UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K
|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934
         For the fiscal year ended December 31, 1998 OR

|_|      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                                  35203
         Suite 750                                      (Zip Code)
    Birmingham, Alabama
 (Address of principal executive 
          offices)

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 Partnership Interest

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

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. |_|

         Documents Incorporated by Reference

         None.

<PAGE>
                                     PART I

Item 1.              Business.

           As used herein, the terms "CRLP" and "Operating  Partnership" include
Colonial Realty Limited  Partnership,  a Delaware limited  partnership,  and its
subsidiaries  and other  affiliates  (including,  Colonial  Properties  Services
Limited  Partnership  and  Colonial  VRS L.L.C.) or, as the context may require,
Colonial  Realty Limited  Partnership  only. As used herein,  the term "Company"
includes Colonial Properties Trust, an Alabama real estate investment trust, and
one or more of its subsidiaries and other affiliates  (including CRLP,  Colonial
Properties Services Limited Partnership and Colonial Properties Services,  Inc.)
or, as the context may require  Colonial  Properties Trust only. As used herein,
the terms "we", "us", and "our" refer to Colonial Realty Limited Partnership.

           This annual  report on Form 10-K  contains  certain  "forward-looking
statements",   including  but  not  limited  to   anticipated   timetables   for
acquisitions,   developments  and  expansions,   expected   economic  growth  in
geographic  markets where CRLP owns or expects to own properties,  and plans for
continuing  CRLP's  diversified  strategy.  These  statements  involve risks and
uncertainties  that may cause actual  results to be  materially  different  from
those  anticipated.  Prospective  investors  should  specifically  consider,  in
connection  with these  forward-looking  statements,  the various  risk  factors
identified  herein and in CRLP's  filings  with the SEC which could cause actual
results  to  differ,   including  downturns  in  local  or  national  economies,
competitive  factors, the availability of suitable properties for acquisition at
favorable prices, and other risks inherent in the real estate business.

           CRLP is the Operating Partnership of the Company, which is one of the
largest  owners,  developers  and  operators of  multifamily,  retail and office
properties in the Sunbelt region of the United States. It is a  fully-integrated
real  estate  company,  whose  activities  include  ownership  of a  diversified
portfolio  of 106  properties  as of  December  31,  1998,  located in  Alabama,
Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas,
and Virginia, development of new properties, acquisition of existing properties,
build-to-suit  development,  and  the  provision  of  management,  leasing,  and
brokerage  services for commercial  real estate.  As of December 31, 1998,  CRLP
owned  49  multifamily  apartment  communities  containing  a  total  of  15,381
apartment units (the "Multifamily Properties"),  40 retail properties containing
a total of  approximately  13.5 million square feet of retail space (the "Retail
Properties"),  17 office  properties  containing  a total of  approximately  2.7
million  square  feet of office  space (the  "Office  Properties"),  and certain
parcels of land adjacent to or near three of these properties (the "Land"). (The
Multifamily  Properties,  the Retail  Properties,  the Office Properties and the
Land are referred to collectively as the "Properties"). As of December 31, 1998,
the Multifamily  Properties that had achieved stabilized  occupancy,  the Retail
Properties,  and the  Office  Properties  were  93.5%,  91.9% and 92.2%  leased,
respectively.

           CRLP's  executive  offices  are located at 2101 Sixth  Avenue  North,
Suite  750,  Birmingham,  Alabama,  35203  and its  telephone  number  is  (205)
250-8700. CRLP was formed in Delaware on August 6, 1993.


Formation of the Company

           The Operating Partnership were formed to succeed to substantially all
of  the  interests  of  Colonial   Properties,   Inc.,  an  Alabama  corporation
("Colonial"),  its affiliates  and certain others in a diversified  portfolio of
multifamily,  retail,  and office properties  located in Alabama,  Florida,  and
Georgia and to the development,  acquisition, management, leasing, and brokerage
businesses of Colonial.

           On September 29, 1993, (i) the Company  consummated an initial public
offering (the "IPO") of 8,480,000 of its common  shares of beneficial  interest,
$.01 par value per  share  ("Common  Shares"),  (ii) the  Operating  Partnership
assumed  ownership of 36  Properties  (or  interests  therein) held by Thomas H.
Lowder,  James K. Lowder,  Robert E. Lowder, and their mother,  Catherine Lowder
(the "Lowder family"),  and third-party  partners of the Lowder family,  and the
operating businesses of Colonial, (iii) the Company transferred the net proceeds
from the IPO through Colonial Properties Holding Company,  Inc. ("CPHC"),  which
was dissolved in 1998, to the Operating  Partnership,  in exchange for 8,480,000
units of limited partnership interest in the Operating Partnership ("OP Units"),
(iv)  the  Operating   Partnership  repaid   approximately   $150.2  million  of
indebtedness and prepayment penalties associated therewith secured by certain of
the Properties,  and (v) the Operating  Partnership  established a $35.0 million
line of credit with  SouthTrust  Bank,  which has since been increased to $250.0
million,  to fund  development  activities  and  property  acquisitions  and for
general corporate  purposes  (collectively,  the "Formation  Transactions").  On
October 28, 1993, the underwriters of the IPO exercised an over-allotment option
to purchase an additional 686,200 shares.


Recent Developments

           Since  the  Company's  IPO,  CRLP  has  significantly   expanded  its
portfolio of Properties and its operating  businesses.  Acquisitions  by CRLP of
new properties represent a total investment of over $1.3 billion.  CRLP has also
completed the expansion of eleven multifamily properties since the IPO, adding a
total of 2,348 units to its multifamily portfolio.  CRLP currently has 12 active
expansion and development projects in progress for Multifamily  Properties,  one
Retail Property  development,  and two Office  Property  developments . CRLP has
also disposed of six Multifamily Properties  representing 2,464 apartment units,
one Office Property representing 25,000 square feet of office space, and entered
into two joint ventures.

           The following is a summary of CRLP's acquisition,  disposition, joint
venture, and development activity in 1998.

Acquisition and Disposition Activity

           CRLP acquired four Multifamily Properties,  including one in Florida,
one in Georgia,  one in Texas and one in South Carolina  containing  1,026 units
for a total purchase price of $48.2 million.

           CRLP  added  2.9  million  square  feet  of  retail   shopping  space
(including  1.5  million  square  feet  in  two  joint  ventures)   through  the
acquisition of a community  shopping center, an enclosed mall, and investment in
two joint ventures, at a net cost of $117.5 million.

           CRLP  also  acquired  five  Office  Properties,  including  three  in
Alabama,  one in Florida and one in Georgia,  containing  827,000 square feet of
office space for a total purchase price of $87.9 million.

Joint Ventures

           During  the  fourth  quarter  of 1998,  CRLP  entered  into two joint
ventures. On December 9, 1998, CRLP and CBL & Associates Properties, Inc. formed
a joint venture to acquire  Parkway City Mall in  Huntsville,  Alabama for $11.4
million.  In addition to the purchase of the  property,  the joint  venture will
redevelop the mall,  with all related costs being shared equally by both venture
partners. At December 31, 1998, CRLP had invested  approximately $5.7 million in
the joint venture and had an ending net investment balance of $5.9 million.

           On December  29,  1998,  CRLP and  Prudential  Real Estate  Investors
("Prudential"), through its Property Investment Separate Account ("PRISA") fund,
entered into a joint venture to own Orlando Fashion  Square.  In connection with
the  formation  of the joint  venture,  Prudential  acquired a 50%  interest  in
Orlando Fashion Square from CRLP for $52 million.  Subsequent to formation,  the
joint venture  leveraged the property with a $65 million  non-recourse  note and
the proceeds from the issuance of the note were distributed equally to the joint
venture  partners.  CRLP's  investment in the joint venture at December 31, 1998
was $20.2 million.  CRLP used the proceeds from the Prudential  joint venture to
fund acquisition and development activities.

Development Activity

           During  1998  CRLP  constructed  596 new  apartment  units  in  seven
multifamily  communities  and  acquired  land on which  it  intends  to  develop
additional  multifamily  communities  during 1999.  The  aggregate  cost of this
multifamily  development  activity was $90.4  million.  As of December 31, 1998,
CRLP had 2,426 apartment units in 12 multifamily  communities  under development
or expansion.  Management  anticipates that the 12 multifamily  projects will be
completed during 1999 through 2001.  Management  expects to invest an additional
$115 million over this period to complete these multifamily projects.

           During 1998 CRLP began development of a community  shopping center in
Birmingham,  Alabama.  The aggregate investment in the retail development during
1998 was $8.8 million.  Management anticipates that it will invest an additional
$25.7 million to complete the retail development.

           During  1998 CRLP began  development  of two office  properties.  The
aggregate  investment in the office  developments  during 1998 was $5.3 million.
Management estimates that it will invest an additional $24.3 million to complete
these projects.

           The table  below  provides  an  overview  of CRLP's  acquisition  and
development activity during 1998:



<PAGE>
                                 Summary of 1998
                           Acquisition and Development
                                    Activity
<TABLE>

<CAPTION>
 Completion or                                                              Type of   Units (M)         Cost or
  Anticipated                   Name of                                     Property  GLA (R/O)       Anticipated
Completion Date              Property (1)                    Location         (2)        (3)           Cost (4)
-----------------  ----------------------------------    -----------------  --------- -----------    --------------

Acquisitions:
<S> <C>            <C>                                  <C>                   <C>       <C>               <C>  
    1st Qtr 98     Perimeter Corporate Park              Huntsville, AL        O         233,000          $ 19,500
    1st Qtr 98     Independence Plaza                    Birmingham, AL        O         106,000             7,500
    2nd Qtr 98     CV at Ashley Plantation               Bluffton, SC          M             200            13,700
    2nd Qtr 98     Orlando Fashion Square             (6)Orlando, FL           R       1,100,000 (5)       104,000
    3rd Qtr 98     CV at River Hills I                   Tampa, FL             M             248             8,500
    3rd Qtr 98     CV at Haverhill                       San Antonio, TX       M             322            17,200
    3rd Qtr 98     Mansell Overlook 200                  Atlanta, GA           O         163,000            27,700
    3rd Qtr 98     Shoppes at Mansell                    Atlanta, GA           R          21,000             3,700
    3rd Qtr 98     Shades Brook Building                 Birmingham, AL        O          35,000             3,100
    3rd Qtr 98     Concourse Center                      Tampa, FL             O         290,000            30,100
    3rd Qtr 98     CV at Walton Way                      Augusta, GA           M             256             8,800
    4th Qtr 98     Bel Air Mall                          Mobile, AL            R       1,434,000            89,100
    4th Qtr 98     Parkway City Mall                  (6)Huntsville, AL        R         414,000            11,400

Developments:
    1st Qtr 98     CV at River Hills III                 Tampa, FL             M             276            14,186
    1st Qtr 98     CV at Inverness                       Birmingham, AL        M              84             6,631
    2nd Qtr 98     CG at Hunter's Creek                  Orlando, FL           M             496            33,426
    2nd Qtr 98     CG at Bayshore II                     Bradenton, FL         M             164             9,289
    1st Qtr 98     CG at Wesleyan  I                     Macon, GA             M             240            13,503
    1st Qtr 99     CG at Inverness Lakes II (expansion)  Mobile, AL            M             132             8,900
    4th Qtr 99     CV at Ashley Plantation (expansion)   Bluffton, SC          M             214            13,800
    2nd Qtr 99     CG at Edgewater II (expansion)        Huntsville, AL        M             192            12,600
    3rd Qtr 99     CG at Wesleyan II (expansion)         Macon, GA             M              88             6,200
    2nd Qtr 00     CG at Liberty Park                    Birmingham, AL        M             300            26,218
    2nd Qtr 00     CV at Heather Glen                    Orlando, FL           M             448            31,234
    2nd Qtr 99     CG at Citrus Park                     Tampa, FL             M             176            12,300
    2nd Qtr 99     CG at Lakewood Ranch                  Sarasota, FL          M             288            20,300
    1st Qtr 99     CG at Cypress Crossing                Orlando, FL           M             250            20,000
    1st Qtr 00     CV at Madison                         Huntsville, AL        M             336            23,000
    3rd Qtr 00     CG at Promenade                       Montgomery, AL        M             384            27,878
    1st Qtr 00     CG at Ridgeland                       Jackson, MS           M             170            12,400
    1st Qtr 00     Colonial Promenade Trussville         Birmingham, AL        R         386,000            31,000
    4th Qtr 99     1800 International Park               Birmingham, AL        O         149,457            16,600
    4th Qtr 99     Colonial Center at Research Park      Huntsville, AL        O         133,368            13,000
                                                                                                     ==============
                                                                                      Total              $ 696,765
                                                                                                     ==============

</TABLE>

(1)In the  listing  of  Multifamily  Property  names,  CG has  been  used  as an
   abbreviation  for Colonial Grand and CV has been used as an abbreviation  for
   Colonial Village.
(2)M refers to  Multifamily  Properties,  R refers to Retail  Properties,  and O
   refers to Office Properties.
(3)Units (in this table  only)  refers to  multifamily  apartment  units and GLA
   refers to gross leasable area of retail and office space.
(4)Amounts in thousands.
(5)Includes  739,000  square feet of GLA and 361,000 square feet of tenant owned
   space.
(6)Properties are 50% owned by CRLP at December 31, 1998.
<PAGE>

Multifamily Property Acquisitions

           Colonial Village at Ashley  Plantation--On May 1, 1998, CRLP acquired
Colonial Village at Ashley Plantation, a 200-unit apartment complex developed in
1997 on approximately 21 acres of land in Bluffton,  South Carolina. The average
unit size is 1,026  square  feet,  and the average  unit market rent is $768 per
month.  The purchase  price of $13.7 million was financed  through an advance on
CRLP's unsecured line of credit.

           Colonial  Village at River  Hills I--On July 1, 1998,  CRLP  acquired
Colonial Village at River Hills I, a 248-unit phase of the River Hills apartment
complex on  approximately  30 acres of land in Tampa,  Florida.  The multifamily
community was  developed in 1985 and was 90% leased at the time of  acquisition.
The average  unit size is 907 square feet with  average unit market rent of $549
per month.  The purchase  price of $8.5 million was funded through an advance on
CRLP's unsecured line of credit.

           Colonial Village at Haverhill--On July 1, 1998, CRLP acquired a 79.8%
interest in  Colonial  Village at  Haverhill,  a 322-unit  apartment  complex on
approximately 19 acres of land in San Antonio,  Texas. The multifamily community
was developed in 1998 and was 90% leased at the time of acquisition. The average
unit size is 1,019  square feet with average unit market rent of $857 per month.
The  purchase  price of $17.2  million  was funded  through an advance on CRLP's
unsecured  line of credit.  The  remaining  20.2%  ownership in this property is
reflected as "minority  interest in consolidated  operating  property" in CRLP's
statement of income,  and is included in "minority  interest" on CRLP's  balance
sheet and statement of cash flows.

           Colonial  Village at Walton  Way --On July 30,  1998,  CRLP  acquired
Colonial Village at Walton Way, a 256-unit  multifamily  apartment  community on
approximately 22 acres of land in Augusta,  Georgia. The community was developed
in 1970 and 1988,  and was 98% leased at the time of  acquisition.  The  average
unit size is 993 square  feet with  average  unit market rent of $671 per month.
The  purchase  price of $8.8  million  was  funded  through an advance on CRLP's
unsecured line of credit.

           CRLP intends to continue to pursue acquisitions in the Sunbelt region
of the United States that meet CRLP's acquisition criteria for property quality,
market strength, and investment return.

Completed Multifamily Expansion and Development Activity

           Colonial Village at River Hills III--CRLP completed construction on a
276-unit expansion of Colonial Village at River Hills located in Tampa, Florida.
The  community  amenities  include a  clubhouse,  a swimming  pool,  an exercise
center,  an  air-conditioned  racquetball  court,  tennis  courts,  and  laundry
facilities. Project development costs, including land acquisition costs, totaled
$14.2 million and were funded  through  advances on CRLP's line of credit.  CRLP
completed construction in the first quarter of 1998.

           Colonial  Village at  Inverness--CRLP  completed  construction  on an
84-unit  expansion  of  Colonial  Village at  Inverness  located in  Birmingham,
Alabama.  This  expansion  phase  offers  the  same  amenities  as the  existing
community.  Project development costs, including land acquisition costs, totaled
$6.6  million and were funded  through  advances on CRLP's line of credit.  CRLP
completed construction in the first quarter of 1998.

           Colonial  Grand at  Bayshore  II--CRLP  completed  construction  on a
164-unit  expansion to this  development  located in  Bradenton,  Florida.  CRLP
acquired the land (12.5  acres) at a cost of $1.0 million  pursuant to an option
acquired at the time CRLP purchased the land for the existing  Colonial Grand at
Bayshore  development  in November 1995.  This  expansion  phase offers the same
amenities as the existing community.  Project development costs,  including land
acquisition  costs,  totaled  $9.3 million and were funded  through  advances on
CRLP's line of credit.  CRLP  completed  construction  in the second  quarter of
1998.

           Colonial Grand at Hunter's  Creek--CRLP  completed  construction on a
496-unit  development  located in Orlando,  Florida.  CRLP acquired the land (36
acres) at a cost of $4.0 million.  The new apartment  community offers a variety
of  amenities,  including a swimming  pool and spa, an exercise  room,  enclosed
garages,  tennis courts,  and a car wash. Project  development costs,  including
land acquisition  costs,  totaled $33.4 million and were funded through advances
on CRLP's line of credit.  CRLP completed  construction in the second quarter of
1998.

           Colonial  Grand  at  Wesleyan  I--CRLP  completed  construction  on a
240-unit  development  of Colonial Grand at Wesleyan  located in Macon,  Georgia
during 1998.  Project  development  costs,  including  land  acquisition  costs,
totaled $13.5 million and were funded through advances on CRLP's line of credit.
CRLP completed construction in the first quarter of 1998.

Continuing Multifamily Expansion and Development Activity

           Colonial Grand at Inverness Lakes II--CRLP continued  construction on
a 132-unit  expansion of Colonial  Grand at Inverness  Lakes  located in Mobile,
Alabama during 1998.  Project  development  costs,  including  land  acquisition
costs, are expected to total $8.9 million and will be funded through advances on
CRLP's  line of credit.  CRLP  expects  to  complete  construction  in the first
quarter of 1999.

           Colonial  Grand at Edgewater  II--CRLP  continued  construction  on a
192-unit expansion of Colonial Grand at Edgewater in Huntsville,  Alabama during
1998. Project development costs,  including land acquisition costs, are expected
to total  $12.6  million and will be funded  through  advances on CRLP's line of
credit. CRLP expects to complete construction in the first quarter of 1999.

           Colonial  Grand at Wesleyan  II--CRLP  continued  construction  on an
88-unit expansion of Colonial Grand at Wesleyan located in Macon, Georgia during
1998. This expansion phase offers the same amenities as the existing  community.
Project  development  costs,  including land acquisition  costs, are expected to
total $6.2 million and will be funded through advances on CRLP's line of credit.
CRLP expects to complete construction in the second quarter of 1999.

           Colonial  Village at Citrus  Park--CRLP  continued  construction on a
176-unit  development  located in Tampa,  Florida during 1998. The new apartment
community will offer a variety of amenities,  including a swimming pool, fitness
center,  resident business center,  garages,  covered parking and a gated entry.
Project  development  costs,  including land acquisition  costs, are expected to
total  $12.3  million  and will be funded  through  advances  on CRLP's  line of
credit. CRLP expects to complete construction in the second quarter of 1999.

           Colonial Grand at Lakewood  Ranch--CRLP  continued  construction on a
288-unit  development  located  in  Sarasota,   Florida  during  1998.  The  new
apartments  will feature  numerous  luxuries that include crown  molding,  tiled
floors, chair railings,  intrusion alarms, fireplaces and screened patios on all
first floor units.  Amenities  will  include a swimming  pool,  fitness  center,
tennis  courts and a gated entry.  Project  development  costs,  including  land
acquisition  costs,  are  expected  to total  $20.3  million  and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the second quarter of 1999.



<PAGE>
New Multifamily Expansion and Development Activity

           Colonial Village at Ashley  Plantation--CRLP  began construction on a
214-unit expansion of Colonial Village at Ashley Plantation located in Bluffton,
South Carolina  during the second quarter of 1998.  Project  development  costs,
including land  acquisition  costs, are expected to total $13.8 million and will
be funded  through  advances on CRLP's line of credit.  CRLP expects to complete
construction in the fourth quarter of 1999.

           Colonial  Grand  at  Liberty  Park--  CRLP  began  construction  on a
300-unit development located in Birmingham,  Alabama during the third quarter of
1998.  The new  apartments  will feature  numerous  luxuries  that include crown
molding, tiled floors, chair railings, intrusion alarms, fireplaces and screened
patios on all first floor units. Amenities will include a swimming pool, fitness
center,  tennis courts and a gated entry.  Project development costs,  including
land  acquisition  costs, are expected to total $26.2 million and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the second quarter of 2000.

           Colonial  Village at Heather  Glen--  CRLP  began  construction  on a
448-unit  development  located in Orlando,  Florida  during the third quarter of
1998.  The new  apartments  will  offer a  variety  of  amenities,  including  a
clubhouse,  car-care center, fitness center with a child play area, two swimming
pools,  tennis courts, and a picnic area. Project  development costs,  including
land  acquisition  costs, are expected to total $31.2 million and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the second quarter of 2000.

           Colonial Grand at Cypress  Crossing--  CRLP began  construction  on a
250-unit  development  located in Orlando,  Florida  during the third quarter of
1998. The new apartments  will feature  numerous  luxuries  including a security
system,  automated  climate control,  highest-speed  Internet  access,  and home
theatre pre-wiring. Project development costs, including land acquisition costs,
are  expected to total  $20.0  million  and will be funded  through  advances on
CRLP's  line of credit.  CRLP  expects  to  complete  construction  in the first
quarter of 1999.

           Colonial  Grand at Madison--  CRLP began  construction  on a 336-unit
development  located in Huntsville,  Alabama.  The new  apartments  will offer a
variety of  amenities,  including a swimming  pool and spa,  an  exercise  room,
tennis  courts,  and a car  wash.  Project  development  costs,  including  land
acquisition  costs,  are  expected  to total  $23.0  million  and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the first quarter of 2000.

           Colonial Grand at Promenade--  CRLP began  construction on a 384-unit
development  located in Montgomery,  Alabama.  The new  apartments  will offer a
variety of amenities,  including a swimming pool, an exercise room, a clubhouse,
tennis courts,  and a gated entry.  Project  development  costs,  including land
acquisition  costs,  are  expected  to total  $27.9  million  and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the second quarter of 2000.

           Colonial Grand at Ridgeland--  CRLP began  construction on a 170-unit
development  located in Jackson,  Mississippi.  The new apartments  will offer a
variety of amenities,  including a fitness center,  swimming pool, garages,  and
tennis courts.  Project development costs, including land acquisition costs, are
expected to total $12.4  million and will be funded  through  advances on CRLP's
line of credit.  CRLP expects to complete  construction  in the first quarter of
2000.



<PAGE>
Retail Property Acquisitions and Mergers

           Orlando  Fashion  Square--On  May 29,  1998,  CRLP  acquired  Orlando
Fashion  Square,  a 1.1 million  square foot  regional mall  (including  361,000
square feet of  tenant-owned  space) in Orlando,  Florida,  for a total purchase
price of $104 million.  The mall anchors include Burdine's,  Sears,  Gayfers, JC
Penney and General  Cinemas.  The entire  purchase  price was funded  through an
advance on CRLP's unsecured line of credit.

          Shoppes at Mansell--On July 1, 1998, CRLP completed the final phase of
its merger with certain  affiliates of Johnson  Development  Company.  The final
phase included the Shoppes at Mansell,  a 21,000 square foot community  shopping
center. The Shoppes at Mansell was developed in 1997 and was 95% occupied at the
time of the merger.  The merger of Shoppes at Mansell,  valued at $3.7  million,
was funded  through the issuance of 76,809 limited  partnership  units valued at
$2.3 million, and an advance on CRLP's unsecured line of credit.

           Bel Air Mall--On December 29, 1998, CRLP acquired Bel Air Mall, a 1.4
million square foot regional mall in Mobile, Alabama, for a total purchase price
of $89.1  million.  The mall anchors  include  Parisian,  Dillard's,  Sears,  JC
Penney,  and Target. The purchase price was funded through the proceeds received
in connection with the formation of the Orlando Fashion Square Joint Venture and
an advance on CRLP's unsecured line of credit.

Retail Development Activity

           Colonial Promenade Trussville--During the third quarter of 1998, CRLP
began the  development  of a  386,000  square  foot  retail  shopping  center in
Birmingham,  Alabama.  The  shopping  center  development  will be anchored by a
Wal-Mart  Supercenter,  Regal Cinemas,  Marshall's Department Store, and Goody's
Family Clothing. Project expansion costs are expected to total $31.0 million and
will be funded  through  advances  on CRLP's  line of  credit.  CRLP  expects to
complete the development during the first quarter of 2000.

Office Property Acquisitions

            Perimeter   Corporate   Park--On  January  1,  1998,  CRLP  acquired
 Perimeter  Corporate  Park,  an  office  park  comprised  of  two  multi-tenant
 buildings in Huntsville, Alabama totaling 233,000 square feet of leasable area.
 Major  tenants  include   Mevatec,   Schafer   Corporation,   Computer  Systems
 Technology,  EER Systems Corporation,  and Silicon Graphics. The purchase price
 of $19.5  million was funded by the  assumption  of $5.7 million of debt and an
 advance on CRLP's unsecured line of credit.

           Independence   Plaza--Also   on  January  1,  1998,   CRLP   acquired
Independence  Plaza,  a 106,000  square  foot  office  building  in  Birmingham,
Alabama,  for a purchase price of $7.5 million.  Major tenants  include  AmSouth
Bank, the Cooney, Rikard & Curtin insurance firm and Wall Street Deli (executive
offices).  The entire  purchase  price was  funded  through an advance on CRLP's
unsecured line of credit.

          Mansell  Overlook 200--On July 1, 1998, CRLP completed the final phase
of its merger with certain affiliates of Johnson Development  Company. The final
phase included  Mansell  Overlook 200, a six-story  office  building  containing
163,000 square feet of space. Mansell Overlook 200 was developed in 1997 and was
95% occupied at the time of the merger. This part of the merger, valued at $27.7
million, was funded through the issuance of 396,365 limited partnership units in
Colonial Realty Limited  Partnership valued at $11.7 million,  and an advance on
CRLP's unsecured line of credit.

           Shades Brook  Building--On  July 13, 1998,  CRLP  acquired the Shades
Brook Building,  a three-story office building  containing 35,000 square feet of
space in  Birmingham,  Alabama.  Shades Brook was acquired for a total  purchase
price of $3.1 million, which was financed through the issuance of 28,492 limited
partnership units in Colonial Realty Limited Partnership valued at $871,000, and
an advance on CRLP's  unsecured  line of credit.  Shades Brook was built in 1979
and was 93% occupied at the time of acquisition.

           Concourse  Center--On July 23, 1998, CRLP acquired  Concourse Center,
 an office park  comprised  of four  multi-tenant  buildings  in Tampa,  Florida
 totaling  290,000  square feet of leasable  area.  The purchase  price of $30.1
 million was  financed  through an advance on CRLP's  unsecured  line of credit.
 Concourse  Center was built  between  1981 and 1985 and was 99% occupied at the
 time of acquisition.

Office Property Development Activity

           1800 International  Park--In August 1998, CRLP began development of a
 six story multi-tenant  office building in Birmingham,  Alabama with a total of
 149,457 square feet of leasable area. Project development costs are expected to
 total $16.6  million and will be funded  through  advances on CRLP's  unsecured
 line of credit. CRLP expects to complete  construction in the fourth quarter of
 1999.

           Colonial  Center at Research  Park--Also  in August 1998,  CRLP began
 development  of two office  buildings  in  Huntsville,  Alabama with a total of
 133,368 square feet of leasable area.  Colonial  Center features Class A office
 space with first-class  amenities.  Project  development  costs are expected to
 total $13.0  million and will be funded  through  advances on CRLP's  unsecured
 line of credit. CRLP expects to complete  construction in the fourth quarter of
 1999.

Financing Activity

           CRLP  funded a large  portion of its  acquisitions  and  developments
through the issuance of debt securities and through cash  contributions from the
Company through the issuance of its common shares.  During 1998, the Company and
CRLP completed the following equity and debt transactions:

                             Common Share Offerings
                                                        (in thousands)
                                              --------------------------------
                       Number of    Price Per     Gross    Offering        Net
Date ...............              Common Share Proceeds     Costs      Proceeds
--------------------   ---------   -------   ---------   ---------    ---------
February ...........     375,540   $    30.00 $  11,266   $     627   $  10,639
March ..............     806,452   $    31.00 $  25,000   $   1,389   $  23,611
March ..............     381,046   $    31.00 $  11,182   $     656   $  11,156
April ..............   3,046,400   $    30.12 $  91,773   $   4,973   $  86,800


                                  Debt Offering
                                                         Gross
                       Type of                          Proceeds
Date                    Note       Maturity    Rate  (in thousands)
--------------        --------   ----------   ----    --------
July                   Senior     July, 2007   7.00%    $175,000


On July 10, 1998, CRLP increased the borrowing capacity under its unsecured line
of credit from $200 million to $250 million. The credit facility,  which is used
by CRLP primarily to finance additional property investments,  bears interest at
a rate  ranging  between 80 and 135 basis points above LIBOR and is renewable in
July 2000. The line of credit agreement  includes a competitive bid feature that
will  allow CRLP to  convert  up to $125  million  under the line of credit to a
fixed rate, for a fixed term not to exceed 90 days. As of December 31, 1998, the
balance outstanding on CRLP's line of credit was $174.5 million.

<PAGE>
Business Strategy

           The general business  strategy of the Company and CRLP is to generate
stable and increasing  cash flow and portfolio value for its  shareholders.  The
Company  and  CRLP  (and  its   predecessor)   have  implemented  this  strategy
principally  by (i)  realizing  growth in income from its existing  portfolio of
properties,  (ii) developing,  expanding,  and selectively  acquiring additional
multifamily,  retail,  and office  properties in growth  markets  located in the
Sunbelt  region of the United  States,  where CRLP has  first-hand  knowledge of
growth  patterns  and  local  economic   conditions,   (iii)  managing  its  own
properties,  which has  enabled  it to better  control  operating  expenses  and
establish  long-term  relationships  with its retail and  office  tenants,  (iv)
maintaining the Company's  third-party property management  business,  which has
increased cash flow and established  additional  relationships with tenants, and
(v) employing a comprehensive capital maintenance program to maintain properties
in first-class  condition.  CRLP's business  strategy and the  implementation of
that strategy are determined by CRLP's  partners and may be changed from time to
time.

