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, 1996 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:
None

         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 |X| 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
subsidiary and other affiliates  (including Colonial Properties Services Limited
Partnership) 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 if its subsidiaries and
other affiliates  (including  Colonial  Properties Holding Company,  Inc., CRLP,
Colonial   Properties  Services  Limited  Partnership  and  Colonial  Properties
Services, Inc.) or, as the context may require, Colonial Properties Trust only.

         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  southeastern  United States.  It is a  fully-integrated  real
estate company, whose activities include ownership of a diversified portfolio of
73  properties  located  in  Alabama,  Florida,  Georgia,  and  South  Carolina,
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.  CRLP  currently  owns 42  multifamily  apartment
communities  containing  a total of 13,617  apartment  units  (the  "Multifamily
Properties"),  21 retail  properties  containing  a total of  approximately  5.6
million  square  feet of  retail  space  (the  "Retail  Properties"),  10 office
properties containing a total of approximately 1.0 million square feet of office
space (the "Office  Properties"),  and certain  parcels of land adjacent to 5 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, 1996, the Multifamily Properties that had
achieved stabilized occupancy, the Retail Properties,  and the Office Properties
were 94.8%, 93.8% and 97.4% 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 was 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. to the Operating
Partnership,  in exchange for 8,480,000 units of limited partnership interest in
the  Operating  Partnership  ("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 $125.0 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  $573.1  million.  CRLP  has also
completed the expansion of four  multifamily  properties since the IPO, adding a
total of 728 units to the multifamily portfolio. CRLP currently has seven active
expansion  and  development  projects in  progress  for  Multifamily  Properties
(including  additional phases of two existing Multifamily  Properties) and major
expansions of the CRLP's Macon Mall and Montgomery Promenade Retail Properties.

         The  following  is a summary  of  CRLP's  acquisition  and  development
activity in 1996.

Acquisition Activity

         CRLP acquired three retail shopping  centers in central Florida and one
regional mall in South Carolina  containing  approximately  1.1 million leasable
square feet for a total purchase  price of  approximately  $90.0  million.  CRLP
spent $4.3  million  to acquire  tenant-owned  space and  underlying  land at an
existing retail center.

         CRLP also  acquired  five  multifamily  properties  in Alabama  and two
multifamily  properties in Georgia  containing  1,505 units for a total purchase
price of approximately $79.0 million.

Development Activity

         During 1996 CRLP constructed 873 new apartment units in six multifamily
communities (three of which were completed during the year) and acquired land on
which it intends to develop two additional multifamily  communities during 1997.
The aggregate cost of this multifamily  development  activity was $68.2 million.
As of December  31,  1996,  CRLP has 1,216  apartment  units in six  multifamily
communities under development and expansion.  Management anticipates that two of
the  multifamily  projects  will be completed  during the first half of 1997 and
three others will be completed during the second half of the year. The remaining
multifamily project will be completed during the first half of 1998.  Management
expects to invest  approximately  $31.8  million over these  periods to complete
these projects.

         During 1996 CRLP also  continued the 422,000  square foot  expansion of
its regional mall in Macon, Georgia and began a 225,000 square foot expansion of
a community shopping center in Montgomery,  Alabama.  The aggregate cost of this
retail  development  activity was $31.6  million.  The Macon Mall  expansion was
completed and opened during February 1997, and management anticipates completing
its  Montgomery  project  during  the last half of 1997.  Management  expects to
invest approximately $19.8 million during 1997 to complete these projects.

         The  table  below  provides  an  overview  of  CRLP's  acquisition  and
development activity during 1996:
<TABLE>

                         Summary of Recent
                    Acquisition and Development
                            Activity

<CAPTION>

Completion or                                                          Cost or
 Anticipated                                       Type of  Units(M) Anticipated
 Completion              Name of                   Property  GLA (R)   Cost (in
   Date                 Property       Location      (1)      (2)  Thousands (3)
--------------  --------------------  -----------   ------  -------  ------------
<S>             <C>                   <C>            <C>       <C>    <C>

Acquisitions:
   2nd Qtr 96   Ashford Place         Mobile, AL     M         168    $  6,400
   2nd Qtr 96   Pointe West           Mobile, AL     M         104       4,700
   2nd Qtr 96   Spring Creek          Macon, GA      M         296      14,400
   2nd Qtr 96   Crowne Chase          Birmingham, AL M         244      13,700
   2nd Qtr 96   Crowne Point          Birmingham, AL M         392      23,100
   2nd Qtr 96   Crowne Ridge          Birmingham, AL M         125       7,200
   3rd Qtr 96   Barrington Club       Macon, GA      M         176       9,500
   3rd Qtr 96   Briarcliffe Mall      Myrtle
                                      Beach, SC      R      488,000     42,800
   3rd Qtr 96   Winter Haven          Orlando,
                 (expansion)           FL            R       22,000      4,300
   4th Qtr 96   Bardmoor Village      St.
                                      Petersburg, FL R      158,000     11,900
   4th Qtr 96   Island Walk           Orlando, FL    R      222,000     17,200
   4th Qtr 96   Wekiva River Walk     Orlando, FL    R      209,000     18,100
Developments:
   1st Qtr 96   McGehee Place V
                 (expansion)          Montgomery, AL M          16         800
   4th Qtr 96   Inverness Lakes
                 (expansion)          Mobile, AL     M         180       9,500
   4th Qtr 96   Colonial Grand at     Birmingham,
                 Galleria (expansion)  AL            M         160       8,700
   1st Qtr 97   Riverchase III
                 (expansion)          Tampa, FL      M         276      14,900
   1st Qtr 97   Colonial Grand at
                 Heathrow             Orlando, FL    M         312      20,400
   1st Qtr 97   Colonial Grand at
                 Bayshore             Bradenton, FL  M         212      11,600
   4th Qtr 97   Colonial Village at   Birmingham,
                Inverness (expansion   AL            M          84       4,100
   4th Qtr 97   Colonial Grand at
                 Bayshore II
                 (expansion)          Bradenton, FL  M         164       9,100
   4th Qtr 97   Colonial Grand at
                 Wesleyan             Macon, GA      M         240      12,800
   2nd Qtr 98   Colonial Grand at
                 Hunter's Creek       Orlando, FL    M         496      33,000
   1st Qtr 97   Macon Mall (expansion)Macon, GA      R      422,000(4)  52,000
   4th Qtr 97   Montgomery Promenade  Montgomery,
                (expansion)           AL             R      225,000(5)   7,000
                                                                      --------
                                                            Total     $357,200
                                                                      ========
<FN>

(1) M refers to Multifamily Properties and R refers to Retail Properties.
(2) Units (in this  table  only)  refers  to  multifamily  apartment  units and
    GLA refers to gross leasable area of retail space.
(3) Amounts in thousands.
(4) Includes  249,000  square feet of GLA and 173,000 square feet of space owned
    by an anchor.
(5) Includes  95,000  square feet of GLA and 130,000  square feet of space
    owned by an anchor.
</FN>
</TABLE>
<PAGE>

Multifamily Property Acquisitions

         Spring Creek  Apartments--On  April 1, 1996, CRLP acquired Spring Creek
Apartments,  a 296-unit  luxury  multifamily  community  in Macon,  Georgia at a
purchase price of $14.4 million which was financed  through an advance on CRLP's
unsecured line of credit.  Spring Creek was constructed in two phases  completed
in 1992 and 1994.  The  development  consists of 33  two-story  buildings  and a
separate  clubhouse on  approximately  27 acres of land.  Amenities  include two
swimming pools, a fitness center, and racquetball and tennis courts.

         Crowne Chase  Apartments--On April 15, 1996, CRLP acquired Crowne Chase
Apartments,  a 244-unit  luxury  multifamily  community in Birmingham,  Alabama.
Crowne  Chase was  acquired  for a  purchase  price of $13.7  million  which was
financed through an advance on CRLP's unsecured line of credit. The development,
which was constructed in 1994, consists of 16 two-story buildings and a separate
clubhouse on  approximately  20.3 acres.  Amenities  include a fitness center, a
swimming pool with sauna,  lighted tennis courts,  and breathtaking  landscaping
and waterscaping.

         Crowne Point  Apartments--On  May 10, 1996,  CRLP acquired Crowne Point
Apartments,  a 392-unit complex comprising 26 two-story buildings in a suburb of
Birmingham,  Alabama.  The buildings were  constructed in two phases in 1987 and
1991.  Crowne Point was acquired for a purchase price of $23.1 million which was
financed  through the  assumption of a mortgage with a balance of $12.4 million,
which bears interest at 8.0%, and an advance on CRLP's unsecured line of credit.
Crowne Point's amenities include a recreational  building, two swimming pools, a
clubhouse with an exercise room, and lighted tennis courts.

         Pointe West Apartments and Ashford Place  Apartments--On April 1, 1996,
CRLP  acquired  Pointe  West  Apartments  in Mobile,  Alabama.  Pointe  West was
completed  in 1981 and consists of 104 units in 14  two-story  buildings  with a
separate clubhouse on approximately 7.6 acres of land.

         Also on April 1,  1996,  CRLP  acquired  Ashford  Place  Apartments  in
Mobile,  Alabama.  Ashford Place was completed in 1983 and consists of 168 units
in 11 two-story  buildings with a separate  clubhouse on approximately 8.8 acres
of land.

         Both  properties  offer a swimming pool,  exercise room, a fireplace in
each unit,  and  controlled  access  parking.  Pointe West also  offers  covered
parking to its residents.  The combined  purchase price of  approximately  $11.1
million for  Ashford  Place and Pointe  West was paid  through  the  issuance of
182,804  limited  partnership  units at  $24.00  per  unit,  the  assumption  of
approximately  $6.4 million of indebtedness  at an interest rate of 7.125%,  and
payment of other acquisition costs estimated at approximately $330,000.

         Crowne Ridge  Apartments--On  May 10, 1996,  CRLP acquired Crowne Ridge
Apartments, located in a suburb of Birmingham, Alabama. Crowne Ridge consists of
125 units in eight  two-story  buildings  which were built in 1992. The purchase
price of $7.2 million was financed through CRLP's  assumption of a mortgage with
a balance of $3.8 million  which bears  interest at 8.06% and through an advance
on CRLP's line of credit.  Crowne Ridge's  amenities include a clubhouse with an
exercise room, a swimming pool, and extensive landscaping.

         Barrington  Club  Apartments--On  September  13,  1996,  CRLP  acquired
Barrington Club Apartments,  a 176-unit luxury  multifamily  community in Macon,
Georgia. Barrington Club was acquired for a purchase price of $9.5 million which
was  financed  through  an  advance  on CRLP's  unsecured  line of  credit.  The
development,  which was completed earlier this year,  consists of eight two- and
three-story  buildings  and a separate  clubhouse on  approximately  14 acres of
land. Amenities include a swimming pool, a fitness center,  tennis courts, and a
playground.  The property is located in the Barrington  Hall, a 650-acre Planned
Unit  Development,  which  includes a golf club with an 18-hole  course,  estate
homes,  and single family homes.  Residents of Barrington  Club  Apartments have
golf privileges at the club.

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

Completed Multifamily Expansions

         McGehee Place V  Apartments--CRLP  completed  the 16-unit  expansion of
McGehee Place  Apartments in Montgomery,  Alabama in May 1996 at a total cost of
$0.8 million,  including land  acquisition  costs funded through  advances under
CRLP's  line of credit.  CRLP  expects to complete  lease-up  of this  completed
expansion during the first quarter of 1997.
         Colonial Grand at  Galleria--CRLP  completed the 160-unit  expansion of
Colonial Grand at Galleria  located in Birmingham,  Alabama in October 1996 at a
total cost of $8.7 million  including  land  acquisition  costs  funded  through
advances under CRLP's line of credit.  CRLP expects to complete lease-up of this
completed expansion during the second quarter of 1997.

         Inverness Lakes  Apartments--CRLP  completed the 180-unit  expansion of
Inverness  Lakes  Apartments  located in Mobile,  Alabama in September 1996 at a
total cost of $9.5 million including land acquisition  costs,  which were funded
through advances under CRLP's line of credit.  CRLP expects to complete lease-up
of this completed expansion during the first quarter of 1997.

Continuing Multifamily Expansion and Development Activity

         Riverchase III--CRLP continued  construction on a 276-unit expansion of
Riverchase III Apartments  located in Tampa,  Florida.  The community  amenities
will  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, are expected to total $14.9
million  and will be funded  through  advances  on CRLP's  line of credit.  CRLP
expects to complete  construction  in the first  quarter of 1997 and to complete
lease-up during the second quarter of 1998.

         Colonial Grand at Bayshore--CRLP  continued  construction on a 212-unit
development  located  in  Bradenton,  Florida.  The new  community  will offer a
variety of amenities,  including a club house,  an exercise  center,  a swimming
pool  overlooking a five-acre lake,  tennis and basketball  courts, a children's
playground,  tenant garages,  and storage units.  Project costs,  including land
acquisition  costs,  are  expected  to total  $11.6  million  and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the second quarter of 1997 and to complete  lease-up during the third quarter
of 1997.

         Colonial Grand at Heathrow--CRLP  continued  construction on a 312-unit
development located in Heathrow (Orlando),  Florida.  CRLP acquired the land (30
acres) in December 1994 at a cost of $2.2 million.  The new development  will be
located adjacent to Heathrow  International Business Center and Heathrow Country
Club. The new apartment community will offer a variety of amenities, including a
clubhouse with  conference and computer rooms,  an exercise  center,  tennis and
basketball courts, a swimming pool, and laundry facilities.  Project development
costs, including land acquisition costs, are expected to total $20.4 million and
will be funded  through  advances  on CRLP's  line of  credit.  CRLP  expects to
complete  construction  in the first  quarter of 1997 and to  complete  lease-up
during the second quarter of 1997.

New Multifamily Expansion and Development Activity

         Colonial Village at  Inverness--CRLP  began  construction on an 84-unit
expansion of Colonial Village at Inverness located in Birmingham, Alabama during
the third quarter of 1996. Project development costs, including land acquisition
costs, are expected to total $4.1 million and will be funded through advances on
CRLP's  line of credit.  CRLP  expects to  complete  construction  in the fourth
quarter of 1997 and to complete lease-up during the first quarter of 1998.

         Colonial Grand at Bayshore  II--CRLP began  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 will offer the same amenities
as the existing community. Project development costs, including land acquisition
costs, are expected to total $9.1 million and will be funded through advances on
CRLP's  line of credit.  CRLP  expects to  complete  construction  in the fourth
quarter of 1997 and to complete lease-up during the second quarter of 1998.

         Colonial  Grand at  Wesleyan--CRLP  began  construction  on a  240-unit
development located in Macon,  Georgia. CRLP acquired the land (49.8 acres) at a
cost of $1.4 million, which was determined pursuant to an option acquired at the
time of the Company's  IPO in September  1993.  The new  community  will offer a
variety of  amenities,  including a clubhouse,  an exercise  center,  a swimming
pool,  tennis courts,  and storage units for rent.  Project  development  costs,
including land  acquisition  costs, are expected to total $12.8 million and will
be funded  through  advances on CRLP's line of credit.  CRLP expects to complete
construction  in the fourth quarter of 1997 and to complete  lease-up during the
second quarter of 1998.

         Colonial Grand at Hunter's Creek--CRLP began 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  will  offer 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, are expected to total $33.0 million and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the second quarter of 1998 and to complete  lease-up during the first quarter
of 1999.

Retail Property Acquisitions

         Briarcliffe  Mall--On July 1, 1996, CRLP acquired  Briarcliffe  Mall, a
488,000  square  foot  regional  mall in Myrtle  Beach,  South  Carolina,  for a
purchase  price of $42.8  million.  The mall  includes a 50,745 square foot J.C.
Penney, an 84,000 square foot K-Mart,  and two Belk's stores,  one having 58,000
square feet and the other having 61,000  square feet under a ground  lease.  The
mall was  constructed  in 1986 and was 96%  leased at  December  31,  1996.  The
acquisition includes approximately 9 acres of land adjacent to the mall property
which is available  for  expansion.  CRLP used  proceeds from its July 1996 debt
offering  to fund $41.6  million  of the  acquisition  price and  issued  48,905
limited partnership units valued at $1.2 million.  The units have been allocated
to the  expansion  land  portion  of the  acquisition  and as such  will  not be
eligible to receive distributions for 24 months after closing.

         Wekiva River Walk--On  October 1, 1996, CRLP acquired Wekiva River Walk
Shopping Center, a 209,000 square foot shopping center in Orlando,  Florida, for
a purchase  price of $18.1  million.  The center  includes a 58,000  square foot
Goodings  Supermarket,  a 36,000 square foot Beall's  Department Store, a 26,000
square foot United Artists Cinema, and ground leases for NationsBank and Barnett
Bank.  The center  includes  approximately  34,000 square feet of vacant in-line
shop space the Company  anticipates  using to enhance the center's  performance.
The center was built in 1990 and was 84% leased at December 31, 1996.

         Bardmoor  Village--On  October 1, 1996, CRLP acquired  Bardmoor Village
Shopping  Center,  a 158,000  square  foot  shopping  center in St.  Petersburg,
Florida,  for a purchase  price of $11.9 million.  The center  includes a 66,000
square foot Publix Super  Market,  a 36,000  square foot Craft  Depot,  a 10,000
square  foot Eckerd Drug  Store,  and a ground  lease for First Union Bank.  The
center was built in 1981,  renovated and expanded in 1991, and was 99% leased at
December 31, 1996.

         Island  Walk--On  October  1,  1996,  CRLP also  acquired  Island  Walk
Shopping Center, a 222,000 square foot shopping center in Orlando,  Florida, for
a purchase  price of $17.2  million.  The center  includes a 108,000 square foot
K-mart and a 56,000 square foot Publix Super Market. The center was built in two
phases with the first phase  completed in 1993 and the second phase in 1995. The
center was 95% leased at December 31, 1996. In the  acquisition of this property
CRLP assumed an existing  mortgage of $10.4 million that matures in October 2001
and bears an interest rate of 8.8%.

Retail Expansion Activity

         Macon  Mall--On  February 12, 1997,  CRLP  completed its 422,000 square
foot expansion of Macon Mall, a super  regional mall located in Macon,  Georgia.
The mall expansion will include new anchor  tenants  Parisian,  Inc. and Dillard
Department  Stores,  Inc.  together with 50 specialty  shops,  which have joined
existing   department  stores  including  Macy's  Primary  Real  Estate,   Inc.,
Belk-Matthews Company of Macon,  Georgia, a Georgia Corporation,  Sears, Roebuck
and Company and J.C. Penney Company, Inc. Macon Mall now contains  approximately
1,431,000  square feet of retail  shopping  space.  The project  expansion costs
totaled  approximately  $52 million and were funded  through  advances on CRLP's
line of credit.  CRLP expects to complete  lease-up of this expansion during the
first quarter of 1998.
         Montgomery  Promenade--CRLP  began the 225,000 square foot expansion of
Montgomery  Promenade,  a power center containing  approximately  210,000 square
feet  located in  Montgomery,  Alabama.  The  expansion,  which will be known as
Montgomery  Promenade North, will increase the shopping center to 435,000 square
feet of leasable area and will include a 130,000 square foot  tenant-owned  Home
Depot.  Montgomery Promenade is anchored by Winn Dixie Market Place, Stein Mart,
Michael's  Arts & Crafts,  Goody's,  Books-A-Million,  and K & B Drugs.  Project
expansion  costs are  expected  to total  approximately  $7 million  and will be
funded  through  advances  on CRLP's  line of credit.  CRLP  expects to complete
construction  in the fourth quarter of 1997 and to complete  lease-up during the
first quarter of 1998.

Financing Activity

          In January 1996 the Company completed a public offering of 4.6 million
Common Shares at a price of $24.625 per share.  The $106.6  million  proceeds of
this  offering,  net of  offering  costs  of  $6.6  million,  were  used to fund
acquisition  and  development  activity,  repay the balances  outstanding  under
CRLP's  revolving  credit  agreements,  and to repay  the $8.2  million  balance
outstanding under a mortgage loan.

