $           | 351,156,224 |       | $      | 310,439,292 |   | $ | 255,730,341 |   |

 

S-3

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