Financing Strategy

           CRLP's  strategy is to maintain  coverage  ratios in order to sustain
its investment grade status.  CRLP's total market  capitalization as of December
31, 1998, was $2.0 billion, and its ratio of debt to total market capitalization
was 45.1%. At December 31, 1998,  CRLP's total debt included  fixed-rate debt of
$681.2  million,  or 74.9% of  total  debt,  and  floating-rate  debt of  $228.1
million,  or 25.1% of total debt. CRLP has obtained interest rate protection for
$50.0 million of the floating-rate debt.

           CRLP may from time to time reevaluate its borrowing policies in light
of then current economic conditions,  relative costs of debt and equity capital,
market values of properties,  growth and  acquisition  opportunities,  and other
factors.  CRLP may modify its borrowing  policy and may increase or decrease its
ratio of debt to total  market  capitalization.  To the extent that the board of
trustees of CRLP  determines  to seek  additional  capital,  CRLP may raise such
capital through additional equity offerings by the Company, debt financings,  or
retention  of cash  flow  (subject  to  provisions  in the  Code  requiring  the
distribution by a REIT of a certain percentage of taxable income and taking into
account  taxes  that  would be imposed  on  undistributed  taxable  income) or a
combination of these methods.


Property Management

           CRLP is experienced  in the  management  and leasing of  multifamily,
retail,  and office  properties  and believes that the management and leasing of
its own portfolio has helped the Properties  maintain  consistent  income growth
and has resulted in reduced  operating  expenses from the Properties.  This also
allows CRLP to establish  additional  relationships with tenants who may require
additional retail or office space and to identify potential acquisitions.


Operational Structure

           Multifamily Division--The multifamily division of CRLP is responsible
for  all  aspects  of  CRLP's  multifamily   operations,   including  day-to-day
management  and  leasing  of the  49  Multifamily  Properties,  as  well  as the
provision of third-party  management services for apartment communities in which
CRLP does not have an ownership  interest.  The  multifamily  division  utilizes
centralized functions of accounting,  information technology,  due diligence and
administrative   services.   Decisions  for  investments  in  acquisitions   and
developments and for dispositions are also centralized. The multifamily division
has regional offices in Birmingham, Mobile and Montgomery,  Alabama, Orlando and
Tampa, Florida, and Stockbridge, Georgia.

           Retail  Division--CRLP's  retail  division  is  responsible  for  all
aspects of CRLP's retail  operations,  including the provision of management and
leasing  services  for the 40 Retail  Properties,  as well as the  provision  of
third-party  management  services for retail  properties  in which CRLP does not
have an ownership  interest and for brokerage  services in other retail property
transactions.  The retail division utilizes centralized functions of accounting,
information technology, due diligence and administrative services. Decisions for
investments in  acquisitions  and  developments  and for  dispositions  are also
centralized.  The retail division has regional  offices in Birmingham,  Alabama,
Orlando, Florida, Macon, Georgia and Burlington, North Carolina.

           Office  Division--CRLP's  office  division  is  responsible  for  all
aspects of CRLP's  commercial  office  operations,  including  the  provision of
management  and leasing  services for the 17 Office  Properties,  as well as the
provision of third-party management services for office properties in which CRLP
does not have an ownership  interest and for brokerage  services in other office
property  transactions.  The office division utilizes  centralized  functions of
accounting,  information technology,  due diligence and administrative services.
Decisions for investments in acquisitions  and developments and for dispositions
are also  centralized.  The office division has regional  offices in Birmingham,
Alabama and Atlanta, Georgia.


Employees

           CRLP employs  approximately  900 persons,  including on-site property
employees who provide services for the Properties that CRLP owns and/or manages.

Tax Status

           CRLP has no provision  for income  taxes since all taxable  income or
loss or tax credits are passed through to the partners.  The Company has made an
election to be taxed as a REIT under  Sections  856 through 860 of the  Internal
Revenue Code of 1986, as amended (the "Code"),  commencing with its taxable year
ending  December 31, 1993. If the Company  qualifies for taxation as a REIT, the
Company  generally  will not be subject  to Federal  income tax to the extent it
distributes at least 95% of its REIT taxable income to its shareholders. Even if
the Company  qualifies  for  taxation  as a REIT,  the Company may be subject to
certain  state and local taxes on its income and property and to federal  income
and excise taxes on its undistributed income.

Risk Factors

           Set  forth  below are the  risks  that we  believe  are  material  to
investors  who purchase or own our units of limited  partnership  interest.  Our
units are redeemable for cash or, at the election of Colonial  Properties Trust,
on a  one-for-one  basis for Colonial  Properties  Trust's  shares of beneficial
interest.

           Our  performance  and property value are subject to risks  associated
with the real estate industry.  If our assets do not generate income  sufficient
to pay our expenses, service our debt and maintain our properties, we may not be
able to make expected  distributions to our unitholders.  Whether our properties
will  generate  sufficient  revenue  to pay our  expenses  and permit us to make
distributions  to our unitholders  will depend on whether we can attract tenants
at  favorable  rental  rates and  whether we can  adequately  control our costs.
Factors that may adversely  affect our ability to attract tenants or to generate
sufficient revenue include:

o          local  conditions  such as an  oversupply  of  multifamily,  retail
           or office  properties or a reduction in demand for
           multifamily, retail or office properties;
o          the attractiveness of our properties to residents, shoppers and
           tenants; decreases in market rental rates; and
o          our ability to collect rent from our tenants.

           Factors that may adversely affect our operating costs include:

o          the need to pay for adequate  insurance and other operating costs, 
           including real estate taxes,  which could increase over time; and
o          the need to periodically repair, renovate and relet space.

           Our  expenses may remain  constant  even if our  revenues  drop.  The
expenses of owning and  operating a property  are not  necessarily  reduced when
circumstances such as market factors and competition cause a reduction in income
from the property.  As a result,  if revenues drop, we may not be able to reduce
our expenses  accordingly.  Loan payments are an example of a cost that will not
be reduced  simply  because our revenues drop. If a property is mortgaged and we
are unable to meet the  mortgage  payments,  the lender  could  foreclose on the
mortgage and take the property, resulting in a further reduction in revenues.

           We may be unable to renew  leases  or relet  space as leases  expire.
When our tenants decide not to renew their leases upon their expiration,  we may
not be able to relet the space. Even if the tenants do renew or we can relet the
space,  the  terms of  renewal  or  reletting,  including  the cost of  required
renovations, may be less favorable than current lease terms. If we are unable to
promptly  renew the leases or relet the space,  or if the rental rates upon such
renewal or reletting are significantly  lower than expected rates, then our cash
flow and ability to service debt and make distributions to shareholders would be
adversely affected.

           New  acquisitions  may fail to perform as  expected.  Assuming we are
able  to  obtain  capital  on  commercially   reasonable  terms,  we  intend  to
selectively acquire  multifamily,  retail or office properties where we perceive
strategic opportunities  consistent with our strategy. Newly acquired properties
may fail to perform as expected.  We may  underestimate  the costs  necessary to
bring an  acquired  property up to the  standards  we have  established  for its
intended market position.  In addition,  we may not be in a position or have the
opportunity in the future to make suitable  property  acquisitions  on favorable
terms.  See  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations - Liquidity and Capital Resources."

           Competition  for  acquisitions  could result in increased  prices for
properties. We expect other major real estate investors with significant capital
to compete with us for attractive  investment  opportunities.  These competitors
include  publicly  traded REITs,  private  REITs,  investment  banking firms and
private  institutional  investment funds. This competition could increase prices
for multifamily, retail or office properties.

           Our  development  and expansion  activities  subject us to risks.  We
intend to continue  to develop new  properties  and expand  existing  properties
where we believe that  development or expansion is consistent  with our business
strategies. New projects subject us to a number of risks, including risks that:

o          construction delays or cost overruns may increase project costs;
o          permanent debt or equity  financing may not be available on 
           acceptable  terms to finance new  development or expansion projects;
o          we may fail to meet  anticipated  occupancy or rent  levels;  
o          we may fail to secure  required   zoning,   occupancy  and  other 
           governmental   permits  and authorizations; and 
o          changes in applicable zoning and land use laws may require us to 
           abandon projects prior to their completion, resulting in the loss of
           development costs incurred prior to abandonment.

           Because real estate  investments are illiquid,  we may not be able to
sell properties when appropriate.  Real estate  investments  generally cannot be
sold quickly.  We may not be able to vary our portfolio  promptly in response to
economic  or other  conditions.  This  inability  to  respond  to changes in the
performance of our  investments  could  adversely  affect our ability to service
debt and make distributions to our unitholders.

           Scheduled  debt  payments  could   adversely   affect  our  financial
condition.  Our  business  is subject  to risks  normally  associated  with debt
financing. If principal payments due at maturity cannot be refinanced,  extended
or paid with proceeds of other capital transactions, such as new equity capital,
our cash flow will not be sufficient in all years to repay all maturing debt. If
prevailing  interest rates or other factors at the time of refinancing,  such as
the possible  reluctance of lenders to make commercial real estate loans, result
in higher interest rates, increased interest expense would adversely affect cash
flow and our ability to service our debt and make distributions to unitholders.

           Our  obligation  to  comply  with  financial  covenants  in our  debt
agreements could restrict our range of operating activities. Our credit facility
contains  customary  restrictions,  requirements  and other  limitations  on our
ability to incur indebtedness, including:

o          debt to assets ratios;
o          secured debt to total assets ratios;
o          debt service coverage ratios; and
o          minimum ratios of unencumbered assets to unsecured debt.

           The indenture under which our senior unsecured indebtedness is issued
contains  financial and  operating  covenants  including  coverage  ratios.  Our
indenture   also  limits  our  ability  to  (1)  incur   secured  and  unsecured
indebtedness,  (2) sell all or substantially all or our assets and (3) engage in
mergers, consolidations and acquisitions.

           Our degree of leverage  could limit our ability to obtain  additional
financing.  Our "debt to market  capitalization"  ratio,  which we  calculate as
total  debt  as a  percentage  of  total  debt  plus  the  market  value  of our
outstanding units and the outstanding shares of beneficial  interest of Colonial
Properties Trust, was approximately 45.1% as of December 31, 1998.  Increases in
our leverage could adversely affect our ability to obtain  additional  financing
in  the  future  for  (1)  working  capital,  (2)  capital   expenditures,   (3)
acquisitions,  (4) development or (4) other general corporate purposes,  and may
make us more vulnerable to a downturn in business or the economy generally.

           Rising interest rates could adversely affect our cash flow.  Advances
under our credit  facility bear  interest at a variable rate ranging  between 80
and 135 basis points above LIBOR. We may borrow  additional  money with variable
interest rates in the future, and may enter into other transactions to limit our
exposure to rising interest rates as appropriate  and cost effective.  Increases
in interest  rates,  or the loss of the  benefits of hedging  agreements,  would
increase our interest  expense,  which would adversely  affect cash flow and our
ability to service our debt and make distributions to unitholders.

           Environmental problems are possible and can be costly. Federal, state
and local laws and regulations relating to the protection of the environment may
require a current or previous  owner or operator of real property to investigate
and clean up hazardous or toxic substances or petroleum  product releases at the
property,  without  regard to whether the owner or  operator  knew or caused the
presence of the contaminants.  If unidentified  environmental  problems arise at
one  of  our  properties,  we  may  have  to  make  substantial  payments  to  a
governmental  entity or third parties for property damage and for  investigation
and clean-up costs.  Even if more that one person may have been  responsible for
the  contamination,  we may be held  responsible  for all of the clean-up  costs
incurred. Our liability under environmental laws could adversely affect our cash
flow and our ability to make distributions to our unitholders.

           At one of our properties,  the Gadsden Mall in Gadsden, Alabama, four
underground  storage tanks were removed in 1989. In connection  with the removal
of  these  gasoline  storage  tanks,   associated  petroleum  contamination  was
discovered in the soil and groundwater.  We are currently working with the state
regulatory  agency to remediate the  contamination in accordance with applicable
requirements.  Because the tanks were registered with the Alabama  Department of
Environmental  Management  and the facility was in compliance  with  regulations
prior to the incident,  we have been  reimbursed  under the Alabama  Underground
Storage Tank Trust Fund for the costs  incurred to date in  connection  with the
ongoing cleanup, and expect to be reimbursed for the remaining costs as well. We
have  received a "no  further  action"  letter from the  Alabama  Department  of
Environmental Management.

           On December  29, 1998,  we acquired Bel Air Mall in Mobile,  Alabama.
During the course of our  environmental  due  diligence,  we identified  several
different areas of the property in which contamination is present.  One of those
areas involves drycleaner solvent;  the others involve petroleum  contamination.
The  Alabama   Department  of   Environmental   Management  is  overseeing   the
investigation and cleanup of the drycleaner contamination. It is possible that a
claim  could  be  asserted  against  us,  as  owner  of the  property,  for  the
investigation and remediation of the contamination. Pursuant to the purchase and
sale  agreement,  the  former  owner of the  property  purchased  a $10  million
insurance policy and established  escrow accounts  totaling  $1,275,000 to cover
the costs associated with investigating and remediating the contaminated  areas.
In addition, subject to limitations,  the seller will be performing all required
remediation of the drycleaner contamination.

           Some of our general partner's trustees and officers have conflicts of
interest and could exercise influence in a manner inconsistent with unitholders'
best  interests.  As  a  result  of  their  substantial  ownership  of  Colonial
Properties Trust's common shares and our units, Messrs. Thomas Lowder,  Colonial
Properties Trust's Chairman of the Board, Chief Executive Officer and President,
and James Lowder,  Harold Ripps,  Herbert Meisler and William  Johnson,  each of
whom is a trustee of Colonial  Properties  Trust,  might seek to exert influence
over our decisions as to sales or refinancings of particular  properties we own.
Any such exercise of influence might produce decisions which are not in the best
interest of all of our unitholders.

           The Lowder family, which includes Thomas, James, Robert and Catherine
Lowder and their  affiliates,  holds  interests in companies that have performed
construction management,  insurance brokerage and other services with respect to
our  properties.  These  companies  may perform  similar  services for us in the
future.  As a result,  the Lowder family may realize benefits from  transactions
between such  companies  and us that are not realized by other  unitholders.  In
addition,  Thomas Lowder and his brother,  James Lowder, as trustees of Colonial
Properties  Trust,  may be in a position to  influence  us to do  business  with
companies in which the Lowder family has a financial interest.  Our policies may
not  be  successful  in  eliminating  the  influence  of  conflicts.   Moreover,
transactions with companies  controlled by the Lowder family, if any, may not be
on terms as  favorable to us as we could  obtain in an  arms-length  transaction
with a third party.

           We do not control our management,  leasing and brokerage  businesses.
To facilitate maintenance of Colonial Properties Trust's REIT qualification,  we
have a  "non-controlled  subsidiary"  which  conducts  management,  leasing  and
brokerage  business for properties we do not wholly own. While we own 99% of the
economic  interest in the noncontrolled  subsidiary,  99% of its voting stock is
owned by members of the Lowder family. We therefore do not control the timing or
amount of  distributions  or the management  and operation of the  noncontrolled
subsidiary. We also lack the ability to set the business policies and operations
of the noncontrolled subsidiary.

           We are  subject to risks  associated  with the  property  management,
leasing and brokerage  businesses.  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 brokerage businesses of our "non-controlled subsidiary,"
including risks that:

o     management contracts or service agreements with third-party owners will be
      lost to competitors; 
o     contracts will not be renewed upon expiration or will not
      be renewed on terms  consistent with current terms;  and
o     leasing and brokerage activity generally may decline.

           Each of these developments could adversely affect our ability to make
debt service payments or expected distributions to unitholders.

           We are  dependent  on external  sources of  capital.  To qualify as a
REIT, Colonial Properties Trust must distribute to its shareholders each year at
least  95% of its net  taxable  income,  excluding  any net  capital  gain.  Our
partnership  agreement generally requires us to distribute  substantially all of
our net cash revenues each quarter and to make reasonable  efforts to distribute
to Colonial  Properties  Trust  enough cash for it to meet the 95%  distribution
requirement.  Because of these distribution requirements,  it is not likely that
we will be able to fund all future capital needs from income from operations. We
therefore will have to rely on  third-party  sources of capital which may or may
not be available on favorable terms or at all. Our access to third-party sources
of capital depends on a number of things,  including the market's  perception of
our growth potential and our current and potential  future  earnings.  Moreover,
additional equity offerings may result in substantial  dilution,  and additional
debt financing may substantially increase our leverage.

           We intend to qualify as a partnership,  but cannot  guarantee that we
will  qualify.  We intend to qualify as a  partnership  for  federal  income tax
purposes.  However,  we will be treated as a corporation  for federal income tax
purposes if we are a "publicly traded  partnership,"  unless at least 90% of our
income it qualifying income as defined in the tax code. The income  requirements
applicable to REITs and the definition of qualifying income for purposes of this
90% test are similar in most, but not all,  respects.  Qualifying income for the
90% test generally  includes  passive  income,  such as specified  types of real
property rents,  dividends and interest.  We cannot  guarantee that we will meet
this qualifying  income test. If we were to be taxed as a corporation,  we would
incur  substantial  tax  liabilities,  Colonial  Properties  Trust would fail to
qualify as a REIT for tax  purposes  and  Colonial  Properties  Trust's  and our
ability to raise additional capital could be impaired.

           Colonial Properties Trust intends to qualify as a REIT, but we cannot
guarantee that it will qualify.  We believe that Colonial  Properties  Trust has
qualified for taxation as a REIT for federal income tax purposes commencing with
its taxable year ended December 31, 1993. If Colonial Properties Trust qualifies
as a REIT, it generally  will not be subject to federal income tax on its income
that it  distributes to its  shareholders.  Colonial  Properties  Trust plans to
continue to meet the requirements for taxation as a REIT, but it may not qualify
as a REIT. Many of the REIT  requirements are highly technical and complex.  The
determination  that Colonial  Properties Trust is a REIT requires an analysis of
various  factual  matters and  circumstances  that may not be totally within its
control.  For  example,  to qualify as a REIT,  at least 95% of our gross income
must come from certain sources that are itemized in the REIT tax laws.  Colonial
Properties  Trust also is required to distribute to shareholders at least 95% of
its REIT  taxable  income,  excluding  capital  gains.  The fact  that  Colonial
Properties  Trust holds its assets through  Colonial Realty further  complicates
the  application  of the REIT  requirements.  Even a  technical  or  inadvertent
mistake could jeopardize Colonial  Properties Trust's REIT status.  Furthermore,
Congress and the IRS might make changes to the tax laws and regulations, and the
courts might issue new rulings that make it more difficult,  or impossible,  for
Colonial  Properties  Trust to remain  qualified  as a REIT.  We do not believe,
however,  that any pending or proposed tax law changes would jeopardize its REIT
status.

           If Colonial  Properties  Trust failed to qualify as a REIT,  Colonial
Properties  Trust  would be subject to federal  income tax at regular  corporate
rates.   Also,  unless  the  IRS  granted  us  relief  under  certain  statutory
provisions,  Colonial  Properties Trust would remain  disqualified as a REIT for
the four years  following  the year  Colonial  Properties  Trust first failed to
qualify. If Colonial Properties Trust failed to qualify as a REIT, it would have
to pay  significant  income taxes and would  therefore have less money available
for investments or for  distributions to shareholders.  This would likely have a
significant adverse affect on the value of our securities. In addition, Colonial
Properties  Trust  would no  longer be  required  to make any  distributions  to
shareholders,   but  we  would  still  be  required  to   distribute   quarterly
substantially all of our net cash revenues to our unitholders.

           Proposed legislation, if enacted, could require us to restructure our
ownership of Colonial  Properties  Services,  Inc. The Clinton  Administration's
fiscal year 2000 budget  proposal could require us to restructure  our ownership
of Colonial Properties Services, Inc. The budget proposal, announced February 1,
1999,  includes a proposal that would  prohibit a REIT from owning more than 10%
of the vote or value of the outstanding  securities of any  corporation,  except
for a qualified REIT  subsidiary or another REIT.  Currently,  a REIT cannot own
more  than 10% of the  outstanding  securities  of any one  issuer.  A REIT can,
however,  own more than 10% of the value of the stock of a corporation,  so long
as not  more  than  25% of the  REIT's  total  assets  are  comprised  stock  of
corporations,  except for qualified REIT  subsidiaries or other REIT's,  and the
stock of any single  corporation  does not account for more than 5% of the value
of the REIT's total  assets.  The proposal  also contains an exception to the 5%
and 10% asset tests that would allow a REIT to have "taxable REIT subsidiaries,"
including both  "qualified  independent  contractor  subsidiaries,"  which could
perform  noncustomary  and other currently  prohibited  services for tenants and
other customers,  and "qualified business  subsidiaries,"  which could undertake
third-party  management and development  activities as well as other non-related
real estate activities.  Under the proposal,  no more than 15% of a REIT's total
assets  could  consist of  taxable  REIT  subsidiaries  and no more than 5% of a
REIT's  total  assets  could   consist  of  qualified   independent   contractor
subsidiaries.  Under the budget proposal, a taxable REIT subsidiary would not be
entitled to deduct any  interest on debt funded  directly or  indirectly  by the
REIT.  This proposal  would be effective  after the date of enactment and a REIT
would be allowed to combine and convert  existing  corporate  subsidiaries  into
taxable REIT subsidiaries  tax-free prior to a certain date. A transition period
would allow for  conversion of existing  corporate  subsidiaries  before the 10%
vote or value test would  become  effective.  For  Colonial  Properties  Trust's
taxable years after the effective  date of the proposal and after any applicable
transition period, the 10% vote or value test would apply to Colonial Properties
Trust's  ownership  in  Colonial  Properties  Services,   Inc.  unless  Colonial
Properties  Services,  Inc. is converted into a taxable REIT  subsidiary.  It is
presently uncertain whether any proposal regarding REIT subsidiaries,  including
the budget proposal,  will be enacted or, if enacted, what the terms,  including
the effective date, of such proposal will be.

           Our operations could be adversely  affected by the year 2000 problem.
Our  revenues  may  be  adversely  affected  if  the  year  2000  problem  poses
significant  problems for any of our tenants  which  prevent them from paying us
rent as it comes  due.  The year 2000  problem  could also  adversely  affect us
should any of our lenders, manufacturers,  vendors or suppliers cease to conduct
business,  as we would be forced to contract with  alternate  providers at rates
which  might  not be  favorable  to us.  Moreover,  our  plans do not  address a
"doomsday" scenario which would require a contingency process for restoration of
our existing  systems and  components in the event of a complete  failure due to
the year 2000 problem.

Item 2.              Properties.


General

           CRLP  acquired  36  properties  in  connection   with  the  Formation
Transactions,  and  acquired  or  developed  19  additional  properties  and  an
additional phase of an existing  property in 1994, six additional  properties in
1995, 11 additional properties in 1996, 25 additional properties in 1997, and 14
additional  properties in 1998.  Since the  Company's  initial  public  offering
("IPO"),  CRLP has developed eleven  additional  Multifamily  Properties and has
disposed of eight properties, all through tax-deferred, like-kind exchanges. The
106 Properties  owned by CRLP at December 31, 1998,  consisted of 49 Multifamily
Properties, 40 Retail Properties, and 17 Office Properties, as described in more
detail below.

                              Summary of Properties

<TABLE>
<CAPTION>
                                              Total 1998     Percent of
                                   Units/      Property      Total 1998    Percentage
Number of                           GLA/       Revenue (2)    Property      Occupancy at
Type of Property   Properties      NRA (1)   (in thousands)  Revenue (2)  Dec. 31, 1998 (3)
----------------   ----------   -----------   -----------    ----------  ----------------

<S>                        <C>       <C>      <C>               <C>             <C>  
Multifamily                49        15,381   $   104,462       40.7%           93.5%
Retail                     40    13,478,000       117,572       45.9%           91.9%
Office                     17     2,707,000        34,409       13.4%           92.2%
                          ---                  -----------    ----------  
Total                     106                  $  256,443      100.0%
                          ===                  ===========    ==========  
</TABLE>

(1)Units (in this table only) refers to multifamily  apartment units, GLA refers
   to gross leasable area of retail space and NRA refers to net rentable area of
   office space. Information is presented as of December 31, 1998.
(2)Includes  CRLP's  proportionate  share  of  revenue  from  those  Office  and
   RetailProperties  accounted  for under the equity  method,  and the Company's
   share of the properties disposed of in 1998.
(3)Excludes 1,842 units of expansion phases of seven Multifamily Properties that
   had not achieved stabilized occupancy as of December 31, 1998.


Multifamily Properties

           The 49  Multifamily  Properties  owned by CRLP at December  31, 1998,
contain a total of 15,381 garden-style  apartments and range in size from 120 to
1,080 apartment units.  Fourteen of the Multifamily  Properties were acquired by
CRLP in  connection  with the  Formation  Transactions,  13  Properties  and one
additional  phase of an existing  Property  were  acquired  during  1994,  seven
Properties were acquired during 1996, five Properties were acquired during 1997,
and four  Properties  were  acquired  in 1998.  Also,  since  the IPO,  CRLP has
developed  eleven  additional   Multifamily   Properties.   Twenty   Multifamily
Properties (containing a total of 7,293 apartment units) are located in Alabama,
16  Multifamily  Properties  (containing a total of 5,014  apartment  units) are
located in Florida,  nine  Multifamily  Properties  (containing a total of 1,874
apartments units) are located in Georgia, one Multifamily Property (containing a
total of 328  apartment  units) are  located  in  Mississippi,  two  Multifamily
Properties  (containing  a total of 550  apartment  units) sre  located in South
Carolina,  and one  Multifamily  Property  (containing  322 apartment  units) is
located in Texas. Each of the Multifamily Properties is established in its local
market and  provides  residents  with  numerous  amenities,  which may include a
swimming pool, exercise room, jacuzzi, clubhouse, laundry room, tennis court(s),
and/or a playground. All of the Multifamily Properties are managed by CRLP.

           The  following  table  sets  forth  certain  additional   information
relating to the Multifamily Properties as of and for the year ended December 31,
1998.



<PAGE>

                             Multifamily Properties
<TABLE>         
<CAPTION>
                                                                                                       Total
                                                                                          Average   Multifamily     Percent of
                                           Year        Number     Approximate              Rental    Property       Total 1998
 Multifamily                             Completed       of       Rentable Area  Percent    Rate    Revenue for      Property
 Property (1)               Location        (2)       Units (3)   (Square Feet)  Occupied Per Unit     1998          Revenue (4)
-----------------------   ------------   ----------  ----------  ------------   -------  -----------------------    ----------

 Alabama:
<S>                        <C>           <C>               <C>       <C>         <C>      <C>         <C>                <C> 
 CV at Ashford Place       Mobile        1983              168       139,000     96.4%    $ 514       $ 995,008          0.4%
 CV at Rocky Ridge         Birmingham    1984              226       259,000     92.9%      612       1,504,737          0.6%
 Colony Park               Mobile        1975              201       130,000     86.1%      414         882,172          0.3%
 CG at Galleria Woods      Birmingham    1994              244       261,000     97.0%      665       1,685,198          0.7%
 CG at Mountain Brook      Birmingham    1987/91           392       393,000     96.7%      688       2,805,188          1.1%
 CV at Trussville          Birmingham    1996/97           376       410,000     97.1%      685       2,662,530          1.0%
 CV at Cahaba Heights      Birmingham    1992              125       131,000    100.0%      695         957,168          0.4%
 CG at Edgewater           Huntsville    1990              500       423,000        (7)     693       2,542,056          1.0%
 CV at Inverness           Birmingham    1986/87/90        586       395,000     98.6%      595       3,545,719          1.4%
 CV at Huntleigh Woods     Mobile        1978              233       199,000     94.4%      457       1,222,101          0.5%
 CG/CV at Inverness Lakes  Mobile        1983/96           482       477,000        (7)     630       2,932,495          1.1%
 CV at McGehee Place       Montgomery    1986/95           468       404,000     90.1%      608       2,679,894          1.0%
 CV at Monte D'Oro         Birmingham    1977              200       296,000     98.5%      659       1,547,956          0.6%
 Patio                     Auburn        1966/83/84        240       179,000     87.9%      424       1,057,375          0.4%
 CV at Hillcrest           Mobile        1981              104       114,000     97.0%      610         684,919          0.3%
 CG at Galleria            Birmingham    1986/96         1,080     1,195,000     93.9%      617       7,487,917          2.9%
 CG at Research Park       Huntsville    1987/94           736       809,000     75.3%      655       4,585,282          1.8%
 CG at Riverchase          Birmingham    1984/91           468       746,000     95.5%      721       3,794,680          1.5%
 Ski Lodge Tuscaloosa      Tuscaloosa    1976/92           304       273,000     94.4%      415       1,498,359          0.6%
 CV at Hillwood            Montgomery    1984              160       151,000     95.0%      534       1,035,246          0.4%
                                                     ----------  ------------   -------  -------   -------------    ----------
     Subtotal - Alabama (20 Properties)                  7,293     7,384,000     92.4%      613      46,106,000         18.0%
                                                     ----------  ------------   -------  -------   -------------    ----------
 Florida:
 CG at Kirkman             Orlando       1991              370       337,000     93.0%      771       3,363,400          1.3%
 CG at Carrollwood         Tampa         1966              244       286,000     95.5%      827       2,239,291          0.9%
 CG at Bayshore            Bradenton     1997              376       369,000        (7)     720       2,558,815          1.0%
 CG at Heathrow            Orlando       1997              312       370,000    100.0%      833       3,197,016          1.2%
 CG at Hunter's Creek      Orlando       1997              496       624,000     95.4%      868       5,010,829          2.0%
 CG at Palma Sola          Bradenton     1992              340       292,000     92.0%      699       2,409,968          0.9%
 CG at Palm Aire           Sarasota      1991              248       252,000     97.2%      806       2,363,955          0.9%
 CG at Gainesville         Gainesville   1989/93/94        560       489,000     98.8%      757       4,688,565          1.8%
 CG at Ponte Vedra         Jacksonville  1988              240       212,000     92.8%      680       1,717,797          0.7%
 CV at Oakleigh            Pensacola     1997              176       186,000     94.0%      738       1,512,500          0.6%
 CV at River Hills         Tampa         1991/97           776       465,000     92.3%      663       4,350,077          1.7%
 CV at Lake Mary           Orlando       1991/95           504       431,000     99.0%      645       3,873,508          1.5%
 CV at Cordova             Pensacola     1983              152       116,000     95.0%      492         874,374          0.3%
 CG at Lakewood Ranch      Sarasota      1999               64        64,000        (7)     937          27,955  (6)     0.0%
 CG at Citrus Park         Tampa         1999               16        48,000        (7)     851           5,074  (6)     0.0%
 CG at Cypress Crossing    Orlando       1999              140       183,000        (7)   1,138         314,498  (6)     0.1%
                                                     ----------  ------------   -------  -------   -------------    ----------
     Subtotal - Florida (16 Properties)                  5,014     4,724,000     95.5%      701      38,507,622         14.9%
                                                     ----------  ------------   -------  -------   -------------    ----------
 Georgia:
 CG at Barrington          Macon         1996              176       201,000     96.0%      655       1,204,779          0.5%
 CG at Wesleyan            Macon         1997              264       288,000        (7)     668       1,675,365          0.7%
 CV at North Ingle         Macon         1983              140       133,000     88.6%      562         750,802          0.3%
 CV at White Bluff         Savannah      1986              120       108,000     95.0%      668         857,625          0.3%
 CV at Vernon Marsh        Savannah      1986/87           178       151,000     92.7%      662       1,267,517          0.5%
 CG at Spring Creek        Macon         1992/94           296       328,000     96.3%      622       2,096,104          0.8%
 CV at Stockbridge         Stockbridge   1993/94           240       253,000     97.9%      686       1,881,614          0.7%
 CV at Timothy Woods       Athens        1996              204       211,000     97.6%      737       1,591,704          0.6%
 CV at Walton Way          Augusta       1984              256       254,000     91.5%      561         751,423  (6)     0.3%
                                                     ----------  ------------   -------  -------   -------------    ----------
     Subtotal - Georgia (9 Properties)                   1,874     1,927,000     90.1%      642      12,076,933          4.7%
                                                     ----------  ------------   -------  -------   -------------    ----------
 Mississippi:
 CG at Natchez Trace       Jackson       1995/97           328       343,000     93.0%      636       2,477,790          1.0%
                                                     ----------  ------------   -------  -------   -------------    ----------
     Subtotal - Mississippi (1 Property)                   328       343,000     93.0%      636       2,477,790          1.0%
                                                     ----------  ------------   -------  -------   -------------    ----------
 South Carolina:
 CV at Ashley Plantation   Bluffton      1998              200       205,000     99.0%      824       1,295,982  (6)     0.5%
 CV at Caledon Wood        Greenville    1995/96           350       367,000     82.9%      857       2,433,183          0.9%
                                                     ----------  ------------   -------  -------   -------------    ----------
     Subtotal - South Carolina (2 Properties)              550       572,000     88.8%      845       3,729,165          1.4%
                                                     ----------  ------------   -------  -------   -------------    ----------
 Texas:
 CV at Haverhill           San Antonio   1997              322       327,000     92.0%      923       1,564,509  (6)     0.6%
                                                     ----------  ------------   -------  -------   -------------    ----------
     Subtotal - Texas (1 Property)                         322       327,000     92.0%      923       1,564,509          0.6%
                                                     ----------  ------------   -------  -------   -------------    ----------
      TOTAL (49 Properties)                              15,381    15,277,000     93.5%    $ 642 (5)$ 104,462,019        40.6%
                                                     ==========  ============   =======  =======   =============    ==========
</TABLE>
(footnotes on next page)
<PAGE>
(1)       All  Multifamily  Properties are 100% owned by CRLP with the exception
          of CV at  Haverhill,  which is 79.8% owned by CRLP.  In the listing of
          Multifamily  Property names,  CG has been used as an abbreviation  for
          Colonial Grand and CV as an abbreviation for Colonial Village.
(2)       Year  initially  completed  and,  where  applicable,  year(s) in which
          additional phases were completed at the Property.
(3)       Units (in this table  only)  refers to  multifamily  apartment  units.
          Number of Units includes all apartment units occupied or available for
          occupancy at December 31, 1998.
(4)       Percent of Total 1998  Property  Revenue  represents  the  Multifamily
          Property's   proportionate  share  of  all  revenue  from  CRLP's  106
          Properties.
(5)       Represents weighted average rental rate per unit of the 49 Multifamily
          Properties at December 31, 1998.
(6)       Represents revenues from the date of CRLP's  acquisition/expansion  of
          this Property in 1998 through December 31, 1998.
(7)       Expanded or newly developed property currently undergoing lease-up.