         In July 1996 CRLP completed a public issuance of senior, unsecured debt
securities totaling $130.0 million.  The securities were issued in two series of
$65 million each  requiring  semi-annual  payments of interest only. One series,
which matures in July 2001,  bears  interest at 7.50% and was priced at a spread
of 95 basis  points  over the  five-year  treasury  bond rate,  resulting  in an
original  issue  discount of $145,383.  The other series,  which matures in July
2006,  bears  interest  at 8.05% and was priced at a spread of 128 basis  points
over the ten-year treasury bond rate, resulting in an original issue discount of
$288,410.

         In July 1996 the Company refinanced loans collateralized by five of the
Company's multifamily properties and representing a total of approximately $53.0
million in outstanding  indebtedness.  The 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 five loans was 3.42% at December  31,
1996.

         In  December  1996  CRLP  completed  a  public  issuance  of  unsecured
medium-term  debt securities  totaling $50.0 million.  The securities  mature in
December 2003 and bear interest at 7.05% which, at the time of issuance, equated
to a spread of 90 basis points over the seven-year treasury bond rate.

         In January  1997 CRLP  completed  an  additional  issuance of unsecured
medium-term debt securities also totaling $50.0 million. These securities mature
in  January  2003 and bear  interst  at 7.16%  which,  at the time of  issuance,
equated to a spread of 80 basis points over the six-year treasury bond rate.

         In January 1997 the Company  completed a public offering of 1.5 million
Common  Shares at a price of $29.875 per share.  The $43.4  million  proceeds of
this  offering,  net of  offering  costs  of  $1.4  million,  were  used to fund
acquisition  and  development  activity,  repay the balances  outstanding  under
CRLP's revolving credit agreement,  and to repay $24.5 million outstanding under
four mortgage loans.

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  their  predecessor)  have  implemented  this  strategy
principally by (i) realizing  growth in income from their existing  portfolio of
properties,  (ii) developing,  expanding,  and selectively  acquiring additional
multifamily,  retail,  and office  properties in growth  markets  located in the
southeastern  United  States,  where  CRLP has  first-hand  knowledge  of growth
patterns and local economic  conditions,  (iii)  managing their own  properties,
which has  enabled  them to better  control  operating  expenses  and  establish
long-term  relationships with their 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 intends to maintain a ratio of debt to total market capitalization
(i.e.,  the total debt  divided by the market  value of issued  Units plus total
debt) of approximately  50% or less. At December 31, 1996, after considering the
effect of the January 1997 debt  offering  and the  Company's  equity  offering,
CRLP's total debt included  fixed-rate  debt of $426.7  million,  or 86.9%,  and
floating-rate  debt of $64.5 million,  or 13.1%. CRLP has obtained interest rate
protection for $17.8 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 partners of
CRLP determine 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 42 Multifamily Properties,  as well as development
and acquisition of additional multifamily  properties.  The multifamily division
also is  responsible  for the provision of third-party  management  services for
apartment communities in which CRLP does not have an ownership interest.

         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  21  Retail  Properties,  as  well  as  the  development  and
acquisition  of  additional  retail  properties.  The  retail  division  also is
responsible  for 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 has regional
offices in Huntsville and Montgomery, Alabama and Orlando, Florida and satellite
leasing offices in two cities in central Florida.

         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 10 Office  Properties,  as well as the development
and  acquisition of additional  office  properties.  The office division also is
responsible  for 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.

Employees

         CRLP employs  approximately  560 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.

<PAGE>
Item 2.  Properties.

General

         The 73  Properties  consist  of 42  Multifamily  Properties,  21 Retail
Properties,  and 10  Office  Properties,  as  described  in more  detail  below.
Thirty-five  of the  Properties  were acquired in connection  with the Formation
Transactions,  19 Properties  and one additional  phase of an existing  Property
were acquired  during 1994,  six  Properties  were acquired  during 1995, and 11
Properties  were acquired in 1996.  Also, two new  multifamily  communities  are
currently being developed by CRLP.<TABLE>

                       Summary of Properties
<CAPTION>


                                                         Percent
                                                           of
                                            Total         Total      Percentage
                               Units/       1996          1996        Occupancy
                     Number     GLA/       Property     Property          at
 Type of               of       NRA        Revenue       Revenue       Dec. 31,
Property            Properties   (1)          (2)          (2)         1996 (3)
-----------------   ---------  --------   ------------  -----------   ----------
<S>                    <C>     <C>        <C>             <C>            <C>

 Multifamily           42       13,617    $ 80,915,000     59.2%         94.8%
 Retail                21      5,646,000    45,775,000     33.5%         93.8%
 Office                10      1,009,000    10,061,000      7.3%         97.4%
                      ----                ------------    -------
    Total              73                 $136,751,000    100.0%
                      ====                ============    =======

<FN>

(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, 1996.
(2)Includes CRLP's  proportionate  share of revenue from those Office Properties
   accounted for under the equity method.
(3)Excludes 2,734 units of expansion  phases of six Multifamily  Properties that
   had not achieved stabilized occupancy as of December 31, 1996.
</FN>
</TABLE>


Multifamily Properties

         The 42 Multifamily  Properties  contain a total of 13,617  garden-style
apartments and range in size from 104 to 1,080 apartment  units.  Sixteen of the
Multifamily  Properties  were acquired by CRLP in connection  with the Formation
Transactions,  17 Properties  and one additional  phase of an existing  Property
were acquired during 1994 from third parties, and seven Properties were acquired
during 1996. Also, two new communities were being developed by CRLP during 1996.
Twenty-three  Multifamily  Properties  (containing  a total of  8,621  apartment
units) are located in Alabama, 13 Multifamily  Properties (containing a total of
3,846  apartment  units) are located in Florida and six  Multifamily  Properties
(containing a total of 1,150 apartments  units) are located in Georgia.  Each of
the  Multifamily  Properties  is  established  in its local  market and provides
residents  with  numerous   amenities,   including  a  swimming  pool,  jacuzzi,
clubhouse, laundry room, tennis court(s), and/or a playground.

<PAGE>


           The  following  table  sets  forth  certain  additional   information
relating to the Multifamily Properties as of and for the year ended December 31,
1996.
<TABLE>

                                    Year      Number  Approximate
 Multifamily                     Completed      of   Rentable Area    Percent
 Property (1)          Location     (2)      Units(3) (Square Feet)  Occupied
--------------------------------------------------------------------------------
<S>                    <C>          <C>         <C>    <C>             <C>

 Ashford Place         Mobile       1983        168    146,000         98.2%
 CV at Rocky Ridge     Birmingham   1984        226    235,000         96.9%
 Colony Park           Mobile       1975        201    144,000         88.1%
 CG at Galleria Woods  Birmingham   1994        244    260,000         93.4%
 CG at Mountain Brook  Birmingham   1987/91     392    393,000         94.6%
 CV at Cahaba Heights  Birmingham   1992        125    131,000         99.2%
 Grande View
       Towers          Huntsville   1990        308    323,000         97.4%
 CV at Inverness       Birmingham   1986/87/90  502    395,000         88.2%
 Huntleigh Woods       Mobile       1978        233    199,000         98.3%
 Inverness             Mobile       1983/96     366    371,000           (7)
 McGehee Place         Montgomery   1986/95     468    387,000           (7)
 CV at Monte D'Oro     Birmingham   1977        200    296,000        100.0%
 Patio                 Auburn       1966/83/84  240    179,000         99.2%
 Pointe West           Mobile       1981        104    114,000         97.1%
 CG at Galleria        Birmingham   1986/96   1,080  1,100,000           (7)
 Rime Village-
  Huntsville           Huntsville   1987/94     736    809,000         92.3%
 CG at Riverchase      Birmingham   1984/91     468    746,000         97.9%
 Ski Lodge I           Birmingham   1972/73/76  648    549,000         94.8%
 Ski Lodge II          Birmingham   1979/86     644    511,000         97.4%
 Ski Lodge III         Birmingham   1984        554    502,000         95.3%
 Ski Lodge
       Tuscaloosa      Tuscaloosa   1976/92     304    273,000         96.4%
 Vieux Carre           Montgomery   1971/74/78  250    222,000         82.0%
 Willow Bend           Montgomery   1984        160    151,000         93.8%
                                              ------   -------         -----
       Subtotal - Alabama (23 Properties)     8,621  8,436,000         94.7%
                                              ------   -------         -----
 CG at Kirkman Park    Orlando      1991        370    337,000         98.4%
 Carrollwood           Tampa        1966        244    286,000         98.0%
 CG at Bayshore        Bradenton    1996        148    203,000           (7)
 CG at Heathrow        Orlando      1996        280    370,000           (7)
 Pelican Pointe        Bradenton    1992        340    292,000         90.3%
 Plantation Gardens    Sarasota     1991        248    252,000         99.6%
 Polos Gainesville     Gainesville  1989/93/94  560    487,000         97.7%
 Polos Pointe Vedra    Jacksonville 1988        240    212,000         88.8%
 Polos West            Orlando      1991        200    169,000         99.5%
 Riverchase            Tampa        1991        392    431,000           (7)
 CV at Lake Mary       Orlando      1991/95     504    431,000         94.6%
 Sunchase              Bradenton    1986        168    135,000         94.1%
 Willowtree            Pensacola    1983        152    116,000         95.4%
                                             -------   --------        -----
       Subtotal - Florida (13 Properties)     3,846  3,721,000         95.7%
                                             -------   --------        -----
 Barrington Club       Macon        1966        176    201,000         92.6%
 North Ingle Villas    Macon        1983        140    133,000         86.4%
 Somerset Place        Savannah     1986        120    108,000         93.3%
 Somerset Wharf        Savannah     1986/87     178    151,000         94.4%
 Spring Creek          Macon        1992/94     296    328,000         97.6%
 Stockbridge Manor     Stockbridge  1993/94     240    267,000         92.5%
                                             -------   --------        -----
       Subtotal - Georgia (6 Properties)      1,150  1,188,000         93.5%
                                             -------   --------        -----

       TOTAL (42 Properties)                 13,617 13,345,000         94.8%
                                             =======   ========        =====
<PAGE>

(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                         Average                            Percent of
                          Rental          Total 1996        Total 1996
                           Rate            Property          Property
                         Per Unit          Revenue          Revenue (4)
------------------------------------------------------------------------
<S>                       <C>        <C>             <C>       <C>
 Ashford Place            $ 471      $       702,000 (6)       0.5%
 CV at Rocky Ridge          584            1,544,000           1.1%
 Colony Park                379              833,000           0.6%
 CG at Galleria Woods       654            1,268,000 (6)       0.9%
 CG at Mountain Brook       633            1,702,000 (6)       1.2%
 CV at Cahaba Heights       685              573,000 (6)       0.4%
 Grande View
       Towers               568            2,017,000           1.5%
 CV at Inverness            539            2,908,000           2.1%
 Huntleigh Woods            416            1,129,000           0.8%
 Inverness                  555            2,035,000           1.5%
 McGehee Place              543            2,622,000           1.9%
 CV at Monte D'Oro          636            1,477,000           1.1%
 Patio                      398            1,063,000           0.8%
 Pointe West                580              541,000 (6)       0.4%
 CG at Galleria             622            6,532,000           4.8%
 Rime Village-
  Huntsville                577            4,616,000           3.4%
 CG at Riverchase           738            3,722,000           2.8%
 Ski Lodge I                404            3,186,000           2.4%
 Ski Lodge II               407            3,043,000           2.3%
 Ski Lodge III              431            2,776,000           2.0%
 Ski Lodge
       Tuscaloosa           400            1,428,000           1.0%
 Vieux Carre                478            1,305,000           1.0%
 Willow Bend                548              979,000           0.7%
                           ------           -------           -----
 Subtotal - Alabama         533           48,001,000          35.2%
                           ------           -------           -----
 CG at Kirkman Park         735            3,363,000           2.5%
 Carrollwood                773            2,158,000           1.6%
 CG at Bayshore             723              177,000           0.1%
 CG at Heathrow             783              743,000           0.5%
 Pelican Pointe             659            2,392,000           1.7%
 Plantation Gardens         767            2,215,000           1.6%
 Polos Gainesville          701            4,534,000           3.3%
 Polos Pointe Vedra         654            1,808,000           1.3%
 Polos West                 617            1,439,000           1.1%
 Riverchase                 567            1,598,000           1.2%
 CV at Lake Mary            610            3,703,000           2.7%
 Sunchase                   604            1,100,000           0.8%
 Willowtree                 475              846,000           0.6%
                            ------           -------           -----
 Subtotal - Florida         670           26,076,000          19.0%
                            ------           -------           -----
 Barrington Club            654              387,000 (6)       0.3%
 North Ingle Villas         551              846,000           0.6%
 Somerset Place             621              873,000           0.6%
 Somerset Wharf             601            1,250,000           0.9%
 Spring Creek               612            1,647,000 (6)       1.2%
 Stockbridge Manor          661            1,835,000           1.4%
                            ------           -------           -----
 Subtotal - Georgia         620            6,838,000           5.0%
                            ------           -------           -----

  TOTAL (42 Properties)    $579      $    80,915,000          59.2%
                            =======         ========          =====
<FN>
(1)All  Multifamily  Properties  are  100%  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, 1996.
(4)Percent of Total 1996 Property Revenue represents the Multifamily  Property's
   proportionate share of all revenue from the 73 Properties.
(5)Represents  weighted  average  rental  rate  per  unit of the 42  Multifamily
   Properties at December 31, 1996.
(6)Represents  revenues from the date of CRLP's  acquisition of this Property in
   1996 through December 31, 1996.
(7)Expanded   or  newly   developed   property   currently undergoing lease-up.
</FN>
</TABLE>

           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>
                                                  Average Base
                          Number      Percent      Rental Rate
        Year-End       of Units(1)   Leased(2)      Per Unit
   <S>                   <C>            <C>           <C>
   December 31, 1996     13,617         94.8%         $579
   December 31, 1995     11,239         95.7%         $552
   December 31, 1994     10,972         96.0%         $531
   December 31, 1993      3,618         96.7%         $510
   December 31, 1992      3,618         94.9%         $472

<FN>
(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.
</FN>
</TABLE>

<PAGE>

Retail Properties

         The 21 Retail  Properties  contain a total of approximately 5.6 million
square  feet  (including  space  owned by anchor  tenants).  Eight of the Retail
Properties are located in Alabama, 10 are located in Florida, two are located in
Georgia,  and one  Retail  Property  is located  in South  Carolina.  The Retail
Properties  consist of five enclosed regional malls  (Briarcliffe  Mall, Gadsden
Mall, Macon Mall, River Oaks Center,  and Village Mall), two power centers,  and
14  neighborhood  shopping  centers.  Nine  of the  21  Retail  Properties  were
originally  developed by Colonial (two Retail  Properties were acquired in 1994,
six were acquired in 1995, and four were acquired in 1996),  and all of them are
now managed by CRLP.

           The following  table sets forth certain  information  relating to the
Retail Properties as of and for the year ended December 31, 1996.
<TABLE>

                        Retail Properties
<CAPTION>

                                                        Gross
                                                       Leasable
                                        Year            Area         Number
 Retail                               Completed       (Square          Of
 Property (1)          Location          (2)          Feet) (3)      Stores
--------------------------------------------------------------------------------

<S>                    <C>             <C>            <C>              <C>
 Alabama:
 River Oaks            Decatur         1979/89        494,000          65
                                                       81,000 (6)
 Gadsden Mall          Gadsden         1974/91        492,000          66
 Village Mall          Auburn          1973/84/89     399,000          65
 Montgomery
       Promenade       Montgomery      1990           165,000          30
                                                       44,000 (6)
 McGehee Place         Montgomery      1986            55,000          14
                                                       50,000 (6)
 Bellwood              Montgomery      1988            37,000          14
                                                       50,000 (6)
 Old Springville       Birmingham      1982            64,000          14
 Olde Town             Montgomery      1978/90         39,000          19
       Other                                                -
                                                  ------------    --------------
       Subtotal-Alabama (8 Properties)              1,970,000         287
                                                  ------------    --------------
 Florida:
 University Park
       Plaza           Orlando         1986/89        399,000          42
 Country Lake          Orlando         1990           217,000          27
 Burnt Store Sq.       Punta Gorda     1990           199,000          22
 Winter Haven          Orlando         1986           197,000          18
 Northdale Court       Tampa           1984           193,000          29
                                                       55,000 (6)
 Bear Lake             Orlando         1990           125,000          22
 Paddock Park          Ocala           1984            87,000          19
 Bardmoor Village      St. Petersburg  1981           158,000          27
 Island Walk           Orlando         1993/95        222,000          23
 Wekiva River Walk     Orlando         1990           209,000          23
                                                  ------------    --------------
       Subtotal-Florida (10 Properties)             2,061,000         252
                                                  ------------    --------------
 Georgia:
 Macon Mall            Macon           1975/88        507,000         115
                                                      510,000 (6)
 Britt David           Columbus        1990           110,000          11
                                                  ------------    --------------
       Subtotal-Georgia (2 Properties)              1,127,000         126
                                                  ------------    --------------
 South Carolina:
 Briarcliffe Mall      Myrtle Beach    1986           488,000          75
                                                  ------------    --------------
       Subtotal-South Carolina (1 Property)           488,000          75
                                                   ------------    -------------
       TOTAL (21 Properties)                        5,646,000         740
                                                  ============    ==============
<PAGE>

(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                                     Average
                                      Base
                                      Rent
                                            Per          Total       Percent Of
                                  Total   Leased      1996 Retail    Total 1996
                    Percent    Annualized Square       Property       Property
                   Leased (3)   Base Rent  Foot (4)     Revenue      Revenue (5)
                ----------------------------------------------------------------

<S>                 <C>   <C>             <C>      <C>                 <C>
Alabama:
River Oaks          91.8% $    3,326,000  $ 14.84  $   4,612,000       3.4%

Gadsden Mall        95.1%      2,615,000    13.38      4,021,000       2.9%
Village Mall        98.5%      2,665,000    12.91      3,801,000       2.8%
Montgomery
      Promenade    100.0%      1,574,000    14.78      2,055,000       1.5%

McGehee Place       97.4%        538,000    11.34        616,000       0.5%

Bellwood           100.0%        380,000    10.76        485,000       0.4%

Old Springville     91.9%        401,000     8.40        461,000       0.3%
Olde Town          100.0%        365,000     9.26        403,000       0.3%
      Other                                              191,000 (8)   0.1%
                 ------------------------------------------------    -------
      Alabama       95.6%     11,864,000    13.11     16,645,000      12.2%
                 ------------------------------------------------    -------
Florida:
University Park
      Plaza         97.7%      2,767,000    13.61      3,849,000       2.8%
Country Lake        96.3%      1,296,000    12.15      1,631,000       1.2%
Burnt Store Sq.     90.2%      1,254,000    11.67      1,593,000       1.2%
Winter Haven        82.7%      1,139,000     9.77      1,135,000       0.8%
Northdale Court     83.1%      1,389,000     9.68      2,033,000       1.5%

Bear Lake           85.5%        871,000    12.84      1,205,000       0.9%
Paddock Park        96.0%        640,000    11.69        831,000       0.6%
Bardmoor Village    98.9%      1,360,000    14.34        473,000 (7)   0.3%
Island Walk         95.1%      1,843,000    15.12        516,000 (7)   0.4%
Wekiva River Walk   83.6%      1,781,000    13.17        650,000 (7)   0.5%
                 ------------------------------------------------    -------
      Florida       91.5%     14,340,000    13.97     13,916,000      10.2%
                 ------------------------------------------------    -------
Georgia:
Macon Mall          93.3%      5,972,000    20.13     10,821,000       7.9%

Britt David        100.0%        807,000     6.37        936,000       0.7%
                 ------------------------------------------------    -------
      Georgia       94.5%      6,779,000    18.18     11,757,000       8.6%
                 ------------------------------------------------    -------
South Carolina:
Briarcliffe Mall    96.0%      4,075,000    15.69      3,457,000 (7)   2.5%
                 ------------------------------------------------    -------
    South Carolina  96.0%      4,075,000    17.34      3,457,000       2.5%
                 -------------------------------------------------    -------
      TOTAL         93.8%  $  37,058,000  $ 14.66   $ 45,775,000      33.5%
                 =================================================    =======
<FN>
(1)All Retail Properties are 100% owned 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  1996  Property  Revenue  represents  the Retail  Property's
   proportionate share of all revenue from the 73 Properties.
(6)Represents space owned by anchor tenants.
(7)Represents  revenues  from  the  date of CRLP's
   acquisitions of the Property in 1996 through December 31, 1996.
(8)Represents revenues from Meadowbrook  Mini-Storage,  a mini-warehouse  rental
   storage facility  containing 295 rental  warehouse  units,  which the Company
   sold in November 1996.
</FN>
</TABLE>
<PAGE>

           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>

                            Gross                   Average
                       Leasable Area   Percent    Base Rent Per
        Year-End       (Square Feet)   Leased    Leased Square
                             (1)                   Foot (2)
   <S>                   <C>           <C>          <C>
   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
   December 31, 1993     2,158,000     95.0%        $12.27
   December 31, 1992     2,148,000     93.5%        $11.50

<FN>
(1)Excludes  790,000  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.
</FN>
</TABLE>

           The following table sets out a schedule of the lease  expirations for
leases in place as of December 31, 1996, for the Retail Properties:
<TABLE>

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

<S>            <C>              <C>         <C>                      <C>
 1997          105              242,000     $   2,896,000             7.8%
 1998          123              361,000         3,873,000            10.5%
 1999          133              468,000         4,537,000            12.2%
 2000          106              589,000         5,083,000            13.7%
 2001           75              201,000         2,748,000             7.4%
 2002           36              127,000         1,450,000             3.9%
 2003           30               98,000         1,359,000             3.7%
 2004           34              429,000         2,530,000             6.8%
 2005           30              138,000         1,960,000             5.3%
 2006           38              426,000         3,410,000             9.2%
 2007-2014      30            1,372,000         7,212,000            19.5%
           ========  =====================================   ==============
               740            4,451,000      $ 37,058,000           100.0%
           ========  =====================================   ==============
<FN>
(1)Excludes  790,000  square feet of space  owned by anchor  tenants and 405,000
   square feet of space not leased as of December 31, 1996.
(2)Annualized base rent is calculated using base rents as of December 31, 1996.
</FN>
</TABLE>
         The  following  is  a  brief  description  of  certain  of  the  Retail
Properties.

         Macon  Mall--Macon  Mall is a  super-regional  mall with  approximately
1,431,000  square  feet  of  rental  space  (including  the  recently  completed
expansion) located in Macon, Georgia,  approximately 100 miles south of Atlanta,
Georgia and serving a trade area of more than 650,000 people. Colonial developed
Macon Mall in 1975,  completely  renovated its interior in 1988, and completed a
422,000  square foot  expansion of the mall in February 1997. As of December 31,
1996, the mall was 93.3% leased to a total of 115 tenants. Parisian,  Dillard's,
Macy's,  Sears, Belk Matthews and J.C. Penney are the anchor department  stores.
As of February 28, 1997, J.C. Penney occupied  approximately 169,000 square feet
(approximately  11.8% of the gross  leasable  area)  pursuant  to a lease  which
expires in August 2000 and Parisian occupied 102,000 square feet  (approximately
7.2% of the gross  leasable  area)  pursuant to a lease  which  expires in March
2017. J.C. Penney has five options to extend the lease for five years each. Each
of Dillard's, Macy's, Sears, and Belk Matthews owns its store. In the opinion of
CRLP, Macon Mall is adequately covered by insurance.

     The following table sets out a schedule of the lease  expirations for Macon
Mall  beginning with 1997.  Leases  accounting  for  approximately  11.6% of the
leased space (all of which is specialty space) in the Macon Mall will exprire on
or before December 31, 1997. <TABLE>
                                                                      Percent of
                                                                    Total Annual
                               Net Rentable                          Base Rent
   Year of      Number of         Area Of          Annualized       Represented
    Lease     Tenants with    Expiring Leases     Base Rent of      by Expiring
 Expiration  Expiring Leases (Square Feet)(1)  Expiring Leases(1)(2)  Leases(1)
--------------------------------------------------------------------------------

<C>             <C>               <C>         <C>                       <C>
1997            20                53,000      $      749,000            12.5%
1998            15                42,000             753,000            12.6%
1999            15                32,000             679,000            11.4%
2000            17               216,000           1,282,000            21.5%
2001             6                12,000             284,000             4.8%
2002             6                 7,000             210,000             3.5%
2003             6                21,000             209,000             3.5%
2004             2                 6,000             130,000             2.2%
2005            15                33,000             843,000            14.1%
2006            12                32,000             796,000            13.3%
2007-2014        1                 2,000              37,000             0.6%
           ========   =======================================   ==============
               115               456,000       $   5,972,000           100.0%
           ========   =======================================   ==============
<FN>
(1)  Excludes  510,000  square feet of space owned by anchor  tenants and 51,000
     square feet of space not leased as of December 31. 1996.
(2)  Annualized base rent is calculated  using a specialty store base rent as of
     December 31, 1996.
</FN>
</TABLE>
         The aggregate tax basis of depreciable  real property of Macon Mall for
Federal  income tax  purposes  was  $21,511,000  as of December  31,  1996.  The
aggregate  tax  basis  of  depreciable  personal  property  associated  with the
Property  for Federal  income tax purposes was $996,000 as of December 31, 1996.
Depreciation  and  amortization  are  computed  on  a  straight-line  method  or
appropriate accelerated methods over the estimated useful life of the Property's
assets,  which  range from seven to 40 years.  The  current  realty tax rate for
Macon Mall is $41.30 per $1,000 of assessed value. The aggregate real estate tax
obligation  of Macon  Mall for 1996 was  $786,000,  or  approximately  $1.18 per
square foot of taxable building area.

         A 336,457  square  foot  portion of the land  underlying  Macon Mall is
subject to a ground lease that expires in 2071. The ground lease requires ground
rent payments of $24,000 each year and is subject to a one-time  adjustment  per
the wholesale index in the year 2000.

         River Oaks  Center--River Oaks Center is a 575,000 square foot regional
mall located in Decatur,  Alabama.  Parisian, J.C. Penney, Sears, Castner Knott,
and Rogers are the anchor tenants. The mall was originally developed in 1979 and
renovated in 1989. CRLP acquired the mall in 1995.

         Gadsden  Mall--Gadsden  Mall is a 492,000  square  foot  regional  mall
located in Gadsden,  Alabama,  approximately  60 miles  northeast of Birmingham,
Alabama.  J.C. Penney,  Sears,  McRae's,  and Belk's are the anchor tenants. The
mall was expanded in 1990 to allow Belk's to relocate and expand within the mall
with its newest prototype store and to allow J.C. Penney the opportunity to move
to the mall from its downtown  location.  In addition,  the interior of the mall
was totally  renovated,  including  the  addition of a food court.  McRae's,  an
anchor tenant,  exercised a one-time option in August 1994 to extend its initial
lease term to July 2014 and completed a major  renovation of its store at a cost
of approximately $2 million.

         Briarcliffe  Mall--Briarcliffe  Mall is a 488,000  square foot regional
mall located in Myrtle Beach,  South  Carolina.  J.C.  Penney,  K-Mart,  and two
Belk's stores are the anchor tenants.  The mall was originally developed in 1986
and acquired by CRLP in 1996.

         Village  Mall--Village  Mall is a 399,000  square  foot  regional  mall
located in Auburn,  Alabama, which is approximately 55 miles east of Montgomery,
Alabama  and 45 miles  northwest  of  Columbus,  Georgia.  Anchored  by Gayfer's
(Mercantile),  Sears,  and J.C.  Penney,  it is the only  enclosed  mall in east
central Alabama.  Originally built in 1973, the mall was expanded to its current
size in 1984 with the addition of J.C.  Penney and  approximately  60,000 square
feet of  specialty  shops.  An  extensive  renovation  of the  interior  in 1989
included the creation of a food court.

         University  Park--University Park is a 399,000 square foot power center
located in Orlando,  Florida.  The anchor tenants are Beall's,  Stein Mart, Baby
Superstore, Waccamaw, Albertson's, and Books-A-Million.  The shopping center was
constructed  in two phases,  with Phase I and Phase II opening in 1986 and 1989,
respectively.

Office Properties

         The 10 Office  Properties  contain a total of approximately 1.0 million
rentable  square  feet.  Nine of the Office  Properties  are  located in Alabama
(representing 93% of the office portfolio's net rentable square feet) and one is
located  in  Orlando,   Florida.  The  Office  Properties  range  in  size  from
approximately  25,000  square feet to 227,000  square  feet.  Four of the Office
Properties  were  developed  by Colonial,  and  Colonial  acquired the other six
Properties at various times between 1980 and 1990. All of the Office  Properties
are now managed by CRLP.

<PAGE>
           The  following  table  sets  forth  certain  additional   information
relating  to the Office  Properties  as of and for the year ended  December  31,
1996.
<TABLE>
                                                     Net
                                                   Rentable
                                      Year           Area
 Office                            Completed        Square          Percent
 Property (1)          Location       (2)            Feet           Leased
----------------------------------------------------------    -----------------

 <S>                  <C>         <C>              <C>             <C>
 Alabama:
 Interstate Park      Montgomery  1982-85/89        227,000         95.5%
 International Park   Birmingham  1987/89           222,000        100.0%
 Energen Plaza        Birmingham  1982              168,000         99.6%
 AmSouth Center       Huntsville  1990              157,000         93.4%
 P&S Building         Gadsden     1946/76/91         40,000        100.0%
 250 Commerce St      Montgomery  1904/81            35,000        100.0%
 Anderson Block (5)   Montgomery  1981/83            34,000         96.1%
 Land Title Bldg.     Birmingham  1975               30,000        100.0%
 Whitesburg Bldg.     Huntsville  1974               25,000        100.0%
                                             ----------------------------------
       Subtotal-Alabama (9 Properties)              938,000         97.6%
                                             ----------------------------------
 Florida:
 University Park
       Plaza          Orlando     1985               71,000         95.5%
                                             ----------------------------------
       TOTAL (10 Properties)                      1,009,000         97.4%
                                             ==================================

(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                                     Average
                                      Base
                                      Rent
                                           Per          Total      Percent Of
                          Total           Leased     1996 Office   Total 1996
                        Annualized        Square       Property     Property
                        Base Rent          Foot      Revenue (3)   Revenue (4)
                    ------------------------------------------------------------

 <S>                  <C>             <C>           <C>               <C>
 Alabama:
 Interstate Park      $   2,760,000   $    12.92    $   2,868,000     2.1%
 International Park       3,282,000        14.86        1,029,000     0.8%
 Energen Plaza            2,366,000        14.40        1,430,000     1.0%
 AmSouth Center           2,538,000        17.36        2,849,000     2.0%
 P&S Building               178,000         4.50          144,000     0.1%
 250 Commerce St            364,000        10.35          361,000     0.3%
 Anderson Block (5)         333,000        10.33          124,000     0.1%
 Land Title Bldg.           382,000        12.82          139,000     0.1%
 Whitesburg Bldg.           205,000        16.61          322,000     0.2%
                      ----------------------------------------------  -------
       Alabama           12,408,000       13.88         9,266,000     6.7%
                      ----------------------------------------------  -------
 Florida:
 University Park
       Plaza                894,000        12.83          795,000     0.6%
                      ----------------------------------------------  -------
       TOTAL           $ 13,302,000  $    13.80      $ 10,061,000     7.3%
                      ============================  ===============   =======
<FN>
(1)All  Office  Properties  are  100%  owned  by  CRLP  with  the  exception  of
   International  Park,  which consists of three buildings and is 37.5% owned by
   CRLP for buildings  1900 and 2100 and is 25% owned by CRLP for building 2000;
   Energen Plaza,  which is 50% owned by CRLP; and 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 1996 Office  Property  revenue is CRLP's share (based on its percentage
   ownership of the property) of total Office Property revenue.
(4)Percent of Total  1996  Property  Revenue  represents  the Office  Property's
   proportionate share of all revenue from the 73 Properties.
(5)CRLP has a leasehold interest in this Property.
</FN>
</TABLE>
<PAGE>

     The following table sets out a schedule of the lease expirations for leases
in place as of December 31, 1996, for the Office Properties (including all lease
expirations for partially-owned Properties). <TABLE>
                                                 Annualized        Percent of
                                Net Rentable    Base Rent of      Annual Base
   Year of     Number of          Area Of         Expiring     Rent Represented
    Lease    Tenants with     Expiring Leases     Leases          by Expiring
 Expiration Expiring Leases  (Square Feet)(1)     (1)(2)           Leases (1)
--------------------------------------------------------------------------------

 <S>             <C>             <C>         <C>                      <C>
  1997           61              180,000     $   2,281,000             17.2%
  1998           26              225,000         3,129,000             23.5%
  1999           41              292,000         4,155,000             31.2%
  2000           15              101,000         1,400,000             10.5%
  2001           14               86,000           880,000              6.6%
  2002            3               18,000           283,000              2.1%
  2005            2               56,000         1,063,000              8.0%
  2007            1                6,000           111,000              0.9%
           =========    ================= =================   ===============
                163              964,000      $ 13,302,000            100.0%
           =========    ================= =================   ===============
<FN>
(1)Excludes 45,000 square feet of space not leased as of December 31, 1996.
(2)Annualized  base rent is  calculated  using base rents as of  December  31,
   1996.
</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>
                         Net                          Average Base
                    Rentable Area         Total      Rent Per Leased
   Year-end         (Square Feet)    Percent Leased  Square Foot (1)

<S>                  <C>                  <C>             <C>
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
December 31, 1993    1,007,000            93.7%           $13.05
December 31, 1992    1,007,000            94.1%           $12.99
<FN>
-----------------
(1)Average base rent per leased square foot is calculated using base rents as of
   December 31 for each respective year.
</FN>
</TABLE>
<PAGE>
         The  following  is  a  brief  description  of  certain  of  the  Office
Properties.

         Interstate  Park--Interstate  Park is a master planned  suburban office
park located in east Montgomery,  Alabama containing a total of 227,000 rentable
square feet. The Property  consists of the Interstate Park Center,  a four-story
building  completed in 1989  containing a total of 78,000  rentable square feet,
and the  Interstate  Buildings 100 through 600, which were  constructed  between
1982 and 1985 and which  contain a total of 149,000  rentable  square feet.  The
Property's major tenants include  affiliates of The Colonial Company,  including
Lowder Construction  Company,  Inc., Colonial Mortgage Company;  Goodwyn Mills &
Cawood; CACI; Webb Crumpton, and the Alabama Housing Finance Authority.

         Historical Rehabilitation Properties--Anderson Block (in which CRLP has
only a 33.3% interest) and 250 Commerce Street are historic buildings located in
Montgomery,  Alabama which have been renovated to Class A office space.  The two
Properties  benefit from their  presence on the National  Historic  Register and
from their prime locations in Montgomery's  downtown  financial  district.  Both
Properties  were  originally  constructed as warehouses in the late  1800s/early
1900s and later underwent  complete  renovation in the early 1980s. The Colonial
BancGroup,  Inc.  occupies  approximately  43% of 250 Commerce Street,  with the
remainder leased to smaller  tenants.  Anderson Block leases its entire space to
seven separate tenants.

         Energen  Plaza--Energen  Plaza is a  12-story  Class A office  building
located  in the  downtown  central  business  district  of  Birmingham,  Alabama
containing a total of 168,000  rentable square feet and in which CRLP owns a 50%
interest. The building was constructed in 1982 and includes a four-level parking
garage with 417 parking  spaces.  It is the  headquarters  building  for Energen
Corp.  (the  parent  company of Alabama  Gas  Corporation)  and for CRLP,  which
occupies 18,000 square feet. The remainder of the Property is leased to Gorham &
Waldrep (a law firm) and to other smaller tenants.

         International  Park--International  Park is a 100-acre  master  planned
office park located 15 minutes south of Birmingham in the Highway  280/Southeast
suburban  submarket.  The Property  consists of three separate office  buildings
(the 1900,  2000 and 2100 Buildings)  which contain a total of 222,000  rentable
square feet. CRLP owns 37.5% of the 1900 Building,  25% of the 2000 Building and
37.5% of the 2100 Building in  partnership  with BE&K, an  international  design
engineering and construction company, and other partners.  The 1900 Building was
constructed  in 1987 and  contains  65,000  rentable  square  feet.  Its largest
tenants  include  Hoar  Construction,   A.B.  Shopping  Centers  and  Innovative
Healthcare.  The 2000  Building  was built in 1987,  contains  129,000  rentable
square  feet and is  solely  occupied  by BE&K.  The most  recently  constructed
building, the 2100 Building (completed in 1989), contains 28,000 rentable square
feet and also is solely occupied by BE&K.

         AmSouth  Center--AmSouth  Center is an 11-story Class A office building
located in downtown  Huntsville,  Alabama.  Constructed  in 1990,  the  Property
contains a total of 157,000  rentable square feet and has an attached  six-story
parking deck with 424 parking spaces.  The building is anchored by AmSouth Bank.
Other major tenants include New York Life; Watson, Gammons & Fees; the Tennessee
Valley Authority; and the law firms of Sirote & Permutt and Bradley, Arant, Rose
& White.

Undeveloped Land

         CRLP owns seven  undeveloped  land parcels  consisting of approximately
61.0 acres (collectively, the "Land"). These parcels are adjacent to five 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
four 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 six such parcels.

         Options to Acquire Additional Land -- In addition to the Land, CRLP has
options to acquire  certain  additional  land parcels owned by the Lowder family
(collectively,  the "Option  Parcels").  The name,  location,  proposed  use and
acreage of each Option Parcel is as follows:
<TABLE>

<S>                      <C>               <C>             <C>
Site Name                Location          Proposed Use    Acres
North Macon (Wimbleton
Forest)..................Macon, GA         Retail           87.9
Altamonte Crossing.......Altamonte         Retail            2.6
                         Springs, FL
Bellwood Commercial......Montgomery, AL    Retail            1.1
Osprey (Sarasota)........Sarasota, FL      Mixed Use        73.9
Interstate Park..........Montgomery, AL    Office           11.3
Bellwood Office..........Montgomery, AL    Office            4.9
Huntsville Research Park Huntsville, AL    Office            9.8
</TABLE>

         Each  option has a term of five  years from the date of the  closing of
the Company's IPO,  subject to earlier  termination if the Company elects not to
exercise a right of first  opportunity  on a proposed sale of such Option Parcel
by  the  Lowder  family.  The  Company  also  has a  five-year  right  of  first
opportunity  with respect to each Option Parcel beginning on the expiration date
of the option term (if the option is not exercised).