           The following  table sets forth the total number of apartment  units,
percent  leased and average base rental rate per apartment unit as of the end of
each of the last five years for the Multifamily Properties:

 <TABLE>
<CAPTION>
                                             Average Base
                        Number   Percent      Rental Rate
Year-End               of Units Leased (2)      Per Unit
--------------------   ------   ----------    ----------
<S>                    <C>          <C>      <C>       
December 31, 1998      15,381       93.5%    $      642
December 31, 1997      13,759       93.8%    $      631
December 31, 1996      13,617       94.8%    $      579
December 31, 1995      11,239       95.7%    $      552
December 31, 1994      10,972       96.0%    $      531

</TABLE>
(1) Units (in this table only) refers to  multifamily  apartment  units owned at
    year end.
(2) Represents weighted average occupancy of the Multifamily Properties that had
    achieved stabilized occupancy at the end of the respective period.


Retail Properties

           The 40 Retail Properties owned by CRLP at December 31, 1998,  contain
a total of  approximately  13.5 million  square feet  (including  space owned by
anchor tenants).  Twelve of the Retail Properties are located in Alabama, twelve
are located in Florida,  seven are located in Georgia, five are located in North
Carolina, one is located in South Carolina, one is located in Tennessee, and two
Retail Properties are located in Virginia.  The Retail Properties  consist of 15
enclosed  regional  malls,  two  power  centers,  and 23  neighborhood  shopping
centers. Nine of the 40 Retail Properties were originally developed by CRLP, two
were acquired in 1994, six were acquired in 1995, four were acquired in 1996, 16
were  acquired  in 1997,  and three  were  acquired  in 1998.  All of the Retail
Properties are managed by CRLP.

           The following  table sets forth certain  information  relating to the
Retail Properties as of and for the year ended December 31, 1998.



<PAGE>
                                Retail Properties

<TABLE>
                                                                                                         Average
                                                                                                          Base
                                                              Gross                                       Rent
                                                            Leasable                                      Per    Total Retail  % of
                                                  Year        Area        Number               Total     Leased   Property Total1998
 Retail                                         Completed    (Square        Of    Percent   Annualized   Square  Revenue for  Prop.
 Property (1)                       Location       (2)      Feet) (3)     Stores  Leased (3) Base Rent   Foot (4)   1998     Rev.(5)
------------------------------------------------------------------------------------------------------------------------------------
 Alabama:
<S>                                 <C>         <C>          <C>            <C>   <C>    <C>         <C>      <C>              <C> 
 Colonial Mall Decatur              Decatur     1979/89       494,000        55    88.1%  $ 3,464,000 $ 17.48  $ 5,157,527      2.0%
                                                               81,000 (6)
 Brookwood Village                  Birmingham  1973/91       463,000        64    88.2%    3,827,000   13.99    6,303,392      2.5%
                                                              231,000 (6)
 Colonial Mall Gadsden              Gadsden     1974/91       492,000        57    96.6%    2,623,000   17.09    4,881,547      1.9%
 Colonial Mall Auburn/Opelika       Auburn      1973/84/89    399,000        54    89.8%    2,409,000   16.53    4,215,395      1.6%
 Colonial Promenade Montgomery      Montgomery  1990/97       274,000        39    97.8%    2,242,000   12.70    3,080,774      1.2%
                                                              174,000 (6)
 Colonial Shoppes McGehee           Montgomery  1986           55,000        14   100.0%      581,000   12.23      741,873      0.3%
                                                               50,000 (6)
 Colonial Shoppes Bellwood          Montgomery  1988           37,000        15    94.5%      462,000   11.43      538,858      0.2%
                                                               50,000 (6)
 Old Springville Shopping Center    Birmingham  1982           64,000         9    94.0%      170,000    7.75      537,756      0.2%
 Colonial Shoppes Inverness         Birmingham  1984           28,000         5   100.0%      400,000   12.58      509,360      0.2%
 Olde Town Shopping Village         Montgomery  1978/90        39,000        15    89.6%      324,000    9.37      395,500      0.2%
 Bel Air Mall                       Mobile      1966/90/97  1,434,000        92    87.8%    7,394,000   15.11       63,889 (7)  0.0%
 Parkway City Mall                  Huntsville  1975          414,000        44    86.0%    1,423,000   11.35       62,267 (7)  0.0%
------------------------------------------------------------------------------------------------------------------------------------
     Subtotal-Alabama (12 Properties)                       4,779,000       463    90.2%   25,319,000   14.39   26,488,138     10.3%
------------------------------------------------------------------------------------------------------------------------------------
 Florida:
 Colonial Promenade University Park Orlando     1986/89       399,000        41    96.2%    2,961,000   12.56    4,237,886      1.7%
 Colonial Promenade Tuskawilla      Orlando     1990          217,000        28   100.0%    1,084,000   10.27    1,847,793      0.7%
 Colonial Promenade Burnt Store     Punta Gorda 1990          199,000        21    91.6%    1,199,000   10.69    1,529,212      0.6%
 Colonial Promenade Winter Haven    Orlando     1986          197,000        26    92.0%    1,329,000    9.03    1,626,772      0.6%
 Northdale Court                    Tampa       1988          193,000        19    75.1%    1,107,000   10.38    1,941,326      0.8%
                                                               55,000 (6)
 Colonial Promenade Bear Lake       Orlando     1990          125,000        18    70.7%      627,000    8.18    1,737,043      0.7%
 Colonial Shoppes Paddock Park      Ocala       1988           87,000        20    91.6%      658,000   12.82      847,439      0.3%
 Colonial Promenade Bardmoor        St. Petersbu1981          158,000        25    74.0%    1,108,000   15.53    1,810,622      0.7%
 Colonial Promenade Hunter's Creek  Orlando     1993/95       222,000        24   100.0%    1,944,000   15.65    2,622,659      1.0%
 Colonial Promenade Wekiva          Orlando     1990          209,000        21    80.3%    1,824,000   17.82    2,459,186      1.0%
 Colonial Promenade Lakewood        Jacksonville1995          195,000        45    93.2%    1,078,000   12.56    2,391,810      0.9%
 Orlando Fashion Square             Orlando     1973/89/93    711,000       227    94.6%    9,722,000   16.49   10,212,704 (7)  4.0%
                                                              361,000 (6)
------------------------------------------------------------------------------------------------------------------------------------
     Subtotal-Florida (12 Properties)                       3,328,000       515    90.6%   24,641,000   13.76   33,264,452     13.0%
------------------------------------------------------------------------------------------------------------------------------------
 Georgia:
 Macon Mall                         Macon       1975/88/97    757,000       150    92.4%   10,047,000   23.95   17,000,938      6.6%
                                                              682,000 (6)
 Beechwood Center                   Athens      1963/92       336,000        41    98.5%    2,411,000   10.56    3,028,040      1.2%
 Britt David Shopping Center        Columbus    1990          110,000         9   100.0%      711,000   12.85      947,982      0.4%
 Lakeshore Mall                     Gainesville 1984-97       518,000        66    92.8%    3,375,000   17.44    5,636,174      2.2%
 Valdosta Mall                      Valdosta    1982-85       325,000        51    95.1%    2,884,000   16.99    5,625,802      2.2%
                                                               74,000 (6)
 Glynn Place Mall                   Brunswick   1986          285,000        47    84.0%    2,443,000   16.32    3,868,983      1.5%
                                                              226,000 (6)
 Shoppes at Mansell  (8)            Atlanta     1996/97             -         8    92.9%      366,000   18.78      190,369 (7)  0.1%
 Village at Roswell Summit          Atlanta     1988           25,000         9    80.4%      371,000   14.56      399,001      0.2%
------------------------------------------------------------------------------------------------------------------------------------
     Subtotal-Georgia (7 Properties)                        3,338,000       381    92.9%   22,608,000   18.69   36,697,289     14.4%
------------------------------------------------------------------------------------------------------------------------------------
 North Carolina:
 Holly Hill Mall                    Burlington  1969/86/94    422,000        51    95.7%    2,549,000   15.50    5,168,367      2.0%
 Mayberry Mall                      Mount Airy  1968/86       150,000        17    94.6%      713,000   10.64    1,040,238      0.4%
                                                               55,000 (6)
 Quaker Village                     Greensboro  1968/88/97    114,000        33   100.0%    1,078,000   12.38    1,480,977      0.6%
 Yadkin Town Center                 Yadkinville 1971/97        94,000        12   100.0%      636,000    7.71      726,603      0.3%
 Stanly Plaza                       Locust      1987/96        47,000         7   100.0%      250,000    7.33      303,020      0.1%
------------------------------------------------------------------------------------------------------------------------------------
     Subtotal-North Carolina (5 Properties)                   882,000       120    96.8%    5,226,000   12.59    8,719,205      3.4%
------------------------------------------------------------------------------------------------------------------------------------
 South Carolina:
 Briarcliffe Mall                   Myrtle Beach1986          488,000        64    94.5%    2,999,000   19.68    7,603,861      3.0%
------------------------------------------------------------------------------------------------------------------------------------
     Subtotal-South Carolina (1 Property)                     488,000        64    94.5%    2,999,000   19.68    7,603,861      3.0%
------------------------------------------------------------------------------------------------------------------------------------
 Tennessee:
 Rivermont Shopping Center          Chattanooga 1986/97        75,000         9    97.1%      210,000    6.72      491,315      0.2%
------------------------------------------------------------------------------------------------------------------------------------
     Subtotal-Tennessee (1 Property)                           75,000         9    97.1%      210,000    6.72      491,315      0.2%
------------------------------------------------------------------------------------------------------------------------------------
 Virginia:
 Staunton Mall                      Staunton    1969/86/97    422,000        46    93.5%    1,808,000    8.62    3,116,642     1.2%
 Abingdon Towne Centre              Abingdon    1987/96       166,000        19   100.0%    1,024,000   10.03    1,191,174     0.5%
------------------------------------------------------------------------------------------------------------------------------------
     Subtotal-Virginia (2 Properties)                         588,000        65    95.3%    2,832,000    8.92    4,307,816      1.7%
-----------------------------------------------------------===========---====================================================-======
     Total (40 Properties)                                 13,478,000     1,617    91.9% $ 83,835,000 $ 14.48 $ 117,572,076    46.0%
-----------------------------------------------------------===========---===========================================================

</TABLE>
<PAGE>
(footnotes on next page)




(1)   All  Retail  Properties  are 100%  owned by CRLP,  with the  exception  of
      Orlando Fashion Square and Parkway City mall, which are owned 50% by CRLP.
(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 GLA  includes  space owned by anchor  tenants,  but  Percent  Leased
      excludes such space.
(4)   Includes specialty store space only.
(5)   Percent of Total 1998 Property  Revenue  represents the Retail  Property's
      proportionate share of all revenue from the 106 Properties.
(6)   Represents space owned by anchor tenants.
(7)   Represents  revenues from the date of CRLP's  acquisitions of the Property
      in 1998 through December 31, 1998.
(8)   This Property is located within the Mansell  Business Park and is included
      in property total with the Mansell Business Park.


           The following table sets forth the total gross leasable area, percent
leased and average base rent per leased square foot as of the end of each of the
last five years for the Retail Properties:

<TABLE>
<CAPTION>
                         Gross                     Average
                     Leasable Area    Percent   Base Rent Per
    Year-End          (Square Feet)   Leased    Leased Square Foot (2)
--------------------   ----------   ----------    ----------
<S>      <C> <C>       <C>             <C>       <C>       
December 31, 1998      11,105,000      91.9%     $    14.48
December 31, 1997       8,880,000      93.3%     $    14.38
December 31, 1996       4,856,000      93.8%     $    14.66
December 31, 1995       3,758,000      93.1%     $    13.23
December 31, 1994       2,467,000      95.8%     $    12.61

</TABLE>


(1) Excludes 2,373,000 square feet of space owned by anchor tenants. (2) Average
base rent per leased square foot is calculated using specialty
    store year-end base rent figures.

           The following table sets out a schedule of the lease  expirations for
leases in place as of December 31, 1998, for the Retail Properties:
<TABLE>
<CAPTION>
                                            Net Rentable         Annualized        Percent of Total
        Year of          Number of            Area Of           Base Rent of       Annual Base Rent
         Lease         Tenants with        Expiring Leases        Expiring         Represented by
       Expiration      Expiring Leases      (Square Feet) (1)   Leases (1)(2)      Expiring Leases (1)
---------------------------------------------------------------------------------------------------

<S>   <C>                        <C>              <C>              <C>                  <C> 
      1999                       242              632,000          7,196,000            8.0%
      2000                       276            1,352,000         11,308,000           12.5%
      2001                       198              689,000          8,054,000            8.9%
      2002                       216              745,000          9,587,000           10.6%
      2003                       154              639,000          6,874,000            7.6%
      2004                        91            1,065,000          6,135,000            6.8%
      2005                       102              316,000          6,120,000            6.8%
      2006                        93              689,000          7,590,000            8.4%
      2007                       115              706,000          8,407,000            9.3%
      2008                        65              611,000          5,325,000            5.9%
      Thereafter                  66            2,357,000         13,884,000           15.3%
                      ===============     ================     ==============     ===========
                               1,618            9,801,000       $ 90,480,000          100.0%
                      ===============     ================     ==============     ===========

<FN>
(1) Excludes  2,373,000  square  feet of  space  owned  by  anchor  tenants  and
    1,304,000 square feet of space not leased as of December 31, 1998.
(2) Annualized base rent is calculated using base rents as of December 31, 1998.
</FN>
</TABLE>

Office Properties

           The 17 Office Properties owned by CRLP at December 31, 1998,  contain
a total of  approximately  2.7 million  rentable  square  feet.  Fourteen of the
Office  Properties  are  located  in  Alabama  (representing  67% of the  office
portfolio's net rentable  square feet) , one is located in Atlanta,  Georgia and
two  are  located  in  Florida.   The  Office  Properties  range  in  size  from
approximately  30,000  square feet to 536,000  square  feet.  Four of the Office
Properties  were developed by Colonial,  five of the Properties were acquired at
various times  between 1980 and 1990,  four of the  Properties  were acquired in
1997,  and four of the  Properties  were  acquired  in 1998.  All of the  Office
Properties are managed by CRLP.

           The  following  table  sets  forth  certain  additional   information
relating  to the Office  Properties  as of and for the year ended  December  31,
1998.

                                Office Properties
<TABLE>
<CAPTION>
                                                                                  Average
                                                                                   Base
                                                                                   Rent
                                              Rentable                             Per      Total Office  Percent of
                                    Year        Area                   Total      Leased    Property     Total 1998
 Office                            Completed   Square     Percent    Annualized   Square    Revenue for   Property
 Property (1)          Location      (2)        Feet      Leased     Base Rent    Foot2)     1998 (3)     Revenue (4)
--------------------  ----------  ---------  -----------  --------  -----------  --------  ----------    --------
 Alabama:
<S>                    <C>        <C>          <C>         <C>    <C>           <C>     <C>                <C> 
 Interstate Park       Montgomery 1982-85/89    227,000     92.5%  $ 2,816,000   $ 13.71 $ 3,104,381        1.1%
 Riverchase Center     Birmingham 1984-88       306,000     92.7%    2,727,000     10.05   3,150,860        1.1%
 International Park    Birmingham 1987/89        93,000    100.0%    2,588,000     14.24   1,432,125        0.6%
 Colonial Plaza        Birmingham 1982          168,000     34.0%    1,010,000     14.73   2,913,954        1.1%
 Progress Center       Huntsville 1983-91       225,000     91.0%    1,681,000      9.08   2,093,690        0.8%
 Lakeside Office Park  Huntsville 1989/90       121,000    100.0%    1,370,000     12.72   1,624,128        0.6%
 AmSouth Center        Huntsville 1990          157,000     94.2%    2,516,000     17.74   2,973,182        1.2%
 P&S Building          Gadsden    1946/76/91     40,000    100.0%      178,000      4.50     178,020        0.1%
 250 Commerce St       Montgomery 1904/81        35,000    100.0%      366,000     10.50     419,008        0.2%
 Anderson Block Bldg(5)Montgomery 1981/83        34,000     97.8%      334,000     10.39     121,413        0.0%
 Land Title Bldg.      Birmingham 1975           30,000    100.0%      393,000     13.19     148,880        0.1%
 Independence Plaza    Birmingham 1979          106,000     97.0%    1,294,000     13.07   1,460,438  (6)   0.6%
 Shades Brook Building Birmingham 1979           35,000     92.5%      151,000     13.82     225,724  (6)   0.1%
 Perimeter Corporate 
 Park                  Huntsville 1986/89       233,000     99.7%    2,834,000     13.96   3,200,829  (6)   1.2%
                                             -----------  --------  -----------  --------  ----------    --------
     Subtotal-Alabama (14 Properties)         1,810,000     89.7%   20,258,000     12.58   23,046,632       8.8%
                                             -----------  --------  -----------  --------  ----------    --------
 Florida:
 Concourse Center      Tampa      1981/85       290,000     97.7%    2,580,000     14.95   2,344,572  (6)   0.9%
 University Park       Orlando    1985           71,000     99.4%      769,000     13.47     913,686        0.4%
                                             -----------  --------  -----------  --------  ----------    --------
     Subtotal-Florida (2 Properties)            361,000     98.0%    3,349,000     14.65   3,258,258        1.3%
                                             -----------  --------  -----------  --------  ----------    --------
 Georgia:
 Mansell Business Park Atlanta    1987/96/97    536,000     96.6%    7,277,000     20.53   8,104,019        3.2%
                                             -----------  --------  -----------  --------  ----------    --------
     Subtotal-Georgia (1 Property)              536,000     96.6%    7,277,000     20.53   8,104,019        3.2%
                                             ===========  ========  ===========  ========  ==========    ========
     TOTAL (17 Properties)                    2,707,000     92.2% $ 30,884,000   $ 14.58 $34,408,909       13.3%
                                             ===========  ========  ===========  ========  ==========    ========


<FN>
(1) All Office Properties are 100% owned by CRLP with the exceptions of Anderson
    Block and Land Title Building, which are each 33.33% owned by CRLP.
(2) Year initially  completed and, where  applicable,  most recent year in which
    the Property was substantially  renovated or in which an additional phase of
    the Property was completed.
(3) Total 1998 Office Property  revenue is CRLP's share (based on its percentage
    ownership  of  the  property)  of  total  Office  Property  revenue,  unless
    otherwise noted.
(4) Percent of Total 1998  Property  Revenue  represents  the Office  Property's
    proportionate share of all revenue from CRLP's 106 Properties.
(5) CRLP has a leasehold interest in this Property. 
(6) Represents revenues from the date of CRLP's acquisition of this Property 
    in 1998 through December 31, 1998.
</FN>
</TABLE>


           The following table sets out a schedule of the lease  expirations for
leases in place as of December 31, 1998,  for the Office  Properties  (including
all lease expirations for partially-owned Properties).

<TABLE>
<CAPTION>
                                    Net Rentable     Annualized         Percent of Total
       Year of       Number of      Area Of         Base Rent of        Annual Base Rent
       Lease       Tenants with   Expiring Leases     Expiring           Represented by
       Expiration  Expiring Leases(Square Feet) (1) Leases (1)(2)       Expiring Leases (1)
-----------------------------------------------------------------------------------------

<S>   <C>                <C>          <C>               <C>                  <C>  
      1999               84           455,000           5,900,000            19.1%
      2000              107           487,000           6,348,000            20.6%
      2001               62           332,000           3,638,000            11.8%
      2002               44           294,000           3,814,000            12.3%
      2003               43           347,000           4,867,000            15.8%
      2004               14           126,000           1,784,000             5.8%
      2005                5           148,000           2,131,000             6.9%
      2006                4           110,000           1,253,000             4.1%
      2007                2            39,000             636,000             2.1%
      2008                2            26,000             494,000             1.6%
      Thereafter          3             2,000              19,000             0.1%
                  ==========     =============     ===============     ============
                        370         2,366,000        $ 30,884,000           100.0%
                  ==========     =============     ===============     ============

<FN>
(1)  Excludes  341,000  square feet of space not leased as of December 31, 1998.
(2) Annualized base rent is calculated using base rents as of December 31, 1998.
</FN>
</TABLE>

           The following sets forth the net rentable area,  total percent leased
and average base rent per leased square foot for each of the last five years for
the Office Properties:

<TABLE> 
<CAPTION>

                                   Total       Average Base
                     Rentable Area Percent   Rent Per Leased
Year-end             (Square Feet) Leased    Square Foot (1)
-------------------------------------------------------------

<S>      <C> <C>       <C>         <C>     <C>      
December 31, 1998      2,707,000   92.2%   $   14.58
December 31, 1997      1,859,000   95.5%   $   12.18
December 31, 1996      1,009,000   97.4%   $   13.80
December 31, 1995      1,009,000   94.0%   $   13.52
December 31, 1994      1,009,000   95.0%   $   12.99
</TABLE>

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


Undeveloped Land

           CRLP owns five undeveloped  land parcels  consisting of approximately
144.7 acres (collectively,  the "Land").  These parcels are adjacent to three of
the Properties and are suitable for potential expansion at those Properties. The
Land  suitable for expansion is located  adjacent to a Multifamily  Property and
two Retail Properties. Land adjacent to Multifamily Properties typically will be
considered for potential development of another phase of an existing Multifamily
Property if CRLP  determines  that the particular  market can absorb  additional
apartment units.  CRLP currently owns one such parcel.  For expansions at Retail
Properties,  CRLP owns  parcels  both  contiguous  to the  boundaries  of Retail
Properties,  which would  accommodate  expansion of the mall or shopping center,
and outparcels  which are suitable for  restaurants,  financial  institutions or
free standing retailers. CRLP owns three such parcels.




Property Markets

           The table below sets forth  certain  information  with respect to the
geographic concentration of the Properties as of December 31, 1998.

                     Geographic Concentration of Properties

<TABLE>
<CAPTION>
                                                                                 Percent
                            Units                                     Total      Of Total
                      (Multifamily)     GLA           NRA        1998 Property  1998 Property
State                          (1)   (Retail) (2)   (Office)(3)     Revenue      Revenue
--------------------   ----------    ------------   -----------   ------------   --------

<S>                         <C>         <C>           <C>         <C>               <C>  
Alabama                     7,293       4,779,000     1,810,000   $ 95,640,770      37.4%
Florida                     5,014       3,328,000       361,000     75,030,332      29.5%
Georgia                     1,874       3,338,000       536,000     56,878,241      22.3%
Mississippi                   328             -0-           -0-      2,477,790       1.0%
North Carolina                -0-         882,000           -0-      8,719,205       3.4%
South Carolina                550         488,000           -0-     11,333,026       3.9%
Tennessee                     -0-          75,000           -0-        491,315       0.2%
Texas                         322             -0-           -0-      1,564,509       0.6%
Virginia                      -0-         588,000           -0-      4,307,816       1.7%
                       ----------    ------------   -----------   ------------   --------
Total                      15,381      13,478,000     2,707,000   $256,443,004     100.0%
                       ==========    ============   ===========   ============   ========
<FN>

(1) Units (in this table only) refer to  multifamily  apartment  units.  (2) GLA
refers to gross  leaseable area of retail space.  (3) NRA refers to net rentable
area of office space.
</FN>
</TABLE>

            CRLP  believes  that  the   demographic   and  economic  trends  and
conditions in the markets where the Properties are located  indicate a potential
for  continued  growth in property net  operating  income.  The  Properties  are
located in a variety of distinct  submarkets within Alabama,  Florida,  Georgia,
Mississippi,  North  Carolina,  South Carolina,  Tennessee,  Texas and Virginia;
however,  Birmingham,  Huntsville and Montgomery,  Alabama,  Orlando,  Tampa and
Sarasota/Bradenton,  Florida, and Macon and Atlanta, Georgia, are CRLP's primary
markets.  CRLP  believes  that its  markets  in these  nine  states,  which  are
characterized by stable and increasing  population and employment growth, should
continue  to  provide  a steady  demand  for  multifamily,  retail,  and  office
properties.