Property Markets

           The table below sets forth  certain  information  with respect to the
geographic concentration of the Properties as of December 31, 1996.
<TABLE>
            Geographic Concentration of Properties
<CAPTION>
                                                                         Percent
                                                          Total      Of Total
                  Units        GLA           NRA     1996 Property 1996 Property
 State       (Multifamily)(1)(Retail)(2)  (Office)(3)    Revenue      Revenue
--------------------------------------------------------------------------------

<S>               <C>       <C>            <C>      <C>               <C>
Alabama           8,621     1,970,000      938,000  $   73,912,000    54.1%
Florida           3,846     2,061,000       71,000      40,787,000    29.8%
Georgia           1,150     1,127,000          -0-      18,595,000    13.6%
South Carolina      -0-       488,000          -0-       3,457,000     2.5%
                -------------------------------------------------- --------
      Total      13,617     5,646,000    1,009,000   $ 136,751,000   100.0%
                ================================================== ========
<FN>
(1) Units (in this table only) refers 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,  Georgia,  South Carolina,  and
Florida; however, Birmingham,  Alabama, Orlando, Florida,  Huntsville,  Alabama,
Macon, Georgia,  Montgomery,  Alabama,  Tampa, Florida, and  Sarasota/Bradenton,
Florida  are the  Company's  primary  markets.  CRLP  believes  that these seven
markets,  which  are  characterized  by stable  and  increasing  population  and
employment  growth,  should continue to reflect 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, 1996, of  approximately  $506.4  million
carrying  a  weighted  average  interest  rate of 7.45% and a  weighted  average
maturity  of 8.5  years.  The  mortgage  indebtedness  on the  Properties  as of
December 31, 1996, is set forth in the table below:<TABLE>

                                                   Principal
                                Interest         Balance (as of
 Property (1)                     Rate             12/31/96)
--------------------------------------------------------------------

<S>                                 <C>        <C>
 Multifamily Properties:
       CG at Kirkman Park           7.900%     $    12,535,549
       Ashford Place                7.125%           3,420,517
       CV at Rocky Ridge            5.900%           6,000,000
                                    7.625%           1,418,333
       CG at Galleria Woods         6.875%           7,395,088
       CG at Mountain Brook         8.000%          12,261,239
       CV at Cahaba Heights         8.060%           3,772,907
       Grande View Towers           7.500%           9,952,418
       CV at Inverness              5.960% (4)       9,900,000
       Huntleigh Woods              9.500%           3,022,034
       Inverness Apartments         5.900%           4,000,000
                                    7.625%           1,741,667
       CV at Monte D'Oro            8.750%           5,314,434 (8)
       Pointe West                  7.125%           2,880,971
       Polos West                   7.450%           5,777,805
       CG at Galleria               4.150%          22,400,000
       Rime Village-Huntsville      4.150%          12,775,000
       CG at Riverchase             7.150%           9,197,454
       Ski Lodge I                  9.500%           7,899,217 (8)
       Ski Lodge II                 9.500%           9,082,891 (8)
       Ski Lodge III                5.450%          10,300,000
       Ski Lodge-Tuscaloosa         9.500%           4,827,530
       Somerset Place               5.960% (4)       4,500,000
       Somerset Wharf I             5.960% (4)       3,400,000
       Vieux Carre                  9.750%           5,158,370
       Willow Bend                  5.900%           3,330,000
                                    7.625%           1,666,667

 Retail Properties:
       Bellwood                    10.125%           2,995,931
       Island Walk                  8.800%          10,406,672
       Montgomery Promenade         9.250%          10,810,000
       Olde Town                   10.000%           1,676,561 (8)

 Office Properties:
       Interstate Park              8.500%           4,731,993
       Whitesburg Building         10.250%           1,282,470

 Other debt:
       Land Loan                    7.220%             700,000
       6 Mortgages                  8.870%          61,520,000
       Line of Credit               7.000% (10)     48,815,000 (8)
       Unsecured Senior Notes       7.500%          64,854,617
       Unsecured Senior Notes       8.050%          64,711,590
       Medium Term Notes            7.050%          50,000,000
                                               ================
 TOTAL                                          $  506,434,925
                                               ================

<PAGE>
(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                                   Anticipated
                                   Annual Debt
                                     Service                          Estimated
                                     (1/1/97-        Maturity        Balance Due
  Property (1)                       12/31/97)        Date (2)       on Maturity
 ----------------------------- -------------------------------------------------

<S>                          <C>                 <C>         <C>
  Multifamily Properties:
        CG at Kirkman Park   $    1,133,819      03/15/98    $    12,360,767
        Ashford Place               282,876      11/01/24             10,065
        CV at Rocky Ridge           354,000      08/01/02 (3)      6,000,000
                                    188,656      08/01/02 (3)        841,667
        CG at Galleria Woods        645,716      07/15/99          7,035,235
        CG at Mountain Brook      1,134,422      01/10/00         11,742,632
        CV at Cahaba Heights        377,274      05/10/00          3,494,138
        Grande View Towers          882,571      11/15/98          9,685,749
        CV at Inverness             347,492      06/15/26 (5)      9,900,000
        Huntleigh Woods             315,823      05/01/02          2,827,436
        Inverness Apartments        236,000      07/31/02 (6)      4,000,000
                                    208,454      07/31/02 (7)      1,234,167
        CV at Monte D'Oro            78,115 (8)  12/01/99          5,309,917 (8)
        Pointe West                 245,649      05/01/22             20,354
        Polos West                  569,276      12/05/03          4,526,555
        CG at Galleria              786,240      06/15/26 (5)     22,400,000
        Rime Village-Huntsville     448,404      06/15/26 (5)     12,775,000
        CG at Riverchase            769,969      12/31/98          8,967,396
        Ski Lodge I                 124,978 (8)  06/01/99          7,893,013 (8)
        Ski Lodge II                143,705 (8)  06/01/99          9,075,757 (8)
        Ski Lodge III               656,655      03/01/15 (9)        900,000
        Ski Lodge-Tuscaloosa        504,514      05/01/02          4,516,671
        Somerset Place              157,952      06/15/26 (5)      4,500,000
        Somerset Wharf I            119,340      06/15/26 (5)      3,400,000
        Vieux Carre                 533,605      06/01/01          4,993,827
        Willow Bend                 196,472      07/31/02 (6)      3,330,000
                                    197,937      07/31/02 (7)      1,179,167

  Retail Properties:
        Bellwood                    324,826      01/01/99          2,948,518
        Island Walk               1,059,697      10/01/01          7,340,184
        Montgomery Promenade        999,924      07/01/00         10,810,000
        Olde Town                    29,359 (8)  03/01/98          1,671,772 (8)

  Office Properties:
        Interstate Park             643,440      08/01/03          2,648,144
        Whitesburg Building         160,494      09/01/01          1,109,612

  Other debt:
        Land Loan                    84,332      09/30/98            648,778
        6 Mortgages                 545,681      02/05/05         61,520,000
        Line of Credit              267,913 (8)  12/18/98 (11)    64,085,000 (8)
        Unsecured Senior Notes    4,875,000      07/15/01         65,000,000
        Unsecured Senior Notes    5,232,500      07/15/06         65,000,000
        Medium Term Notes         3,525,000      12/15/03         50,000,000
                             ===============                 ================
  TOTAL                       $  29,388,080                   $  495,701,521
                             ===============                 ================
<FN>
----------------
(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 yield maintenance basis, except for the
   mortgages encumbering Colonial Village at Rocky Ridge,  Inverness Apartments,
   Willowbend, and Colonial Grand at Riverchase,  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)Represents  the maximum  interest  rate payable by CRLP for the next year and
   nine  months on these  loans as the  result of an  interest  rate  protection
   agreement  entered  into by CRLP.  The  loans  (which  are  financed  through
   tax-exempt  bonds)  secured  by these  Properties  (or phases  thereof)  bear
   interest  at a variable  rate,  determined  weekly at the rate  necessary  to
   produce a bid in the  process  of  remarketing  the  bonds  equal to par plus
   accrued interest, based on comparable issues in the market. The interest rate
   for these debt  obligations  as of  December  31,  1996,  was 4.05% for these
   Properties.
(5)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 five loans was 3.42% at December 31, 1996.
(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, 2022.
(7)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.
(8)The principal balances  outstanding on these loans were repaid in January and
   February 1997 with proceeds from the January 1997 debt and equity  offerings.
   The amounts  presented  for  anticipated  annual debt service for these loans
   represent the  principal  and interest paid during  January and February 1997
   (excluding  the final  principal  balance  paid).  The amounts  presented for
   estimated  balance due on maturity for these loans  represent the outstanding
   balances that were repaid in January and February 1997.
(9)The maturity date noted  represents the date on which the 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 loan is
   March 1, 2015.
(10) This loan bears interest at a variable  rate,  based on LIBOR plus a spread
   determined by certain capitalization and coverage ratios that ranges from 100
   to 150 basis points.
(11) This credit facility has a term of two years beginning in December 1996 and
   provides for a one-year amortization in the event of non-renewal.
</FN>
</TABLE>

           In addition to the foregoing  mortgage debt,  the four  Properties 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,
1996, was $7,283,000 which carried a weighted average interest rate of 8.9%. The
maturity dates of these loans range from February 28, 1997 to July 17, 2000, and
as of December 31, 1996, the loans had a weighted average maturity of 1.1 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 1996.

<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, 1997, there were 28 holders of record of Units.

         CRLP has made consecutive  quarterly  distributions since its formation
in the third quarter of 1993. The current indicated annual  distribution rate is
$2.08 per Unit ($.52 per Unit per quarter). 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
Directors of CPHC, 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:
<TABLE>

           <S>                             <C>
           Calendar Period                  Distribution

           1997:
             First Quarter................ $       .520
           1996:
             First Quarter................ $       .500
             Second Quarter............... $       .500
             Third Quarter................ $       .500
             Fourth Quarter............... $       .500
           1995:
             First Quarter................ $       .475
             Second Quarter............... $       .475
             Third Quarter................ $       .475
             Fourth Quarter............... $       .475
</TABLE>

Item 6.    Selected Financial Data.

           The  following  table sets forth  selected  financial  and  operating
information  on a  historical  basis for CRLP  (and,  for  periods  prior to the
Company's IPO, the Colonial Group) for each of the five years ended December 31,
1996.  The  historical  operating data for the year ended December 31, 1992, has
been derived,  and the historical operating data for the year ended December 31,
1993, has been partially derived,  from the historical  financial  statements of
the Colonial Group,  whose real estate interest were acquired in connection with
the  formation  of CRLP in 1993.  The  "Colonial  Group"  consists  of  Colonial
Properties,  Inc., Equity Partners Joint Venture, Colonial Properties Management
Association,  and certain real estate  interests of Thomas H. Lowder,  Robert E.
Lowder, James K. Lowder, Catherine K. Lowder and the Bellwood Trust.
<TABLE>

Dollar amounts in thousands, except
     share data                              1996        1995        1994
                                           -------------------------------
<CAPTION>
<S>                                     <C>         <C>         <C>
OPERATING DATA
Total revenue ......................... $ 134,881   $ 111,437   $  63,958
Expenses:
    Depreciation and amortization .....    23,533      20,615      13,060
    Other operating expenses ..........    46,819      42,282      24,011
Income from operations ................    64,529      48,540      26,887
Interest expense ......................    24,584      23,972      10,820
Other income (expense), net ...........     1,104         674         582
Income (loss) before gains from sales
 of property, and extraordinary items .    40,580      25,067      16,528
Net income (loss) .....................    40,538      25,242      16,650

Per unit:
    Net income ........................      1.58        1.28        1.17
    Distributions .....................      2.00        1.90        1.73
BALANCE SHEET DATA
Land, buildings, and equipment, net ... $ 801,798   $ 624,514   $ 555,577
Total assets ..........................   947,947     681,297     603,135
Total debt ............................   506,435     354,100     344,234

OTHER DATA
Total properties (at end of period) ...        73          61          55

(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                                                1993 (1)        1992
                                         ------------------------------
OPERATING DATA
<S>                                        <C>             <C>
Total revenue .........................    $  42,629       $  35,046
Expenses:
    Depreciation and amortization .....        7,874           6,449
    Other operating expenses ..........       16,777          14,788
Income from operations ................       17,978          13,809
Interest expense ......................       12,772          14,509
Other income (expense), net ...........       (1,697)            (80)
Income (loss) before gains from sales
 of property, and extraordinary items .        3,509            (780)
Net income (loss) .....................       (3,775)           (215)

Per unit:
    Net income ........................           -0-             -0-
    Distributions .....................           -0-             -0-
BALANCE SHEET DATA
Land, buildings, and equipment, net ...    $ 236,058       $ 139,665
Total assets ..........................      290,925         156,560
Total debt ............................      110,432         167,275

OTHER DATA
Total properties (at end of period) ...           36              23
<FN>
(1)    Increases  (decreases)  for 1993  compared  to 1992 relate  primarily  to
       Colonial's formation as a public REIT on September 29, 1993.
</FN>
</TABLE>

<PAGE>

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

General
           The  following  commentary  should  be read in  conjunction  with the
Consolidated Financial Statements and Notes to Consolidated Financial Statements
appearing  elsewhere in this report.  Historical  results and trends which might
appear should not be taken as indicative of future operations.

           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  necessarily  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--1996 and 1995
           The  Operating  Partnership  reported net income of $40.5 million for
1996  compared to $25.2  million for 1995.  On a per Unit basis,  net income was
$1.58 for 1996 compared to $1.28 for 1995. Net income increased during 1996 when
compared to 1995 primarily due to the  acquisition of 17 properties  during 1995
and 1996,  the  completion and placement in service during 1995 and 1996 of five
properties  developed  or  expanded  by  the  Operating  Partnership,   and  the
operations of several  properties  whose  development  was in various  stages of
completion during 1995 and 1996.

Revenue--Total  revenue  increased  by $23.4  million,  or 21.0%,  for 1996 when
compared to 1995, primarily due to an increase in rent revenue,  which increased
by $23.2 million,  or 21.7%,  during the same period.  Of this  increase,  $21.2
million represents rent revenues generated by the properties  acquired/placed in
service  during 1995 and 1996.  The $2.0  million  remainder  of the increase in
rental  revenue  primarily  represents  increases  in rental  rates  charged for
existing  space.  Other revenue  increased $0.2 million,  or 5.8%, for 1996 when
compared to 1995.  This  increase is partially  attributable  to $0.5 million of
other  revenues  generated by the properties  acquired/placed  in service during
1995 and 1996. Other revenue also decreased $0.5 million during 1996 compared to
1995 due to  one-time  revenues  received  from lease  cancellations  during the
second  quarter of 1995.  The remainder of the increase in other revenue of $0.2
million represents increases in other revenues at existing properties.

Operating  Expenses--Total  operating  expenses  increased by $7.5  million,  or
11.9%, for 1996 when compared to 1995. Of this increase, $9.4 million represents
operating expenses of the properties  acquired/placed in service during 1995 and
1996. Operating expenses also decreased by $1.9 million due to the resolution of
certain state tax contingencies and the resulting reduction in related reserves.

Other  Income and  Expenses--Interest  expense  reflected a net increase of $0.6
million,  or 2.6%, for 1996 when compared to 1995.  Interest  expense  increased
$5.3 million due to an increase in  indebtedness,  which was incurred to finance
acquisition and development  activity.  Interest  expense also decreased by $1.9
million,  which  represents  interest savings on two mortgages and one revolving
credit   agreement   that  were  repaid  through  a  portion  of  the  Operating
Partnership's  issuance of limited  partnership units in January 1996.  Interest
expense also decreased by $2.8 million due to the capitalization of $3.7 million
in interest on  construction  expenditures  during 1996 compared to $0.9 million
capitalized during 1995.

Results of Operations--1995 and 1994
           The  Operating  Partnership  reported net income of $25.2 million for
1995  compared to $16.7  million for 1994.  On a per Unit basis,  net income was
$1.28 for 1995 compared to $1.17 for 1994. Net income increased during 1995 when
compared to 1994 primarily due to the  acquisition of 26 properties  during 1994
and 1995,  the completion and placement in service during 1995 of two properties
developed  or expanded  by the  Operating  Partnership,  and the  operations  of
several  properties whose development was in various stages of completion during
1994 and 1995.

Revenue--Total  revenue  increased  by $47.5  million,  or 74.2%,  for 1995 when
compared to 1994, primarily due to an increase in rent revenue,  which increased
by $44.9  million  during  the same  period.  Of this  increase,  $39.9  million
represents rent revenues generated by the properties  acquired/placed in service
during  1994 and 1995.  The $5.0  million  remainder  of the  increase in rental
revenue  primarily  represents  increases in rental  rates  charged for existing
space.  Other revenue increased $2.6 million,  or 150.2%, for 1995 when compared
to 1994.  This  increase  is  attributable  primarily  to $1.5  million of other
revenues generated by the properties  acquired/placed in service during 1994 and
1995 and $0.5  million  received  from  lease  cancellations  during  the second
quarter of 1995.

Operating  Expenses--Total  operating  expenses  increased by $25.8 million,  or
69.7%,  for  1995  when  compared  to  1994.  Of this  increase,  $21.2  million
represents  operating  expenses  of the  properties  acquired/placed  in service
during 1994 and 1995.  General and  administrative  expenses  increased  by $2.3
million,  or 65.1%,  during  1995 when  compared  to 1994 due to  administrative
expenses  associated with the properties  acquired/placed in service during 1994
and 1995, an increase in reserve for  contingencies,  and a general  increase in
administrative expenses.

Other Income and Expenses--Interest  expense increased $13.2 million, or 121.2%,
for 1995 when  compared  to 1994.  This  increase  is  attributed  primarily  to
properties  acquired/placed  in service  during 1994 and 1995 that were financed
through  advances  under CRLP's lines of credit and the  assumption of debt. The
financing of these  properties  increased  interest expense by $13.3 million for
1995 over 1994. The Company  capitalized  interest on its  development  projects
during the construction  period,  which reduced interest expense by $0.9 million
in 1995, compared to $0.3 million capitalized in 1994.

Liquidity and Capital Resources
           During  1996  CRLP  invested  approximately  $273.1  million  through
acquisition  and  development of properties.  This  acquisition  and development
activity added to CRLP's multifamily and retail property holdings. CRLP financed
this  property   investment  through  proceeds  from  the  issuance  of  limited
partnership  units and debt totaling  approximately  $286.6 million during 1996,
net of  offering  costs,  advances  on its bank  line of  credit  and cash  from
operations.  CRLP also used  proceeds from these sources of funds to repay $42.6
million  outstanding  on two  mortgage  loans  and  to  reduce  its  outstanding
revolving credit balances by $21.9 million.

Acquisition Activities--During 1996 CRLP added 1,505 apartment units through its
acquisition  of seven  multifamily  communities  at an  aggregate  cost of $79.0
million. CRLP also added 1.1 million square feet of retail leasable area through
its acquisition of three community  shopping  centers and one regional  shopping
mall and purchased  tenant-owned  space and the  underlying  land at an existing
retail center.  CRLP completed these retail acquisitions at an aggregate cost of
approximately $94.3 million.

Development  Activities--During 1996 CRLP constructed 873 new apartment units in
six  multifamily  communities  (three of which were  completed  for  development
during the year) and acquired land on which it intends to develop two additional
multifamily  communities  during 1997. The aggregate  investment  during 1996 in
this  multifamily  development  activity was $68.2  million.  As of December 31,
1996,  CRLP has  1,216  apartment  units in six  multifamily  communities  under
development and expansion.  Management  anticipates  that two of the multifamily
projects  will be completed  during the first half of 1997 and three others will
be  completed  during the second  half of the year.  The  remaining  multifamily
project will be completed during the first half of 1998.  Management  expects to
invest  approximately  $31.8  million  over  these  periods  to  complete  these
projects.

           During 1996 CRLP also  continued its 423,000 square foot expansion of
its regional mall in Macon, Georgia and began a 225,000 square foot expansion of
a community shopping center in Montgomery,  Alabama. The aggregate investment in
this retail development activity was $31.6 million. The Macon Mall expansion was
completed and opened during February 1997, and management anticipates completing
its  Montgomery  project  during  the last half of 1997.  Management  expects to
invest approximately $19.8 million during 1997 to complete these projects.

Financing  Activities--CRLP  funded a portion of this  investment in acquisition
and  development  by raising  capital.  In January 1996 the Company  completed a
public  offering of 4.6 million common shares of beneficial  interest at a price
of $24.625  per share.  The $106.6  million  proceeds of this  offering,  net of
offering costs of $6.6 million,  were used to fund  acquisition  and development
activity,   repay  the  balances   outstanding  under  CRLP's  revolving  credit
agreements,  and to repay the $8.2 million balance  outstanding under a mortgage
loan.

           CRLP also funded its  investment in  acquisition  and  development by
incurring  additional debt.  During 1996 notes and mortgages  payable  increased
$152.3  million to total $506.4  million at December  31, 1996.  During the year
CRLP borrowed  $220.0 million through the public issuance of debt securities and
through debt assumed in property acquisitions. During the year CRLP also reduced
the principal  outstanding  on its notes and mortgages  payable by $45.8 million
(including $42.6 million on mortgage loans that were  extinguished)  and reduced
its outstanding revolving credit balances by $21.9 million.

           In July 1996 CRLP  completed a public  issuance of senior,  unsecured
debt  securities  totaling  $130.0  million.  The securities  were issued in two
series of $65 million each requiring  semi-annual payments of interest only. One
series,  which matures in July 2001, bears interest at 7.50% and was priced at a
spread of 95 basis points over the five-year treasury bond rate, resulting in an
original  issue  discount of $145,383.  The other series,  which matures in July
2006,  bears  interest  at 8.05% and was priced at a spread of 128 basis  points
over the ten-year treasury bond rate, resulting in an original issue discount of
$288,410.

           In July 1996 CRLP refinanced loans  collateralized  by five of CRLP's
multifamily  properties and representing a total of approximately  $53.0 million
in outstanding  indebtedness.  The loans are financed  through  tax-exempt bonds
which are credit  enhanced by Fannie Mae.  The loans,  which bear  interest at a
weekly variable 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 five loans was 3.42% at December 31, 1996.

           In  December  1996 CRLP  completed  a public  issuance  of  unsecured
medium-term  debt securities  totaling $50.0 million.  The securities  mature in
December 2003 and bear interest at 7.05% which, at the time of issuance, equated
to a spread of 90 basis points over the seven-year treasury bond rate.

           In January 1997, subsequent to year-end, CRLP completed an additional
issuance of unsecured  medium-term  debt securities also totaling $50.0 million.
These securities  mature in January 2003 and bear interst at 7.16% which, at the
time of  issuance,  equated  to a spread of 80 basis  points  over the  six-year
treasury bond rate.

           In January 1997 the Company also  completed a public  offering of 1.5
million  common shares of  beneficial  interest at a price of $29.875 per share.
The $43.4  million  proceeds of this  offering,  net of  offering  costs of $1.4
million,  were used to fund  acquisition  and  development  activity,  repay the
balances outstanding under CRLP's revolving credit agreement, and to repay $24.5
million outstanding under four mortgage loans.

           At December 31,  1996,  after  considering  the effect of the January
1997 debt and equity  offerings,  CRLP's total debt included  fixed-rate debt of
$426.7 million,  or 86.9%, and  floating-rate  debt of $64.5 million,  or 13.1%.
CRLP  has  obtained   interest  rate   protection   for  $17.8  million  of  the
floating-rate  debt, which limits this debt to an interest rate of 5.96% through
September 30, 1998.

           At December 31,  1996,  CRLP has one  unsecured  bank line of credit,
which provides for  borrowings up to $125 million,  bears interest at LIBOR plus
100 to 150 basis points, has a term of two years beginning in December 1996, and
provides for a one-year amortization in the case of non-renewal.  As of December
31,  1996,  after  considering  the effect of the  January  1997 debt and equity
offerings, the balance outstanding on CRLP's line of credit was $0.5 million.

           Management    intends   to   maintain   CRLP's    strength    through
diversification,  while  continuing  to pursue  acquisitions  that  meet  CRLP's
acquisition  criteria for property  quality,  market  strength,  and  investment
return.  Management  expects  to use its line of  credit  agreement  to fund its
investment in 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  securities,  including  sales of Units to
CPHC in connection  with public  offerings of securities by the Company,  and/or
permanent financing, as market conditions permit. Management believes that these
potential  sources of funds,  along  with the  possibility  of issuing  Units in
exchange for properties,  will provide CRLP with the means to finance additional
acquisitions and development.

           Cash and equivalents  increased by $1,755,000 during 1996. 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 distributions to Unit holders.  Management
does not anticipate any  significant  costs  associated  with Year 2000 software
requirements.

Inflation--Substantially  all of the leases at the retail properties provide for
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 or one year and
allow  for  rent  adjustments  at the  time of  renewal.  Leases  at the  office
properties  typically  provide for rent  adjustment and  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.

<PAGE>

Item 8.    Financial Statements and Supplementary Data.

The following financial statements are filed as a part of this report:

Report of Independent Accountants

Financial Statements:

Consolidated Balance Sheets as of December 31, 1996 and 1995

Consolidated  Statements  of Income  for the years  ended  December
31, 1996, 1995, and 1994

Consolidated  Statements  of Partners'  Capital for the years ended
December 31, 1996, 1995, and 1994

Consolidated   Statements   of  Cash  Flows  for  the  years  ended
December 31, 1996, 1995, and 1994

Notes to Consolidated Financial Statements


REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors
Colonial Properties Holding Company, Inc.

We have audited the accompanying  consolidated balance sheets of Colonial Realty
Limited  Partnership  as of  December  31,  1996 and  1995 and the  consolidated
statements  of  operations,  partners'  capital,  and cash flows for each of the
three years in the period ended December 31, 1996.  These  financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards 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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial position of Colonial Realty
Limited  Partnership  as of  December  31,  1996 and  1995 and the  consolidated
results of its  operations and its cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted  accounting
principles.


                                             /s/ Coopers & Lybrand L.L.P.
                                               COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 24, 1997


<PAGE>
<TABLE>

COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
<CAPTION>

December 31, 1996 and 1995
------------------------------------------------------------------------------
                                                      1996               1995
------------------------------------------------------------------------------
<S>                                       <C>                <C>
ASSETS
Land, buildings, & equipment, net         $    801,797,749   $    624,514,188
Undeveloped land and construction
     in progress                               113,689,163         32,640,381
Cash and equivalents                             3,340,281          1,584,850
Restricted cash                                  2,450,335          2,079,796
Accounts receivable, net                         4,778,607          2,280,508
Prepaid expenses                                 4,467,918          3,561,611
Notes receivable                                   583,594            580,169
Deferred debt and lease costs                    6,288,125          3,841,814
Investment in partnerships                       5,028,219          5,363,639
Other assets                                     5,523,118          4,849,614
------------------------------------------------------------------------------
                                          $    947,947,109   $    681,296,570
------------------------------------------------------------------------------

LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable               $    506,434,925   $    354,099,770
Accounts payable                                 7,450,770          6,343,353
Accounts payable to affiliates                   9,972,954          5,080,477
Accrued interest                                 5,465,237            957,518
Accrued expenses                                 1,584,852            975,550
Tenant deposits                                  2,926,404          2,401,604
Unearned rent                                      924,193            843,642
------------------------------------------------------------------------------
      Total liabilities                        534,759,335        370,701,914
------------------------------------------------------------------------------

Redeemable units, at redemption value          256,097,639        207,596,087
------------------------------------------------------------------------------
Partners' capital, excluding
     redeemable units                          157,090,135        102,998,569
------------------------------------------------------------------------------
                                          $    947,947,109   $    681,296,570
------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>


<PAGE>
<TABLE>

COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>

For the Years Ended December 31, 1996, 1995, 1994
--------------------------------------------------------------------------------
                                             1996           1995           1994
--------------------------------------------------------------------------------
<S>                                  <C>            <C>             <C>
Revenue:
     Rent                            $129,612,153   $106,335,068    $61,478,244
     Rent from affiliates                 757,818        836,426        775,492
     Other                              4,511,384      4,265,180      1,704,499
--------------------------------------------------------------------------------
         Total revenue                134,881,355    111,436,674     63,958,235
--------------------------------------------------------------------------------
Property operating expenses:
     General operating expenses         9,530,324      8,355,107      4,704,992
     Salaries and benefits              8,606,321      7,362,486      4,203,958
     Repairs and maintenance           13,072,944     10,890,018      5,770,758
     Taxes, licenses,
          and insurance                11,538,481      9,926,589      5,849,776
General and administrative              4,071,156      5,747,452      3,481,517
Depreciation                           22,024,933     18,043,875     10,816,858
Amortization                            1,508,515      2,570,861      2,243,662
--------------------------------------------------------------------------------
         Total operating expenses      70,352,674     62,896,388     37,071,521
--------------------------------------------------------------------------------
         Income from operations        64,528,681     48,540,286     26,886,714
--------------------------------------------------------------------------------
Other income (expense):
     Interest expense                 (24,584,298)   (23,972,107)   (10,819,643)
     Income from partnerships             635,278        498,664        460,897
     Gains from sales of property         468,619        174,954        121,600
--------------------------------------------------------------------------------
         Total other expense          (23,480,401)   (23,298,489)   (10,237,146)
--------------------------------------------------------------------------------
         Income before
          extraordinary items          41,048,280     25,241,797     16,649,568
Extraordinary loss from early
     extinguishment of debt              (510,602)            -0-            -0-
--------------------------------------------------------------------------------
         Net income                  $ 40,537,678   $ 25,241,797    $16,649,568
--------------------------------------------------------------------------------

Income per unit
 Income before extraordinary items   $       1.60   $       1.28    $      1.17
 Extraordinary loss from early
   extinguishment of debt                   (0.02)            -0-            -0-
--------------------------------------------------------------------------------
         Net income per unit         $       1.58   $       1.28    $      1.17
--------------------------------------------------------------------------------
Weighted average units outstanding     25,702,846     19,694,071     14,270,527
--------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

<PAGE>
<TABLE>

COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
<CAPTION>

For the Years Ended December 31, 1996, 1995, 1994
-------------------------------------------------------------------------
                                                               Total
                                                              Partners'
                                                               Capital
-------------------------------------------------------------------------

<S>                                                      <C>
Balance, December 31, 1993                               $    73,718,916

      Distributions                                         (24,684,603)
      Net income                                              16,649,568
      Issuance of limited partnership units                   75,538,014
      Allocations to redeemable units                       (80,665,963)
      Other                                                    3,085,472
-------------------------------------------------------------------------
Balance, December 31, 1994                                    63,641,404

      Cash Contributions                                      73,742,388
      Distributions                                         (35,222,284)
      Net income                                              25,241,797
      Issuance of limited partnership units                    1,629,872
      Allocations to redeemable units                       (26,017,509)
      Other                                                     (17,099)
-------------------------------------------------------------------------
Balance, December 31, 1995                                   102,998,569

      Cash Contributions                                     106,847,154
      Distributions                                         (51,818,736)
      Net income                                              40,537,678
      Issuance of limited partnership units                    7,027,021
      Allocations to redeemable units                       (48,501,551)
-------------------------------------------------------------------------
Balance, December 31, 1996                                $  157,090,135
-------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

<PAGE>
<TABLE>

COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

For the Years Ended December 31, 1996, 1995, 1994
-------------------------------------------------------------------------------
                                                 1996        1995         1994
-------------------------------------------------------------------------------
<S>                                       <C>         <C>          <C>
Cash flows from operating activities:
   Net  income                            $40,537,678 $25,241,797  $16,649,568
   Adjustments to reconcile net income
    to net cash
       provided by operating activities:
       Depreciation and amortization       23,533,448  20,614,736   13,060,520
       Income from partnerships              (635,278)   (498,664)    (460,897)
       Other                                  557,828     (38,837)      34,027
       Decrease (increase) in:
            Restricted cash                  (370,539)   (933,092)    (629,340)
            Accounts receivable            (3,245,731)    218,455   (1,005,957)
            Due from affiliates                   -0-         -0-   23,961,595
            Prepaid expenses                 (248,441)   (172,691)     903,025
            Other assets                   (1,187,461) (1,855,155)  (1,302,050)
       Increase (decrease) in:
            Accounts payable                   10,529   4,583,012       92,829
            Accrued interest                3,569,771     138,518      208,473
            Accrued expenses and other        404,435    (130,764)     287,892
-------------------------------------------------------------------------------
            Net cash provided by
             operating activities          62,926,239  47,167,315   51,799,685
-------------------------------------------------------------------------------
Cash flows from investing activities:
   Acquisition of properties             (125,926,554)(67,580,603)(106,035,067)
   Development expenditures               (22,168,286) (3,741,192)  (3,364,634)
   Development expenditures paid to
    an affiliate                          (70,414,613)(21,646,534)  (8,933,717)
   Tenant improvements                     (1,029,075) (1,061,087)  (1,531,885)
   Capital expenditures                    (6,824,888) (2,803,685)    (658,202)
   Proceeds from sales of property          1,254,359     328,237      513,963
   Distributions from partnerships            984,492     998,244    1,037,234
   Capital contributions to partnerships      (13,794)   (230,121)    (202,269)
-------------------------------------------------------------------------------
            Net cash used in investing
             activities                  (224,138,359)(95,736,741)(119,174,577)
-------------------------------------------------------------------------------
Cash flows from financing activities:
   Principal reductions of debt           (45,797,858)(19,231,834)  (1,102,053)
   Proceeds from additional borrowings    179,540,450  62,220,000          -0-
   Net change in revolving credit balances(21,877,000)(33,205,744)  93,897,744
   Cash contributions                     106,847,154  73,742,388          -0-
   Capital distributions                  (51,818,736)(35,222,284) (24,684,603)
   Payment of mortgage financing cost      (3,415,857)   (946,017)  (1,206,340)
   Other, net                                (510,602)         -0-          -0-
-------------------------------------------------------------------------------
            Net cash provided by
             financing activities         162,967,551  47,356,509   66,904,748
-------------------------------------------------------------------------------
            Increase (decrease) in cash
             and equivalents                1,755,431  (1,212,917)    (470,144)
Cash and equivalents, beginning of period   1,584,850   2,797,767    3,267,911
-------------------------------------------------------------------------------
Cash and equivalents, end of period       $ 3,340,281 $ 1,584,850  $ 2,797,767
-------------------------------------------------------------------------------

Supplemental disclosures of cash flow information:
   Cash paid during the year for interest $20,076,579 $23,609,172  $10,621,230
-------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>

                       COLONIAL REALTY LIMITED PARTNERSHIP
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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  interests
 of Colonial  Properties,  Inc.  (CPI),  and certain  real estate  interests  of
 persons and companies affiliated with CPI. 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"). The
 Company 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.
      The Company  manages CRLP through the Company's  wholly owned  subsidiary,
 Colonial  Properties  Holding  Company,  Inc.  ("CPHC"),  which  in  turn  owns
 approximately 68% of the general and limited partnership  interests in CRLP and
 serves as the sole  general  partner of CRLP.  The  limited  partners  who hold
 partnership units can require that CRLP redeem their partnership units.  Unless
 the  Company  elects the right to issue  common  shares in  exchange  for these
 partnership units, the redeeming limited partner will receive cash in an amount
 equal to the market value of the partnership units to be redeemed.  The Company
 currently  intends to exercise  its right to issue the common  shares for these
 redeemed partnership units.  Partners' capital allocable to limited partnership
 interests is included in "redeemable units" in the Consolidated  Balance Sheets
 at  the  cash  redemption  amount  at  the  balance  sheet  date.  Net  income,
 distributions,  and  adjustments  to  partners'  capital  allocable  to limited
 partnership interests are reflected as "allocations to redeemable units" in the
 Consolidated  Statements of Partners'  Capital.  At December 31, 1996 and 1995,
 CRLP had redeemable units outstanding in the amount of 8,431,198 and 8,141,023,
 respectively.
      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 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  Colonial  Realty  Limited  Partnership  holds 99% general and limited
partner interests).
      Investments  In  Partnerships--Partnerships  in  which  CRLP  owns a fifty
percent or less interest and does not control are reflected in the  consolidated
financial statements as investments accounted for under the equity method. 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 7 to 40 years.  Maintenance  and  repairs  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 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 mortgage costs is recorded
using the  straight-line  method,  which  approximates  the  effective  interest
method,  over the terms of the related mortgages.  Leasing  commissions and fees
are  amortized  using the  straight-line  method  over the terms of the  related
leases.
      Interest rate cap  agreements  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.
      Revenue Recognition--Rental income attributable to leases is recognized on
a straight-line basis over the terms of the leases.
      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.
      Reclassifications--Certain  immaterial reclassifications have been made to
the 1994 and 1995  financial  statements  in order to  conform  them to the 1996
financial statement presentation.

3.  Property Acquisitions
      CRLP acquired 11 properties  during 1996, six properties  during 1995, and
20  properties  during 1994 at aggregate  costs of  approximately  $173,700,000,
$68,400,000, and $331,000,000, respectively. CRLP funded these acquisitions with
cash proceeds from its public  offerings of debt (see Note 7),  advances on bank
lines of credit,  proceeds from the issuance of limited  partnership  units, and
cash from operations. A portion of the purchase price of Rime Village-Huntsville
was subject to adjustment  during 1995 based upon the  operating  results of the
second phase of the property  which was in lease-up when it was  acquired.  This
portion of the purchase price was paid through the issuance of 70,864 additional
limited partnership units.
   The properties acquired during 1996, 1995, and 1994 are listed below:
<TABLE>
                                                  Effective
                                                 Acquisition
                             Location                Date
-----------------------------------------------------------------
<S>                       <C>                  <C>
Multifamily Properties:
Carrollwood                 Tampa, FL          January 1, 1994
Grande View Towers        Huntsville, AL       January 1, 1994
Plantation Gardens        Sarasota, FL          March 31, 1994
Patio I                    Auburn, AL           March 31, 1994
Arbors at Kirkman          Orlando, FL         August 10, 1994
Polos at Gainesville     Gainesville, FL       August 10, 1994
Polos at Ponte Vedra    Jacksonville, FL       August 10, 1994
Polos West                 Orlando, FL         August 10, 1994
Huntleigh Woods            Mobile, AL         December 31, 1994
Monte D'Oro              Birmingham, AL       December 31, 1994
Rime Village-Hoover      Birmingham, AL       December 31, 1994
Rime Village-Huntsville  Huntsville, AL       December 31, 1994
Riverchase Manor         Birmingham, AL       December 31, 1994
Ski Lodge I              Birmingham, AL       December 31, 1994
Ski Lodge II             Birmingham, AL       December 31, 1994
Ski Lodge III            Birmingham, AL       December 31, 1994
Ski Lodge Tuscaloosa     Tuscaloosa, AL       December 31, 1994
Stockbridge Manor       Stockbridge, GA       December 31, 1994
Ashford Place             Mobile, AL            April 1, 1996
Pointe West               Mobile, AL            April 1, 1996
Spring Creek              Macon, GA             April 1, 1996
Crowne Chase             Birmingham, AL         April 15, 1996
Crowne Point             Birmingham, AL          May 10, 1996
Crowne Ridge             Birmingham, AL          May 10, 1996
Barrington Club           Macon, GA            September 13, 1996
Retail Properties:
Burnt Store Square      Punta Gorda, FL         July 13, 1994
Britt David
  Shopping Center        Columbus, GA          October 25, 1994
Bear Lake Village        Orlando, FL             July 1, 1995
Country Lake Village     Orlando, FL             July 1, 1995
Winter Haven Village     Orlando, FL             July 1, 1995
River Oaks Center        Decatur, AL             July 14, 1995
North Dale Court          Tampa, FL             October 1, 1995
Paddock Park              Ocala, FL            November 16, 1995
Briarcliffe Mall       Myrtle Beach, SC           July 1, 1996
Wekiva River Walk        Orlando, FL            October 1, 1996
Bardmoor Village      St. Petersburg, FL        October 1, 1996
Island Walk              Orlando, FL            October 1, 1996
</TABLE>
<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 1996, 1995, and 1994 are comprised of the
following: <TABLE>

                                                1996         1995          1994
================================================================================
<S>                                     <C>           <C>          <C>
Assets purchased:
   Land, buildings, and equipment       $173,276,789  $68,322,274  $328,593,287
   Other assets                              454,515       42,691     2,422,530
--------------------------------------------------------------------------------
                                         173,731,304   68,364,965   331,015,817
Notes and mortgages assumed              (40,443,806)          -0- (141,005,861)
Other liabilities assumed or recorded     (1,773,648)    (784,362)   (8,436,875)
Issuance of limited partnership units
 of Colonial Realty Limited Partnership   (5,587,296)          -0-  (75,538,014)
--------------------------------------------------------------------------------
   Cash paid                            $125,926,554  $67,580,603  $106,035,067
================================================================================
</TABLE>

   CRLP's  unaudited  pro forma results of  operations,  assuming  these
acquisitions  had been effected by CRLP prior to January 1, 1994,  are as
follows:
<TABLE>
For the Year Ended December 31,           1996            1995            1994
================================================================================
<S>                               <C>             <C>             <C>
Revenues                          $145,866,000    $139,522,000    $129,063,000
================================================================================
Net income                        $ 41,281,000    $ 36,427,000    $ 35,358,000
================================================================================
Net income per unit               $       1.58    $       1.40    $       1.35
</TABLE>

      On January 8,  1997,  subsequent  to year end,  CRLP  acquired  Riverchase
Center,  an office park  comprised of eight  one-level  buildings in Birmingham,
Alabama  totaling 306,000 square feet of leasable area. The total purchase price
of $20,800,000  was funded by the assumption of $8,710,000 in mortgage debt, the
issuance of 25,163 limited partnership units valued at $750,000,  and an advance
on CRLP's bank line of credit agreement. The effects of this acquisition are not
included in CRLP's accompanying  consolidated financial statements or in the pro
forma information above.