<PAGE>

Mortgage Financing

           Certain of the Properties are subject to mortgage  indebtedness.  The
Properties whose financial results are consolidated in the financial  statements
of CRLP are subject to existing mortgage indebtedness and other notes payable in
an aggregate  amount as of December 31, 1998, of  approximately  $909.3  million
carrying  a  weighted  average  interest  rate of 7.07% and a  weighted  average
maturity  of 6.6  years.  The  mortgage  indebtedness  on the  Properties  as of
December 31, 1998, is set forth in the table below:

                         Mortgage Debt and Notes Payable
<TABLE>
<CAPTION>
                                                                             Anticipated
                                                                             Annual Debt
                                                          Principal            Service                             Estimated
                                        Interest        Balance (as of        (1/1/99-           Maturity         Balance Due
 Property (1)                             Rate            12/31/98)           12/31/99)          Date (2)         on Maturity
------------------------------------   -----------     ----------------    ---------------     ------------     ----------------

 Multifamily Properties:
      <S>                                  <C>               <C>                <C>               <C>   <C>         <C>        
      CG at Carrollwood                    8.870%            6,230,000          $ 552,601         03/05/05          $ 6,230,000
      CG at Natchez Trace                  7.950%            6,830,143            574,150         09/01/35               47,813
      CG at Natchez Trace                  8.000%            4,066,699            339,941         02/01/37               29,071
      CV at Rocky Ridge                    5.900%            6,000,000            354,000         08/01/02 (5)        6,000,000
      CV at Rocky Ridge                    7.625%            1,245,000            190,137         08/01/02 (3)          841,667
      CG at Galleria Woods                 6.875%            7,101,608          7,345,726         06/15/99            7,035,235
      CG at Mountain Brook                 8.000%           11,929,545          1,141,187         01/10/00           11,742,632
      CV at Cahaba Heights                 8.060%            3,607,835            374,615         05/10/00            3,502,055
      CV at Inverness                      4.520%            9,900,000            447,480         06/15/26 (4)        9,685,749
      CV at Inverness Lakes                5.900%            4,000,000            236,000         08/01/02 (5)        4,000,000
      CV at Inverness Lakes                7.625%            1,583,333            206,257         08/01/02 (6)        1,234,167
      CG at Galleria                       4.440%           22,400,000            994,560         06/15/26 (4)       22,400,000
      CG at Research Park                  4.490%           12,775,000            573,598         06/15/26 (4)       12,775,000
      CV at White Bluff                    4.520%            4,500,000            203,400         07/01/26 (4)        4,500,000
      CV at Vernon Marsh                   4.570%            3,400,000            155,380         07/01/26 (4)        3,400,000
      CV at Hillwood                       5.900%            3,330,000            196,470         08/01/02 (5)        3,300,000
      CV at Hillwood                       7.625%            1,515,000            197,820         08/01/02 (6)        1,179,167

 Retail Properties:
      Colonial Promenade Hunter's Creek    8.800%           10,089,395          1,061,620         10/01/01            9,578,044
      Mayberry Mall                        9.220%            3,350,078            363,445         10/01/01            3,237,064
      Colonial Promenade Montgomery        9.250%           10,810,000            999,925         07/01/00           10,810,000
      Rivermont Shopping Center           10.125%            1,693,400            273,553         09/01/08               52,091
      Colonial Promenade University Park   8.870%           14,445,000          1,281,272         03/05/05           14,445,000
      Village at Roswell Summit            8.930%            1,628,831            170,306         09/01/05            1,401,860

 Office Properties:
      2100 International Park              8.650%            1,967,410          2,095,046         10/01/99            1,931,425
      1800 International Park              6.500%            1,793,554          1,880,990         10/01/99            1,793,554
      Interstate Park                      8.500%            4,208,107            642,311         08/01/03            2,648,144
      Riverchase Center                    7.880%            8,238,096            902,959         12/01/00            7,766,043
      Mansell Overlook 100                 8.250%           17,419,860          1,589,386         01/10/08           15,285,811
      Mansell One Story Bldg. 10           8.625%           13,876,373          1,331,115         06/01/00           13,682,324
      Perimeter Corporate Park             8.680%            5,536,731            609,507         12/01/03            4,858,772

 Other debt:
      Land Loan                            7.020%              642,641             45,113         09/30/00              649,897
      Line of Credit, incl. Comp. Bid      6.492% (7)      174,489,000         11,327,826         07/10/00 (8)      174,489,000
      Unsecured Senior Notes               7.500%           64,916,320          4,868,724         07/15/01           65,000,000
      Unsecured Senior Notes               8.050%           64,770,044          5,213,989         07/15/06           65,000,000
      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                    6.960%           75,000,000          5,220,000         07/26/04           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
      Senior Notes                         7.000%          174,033,125         12,182,319         07/14/07          175,000,000
                                                       ================    ===============                      ================
 TOTAL                                                   $ 909,322,129       $ 76,732,725                         $ 890,531,585
                                                       ================    ===============                      ================
</TABLE>

(footnotes presented on the next page)
<PAGE>

----------------

(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)   All of the  mortgages  can be prepaid at any time,  subject to  prepayment
      penalties  calculated  typically  on a  percentage  basis,  except for the
      mortgages  encumbering CV at Rocky Ridge, CV at Inverness Lakes, and CV at
      Hillwood, which are closed to prepayment for varying lengths of time.
(3)   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, 2007.
(4)   These  loans are  financed  through  tax-exempt  bonds  which  are  credit
      enhanced  by Fannie  Mae.  The  loans,  which  bear  interest  at a weekly
      variable  interest rate,  require monthly  interest  payments through June
      2006 and principal and interest payments from July 2006 through June 2026.
      The weighted  average  interest  rate of these three was 4.51% at December
      31, 1998.  On February 15, 1999,  CRLP entered into an interest  rate swap
      for these bonds at a rate of 3.23%
(5)   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.
(6)   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, 2010.
(7)   This line of credit  facility bears interest at a variable rate,  based on
      LIBOR plus a spread that ranges from 80 to 135 basis  points.  At December
      31,  1998,  line of credit  facility  bore  interest at a rate of 95 basis
      points above LIBOR.  The facility also includes a competitive  bid feature
      that allows CRLP to convert up to $125 million under the line of credit to
      a fixed  rate,  for a fixed term not to exceed 90 days.  At  December  31,
      1998, $65 million was outstanding  under a competitive bid loan which bore
      interest at a weighted average rate of 6.29%.
(8)   This credit  facility  has a term of two years  beginning in July 1998 and
      provides for a two-year amortization in the event of non-renewal.

           In addition to the foregoing mortgage debt, the two Office Properties
and one  Retail  Property  in which  CRLP  owns  partial  interests  (and  which
therefore are not  consolidated  in the  financial  statements of CRLP) also are
subject  to  existing  mortgage  indebtedness.  CRLP's  pro-rata  share  of such
indebtedness as of December 31, 1998, was  $33,512,000  which carried a weighted
average  interest rate of 6.9%. The maturity dates of these loans range from May
31,  1999 to January  15,  2006 and as of  December  31,  1998,  the loans had a
weighted average maturity of 6.6 years.

Item 3.              Legal Proceedings.

           Neither CRLP nor the Properties are presently subject to any material
litigation  nor, to CRLP's  knowledge,  is any  material  litigation  threatened
against CRLP or the  Properties,  other than routine  litigation  arising in the
ordinary  course of  business  which is  expected  to be  covered  by  liability
insurance.


Item 4.              Submission of Matters to a Vote of Security Holders.

           No matters were  submitted  to CRLP's unit holders  during the fourth
quarter of 1998.
<PAGE>

                                     PART II

Item 5.              Market for Registrant's  Common Equity and Related 
                     Shareholder Matters.

          There is no established  public  trading  market for the Units.  As of
March 10, 1999, there were 76 holders of record of Units.

           CRLP has made consecutive quarterly distributions since its formation
in the third quarter of 1993. CRLP's ability to make distributions  depends on a
number of factors,  including  its net cash  provided by  operating  activities,
capital commitments and debt repayment schedules.  Holders of Units are entitled
to receive  distributions  when,  as and if declared by the Board of Trustees of
the Company,  its general partner,  out of any funds legally  available for that
purpose.

           The  following  table sets forth the  distributions  per Unit paid by
CRLP during the periods noted:

             Calendar Period            Distribution
               --------------------------------------
               1998:
                  First Quarter......       $.55
                  Second Quarter.....       $.55
                  Third Quarter......       $.55
                  Fourth Quarter.....       $.55
               1997:
                  First Quarter......       $.52
                  Second Quarter.....       $.52
                  Third Quarter......       $.52
                  Fourth Quarter.....       $.52

Item 6.              Selected Financial Data.

           The  following  table sets forth  selected  financial  and  operating
information  on a  historical  basis for CRLP for each of the five  years  ended
December 31, 1998.

<TABLE> 
<CAPTION>

Dollar amounts in thousands, except unit data        1998           1997          1996          1995          1994
---------------------------------------------------------------------------------------------------------------------
OPERATING DATA
<S>                                             <C>            <C>           <C>           <C>           <C>        
Total revenue                                   $   257,367    $   184,126   $   134,881   $   111,437   $    63,958
Expenses:
     Depreciation and amortization                   48,647         33,278        23,533        20,615        13,060
     Other operating expenses                        87,972         63,581        46,819        42,282        24,011
Income from operations                              120,748         87,267        64,529        48,540        26,887
Interest expense                                     52,063         40,496        24,584        23,972        10,820
Other income (expense), net                             (62)         3,069         1,104           674           582
Income before extraordinary items                    68,623         49,840        41,049        25,242        16,650   
Dividends to preferred unitholders                   10,938          1,671          --            --            --
Net income available to common unitholders           57,284         44,519        40,538        25,242        16,650
Per unit - basic and diluted:
     Net income                                        1.64           1.55          1.58          1.28          1.17
     Distributions                                     2.20           2.08          2.00          1.90          1.73
----------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Land, buildings, and equipment, net             $ 1,566,840    $ 1,268,430   $   801,798   $   624,514   $   555,577
Total assets                                      1,756,548      1,396,660       947,947       681,297       603,135
Total debt                                          909,322        702,044       506,435       354,100       344,234
----------------------------------------------------------------------------------------------------------------------
OTHER DATA
Total properties (at end of period)                     106             93            73            61            55
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Item 7.              Management's Discussion and Analysis of Financial Condition
                     and Results of Operations.

GENERAL

Colonial  Realty  Limited  Partnership,  a Delaware  limited  partnership is the
operating  partnership  of Colonial  Properties  Trust,  an Alabama  real estate
investment  trust (the "Company")  whose shares are listed on the New York Stock
Exchange. The Company is engaged in the ownership, development,  management, and
leasing of  multifamily  communities,  retail  malls and shopping  centers,  and
office buildings. The Company owns and operates properties in nine states in the
Sunbelt region of the United States. As of December 31, 1998, CRLP's real estate
portfolio consisted of 49 multifamily communities,  40 retail properties, and 17
office properties.

CRLP manages its business with three separate and distinct operating  divisions:
Multifamily,  Retail, and Office.  Each division has an Executive Vice President
that oversees  growth and operations and has a separate  management team that is
responsible  for  acquiring,  developing,  and  leasing  properties  within each
division. This structure allows CRLP to utilize specialized management personnel
for each operating  division.  Constant  communication  among the Executive Vice
Presidents and centralized functions of accounting,  information technology, due
diligence and administrative  services provide CRLP with unique synergy allowing
CRLP to take advantage of a variety of investment  opportunities.  Decisions for
investments in  acquisitions  and  developments  and for  dispositions  are also
centralized.

The following  discussion  should be read in conjunction  with the  Consolidated
Financial Statements and Notes to Consolidated Financial Statements appearing
elsewhere in this report.

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

Results of Operations - 1998 vs. 1997

In 1998, CRLP experienced growth in revenues, operating expenses, and net income
which  primarily  resulted from the acquisition and development of 40 properties
and the  expansion  of 13  properties  during 1998 and 1997.  As a result of the
acquisitions, developments, and expansions CRLP's net income before dividends to
preferred  unitholders  increased  by $22.0  million,  or  47.7%,  for 1998 when
compared  to 1997.  On a per unit basis,  net income was $1.64 for 1998,  a 5.2%
increase, compared to $1.55 for 1997.

Revenues - Total revenues increased by $73.2 million, or 39.8%, during 1998 when
compared to 1997. Of this increase,  $61.7 million relates to revenues generated
by  properties  that were  acquired or  developed  during 1998 and 1997,  net of
revenues of properties  disposed of in 1997. The retail  division  accounted for
the majority of the overall revenue increase, approximately $46.4 million, while
the  office and  multifamily  divisions  accounted  for $18.2  million  and $9.0
million,  respectively. The divisional revenue growth was primarily attributable
to the  acquisition,  development,  and  expansion of 21 retail  properties,  22
multifamily  properties,  and 10 office  properties  during  1998 and 1997.  The
remaining  increase relates to increases in rental rates at existing  properties
and lease buyouts during 1998.

Operating  Expenses - Total operating  expenses  increased by $39.8 million,  or
41.1%,  during 1998 when compared to 1997. The majority of this increase relates
to  additional  property  operating  expenses of $20.3  million  and  additional
depreciation  of $13.4 million  associated  with  properties that were acquired,
developed,  or  expanded  during  1998 and 1997,  net of  operating  expenses of
properties disposed of during 1997.  Depreciation expense on existing properties
increased by $1.5 million during 1998 when compared to 1997. Divisional property
operating  expenses increased by $14.8 million,  $2.8 million,  and $5.5 million
for retail, multifamily,  and office divisions,  respectively,  during 1998 when
compared to 1997.  The increase in divisional  property  operating  expenses was
primarily  attributable  to the  acquisition,  development,  and expansion of 21
retail properties,  22 multifamily  properties,  and 10 office properties during
1998 and  1997.  The  remaining  increase  primarily  relates  to  increases  in
operating  expenses at existing  properties,  and overall increases in corporate
overhead and personnel costs associated with CRLP's continued growth.

Other Income and Expenses - Interest  expense  increased  by $14.7  million,  or
39.3%,  during 1998 when compared to 1997.  The increase in interest  expense is
primarily  attributable  to the assumption of $5.7 million of debt, the issuance
of $175 million in Senior Unsecured Notes, and the net increased usage of CRLP's
Line  of  Credit  in  conjunction   with  the  financing  of  acquisitions   and
developments.

Results of Operations - 1997 vs. 1996

In 1997, CRLP experienced growth in revenues, operating expenses, and net income
which  resulted from the  acquisition  and  development of 38 properties and the
expansion of 7 properties  during 1997 and 1996. As a result of the acquisitions
and  developments,  CRLP's net income before dividends to preferred  unitholders
increased by $5.0  million,  or 18.0%,  for 1997 when compared to 1996. On a per
unit basis,  net income was $1.55 for 1997, a 1.9%  decrease,  compared to $1.58
for 1996. The decrease in net income available to common shareholders,  on a per
share  basis,  is directly  attributable  to the  extraordinary  loss from early
extinguishment  of debt and the dividends paid to the preferred  shareholders in
1997.

Revenues - Total revenues increased by $49.2 million, or 36.5%, during 1997 when
compared to 1996. Of this increase,  $43.4 million relates to revenues generated
by  properties  that were  acquired  or  developed  during  1997 and  1996.  The
remaining  increase  primarily  relates to increases in rental rates at existing
properties.  The retail  division  accounted  for the  majority  of the  overall
revenue increase,  approximately $25.4 million, while the multifamily and office
divisions  accounted  for $14.6  million  and $8.9  million,  respectively.  The
divisional  revenue  growth  was  primarily  attributable  to  the  acquisition,
development,  and expansion of 20 retail properties,  19 multifamily properties,
and 6 office properties during 1997 and 1996.

Operating  Expenses - Total operating  expenses  increased by $26.5 million,  or
37.7%,  during 1997 when compared to 1996. The majority of this increase relates
to  additional  property  operating  expenses of $13.3  million  and  additional
depreciation  of $8.2 million  associated  with properties that were acquired or
developed  during 1997 and 1996.  Depreciation  expense on  existing  properties
increased by $1.8 million during 1997 when compared to 1996. Divisional property
operating expenses increased by $7.4 million, $2.1 million, and $4.9 million for
retail,  multifamily,  and  office  divisions,  respectively,  during  1997 when
compared to 1996.  The increase in divisional  property  operating  expenses was
primarily  attributable  to the  acquisition,  development,  and expansion of 20
retail  properties,  19 multifamily  properties,  and 6 office properties during
1997 and 1996. The remaining change primarily relates to the resolution of prior
year reserves for certain tax contingencies,  increases in operating expenses at
existing  properties,  and overall increases in corporate overhead and personnel
costs associated with CRLP's continued growth.

Other Income and Expenses - Interest  expense  increased  by $15.9  million,  or
64.7%,  during 1997 when compared to 1996.  The increase in interest  expense is
primarily attributable to the assumption of $75 million of debt, the issuance of
$175 million in  Medium-Term  Notes,  and the increased  usage of CRLP's Line of
Credit in conjunction with the financing of acquisitions and developments.

LIQUIDITY AND CAPITAL RESOURCES

During  1998,  CRLP  invested  $358.1  million,  net  of  disposition,   in  the
acquisition  and  development of properties.  This  acquisition  and development
activity  increased CRLP's  multifamily,  retail,  and office property holdings.
CRLP financed the growth  through  proceeds from public  offerings of equity and
debt totaling $315 million during 1998, advances on its bank line of credit, the
issuance of limited partnership units in CRLP, the proceeds from joint ventures,
and cash from  operations.  CRLP also used these sources of funds to repay $29.5
million on five mortgage loans.

Acquisition and Development Activities

Multifamily  Properties - During 1998,  CRLP added 1,026 apartment units through
the  acquisition of four  multifamily  communities at an aggregate cost of $48.2
million.  CRLP  also  completed  development  of 596  apartment  units  in seven
multifamily  communities  during 1998 and  acquired  land on which it intends to
develop additional multifamily communities during 1999. The aggregate investment
in the multifamily developments during 1998 was $90.4 million.

As of  December  31,  1998,  CRLP has 2,426  apartment  units in 12  multifamily
communities under development or expansion.  Management  anticipates that the 12
multifamily  projects  will be completed  during 1999 through  2001.  Management
estimates  that it will invest an  additional  $115  million to  complete  these
multifamily communities.

Retail  Properties - During 1998,  CRLP added 2.9 million  square feet of retail
shopping space (including 1.5 million square feet in two joint ventures) through
the acquisition of a community  shopping center, an enclosed mall and investment
in two joint ventures at a net cost of $117.5 million.  In addition,  CRLP began
the  development  of a community  shopping  center in Birmingham,  Alabama.  The
aggregate  investment  in the retail  development  during 1998 was $8.8 million.
Management  anticipates  that it will  invest an  additional  $25.7  million  to
complete the retail development.

Office  Properties - During 1998, CRLP increased its office portfolio by 827,000
square feet with the acquisition of five office  properties at an aggregate cost
of $87.9 million. In addition,  CRLP began development on two office properties.
The  aggregate  investment  in the  office  developments  during  1998  was $5.3
million. Management estimates that it will invest an additional $24.3 million to
complete these properties.

Joint Ventures

During the fourth  quarter of 1998,  CRLP  entered into two joint  ventures.  On
December 9, 1998,  CRLP and CBL &  Associates  Properties,  Inc.  formed a joint
venture to acquire  Parkway City Mall in Huntsville,  Alabama for $11.4 million.
In addition to the purchase of the property,  the joint  venture will  redevelop
the mall, with all related costs being shared equally by both venture  partners.
At December 31, 1998, CRLP had invested  approximately $5.7 million in the joint
venture and had an ending net  investment  balance of $5.9 million.  On December
29,  1998,  CRLP and  Prudential  Real Estate  Investors,  through its  Property
Investment  Separate Account Fund (Prudential),  entered into a joint venture to
own Orlando  Fashion  Square.  In  connection  with the  formation  of the joint
venture,  Prudential acquired a 50% interest in Orlando Fashion Square from CRLP
for $52  million  which  approximated  both  book  value  and fair  value of the
recently acquired property. Subsequent to formation, the joint venture leveraged
the  property  with a $65 million  nonrecourse  note and the  proceeds  from the
issuance of the note were  distributed  equally to the joint  venture  partners.
CRLP's  investment in the joint venture at December 31, 1998 was $20.2  million.
CRLP used the proceeds from the Prudential joint venture to fund acquisition and
development  activities.  Both joint  ventures have been accounted for using the
equity method.

Financing Activities

CRLP funded a large portion of its  acquisitions  and  developments  through the
issuance of debt  securities  and through  cash  contributions  from the Company
through the  issuance  of its common and  preferred  shares.  During  1998,  the
Company and CRLP completed the following equity and debt transactions:

                             Common Share Offerings
                                                        (in thousands)
                                              --------------------------------
                       Number of    Price Per     Gross    Offering        Net
Date ...............              Common Share Proceeds     Costs      Proceeds
--------------------   ---------   -------   ---------   ---------    ---------
February ...........     375,540   $    30.00 $  11,266   $     627   $  10,639
March ..............     806,452   $    31.00 $  25,000   $   1,389   $  23,611
March ..............     381,046   $    31.00 $  11,182   $     656   $  11,156
April ..............   3,046,400   $    30.12 $  91,773   $   4,973   $  86,800


                                  Debt Offering
                                                         Gross
                       Type of                          Proceeds
Date                    Note       Maturity    Rate  (in thousands)
--------------        --------   ----------   ----    ------------
July                   Senior     July, 2007   7.00%    $ 175,000


On July 10, 1998, CRLP increased the borrowing capacity under its unsecured line
of credit from $200 million to $250 million. The credit facility,  which is used
by CRLP primarily to finance additional property investments,  bears interest at
a rate  ranging  between 80 and 135 basis points above LIBOR and is renewable in
July 2000. The line of credit agreement  includes a competitive bid feature that
will  allow CRLP to  convert  up to $125  million  under the line of credit to a
fixed rate, for a fixed term not to exceed 90 days. As of December 31, 1998, the
balance outstanding on CRLP's line of credit was $174.5 million.

At December 31, 1998,  CRLP's total outstanding debt balance was $909.3 million.
The outstanding  balance includes  fixed-rate debt of $681.2 million,  or 74.9%,
and floating-rate  debt of $228.1 million,  or 25.1%. CRLP has obtained interest
rate protection for $50.0 million of the  floating-rate  debt. The cap agreement
limits the debt to an interest rate of 8.00%  through May 2, 2000.  CRLP's total
market  capitalization as of December 31, 1998 was $2.0 billion and its ratio of
debt to total market  capitalization was 45.1%.  Certain loan agreements of CRLP
contain restrictive covenants which, among other things,  require maintenance of
various  financial  ratios.  At December 31, 1998,  CRLP was in compliance  with
these covenants.

CRLP has only limited involvement with derivative financial instruments and does
not use them for trading  purposes.  Interest rate cap  agreements  and interest
rate swaps are used to reduce the  potential  impact of  increases  in  interest
rates on variable-rate  debt.  Treasury lock agreements are used by CRLP to lock
in interest  rates in connection  with public debt  offerings.  CRLP has entered
into an  interest  rate cap  agreement  which  limits  debt of $50 million to an
interest rate of 8.00% through May 2, 2000. Subsequent to year-end, CRLP entered
into two interest rate swap agreements. On January 4, 1999, CRLP entered into an
interest rate swap for $50 million of its line of credit at 4.97% plus 80 to 135
basis  points and on January 15, 1999,  CRLP entered into an interest  rate swap
for $52 million of tax exempt bonds at a rate of 3.23%.  Both of these  interest
rate swap agreements have one-year terms and any payments made or received under
the agreements  are  recognized as adjustments to interest  expense as incurred.
CRLP  is  exposed  to  credit  losses  in the  event  of  nonperformance  by the
counterparties to its interest rate cap and  nonderivative  financial assets but
has no  off-balance-sheet  credit risk of  accounting  loss.  CRLP  anticipates,
however,  that  counterparties  will be able to fully satisfy their  obligations
under the  contracts.  CRLP does not  obtain  collateral  or other  security  to
support  financial  instruments  subject to credit risk but  monitors the credit
standing of counterparties.

OUTLOOK

Management    intends   to   maintain   CRLP's   strength   through    continued
diversification,  while pursuing  acquisitions  and  developments  that meet the
Company's criteria for property quality, market strength, and investment return.
Management  will  continue  to use its  line of  credit  to  provide  short-term
financing for acquisition  and  development  activities and plans to continue to
replace  significant  borrowings  under  the  bank  line of  credit  with  funds
generated from the sale of additional equity securities and permanent financing,
as market conditions permit. Management believes that these potential sources of
funds,  along with the possibility of issuing limited  partnership units of CRLP
in  exchange  for  properties,  will  provide  CRLP  with the  means to  finance
additional acquisitions and development.

In addition  to the  issuance of equity and debt,  management  is  investigating
alternate  financing  methods  and  sources  to raise  future  capital.  Private
placements,  joint ventures,  and non-traditional  equity and debt offerings are
some of the alternatives  CRLP is  contemplating.  The Company continues to work
diligently to improve its credit rating,  in order to reduce its cost of raising
future capital.  Management anticipates that its net cash provided by operations
and its existing cash balances will provide the necessary  funds on a short- and
long-term basis to cover its operating expenses, interest expense on outstanding
indebtedness,  recurring capital expenditures,  and dividends to shareholders in
accordance  with Internal  Revenue Code  requirements  applicable to real estate
investment trusts.

YEAR 2000 ISSUE

Overview of Y2K Problem

The Year 2000 or "Y2K" problem refers to the inability of many existing computer
programs  having  time-sensitive  software to recognize a date using "00" as the
year 2000. Instead,  the computer programs interpret such data as the year 1900.
This  failure to  accurately  recognize  the year 2000 and other key dates could
result in a variety of problems ranging from data miscalculations to the failure
of entire  systems.  In an attempt to eliminate or minimize this potential risk,
CRLP has initiated an effort to identify,  understand, and address the myriad of
issues associated with the Y2K problem. CRLP has identified two main areas where
potential  Y2K  problems  exist:  (a)  Property   Management  Systems  and;  (b)
Information Systems.

Phase One - Assessing CRLP's Y2K Readiness

As a result of potential  risks posed by Y2K problems on CRLP's  operations,  in
the early months of 1998, CRLP formed a Year 2000 Committee to oversee,  manage,
and implement a Year 2000 Compliance  Program (the "Program").  The Committee is
comprised of representatives  from senior management and various departments and
advisors at the home and regional  offices,  including  the  telecommunications,
information   systems,   and  office  services   departments.   Because  of  the
wide-ranging  implications of the Y2K problem,  management  decided to carry out
the Program in multiple  phases over the remainder of 1998 and 1999. Many of the
phases of the Program are being carried out simultaneously.

The initial  step in assessing  CRLP's Y2K  readiness  consisted of  identifying
systems that are date  sensitive  and,  accordingly,  could pose  potential  Y2K
problems.  The process  included an examination  of  information  technology and
non-information  technology  systems at CRLP's home and regional  offices and at
CRLP's properties. The initial step of identifying systems has been completed by
CRLP's information  services department and building services department through
a combination of physical inspections and informational  interviews with Company
employees.

Having  identified  systems  that could have a potential  Y2K  problem,  CRLP is
attempting to determine which of the systems  actually have a Y2K problem.  Much
of the required  information  is within the exclusive  control of CRLP's vendors
and  manufacturers,  who are being contacted  through  standard form letters and
telephone calls requesting such information.  In the case of property management
systems,  a  database  was  compiled  for  the  types  of  equipment,  names  of
manufacturers  and model  numbers.  The  following is a summary of the Phase One
results obtained to date.

Property Management Systems

CRLP has identified six  categories of property  management  systems in which it
has the most exposure to potential Y2K problems. These categories include:

o Building automation (e.g.,  energy management,  HVAC) o Security card access o
Fire and life safety o Elevator o Garage revenue control o Office equipment

In April 1998,  CRLP began  gathering data from vendors to catalog the equipment
in all of its buildings. To date, approximately 75% of the information requested
has been  received.  CRLP does not  expect to  receive  100% of the  information
requested due to a number of nonresponsive vendors or unavailable information.

All of the responses  have confirmed that their systems would not be affected in
an adverse way due to the Y2K date change.  The Y2K steering committee is in the
process of evaluating if any of these  property  management  systems are mission
critical in nature and would have a negative impact on CRLP's ability to conduct
business if a failure  occurs.  At this time CRLP does not believe these systems
are mission critical. Regardless, efforts continue to obtain additional evidence
from vendors concerning these systems such as processes followed,  test scripts,
and actual findings. Once received, CRLP will further evaluate these systems and
will determine if it will be necessary to confirm the information  received from
the vendors. Due to the positive responses received CRLP does not feel that this
will be necessary.

Information Systems

Information systems fall into four general  categories:  Accounting and property
management; network operating systems; desktop software; and secondary systems.

Accounting and Property  Management - The general ledger and property management
software systems are not currently  compliant.  However,  new versions have been
written and are stated to be Y2K  compliant  by the  supplying  vendor.  CRLP is
currently in the process of testing the new  versions and the expected  schedule
for confirming compliance is as follows:

o System  testing - First  Quarter  1999 o Test  software  upgrades  - First and
Second  Quarter 1999 o Begin  installation  of upgrades - Second  Quarter 1999 o
Full Y2K Compliance - Second and Third Quarter 1999

New versions of the general ledger software system were written and delivered to
CRLP during the first quarter of 1999. CRLP found the new versions would not run
in the current environment. The vendor continues to develop the software systems
and has  represented  to CRLP that it expects to deliver Y2K  compliant  systems
during the early part of the third  quarter.  Upon  receipt,  CRLP will test the
systems and the software  upgrades  and,  assuming that the systems and upgrades
are operational,  will install the systems in the third and fourth quarters with
a goal of becoming fully compliant  during the early part of the fourth quarter.
While  the  vendor  is  revising  the  systems,  CRLP  intends  to  pursue  test
alternative  software  systems  offered  by  other  vendors.  If CRLP  finds  an
acceptable  alternative software system that is Y2K compliant,  it may implement
that system  instead of the system being revised by CRLP's  current  vendor.  If
CRLP were to implement an alternative  system,  CRLP may be able to achieve full
Y2K compliance as early as the third quarter.

Network  Operating  Systems -  Management  believes  that the network  operating
servers are  currently  Y2K compliant  subject to certain  possible  exceptions.
Microsoft  Corporation  recently announced that Windows NT 4.0, which CRLP uses,
is not Y2K compliant with service pak level III.  However,  Microsoft has stated
that  service  pak level IV will need to be  loaded  to  become  completely  Y2K
compliant.  Upgrades of Company  network  operating  systems are  expected to be
installed  in the  first and  second  quarters  of 1999,  bringing  the  network
operating servers into full compliance. Management believes that testing of this
new  software  will not be  necessary,  as it has  already  been  proven  in the
industry to be Y2K compliant.

Desktop  Software - Management  has  reviewed  all desktop  systems and software
applications, identified those that are not in compliance and compiled a list of
necessary  upgrades.  Those  upgrades have been completed for 95% of the current
systems and are now Y2K compliant.  The remaining upgrades for 5% of the systems
are anticipated to be completed by the end of the first quarter.  As part of the
continuing  efforts  to be Y2K  compliant,  every  new  system  is  tested  upon
installation.

The status of desktop compliance is as follows:

o Systems (hardware and software) testing - Complete
o Installation of updated  software that also provides Y2K compliance - November
1998 o Complete installation/full compliance - First Quarter 1999

Secondary Information Systems - "Secondary" information systems include, but are
not limited to: payroll;  fixed-asset system; and forecasting modeling software,
which provide projections on property returns and other items. Letters have been
received confirming Y2K compliance from the vendors of CRLP's secondary systems.
The number of  computers  related to these  secondary  systems  are  nominal and
testing is expected to be completed by the end of the second quarter of 1999.

Telecommunications  Systems - In general,  management believes that the internal
telephone  systems are not date sensitive and should not be materially  affected
by Y2K problems.  A letter has been  received  from the telephone  system vendor
confirming  Y2K  readiness  of the  voice  mail  system,  telephone  system  and
telephone  hardware.  Testing will be completed by the end of the second quarter
of 1999.


Phase Two - Determining the Cost of Achieving Y2K Readiness and Implementing the
Y2K Action Plan

During the last two years,  costs for new  technology  to ensure Y2K  readiness,
including computers,  telephone systems, and software, has been approximately $1
million  and an  additional  $400,000  is  estimated  to be  spent  on  property
management  software  upgrades  and testing  from a  third-party  consultant  on
current secondary systems.  However, the costs of the project and the completion
date are based on  management's  best  estimates,  which  are based on  numerous
assumptions of future events.

Phase Three - Assessing the Risks to CRLP  of Noncompliance

Management does not believe that the impact of Y2K will have a material  adverse
effect on CRLP's financial condition, results of operations and cash flows. Such
belief is based on management's  analysis of the risks to CRLP related to CRLP's
own  potential  Y2K  problems  discussed  above  and the  assessment  of the Y2K
problems of vendors, suppliers, and customers.

Property  Management Systems - Management  believes that the Y2K risks to CRLP's
financial  condition  and  operations  associated  with a  failure  of  building
management  systems is immaterial due to the fact that each of CRLP's properties
have, for the most part,  separate  building  management  systems.  In addition,
based upon the investigation results received to date, management believes there
is sufficient time to correct those system problems within CRLP's control before
the Year 2000.