4.  Land, Buildings, and Equipment
      Land,  buildings,  and equipment consists of the following at December 31,
1996 and 1995:
<TABLE>
                                                       1996           1995
                                                    ------------  -------------
      <S>                                         <C>            <C>                                                            <C>
      Buildings                                   $ 736,621,679  $ 568,861,504                                                  $
      Furniture and fixtures                         23,440,761     18,284,701
      Equipment                                       2,569,139      1,406,215
      Land improvements                              18,327,845     14,218,447
      Tenant improvements                            11,969,390     10,516,274
                                                    ------------  -------------
                                                    792,928,814    613,287,141
      Accumulated depreciation                     (101,547,650)   (79,779,155)
                                                    ------------  -------------
                                                    691,381,164    533,507,986
      Land                                          110,416,585     91,006,202
                                                    ------------  -------------
                                                   $ 801,797,749 $ 624,514,188                                                  $
                                                    ============  =============
</TABLE>

5.  Undeveloped Land and Construction in Progress
      During 1996 CRLP completed the construction of three multifamily expansion
projects at a combined total cost of  approximately  $18,960,000.  The expansion
projects  produced 356 new apartment units (51 units  completed  during 1995 and
305 units  completed  during  1996),  16 units at McGehee  Place in  Montgomery,
Alabama,  180 units at Colonial Grand at Inverness in Mobile,  Alabama,  and 160
units at Colonial Grand at Galleria in Birmingham,  Alabama.  CRLP currently has
nine active  expansion and development  projects in progress and various parcels
of land  available  for  expansion,  construction,  or sale.  During  1996  CRLP
completed  construction  on 873  apartment  units  (including  the 305  units in
completed  projects mentioned above), and CRLP has an additional 1,216 apartment
units in progress at December 31, 1996.  Undeveloped  land and  construction  in
progress is comprised of the following at December 31, 1996:
<TABLE>
                                 Total
                                 Units/                                Costs
                                 Square  Estimated     Estimated     Capitalized
                                  Feet  Completion    Total Costs      To Date
================================================================================
<S>                             <C>         <C>     <C>            <C>
Multifamily Projects:
Colonial Village at
     Heatherbrooke (expansion)      84      1997    $  4,100,000   $  1,462,407
Colonial Village at
     Riverchase (expansion)        276      1997      14,900,000     13,368,319
Colonial Grand at Heathrow         312      1997      20,400,000     20,050,293
Colonial Grand at Bayshore         212      1997      11,600,000     11,155,327
Colonial Grand at Bayshore II      164      1997       9,100,000      3,377,532
Colonial Grand at Wesleyan         240      1997      12,800,000      7,758,183
Colonial Grand at Hunters Creek    496      1998      33,000,000     16,824,877
--------------------------------------------------------------------------------
                                 1,784               105,900,000     73,996,938
================================================================================

Retail Projects:
Macon Mall (expansion)         423,000      1997      52,000,000     38,085,793
Montgomery
     Promenade (expansion)     225,000      1997       7,000,000      1,100,000
--------------------------------------------------------------------------------
                               648,000                59,000,000     39,185,793
================================================================================
Other Projects and
     Undeveloped Land                                                   506,432
--------------------------------------------------------------------------------
                                                    $164,900,000   $113,689,163
================================================================================
</TABLE>
   Interest  capitalized on construction in progress during 1996, 1995, and 1994
was $3,745,000, $868,000 and $333,000,  respectively.  During February 1997, the
Company completed its expansion of Macon Mall.
<PAGE>
6.  INVESTMENT IN PARTNERSHIPS
   Investment  in  partnerships  at December  31, 1996 and 1995  consists of the
following:
<TABLE>
                                           Percent
                                            Owned              1996       1995
================================================================================
<S>                                           <C>        <C>         <C>
Office:
600 Building Partnership, Birmingham, AL      33.34%     $    5,044  $   21,143
Anderson Block Properties, Montgomery, AL     33.33%        (52,773)    (65,760)
Hoar/Colonial/Polar-BEK Partnership I,
     Birmingham, AL                           37.50%       (429,744)   (395,691)
Hoar/Colonial/Polar-BEK Partnership II,
     Birmingham, AL                           37.50%        (34,876)     (2,438)
Polar-BEK/Colonial Partnership I,
     Birmingham, AL                           50.00%      4,999,726   5,236,912
Polar-BEK/Rubaiyat/Colonial Partnership,
     Birmingham, AL                           25.00%        505,338     526,824
--------------------------------------------------------------------------------
                                                          4,992,715   5,320,990
--------------------------------------------------------------------------------

Other:
Colonial/Polar-BEK Management Company,
     Birmingham, AL                           50.00%         35,504      42,649
--------------------------------------------------------------------------------
                                                         $5,028,219  $5,363,639
================================================================================
</TABLE>

7.  NOTES AND MORTGAGES PAYABLE
   Notes and  mortgages  payable at December  31, 1996 and 1995  consists of the
following:
<TABLE>
                                                  1996             1995
================================================================================
<S>                                          <C>             <C>
Senior unsecured notes, net of unamortized
     discounts totaling $433,793             $179,566,207    $         -0-
Revolving credit agreements                    48,815,000      70,692,000
Mortgages and other notes:
  4.50% to 6.00%                               76,605,000      88,095,394
  6.01% to 7.50%                               39,324,252      49,774,944
  7.51% to 9.00%                              115,369,461      98,455,300
  9.01% to 10.25%                              46,755,005      47,082,132
--------------------------------------------------------------------------------
                                             $506,434,925    $354,099,770
================================================================================
</TABLE>

      As of  December  31,  1996,  CRLP has one  unsecured  bank  line of credit
providing  for  total  borrowings  of up to  $125,000,000.  The  line of  credit
agreement  bears  interest at LIBOR plus 100 to 150 basis points,  has a term of
two years  beginning in December 1996, and provides for a one-year  amortization
in the case of  non-renewal.  The credit  facility is primarily  used by CRLP to
finance property  acquisitions and development and had an outstanding balance at
December 31, 1996, of $48,815,000.  The weighted  average  interest rate of this
short-term borrowing facility was 6.81% and 7.47% at December 31, 1996 and 1995,
respectively.
      In July 1996 CRLP  completed a public  offering of senior,  unsecured debt
securities  totaling  $130,000,000.  The securities were issued in two series of
$65,000,000  each requiring  semi-annual  payments of interest only. One series,
which matures in July 2001,  bears  interest at 7.50% and was priced at a spread
of 95 basis  points  over the  five-year  treasury  bond rate,  resulting  in an
original  issue  discount of $145,383.  The other series,  which matures in July
2006,  bears  interest  at 8.05% and was priced at a spread of 128 basis  points
over the ten-year treasury bond rate, resulting in an original issue discount of
$288,410.  The issue discounts are being amortized to interest  expense over the
life of the corresponding issue.
      In July  1996  CRLP  refinanced  loans  collateralized  by five of  CRLP's
multifamily  properties and representing a total of approximately  $53.0 million
in outstanding  indebtedness.  The loans are financed  through  tax-exempt bonds
which are credit  enhanced by Fannie Mae.  The loans,  which bear  interest at a
weekly variable 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 five loans was 3.42% at December 31, 1996.
      In December 1996 CRLP completed a public offering of unsecured medium term
debt securities totaling $50,000,000. The securities mature in December 2003 and
pay a coupon rate of 7.05% which equated to a spread of 90 basis points over the
seven-year treasury bond rate.
      In January 1997, subsequent to year-end,  CRLP completed a public offering
of unsecured medium term debt securities  totaling  $50,000,000.  The securities
mature in January 2003 and pay a coupon rate of 7.16% which  equated to a spread
of 80 basis  points over the  six-year  treasury  bond rate.  The effect of this
issuance is not reflected in CRLP's consolidated financial statements.
      In  February  1995  CRLP  entered  into  a  note  payable  agreement  with
Nationwide  Life Insurance  Company in the amount of  $61,520,000.  The ten-year
note  requires  monthly  payments of  interest  only at 8.87% for the first five
years and monthly payments of interest only at a redetermined  interest rate for
the remainder of the term. At the end of the first five years of the term,  CRLP
may elect to repay the note without penalty.
      CRLP has entered into an interest rate cap agreement  which limits debt of
$17,800,000 to an interest rate of 5.96% through  September 30, 1998.  CRLP paid
approximately  $374,000  in total  for the  interest  rate  cap,  which is being
amortized  over the life of the  agreement.  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, 1996,  CRLP had  $228,815,000  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 $467,203,240 at December 31, 1996.
      The aggregate  maturities  of notes and mortgages  payable at December 31,
1996, are as follows:
<TABLE>

      <S>                        <C>
      1997                       $  2,383,837
      1998                         84,465,343
      1999                         33,631,776
      2000                         27,654,318
      2001                         82,213,194
      Thereafter                  276,086,457
                                 ------------
                                $ 506,434,925
                                 ============
</TABLE>

      A  substantial  majority of CRLP's notes and  mortgages  payable have been
recently  financed or are covered by interest rate cap agreements,  and as such,
the balances  outstanding  on these notes and mortgages are considered to be the
fair values.  CRLP's line of credit  arrangement  bears  interest at a rate that
varies with changes in LIBOR; therefore, the balances outstanding are considered
to be the fair value.
      Certain  partners of CRLP have  guaranteed  indebtedness  of CRLP totaling
approximately  $25,348,000 (of which  $19,048,000 was guaranteed  during 1996 in
conjunction with the acquisition of Briarcliffe Mall) at December 31, 1996. CRLP
has  indemnified  these  individuals  from  their  guarantees  of  approximately
$3,304,000 of this indebtedness.

8.  Cash Contributions
      During  1995 and 1996  and in the  first  quarter  of  1997,  the  Company
completed three public  offerings of stock totaling  9,550,000  common shares of
beneficial  interest  (Common  Shares).  The net proceeds of the offerings  were
contributed to CRLP and used to fund acquisitions and development  expenditures,
repay balances outstanding on CRLP's revolving credit agreements,  repay certain
notes  and  mortgages  payable,  and for  general  corporate  purposes.  Details
relating to these equity offerings are as follows:<TABLE>

                    Number of  Stock Price    Gross      Offering       Net
           Date   Common Shares Per Share   Proceeds       Costs     Proceeds
--------------------------------------------------------------------------------
      <S>           <C>         <C>       <C>           <C>        <C>
      May 1995      3,450,000   $22.750   $  78,487,500 $4,831,871 $  73,655,629
      January 1996  4,600,000   $24.625   $ 113,275,000 $6,631,817 $ 106,643,183
      January 1997  1,500,000   $29.875   $  44,812,500 $1,422,500 $  43,390,000
</TABLE>

 The effect of the January 1997 offering is not reflected in CRLP's consolidated
financial statements.

9.  Employee Benefits
      Employees  of CRLP have  participated  with those of  Colonial  Properties
Services,  Inc.  (CPSI) (an  affiliate of the Company) and The Colonial  Company
(TCC) (an affiliate of certain limited  partners) and its other related entities
in a  noncontributory  defined benefit pension plan covering  substantially  all
employees. TCC's policy was to currently fund the amount of pension cost allowed
by the Internal  Revenue Code.  Pension  expense  includes  service and interest
costs  adjusted  by actual  earnings on plan  assets and  amortization  of prior
service cost and the  transition  amount,  calculated  using the  guidelines  of
Statement of Financial  Accounting  Standards  No. 87. The benefits are based on
years of service and the employees' final  compensation.  The allocated  pension
cost of CRLP and CPSI,  based on their portion of total payroll  expense for the
year ended  December  31,  1994,  was  $186,000,  which was paid to The Colonial
Company.
      Effective  January  1, 1995,  the  Company  created a new  noncontributory
defined  benefit pension plan designed to cover  substantially  all employees of
CRLP and CPSI.  Therefore,  these  employees did not  participate in the pension
plan mentioned above after December 31, 1994. The benefits provided by this plan
are based on years of service and the employee's final average compensation. The
Company'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, 1996 and 1995, as it relates to the employees of CRLP and CPSI.
<TABLE>
                                               1996              1995
============================================================================

<S>                                      <C>              <C>
Actuarial present value of accumulated
     benefit obligation including vested
      benefits of $528,000 and $374,000
       at December 31, 1996 and 1995,
        respectively                     $   587,000       $   401,000
Actuarial present value of projected
     benefit obligations at year end       1,439,000         1,140,000
Fair value of assets at year end             644,000           358,000
Accrued pension cost                         274,000           176,000
Net pension cost for the year                337,000           216,000
</TABLE>

      Actuarial  assumptions used in determining the actuarial  present value of
projected benefit obligations at January 1, 1996 are as follows:
<TABLE>
                                              1996              1995
==============================================================================
<S>                                          <C>                <C>
Weighted-average interest rate               7.75%              7.0%
------------------------------------------------------------------------------
Increase in future compensation levels        4.5%              4.0%
</TABLE>

      CRLP and CPSI also participated with TCC and its other related entities in
a salary  reduction  profit sharing plan covering  substantially  all employees.
This plan provided,  with certain restrictions,  that employees may contribute a
portion  of  their  earnings  with  the  employer   matching  one-half  of  such
contributions.  Contributions  by CRLP and CPSI were $108,000 for the year ended
December 31, 1994.
      Effective January 1, 1995, the Company also created a new salary reduction
profit  sharing  plan  covering  substantially  all  employees of CRLP and CPSI.
Similar to TCC's salary reduction profit sharing plan, this plan provides,  with
certain restrictions,  that employees may contribute a portion of their earnings
with the  employer  matching  one-half  of such  contributions.  Therefore,  the
employees of CRLP and CPSI did not  participate in the salary  reduction  profit
sharing plan mentioned above after December 31, 1994.  Contributions by CRLP and
CPSI were $164,000 and $155,000 for the years ended  December 31, 1996 and 1995,
respectively.

10.  Leasing Operations
      CRLP is in the business of leasing and managing  commercial,  retail,  and
residential  property.  For  properties  owned by CRLP,  minimum  rentals due in
future periods under noncancelable operating leases extending beyond one year at
December 31, 1996, are as follows:
<TABLE>

      <S>                              <C>                                                                            <C>
      1997                             $  40,897,000                                                                  $
      1998                                35,756,000
      1999                                30,329,000
      2000                                23,951,000
      2001                                19,293,000
      Thereafter                          99,845,000
                                        ------------
                                       $ 250,071,000                                                                 $
                                        ============
</TABLE>

      The noncancelable  leases are primarily with tenants engaged in retail and
commercial  operations  in  Alabama,   Georgia,  Florida,  and  South  Carolina.
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, 1996,  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  1996,  1995,  and 1994  includes  contingent  rent of
$1,841,000,  $1,782,000,  and $1,729,000,  respectively.  This rental income was
earned when certain  retail tenants  attained  sales volumes  specified in their
respective lease agreements.

11.  Related Party Transactions
      CRLP has generally used  affiliated  construction  companies to manage and
oversee  its  development  projects.  CRLP paid  $42,554,000,  $16,124,000,  and
$8,934,000 for property development costs to Lowder Construction Company,  Inc.,
a construction  company owned by TCC,  during the years ended December 31, 1996,
1995, and 1994,  respectively.  CRLP had outstanding  construction  invoices and
retainage payable to Lowder Construction  Company,  Inc. totaling $6,746,000 and
$3,306,000 at December 31, 1996 and 1995, respectively.  The $3,440,000 increase
in  construction-related  payables  to  this  affiliate,  representing  non-cash
increases  in  construction  in  progress,  have  been  excluded  from  the 1996
statement of cash flows.  CRLP also paid $27,861,000 and $5,522,000 for property
development  costs to two construction  companies owned by three trustees during
the years ended December 31, 1996 and 1995,  respectively.  CRLP had outstanding
construction  invoices and  retainage  payable to these  construction  companies
totaling  $3,227,000  and $678,000 at December 31, 1996 and 1995,  respectively.
The  $2,549,000  increase in  construction-related  payables to this  affiliate,
representing non-cash increases in construction in progress,  have been excluded
from the 1996 statement of cash flows.
      CRLP received rental income totaling $758,000, $836,000, and $775,000 from
TCC, CPSI, and other  affiliated  companies  during the years ended December 31,
1996, 1995, and 1994, respectively.
      During  1994,  TCC  performed  certain  administrative  services  for CRLP
including payroll processing and computer processing.  CRLP paid TCC $82,000 for
these services during that year.  Colonial  Insurance Company provides insurance
brokerage services for CRLP for which CRLP paid $187,000, $168,000, and $172,000
during the years ended  December 31, 1996,  1995, and 1994,  respectively.  CRLP
paid rent to Polar BEK/Colonial  Partnership I, which is a partnership accounted
for by CRLP  under the  equity  method  (listed  in Note 6), in the  amounts  of
$211,000, $209,000, and $213,000 during the years ended December 31, 1996, 1995,
and 1994, respectively.
      Colonial Commercial Investments, Inc., which is owned by trustees James K.
Lowder and Thomas H. Lowder, has guaranteed  indebtedness totaling $1,438,000 at
December  31,  1996  for  Anderson  Block  Properties,  which  is a  partnership
accounted  for by CRLP under the  equity  method  (listed  in Note 6).  CRLP has
indemnified  Colonial Commercial  Investments,  Inc. from its guarantees of this
indebtedness.
      In July  1996  CRLP  acquired  land in Macon,  Georgia,  on which  CRLP is
developing its Colonial Grand at Wesleyan multifamily  community.  CRLP acquired
this land from  Colonial  Commercial  Investments,  Inc. The  purchase  price of
$1,440,000,  which was determined  pursuant to an option acquired at the time of
the Company's  initial public  offering in September  1993, was paid through the
issuance of 58,466 units of limited partnership interest.
      In  December  1994  CRLP  acquired,  in  exchange  for  units  of  limited
partnership interest ("Units"),  ten multifamily  properties developed and owned
by The Rime  Companies,  in which  Messrs.  Ripps and Meisler owned an interest.
Subsequent to the acquisition,  Messrs.  Ripps and Meisler were elected to serve
on the Board of Trustees of the Company. The acquisition  agreements relating to
the  acquisition  transaction  provided for the possible  issuance of additional
Units to the owners of The Rime  Companies if one of the  properties met certain
performance criteria after the acquisition. During 1995 CRLP issued 33,661 Units
to Mr. Ripps and 33,660 Units to the adult children of Mr. Meisler,  pursuant to
these acquisition agreements.

12.  Subsequent Event
      On January 24, 1997, the Trustees declared a cash distribution to partners
of Colonial  Realty Limited  Partnership  in the amount of $.52 per  partnership
unit, totaling  $14,322,531.  The distribution was made to partners of record as
of February 3, 1997, and was paid on February 10, 1997.


<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, through CPHC, the general partner of
CRLP. The directors and executive officers of the Company are as follows:

                            Directors of the Company

      Thomas  H.  Lowder,  47,  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 and Colonial  Properties Holding Company,  Inc.
("CPHC") and is the  president and a director of Colonial  Properties  Services,
Inc. (the "Management  Corporation"),  which conducts the Company's  third-party
management  leasing and brokerage  operations.  Mr.  Lowder became  President of
Colonial Properties,  Inc. ("Colonial"),  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
Colonial  and 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  for,  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. Mr. Lowder also is a member of the executive committee of the board of
directors of CPHC. Mr. Lowder is the brother of James K. Lowder, who also serves
as a trustee.

      Carl F. Bailey,  66, has been a trustee of the Company and a director of
CPHC and 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 and is a member  of the  board of  directors  of  SouthTrust
Corporation  and  Delchamps  of  Mobile.  Mr.  Bailey  serves  on the board of
trustees  and  executive   committee  of  Southern   Research   Institute  and
Birmingham  Southern  College.  Mr.  Bailey  is  a  member  of  the  Executive
Committee  and is chairman of the Audit  Committee  of the Board of  Trustees.
He also is a member of the  executive  committee  of the board of directors of
CPHC.

      M. Miller  Gorrie,  61, is a trustee of the Company and a director of CPHC
and the Management  Corporation.  Mr. Gorrie is, chairman of the board and chief
executive  officer of  Brasfield  & Gorrie,  Inc.,  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   for,   among  other
organizations, AmSouth Bank of Alabama, Southern Research Institute and American
Cast Iron Pipe Co. He is a past director of the Alabama Chamber of Commerce, the
Associated  General  Contractors,  the Building Science Advisory Board of Auburn
University,  the Business  Council of Alabama and the March of Dimes. Mr. Gorrie
is chairman of the Executive Committee and the Executive  Compensation Committee
of the Board of Trustees. He also is the chairman of the executive committee and
the executive compensation committee of the board of directors of CPHC.

      James K.  Lowder,  47,  has been a  trustee  of the  Company  since  its
formation  in July 1993.  He is also a director  of CPHC.  Mr.  Lowder is also
chairman  of the  board of The  Colonial  Company,  chairman  of the  board of
Lowder  Construction  Company,  Inc.  and  chairman of the board of Lowder New
Homes,  Inc.  and  Lowder  Realty  Company,  Inc.  He is also a member  of the
Alabama  Association  of  Realtors,  Montgomery  Board of  Realtors,  the Home
Builders  Association  of Alabama and the  Greater  Montgomery  Home  Builders
Association.  Mr. Lowder is a member of the Executive  Compensation  Committee
of the  Board  of  Trustees.  Mr.  Lowder  also is a member  of the  executive
compensation committee of the board of directors of CPHC.

      Herbert A.  Meisler,  69, is a trustee of the  Company  and a director  of
CPHC.  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 for the Community Foundation of South
Alabama  and the  Mobile  Airport  Authority  and is the  president  of  Wichita
Greyhound  Park.  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 the  Audit  Committee  of the  Board  of
Trustees.  He also is a member of the  executive  compensation  committee of the
board of directors of CPHC.

      Claude B.  Nielsen,  46, is a trustee of the  Company  and a director of
CPHC.  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  and Cobb  Theatres.  He also  currently  serves  as a
board member and finance  committee  chairman of the  Birmingham  Civil Rights
Institute as well as a board member of the Birmingham Airport  Authority.  Mr.
Nielsen is a member of the  Executive  Compensation  Committee of the Board of
Trustees.  Mr.  Nielsen  also  is  a  member  of  the  executive  compensation
committee of the board of directors of CPHC.

      Harold W.  Ripps,  58, is a trustee of the  Company and a director of CPHC
and the Management Corporation.  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 and the
Executive  Compensation  Committee of the Board of Trustees. He also is a member
of the executive committee and the executive compensation committee of the board
of directors of CPHC.

      Donald T. Senterfitt, 77, has been a trustee of the Company and a director
of CPHC 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 to the Florida
Bankers  Association,  and  served  both  organizations  in a  variety  of other
capacities.  He currently serves as president and chief executive officer of The
Pilot Group,  L.C., a financial  institutions  consulting firm  headquartered in
Orlando,  Florida. He is a director of Colonial Bank of Florida.  Mr. Senterfitt
is a member of the Audit Committee of the Board of Trustees.

                        Executive Officers of the Company

            Thomas H. Lowder,  47, is the President and Chief Executive  Officer
of the Company and CPHC,  a trustee of the  Company,  and a director of CPHC and
the Management Corporation.  Mr. Lowder became President of Colonial 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
Colonial.  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 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  for
Discovery   2000,   the   Children's   Hospital   of   Alabama,   American   Red
Cross-Birmingham  Area  Chapter,  and the  United  Way of  Central  Alabama.  He
graduated with honors from Auburn University with a Bachelor of Science Degree.

            Howard B. Nelson,  Jr., 49, has been Senior Vice President and Chief
Operating  Officer  of  the  Company  and  CPHC,  with  responsibility  for  the
day-to-day  management of the Company,  since September 1993. 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.

            Douglas B.  Nunnelley,  54, has been Senior Vice President and Chief
Financial  Officer of the  Company and CPHC,  with  general  responsibility  for
financing  matters,  since 1993. From 1979 until 1993, Mr.  Nunnelley  served as
Executive  Vice  President,  Comptroller,  and Chief  Accounting  Officer of the
AmSouth  Bancorporation,  and as Senior Vice  President and  Comptroller  of the
First  National  Bank of  Birmingham.  He serves on the  Board of  Directors  of
Eastern Health Systems, Inc. Mr. Nunnelley holds a Bachelor of Science Degree in
accounting  from the  University  of Alabama  and is a graduate  of the  Stonier
Graduate  School of Banking  at Rutgers  University  and is a  Certified  Public
Accountant.

            Paul  F.  Earle,  39,  has  been  Senior  Vice-President-Multifamily
Division  of  CPHC,  with  responsibility  for  management  of  all  multifamily
properties  owned  and/or  managed by the Company,  since April 1996.  He joined
Colonial in 1991 and has served as Vice President-Acquisitions.  Mr. Earle is an
active  member  of  the  Alabama  Multifamily  Council  and  National  Apartment
Association.  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, 37, has been Senior Vice  President-Retail  Division
Development of CPHC, with  responsibility  for the expansion and new development
of Retail  Properties,  since  September  1993.  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.

            Thomas M. LaDow, 46, has been Senior  Vice-President Office Division
of CPHC, with responsibility for management and leasing of all office properties
owned and/or managed by the Company, since September 1993. He joined Colonial in
1975 as a property manager and became Senior  Vice-President-Office  Division of
Colonial in September 1993. Mr. LaDow is a Certified  Property Manager (CPM) and
is an active member of the Institute of Real Estate Management, Building Owner's
and Manager's  Association and the National Association of Industrial and Office
Park. He holds a Bachelor of Science Degree from Birmingham  Southern College in
Birmingham, Alabama.

            Charles A. McGehee,  51, has been Senior Vice  President-Multifamily
Acquisitions/Development  of  CPHC,  in  charge  of  the  Company's  Multifamily
Property  acquisitions  and the Birmingham  sales brokerage  departments,  since
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. He became Senior Vice President-Office Division of Colonial in 1990, a
position he held until assuming his current position.  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.

            John L. Moss, 47, has been Senior Vice President-Retail  Division of
CPHC, with responsibility for management,  leasing,  and marketing of all retail
property owned and/or managed by the Company,  since  September  1993. He joined
Colonial  in 1973  as a  property  manager  and  assumed  various  positions  of
increasing  responsibility  in  the  retail  area  until  becoming  Senior  Vice
President-Retail  Division  of Colonial in 1990.  Mr.  Moss,  who is a Certified
Shopping  Center  Manager  (CSM),  has  served  as the  state  director  and the
Alabama/Mississippi  state  governmental  affairs chairman of the  International
Council of Shopping  Centers.  He holds a Bachelor of Science Degree from Auburn
University.

            C.  Reynolds  Thompson,  III,  34,  joined CPHC 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  ten  year  real  estate  background  includes
acquisitions,  development,  leasing, and management of office properties in the
Southeast.  He is an active member of the National Association of Industrial and
Office  Parks and holds a Bachelor  of Science  degree from  Washington  and Lee
University.

<PAGE>
Item 11.    Executive Compensation.

                             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>
                           Summary Compensation Table
<CAPTION>

                                       Annual Compensation

                                                            Other Annual
Name and Principal Position      Year  Salary ($) Bonus ($) Compensation
<S>                              <C>   <C>        <C>            <C>
Thomas H. Lowder..............   1996  $285,000   $30,000        --
Chairman of the Board            1995   285,000   110,000        --
President and Chief Executive.   1994   275,000   100,000        --
Officer

Howard B. Nelson, Jr..........   1996   171,726   23,000         --
Senior Vice President and ....   1995   145,000   68,000         --
Chief Operating Officer          1994   120,000   62,000         --

John N. Hughey................   1996   104,998   50,000         --
Senior Vice President -          1995    95,000   62,000         --
Retail Development               1994    95,000   38,000         --

Charles A. McGehee............   1996   120,000   20,000         --
Senior Vice President -          1995   110,000   63,000         --
Multifamily Acquisitions/        1994   107,500   58,600         --
Development

John L. Moss..................   1996   115,000   11,500         --
Senior Vice President -          1995   115,000   35,000         --
Retail Division                  1994   115,000   19,000         --

(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                                           Long-Term Compensation
                                     Restricted    Securities          All
                                       Share       Underlying         Other
Name and Principal Position        Awards ($) (1)  Options (#)   Compensation(2)
<S>                                   <C>             <C>           <C>
Thomas H. Lowder..............        $67,200         16,000        $4,500
Chairman of the Board                  62,775         15,835         4,500
President and Chief Executive.         62,745         16,000         4,620
Officer

Howard B. Nelson, Jr..........         33,600          8,500         4,500
Senior Vice President and ....         26,100          6,450         4,159
Chief Operating Officer                13,684          3,460         3,588

John N. Hughey................         14,400          3,500         3,145
Senior Vice President -                13,388          3,295         3,088
Retail Development                     10,903          2,740         2,685

Charles A. McGehee............         16,800          4,000         4,500
Senior Vice President -                15,413          3,815         3,276
Multifamily Acquisitions/              12,238          3,100         3,349
Development

John L. Moss..................         14,400          3,500         3,738
Senior Vice President -                16,088          3,990         3,472
Retail Division                        13,128          3,320         3,058

<FN>
(1)   The  number and value of  restricted  shares  held by the Named  Executive
      Officers as of  December  31,  1996 were as  follows:  Mr.  Lowder - 8,410
      shares ($255,454); Mr. Nelson - 3,175 shares ($96,441); Mr. Hughey - 1,685
      shares  ($51,182);  Mr. McGehee - 1,935 shares  ($58,776);  and Mr. Moss -
      1,905 shares  ($57,864).  Dividends are paid on  restricted  shares at the
      same rate paid to all holders of Common Shares.
(2)   All Other  Compensation  consists solely of employer  contributions to the
      Company's 401(k) Plan.
</FN>
</TABLE>

<PAGE>

      The following table sets forth certain  information  concerning  exercised
and  unexercised  options held by the Named  Executive  Officers at December 31,
1996:
<TABLE>

  Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
                                     Values
<CAPTION>
                                                            Number of
                              Shares                   Securities Underlying
                             Acquired        Value      Unexercised Options
Name                      on Exercise(#)  Realized($)  at December 31, 1996
----                    --------------------------------------------------------

                                                     Exercisable  Unexercisable

<S>                             <C>         <C>       <C>            <C>
Thomas H. Lowder               -0-          $-0-      15,945         31,890

Howard B. Nelson, Jr.          -0-           -0-       4,457         13,953

John N. Hughey.                -0-           -0-       2,925          6,610

Charles A. McGehee             -0-           -0-       3,338          7,577

John L. Moss...                -0-           -0-       3,543          7,267

(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                                        Value of Unexercised
                                            In-the-Money
                                              Options
Name                                    at December 31, 1996(1)
----                                    -------------------

                                       Exercisable  Unexercisable

<S>                                     <C>           <C>
Thomas H. Lowder                        $117,594      $209,189

Howard B. Nelson, Jr.                     32,867        89,094

John N. Hughey.                           21,572        43,061

Charles A. McGehee                        24,620        49,378

John L. Moss...                           26,132        47,904

------------------------
<FN>
(1)Based on closing  price of $30.375 per Common Share on December 31, 1996,  as
   reported by the New York Stock Exchange.
</FN>
</TABLE>

      The  following  table  shows  certain  information  relating to options to
purchase Common Shares granted to the Named Executive Officers during 1996:
<TABLE>
                        Option Grants in Last Fiscal Year
<CAPTION>
                                Individual Grants

                                                       Percent
                                        Number of      of Total
                                       Securities      Options
                                       Underlying     Granted to   Exercise
                                         Options     Employees in    Price
Name                                   Granted (#)    Fiscal Year    ($/Sh)

<S>                                      <C>           <C>          <C>
Thomas H. Lowder  ........................16,000       23.40%       $24.63

Howard B. Nelson, Jr...................... 8,500       12.40%       $24.63

John N. Hughey    .........................3,500        5.10%       $24.63

Charles A. McGehee........................ 4,000        5.80%       $24.63

John L. Moss      .........................3,500        5.10%       $24.63


(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                                                        Potential Realizable
                                                          Value at Assumed
                                                       Annual Rates of Share
                                                       Price Appreciation for
                                        Expiration         Option Term
Name                                       Date           5%         10%

<S>                                      <C>           <C>         <C>
Thomas H. Lowder  .......                3/11/06       $231,146    $601,997

Howard B. Nelson, Jr.....                3/11/06        122,982     319,811

John N. Hughey    .......                3/11/06         50,640     131,687

Charles A. McGehee.......                3/11/06         57,874     150,499

John L. Moss      .......                3/11/06         50,640     131,687

</TABLE>

      All options  granted in 1996  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  has adopted a  Retirement  Plan (the  "Plan") for all of the
employees of the Company and its subsidiaries. The Plan also has been adopted by
the Management  Corporation.  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.
<TABLE>
                               Pension Plan Table
<CAPTION>
                                Years of Service
               ----------------------------------------------------------
Remuneration        5            10          15         20         25
-----------

<C>              <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 1997.  This limit is scheduled to increase  periodically
with the cost of living.

      Covered  compensation  under the Plan includes only the employees'
base  salary.  Thomas H.  Lowder has 22 years of covered  service  under
the Plan, Howard B. Nelson, Jr. has 12 years of service,  John N. Hughey
has 14 years of service,  Charles A.  McGehee has 19 years,  and John L.
Moss has 21 years 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
provided for an initial term of three years, and is renewable  automatically 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,  James
K.  Lowder,  Herbert A.  Meisler and Harold W.  Ripps,  who are members of the
Committee,  own interests in certain entities that,  during 1996, were parties
to certain transactions involving the Company.


      Brasfield & Gorrie  General  Contractors,  Inc., a corporation of which M.
Miller 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
the  corporation a total of $22.8 million  ($21.8 million of which was then paid
to unaffiliated subcontractors) during 1996 pursuant to this engagement.

      In July 1996, the Company  acquired land in Macon,  Georgia on which it is
developing a multifamily community. The Company acquired this land from Colonial
Commercial Investments, Inc., which was owned by James K. Lowder and his brother
Thomas H.  Lowder.  The  purchase  price of  $1,440,000,  which  was  determined
pursuant  to an option  acquired  at the time of the  Company's  initial  public
offering in  September,  1993,  was paid through the issuance of 58,446 units of
limited partnership interest in the Company's subsidiary Colonial Realty Limited
Partnership.

      The Management Corporation provided management and leasing services during
1996 to certain  entities in which James K.  Lowder and his  brothers  Thomas H.
Lowder and Robert E. Lowder, have an interest. The aggregate amount of fees paid
to the  Management  Corporation by such entities  during 1996 was  approximately
$356,000.

      Colonial Insurance  Company, a corporation  indirectly owned by the Lowder
family,  provided insurance  brokerage services for the Company during 1996. The
aggregate  amount paid by the Company to  Colonial  Insurance  Company for these
services for the year ended December 31, 1996, was approximately $187,000.

      The Company  leased space to certain  entities in which the Lowder  family
has an interest and received  rent from these  entities  totaling  approximately
$758,000 during 1996.

      The Company engaged Lowder Construction  Company,  Inc., of which James K.
Lowder serves as chairman of the board and which is indirectly owned by James K.
Lowder and Thomas H. Lowder, to serve as construction manager for 11 multifamily
development  and  expansion  projects  during 1996.  The Company paid a total of
$42.6  million   ($41.2   million  of  which  was  then  paid  to   unaffiliated
subcontractors) for the construction of these development and expansion projects
during 1996.

      The Company also paid to Rime Construction Company, Inc., a corporation in
which  Harold  W.  Ripps,  Herbert  A.  Meisler,  and Mr.  Meisler's  son own an
interest,  a total of $5.1  million  ($4.9  million  of which  was then  paid to
unaffiliated  subcontractors)  for  construction  of one  multifamily  expansion
project during 1996.
            The  information  required  by this item is hereby  incorporated  by
reference to the material  appearing  in the Proxy  Statement  under the caption
"Executive Compensation."
<PAGE>

Item 12.    Security Ownership of Certain Beneficial Owners and Management

            The following  table sets forth  information,  as of March 10, 1997,
regarding the beneficial  ownership of Units by (1) each person known by CRLP to
be the beneficial owner of more than five percent of CRLP's  outstanding  Units,
(2) each trustee of the Company (each of whom also serves as a director of CPHC)
and  each  of the  chief  executive  officer  and the  four  other  most  highly
compensated  executive officers of the Company (the "Named Executive  Officers")
(each of whom also is an  executive  officer of CPHC) and (3) the  trustees  and
executive  officers of Colonial as a group.  Each person  named in the table has
sole voting and investment power with respect to all Units shown as beneficially
owned by such person,  except as otherwise  set forth in the notes to the table.
The extent to which a person  held  Common  Shares of  Colonial  as of March 10,
1997, is set forth in Colonial's Proxy Statement dated March 24, 1997, under the
caption "Voting  Securities and Principal  Holders Thereof," and is incorporated
by  reference in this Annual  Report and shall be deemed a part  hereof.  Unless
otherwise provided in the table, the address of each beneficial owner is Energen
Plaza, Suite 750, 2101 Sixth Avenue North, Birmingham, Alabama 35203.
<TABLE>

 Name and Business                            Number of        Percent of
 Address of Beneficial Owner                    Units           Units(1)
-----------------------------------------   --------------   ---------------

<S>                                        <C>                    <C>
Colonial Properties Trust (through
Colonial Properties Holding Company,       18,898,575 (2)         68.4%
Inc.)

 Thomas H. Lowder                           2,791,829 (3)         10.1%

 James K. Lowder                            2,791,829 (4)         10.1%
 2000 Interstate Parkway
 Suite 400
 Montgomery, Alabama  36104

 Robert E. Lowder                           1,737,933 (5)          6.3%
 One Commerce Street
 Montgomery, Alabama  36104

 Carl F. Bailey                                   -0-                 *

 M. Miller Gorrie                                 -0-                 *

 Herbert A. Meisler                         1,442,757 (6)          5.2%

 Claude B. Nielsen                                 -0-                *

 Harold W. Ripps                             1,851,308             6.7%

 Donald T. Senterfitt                              -0-                *

 John N. Hughey                                    -0-                *

 Charles A. McGehee                                -0-                *

 John L. Moss                                      -0-                *

 Howard B. Nelson, Jr.                             -0-                *

 All executive officers and trustees as a
 group (15 persons)                         6,618,694 (7)         24.0%


 *   Less than 1%

-----------------------------------------
<FN>
(1)    The number of Units outstanding as of March 10, 1997, was 27,631,248.
(2)    Does not include 276,312 units of general partnership  interest held by
      CPHC, representing a one percent equity interest in CRLP.
(3)    Includes  532,800 Units owned by Thomas Lowder,  1,258,297  Units owned
      by Colonial  Commercial  Investments,  Inc.  ("CCI"),  a corporation owned
      equally by Thomas and James Lowder,  and  1,000,732  Units owned by Equity
      Partners Joint Venture  ("EPJV"),  a general  partnership of which Thomas,
      James and Robert Lowder are the sole general partners.  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.  Units owned by
      EPJV are reported three times in this table, as beneficially owned by each
      of the Lowder brothers.
(4)    Includes 532,800 Units owned by James Lowder,  1,258,297 Units owned by
      CCI and 1,000,732 Units owned by EPJV.
(5)   Includes 523,546 Units owned by Robert Lowder,  213,655 Units owned by CBC
      Realty,  Inc. ("CBC"),  a corporation  wholly owned by Robert Lowder,  and
      1,000,732 Units owned by EPJV.
(6)   Includes 55,062 Units owned by Mr.  Meisler,  915,823 Units owned by Bamil
      Investment Company, a partnership comprised of Mr. Meisler's children, and
      471,872 Units owned by BerFan Company,  a partnership of which Mr. Meisler
      and his wife are the sole general partners.
(7) Units held by CCI and EPJV have been counted only once for this purpose.
</FN>
</TABLE>

Item 13.    Certain Relationships and Related Transactions.