In the event a failure of essential property management systems occurs at one or
more of CRLP's  buildings,  whether  due to a failure of a Company  system or an
interruption of utilities, management believes that the individual tenant leases
will protect CRLP from claims of  constructive  eviction or other  remedies that
could result in a termination of lease rights.  It is also  management's  belief
that most of the leases  eliminate,  limit or qualify  the rights of a tenant to
receive an abatement under such  circumstances.  Although there is always a risk
of claims  being  brought  on a  noncontractual  basis  (e.g.,  in tort),  it is
management's  belief that CRLP's efforts to identify and solve Y2K problems will
minimize  such  risk.   CRLP  has  also   attempted  to  allocate  the  risk  of
noncompliance to the vendors and  manufacturers  of the property  management and
information  systems by establishing  standard riders and addenda to be attached
to new contracts for systems using time sensitive data.

Information  Systems - Because CRLP's major source of income is rental  payments
under long-term leases,  the failure of key information  systems is not expected
to have a material  adverse  effect on CRLP's  financial  condition,  results of
operations, or cash flows for its existing properties. Even if problems with the
information systems are experienced,  the payment of rent under leases would not
be  excused.  However,  the  ability of CRLP to produce  complete  and  accurate
financial  information  in a timely  fashion could be impaired.  This  situation
would affect CRLP's  anticipated  development  projects or  acquisitions  of new
properties. Management expects to correct any information system problems within
CRLP's  control  before  the Year  2000,  thereby  minimizing  or  avoiding  the
increased cost of correcting problems after the fact.

Our  Vendors  - The  success  of  CRLP's  business  is not  closely  tied to the
operations  of any one  manufacturer,  vendor or supplier.  Accordingly,  if any
manufacturers, vendors or suppliers cease to conduct business due to Y2K related
problems,  management  expects to be able to contract with  alternate  providers
without  experiencing any material adverse effect on CRLP's financial condition,
results of operations, or cash flows.

Our Customers - Because of a broad  customer/tenant  base, CRLP's success is not
closely tied to the success of any particular  tenant.  Accordingly,  management
believes that there should not be a material  adverse effect on CRLP's financial
condition,  results of operations, or cash flows if any tenant ceases to conduct
business due to Y2K related  problems.  CRLP has  requested  that major  tenants
provide periodic updates as to their Y2K readiness.

Phase Four - Developing Contingency Plans

CRLP currently does not have  contingency  plans in place;  however,  management
expects  to develop  and  implement  contingency  plans by the end of the second
quarter of 1999.  CRLP's  contingency  plans will be  structured to address both
restoration of systems and their components and overall business operating risk.
These plans are intended to mitigate both internal  risks,  as well as potential
risks in the supply chain of CRLP's suppliers and customers.

RECENTLY ISSUED ACCOUNTING STANDARD

Statement of Financial Accounting  Standards No. 133 (SFAS 133),  Accounting for
Derivative  Instruments  and Hedging  Activities,  addresses the  accounting for
derivative  instruments,  including certain derivative  instruments  embedded in
other contracts,  and hedging activities.  Under SFAS 133, CRLP will be required
to account for derivative  financial  instruments,  if any, at their fair market
value, and make certain required disclosures. CRLP is required to adopt SFAS 133
for periods beginning January 1, 2000.

INFLATION

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


Item 8.              Financial Statements 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, 1998 and 1997

           Consolidated Statements of Income for the years ended December 31, 
           1998, 1997, and 1996

           Consolidated Statements of Partner's Capital for the years ended
           December 31, 1998, 1997, and 1996

           Consolidated Statements of Cash Flows for the years ended 
           December 31, 1998, 1997, and 1996

           Notes to Consolidated Financial Statements

<PAGE>
Report of Independent Accountants

To the Partners
of Colonial Realty Limited Partnership

In our opinion, the consolidated financial statements listed in the accompanying
index  present  fairly,  in all material  respects,  the  financial  position of
Colonial  Realty  Limited  Partnership  at December  31, 1998 and 1997,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  1998,  in  conformity  with  generally  accepted
accounting  principles.  In addition,  in our opinion,  the financial  statement
schedules  listed in the  accompanying  index  present  fairly,  in all material
respects,  the information  set forth therein when read in conjunction  with the
related  consolidated  financial  statements.  These  financial  statements  and
financial   statement   schedules  are  the   responsibility  of  the  Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedules based on our audits. We conducted
our audits of these  statements in accordance with generally  accepted  auditing
standards which require that we plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  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 by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.


/s/ PricewaterhouseCoopers L.L.P.
PricewaterhouseCoopers L.L.P.

Birmingham, Alabama
January 13, 1999, except for Note 13, as
to which the date is February 10, 1999

<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
December 31, 1998 and 1997
--------------------------------------------------------------------------------        
                                                              1998          1997
--------------------------------------------------------------------------------
ASSETS
<S>                                                    <C>           <C>        
Land, buildings, & equipment, net                      $ 1,566,840   $ 1,268,430
Undeveloped land and construction in progress              128,336        98,555
Cash and equivalents                                         4,582         4,534
Restricted cash                                              2,897         2,665
Accounts receivable, net                                     9,151         7,174
Prepaid expenses                                             3,116         3,038
Notes receivable                                               696           575
Deferred debt and lease costs                                9,644         7,031
Investment in partnerships                                  26,079          (28)
Other assets                                                 5,207         4,686
--------------------------------------------------------------------------------
                                                       $ 1,756,548   $ 1,396,660
--------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable                            $   909,322   $   702,044
Accounts payable                                             8,150        11,913
Accounts payable to affiliates                               4,670         2,320
Accrued interest                                            12,051         6,526
Accrued expenses                                             3,559         2,700
Tenant deposits                                              4,272         3,715
Unearned rent                                                2,800         2,253
-------------------------------------------------------------------------------- 
     Total liabilities                                     944,824       731,471
-------------------------------------------------------------------------------- 
Redeemable units, at redemption value                      282,597       299,492
--------------------------------------------------------------------------------
Partners' capital excluding redeemable units               529,127       365,697
--------------------------------------------------------------------------------
                                                       $ 1,756,548   $ 1,396,660
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>

COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
For the Years Ended December 31, 1998, 1997, 1996
-------------------------------------------------------------------------------------------------
                                                                   1998         1997         1996
-------------------------------------------------------------------------------------------------
Revenue:
<S>                                                           <C>          <C>          <C>      
    Base rent                                                 $ 206,234    $ 154,063    $ 115,174
    Base rent from affiliates                                     1,027          879          758
    Percentage rent                                               4,002        2,161        1,841
    Tenant recoveries                                            31,573       17,349       10,717
    Other                                                        14,531        9,674        6,391
-------------------------------------------------------------------------------------------------
       Total revenue                                            257,367      184,126      134,881
-------------------------------------------------------------------------------------------------
Property operating expenses:
    General operating expenses                                   20,590       12,603        9,530
    Salaries and benefits                                        12,600       10,283        8,606
    Repairs and maintenance                                      24,795       18,669       13,073
    Taxes, licenses, and insurance                               22,312       15,578       11,538
General and administrative                                        7,675        6,448        4,071
Depreciation                                                     46,841       31,956       22,025
Amortization                                                      1,806        1,322        1,509
-------------------------------------------------------------------------------------------------
       Total operating expenses                                 136,619       96,859       70,352
-------------------------------------------------------------------------------------------------
       Income from operations                                   120,748       87,267       64,529
-------------------------------------------------------------------------------------------------
Other income (expense):
    Interest expense                                            (52,063)     (40,496)     (24,584)
    Income (loss) from partially owned entities                     (43)         502          635
    Gains (losses) from sales of property                           (19)       2,567          469
-------------------------------------------------------------------------------------------------
       Total other expense                                      (52,125)     (37,427)     (23,480)
-------------------------------------------------------------------------------------------------
       Income before extraordinary items                         68,623       49,840       41,049
Extraordinary loss from early extinguishment of debt               (401)      (3,650)        (511)
-------------------------------------------------------------------------------------------------
       Net income                                                68,222       46,190       40,538
Dividends to preferred unitholders                              (10,938)      (1,671)         -0-
-------------------------------------------------------------------------------------------------
       Net income available to common unitholders                57,284       44,519       40,538
-------------------------------------------------------------------------------------------------

Basic and Diluted net income per unit:
-------------------------------------------------------------------------------------------------
       Income before extraordinary item                       $    1.65    $    1.64    $    1.60
       Extraordinary loss from early extinguishment of debt       (0.01)       (0.09)       (0.02)
-------------------------------------------------------------------------------------------------
       Net income per common unit                             $    1.64    $    1.55    $    1.58
-------------------------------------------------------------------------------------------------
Weighted average common units outstanding                        34,944       28,719       25,703
-------------------------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statments.
</FN>

</TABLE>
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands)
<TABLE>
<CAPTION>
For the Years Ended December 31, 1998, 1997, 1996
--------------------------------------------------------------
                                                        Total
                                                      Partners'
                                                       Capital
--------------------------------------------------------------
<S>                                                  <C>      
Balance, December 31, 1995                           $ 102,999

     Cash Contributions                                106,847
     Distributions                                     (51,819)
     Net income                                         40,538
     Issuance of limited partnership units               7,027
     Allocations to redeemable units                   (48,502)
--------------------------------------------------------------
Balance, December 31, 1996                             157,090

     Cash Contributions                                221,873
     Distributions                                     (59,471)
     Net income                                         44,519
     Issuance of limited partnership units              45,079
     Allocations to redeemable units                   (43,393)
--------------------------------------------------------------
Balance, December 31, 1997                             365,697

     Cash Contributions                                142,243
     Distributions                                     (76,545)
     Net income                                         57,284
     Earnings in minority interest property                153
     Issuance of limited partnership units              23,400
     Allocations to redeemable units                    16,895
--------------------------------------------------------------
Balance, December 31, 1998                             529,127
--------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<TABLE>
<CAPTION>
For the Years Ended December 31, 1998, 1997, 1996
------------------------------------------------------------------------------
                                                1998         1997         1996
------------------------------------------------------------------------------
Cash flows from operating activities:
<S>                                        <C>          <C>          <C>      
     Net  income                           $  57,284    $  44,519    $  40,538
     Adjustments  to  reconcile  net 
     income to net cash  provided  by  
     operating activities:
        Depreciation and amortization         48,647       33,278       23,533
        Income from partnerships                (110)        (502)        (635)
        Gains from sales of property              19       (2,567)         468
        Other, net                               336        4,204           90
        Decrease (increase) in:
           Restricted cash                      (232)        (215)        (371)
           Accounts receivable                (4,287)      (2,620)      (3,246)
           Prepaid expenses                      (75)         879         (248)
           Other assets                          729          424       (1,187)
        Increase (decrease) in:
           Accounts payable                   (1,413)      (3,191)          10
           Accrued interest                    5,525        1,061        3,570
           Accrued expenses and other         (2,967)      (5,421)         404
------------------------------------------------------------------------------
           Net cash provided by 
           operating activities              103,456       69,849       62,926
------------------------------------------------------------------------------
Cash flows from investing activities:
     Acquisition of properties              (312,585)    (301,931)    (125,926)
     Development expenditures                (62,075)     (37,589)     (22,168)
     Development expenditures paid to 
     an affiliate                            (40,347)     (46,481)     (70,414)
     Tenant improvements                      (4,140)      (2,792)      (1,029)
     Capital expenditures                    (24,982)     (12,325)      (6,825)
     Proceeds from sales of property, 
     net of selling costs                     52,238       54,092        1,254
     Distributions from partnerships          32,314          719          984
     Capital contributions to partnerships    (5,850)        (320)         (14)
------------------------------------------------------------------------------
           Net cash used in investing 
           activities                       (365,427)    (346,627)    (224,138)
------------------------------------------------------------------------------
Cash flows from financing activities:
     Principal reductions of debt            (31,725)    (122,880)     (45,798)
     Proceeds from additional borrowings     173,976      175,246      179,540
     Net change in revolving credit balance   57,403       68,271      (21,877)
     Cash contributions                      142,243      221,873      106,847
     Cash distributions                      (76,545)     (59,471)     (51,819)
     Payment of mortgage financing cost       (3,734)      (1,417)      (3,416)
     Other, net                                  401       (3,650)        (510)
------------------------------------------------------------------------------
           Net cash provided by financing 
           activities                        262,019      277,972      162,967
------------------------------------------------------------------------------
           Increase in cash and equivalents       48        1,194        1,755
Cash and equivalents, beginning of period      4,534        3,340        1,585
------------------------------------------------------------------------------
Cash and equivalents, end of period        $   4,582    $   4,534    $   3,340
------------------------------------------------------------------------------

Supplemental disclosures of cash flow information:
     Cash paid during the year for interest$  46,538    $  39,435    $  20,077
------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>


1. Organization and Basis of Presentation


          Organization - Colonial  Realty Limited  Partnership  (the  "Operating
Partnership"or "CRLP"), a Delaware limited partnership,  was formed on August 6,
1993, to succeed as owner of  substantially  all of the predecessor  interest of
Colonial  Properties,  Inc. (CPI),  Equity Partners Joint Venture,  and Colonial
Properties Management Association, and certain real estate interest of Thomas H.
Lowder, Robert E. Lowder, James K. Lowder, Catherine K. Lowder, and the Bellwood
Trust  (collectively  referred to as the  Colonial  Group for  purposes of these
financial statements).  CRLP is the operating partnership of Colonial Properties
Trust, an Alabama real estate  investment trust (the "Company") 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,  retail malls and centers, and office buildings. Certain parcels of
land are also included.

         Federal  Income Tax Status -No  provision  for income taxes is provided
since all  taxable  income or loss or tax  credits  are  passed  through  to the
partners.  The Company, which is considered a corporation for federal income tax
purposes,  qualifies  as a real estate  investment  trust  ("REIT")  for federal
income tax purposes and generally  will not be subject to federal  income tax to
the extent it distributes its REIT taxable income to its shareholders. REITs are
subject  to a number of  organizational  and  operational  requirements.  If the
Company  fails to qualify as a REIT in any taxable  year,  the  Company  will be
subject to federal income tax on its taxable income at regular corporate rates.

         Principles of  Consolidation - The  consolidated  financial  statements
include the  Operating  Partnership  and Colonial  Properties  Services  Limited
Partnership (in which CRLP holds 99% general and limited partner interests).

         Investments in Partially Owned Entities - Partnerships and corporations
in which CRLP owns a 50% or less  interest and does not control are reflected in
the  consolidated  financial  statements as investments  accounted for under the
equity method. Under this method the investment is carried at cost plus or minus
equity in undistributed earnings or losses since the date of acquisition.


2. Summary of Significant Accounting Policies

         Land,  Buildings,  and  Equipment - Land,  buildings,  and equipment is
stated at the lower of cost, less  accumulated  depreciation,  or net realizable
value.  Where an impairment of a property's value is determined to be other than
temporary,  an allowance  for the estimated  potential  loss is  established  to
record the property at its net realizable value.  Depreciation is computed using
the  straight-line  method over the estimated useful lives of the assets,  which
range from seven to 40 years.  Repairs and maintenance are charged to expense as
incurred. Replacements and improvements are capitalized and depreciated over the
estimated remaining useful lives of the assets.  When items of land,  buildings,
or equipment are sold or retired, the related cost and accumulated  depreciation
are removed from the accounts and any gain or loss is included in the results of
operations.

         Undeveloped  Land and  Construction in Progress - Undeveloped  land and
construction in progress is stated at the lower of cost or net realizable value.
CRLP  capitalizes  all  costs   associated  with  land   development   including
construction period interest and property taxes.

         Capitalization  of Interest - CRLP capitalizes  interest during periods
in which property is undergoing  development activities necessary to prepare the
asset for its intended use.

         Cash  and  Equivalents  -  CRLP  includes   highly  liquid   marketable
securities  and debt  instruments  purchased  with a maturity of three months or
less in cash equivalents.

         Restricted  Cash - Cash which is legally  restricted as to use consists
primarily of tenant deposits.

         Deferred Debt and Lease Costs - Amortization  of debt costs is recorded
using the  straight-line  method,  which  approximates  the  effective  interest
method,  over the terms of the related debt.  Leasing  commissions  and fees are
amortized using the straight-line method over the terms of the related leases.

         Derivatives  -  CRLP  has  only  limited  involvement  with  derivative
financial instruments and does not use them for trading purposes.  Interest rate
cap agreements  and interest rate swaps are used to reduce the potential  impact
of  increases  in  interest  rates  on  variable-rate  debt.  Premiums  paid for
purchased  interest rate cap  agreements are amortized to expense over the terms
of the caps.  Unamortized  premiums  are included in other assets in the balance
sheets.  Amounts  receivable  under cap agreements are accrued as a reduction of
interest expense. Payments under interest rate swap agreements are recognized as
adjustments to interest  expense as incurred.  Treasury lock agreements are used
by CRLP to set interest  rates in  anticipation  of public debt  offerings.  Any
gains or losses  related to treasury  locks are  included  in deferred  debt and
lease cost on the balance sheet and amortized  over the life of the related debt
to the extent that such treasury  locks are utilized.  All  unutilized  treasury
locks are expensed when their future  utility  expires.  All treasury locks were
utilized during 1998 and 1997.

         Revenue  Recognition - Rental income and management fees are recognized
as earned.  Anticipated  losses, if any, are recognized when such amounts become
known.

         Net  Income  Per Unit - Basic  net  income  per unit is  calculated  by
dividing the net income available to common  unitholders by the weighted average
numbers of common units outstanding  during the periods.  Diluted net income per
unit is calculated by dividing the net income available to common unitholders by
the weighted  average  numbers of common units  outstanding  during the periods,
adjusted for the assumed conversion of all potentially dilutive securities.

         Use  of  Estimates  -  The  preparation  of  financial   statements  in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  and the reported  amounts of revenues and expenses.  Actual results
could differ from those estimates.

         Recently Issued Accounting Standard - Statement of Financial Accounting
Standards No. 133 (SFAS 133), Accounting for Derivative  Instruments and Hedging
Activities,  addresses the  accounting  for  derivative  instruments,  including
certain  derivative  instruments  embedded  in  other  contracts,   and  hedging
activity.  Under  SFAS 133,  CRLP will be  required  to account  for  derivative
financial  instruments,  if any, at their fair market  value,  and make  certain
required  disclosures.  CRLP is required to adopt SFAS 133 for periods beginning
January 1, 2000.

         Segment  Reporting  - In 1998,  CRLP  adopted  Statement  of  Financial
Accounting  Standards  No.  131 (SFAS  131),  Disclosure  about  Segments  of an
Enterprise and Related  Information.  Reportable  segments are identified  based
upon  management's   approach  for  making  operating  decisions  and  assessing
performance  of  CRLP.  The  adoption  of SFAS  131 did not  affect  results  of
operations  or  financial  position  but did require the  disclosure  of segment
information (see Note 7).

         Software  Development - CRLP capitalizes  certain internally  developed
software  costs.   Costs   capitalized  in  connection  with  internal  software
development  are  amortized  using the  straight-line  method over the estimated
useful life of the software.

         Reclassifications - Certain immaterial reclassifications have been made
to the 1996 and 1997  financial  statements in order to conform them to the 1998
financial statement presentation. <PAGE>

3. Property Acquisitions and Dispositions

          CRLP  acquired  12  properties  and  invested in an  additional  joint
venture during 1998, 25 properties during 1997, and 11 properties during 1996 at
aggregate  costs  of  $348.6  million,   $430.6  million,  and  $173.7  million,
respectively.  CRLP funded these acquisitions with cash proceeds from its public
offerings  of equity (see Note 9) and debt (see Note 8),  advances on bank lines
of credit,  the  issuance of limited  partnership  units in CRLP,  the  proceeds
received  from the  formation  of joint  ventures  (see  Note 6),  and cash from
operations.

                                                              Effective
                                                             Acquisition
                                         Location                Date         
--------------------------------------------------------------------------------
Retail Properties:
Briarcliffe Mall ..................   Myrtle Beach, SC     July 1, 1996
Colonial Promenade Wekiva .........   Orlando, FL          October 1, 1996
Colonial Promenade Bardmoor .......   St. Petersburg, FL   October 1, 1996
Colonial Promenade
      Hunter's Creek ..............   Orlando, FL          October 1, 1996
Colonial Shoppes Inverness ........   Birmingham, AL       March 24, 1997
Beechwood Shopping Center .........   Athens, GA           March 27, 1997
Brookwood Village .................   Birmingham, AL       May 13, 1997
Lakewood Plaza ....................   Jacksonville, FL     October 1, 1997
Glynn Place Mall ..................   Brunswick, GA        November 1, 1997
Lakeshore Mall ....................   Gainesville, GA      November 1, 1997
Valdosta Mall .....................   Valdosta, GA         November 1, 1997
Holly Hill Mall ...................   Burlington, NC       November 1, 1997
Yadkin Town Center ................   Yadkinville, NC      November 1, 1997
Mayberry Mall .....................   Mount Airy, NC       November 1, 1997
Quaker Village ....................   Greensboro, NC       November 1, 1997
Stanly Plaza ......................   Locust, NC           November 1, 1997
Rivermont Plaza ...................   Chattanooga, TN      November 1, 1997
Staunton Mall .....................   Staunton, VA         November 1, 1997
Abingdon Village ..................   Abingdon, VA         November 1, 1997
Village at Roswell Summit .........   Atlanta, GA          December 31, 1997
Orlando Fashion Square ............   Orlando, FL          May 29, 1998
Shoppes at Mansell ................   Atlanta, GA          July 1, 1998
Parkway City Mall .................   Huntsville, AL       December 9, 1998
Bel Air Village ...................   Mobile, AL           December 29, 1998


Multifamily Properties:
Colonial Village at Ashford Place .   Mobile, AL           April 1, 1996
Colonial Village at Hillcrest .....   Mobile, AL           April 1, 1996
Colonial Grand at Spring Creek ....   Macon, GA            April 1, 1996
Colonial Grand at Galleria Woods ..   Birmingham, AL       April 15, 1996
Colonial Grand at Mountain Brook ..   Birmingham, AL       May 10, 1996
Colonial Village at Cahaba Heights    Birmingham, AL       May 10, 1996
Colonial Grand at Barrington ......   Macon, GA            September 13, 1996
Colonial Village at Trussville ....   Birmingham, AL       April 1, 1997
Colonial Village at Timothy Woods .   Athens, GA           July 1, 1997
Colonial Grand at Oakleigh ........   Pensacola, FL        July 1, 1997
Colonial Grand at Natchez Trace ...   Jackson, MS          August 1, 1997
Colonial Village at Caledon Wood ..   Greenville, SC       October 1, 1997
Colonial Village at Ashley Plantation Bluffton, SC         May 1, 1998
Colonial Village at Haverhill .....   San Antonio, TX      July 1, 1998
Colonial Village at Walton Way ....   Augusta, GA          July 1, 1998
Colonial Village at River Hills I .   Tampa, FL            July 1, 1998

Office Properties:
Riverchase Center .................   Birmingham, AL       January 1, 1997
Lakeside Office Park ..............   Huntsville, AL       May 23, 1997
Progress Center ...................   Huntsville, AL       June 24, 1997
Mansell Business Park .............   Atlanta, GA          July 31, 1997
Perimeter Corporate Park ..........   Huntsville, AL       January 1, 1998
Independence Plaza ................   Birmingham, AL       January 1, 1998
Shades Brook Building .............   Birmingham, AL       July 1, 1998
Mansell Overlook 200 ..............   Atlanta, GA          July 1, 1998
Concourse Center ..................   Tampa, FL            July 1, 1998

<PAGE>
         Results  of  operations  of  these  properties,   subsequent  to  their
respective  acquisition  dates,  are  included  in  the  consolidated  financial
statements of CRLP. The cash paid to acquire these properties is included in the
statements  of cash flows.  The  acquisitions  during 1998,  1997,  and 1996 are
comprised of the following:

<TABLE> 
<CAPTION>
(in thousands)                               1998         1997         1996
--------------                               ----         ----         ----

Assets purchased:
<S>                                       <C>          <C>          <C>      
    Land, buildings, and equipment ....   $ 348,564    $ 430,614    $ 173,277
    Other assets ......................        --              4          455
-------------------------------------------------------------------------------- 
                                            348,564      430,618      173,732
Notes and mortgages assumed ...........      (7,509)     (74,910)     (40,444)
Other liabilities assumed .............      (5,070)      (8,716)      (1,774)
Issuance of limited partnership units of
            Colonial Realty Limited 
            Partnership                     (23,400)     (45,061)      (5,587)
--------------------------------------------------------------------------------
Cash paid ..............................   $ 312,585    $ 301,931    $ 125,927
--------------------------------------------------------------------------------

</TABLE>

          During 1998,  CRLP  contributed  Orlando  Fashion  Square into a joint
venture  equally owned by CRLP and an unrelated  party.  Proceeds  received from
this  contribution  were used to fund additional  acquisitions and developments.
CRLP accounts for its 50% interest in the joint venture as an equity  investment
(see Note 6).

         CRLP's  unaudited  pro forma  results  of  operations,  assuming  these
acquisitions and disposition had been effected by CRLP prior to January 1, 1997,
are as follows:

<TABLE> 
<CAPTION>
                                        For the Year Ended   For the Year Ended
                                        December 31, 1997    December 31, 1998
(in thousands)                             (unaudited)          (unaudited)
--------------------------------------------------------------------------------
<S>                                         <C>                   <C>      
Revenues                                    $ 265,903             $ 250,713
--------------------------------------------------------------------------------
Net Income available to 
   common unitholders                        $ 61,481              $ 65,980
--------------------------------------------------------------------------------
Net Income per unit-basic and diluted            1.65                  1.60
--------------------------------------------------------------------------------
</TABLE>


4. Land, Buildings, and Equipment

Land,  buildings,  and equipment  consists of the following at December 31, 1998
and 1997:

<TABLE>
<CAPTION>
(in thousands) .........        1998           1997
-----------------------------------------------------

<S>                        <C>            <C>        
Buildings ..............   $ 1,416,937    $ 1,140,504
Furniture and fixtures .        43,074         30,147
Equipment ..............        12,027          3,087
Land improvements ......        35,580         27,343
Tenant improvements ....        18,733         15,273
-----------------------------------------------------
                             1,526,351      1,216,354
Accumulated depreciation      (169,522)      (124,254)
-----------------------------------------------------
                             1,356,829      1,092,100
Land ...................       210,011        176,330
-----------------------------------------------------
                           $ 1,566,840    $ 1,268,430
=====================================================

</TABLE>

5. Undeveloped Land and Construction in Progress

         During  1998,  CRLP  completed  the  construction  of five  multifamily
development  projects at a combined total cost of $77.0 million. The multifamily
development  projects  produced  1,260 new apartment  units that were  completed
during 1998 and 1997. The completed multifamily developments are as follows:

<TABLE>
<CAPTION>
                                                             Total   Total   
                                                             Units    Cost
Completed Developments:
<S>                                                           <C>   <C>    
Colonial Village at River Hills II         Tampa, FL          276   $14,186
Colonial Village at Inverness              Birmingham, AL      84     6,631
Colonial Grand at Hunter's Creek           Orlando, FL        496    33,426
Colonial Grand at Bayshore II              Bradenton, FL      164     9,289
Colonial Grand at Wesleyan                 Macon, GA          240    13,503
--------------------------------------------------------------------------------
                                                            1,260   $77,035
================================================================================
</TABLE>


         CRLP  currently  has 15 active  expansion and  development  projects in
progress and various parcels of land available for expansion,  construction,  or
sale. During 1998, CRLP completed construction on 596 apartment units (including
the remaining units completed in the projects  mentioned above), and CRLP has an
additional  2,978 apartment units in progress at December 31, 1998.  Undeveloped
land and  construction in progress is comprised of the following at December 31,
1998:

<TABLE>
 <CAPTION>
                                                                                           Costs
                                                                Estimated   Total Costs Capitalized 
                                                                                          to Date
                                                                Completion(in thousands)(in thousands)
-----------------------------------------------------------------------------------------------------
Multifamily Projects:
<S>                                                           <C>   <C>    <C>        <C>     
      Colonial Grand at Inverness Lakes II (expansion)        132   1999   $  8,900   $  8,838
      Colonial Village at Ashley Plantation (expansion)       214   1999     13,800      2,949
      Colonial Grand at Edgewater II (expansion)              192   1999     12,600     12,487
      Colonial Grand at Wesleyan II (expansion)                88   1999      6,200      5,945
      Colonial Grand at Liberty Park                          300   2000     26,218      2,924
      Colonial Grand at Heather Glen                          448   2000     31,234      9,800
      Colonial Grand at Citrus Park                           176   1999     12,300      9,482
      Colonial Grand at Lakewood Ranch                        288   1999     20,300     17,839
      Colonial Grand at Cypress Crossing                      250   1999     20,000     19,176
      Colonial Grand at Madison                               336   2000     23,000      4,690
      Colonial Grand at Promenade                             384   2000     27,878      4,320
      Colonial Grand at Ridgeland                             170   2000     12,400      1,454
----------------------------------------------------------------------------------------------   
         Total Multifamily Projects                         2,978           214,830     99,904
----------------------------------------------------------------------------------------------
Retail Projects:
      Colonial Promenade Trussville                       386,000   2001     31,000      5,321
----------------------------------------------------------------------------------------------        
         Total Retail Projects                            386,000            31,000      5,321
----------------------------------------------------------------------------------------------
Office Projects:
      1800 International Park                             149,457   1999     16,600      3,950
      Colonial Center at Research Park                    133,368   1999     13,000      1,373
----------------------------------------------------------------------------------------------
         Total Office Projects                            282,825            29,600      5,323
----------------------------------------------------------------------------------------------
      Other Projects and Undeveloped Land                                               17,788
----------------------------------------------------------------------------------------------
                                                                            $275,430  $128,336
==============================================================================================
</TABLE>

         Interest capitalized on construction in progress during 1998, 1997, and
1996 was $3.7 million, $4.1 million, and $3.7 million, respectively.

6. Investment in Partnerships

         Investment  in  partnerships  at December 31, 1998 and 1997 consists of
the following:

<TABLE>
<CAPTION>
                                                  Percent
(in thousands)                                     Owned       1998     1997
-----------------------------------------------------------------------------
Office:

<S>                                                <C>    <C>         <C>   
600 Building Partnership, Birmingham, AL           33.34% $    (30)   $  (8)
Anderson Block Properties Partnership,
          Montgomery, AL                           33.33%      (24)     (38)
-----------------------------------------------------------------------------
                                                               (54)     (46)
Retail:
Orlando Fashion Square, Orlando, FL                50.00%   20,241       --
Parkway Place LP, Huntsville, AL                   50.00%    5,859       --
-----------------------------------------------------------------------------
                                                            26,100       --
Other:
Colonial/Polar-BEK Management Company,
          Birmingham, AL                           50.00%       33       18
----------------------------------------------------------------------------- 
                                                                33       18
-----------------------------------------------------------------------------
                                                          $ 26,079    $ (28)
=============================================================================

</TABLE>
         During December 1998, CRLP entered into two joint ventures. The Parkway
Place Limited Partnership owns and operates the Parkway City Mall in Huntsville,
Alabama.  At December 31, 1998, CRLP had invested  approximately $5.7 million in
the joint venture and had an ending net investment balance of $5.9 million.  The
Orlando  Fashion  Square Joint  Venture  owns and  operates the Orlando  Fashion
Square in  Orlando,  Florida.  CRLP's  net  investment  in the joint  venture at
December 31, 1998 was $20.2 million. Both joint ventures have been accounted for
using the equity method.