            The information required by this item is included in Item 11 of this
Form 10-K.
<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:

      Report of Independent Accountants

      Consolidated Balance Sheets as of December 31, 1996 and 1995

      Consolidated  Statements  of Income  for the years  ended  December  31,
      1996, 1995, and 1994

      Consolidated  Statements  of  Partners'  Capital  for  the  years  ended
      December 31, 1996, 1995, and 1994

      Consolidated  Statements of Cash Flows for the years ended  December 31,
      1996, 1995, and 1994

      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     Registration Rights and Lock-Up Agreement among the
                      Company and the persons named herein.
          ** 10.3 ++  First Amended and Restated Employee Share Option and
                      Restricted Share Plan.
           + 10.4     Non-employee Trustee Share Option Plan.
           + 10.5     Non-employee Trustee Option Agreement.
           + 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    Articles of Incorporation of CPHC, as amended.
           + 10.12    Bylaws of CPHC.
           + 10.13    Land Option Agreement.
          ++          10.14 Credit agreement  between the Company and SouthTrust
                      Bank of Alabama,  National  Association,  AmSouth  Bank of
                      Alabama,    Wells   Fargo   Realty    Advisors    Funding,
                      Incorporated,  and National Bank of Commerce of Birmingham
                      dated December 18, 1995 and related promissory notes.
           + 10.16 ++ Annual Incentive Plan.
         ++++10.17    Indenture  dated  as of  July  22,  1996,  by and  between
                      Colonial  Realty  Limited  Partnership  and Bankers  Trust
                      Company, as amended
           + 21.1     List of Subsidiaries.
             23.1     Consent of Independent Accountants.
             27       Financial Data Schedules.
--------------------

*  Incorporated  by reference to the Annexes to the  Company'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 the
   Company's Annual Report on Form 10-K dated December 31, 1995.
++++  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.

14(b)       Reports on Form 8-K

            Reports on Form 8-K filed during the last quarter of 1996:
               -  Form 8-K dated December 5, 1996,  reported certain  property
                  acquisitions during 1996 under Item 5, "Other Events."
               -  Form 8-K dated December 6, 1996, reported the required
                  filings for the issuance of medium term debt securities 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 28, 1997.

                                            COLONIAL REALTY LIMITED PARTNERSHIP,
                                            a Delaware limited partnership

                                            By: Colonial Properties Holding
                                                  Company, Inc.,
                                                  its general partner



                                            By:    /s/ Douglas B. Nunnelley
                                                  -------------------------
                                                  Douglas B. Nunnelley
                                                  Senior Vice President and
                                                  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 28, 1997.


                     Signature

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

               /s/ Douglas B. Nunnelley        Senior Vice President and Chief
-------------------------------------------    Financial Officer
           Douglas B. Nunnelley

              /s/ Kenneth E. Howell            Vice President, Controller,
-------------------------------------------    and Secretary
           Kenneth E. Howell                   (Chief Accounting Officer)

                /s/ Carl F. Bailey             Director
-------------------------------------------
           Carl F. Bailey

                /s/ M. Miller Gorrie           Director
-------------------------------------------
           M. Miller Gorrie

                /s/ James K. Lowder            Director
-------------------------------------------
           James K. Lowder

                                               Director
-------------------------------------------
           Herbert A. Meisler

                /s/ Claude B. Nielsen          Director
-------------------------------------------
           Claude B. Nielsen

               /s/ Harold W. Ripps             Director
-------------------------------------------
           Harold W. Ripps

               /s/ Donald T. Senterfitt        Director
-------------------------------------------
           Donald T. Senterfitt


<PAGE>
<TABLE>
                            SCHEDULE III
                  COLONIAL REALTY LIMITED PARTNERSHIP
            REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                         December 31, 1996
<CAPTION>

                                                         Initial Cost to
                                                            Company
                                                                   Buildings and
  Description                         Encumbrances      Land      Improvements

 <S>                                  <C>           <C>             <C>
 Multifamily:
 Colonial Grand at Kirkman Park       $12,535,549   $  2,220,000    $21,747,240
 Ashford Place                          3,420,517        537,600      5,839,838
 Barrington Club                              -0-        880,000      8,605,143
 Carrollwood Apartments                 6,230,000      1,464,000     10,657,840
 Colonial Village at Rocky Ridge        7,418,333        644,943      8,325,057
 Colony Park                                  -0-        409,401      4,345,599
 Colonial Grand at Galleria Woods       7,395,088      1,220,000     12,480,949
 Colonial Grand at Mountain Brook      12,261,239      1,960,000     21,181,118
 Colonial Village at Cahaba Heights     3,772,907        625,000      6,548,683
 Grande View Towers                     9,952,418      1,540,000     12,671,606
 Colonial Village at Inverness          9,900,000      1,713,668     10,352,151
 Huntleigh Woods                        3,022,034        745,600      4,908,990
 Inverness Apts                         5,741,667        735,461      7,254,539
 Inverness Lakes Apts                         -0-        641,334      8,873,906
 McGehee Place Apts                           -0-        795,627            -0-
 Colonial Village at Monte D'Oro        5,314,434      1,000,000      6,994,227
 North Ingle Villas                           -0-        497,574      4,122,426
 Patio I, II & III                            -0-        249,876      3,305,124
 Pelican Pointe                         8,245,000      1,479,352            -0-
 Plantation Gardens                           -0-      1,488,000     13,515,075
 Pointe West                            2,880,971        332,800      4,310,671
 Polos at Gainesville                  11,360,000      3,360,000     24,173,649
 Polos at Ponte Vedra                   5,760,000      1,440,000     10,038,593
 Polos West                             5,777,805      1,200,000      8,581,389
 Colonial Grand at Galleria            22,400,000      4,600,000     39,078,925
 Rime Village - Rime Reserve                  -0-        758,439      7,902,382
 Rime Village - Huntsville             12,775,000      3,680,000     31,686,621
 Riverchase II                                -0-        857,080            -0-
 Colonial Grand at Riverchase           9,197,454      2,340,000     25,248,548
 Ski Lodge I                            7,899,217      3,270,000     12,574,303
 Ski Lodge II                           9,082,891      3,220,000     13,678,104
 Ski Lodge III                         10,300,000      2,770,000     15,244,144
 Ski Lodge - Tuscaloosa                 4,827,530      1,064,000      6,636,685
 Somerset Place                         4,500,000        699,128      4,920,872
 Somerset Wharf                         3,400,000        960,984      3,511,596
 Spring Creek                                 -0-      1,184,000     13,243,975
 Stockbridge Manor                            -0-        960,000     11,975,947
 Colonial Village at Lake Mary                -0-      2,145,480            -0-
 Sunchase                                     -0-      1,121,244            -0-
 Vieux Carre                            5,158,370         32,143            -0-
 Willow Bend                            4,996,667        511,700      5,508,300
 Willowtree                                   -0-        134,000      3,986,304
 Retail:
 Bardmoor Village                             -0-      2,143,152      9,746,573
 Bear Lake Village                            -0-      2,134,440      6,551,683
 Bellwood                               2,995,932        330,000            -0-
 Briarcliffe Mall                             -0-      9,099,972     33,663,654
 Britt David                                  -0-      1,755,000      4,951,852
 Burnt Store Square                           -0-      3,750,000      8,198,677
 Country Lake Village                         -0-      3,659,040      6,783,697
 Gadsden Mall                          15,480,000        639,577            -0-
 Island Walk                           10,406,672      4,181,760     13,023,401
 Macon Mall                                   -0-      1,684,875            -0-
 McGehee Place                                -0-        197,152            -0-
 Montgomery Promenade                  10,810,000      3,788,913     11,346,754
 Northdale Court                              -0-      3,059,760      8,054,090
 Old Springville                              -0-        272,594            -0-
 Olde Town                              1,676,562        343,325            -0-
 Paddock Park                                 -0-      1,532,520      3,754,879
 River Oaks                                   -0-      3,262,800     23,636,229
 University Park Plaza                 14,445,000      6,946,785     20,104,517
 Village Mall                                 -0-        103,480            -0-
 Wekiva River Walk                            -0-      2,817,788     15,302,375
 Winter Haven Village                         -0-      1,768,586      3,928,903
 Office:
 250 Commerce Street                          -0-         25,000        200,200
 AmSouth Center                               -0-        764,961            -0-
 Interstate Park                        4,731,991      1,125,990      7,113,558
 P&S Building                                 -0-        104,089            -0-
 University Park                              -0-        396,960            -0-
 Whitesburg Building                    1,282,470      1,081,618      1,050,000
 Active Development Projects:
 Colonial Grand at Bayshore                   -0-     11,155,327            -0-
 Colonial Grand at Bayshore II                -0-      3,377,532            -0-
 Colonial Grand at Wesleyan                   -0-      7,034,301            -0-
 Colonial Village at Inverness                -0-      1,462,407            -0-
 Colonial Grand at Heathrow                   -0-     20,050,293            -0-
 Colonial Grand at Hunter's Creek             -0-     16,824,877            -0-
 Inverness Lakes                              -0-         17,733            -0-
 Macon Mall Expansion                         -0-     37,422,651            -0-
 McGehee Place Apts. I                        -0-         58,548            -0-
 Montgomery Promenade                         -0-      1,100,000            -0-
 Riverchase III                               -0-     13,368,319            -0-
 Unimproved Land:
 Macon Mall Outparcels                        -0-        663,142            -0-
 Colonial Grand at Wesleyan Land              -0-        720,000          3,882
 Village Mall                                 -0-        404,187            -0-
 McGehee Place Land                       700,000        430,151            -0-
--------------------------------------------------------------------------------

                                    $ 278,053,718   $228,548,039 $  591,445,443
--------------------------------------------------------------------------------


(INFORMATION CONTINUED FROM PREVIOUS TABLE)

       Cost                        Gross Amount at   Which
    Capitalized                  Carried at Close of Period
   Subsequent to                       Buildings and
    Acquisition          Land          Improvements       Total


   <S>               <C>                <C>            <C>
   $     313,875     $  2,220,000       $22,061,115    $24,281,115
          15,465          537,600         5,855,303      6,392,903
          20,282          880,000         8,625,425      9,505,425
         517,598        1,464,000        11,175,438     12,639,438
          54,552          644,943         8,379,609      9,024,552
         135,648          409,406         4,481,243      4,890,648
           4,733        1,220,000        12,485,682     13,705,682
          38,214        1,960,000        21,219,332     23,179,332
          11,404          625,000         6,560,087      7,185,087
          82,008        1,540,000        12,753,614     14,293,614
       7,394,197        1,713,668        17,746,348     19,460,016
         324,208          745,600         5,233,198      5,978,798
         109,111          735,080         7,364,031      8,099,111
             -0-          641,334         8,873,906      9,515,240
      16,185,893          842,321        16,139,199     16,981,520
         554,158        1,000,000         7,548,385      8,548,385
         267,212          497,574         4,389,638      4,887,212
       1,888,226          366,717         5,076,509      5,443,226
      12,219,880        1,479,352        12,219,880     13,699,232
          92,851        1,489,500        13,606,426     15,095,926
          12,401          332,800         4,323,072      4,655,872
       2,447,552        3,361,850        26,619,351     29,981,201
         102,400        1,440,000        10,140,993     11,580,993
         144,379        1,200,000         8,725,768      9,925,768
         578,891        4,600,000        39,657,816     44,257,816
             -0-          758,439         7,902,382      8,660,821
      (2,241,014)       3,680,000        29,445,607     33,125,607
       8,879,587          857,080         8,879,587      9,736,667
         308,789        2,340,000        25,557,337     27,897,337
         451,675        3,270,000        13,025,978     16,295,978
         442,794        3,220,000        14,120,898     17,340,898
         248,578        2,770,000        15,492,722     18,262,722
         143,739        1,064,000         6,780,424      7,844,424
         184,687          699,128         5,105,559      5,804,687
       2,987,412          960,984         6,499,008      7,459,992
          42,571        1,184,000        13,286,546     14,470,546
          29,025          960,000        12,004,972     12,964,972
      18,757,353        3,634,094        17,268,739     20,902,833
       5,534,992        1,121,244         5,534,992      6,656,236
       4,661,083           32,143         4,661,083      4,693,226
         124,334          511,700         5,632,634      6,144,334
         234,856          134,000         4,221,160      4,355,160

           3,175        2,143,152         9,749,748     11,892,900
          19,543        2,134,440         6,571,226      8,705,666
       2,828,827          330,000         2,828,827      3,158,827
         149,589        9,099,972        33,813,243     42,913,215
             -0-        1,755,000         4,951,852      6,706,852
          25,961        3,750,000         8,224,638     11,974,638
          35,544        3,659,040         6,819,241     10,478,281
      18,438,004          639,577        18,438,004     19,077,581
             -0-        4,181,760        13,023,401     17,205,161
      30,519,154        1,684,875        30,519,154     32,204,029
       3,669,113          197,152         3,669,113      3,866,265
         983,175        4,332,432        11,786,410     16,118,842
          20,220        3,059,760         8,074,310     11,134,070
       3,321,753          277,975         3,316,372      3,594,347
       2,435,727          343,325         2,435,727      2,779,052
          18,225        1,532,520         3,773,104      5,305,624
         292,218        3,262,800        23,928,447     27,191,247
         155,080        6,946,785        20,259,597     27,206,382
      13,943,984          319,528        13,727,936     14,047,464
             -0-        2,817,788        15,302,375     18,120,163
       4,297,159        4,045,045         5,949,603      9,994,648

       2,248,010           25,000         2,448,210      2,473,210
      16,470,520          764,961        16,470,520     17,235,481
       8,014,064        1,125,988        15,127,624     16,253,612
         641,336          104,089           641,336        745,425
       4,153,866          396,960         4,153,866      4,550,826
          25,986        1,081,618         1,075,986      2,157,604

             -0-        1,062,827        10,092,500     11,155,327
             -0-          984,000         2,393,532      3,377,532
             -0-          720,000         6,314,301      7,034,301
             -0-          630,858           831,549      1,462,407
             -0-        2,201,539        17,848,754     20,050,293
             -0-        4,000,000        12,824,877     16,824,877
             -0-              -0-            17,733         17,733
             -0-        3,192,332        34,230,319     37,422,651
               1           58,549               -0-         58,549
             -0-        1,100,000               -0-      1,100,000
             -0-        1,662,913        11,705,406     13,368,319

             -0-          663,142               -0-        663,142
             -0-          720,000             3,882        723,882
             -0-          404,187               -0-        404,187
             -0-          430,151               -0-        430,151
------------------------------------------------------------------

    $197,015,833     $136,985,597    $  880,023,719 $1,017,009,315
------------------------------------------------------------------

(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                                   Date
                                Acquired/
    Accumulated     Date        Placed in  Depreciable
    Depreciation  Completed      Service   Lives/Years


    <S>              <C>          <C>        <C>
    $  1,731,563     1991         1994       7-40 Years
         109,842     1983         1996       7-40 Years
         113,100     1996         1996       7-40 Years
       1,152,497     1966         1994       7-40 Years
         685,639     1984         1993       7-40 Years
         367,304     1975         1993       7-40 Years
         312,979     1994         1996       7-40 Years
         369,205     1987/91      1996       7-40 Years
         130,255     1992         1996       7-40 Years
       1,349,293     1990         1994       7-40 Years
       3,140,548     1986/87/90   1986/87/90 7-40 Years
         277,678     1978         1994       7-40 Years
         607,849     1983         1993       7-40 Years
         257,609     1996         1996       7-40 Years
       3,139,011     1986/95      1986/95    7-40 Years
         373,817     1977         1994       7-40 Years
         367,139     1983         1983       7-40 Years
         402,449     1966/83/84   1994/93/93 7-40 Years
       2,710,564     1992         1992       7-40 Years
       1,269,629     1991         1994       7-40 Years
          80,981     1981         1996       7-40 Years
       2,297,486     1989/93/94   1994       7-40 Years
         714,766     1988         1994       7-40 Years
         711,946     1991         1994       7-40 Years
       2,043,734     1986         1994       7-40 Years
         135,201     1996         1996       7-40 Years
       1,873,936     1987/94      1994       7-40 Years
       2,093,904     1991         1991       7-40 Years
       1,478,422     1984/91      1994       7-40 Years
         665,845     1972/73/76   1994       7-40 Years
         703,702     1979/86      1994       7-40 Years
         775,146     1984         1994       7-40 Years
         388,992     1976/92      1994       7-40 Years
         410,743     1986         1993       7-40 Years
       1,335,389     1986/87      1986/93    7-40 Years
         334,531     1992/94      1996       7-40 Years
         894,806     1993/94      1994       7-40 Years
       2,905,302     1991/95      1991/95    7-40 Years
       1,759,536     1986         1986       7-40 Years
       3,119,253     1971/74/78   1971/74/78 7-40 Years
         476,271     1984         1993       7-40 Years
       2,037,434     1983         1983       7-40 Years

          49,507     1981         1996       7-40 Years
         252,138     1990         1995       7-40 Years
         796,167     1988         1988       7-40 Years
         140,482     1986         1996       7-40 Years
         268,225     1990         1994       7-40 Years
         513,237     1990         1994       7-40 Years
         257,378     1990         1995       7-40 Years
       7,235,551     1974         1974       7-40 Years
          71,623     1993/95      1996       7-40 Years
      13,508,163     1975/88      1975/88    7-40 Years
       1,010,591     1986         1986       7-40 Years
       1,746,827     1990         1993       7-40 Years
         235,422     1988         1995       7-40 Years
       2,354,651     1982         1982       7-40 Years
         543,272     1978/90      1978/90    7-40 Years
         105,386     1988         1995       7-40 Years
         812,615     1979/89      1993       7-40 Years
       5,120,083     1986/89      1993       7-40 Years
       7,312,507     1973/84/89   1973/84/89 7-40 Years
          75,433     1990         1996       7-40 Years
         165,856     1986         1995       7-40 Years

       2,242,334     1904         1980       7-40 Years
       4,677,513     1990         1990       7-40 Years
       3,684,087     1982-85/89   1982-85/89 7-40 Years
         357,335     1946         1974       7-40 Years
       1,402,139     1985         1985       7-40 Years
         186,865     1974         1990       7-40 Years

          76,260     N/A          1985          N/A
             -0-     N/A          1985          N/A
             -0-     N/A          1996          N/A
             -0-     N/A          1985          N/A
         234,715     N/A          1994          N/A
             -0-     N/A          1996          N/A
             -0-     N/A          1994          N/A
             -0-     N/A          1987          N/A
             -0-     N/A          1987          N/A
             -0-     N/A          1993          N/A
             -0-     N/A          1985          N/A

             -0-     N/A          1987          N/A
             -0-     N/A          1996          N/A
             -0-     N/A          1981          N/A
             -0-     N/A          1981          N/A
------------------

  $  101,541,658
------------------
</TABLE>
<PAGE>

                                      NOTES TO SCHEDULE III
                               COLONIAL REALTY LIMITED PARTNERSHIP
                                        December 31, 1996


      The aggregate cost for Federal Income Tax purposes was  approximately  (1)
$711,887,000 at December 31, 1996.

      See  description  of  mortgage  notes  payable  in Note 7 of  Notes to (2)
Consolidated Financial Statements.

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

<TABLE>
                               Reconciliation of Real Estate
<CAPTION>
                                     1996             1995            1994
                                ---------------   -------------   -------------
<S>                              <C>             <C>              <C>
Real estate investments:
   Balance at beginning of year  $  736,937,703  $ 640,680,718    $ 295,516,276
      Acquisitions of new property  173,276,789     67,326,328      328,593,287
      Improvements and development  107,834,251      29,121,438      17,362,104
      Disposition of property        (1,039,428)       (190,781)       (790,949)
                                    ------------   -------------   -------------
   Balance at end of year        $1,017,009,315   $ 736,937,703   $ 640,680,718
                                 ===============   =============   =============
</TABLE>

<TABLE>


                         Reconciliation of Accumulated Depreciation
<CAPTION>
                                       1996             1995            1994
                                 ---------------   -------------   -------------
<S>                                 <C>              <C>             <C>
Accumulated depreciation:
   Balance at beginning of year      $79,780,292     $61,773,344     $51,354,506
      Depreciation
                                      22,015,054      18,044,446      10,817,424
      Depreciation of disposition of
     property                          (253,688)        (37,498)       (398,586)
                                 ---------------   -------------   -------------

   Balance at end of year           $101,541,658     $79,780,292     $61,773,344
                                 ===============   =============   =============
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors
Colonial Properties Holding Company, Inc.

Our report on the consolidated  financial  statements of Colonial Realty Limited
Partnership  is included  in Item 8 of this Form 10-K.  In  connection  with our
audits of such financial statements,  we have also audited the related financial
statement schedules listed in the index in Item 14 of this Form 10-K.

In our opinion,  the financial  statements referred to above, when considered in
relation to the basic financial  statements taken as a whole, present fairly, in
all material respects, the information required to be included therein.


                                                   /s/ Coopers & Lybrand L.L.P.
                                                      COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 24, 1997