<PAGE>



         The  summarized  financial   information  related  to  the  significant
partially owned entities is as follows:

December 31, 1998                                  (in thousands)
Balance Sheet
Assets
  Land, building, and equipment, net .............   $ 113,799
  Construction in progress .......................       3,369
  Other assets ...................................       1,175
  ------------------------------------------------------------
           Total assets ..........................   $ 118,343
  ------------------------------------------------------------

Liabilities and Partners' Equity
  Notes payable ..................................   $  65,000
  Other liabilities ..............................         392
  Partners' Equity ...............................      52,951
  ------------------------------------------------------------
           Total liabilities and partners' capital   $ 118,343
  ------------------------------------------------------------

Statement of Operations
Revenues .........................................   $     246
Operating expenses ...............................         (76)
Depreciation and amortization ....................         (14)
--------------------------------------------------------------
         Net income ..............................   $     156
 -------------------------------------------------------------

7. Segment Information

         CRLP  is  organized  into,  and  manages  its  business  based  on  the
performance of, three separate and distinct  operating  divisions:  Multifamily,
Retail,  and  Office.  Each  division  has a  separate  management  team that is
responsible for acquiring,  developing,  managing, and leasing properties within
each division.  The applicable  accounting policies of the segments are the same
as  those  described  in  the  "Summary  of  Significant  Accounting  Policies."
Management  evaluates the performance of its segments and allocates resources to
them based on net operating  income (NOI). NOI consists of revenues in excess of
general operating expenses, salaries and wages, repairs and maintenance,  taxes,
licenses,  and insurance.  Segment  information for the years ended December 31,
1998, 1997, and 1996 is as follows:

(in thousands)
1998                   Retail     Office   Multifamily     Total
-----------------------------------------------------------------
Divisional revenues   $117,572   $ 34,409   $104,462   $  256,443
NOI                     83,059     24,307     68,789      176,155
Divisional assets      683,042    240,161    783,097    1,706,300

1997
-----------------------------------------------------------------
Divisional revenues   $ 71,179   $ 16,224   $ 95,503   $  182,906
NOI                     51,500     11,615     62,658      125,773
Divisional assets      577,954    147,974    652,923    1,378,851

1996
-----------------------------------------------------------------
Divisional revenues   $ 45,775   $  7,337   $ 80,914   $  134,026
NOI                     33,455      4,813     53,011       91,279
Divisional assets      306,771     32,457    595,397      934,625

<PAGE>


         A  reconciliation  of total segment  revenues to total revenues,  total
segment  NOI to income from  operations,  and total  divisional  assets to total
assets,  for the years ended  December 31, 1998,  1997,  and 1996,  is presented
below:

<TABLE>
<CAPTION>
(in thousands)

Revenues                                          1998           1997         1996
----------------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>      
Total divisional revenues                  $   256,443    $   182,906    $ 134,026
Unallocated corporate revenues                     924          1,220          855
----------------------------------------------------------------------------------
                 Total revenues            $   257,367    $   184,126    $ 134,881
----------------------------------------------------------------------------------

NOI                                               1998           1997         1996
----------------------------------------------------------------------------------
Total divisional NOI                       $   176,155    $   125,773    $  91,279
Unallocated corporate revenues                     924          1,220          855
General and administrative expenses             (7,675)        (6,448)      (4,071)
Depreciation                                   (46,841)       (31,956)     (22,025)
Amortization                                    (1,806)        (1,322)      (1,509)
Other                                               (9)          --           --
----------------------------------------------------------------------------------
                 Income from operations    $   120,748    $    87,267    $  64,529
----------------------------------------------------------------------------------

Assets                                            1998           1997         1996
----------------------------------------------------------------------------------
Total divisional assets                    $ 1,706,300    $ 1,378,851    $ 934,625
Unallocated corporate assets                    50,248(1)      17,809       13,322
----------------------------------------------------------------------------------
                 Total assets              $ 1,756,548    $ 1,396,660    $ 947,947
----------------------------------------------------------------------------------
</TABLE>
(1) Includes the  Company's  investment in partially  owned  entities of $25,181
(see Note 6).


8. Notes and Mortgages Payable

Notes and  mortgages  payable  at  December  31,  1998 and 1997  consist  of the
following:

(in thousands)                   1998       1997
--------------------------------------------------
Revolving credit agreement     $174,489   $117,086

Mortgages and other notes:
             4.50% to 6.00%      66,305     66,305
             6.01% to 7.50%     471,694    316,701
             7.51% to 9.00%     179,187    175,207
             9.01% to 10.25%     17,647     26,745
--------------------------------------------------
                               $909,322   $702,044
 --------------------------------------------------

         As of December  31,  1998,  CRLP has an  unsecured  bank line of credit
providing  for  total  borrowings  of up to $250  million.  This  line of credit
agreement  bears interest at LIBOR plus 80 to 135 basis points,  is renewable in
July 2000 and provides for a two-year  amortization  in the case of  nonrenewal.
The line of credit agreement  includes a competitive bid feature that will allow
CRLP to convert up to $125 million under the line of credit to a fixed rate, for
a fixed term not to exceed 90 days.  The credit  facility is  primarily  used by
CRLP to finance  property  acquisitions  and  development and has an outstanding
balance at December 31, 1998, of $174.5 million.  The weighted  average interest
rate of this  short-term  borrowing  facility,  including  the  competitive  bid
balance, was 6.42% and 6.70% at December 31, 1998 and 1997, respectively.

         During 1998 and 1997, CRLP completed five public offerings of unsecured
debt securities  totaling $350 million.  The proceeds of the offerings were used
to fund acquisitions,  development  expenditures,  repay balances outstanding on
CRLP's revolving credit facility, repay certain notes and mortgages payable, and
for general corporate purposes.  Details relating to these debt offerings are as
follows:

<TABLE>
<CAPTION>
                                                                 Gross Proceeds

Date                  Type of Note     Maturity           Rate   (in thousands)
--------------------------------------------------------------------------------

<S>                    <C>            <C>                 <C>        <C>     
January 1997           Medium-term    January 2003        7.16%      $ 50,000
July 1997              Medium-term    July 2004           6.96%      $ 75,000
August 1997            Medium-term    August 2005         6.96       $ 25,000
September 1997         Medium-term    September 2005      6.98%      $ 25,000
July 1998              Senior         July 2007           7.00       $175,000

</TABLE>

          CRLP has entered into an interest rate cap agreement which limits debt
of $50  million to an  interest  rate of 8.00%  through  May 2, 2000.  CRLP paid
$227,500 for the interest rate cap,  which is being  amortized  over the life of
the agreement.  Subsequent to year-end, CRLP entered into two interest rate swap
agreements.  On January 4, 1999, Colonial entered into an interest rate swap for
$50  million of its line of credit at 4.97%  plus 80 to 135 basis  points and on
January 15, 1999, CRLP entered into an interest rate swap for $52 million of tax
exempt bonds at a rate of 3.23%.  Both of these  interest  rate swap  agreements
have one-year  terms and any payments made or received  under the agreements are
recognized  as  adjustments  to  interest  expense as  incurred.  Treasury  lock
agreements  are used by CRLP, to set interest  rates in  anticipation  of public
debt offerings.  CRLP is exposed to credit losses in the event of nonperformance
by the  counterparties  to its  interest  rate cap and  nonderivative  financial
assets  but has no  off-balance-sheet  credit  risk  of  accounting  loss.  CRLP
anticipates,  however,  that  counterparties will be able to fully satisfy their
obligations  under the  contracts.  CRLP  does not  obtain  collateral  or other
security to support  financial  instruments  subject to credit risk but monitors
the credit standing of counterparties.

         At December 31, 1998, CRLP had $704.5 million in unsecured indebtedness
including  balances  outstanding  on its bank line of credit and  certain  other
notes  payable.  The  remainder  of  CRLP's  notes  and  mortgages  payable  are
collateralized  by the assignment of rents and leases of certain  properties and
assets with an aggregate net book value of $320.8 million at December 31, 1998.

         The aggregate maturities of notes and mortgages payable at December 31,
1998, are as follows:

(in thousands)                                                 
---------------------------------------------
1999                                $  12,809
2000                                  224,308
2001                                   79,128
2002                                    1,404
2003                                  108,652
Thereafter                            483,021
---------------------------------------------
                                     $909,322
---------------------------------------------

         Based on  borrowing  rates  available  to CRLP for notes and  mortgages
payable  with  similar  terms,  the  estimated  fair  value of CRLP's  notes and
mortgages payable at December 31, 1998 and 1997 was approximately $912.6 million
and $711.0 million, respectively.

         Certain loan agreements of CRLP contain  restrictive  covenants  which,
among other things, require maintenance of various financial ratios. At December
31, 1998, CRLP was in compliance with these covenants.

         Certain partners of CRLP have guaranteed  indebtedness of CRLP totaling
$33.5 million at December 31, 1998. These  individuals have not been indemnified
by CRLP.
<PAGE>

9. Cash Contributions

     During 1998, 1997 and 1996, the Company completed eight public offerings of
common stock totaling  12,575,070  common shares of beneficial  interest (Common
Shares) and one public offering of preferred stock  (Preferred  Shares) totaling
5,000,000.  The proceeds of the offerings  were  contributed to CRLP and used to
fund  acquisition and development  expenditures,  repay balances  outstanding on
CRLP's revolving credit  agreement,  repay certain notes and mortgages  payable,
and for general corporate  purposes.  Details relating to these equity offerings
are as follows:

<TABLE> 
<CAPTION>
                                                             (in thousands)
                                                     -------------------------------
                  Number of                Price Per  Gross       Offering      Net
                  Offering       Shares      Share   Proceeds       Costs    Proceeds
--------------------------------------------------------------------------------------
<S>               <C>         <C>         <C>        <C>         <C>         <C>      
January 1996      Common      4,600,000   $   24.63  $ 113,275   $   6,632   $ 106,643
January 1997      Common      1,500,000   $   29.88  $  44,812   $   1,457   $  43,355
July 1997         Common      1,700,000   $   30.94  $  52,594   $   2,945   $  49,649
November 1997     Preferred   5,000,000   $   25.00  $ 125,000   $   4,451   $ 120,549
December 1997     Common        165,632   $   30.19  $   5,000   $     330   $   4,670
February 1998     Common        375,540   $   30.00  $  11,266   $     627   $  10,639
March 1998        Common        806,452   $   31.00  $  25,000   $   1,389   $  23,611
March 1998        Common        381,046   $   31.00  $  11,812   $     656   $  11,156
April 1998        Common      3,046,400   $   30.13  $  91,773   $   4,973   $  86,800

</TABLE>

10. Employee Benefits

         Employees  of CRLP and  Colonial  Properties  Services,  Inc.  ("CPSI")
participate in a noncontributory  defined benefit pension plan designed to cover
substantially all employees. Pension expense includes service and interest costs
adjusted by actual  earnings on plan assets and  amortization  of prior  service
cost and the transition  amount. The benefits provided by this plan are based on
years of service and the employee's final average compensation. CRLP's policy is
to fund the minimum required  contribution  under ERISA and the Internal Revenue
Code.

         The  table  below  presents  a summary  of  pension  plan  status as of
December 31, 1998 and 1997, as it relates to the employees of CRLP and CPSI.

(amounts in thousands)                                          1998       1997
------------------------------------------------------------   ------    ------
Actuarial present value of accumulated benefit obligation
            including vested benefits of $1,193 and $828
            at December 31, 1998 and 1997, respectively        $1,368    $  961
Actuarial present value of projected benefit obligations
            at year end                                        $2,593    $1,957
Fair value of assets at year end                               $  981    $  861
Accrued pension cost                                           $  868    $  536
Net pension cost for the year                                  $  393    $  310

<PAGE>

         Actuarial  assumptions used in determining the actuarial  present value
of accumulated benefit obligations at January 1, 1998, are as follows:

                                                               1998       1997
                                                               ----       ----

Weighted-average interest rate                                 6.75%      7.25%
--------------------------------------------------------------------------------
Increase in future compensation levels                         4.00%      4.25%

         CRLP and CPSI  participate  in a salary  reduction  profit sharing plan
covering  substantially  all  employees.   This  plan  provides,   with  certain
restrictions,  that  employees may  contribute a portion of their  earnings with
CRLP and CPSI matching one-half of such contributions, solely at CRLP and CPSI's
discretion.  Contributions by CRLP and CPSI were $178,000, $159,000 and $164,000
for the years ended December 31, 1998, 1997 and 1996, respectively.

11. Leasing Operations

         CRLP is in the business of leasing and  managing  office,  retail,  and
multifamily  property.  For  properties  owned by CRLP,  minimum  rentals due in
future periods under noncancelable operating leases extending beyond one year at
December 31, 1998, are as follows:

                                                               (in thousands)
                                                             -----------------
         1999                                                $        107,651
         2000                                                          90,435
         2001                                                          77,498
         2002                                                          67,999
         2003                                                          55,640
         Thereafter                                                   228,509
                                                             -----------------
                                                             $        627,732
                                                             =================

         The noncancelable  leases are with tenants engaged in retail and office
operations  in  Alabama,  Georgia,  Florida,  North  Carolina,  South  Carolina,
Tennessee,  and Virginia.  Performance in accordance  with the lease terms is in
part  dependent  upon  the  economic  conditions  of the  respective  areas.  No
additional  credit risk  exposure  relating to the leasing  arrangements  exists
beyond the accounts  receivable  amounts  shown in the December 31, 1998 balance
sheet. Leases with tenants in multifamily  properties are generally for one year
or less and are thus excluded from the above table.  Substantially all of CRLP's
land,  buildings,  and equipment  represent  property leased under the above and
other short-term leasing arrangements.

         Rental income for 1998, 1997, and 1996 includes percentage rent of $4.0
million,  $2.2 million, and $1.8 million,  respectively.  This rental income was
earned when certain  retail tenants  attained  sales volumes  specified in their
respective lease agreements.

12. Related Party Transactions

     CRLP has generally  used  affiliated  construction  companies to manage and
oversee its development  projects.  CRLP paid $40.0 million,  $41.3 million, and
$42.6 million  ($37.3  million,  $39,8  million,  and $41.2 million of which was
subsequently  then  paid  to  unaffiliated  subcontractors,   respectively)  for
property development costs to Lowder Construction Company,  Inc., a construction
company  owned  by  The  Colonial  Company  ("TCC")  (an  affiliate  of  certain
shareholders and minority interest holders), during the years ended December 31,
1998, 1997, and 1996,  respectively.  CRLP had outstanding construction invoices
and retainage payable to Lowder Construction Company, Inc. totaling $4.3 million
and $2.3  million at December  31, 1998 and 1997,  respectively.  CRLP also paid
$0.4 million,  $5.2 million, and $27.9 million for property development costs to
two  construction  companies  owned by three  trustees  during  the years  ended
December  31,  1998,  1997,  and  1996,   respectively.   CRLP  had  outstanding
construction  invoices and  retainage  payable to these  construction  companies
totaling  $1.2  million  at  December  31,  1998.   There  were  no  outstanding
construction  invoices and retainage payable to these construction  companies at
December 31, 1997.

         Colonial  Commercial  Investments,  Inc.  ("CCI"),  which  is  owned by
trustees  James K.  Lowder and  Thomas H.  Lowder  has  guaranteed  indebtedness
totaling $1.3 million at December 31, 1998 for Anderson Block Properties,  which
is a partnership  accounted for by CRLP under the equity method  (listed in Note
6). CRLP has indemnified CCI from its guarantees of this indebtedness.

         On July 1, 1998, CRLP acquired a 79.8% interest in Colonial  Village at
Haverhill (formerly Haverhill Apartments).  The remaining 20.2% interest in this
property was acquired by entities that are owned by a trustee of CRLP.

         In connection with the Riverchase  Center  acquisition,  CRLP initially
acquired a 73% interest in a portion of the office complex.  Effective  November
1, 1997,  CRLP  purchased  the remaining 27% interest in the property by issuing
114,798  limited  partnership  units to the  seller.  The seller is a trustee of
CRLP.

         In November  1997,  CRLP  purchased  Polar BEK's 50%  interest in Polar
BEK/Colonial  Partnership I (a  partnership  previously  accounted for under the
equity method of  accounting),  a partnership  which owned a 168,000 square foot
office building in Birmingham for $7.4 million.  This purchase  increased CRLP's
ownership from 50% to 100%.

         Following is a summary of property acquisitions from entities for which
directors of the Company are involved as a partner or shareholder:

<TABLE>
<CAPTION>

         Date                 Property and Land Acquired           Purchase Price            Units Issued
----------------------- --------------------------------------- --------------------- ----------------------------
<S>                          <C>                                    <C>                     <C>               
November 1998                Colonial  Center at Research  Park     $1.0 million            36,647 CRLP  Units
September  1998              1800  International  Park              $1.8 million(1) 
October 1998                 Colonial Grand at Promenade            $1.5 million            34,700 CRLP Units 
July 1998                    Mansell Overlook 200                  $27.7 million           396,365 CRLP Units 
July 1998                    Shoppes at Mansell                     $3.7 million            76,809 CRLP Units 
March 1997                   Colonial Shoppes Inverness             $3.0 million            16,303 CRLP Units 
April 1997                   Colonial  Village at Trussville       $20.5 million            57,072 CRLP Units
July 1997                    Colonial  Village at Timothy  Woods   $12.8 million            27,275 CRLP Units
August 1997                  Colonial Grand at Inverness  Lakes II  $0.5 million            10,822 CRLP Units
December  1997               Village at Roswell  Summit             $3.0 million            34,777 CRLP Units 
</TABLE>
(1) In connection with purchase,  the Company issued a $1.8 million note payable
to a related entity.

         During 1997 CRLP, through CPSI, exercised options to purchase land from
a related party in the amount of $366,000.  As of December 31, 1998, all options
to  purchase  land from a related  party had  expired.  In December  1997,  CPSI
acquired a parcel of land from CCI and sold the land,  along  with an  adjoining
parcel of land, to an unaffiliated  third party for a net gain of $60,000.  Also
in December 1997,  CPSI sold a separate parcel of land to CCI, which resulted in
a net gain of $120,000.

         CRLP and its  subsidiaries  provided  certain  services to and received
certain  services from related  entities which resulted in the following  income
(expense) included in the accompanying statements of income:

                                                 (Amounts in thousands)
                                                1998        1997        1996
                                            ----------------------------------
Rental income                                  $1,027       $879        $758
Management/leasing fee income                     289        368         356
     Insurance brokerage expense                 (131)      (182)       (187)
    Rental expense                                  0       (156)       (211)


<PAGE>

13.      Subsequent Event

         On January 23,  1999,  the Board of Trustees of the Company  declared a
cash  distribution  to  partners of CRLP in the amount of $.58 per share and per
partnership unit, totaling $21.3 million.  The distribution was made to partners
of record as of February 3, 1999, and was paid on February 10, 1999.
<PAGE>

Item 9.              Changes in and Disagreements with Accountants on Accounting
                     and Financial Disclosure.

           None.

<PAGE>
                                    PART III

Item 10.             Directors and Executive Officers of the Registrant.

           CRLP is managed by the  Company,  the  general  partner of CRLP.  The
directors and officers of the Company are as follows:

          Thomas H.  Lowder,  49,  has been a trustee of the  Company  since its
formation  in July 1993.  He is the chairman of the board,  president  and chief
executive  officer of the  Company.  Mr.  Lowder  became  President  of Colonial
Properties,  Inc., the Company's  predecessor,  in 1976, and since that time has
been actively engaged in the acquisition,  development,  management, leasing and
sale of multifamily, retail and office properties for the Company. Mr. Lowder is
a member and past president of the Alabama Chapter of the Commercial  Investment
Real  Estate  Institute.  Mr.  Lowder is a former  state  Chairman  of the Young
Presidents'  Organization  and is a  member  of the  Birmingham  Area  Board  of
Realtors, the National Association of Industrial Office Parks, the International
Council  of  Shopping  Centers  and the  National  Association  of  Real  Estate
Investment Trusts (NAREIT).  He serves on the Board of Directors of, among other
companies,  the Children's Hospital of Alabama,  American Red Cross - Birmingham
Area Chapter and the United Way of Central  Alabama.  Mr.  Lowder is a member of
the  Executive  Committee  of the Board of Trustees and a member of the board of
directors of the Management Corporation.

          Carl F.  Bailey,  68, has been a trustee of the Company and a director
of Colonial Properties Services,  Inc., which conducts the Company's third-party
management,  leasing and brokerage  operations  (the  "Management  Corporation")
since  September  1993.  Mr.  Bailey  is  a  former   co-chairman  of  BellSouth
Telecommunications,  Inc.  and former  chairman and chief  executive  officer of
South Central Bell Telephone  Company,  positions from which he retired in 1991.
He worked for South Central Bell in a number of  capacities  over the past three
and a half  decades  and was  elected  president  and a member  of the  board of
directors in 1982.  Mr.  Bailey is president of BDI,  vice chairman of Polymers,
Inc.,  and a member of the board of directors  of  SouthTrust  Corporation.  Mr.
Bailey  serves on the board of  trustees of  Birmingham  Southern  College.  Mr.
Bailey is a member  of the  Executive  Committee  and is  chairman  of the Audit
Committee of the Board of Trustees.

          M.  Miller  Gorrie,  63, is a trustee of the  Company.  Mr.  Gorrie is
chairman of the board and chief executive officer of Brasfield & Gorrie, L.L.C.,
a  general  contracting  firm  located  in  Birmingham,  Alabama  that is ranked
consistently  among  ENR's  "Top 100  Contractors."  He  serves  on the board of
directors of Winsloew  Furniture  Co. and is a past  director of AmSouth Bank of
Alabama, the Southern Research Institute,  the Alabama Chamber of Commerce,  the
Associated  General  Contractors,  the Building Science Advisory Board of Auburn
University,  the Business Council of Alabama and the United Way of Alabama.  Mr.
Gorrie is chairman of the  Executive  Committee and is a member of the Executive
Compensation  Committee  of the  Board of  Trustees.  He also is a member of the
executive  compensation  committee of the board of  directors of the  Management
Corporation.

          William M.  Johnson,  52, has been a trustee of the Company since July
1997,  following the first stage of the Company's  acquisition from Mr. Johnson,
by merger,  of six office buildings in Mansell 400 Business Center,  the largest
Class-A  multi-tenant  office park in the North Fulton (Atlanta,  Georgia) area,
and additional office and retail space totaling 560,600 square feet. Mr. Johnson
is president and chief executive officer of Johnson Development  Company, a real
estate  development,  construction and management firm which he founded in 1978.
As chief  executive  officer,  he directed the development of 1.2 million square
feet of office,  warehouse,  retail and hotel space  having a value in excess of
$117  million.  Mr.  Johnson  has been an active  member of the  Roswell  United
Methodist  Church and the North  Fulton  Chamber of  Commerce,  was the founding
chairman of the board of the Coalition for Drug-Free  North Fulton,  is a member
of the board of directors  and the  executive  committee  of the American  Tract
Society  Ministry,  and is a member  of the  board  of  directors  of Reach  Out
Ministries.  Mr.  Johnson  serves  as  an  advisor  in  strategic  planning  for
not-for-profit agencies in Colorado, Montana, Texas and Kentucky. Mr. Johnson is
a member of the Executive Compensation Committee of the Board of Trustees of the
Company.

          James K.  Lowder,  49,  has been a trustee  of the  Company  since its
formation  in July  1993.  Mr.  Lowder is also  chairman  of the board and chief
executive  officer  of The  Colonial  Company,  chairman  of the board of Lowder
Construction  Company,  Inc.,  chairman of the board of Lowder New Homes,  Inc.,
chairman of the board of Lowder Realty Company,  Inc.,  chairman of the board of
Colonial Commercial Realty, Inc., chairman of the board of Colonial Homes, Inc.,
chairman of the board of American Colonial  Insurance  Company,  chairman of the
board and president of Colonial  Commercial  Investments,  Inc. and treasurer of
Colonial  Insurance  Agency.  He also is a member of the Alabama  Association of
Realtors,  the Montgomery  Board of Realtors,  the Home Builders  Association of
Alabama, and the Greater Montgomery Home Builders  Association,  and is a member
of the board of directors of Alabama  Power  Company.  Mr. Lowder is a member of
the Executive Compensation Committee of the Board of Trustees. Mr. Lowder is the
brother of Thomas H. Lowder.

          Herbert A. Meisler, 71, is a trustee of the Company. Together with Mr.
Ripps, he formed The Rime Companies, a real estate development, construction and
management firm  specializing in the development of multifamily  properties.  In
December 1994, the Company  purchased ten  multifamily  properties from partners
associated with The Rime Companies.  While with The Rime Companies,  Mr. Meisler
oversaw the development and  construction of  approximately  15,000  multifamily
apartment units in the  southeastern  United States.  He currently serves on the
board of directors of the  Community  Foundation of South Alabama and the Mobile
Airport Authority.  He is a past director of the Alabama Eye and Tissue Bank and
past president of the Mobile Jewish Welfare Fund. Mr. Meisler is a member of the
Executive  Compensation  Committee  (and its Option Plan  Subcommittee)  and the
Audit Committee of the Board of Trustees.

          Claude  B.  Nielsen,  48,  has been a  trustee  of the  Company  since
September 1993. Since 1990, Mr. Nielsen has been president of Coca-Cola Bottling
Company United,  Inc.,  headquartered  in Birmingham,  Alabama,  serving also as
chief operating  officer from 1990 to 1991 and as chief executive  officer since
1991.  Prior to 1990, Mr.  Nielsen  served as president of Birmingham  Coca-Cola
Bottling  Company.  Mr.  Nielsen  is  on  the  board  of  directors  of  AmSouth
Bancorporation.  He also  currently  serves as a board member of the  Birmingham
Civil Rights  Institute and the  Birmingham  Airport  Authority.  Mr. Nielsen is
chairman of the Executive Compensation Committee of the Board of Trustees and is
chairman of its Option Plan Subcommittee.

          Harold W. Ripps,  60, is a trustee of the Company.  Together  with Mr.
Meisler, they formed The Rime Companies, a real estate development, construction
and management firm  specializing in the development of multifamily  properties.
In December 1994, the Company purchased ten multifamily properties from partners
associated  with The Rime Companies.  While with The Rime  Companies,  Mr. Ripps
oversaw the development and  construction of  approximately  15,000  multifamily
apartment  units  in the  southeastern  United  States.  He is a  member  of the
executive  committee  of the  Birmingham  Council of Boy Scouts of America,  the
President's   Advisory   Committee  of  Birmingham   Southern  College  and  the
President's  Council of the University of Alabama in Birmingham.  Mr. Ripps is a
member of the  Executive  Committee  of the Board of Trustees and is a member of
the  board  of  directors  and  the  executive  compensation  committee  of  the
Management Corporation.

          Donald T.  Senterfitt,  79,  has been a trustee of the  Company  since
September  1993.  Mr.  Senterfitt  is a former  director  and vice  chairman  of
SunTrust  Banks,  Inc.,  a bank  holding  company.  He is past  president of the
American  Bankers  Association and former general counsel of the Florida Bankers
Association, and served both organizations in a variety of other capacities. Mr.
Senterfitt is president and chief executive officer of The Pilot Group,  L.C., a
financial institutions consulting firm headquartered in Orlando,  Florida. He is
a member of the board of directors  and  currently  serves as president of CITE,
Inc.,  the Center for  Independence,  Technology  and  Education,  a  non-profit
organization  which  serves  the  needs  of  blind,   visually  handicapped  and
multi-handicapped children and adults.

<PAGE>
                        Executive Officers of the Company

           Thomas H.  Lowder,  49, has been a trustee of the  Company  since its
formation  in July 1993.  He is the chairman of the board,  president  and chief
executive  officer of the  Company.  Mr.  Lowder  became  President  of Colonial
Properties,  Inc., the Company's  predecessor,  in 1976, and since that time has
been actively engaged in the acquisition,  development,  management, leasing and
sale of multifamily, retail and office properties for the Company. Mr. Lowder is
a member and past president of the Alabama Chapter of the Commercial  Investment
Real  Estate  Institute.  Mr.  Lowder is a former  state  Chairman  of the Young
Presidents'  Organization  and is a  member  of the  Birmingham  Area  Board  of
Realtors, the National Association of Industrial Office Parks, the International
Council  of  Shopping  Centers  and the  National  Association  of  Real  Estate
Investment Trusts (NAREIT).  He serves on the Board of Directors of, among other
companies,  the Children's Hospital of Alabama,  American Red Cross - Birmingham
Area Chapter and the United Way of Central  Alabama.  Mr.  Lowder is a member of
the  Executive  Committee  of the Board of Trustees and a member of the board of
directors of the Management Corporation.

           Howard B. Nelson,  Jr., 51, has been Chief  Financial  Officer of the
Company,  with general  responsibility for financing matters since May 1997. Mr.
Nelson was Senior Vice  President  and Chief  Operating  Officer of the Company,
with responsibility for the day-to-day management of the Company, from September
1993 to May 1997.  He joined  Colonial  in 1984 as a vice  president  and became
Senior Vice President-Finance in 1987. Mr. Nelson has served as treasurer,  vice
president, president, and board member of the Birmingham Chapter of the National
Association  of Industrial  and Office Parks as well as vice president and board
member  of  the  Building  Owners  and  Managers   Association  of  Metropolitan
Birmingham.  He also serves on the Board of Directors of the  Children's  Harbor
Family Center and the College of Business Advisory Council of Auburn University.
He holds a Bachelor of Science Degree from Auburn University.

           C. Reynolds  Thompson,  III, 36, has been Chief Investment Officer of
the Company,  with the  responsibility  for the Company's  investment  strategy,
since May 1998. Mr. Thompson was Executive Vice President--Office Division, with
responsibility  for management of all office  properties owned and/or managed by
the  Company,  from May 1997 to May 1998.  Mr.  Thompson  joined the  Company in
February 1997 as Senior Vice President--Office Acquisitions, with responsibility
for all  acquisitions  of office  properties.  Prior to  joining  Colonial,  Mr.
Thompson   worked  for  CarrAmerica   Realty   Corporation  in  office  building
acquisitions  and  due  diligence.   Mr.  Thompson's  twelve  year  real  estate
background includes acquisitions, development, leasing, and management of office
properties in the south.  He is an active member of the National  Association of
Industrial  and Office  Parks,  serves on the Board of Trustees  for the Alabama
Real  Estate  Research  and  Education  Center,  and holds a Bachelor of Science
Degree from Washington and Lee University.

           Paul F.  Earle,  41,  has been  Executive  Vice-President-Multifamily
Division of the Company,  with  responsibility for management of all multifamily
properties  owned  and/or  managed  by the  Company,  since May 1997.  He joined
Colonial  in 1991  and has  served  as Vice  President-Acquisitions,  as well as
Senior Vice President--Multifamily Division. Mr. Earle serves as Chairman of the
Alabama  Multifamily  Council and is an active member of the National  Apartment
Association. He also serves on the Board of Directors of Big Brother/Big Sisters
and is a Board  member  of the  National  Multifamily  Housing  Council.  Before
joining  Colonial,  Mr. Earle was the President and Chief  Operating  Officer of
American  Residential  Management,  Inc.,  Executive  Vice  President  of  Great
Atlantic  Management,  Inc.,  and  Senior  Vice  President  of  Balcor  Property
Management, Inc.

           John N. Hughey, 39, has been Executive Vice President-Retail Division
of the  Company,  with  responsibility  for all retail  properties  owned and/or
managed by the Company,  since May 1997. He joined  Colonial in 1982 and assumed
responsibility for an increasing number of shopping centers until being named to
Senior Vice President-Retail  Division of Colonial in 1991. Mr. Hughey served as
the Alabama/Mississippi  State Operations Chairman for the International Council
of Shopping  Centers from 1993-1995.  He holds a Bachelor of Science Degree from
Auburn University.

           Charles  A.  McGehee,  53,  has been  Executive  Vice  President-Land
Acquisitions, Brokerage and Dispositions of the Company, with responsibility for
the Company's acquisitions and dispositions and the sales brokerage departments,
since  May  1997.   Mr.   McGehee   was   Senior   Vice   President--Multifamily
Acquisitions/Development  from  September  1993  to May  1997  and  Senior  Vice
President--Office  Division  from  January  1990 to  September  1993.  He joined
Colonial in 1976 as vice  president of retail  leasing and was  responsible  for
leasing all retail  space owned  and/or  managed by  Colonial.  Mr.  McGehee has
served as president and a board member of the National Association of Industrial
and Office Parks as well as a member of the Board of Directors of the Birmingham
Area Board of  Realtors.  He holds a  Bachelor  of Science  Degree  from  Auburn
University.

           Robert A. "Bo" Jackson, 44, has been Executive Vice  President-Office
Division of the  Company,  with general  responsibility  for  management  of all
office  properties  owned and/or managed by the Company since May 1998. Prior to
joining  the  Company,  Mr.  Jackson  worked  for  Beacon  Properties  as a vice
president  responsible  for  leasing  performance,  new office  development  and
acquisitions.  He has received professional  accolades from The Atlanta Board of
Realtors,  The  Downtown  Developers  Group and NAIOP.  He holds a  Bachelor  of
Science Degree in Business Administration from the University of Delaware.

           Kenneth  E.  Howell,   49,  has  been  Senior  Vice   President-Chief
Accounting  Officer  of  the  Company,  with  general   responsibility  for  the
supervision of accounting for all of the properties  owned and/or managed by the
Company,  since  August  1998.  He  joined  the  Company  in 1981  and was  Vice
President,  Controller from 1981 to 1998. Mr. Howell holds a Bachelor of Science
Degree in Business Administration from Auburn University.

<PAGE>

Item 11.             Executive Compensation.

           The following  table sets forth certain  information  concerning  the
annual and long-term  compensation for the chief executive  officer and the four
other most highly  compensated  executive  officers  of the Company  (the "Named
Executive Officers"):

<TABLE>
<CAPTION>
                                                       Annual Compensation                     Long-Term Compensation
                                           -------------------------------------       -----------------------------------
                                                                                     Restricted   Securities      All
                                                                                       Share      Underlying     Other
   Name and Principal Position             Year   Salary ($) Bonus($)(1) Compensation Awards($)(1) Options (#)Compensation(2)
-----------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>    <C>        <C>               <C>      <C>        <C>       <C>
Thomas H. Lowder                           1998   $310,000   $   --             --     $ 94,640       --     $  2,721
      Chairman of the Board,               1997    295,000    225,000           --       89,250     16,000      3,453
      President and Chief Executive        1996    285,000     30,000           --       68,950     16,000      4,500
      Officer

Howard B. Nelson, Jr                       1998    208,000       --             --       53,200       --        2,721
      Chief Financial Officer and          1997    198,000    120,000           --       51,000     10,000      3,453
      Secretary                            1996    171,726     23,000           --       34,475      8,500      4,500

C. Reynolds Thompson, III                  1998    149,500     22,500           --       38,500       --        2,906
      Chief Investment Officer (3)         1997    103,242     75,000           --       14,438      2,500       --


John N. Hughey                             1998    145,000     41,405           --       60,333       --        2,721
      Executive Vice President-            1997    120,000     75,000           --       19,125      3,500      3,453
      Retail Division                      1996    104,998     50,000           --       14,775      3,500      3,145

Robert A. Jackson                          1998    130,000     64,400           --       33,437     10,000       --
      Executive Vice President -
      Office Division (4)
</TABLE>

(1)       The Company's incentive compensation plan permits officers to elect to
          receive all or part of their  annual  bonus in the form of  restricted
          shares  instead  of cash.  Officers  who elect to receive up to 50% of
          their bonus in restricted  shares receive shares having a market value
          on the issue date equal to 125% of the deferred  amount.  Officers who
          elect to receive  more than 50% of their  annual  bonus in  restricted
          shares receive shares having a market value on the issue date equal to
          140% of the deferred amount. Messrs. Lowder, Nelson, Thompson,  Hughey
          and  Jackson  elected  to  receive  100%,  100%,  55%,  51%  and  20%,
          respectively,  of their bonuses in restricted  shares.  The restricted
          shares issued to Messrs. Lowder, Nelson, Thompson and Hughey vest over
          three years,  with 50% vesting on the first  anniversary  of the issue
          date and the remaining 50% vesting in equal installments on the second
          and third  anniversaries  of the issue  date.  The  restricted  shares
          issued to Mr.  Jackson  vest over two years,  with 60%  vesting on the
          first  anniversary  of the issue date and the remaining 40% vesting on
          the  second  anniversary.  The  restricted  shares  issued  under  the
          incentive  compensation  plan were issued in February 1999. The number
          and value of restricted shares held by the Named Executive Officers as
          of  December  31,  1998 were as  follows:  Mr.  Lowder - 7,378  shares
          ($196,439); Mr. Nelson - 4,024 shares ($107,139); Mr. Thompson - 1,907
          shares  ($50,773);  Mr.  Hughey  -  3,044  shares  ($81,046);  and Mr.
          Jackson-  1,236 shares  ($32,908).  Dividends  are paid on  restricted
          shares at the same rate paid to all other  holders  of Common  Shares.

(2)       All Other  Compensation  consists solely of employer  contributions to
          the Company's 401(k) Plan.

(3)       Mr. Thompson became an executive officer of the Company in 1997.

(4)       Mr. Jackson became an executive  officer of the Company in 1998.  When
          Mr. Jackson joined the Company he received 500 restricted shares which
          had  a  market  value  as of  December  31,  1998  of  $13,312.  These
          restricted shares vest ratably in five annual  installments  beginning
          on the third anniversary of the date of issuance,  unless  accelerated
          by achievement of certain performance targets.

<TABLE>
<CAPTION>
                                                                 Number of            Value of Unexercised
                                  Shares                    Securities Underlying          In-the-Money
                                 Acquired        Value       Unexercised Options              Options
Name                           on Exercise(#)  Realized($)   at December 31, 1998      at December 31, 1998(1)
--------------------------------------------------------------------------------------------------------------
                                                            Exercisable Unexercisable  Exercisable  Unexercisable
                                                           -----------------------------------------------------

<S>                                          <C>               <C>           <C>       <C>              <C>  
Thomas H. Lowder                      --     $     --          47,836        15,999    $ 112,828        7,666

Howard B. Nelson, Jr.                 --           --          18,911         9,499       38,495        4,072

C. Reynolds Thompson, III             --           --             834         1,666          --            --

John N. Hughey                        --           --           9,535         3,500       21,835        1,677

Robert A. Jackson                     --           --              --        10,000          --            --

</TABLE>

(1)       Based on the closing price of $26.625 per Common Share on December 31,
          1998, as reported by the New York Stock Exchange.


           The  following  table  sets forth  certain  information  relating  to
options to purchase Common Shares granted to the Named Executive Officers during
1998:
<TABLE>
<CAPTION>

                        Option Grants in Last Fiscal Year

                                        Individual Grants
------------------------------------------------------------------------------------------------------------

                                                          Percent                                            Potential Realizable
                                  Number of               of Total                                             Value at Assumed
                                 Securities               Options                                            Annual Rates of Share
                                 Underlying              Granted to                  Exercise                Price Appreciation for
                                  Options               Employees in                   Price        Expiration     Option Term    
                                                                                                             ----------------------
Name                             Granted (#)             Fiscal Year                   ($/Sh)          Date        5%         10%
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                     <C>                        <C>           <C>      <C>         <C>  
Thomas H. Lowder                       --                      --                         --            --     $   --      $   --

Howard B. Nelson, Jr.                  --                      --                         --            --         --          --

C. Reynolds Thompson, III              --                      --                         --            --         --          --

John N. Hughey                         --                      --                         --            --         --          --

Robert A. Jackson                    10,000                    67%                     $30.69       2/20/2008   $183,830   $474,490

</TABLE>


           All options granted in 1998 become  exercisable in three equal annual
installments  beginning on the first anniversary of the date of grant and have a
term of ten years.

Defined Benefit Plan

           The Company  maintains a Retirement  Plan (the "Plan") for all of the
employees of the Company and its  subsidiaries.  An employee becomes eligible to
participate  in the Plan on January 1 or July 1 following the first  anniversary
of the  person's  employment  by the  Company  or  one  of its  consolidated  or
unconsolidated  subsidiaries  or age 21 if later.  Benefits  are based  upon the
number  of  years  of  service  (maximum  25  years),  and  the  average  of the
participant's  earnings during the five highest years of compensation during the
final 10 years of employment.  Each participant accrues a benefit at a specified
percentage of  compensation up to the Social Security wage base, and at a higher
percentage of compensation  above the Social  Security wage base.  Employment by
Colonial,  the Company's  predecessor,  or certain of its affiliated entities is
treated as covered  service for  purposes of the Plan.  A  participant  receives
credit for a year of service for every year in which  1,000 hours are  completed
in the employment of the Company or its subsidiaries.

           The following table reflects  estimated  annual benefits payable upon
retirement  under the Plan as a single life annuity  commencing at age 65. These
benefits  ignore the lower benefit rate  applicable to earnings below the Social
Security covered compensation level.

                               Pension Plan Table

<TABLE>
<CAPTION>
                                                                    Years of Service
                                   -----------------------------------------------------------------------------------
Remuneration                              5               10               15              20               25
----------------------

       <S>                             <C>             <C>              <C>             <C>              <C>    
       $ 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
       $ 160,000 or over               $12,160         $24,320          $36,480         $48,640          $60,800

</TABLE>


           The benefits shown are limited by the current  statutory  limitations
which  restrict  the  amount of  benefits  which  can be paid  from a  qualified
retirement plan. The statutory limit on compensation  which may be recognized in
calculating  benefits is $160,000 in 1999.  This limit is  scheduled to increase
periodically with the cost of living.

          Covered  compensation  under the Plan  includes  the  employees'  base
salary and other  earnings  received  from the Company.  Thomas H. Lowder has 24
years of covered service under the Plan,  Howard B. Nelson,  Jr. has 14 years of
service, C. Reynolds Thompson,  III has two years of service, John N. Hughey has
16 years of service, and Robert A. Jackson has one year of service.

Employment Agreement

           Thomas H. Lowder, the chief executive officer of the Company, entered
into an employment  agreement with the Company in September 1993. This agreement
provides  for an  initial  term of three  years,  with  automatic  renewals  for
successive  one year terms if neither party  delivers  notice of  non-renewal at
least six months prior to the next  scheduled  expiration  date.  The  agreement
provides for annual compensation of at least $275,000 and incentive compensation
on  substantially  the same terms as set forth in the  description of the Annual
Incentive Plan. See "Report on Executive Compensation -- Annual Incentive Plan."
The agreement includes provisions restricting Mr. Lowder from competing with the
Company during  employment and, except in certain  circumstances,  for two years
after termination of employment.  The employment  agreement provides for certain
severance  payments in the event of  disability  or  termination  by the Company
without cause or by the employee with cause.



<PAGE>


                 EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND

                              INSIDER PARTICIPATION


          None of the five members of the Executive Compensation Committee is an
employee of the  Company.  As  described  below,  M. Miller  Gorrie,  William M.
Johnson and James K. Lowder, who are members of the Committee,  own interests in
certain  entities  that,  during  1997,  were  parties to  certain  transactions
involving the Company

          On July 1, 1998, the Company acquired the Shoppes at Mansell, a retail
shopping center  containing  20,900 square feet of gross leasable area, from Mr.
Johnson and a partnership  controlled by Mr.  Johnson,  for  approximately  $3.7
million.  The  Company  paid the  purchase  price with  76,809  units of limited
partnership interest in the Operating Partnership ("Units").

          Also on July 1, 1998,  the Company  acquired  Mansell  Overlook 200, a
Class-A  office  building  with 162,693  square feet of net rentable  area and a
500-car  parking  facility,  from a partnership  controlled  by Mr.  Johnson for
approximately  $27.7  million.  The Company paid the purchase price with 396,365
Units.  By these two  acquisitions,  the Company  completed the  transactions by
which it acquired Mr.  Johnson's real estate  portfolio,  as contemplated by the
1997 merger between the Company and Mr. Johnson.

          On July 1, 1998,  the  Company  acquired a 79.8%  interest in Colonial
Village at Haverhill, a multifamily property located in San Antonio,  Texas, for
a purchase price of $17.2 million. The remaining 20.2% interest was purchased by
certain entities controlled by Mr. Gorrie for a purchase price of $4.3 million.

          On  August  31,  1998,  the  Company   acquired  land  known  as  1800
International   Park,  from  Polar   BEK/Colonial   Partnership  II,  a  general
partnership  of which one of the two general  partners is Equity  Partners Joint
Venture,  a general  partnership in which Messrs. J. Lowder, T. Lowder and their
brother,  Robert E. Lowder,  are the sole general  partners  ("EPJV"),  for $1.8
million.  The  Company  paid the  purchase  price by issuing a  promissory  note
payable to Polar BEK/Colonial Partnership II for the full amount of the purchase
price.

          On October 7, 1998, the Company  acquired land known as Colonial Grand
at Promenade from Colonial Commercial  Investments,  Inc. ("CCI"), a corporation
owned by Messrs.  J. Lowder and T. Lowder for  approximately  $1.5 million.  The
Company paid the purchase price with 34,700 Units.

          On November  18,  1998,  the Company  acquired  land known as Colonial
Center at Research Park from CCI for  approximately  $1.0  million.  The Company
paid the purchase price with 36,647 Units.

          Brasfield & Gorrie General Contractors, Inc. ("B&G"), a corporation of
which Mr. Gorrie is a shareholder and chairman of the board,  was engaged during
1995 to construct the expansion of the  Company's  Macon Mall.  The Company paid
B&G a total of $0.4  million  ($384,000  of which was then paid to  unaffiliated
subcontractors)  during  1998  pursuant  to this  engagement.  The  Company  had
outstanding construction invoices and retainage payable to this company totaling
$1.2 million at December 31, 1998.

          CCI has guaranteed  indebtedness of a partnership accounted for by the
Company under the equity  method in the  aggregate  amount of $1.3 million as of
December 31, 1998. The Company has  indemnified CCI against any liability it may
incur under this guarantee.

          The Management  Corporation  provided  management and leasing services
during 1998 to certain  entities in which  Messrs.  J. Lowder,  T. Lowder and R.
Lowder have an interest.  The  aggregate  amount of fees paid to the  Management
Corporation by such entities during 1998 was approximately $289,000. The Company
owns  a 99%  economic  interest  in  the  Management  Corporation  but,  due  to
limitations  imposed by the IRS's REIT rules,  owns only 1% of the voting stock.
The remainder of the voting stock is held by members of the Lowder family.

          Colonial  Insurance  Company,  a corporation  indirectly  owned by the
Lowder  family,  provided  insurance  brokerage  services for the Company during
1998. The aggregate amount paid by the Company to Colonial Insurance Company for
these services for the year ended December 31, 1998, was approximately $131,000.

          The  Company  leased  space to  certain  entities  in which the Lowder
family  has  an  interest  and  received  rent  from  these  entities   totaling
approximately $1.0 million during 1998.

          The Company engaged Lowder Construction Company, Inc., of which Mr. J.
Lowder serves as chairman of the board and which is  indirectly  owned by Mr. J.
Lowder and T.  Lowder,  to serve as  construction  manager  for ten  multifamily
development  and  expansion  projects  during 1998.  The Company paid a total of
$40.0  million   ($37.3   million  of  which  was  then  paid  to   unaffiliated
subcontractors) for the construction of these development and expansion projects
during 1998.  The Company had  outstanding  construction  invoices and retainage
payable to Lowder Construction  Company,  Inc. totaling $4.3 million at December
31, 1998.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

           The following table sets forth  information  regarding the beneficial
ownership of Common Shares as of March 10, 1999 for (1) each person known by the
Company to be the  beneficial  owner of more than five percent of the  Company's
outstanding  Common  Shares,  (2) each  trustee  of the  Company  and each Named
Executive Officer and (3) the trustees and executive  officers of the Company as
a group.  Each person  named in the table has sole voting and  investment  power
with respect to all shares shown as beneficially owned by such person, except as
otherwise  set  forth in the  notes to the  table.  References  in the  table to
"Units"  are  to  units  of  limited  partnership   interest  in  the  Operating
Partnership.  Units  owned by a person  named in the table are  included  in the
"Number of Common  Shares"  column  because  such Units are  redeemable,  at the
option of the holder,  for cash equal to the value of an equal  number of Common
Shares or, at the election of the Company, for an equal number of Common Shares.
Because of  limitations  on ownership of Common Shares  imposed by the Company's
Declaration  of Trust,  none of the Lowder  brothers nor Mr. Ripps could in fact
redeem all of his Units for Common Shares without divesting a substantial number
of Common Shares in connection with the redemption. The extent to which a person
holds Units as opposed to Common Shares is set forth in the footnotes.

<TABLE>
<CAPTION>
                                                                              Percent of
                                 Number of                      Percent of      Common
Name and Business Address         Common                          Common        Shares
of Beneficial Owner               Shares                        Shares (1)     and Units(2)
--------------------              -------                       ----------    ------------

<S>                              <C>                    <C>         <C>          <C>  
Thomas H. Lowder                 3,285,819              (3)         11.20%       8.90%
Colonial Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, Alabama 35203

James K. Lowder                  3,250,950              (4)         11.10%       8.80%
2000 Interstate Parkway
Suite 400
Montgomery, Alabama 36104

Robert E. Lowder                 1,848,161              (5)          6.60%       5.00%
One Commerce Street
Montgomery, Alabama 36104

Ohio PERS                        1,435,000              (6)          5.50%       3.90%
277 East Town Street
Columbus, OH  43215

Carl F. Bailey                      36,442              (7)           *             *

M. Miller Gorrie                   289,346              (8)          1.10%          *

William M. Johnson               1,049,853              (9)          3.80%       2.80%

Herbert A. Meisler                 541,934             (10)          1.90%       1.50%

Claude B. Nielsen                   21,000             (11)           *             *

Harold W. Ripps                  1,925,896             (12)          6.80%       5.20%
1094 Greystone Crest
Birmingham, AL 35242

Donald T. Senterfitt                21,000             (11)           *             *

Howard B. Nelson, Jr                41,550                            *             *

C. Reynolds Thompson III             3,791             (14)           *             *

John N. Hughey                      18,494             (14)           *             *

Robert A. Jackson                    4,570             (14)           *             *

All executive officers and 
     trustees as a group
     (16 persons)                8,705,867             (15)         25.40%(16)   23.40%(17)

<FN>
           *         Less than 1%

(1)       For purposes of this  calculation,  the number of Common Shares deemed
          outstanding  includes  26,314,504 Common Shares currently  outstanding
          and the number of Common Shares  issuable to the named  person(s) upon
          redemption of Units or upon the exercise of options exercisable within
          60 days.

(2)       For  purposes  of this  calculation,  the number of Common  Shares and
          Units deemed outstanding  includes  26,314,504 Common Shares currently
          outstanding,  10,610,321 Units currently outstanding  (excluding Units
          held by the Company),  and the number of Common Shares issuable to the
          named  person(s)  upon the exercise of options  exercisable  within 60
          days.

(3)       The total  includes  68,689  shares  owned by Thomas  Lowder,  175,296
          shares  owned by Colonial  Commercial  Investments,  Inc.  ("CCI"),  a
          corporation  owned equally by Thomas and James  Lowder,  61,574 shares
          owned by Equity Partners Joint Venture ("EPJV"), a general partnership
          of  which  Thomas,  James  and  Robert  Lowder  are the  sole  general
          partners,  9,457 shares owned  pursuant to the Company's  401(k) plan,
          4,000 shares held in trust for the benefit of Thomas Lowder's children
          and 58,502 shares  subject to options  exercisable  within 60 days. In
          addition,  the total  includes  538,211 Units owned by Thomas  Lowder,
          1,356,919  Units owned by CCI,  1,012,976  Units owned by EPJV and 195
          Units  held in trust  for the  benefit  of Thomas  Lowder's  children.
          Shares and Units owned by CCI are reported  twice in this table,  once
          as beneficially owned by Thomas Lowder and again as beneficially owned
          by James  Lowder.  Shares and Units owned by EPJV are  reported  three
          times in this  table,  as  beneficially  owned  by each of the  Lowder
          brothers.

(4)       The total includes 54,020 shares owned by James Lowder, 175,296 shares
          owned by CCI,  61,574  shares  owned by EPJV,  19,200  shares owned by
          James K. Lowder as custodian  for his  children,  11,252  shares owned
          pursuant to the  Company's  401(k) plan and 20,000  shares  subject to
          options  exercisable within 60 days and 1,307 shares owned pursuant to
          the Company's  Non-Employee Trustee Share Plan. In addition, the total
          includes 538,211 Units owned by James Lowder, 1,356,919 Units owned by
          CCI, 1,012,976 Units owned by EPJV and 195 Units held in trust for the
          benefit of James  Lowder's  children.  

(5)       The  total  includes  61,574  shares  owned by EPJV and  5,000  shares
          subject to options exercisable within 60 days. In addition,  the total
          includes  737,201 Units owned by Robert Lowder,  1,012,976 Units owned
          by EPJV and 195 Units held in trust for the benefit of Robert Lowder's
          children.

(6)       Based on a  Schedule  13G filed  with the SEC,  reflecting  beneficial
          ownership as of December 31, 1998.

(7)       Includes 1,000 shares owned by Mr.  Bailey's  spouse and 20,000 shares
          subject to options exercisable within 60 days.

(8)       Includes   60,422  shares  owned  by  Brasfield  &  Gorrie,   Inc.,  a
          corporation controlled by Mr. Gorrie, 52,961 shares owned by Brasfield
          & Gorrie  General  Contractor,  Inc., a corporation  controlled by Mr.
          Gorrie,  26,000  shares held in an account for Mr.  Gorrie's  aunt and
          over which Mr. Gorrie shares voting and investment power, 2,300 shares
          held in trust for Mr.  Gorrie's  brother,  10,000  shares  subject  to
          options  exercisable  within 60 days and  115,167  units  owned by B&G
          Properties.

(9)       Includes  564,262 Units owned by Mr.  Johnson,  396,365 Units owned by
          William M. Johnson  Investments II, LLLP, en entity  controlled by Mr.
          Johnson, 74,505 Units owned by William M. Johnson Investments I, LLLP,
          an  entity  controlled  by Mr.  Johnson,  12,706  Units  owned  by Mr.
          Johnson's  spouse  and 348  Units  owned  by VRS  Corp.  I, an  entity
          controlled  by Mr.  Johnson.  Also  includes  1,667 shares  subject to
          options exercisable within 60 days.

(10)      Includes 10,000 shares subject to options  exercisable  within 60 days
          and  526,934  Units  owned by  Meisler  Enterprises  L.P.,  a  limited
          partnership of which Mr. Meisler and his wife are the sole partners.

(11)      Includes 20,000 shares subject to options exercisable within 60 days.

(12)      Includes  6,667 shares subject to options  exercisable  within 60 days
          and 1,908,380 Units.

(13)      Includes 369 Units.  Mr.  Nelson also owns 400 shares of the Company's
          Series A Cumulative  Redeemable  Preferred  Shares,  representing less
          than 1.0% of the series outstanding.

(14)      Includes,   for  Messrs.   Nelson,   Thompson,   Hughey  and  Jackson,
          respectively,  4,634,  99,  442,  and 0 shares  held  pursuant  to the
          Company's  401(k)  plan and  25,077,  1,667,  11,868 and 3,334  shares
          subject to options exercisable within 60 days.

(15)      Includes  684,927  Common Shares,  7,783,139  Units and 237,801 Common
          Shares subject to options exercisable within 60 days. Shares and Units
          held by CCI and EPJV have been counted only once for this purpose.

(16)      For purposes of this  calculation,  the number of Common Shares deemed
          outstanding  includes 26,314,504 Common Shares outstanding as of March
          10, 1999,  7,783,139 Units reported as beneficially owned by Thomas H.
          Lowder,  James K. Lowder,  Mr. Ripps,  Mr. Meisler,  Mr. Johnson,  Mr.
          Gorrie and Mr.  Nelson,  and 237,801  Common Shares subject to options
          exercisable within 60 days.

(17)      For  purposes  of this  calculation,  the number of Common  Shares and
          Units  deemed  outstanding  is  described  in note 2 to this table and
          includes 237,801 Common Shares subject to options  exercisable  within
          60 days.
</FN>
</TABLE>


Item 13.  Certain Relationships and Related Transactions.

           The  information  required  by this  item is hereby  incorporated  by
reference to the material  appearing in the Proxy  Statement  under the captions
"Executive Compensation Committee Interlocks and Insider Participation" and
"Certain Transactions."

<PAGE>
                                     Part IV

Item 14.  Exhibits, Financial Schedules, and Reports on Form 8-K.

14(a)(1) and (2)  Financial Statements and Schedules

         Index to Financial Statements and Financial Statement Schedules

Financial Statements:

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

           Report of Independent Accountants

           Consolidated Balance Sheets as of December 31, 1998 and 1997

           Consolidated Statements of Income for the years ended 
           December 31, 1998, 1997, and 1996

           Consolidated Statements of Partner's Capital for the years ended
           December 31, 1998, 1997, and 1996

           Consolidated Statements of Cash Flows for the years ended
           December 31, 1998, 1997, and 1996

           Notes to Consolidated Financial Statements

Financial Statement Schedules:

           Schedule III            Real Estate and Accumulated Depreciation

           Report of Independent Accountants

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

14(a)(3)   Exhibits

              * 3.1         Declaration of Trust of Company.
              * 3.2         Bylaws of the Company.
            ** 10.1         Second Amended and Restated Agreement of Limited 
                            Partnership of the Operating Partnership,as amended.
             +              10.2.1  Registration  Rights and  Lock-Up  Agreement
                            dated September 29, 1993,  among the Company and the
                            persons named therein.
         (PSI) 10.2.2       Registration Rights and Lock-Up Agreement dated
                            March 25, 1997, among the Company and the persons 
                            named therein. (EDGAR Version Only)
         (PSI) 10.2.3       Registration Rights and Lock-Up Agreement dated
                            November 4, 1994, among the Company and the persons 
                            named therein. (EDGAR Version Only)
         (PSI) 10.2.4       Registration Rights and Lock-Up Agreement dated 
                            August 20, 1997, among the Company and the persons 
                            named therein. (EDGAR Version Only)
         (PSI) 10.2.5       Registration Rights and Lock-Up Agreement dated 
                            November 1, 1997, among the Company and the persons
                            named therein. (EDGAR Version Only)
         (PSI) 10.2.6       Registration Rights and Lock-Up Agreement dated 
                            July 1, 1997, among the Company and the persons
                            named therein. (EDGAR Version Only)
         (PSI) 10.2.7       Registration Rights and Lock-Up Agreement dated 
                            July 1, 1996, among the Company and the persons 
                            named therein. (EDGAR Version Only)
               10.2.8       Registration Rights and Lock-Up Agreement dated 
                            February 23, 1999, among the Company Belcrest
                            Realty Corporation, and Belair Real Estate 
                            Corporation. (EDGAR Version Only)
               10.2.9       Registration Rights and Lock-Up Agreement dated 
                            July 1, 1998, among the Company and the persons 
                            named therein. (EDGAR Version Only)
              10.2.10       Registration Rights and Lock-Up Agreement dated 
                            July 31, 1997, among the Company and the persons 
                            named therein. (EDGAR Version Only)
              10.2.11       Registration Rights and Lock-Up Agreement dated 
                            November 18, 1998, among the Company and the persons
                            named therein. (EDGAR Version Only)
              10.2.12       Registration Rights and Lock-Up Agreement dated 
                            December 24, 1994, among the Company and the persons
                            named therein. (EDGAR Version Only)
            + 10.6++        Employment Agreement between the Company and 
                            Thomas H. Lowder.
            + 10.7++        Officers and Trustees Indemnification Agreement.
            + 10.8          Partnership Agreement of the Management Partnership.
           ** 10.9          Articles of Incorporation of the Management 
                            Corporation, as amended.
            + 10.10         Bylaws of the Management Corporation.
           ++ 10.11         Credit Agreement between the Colonial Realty Limited
                            Partnership     and     SouthTrust     Bank,National
                            Association,  AmSouth Bank,  N.A., 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.
              10.11.1       Amendment to Credit Agreement dated July 10, 1998.
              10.11.2       Second Amendment to Credit Agreement dated 
                            August 21,1998.
            + 10.12 ++      Annual Incentive Plan.
          ++++10.13         Indenture  dated as of July 22, 1996, by and between
                            Colonial  Realty  Limited  Partnership  and  Bankers
                            Trust Company, as amended.
              10.13.1       First Supplemental  Indenture dated as of 
                            December 31, 1998 by and between Colonial Realty 
                            Limited  Partnership  and Bankers Trust Company,
                            as amended.
              21.1          List of Subsidiaries
              23.1          Consent of PricewaterhouseCoopers L.L.P.
              27            Financial Data Schedules (EDGAR Version Only)

--------------------

*        Incorporated  by reference to the Annexes to Colonial's  Proxy 
         Statement dated September 1, 1995.
**       Incorporated  by  reference  to the same  titled and number  exhibit in
         Colonial's Annual Report on Form 10-K dated December 31, 1994.
+        Incorporated  by  reference  to the same  titled  and  numbered  
         exhibit  in Colonial's Registration Statement on Form S-11, 
         No. 33-65954.
++       Management  contract or  compensatory  plan required to be filed  
         pursuant to Item 14(c) of Form 10-K.  
++       Incorporated  by  reference  to the same  titled and number  exhibit in
         CRLP's Quarterly Report on Form 10-Q dated June 30, 1997.
++++     Incorporated  by  reference to (i) Exhibit D to the Form 8-K dated July
         19,  1996,  filed by  Colonial  Realty  Limited  Partnership,  and (ii)
         Exhibit B to the Form 8-K dated  December  6, 1996,  filed by  Colonial
         Realty Limited Partnership.
(PSI)    Incorporated  by reference to the same titled and number exhibit in the
         Company's Annual Report on Form 10-K dated December 31, 1997.
(PI)     Incorporated by reference to Exhibit 99.1 to Colonial's Registration 
         Statement on Form S-8, No. 333-60333.
+/-      Incorporated by reference to Colonial's Registration Statement on 
         Form S-8, No. 333-27203.
+/-+/-   Incorporated by reference to Colonial's Registration Statement on 
         Form S-8, No. 333-27205.
(OMEGA)  Incorporated by reference to Colonial's Registration Statement on 
         Form S-8, No. 333-27201.

14(b)   Reports on Form 8-K

        Reports  on Form 8-K filed  during the last  quarter  of 1998:  Form 8-K
        dated October 26, 1998 reported the  authorization of the Form of Rights
        Agreement  between the Company and BankBoston  N.A. under Item 5, "Other
        Events".

14(c)   Exhibits

                     The list of Exhibits filed with this report is set forth in
response to Item 14(a)(3).

14(d)   Financial Statements

        None.

<PAGE>
                                   SIGNATURES

           Pursuant to the requirements of Section 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 the undersigned,  thereunto duly authorized, on March
30, 1999.

                                             COLONIAL REALTY LIMITED PARTNERSHIP
                                                  a Delaware limited partnership


                                                    By: /s/ Howard B. Nelson Jr.
                                                        ------------------------
                                                           Howard B. Nelson, Jr.
                                                         Chief Financial Officer


           Pursuant to the requirements of the Securities  Exchange Act of 1934,
as amended, this report has been signed below by the following persons on behalf
of the registrant and the capacities indicated on March 30, 1999.

     Signature


/s/ Thomas H. Lowder                       Chairman of the Board, President,
--------------------------                 and Chief Executive Officer
Thomas H. Lowder                           

/s/ Howard B. Nelson, Jr.                  Chief Financial Officer
--------------------------
Howard B. Nelson, Jr.

/s/ Kenneth E. Howell                      Senior Vice President-Chief 
--------------------------                 Accounting Officer
Kenneth E. Howell

/s/ Carl F. Bailey                         Trustee
--------------------------
Carl F. Bailey

/s/ M. Miller Gorrie                       Trustee
--------------------------
M. Miller Gorrie

/s/ William M. Johnson                     Trustee
--------------------------
William M. Johnson

/s/ James K. Lowder                        Trustee
--------------------------
James K. Lowder

/s/ Herbert A. Meisler                     Trustee
--------------------------
Herbert A. Meisler

/s/ Claude B. Nielsen                      Trustee
--------------------------
Claude B. Nielsen

/s/ Harold W. Ripps                        Trustee
--------------------------
Harold W. Ripps

/s/ Donald T. Senterfitt                   Trustee
--------------------------
Donald T. Senterfitt

<PAGE>

<TABLE>
<CAPTION>
                                  SCHEDULE III
                      COLONIAL REALTY LIMITED PARTNERSHIP
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                               December 31, 1998



                                                       Initial Cost to                  Cost                   Gross Amount at Which
                                                            Company                Capitalized            Carried at Close of Period
                                                                   Buildings and   Subsequent to                       Buildings and
Description                       Encumbrances         Land         Improvements   Acquisition          Land            Improvements
------------------------------   -------------   --------------   --------------   --------------   --------------   ---------------

S-1
Multifamily:
<S>                                     <C>     <C>           <C>           <C>           <C>           <C>           <C>        
CG at Barrington                        $ -0-   $   880,000   $ 8,605,143   $   168,569   $   880,000   $ 8,773,712   $ 9,653,712
CG at Bayshore                            -0-     2,044,100           -0-    18,885,484     1,265,561    19,664,023    20,929,584
CG at Carrollwood                   6,230,000     1,464,000    10,657,840       887,864     1,464,000    11,545,704    13,009,704
CG at Edgewater                           -0-     1,540,000    12,671,606       560,342     1,540,000    13,231,948    14,771,948
CG at Gainesville                         -0-     3,360,000    24,173,649     3,304,425     3,361,850    27,476,224    30,838,074
CG at Galleria                     22,400,000     4,600,000    39,078,925     2,318,735     4,600,000    41,397,660    45,997,660
CG at Galleria II                         -0-       758,439     7,902,382        26,890       758,439     7,929,272     8,687,711
CG at Galleria Woods                7,101,608     1,220,000    12,480,949       347,858     1,220,000    12,828,807    14,048,807
CG at Heathrow                            -0-     2,560,661    17,612,990       379,575     2,560,661    17,992,565    20,553,226
CG at Hunter's Creek                      -0-     3,949,850           -0-    29,885,576     4,725,936    29,109,490    33,835,426
CG at Inverness Lakes                     -0-       641,334     8,873,906     2,683,421       641,334     7,684,466     8,325,800
CG at Kirkman                             -0-     2,220,000    21,747,240       885,192     2,220,000    22,632,432    24,852,432
CG at Mountain Brook               11,929,545     1,960,000    21,181,118     1,125,328     1,960,000    22,306,446    24,266,446
CG at Natchez Trace                10,896,842     1,312,000    16,568,050       176,568     1,312,000    16,744,618    18,056,618
CG at Palm Aire                           -0-     1,488,000    13,515,075       292,594     1,489,500    13,806,169    15,295,669
CG at Palma Sola                          -0-     1,479,352           -0-    12,571,483     1,479,352    12,571,483    14,050,835
CG at Ponte Vedra                         -0-     1,440,000    10,038,593       948,276     1,440,000    10,986,869    12,426,869
CG at Research Park                12,775,000     3,680,000    29,322,067     1,054,756     3,680,000    30,376,823    34,056,823
CG at Riverchase                          -0-     2,340,000    25,248,548     1,105,212     2,340,000    26,353,760    28,693,760
CG at Spring Creek                        -0-     1,184,000    13,243,975       319,662     1,184,000    13,563,637    14,747,637
CG at Wesleyan                            -0-       720,000    12,760,587        40,537       720,000    12,801,124    13,521,124
Colony Park                               -0-       409,401     4,345,599       404,085       409,406     4,749,680     5,159,085
CV at Ashford Place                       -0-       537,600     5,839,838       142,174       537,600     5,982,012     6,519,612
CV at Ashley Plantation                   -0-     1,160,000    12,540,387       115,604     1,160,000    12,655,991    13,815,991
CV at Cahaba Heights                3,607,835       625,000     6,548,683       177,084       625,000     6,725,767     7,350,767
CV at Caledon Wood                        -0-     2,100,000    19,482,210       251,926     2,100,000    19,734,136    21,834,136
CV at Cordova                             -0-       134,000     3,986,304       393,665       134,000     4,379,969     4,513,969
CV at Haverhill                           -0-     1,771,000    19,749,176        18,546     1,771,000    19,767,722    21,538,722
CV at Hillcrest                           -0-       332,800     4,310,671       227,385       332,800     4,538,056     4,870,856
CV at Hillwood                      4,845,000       511,700     5,508,300       381,894       511,700     5,890,194     6,401,894
CV at Huntleigh Woods                     -0-       745,600     4,908,990       750,730       745,600     5,659,720     6,405,320
CV at Inverness                     9,900,000     1,713,668    10,352,151       132,842     1,713,668    10,484,993    12,198,661
CV at Inverness II/III                    -0-       635,819     5,927,265     8,381,975       635,819    14,309,240    14,945,059
CV at Inverness Lakes               5,583,333       735,080     7,254,920     1,807,530       735,080     9,062,450     9,797,530
CV at Lake Mary                           -0-     2,145,480           -0-    19,409,367     3,634,094    17,920,753    21,554,847
CV at McGehee Place                       -0-       795,627           -0-    17,163,015       842,321    17,116,321    17,958,642
CV at Monte D'Oro                         -0-     1,000,000     6,994,227     1,326,469     1,000,000     8,320,696     9,320,696
CV at North Ingle                         -0-       497,574     4,122,426       406,424       497,574     4,528,850     5,026,424
CV at Oakleigh                            -0-       880,000     9,685,518       200,802     1,024,334     9,741,986    10,766,320
CV at River Hills                         -0-    15,319,754     7,474,784    11,171,763     2,551,154    31,415,147    33,966,301
CV at Rocky Ridge                   7,245,000       644,943     8,325,057       499,329       644,943     8,824,386     9,469,329
CV at Stockbridge                         -0-       960,000    11,975,947       382,176       960,000    12,358,123    13,318,123
CV at Timothy Woods                       -0-     1,020,000    11,910,546        82,777     1,020,000    11,993,323    13,013,323
CV at Trussville                          -0-     1,504,000    18,800,253       871,867     1,504,000    19,672,120    21,176,120
CV at Vernon Marsh                  3,400,000       960,984     3,511,596     3,149,558       960,984     6,661,154     7,622,138
CV at Walton Way                          -0-     1,024,000     7,877,766       104,791     1,024,000     7,982,557     9,006,557
CV at White Bluff                   4,500,000       699,128     4,920,872       330,315       699,128     5,251,187     5,950,315
Patio I, II & III                         -0-       249,876     3,305,124     1,945,935       366,717     5,134,218     5,500,935
Ski Lodge - Tuscaloosa                    -0-     1,064,000     6,636,685       880,414     1,064,000     7,517,099     8,581,099
<PAGE>

S-2
Retail:
Abingdon Town Centre                       -0-     2,051,250     6,687,616        66,883     2,051,250     6,754,499     8,805,749
Colonial Mall Auburn-Opelika               -0-       103,480           -0-    15,553,538       723,715    14,933,303    15,657,018
Colonial Shoppes Bardmoor                  -0-     1,989,019     9,047,663       105,743     2,143,152     8,999,273    11,142,425
Colonial Promenade Bear Lake               -0-     2,134,440     6,551,683        94,660     2,134,440     6,646,343     8,780,783
Beechwood Shopping Center                  -0-     2,565,550    19,647,875       786,371     2,565,550    20,434,246    22,999,796
Bel Air Mall                               -0-     7,517,000    81,585,057           -0-     7,517,000    81,585,057    89,102,057
Colonial Shoppes Bellwood                  -0-       330,000           -0-     3,209,650       330,000     3,209,650     3,539,650
Briarcliffe Mall                           -0-     9,099,972    33,663,654        12,953     9,099,972    33,676,607    42,776,579
Britt David Shopping Center                -0-     1,755,000     4,951,852         1,194     1,755,000     4,953,046     6,708,046
Brookwood Village                          -0-     8,136,700    24,435,002     1,673,055     8,136,700    26,108,057    34,244,757
Colonial Promenade Burnt Store             -0-     3,750,000     8,198,677        83,847     3,750,000     8,282,524    12,032,524
Colonial Promenade Tuskawilla              -0-     3,659,040     6,783,697       113,066     3,659,040     6,896,763    10,555,803
Colonial Mall Decatur                      -0-     3,262,800    23,636,229     1,566,670     3,262,800    25,202,899    28,465,699
Colonial Mall Gadsden                      -0-       639,577           -0-    19,561,774       639,577    19,561,774    20,201,351
Glynn Place Mall                           -0-     3,588,178    22,514,121     1,054,761     3,588,178    23,568,882    27,157,060
Holly Hill Mall                            -0-     4,120,000    25,632,587       393,711     4,120,000    26,026,298    30,146,298
Colonial Promenade Hunter's Creek   10,089,395     4,181,760    13,023,401       151,399     4,181,760    13,174,800    17,356,560
Lakeshore Mall                             -0-     4,646,300    30,973,239     2,076,687     4,646,300    33,049,926    37,696,226
Lakewood Plaza                             -0-     2,984,522    11,482,512     1,900,323     2,984,522    13,382,835    16,367,357
Macon Mall                                 -0-     1,684,875           -0-    91,501,975     5,591,743    87,595,107    93,186,850
Mayberry Mall                        3,350,078       862,500     3,778,590       133,806       862,500     3,912,396     4,774,896
Colonial Shoppes McGehee                   -0-       197,152           -0-     3,954,077       197,152     3,954,077     4,151,229
Colonial Promenade Montgomery       10,810,000     3,788,913    11,346,754     1,200,517     4,332,432    12,003,752    16,336,184
Colonial Promenade Montgomery Nor          -0-     2,400,000     5,664,858       560,392     2,400,000     6,225,250     8,625,250
Northdale Court                            -0-     3,059,760     8,054,090       850,077     3,059,760     8,904,167    11,963,927
Old Springville Shopping Center            -0-       272,594           -0-     3,364,134       277,975     3,358,753     3,636,728
Olde Town Shopping Village                 -0-       343,325           -0-     2,470,994       343,325     2,470,994     2,814,319
Colonial Shoppes Paddock Park              -0-     1,532,520     3,754,879       110,214     1,532,520     3,865,093     5,397,613
Quaker Village                             -0-       931,000     7,901,874       163,198       931,000     8,065,072     8,996,072
Rivermont Shopping Center            1,693,400       515,250     2,332,486       128,741       515,250     2,461,227     2,976,477
Colonial Shoppes Inverness                 -0-     1,680,000     1,387,055        93,216     1,680,000     1,480,271     3,160,271
Shoppes at Mansell                         -0-       600,000     3,089,565        21,041       600,000     3,110,606     3,710,606
Stanly Plaza                               -0-       450,000     1,657,870        58,196       450,000     1,716,066     2,166,066
Staunton Mall                              -0-     2,895,000    15,083,542       254,735     2,895,000    15,338,277    18,233,277
Colonial Promenade University Par   14,445,000     6,946,785    20,104,517       414,563     6,946,785    20,519,080    27,465,865
Valdosta Mall                              -0-     5,377,000    30,239,796       857,786     5,377,000    31,097,582    36,474,582
Village at Roswell Summit            1,628,831       450,000     2,563,642       126,073       450,000     2,689,715     3,139,715
Colonial Promenade Wekiva                  -0-     2,817,788    15,302,375       127,375     2,817,788    15,429,750    18,247,538
Colonial Promenade Winter Haven            -0-     1,768,586     3,928,903     4,574,790     4,045,045     6,227,234    10,272,279
Yadkin Town Center                         -0-     1,080,000     1,224,136     3,211,391     1,080,000     4,435,527     5,515,527
<PAGE>

S-3
Office:
250 Commerce Street                        -0-        25,000       200,200     2,280,668        25,000     2,480,868     2,505,868
AmSouth Center                             -0-       764,961           -0-    18,150,464       764,961    18,150,464    18,915,425
Colonial Plaza                             -0-     1,001,375    12,381,023       228,170     1,001,375    12,609,193    13,610,568
Concourse Center                           -0-     4,875,000    25,702,552        42,002     4,875,000    25,744,554    30,619,554
Independence Plaza                         -0-     1,505,000     6,018,476       180,678     1,505,000     6,199,154     7,704,154
International Park                   1,967,410     1,279,355     5,668,186       150,575     1,279,355     5,818,761     7,098,116
Interstate Park                      4,208,107     1,125,990     7,113,558     8,924,443     1,125,988    16,038,003    17,163,991
Lakeside Office Park                       -0-       423,451     8,313,291       235,247       423,451     8,548,538     8,971,989
Mansell Office Park                 31,296,233     4,540,000    71,712,971       954,671     4,540,000    72,667,642    77,207,642
P&S Building                               -0-       104,089       558,646       214,930       104,089       773,576       877,665
Perimeter Corporate Park             5,536,731     1,422,169    18,377,648       261,614     1,422,169    18,639,262    20,061,431
Progress Center                            -0-       521,037    14,710,851       683,654       521,037    15,394,505    15,915,542
Riverchase Center                    8,238,096     1,916,727    22,091,651     1,074,586     1,916,727    23,166,237    25,082,964
Shades Brook Building                      -0-       873,000     2,240,472           -0-       873,000     2,240,472     3,113,472
University Park                            -0-       396,960     2,971,049     1,644,998       396,960     4,616,047     5,013,007

Active Development Projects:

CG at Citrus Park                          -0-     1,223,652           -0-     8,258,914     1,223,652     8,258,914     9,482,566
CG at Cypress Crossing                     -0-     1,942,202           -0-    17,233,557     1,942,202    17,233,557    19,175,759
CG at Edgewater II                         -0-       999,221           -0-    11,487,365       999,221    11,487,365    12,486,586
CG at Heather Glen                         -0-     3,836,003           -0-     5,964,285     3,836,003     5,964,285     9,800,288
CG at Inverness Lakes II                   -0-       477,259           -0-     8,360,459       477,259     8,360,459     8,837,718
CG at Lakewood Ranch                       -0-     1,831,987           -0-    16,007,271     1,831,987    16,007,271    17,839,258
CG at Liberty Park                         -0-     2,115,340           -0-       808,388     2,115,340       808,388     2,923,728
CG at Promenade                            -0-     1,536,313           -0-     2,783,611     1,536,313     2,783,611     4,319,924
CG at Research Park II                     -0-         3,538           -0-        51,299         3,538        51,299        54,837
CG at Ridgeland                            -0-     1,025,720           -0-       428,564     1,025,720       428,564     1,454,284
CG at Wesleyan II                          -0-       550,991           -0-     5,393,690       550,991     5,393,690     5,944,681
CV at Ashley Plantation II                 -0-     1,383,770           -0-     1,565,180     1,383,770     1,565,180     2,948,950
CV at Madison                              -0-     1,695,369           -0-     2,995,140     1,695,369     2,995,140     4,690,509
CV at McGehee Place                        -0-        60,438           -0-        53,018        60,438        53,018       113,456
Colonial Promenade Trussville              -0-     4,199,186           -0-     1,121,816     4,285,842     1,035,160     5,321,002
1800 International Park                    -0-     1,793,000           -0-     2,156,857     3,949,857           -0-     3,949,857
Colonial Center at Research Park -0-               1,000,000           -0-       373,238     1,373,238           -0-     1,373,238
Other Miscellaneous Projects               -0-           -0-           -0-     1,470,351           -0-     1,470,351     1,470,351

Unimproved Land:
Briarcliffe Mall                           -0-     1,433,596           -0-           -0-     1,433,596           -0-     1,433,596
Valdosta Mall                              -0-       975,506           -0-           -0-       975,506           -0-       975,506
McGehee Place Land                     668,364       436,471           -0-           -0-       436,471           -0-       436,471
North Heathrow Land                        -0-     9,553,734           -0-     2,167,333     9,553,734     2,167,333    11,721,067


                                 =============   ===========   ===========   ===========   ===========   ===========   ===========
                                 $ 204,345,808  $246,033,816$1,186,268,309  $435,369,401  $245,185,945$1,618,612,721$1,863,798,665
                                 =============   ===========   ===========   ===========   ===========   ===========   ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                            SCHEDULE III, CONTINUED
                      COLONIAL REALTY LIMITED PARTNERSHIP
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1998


                                                                Date
                                                              Acquired/
                                 Accumulated       Date       Placed In   Depreciable     
Description                     Depreciation     Completed     Service    Lives-Year
-------------------------------------------------------------------------------------
S-1
Multifamily:
<S>                              <C>                <C>          <C>      <C>       
CG at Barrington                 $  790,514         1996         1996     7-40 Years
CG at Bayshore                    1,196,831         1997   1985/97/98     7-40 Years
CG at Carrollwood                 2,062,188         1966         1994     7-40 Years
CG at Edgewater                   2,289,403         1990         1994     7-40 Years
CG at Gainesville                 4,318,899   1989/93/94         1994     7-40 Years
CG at Galleria                    4,278,059         1986         1994     7-40 Years
CG at Galleria II                   679,141         1996         1996     7-40 Years
CG at Galleria Woods              1,206,846         1994         1996     7-40 Years
CG at Heathrow                    1,586,655         1997      1994/97     7-40 Years
CG at Hunter's Creek              1,632,756         1996         1996     7-40 Years
CG at Inverness Lakes               994,984         1996         1996     7-40 Years
CG at Kirkman                     3,272,298         1991         1994     7-40 Years
CG at Mountain Brook              1,549,053      1987/91         1996     7-40 Years
CG at Natchez Trace                 830,133      1995/97         1997     7-40 Years
CG at Palm Aire                   2,229,216         1991         1994     7-40 Years
CG at Palma Sola                  4,054,758         1992         1992     7-40 Years
CG at Ponte Vedra                 1,388,793         1988         1994     7-40 Years
CG at Research Park               3,760,816      1987/94         1994     7-40 Years
CG at Riverchase                  3,067,215      1984/91         1994     7-40 Years
CG at Spring Creek                1,267,969      1992/94         1996     7-40 Years
CG at Wesleyan                      668,831         1997      1996/97     7-40 Years
Colony Park                         665,854         1975         1993     7-40 Years
CV at Ashford Place                 414,703         1983         1996     7-40 Years
CV at Ashley Plantation             297,331         1997         1998     7-40 Years
CV at Cahaba Heights                559,259         1992         1996     7-40 Years
CV at Caledon Wood                  844,822      1995/96         1997     7-40 Years
CV at Cordova                     2,337,725         1983         1983     7-40 Years
CV at Haverhill                     227,776         1998         1998     7-40 Years
CV at Hillcrest                     319,714         1981         1996     7-40 Years
CV at Hillwood                      797,130         1984         1993     7-40 Years
CV at Huntleigh Woods               655,991         1978         1994     7-40 Years
CV at Inverness                   1,503,594   1986/87/90   1986/87/90     7-40 Years
CV at Inverness II/III            3,049,894         1997         1997     7-40 Years
CV at Inverness Lakes             1,045,135      1983/96         1993     7-40 Years
CV at Lake Mary                   4,252,705      1991/95      1991/95     7-40 Years
CV at McGehee Place               4,266,205      1986/95      1986/95     7-40 Years
CV at Monte D'Oro                   913,566         1977         1994     7-40 Years
CV at North Ingle                   630,407         1983         1983     7-40 Years
CV at Oakleigh                      532,147         1997         1997     7-40 Years
CV at River Hills                 3,860,203         1985         1998     7-40 Years
CV at Rocky Ridge                 1,134,717         1984         1993     7-40 Years
CV at Stockbridge                 1,835,157      1993/94         1994     7-40 Years
CV at Timothy Woods                 637,961         1996         1997     7-40 Years
CV at Trussville                  1,200,635      1996/97         1997     7-40 Years
CV at Vernon Marsh                1,685,612      1986/87      1986/93     7-40 Years
CV at Walton Way                     83,691      1970/88         1998     7-40 Years
CV at White Bluff                   713,076         1986         1993     7-40 Years
Patio I, II & III                   699,322   1966/83/84   1994/93/93     7-40 Years
Ski Lodge - Tuscaloosa              866,439      1976/92         1994     7-40 Years
<PAGE>

S-2
Retail:

Abingdon Town Centre                202,618      1987/96         1997     7-40  Years
Colonial Mall Auburn-Opelika      8,286,927   1973/84/89   1973/84/89     7-40  Years
Colonial Shoppes Bardmoor           545,346         1981         1996     7-40  Years
Colonial Promenade Bear Lake        607,055         1990         1995     7-40  Years
Beechwood Shopping Center           923,225      1963/92         1997     7-40  Years
Bel Air Mall                         12,114   1966/90/97         1998     7-40  Years
Colonial Shoppes Bellwood         1,039,508         1988         1988     7-40  Years
Briarcliffe Mall                  2,017,547         1986         1996     7-40  Years
Britt David Shopping Center         515,845         1990         1994     7-40  Years
Brookwood Village                 1,164,788      1973/91         1997     7-40  Years
Colonial Promenade Burnt Store      935,279         1990         1994     7-40  Years
Colonial Promenade Tuskawilla       610,478         1990         1995     7-40  Years
Colonial Mall Decatur             2,262,361      1979/89         1993     7-40  Years
Colonial Mall Gadsden             9,004,107      1974/91         1974     7-40  Years
Glynn Place Mall                    784,516         1986         1997     7-40  Years
Holly Hill Mall                     791,409   1969/86/94         1997     7-40  Years
Colonial Promenade Hunter's Creek   811,823      1993/95         1996     7-40  Years
Lakeshore Mall                    1,148,848      1984-87         1997     7-40  Years
Lakewood Plaza                      375,609         1995         1997     7-40  Years
Macon Mall                       18,411,197   1975/88/97      1975/88     7-40  Years
Mayberry Mall                       115,584      1968/86         1997     7-40  Years
Colonial Shoppes McGehee          1,265,015         1986         1986     7-40  Years
Colonial Promenade Montgomery     2,431,972         1990         1993     7-40  Years
Colonial Promenade Montgomery Nor   148,361         1997         1995     7-40  Years
Northdale Court                     642,677         1988         1995     7-40  Years
Old Springville Shopping Center   2,700,536         1982         1982     7-40  Years
Olde Town Shopping Village          699,057      1978/90      1978/90     7-40  Years
Colonial Shoppes Paddock Park       312,079         1988         1995     7-40  Years
Quaker Village                      265,428   1968/88/97         1997     7-40  Years
Rivermont Shopping Center            69,521      1986/97         1997     7-40  Years
Colonial Shoppes Inverness           69,468         1984         1997     7-40  Years
Shoppes at Mansell                   32,183      1996/97         1998     7-40  Years
Stanly Plaza                         52,617      1987/96         1997     7-40  Years
Staunton Mall                       452,286   1969/86/97         1997     7-40  Years
Colonial Promenade University Par 6,331,114      1986/89         1993     7-40  Years
Valdosta Mall                     1,054,291      1982-85         1997     7-40  Years
Village at Roswell Summit            66,061         1988         1997     7-40  Years
Colonial Promenade Wekiva           913,009         1990         1996     7-40  Years
Colonial Promenade Winter Haven     485,229         1986         1995     7-40  Years
Yadkin Town Center                  102,084      1971/97         1997     7-40  Years
<PAGE>

S-3
Office:

250 Commerce Street               2,326,569      1904/81         1980     7-40  Years
AmSouth Center                    6,108,744         1990         1990     7-40  Years
Colonial Plaza                      339,665         1982         1997     7-40  Years
Concourse Center                    270,075      1981/85         1998     7-40  Years
Independence Plaza                  143,234         1979         1998     7-40  Years
International Park                  246,545      1987/89         1997     7-40  Years
Interstate Park                   4,822,534   1982-85/89   1982-85/89     7-40  Years
Lakeside Office Park                342,092      1989/90         1997     7-40  Years
Mansell Office Park               1,844,656   1987/96/97         1997     7-40  Years
P&S Building                        442,562   1946/76/91         1974     7-40  Years
Perimeter Corporate Park            422,730      1986/89         1998     7-40  Years
Progress Center                     584,073      1983/91         1997     7-40  Years
Riverchase Center                 1,097,429      1984-88         1997     7-40  Years
Shades Brook Building                23,338         1979         1998     7-40  Years
University Park                   1,811,232         1985         1985     7-40  Years

Active Development Projects:

CG at Citrus Park                       -0-          N/A         1997             N/A
CG at Cypress Crossing              123,830          N/A         1998             N/A
CG at Edgewater II                  318,451          N/A         1997             N/A
CG at Heather Glen                      -0-          N/A         1998             N/A
CG at Inverness Lakes II            349,674          N/A         1994             N/A
CG at Lakewood Ranch                 17,320          N/A         1997             N/A
CG at Liberty Park                      -0-          N/A         1998             N/A
CG at Promenade                         -0-          N/A         1998             N/A
CG at Research Park II                  -0-          N/A         1985             N/A
CG at Ridgeland                         -0-          N/A         1998             N/A
CG at Wesleyan II                     1,744          N/A         1996             N/A
CV at Ashley Plantation II              -0-          N/A         1998             N/A
CV at Madison                           -0-          N/A         1998             N/A
CV at McGehee Place                     -0-          N/A         1987             N/A
Colonial Promenade Trussville           -0-          N/A         1998             N/A
1800 International Park                 -0-          N/A         1998             N/A
Colonial Center at Research Park        -0-          N/A         1998             N/A
Other Miscellaneous Projects            -0-          N/A         1993             N/A

Unimproved Land:
Briarcliffe Mall                        -0-          N/A         1981             N/A
Valdosta Mall                           -0-          N/A      1982/85             N/A
McGehee Place Land                      -0-          N/A         1981             N/A
North Heathrow Land                     -0-          N/A         1997             N/A
---------------------------------------------------------------------------------------
                              $ 169,451,798
=======================================================================================
</TABLE>
<PAGE>
                              NOTES TO SCHEDULE III
                       COLONIAL REALTY LIMITED PARTNERSHIP
                               December 31, 1998


 (1)     The aggregate  cost for Federal  Income Tax purposes was  approximately
         $1,464,775,000 at December 31, 1998.

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

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

<TABLE>
<CAPTION>

                          Reconciliation of Real Estate


                                                                           1998               1997               1996
                                                                ---------------    ---------------    ---------------
Real estate investments:
<S>                                                             <C>                <C>                <C>            
     Balance at beginning of year                               $ 1,489,114,015    $ 1,017,009,315    $   736,937,703
         Acquisitions of new property                               346,267,522        451,256,964        173,276,789
         Improvements and development                               134,804,450         97,564,705        107,834,251
         Dispositions of property                                  (106,387,322)       (76,716,969)        (1,039,428)
                                                                ---------------    ---------------    ---------------

     Balance at end of year                                     $ 1,863,798,665    $ 1,489,114,015    $ 1,017,009,315
                                                                ===============    ===============    ===============

</TABLE>
<TABLE>
<CAPTION>


                   Reconciliation of Accumulated Depreciation


                                                                         1998             1997             1996
                                                                -------------    -------------    -------------
Accumulated depreciation:
<S>                                                             <C>              <C>              <C>          
     Balance at beginning of year                               $ 124,236,057    $ 101,541,658    $  79,780,292
         Depreciation                                              46,787,982       31,945,960       22,015,054
         Depreciation of disposition of property                   (1,572,241)      (9,251,561)        (253,688)
                                                                -------------    -------------    -------------

     Balance at end of year                                     $ 169,451,798    $ 124,236,057    $ 101,541,658
                                                                =============    =============    =============

                                      S-4
</TABLE>
<PAGE>